Negotiating Team Budgets

Make your budget process smoother! Use my checklist based on my 15 years of experience. 🔗 Download it here: https://lnkd.in/edvf5exs Here is what is inside: 1️⃣ Preparation & Planning 🔲 Understand management's expectations concerning growth, strategy & profitability 🔲 Set clear financial goals and differentiate between short and long-term objectives 🔲 Establish a structured approach for managing the budget process (deadlines, owners) 🔲 Ensure that budgeting activities align with the organization’s overarching goals and priorities Tip: you can use ChatGPT to draft your budget instructions or budget memo. If you want to learn how to use ChatGPT for Finance, you can learn it here: https://lnkd.in/e8RGdYsK 2️⃣ Sales Planning 🔲 Choose an appropriate method for sales planning 🔲 Detail your budget sufficiently for effective analysis 🔲 Consider external factors like market trends, economic conditions impacting the business 🔲 Ensure accurate phasing of the sales plan 🔲 Conduct 'what-if' analysis to understand impacts on resources and profitability 3️⃣ Operational & Resource Planning 🔲 Plan for production, delivery, and workload 🔲 Account for direct headcounts & determine capacity 🔲 Determine material needs and plan for necessary investments 🔲 Collaborate with cross-functional teams to develop a comprehensive operational plan 4️⃣ Costing & Overhead Planning 🔲 Compute standard costs: direct labor, material costs, and manufacturing overhead allocation 🔲 Budget for individual departments and allocate overhead costs accordingly 5️⃣ Financial Statements & Reporting 🔲 Translate the budget into key financial statements: Income Statement, Balance Sheet, & Cash Flow 🔲 Establish a structured reporting process to communicate budget-related information to stakeholders 🔲 Create a visual budget performance dashboard to quickly assess the financial performance 6️⃣ Monitoring & Analysis 🔲 Regularly monitor and analyze budget variances to identify deviations 🔲 Perform sensitivity analysis to understand potential impacts on the budget 🔲 Leverage financial data analysis tools to identify trends, patterns, and opportunities for improvement 7️⃣ Communication & Collaboration 🔲 Foster open communication and shared financial goals in relationships, both internally and externally 🔲 Engage with stakeholders from different departments to gather valuable insights 🔲 Develop and communicate clear budgeting policies and procedures 8️⃣ Final Review & Implementation 🔲 Review the budget for any inconsistencies or errors 🔲 Communicate the finalized budget to all relevant departments and ensure its implementation 👉 Did I miss anything? Get this checklist to organize your budget process. Link below in comments.

If a ₹5 biscuit can tell us everything, why can’t a ₹100 crore road? I recently came across this thought-provoking visual-and it struck a chord. In fact, I’ve seen something similar already implemented on several PWD roads in Kerala, where boards display the cost, contractor, and responsible engineers involved in a public works project. That’s transparency. That’s accountability. And that’s exactly what we need nationwide. Why this matters: A ₹5 Parle-G biscuit packet gives you: Manufacturer Batch number License details Expiry date A ₹100 crore road? Often no clue who built it, how much it cost, or who's accountable for its failure. Imagine if every road had: A QR code on a board at regular intervals Scannable info on: Name of the contractor Date of completion Cost incurred Responsible government department Supervising engineers and ministers This is not a futuristic dream-it’s a reality in progressive states like Kerala. So why not scale it across India? As per Kerala PWD's 2023 circular, all major road works must display: Project name Contractor details Total sanctioned cost Start and end dates Contact number for grievance redressal These boards are common on NH, SH, and PMGSY roads in the state. A suggestion for India: Let’s treat public infrastructure like public information. Taxpayer money deserves traceability-whether it’s for a bridge, a hospital, or a highway. Let’s build roads you can drive on and trust. #Transparency #Accountability #GoodGovernance #KeralaModel #PublicInfrastructure #DigitalIndia #RoadSafety #NHAI #PMGSY #TaxpayerMoney #LinkedInIndia #IndiaDeservesBetter #QRcodeInitiative

