Before undertaking budgeting and planning work, it may help to explain a little more about what's been going on during the current year SO far. Earlier there was a mention of timing of the budgeting and financial planning process. Figure 12-2 shows key elements and timing with respect to the annual business plan. Basically, there are four activities taking place during the course of an operational year, sometimes called fiscal year. The well-managed organization begins the year with an approved budget and business plan. Throughout the year, operating results are recorded and reported on internally and externally. Even though the plan is fixed and doesn't change, operations and results will vary because of several reasons. Moreover, the organization that doesn't change its 12 BUDGETING AND FINANCIAL PLANNING Next Year's Plan Forecast Forecast Actual Actual Actual Actual FIGURE 12-2 Financial Reporting Planning Activities and Time Line way of operating during the course of the year isn't long-lived. At the root of change is the forecast activity. Properly carried out, forecast- ing is a powerful tool for driving annual operating and strategic business plans. Assumptions and Growth Scenarios First of all, let's assume for purposes of the exercise, that we are on the receiving end of the assumptions and scenarios. The effort will involve: Responding to the request for a plan and budget Preparing a budget for the communications cost management function Supporting all other departments with communications expert- ise in the preparation of their operating and capital budgets. Here are the assumptions provided each department: General economic growth remains sluggish to a point or two on the upside Industry segment growth: 3% overall Inflation between 3% and 4% Business growth in accordance with long-range strategic plan Delay replacement equipment capital from first to second quarter Delay expansion capital from second to third quarter PRACTICAL IP AND TELECOM FOR BROADCAST ENGINEERING AND OPERATIONS Revenue growth: 5% 