Summarize proposed targets and present them to your board of directors. It would be a shame to go through a very detailed planning cycle to ultimately roll up your plan and not have the support of your most important stakeholders (your board, likely also your largest investors if you are a privately held company).
5. Finalize Your Detailed Planning
Complete your detailed planning with approximately three to four months left in your fiscal year. This will allow you enough time to incorporate any feedback that you’ve received from your board of directors into your plan. Hopefully this is a very light exercise given the regular interlock with your board regarding your long-range plan, but in case it’s not, you won’t be in a bind.
6. Plan To Grow by Product, Segment and Region
As you finalize your detailed plan, consider where your growth will come from and how it will be achieved. Are you pursuing new channels, developing new products or contemplating new commercialization models? If so, ensure each of those components are reflected in your plan. It might mean you have slightly different dynamics than what you see in your regular day-to-day results, but it’s a great opportunity to tune your metrics and consider areas to drive your business forward in leap functions versus in a linear fashion. This means planning all of your functions in a holistic manner, whether it’s how marketing will help the business build demand and go-to-market or how a G&A function will ensure the right infrastructure is in place to set the business up for success.
7. Update Commission Plans (Including Plan Provisions)
Update your commission and compensation plans to ensure the general philosophies support the ongoing strategy of the business. This should be an exercise that aims to align the corporate strategy, operational plans and the incentivization of your team members. The more you can align the interests of all parties, the greater the chance that everyone will be marching in the same direction.
Once your plan provisions are set, either your FP&A team (or often an Ops team) should be picking up the detailed quota planning for the year.
8. Q4 Plan Review
In the final month of the year, update your forecast for the year as a gut check against your budget. In the event that nothing has materially changed since your board meeting, you can likely proceed as is. If there are major changes to the trajectory or performance of your business, this is a good chance to make any necessary adjustments in advance of kicking off your fiscal year.
9. Distribute Finalized Budgets to the Business
A major part of the budgeting process is communication to stakeholders, ensuring all parties are brought into the plan. To do so, make sure there is a formalized communication of the finalized budget to all budget holders. This will establish that everyone is working off of the same plan and that there is no opportunity for misunderstandings.
10. Annual Kick-Off
It’s time to celebrate! Share your goals, operational plans and the annual budget with the entire company. By planning earlier, reviewing your assumptions often and engaging the business regularly, your annual kick-off should not only be a message that is fun to deliver, it should resonate with everyone.
11. Make Budgeting an Agile, Ongoing Process
Forecasting season never really ends. You should be reviewing your forecast and plans on a monthly, quarterly and annual basis to help drive your Plan To Grow™, comparing your actuals against your plan to drive an agile approach to business planning.
Tips and Reminders
The budgeting process is hard work and there will likely be challenges along the way considering timeframes and all of the variables at play. So focus on the big picture, lay out a plan that makes sense and acknowledge that course corrections will need to occur along the way. Your goal should be to roll out a plan that is directionally correct and that helps better inform investment decisions. It’s often in our nature to focus on all of the details (which isn’t necessarily a bad thing), however, you need to make sure enough time and effort are spent on the items that move the needle, so ensure you prioritize accordingly.