The longer I’ve been in this role, the more I’ve come to believe that the CFO’s job is to make trade-offs explicit and help the business make deliberate choices. Finance teams have all heard some version of “Finance won’t fund it" after a tough budget conversation. Usually, it comes from a team pushing for an initiative they believe in. I think we need to reframe this narrative. Resources are finite, and every investment decision is a choice between competing priorities. My responsibility is to make those choices visible, so we’re deciding deliberately, not by default, and aligning around what matters most. Here’s how I try to do that: 1) Bring people into the process early Decisions are never made in isolation. It’s important to bring people into the process to show them where the dollars are going, where we have gaps, and where we may be over-invested. 2) Make the constraints clear When someone says, “We need more funding,” I remind the team that we have a fixed pool of resources to allocate across the business. If we’re spending $10M in one area, that means we’re not spending $10M somewhere else—so we need to make that trade-off together. 3) Pressure-test the ask I urge people to think through the trade-offs. We’re always working with the team, asking questions like: Is it really $10M? Or if you did X, Y, and Z, could it be $6M? Then, could we take the remaining $4M and spend it elsewhere? Capital allocation forces real choices about what we fund, what we delay, and what we deprioritize. That means budget decisions are rarely a simple yes-or-no. Every decision is a trade-off, and it’s the CFO’s job to help make that trade-off clear.

Let's break down budgeting. ...and share five hacks to improve the process... 90% of companies still have budgets. Here's a breakdown of the typical process: 1️⃣ High-level guidance 2️⃣ Timeline shared 3️⃣ Assumptions 4️⃣ Templates sent 5️⃣ Local data gathered 6️⃣ Budget meetings 7️⃣ Enterprise budget 8️⃣ Management presentation 9️⃣ Board approval Check the details of each step 👇 A typical budget process takes four months. How could we improve the process? Here are five hacks... ✅ Use AI for initial budget drafts Based on historical data and trends, this can save time and provide a solid starting point for human review and adjustment. ✅ Conduct short budgeting sprints Stakeholders can focus exclusively on the budget over a few days. This can speed up the process and ensure applied effort and collaboration. ✅ Create a “Budget War Room” Whether a physical or virtual ace, budgeting teams can focus, collaborate, discuss issues, and make decisions in real-time, reducing communication delays. ✅ Automate audit trails Implement automation tools that create and maintain audit trails for all budget changes to enhance transparency, simplify reviews, and ensure accountability. ✅ Pre-set queries for data collection Develop and distribute a set of pre-defined queries for data collection from various departments. This reduces back-and-forth communication and ensures consistent data input. For tips on how to implement these hacks, check 👇 Do you expect your 2025 budget process to look like this? What improvements will you implement compared to 2024? ————— 🧑💼 I'm a partner at Business Partnering Institute 🆘 Need immediate help in your finance team, call us! 🤝 We help increase the influence of your finance team 🔔 To see more content, hit the bell on my profile 🧑🎓 Enroll in our LinkedIn course: https://bit.ly/4a5fB9l 📻 #FinanceMaster podcast: https://bit.ly/3NLSt73 📺 Follow us on YouTube: https://bit.ly/4bSBut6 📢 Join our WhatsApp channel: https://bit.ly/3WWGOrc 📄 Check out all our templates and cheat sheets here: https://lnkd.in/eC_zuCU4

