An updated slide deck for our roundtable hosted at the Junto Institute on Budgeting and Forecasting for High Growth Companies

1. Budgeting & Forecasting For High
Growth Companies
2019

2. Agenda
1. Intros
2. Defining budgets/forecasts/models
3. How does your company budget and/or forecast?
4. Why take the time to budget?
5. How to budget revenues and expenses
• Break-out Session #1 (budget revenue)
6. Cash flow considerations
7. Reviewing your actuals vs. budget
8. Improving your business based on your budget review
 Break-out Session #2 (create a key operational metric)
9. Available software options
10. Budgeting gone bad
11. Action items/Appreciations
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3. Definitions
Budget: static stake in the ground
Forecast: changes and forward-looking
Model: 3 to 5 year plan
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4. Sharing is Caring
How does your company budget and/or
forecast?
–When
–Who
–How
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5. Why Should I Budget?
1. Creating
• It’s about the process and forcing you to plan
• You will be way off and that’s OK
2. Reviewing
• Gives you a guidepost to compare against
• Question how you’re actually doing vs. plan
3. Changing
• How can we improve our planning?
• What operational changes can we make?
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6. Just Do It
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7. Why Should I Budget?
1. Creating
• What key assumptions are we making?
• Will we have the needed cash flow?
• What are our drivers of growth and costs?
2. Reviewing
3. Changing
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8. Best Practices We’ve Seen
1. Who’s involved, process (all departments should be involved)
2. Top-down goals, bottom-up drivers (set goals from top, but ensure
reasonableness from the bottom)
3. “Aim small, miss small” (“ The Patriot” clip) – details are good!
4. Link expenses to revenue and know your growth ratios (e.g. one person
per every 4 clients)
5. 3A’s Scenarios: Anemic, Average, Awesome (plan for different
scenarios)
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9. Budgeting Revenue
What are the revenue drivers?
1. Subscription - similar
2. Subscription - unique
3. Project-based
4. Commission-based
5. Transaction-based
Review revenue template file
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10. Break-out Session #1
Budget your main revenue account for 2020
 Use our template if you need one
 Use 2019 trends as a starting point
 Prepare a two-minute summary of your plan to share with us
how you arrived at your budgeted revenue
1. What revenue account did you budget? Why?
2. What revenue template(s) did you use?
3. How did you decide on your key driver values?
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11. Budgeting Expenses
1. Most important: COGS & Variable
expenses
2. Semi-fixed expenses
3. Taxes
4. Depreciation, Amortization
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12. P&L ≠ Cash flow
1. Accounts receivable
2. Accounts payable
3. Inventory
4. Fixed assets
5. Deferred revenue
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13. Why Should I Budget?
1. Creating
2. Reviewing
• What assumptions were accurate/inaccurate?
• Why did we miss revenue? (longer sales cycle, churn)
• Why do we have lower profit margins?
3. Changing
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14. Because I’m a Packers Fan
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15. How does this P&L look?
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16. Now vs. the Budget
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17. I have a budget, now what?
1. Monthly review is a best practice we’ve seen
2. Reviewing actuals to budget AND comparing full-year
forecast vs. budget
3. Once your budget becomes stale, create a new one for the
rest of the year (quarterly or semi-annually)
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18. Monthly Review - Current
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19. Monthly Review - Annual
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20. Why Should I Budget?
1. Creating
2. Reviewing
3. Changing
• How should we revise our assumptions?
• Can we shorten the sales cycle with a free trial?
• Can we automate a task that we do across all clients?
• Do we need to raise prices? Lower them?
• Do we need to repurpose or layoff personnel?
• What operational metrics can we create?
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21. Operational Metrics
Bridge daily operations with your financial goals
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22. Operational Metrics
Bridge daily operations with your financial goals
1. Great Game of Business
2. Daily or weekly review (not monthly)
3. Examples:
a) Weekly/daily prospect touches for sales team
b) Labor time budget per project
c) Project duration progress vs. plan
d) Sales back log
e) Digital advertising cost-per-action
f) Customer software usage frequency
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23. Our Budgeting Process
1. Time budget for each client (bottom up)
2. Time by task (aim small)
3. Managers and Associates own them
(team)
4. Monthly review
5. “Twice as long” operational metric
drives daily behavior
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24. Break-out Session #2
Identify key expense category and create operational
metric for it
 Variable expenses are usually most important
 Why is this expense critical for your success?
 How can an employee use this metric daily/weekly?
 Prepare a two-minute summary of your plan to share with us
how you arrived at your metric
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25. Software
1. Spreadsheet
2. LivePlan
3. PlanGuru
4. 100’s of others
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26. Budgeting Gone Bad
1. Not team-based:
no buy-in
2. Revenue “plug”:
nothing learned
3. Too much detail:
never used after created
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27. Making a Commitment
1. What will you change about your
budgeting or forecasting process?
2. What will you change about how you
budget for certain numbers?
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28. Get in touch.
1. Click here to fill out our online form.
2. Connect with me:
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