Activity-based budgeting focuses on the actual activities that drive costs in your business, rather than just looking at historical spending patterns. Think of it this way – traditional budgeting might allocate $50,000 to "marketing" based on last year's numbers, while activity-based budgeting breaks that down into specific activities like "customer acquisition campaigns," "brand awareness initiatives," and "retention programs."
This approach gives you much clearer visibility into where your money actually goes and why. You can see which activities generate the best returns and make informed decisions about resource allocation. Many of our Australian clients find this particularly valuable when dealing with seasonal business fluctuations or regulatory changes.
The implementation timeline varies significantly based on your organisation's size and complexity. For small to medium businesses, we typically see initial frameworks in place within 6-8 weeks. Larger organisations or those with multiple divisions might need 3-4 months for full implementation.
However, you don't have to wait for complete implementation to see benefits. Most clients start gaining valuable insights within the first few weeks as we begin mapping their key activities and cost drivers. The process is iterative – you'll be refining and improving your system continuously rather than waiting for a "finished" product.
You'll need your basic financial records – profit and loss statements, expense reports, and any existing budget documents. But don't worry if your current data isn't perfectly organised. Part of our process involves helping you identify and categorise the information that matters most.
- Historical financial statements (12-24 months)
- Current expense categorisation
- Any existing activity or project tracking data
- Basic operational information about your key business processes
We've worked with businesses that had everything in spreadsheets and others with sophisticated ERP systems. The key is starting with what you have and building from there.
Absolutely. In fact, service businesses often see some of the most dramatic improvements because their costs are primarily driven by activities rather than physical materials. Professional services firms, consultancies, marketing agencies, and even healthcare practices have successfully implemented activity-based approaches.
For service businesses, activities might include client onboarding, project delivery phases, business development efforts, or administrative functions. By understanding the true cost of these activities, service providers can price their offerings more accurately and identify opportunities for efficiency improvements.
Activity-based budgeting actually makes your business more resilient to unexpected changes because you understand your cost structure at a granular level. When market conditions shift or unexpected expenses arise, you can quickly identify which activities to scale up, down, or modify.
We build flexibility into the budgeting framework from the start. This includes scenario planning for different market conditions and establishing clear decision-making criteria for budget adjustments. During 2024's economic uncertainty, our clients were able to adapt their spending much more quickly than businesses using traditional budgeting methods.
Implementation is just the beginning. We provide quarterly reviews to help you refine your activity definitions and cost allocations as your business evolves. You'll also have access to our team for questions that come up during monthly or annual planning cycles.
Many clients appreciate our benchmarking reports, where we share insights from similar businesses (anonymised, of course) to help you understand how your activity costs compare to industry standards. We also provide updates when new regulations or market conditions might affect your budgeting approach.
