It’s budget season and I thought it would be helpful to gather previous blog posts covering some practical tips. The key advice we give clients is quite simple:
- Treat budgets as an opportunity to meet as a team to agree policies for next year. Examples of policies include, headcount and roles by department, pricing policies, new product development budgets, marketing expenditures including which trade shows make sense, technology investments across each department, sales quotas by territory and by Account Manager.
- Build a financial model that treats these policies as an initial set of assumptions and visualize the consequences.
- Use the model to test changes to policies and by agreement arrive at an ambitious but credible P&L, Cash Flow and Balance sheet
- Once agreed there is only one budget. As next year starts to unfold, the story will change which is reflected in forecasts. The budget never changes. It represents a road map to a promise. The roadmap may have to change (forecasts) but the promise should be a commitment worth keeping.
These posts should help:
Why Budgets Are Not Forecasts
Why Budgets Fail
Checklist To Build The Perfect Budget
Our current focus at The Portfolio Partnership in collaboration with the award winning, The Grist, branding agency is to Build Exit-Ready Businesses using our proprietary tools and decades of operator experience and over 40 successful exits.
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Ian@TPPboston.com
