Whether you’re playing a game of chess or helping to grow a business, strategy is key to making every move the right one. So how do you decide your next move when you have no visibility into the strategy at play?
If you’re part of a finance team, you may find yourself in exactly that position during budgeting season—building out your budget without a strong view into business goals and objectives. Without that, you’re left moving your pieces and assuming the game hasn’t changed, making critical decisions on where to allocate resources for operations and growth without a roadmap.
That’s why budget alignment with business strategy and KPI or goal setting is a critical part of a successful budget—and key to achieving your organizational goals. It’s also how you ensure you have the right resources and team in place as you work to meet your overall objectives, reallocating resources as necessary to meet those goals.
So as you work to align your budget with your company’s strategy, consider the following:
- Why should your budget be aligned with organizational goals?
- 4 steps to achieving budget alignment
Why Should Your Budget Be Aligned With Organizational Goals?
The more your finance team is involved in business strategy, the more organic budget alignment will become. But no matter your organizational structure, it’s going to be critical to success. So if you don’t have visibility into that organizational roadmap already, it may be time to start advocating for it—or even asking for a seat at the table so that your team can fully support business goals from beginning to end. When making your case, consider three reasons why your organization should be making alignment a top objective this budgeting season:
1. You’ll make the budgeting process less of an administrative task.
When true alignment is achieved, your budget moves from a job that needs to get done to become an operational extension of your overall strategic planning process.
2. You’ll allocate resources more intelligently.
Even in high-growth companies, resources aren’t infinite—and spending them unwisely is just unhealthy business practice. Every leadership team is going to have to make tough decisions on where to spend and where to cut as well as what operational and growth initiatives are worth investing in. Budget alignment helps you prioritize or provide portfolio options for that spending so that financial allocation decisions are based on your company objectives—and not just the loudest voice in the room.
3. You’ll have more money when you need it.
Without a deep understanding of company strategy, your finance team won’t be able to model or advise on resource requests, including the headcount, tools and other resources that will empower your organization as it turns strategy into results. Teams will be left scrambling when the time comes—something that can lead to employee burnout and stunted progress, or force teams to adjust plans in a silo to accommodate for the resources available rather than taking a holistic organization-wide approach.
Without alignment, it’s easy to spread your money, focusing too thinly across too many projects and end up without enough cross-functional resources to get things done across the line. It’s in the best interests of everyone in the organization, then, to make sure that alignment is achieved.
4 Steps to Achieving Budget Alignment
What is the relationship between strategic planning and budgeting in your organization?
If a strategic plan outlines where your business is going, the right budget should smooth the path—allocating resources holistically to operationalize your strategies. The following steps can help achieve that, to ensure your budget supports your organizational goals:
Step 1: Get your leaders involved early.
Ensuring your budget is fully aligned with the latest company goals means getting the executive team involved from the beginning of the budget process—or involving finance in the formation of those goals to build out alignment even earlier. Ideally, this will provide the transparency and insights necessary for your team to allocate resources accordingly.
Step 2: Keep your eye on the long term.
Whether you budget annually or have a rolling budget, your long-term strategy should be a sounding board to your process early on so that you’re able to prioritize the right resources and programs. Most business goals are going to take longer than a year to reach fruition so even an annual budget can’t take into consideration the full picture. Keep strategy front of mind during all of your team’s long-term planning to ensure it trickles down to fuel your ongoing budgeting needs.
Step 3: Stay flexible to change.
While you should always have an eye on the endgame, the market is going to change and your business goals along with it, providing you with new challenges, opportunities and demands to address. With that in mind, keep your budget or operating plan agile to those moving parts—whether that means you introduce a rolling budget or forecast every month or quarter to ensure you’re still on the best path to reach your company’s objectives.
Step 4: Measure your success—and repeat it.
Identify the metrics critical to measuring progress on your company objectives in order to better understand how your budget is helping to achieve them. Both financial and non-financial metrics will be key to understanding how your budget is succeeding—and give you the insights you need to adjust the next forecast or plan or to make rolling changes based on what’s working and what’s not.
With executive involvement and visibility into market changes, combined with a view to the long term and ongoing measurement along the way, you’ll be able to build better alignment into your budgeting process and put your company on the right path to strategic growth.
Just remember, aligning budget to strategy isn’t just a “nice to have.” It can make the difference in whether your company achieves its larger objectives—and how fast it meets those goals.
Find out how Vena can help you build a better budget.