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You're at an inflection point. You've been a high-growth business--but now that growth has plateaued and your momentum has stalled.
It's the first time your teams have teams. They're forming silos--each has its own processes and every day you hear, "We just don't have the time." Now, sales and marketing aren't aligned, finance is budgeting on its own and HR can't hire quickly enough. More competitors are entering your market and you need to move faster. But how?
To scale the right way, you need to prepare your budget collaboratively, flexibly and quickly to avoid the common budgeting missteps made by small and medium-sized businesses.
Today, we'll cover three budgeting mistakes often made by businesses of these sizes as they attempt to scale.
When growth opportunities arise, without cash, you can't capitalise. While organisations set aside contingency funds, they may not allocate enough cash to both emergencies and investment opportunities. That's when--with limited resources--you may spend more money than you planned. To commit to your budget, you need to forecast cash flow with greater accuracy by modelling different cash flow cycle scenarios and opening up the channels of communication between your teams.
Watch this video to hear Paul Gill, Partner, Valuations and Modeling Financial Advisory Services at BDO, talk about growing assets during times of higher inflation.
To watch the full episode of CFO Confidential: Unpacking Inflation, become a Plan To Grow member and join the community where you'll learn best practices and elevate your leadership skills.
If you're not performing a variance analysis at least monthly and tracking your plans against actuals, you're missing trends that indicate opportunities or threats. You may be underestimating your cost base and operating expenses, or just don't have an accurate forecast of cash inflows and cash outflows. To be able to identify opportunities--such as where you can save on expenses or which sales regions you should focus on more--you need to analyze your budgets vs. actuals monthly at a minimum.
Evan Short, Solutions Consultant at Vena, explains in this video how Vena allows you to create more accurate, driver-based forecasts for operating expenses, track your budgets vs. actuals and analyze what-if scenarios.
To watch the full episode of Vena with Evan: OpEx Planning, become a Plan To Grow member.
How many scenarios are you prepared for? Many organisations don't implement agile planning processes, such as the rolling forecast and scenario modelling, and thus are only prepared for one eventuality. If you don't reforecast regularly when budgeting--some organisations forecast only once every year--you won't have the flexibility to adjust when market conditions fluctuate. To protect your organisation from uncertainty and to be able to seize opportunities, you need to reforecast at every month's end and regularly conduct what-if scenario analysis.
Scaling requires collaboration, agility, speed and process alignment. For many high-growth small and medium-sized businesses at this inflection point, as their teams grow, their respective teams are at risk of drifting apart, establishing their "own way of doing things" and not sharing information when budgeting and forecasting.
With Vena's Excel-based Budgeting and Forecasting solution, you can prepare your budgets collaboratively, flexibly and quickly. Your budget sets your company's direction, and with Vena, you can avoid budgeting mistakes often committed by small and medium-sized businesses--helping you to scale the right way.
