Budgeting vs. Forecasting: What’s the Difference?

[Original article published at AMA Playbook] or http://playbook.amanet.org/budgeting-vs-forecasting-whats-the-difference/

by Chia-Li Chien | Aug. 28, 2014

Investors behave differently depending on whether information is favorable or unfavorable with regard to the stock market. Information such as quarterly earnings report, unemployment rate, interest rate, or every move of the Federal Reserve makes waves in the stock market. Top management of these publicly-traded companies set their expected or forecasted quarterly earnings a year in advance. Each quarter they will be measured by how well they are performing against their forecast.

In the business world, public or private sectors tend to take ideas and run a forecast just to see how they stack up financially. Ultimately, they want to meet the stakeholders’ expectations. The stakeholders include equity or bond holders (or investors), customers, employees and suppliers, etc.

What is Forecasting?

Let’s take a look at the definition from Merriam-Webster dictionary:

(Emily Huling) 17 Terrific Management Tips

by Emily Huling | Sept. 11, 2014

Retirements, company restructuring, and growing businesses are launching new leaders and managers. Both new and experienced managers face modern-day management issues. Those include remote employees, flex-time workers, video and telephone meetings, different time zones, workforce diversity, and 24/7 access to work. Here are some quick tips to be an effective and supportive manager in today's world.


1) Manage work. Develop people. Make these principles your watchwords.

2) Give people something to work toward, not just work on. Be concise about corporate and department goals, values, and metrics.

3) Listening is your most effective tool. Don't assume you need to step in, solve a problem, or offer an opinion. After focused listening ask, "How can I help?" The answer will guide your response.

4) Personal friendships with direct reports are best kept outside the office. Perceived favoritism can lead to ill will from other associates.

5) A structured new-employee orientation is critical for success. To engage and enlighten the new hire: a personal welcome by a top leader, an assigned coordinator, a review of standard office protocols, job shadowing throughout the company, as well as specific job training.

Be Ready with a Succession Strategy

Doing what's best for you, your family and your employees

by Chia-Li Chien | Aug. 27, 2014

Succession Strategy 101 by Chia-Li ChienYou can’t help but feel excited when getting calls from investment bankers. It’s a boost to your ego when private equity firms and even brokers express interest in investing in your business. And before you know it, they’re in your office and you’ve gotten to know their niche and how they might help you expand your business. You like that they promise to leave all management decisions to you, and simply be available for advice when needed.

Many owners often come to me for advice, but not because discussions with these investors are complex or confusing. It’s that owners want to make sure they can strategically align with the right investor(s) and create a win-win situation for the family, customers and employees. [1]

That being said, using equity to finance your business or 3rd party selling is only one of twenty-seven ways for succession planning. You, the owner can be equitably compensated from your business if you align the selling methods with your goals strategically. There are two major transfer channels: Internal and External. [2]

Internal channels include transfers to:

•    Partners/ Co-owners
•    Employees
•    Family members
•    Charitable trusts

The Unknown Known about Women Owners’ Succession

by Chia-Li Chien | Jul. 14, 2014

You think you know, but you really don’t know?” said Donald Rumsfeld, past U.S. secretary of defense in a documentary film The Unknown Known.

My experience tells me that privately-held business owners want to have a successful cash out event regardless to whom they sell. Yet to create a win-win situation for both buyer and seller there are some timing characters to be aligned according to Slee (2009):

•    Business Timing: Does the business has a solid key management team that can operate with or without the owner or founder.

•    Economic Timing: Where is the economic cycle and its related Industry trending in Market M&A (Merger and Acquisition) movement (not performance), see detail of Slee (2007).

•    Personal timing of the owner: the readiness for owners to move on to something else more or less challenging?

Is your business working for you?

What would have been your ROI (Return of Investment) if you had invested in Apple stock on July 1, 2004? Well, according to Morningstar, if you bought Apple stock on that date, you paid $2.31 a share. On July 11, 2014, the same Apple stock was trading at $95.22 per share. A quick calculation reveals your ROI would have been 40 times greater than your initial purchase.

Role Title: Research Intern

Date posted: April 16, 2016
Job Type: Flexible 3 to 4 hours per week based on your availability (Fall 2016 and Spring 2017)

Salary: unpaid

Role Responsibilities:

A. Data mining secondary dataset in one of the following per assignment but not limited to:
A.1 SEC investment advisor data (Federal level)
A.2 NASAA investment advisor data (State level)
A.3 US Census SIPP data (Survey of income and program participation for net worth)
A.4 US social security (retirees only) monthly benefits
A.5 Proprietary financial advisor M&A data
A.6 Census data from China and India

B. Software include but not limited to:
B.1 Excel
B.3 Oracle Crystal Ball (Excel Add-On)

C. Output of the dataset can be one of the following:
C.1 Descriptive stat or distribution
C.2 Panel
C.3 Scenario analysis
C.4 Monte Carlo Simulation
C.5 Charts, tables
C.6 Regression

D. Qualification:
D.1 Currently enroll full time as junior or sophomore in 4-year university.
D.2 A desire for obtaining graduate degree
D.3 Proficient in Excel

How to apply?

Please email the following to Chia-Li Chien, CFP®, PMP® at jolly@chialichien.com:

a) Resume, please include your current GPA
b) A cover letter of your interests and include:
b.1) Your career goal
b.2) How will this position benefit you?

Deep dive into Business Forecasting

And increase your business value.

by Chia-Li Chien | Apr. 10, 2014

Deep dive into Business Forecasting by Chia-Li ChienIn my previous article, How well do you forecast in business?, we explored the difference between forecasting and budgeting and how a business forecast can allow the planning required for business success.

Remember, the key is to be more proactive, rather than reactive, in achieving business goals.

But when you look at a business forecast, what do you look for? In The Design of Business by Roger Martin, he summarizes three things owners of public or private enterprises must look for:

1.    Reliability – Known as R2, this is one of the key measures for how accurate, reliable and positive correlation the forecast is. This involves in-depth research from within your company’s historical data pattern, seasonality, as well as industry and economic trends.
2.    Validity – Is the platform or business model even valid after looking at the forecast?
3.    Advanced Knowledge – What do you gain based on the forecast? Can you apply this knowledge into your product design or address market needs with favorable methods?