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Strategic planning vs. long-range financial planning: Successful associations need both


In association management, there is a difference between strategic planning and long-range financial planning, yet they are both necessary to ensure the overall financial health and growth of the association.

We consider long-range financial planning as an inwardly focused look at your association’s goals and objectives. It is an extension of the one-year planning budget with a timeline of at least three years and is simply a prediction of future revenues and expenses based on past events and the “predicted future.” A long-range plan doesn’t take into consideration any social or political factors, assumes a stable future market and is numbers-driven. The long-range plan is important because it sets the process by which the strategic plan will be achieved.

At AMPED, we make sure we begin our client budgeting process at least three to four months prior to the cleint's fiscal year end. We begin forecasting their current fiscal year about four months prior to their fiscal year end so they have an idea where their year will end compared to their budget. This is important so that steps can be taken to reduce expenses should the forecasted revenues fall below budget. Another aspect of our monthly reporting is cash flow forecasting, usually one year into the future. This is very important if the association has invested in new and significant initiatives that are cash heavy upfront with revenue being generated at a later time. Will there be enough cash until that revenue is generated?

Strategic planning is much more complex and crucial to the ongoing success of the association. A good strategic plan will ensure that your association is quick to respond to a changing environment. The strategic plan assesses the larger forces in society including social, natural resource and political factors. Your plan needs to address what your association’s situation is, what your association wants to achieve and what needs to be done to achieve your goals. The strategic plan is idea-driven and more qualitative and needs to provide a clear vision/focus for the association. It is a framework and way of thinking rather than a set of procedures. The strategic plan should be developed cooperatively between the board of directors or a strategic plan committee (subset of directors) and senior staff.

All of our clients have strategic plans in place which continually evolve to meet changing external factors. Don’t forget the financial impact. And remember to consider cutting rather than always adding!

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