💰 🧮 💸 🎓 A common refrain I hear when talking to college and university trustees: budgets in higher ed are unlike anything in the business world. How colleges make and spend money remains mysterious even to those who've spent their careers in higher education. That's why in the latest installment of the Higher Ed 101 series on the Future U Podcast, Michael Horn and I took a deep dive into college budgeting with Rick Staisloff, a former college CFO and founder of RPK Group. Whether you're a board member, college professor, or tuition-paying parent, this episode offers valuable insights into college budgeting—what works and what doesn't. My three takeaways: 1️⃣ College budget buckets are too large. Most institutions don't really know where they're making money or where they're spending it. "We have to get into unit cost to really understand the financial health of an institution," Staisloff told us. Most colleges don't know how much it costs to graduate a biology major versus an English major, for instance. When enrollment was growing and public funding flowed freely, this approach probably wasn't fiscally responsible but it functioned. Now, when institutions need to be strategic, leaders need greater insight into resource allocation—otherwise they're moving pennies instead of dollars. In other words: show me where you spend your money, and I'll show you what you value. 2️⃣ The lack of transparency leads to lack of accountability. While colleges might set enrollment goals, their leaders often don't know what financial targets they should be hitting. "I'm always struck at the institutions we work with at how seldom deans, chairs, budget unit heads are given a clear sense of what good looks like and what they're supposed to be achieving," Staisloff explained. 3️⃣ It's business intelligence, stupid. My biggest takeaway: how little higher ed leaders know about their business. Part of this is cultural—campuses resist discussing ROI of individual programs. Part is technological—colleges have underinvested in ERP systems, leaving them flying blind in financial forecasting. This becomes increasingly problematic as we face an enrollment cliff and federal funding uncertainty. 🎧 Listen to the full episode here: https://lnkd.in/e8zV_PSy 📺 Watch highlights of this episode as well as select full episodes on our YouTube channel: https://lnkd.in/dRRBvpiR I'm biased, but this episode should be required listening for new board members:

Every marketing team I know is deep in budgeting right now. And every year, the same pattern shows up: There’s bad budgeting, a painful, check-the-box exercise. And there’s good budgeting, a strategic decision-making exercise. The best CFOs and CMOs push for the latter. At its core, strategy is a set of choices about what to do and what not to do within the constraints you have. Budget is one of the most important constraints we operate within. When budgeting is done well, it surfaces the real trade-offs (not the fictional tradeoffs where resources aren't actually transferable from one piece of work to another). Here’s what I see work well in teams that turn budgeting into a strategic exercise: 1️⃣ Frame the playing field clearly. Whether you organize by audience, product, business unit, objective, or something else, the framing determines which trade-offs are visible. The wrong frame often leads to circular debates. The right one reveals real choices. 2️⃣ Use budgeting as a mechanism to drive explicit prioritization. What are you strategic priorities? How do your proposed efforts ladder up to them... and to keeping the lights on? What is the balance between driving revenue today, building brand to drive revenue in the future, and experimentation? Good budgeting forces this clarity up front. 3️⃣ Ask for structured prep before the meeting. When people show up with data and reasoned assumptions, the conversation typically becomes strategic and focused on the business. When they show up with in-the-moment reactions, the discussion often becomes emotional and then turns political. 4️⃣ Use disagreement as a diagnostic tool. Divergence isn’t a problem. It’s a map to reveal differences in hidden assumptions, differences in plan details, and mismatched definitions of success. In talking with hundreds of CMOs, this is one of the most consistent patterns: teams that treat budgeting as strategy tend to build more alignment, ship better work, and move faster during the year... and that results in happier teams and better business outcomes. How are you framing budgeting this year?

"Should we hire or should we cut?" is a question I'm hearing often from small business owners right now, which is fair given the mixed economic signals. Some clients are seeing their best quarters ever. Others are watching pipelines thin out. Everyone seems to be asking, "How do we plan for what we can't predict?" This is where scenario planning becomes your survival tool; not just hoping for the best, but modeling the reality of different futures. Here's what we walk our clients through: 🌳 The Growth Scenario: For example, if revenue is expected to be up, we’re looking at potential team expansion and higher overhead. Looking at what that does for cash flow given the changes to expected expense changes. 🌱 The Steady Scenario: Where flat growth is expected and we plan to maintain current team, we’ll want to optimize margins and prepare for inevitable per team member increases. There will likely be some percentage increase YOY but we expect the core costs to stay the same. 🍃 The Contraction Scenario: On the other hand, if revenue is expected to go down, we want to look at strategic cuts that allow the team to run efficiently while preserving cash. For our clients, this is usually a mix of team, professional services, and travel. We also want to ensure that the resources kept are used efficiently. Each scenario gets its own financial mode where we map out cash flow, runway, and break-even points for 3, 6, and 12 months ahead. The command center for this? Fathom. We've been using Fathom since the beginning of Little Fish Accounting and it lets us build the scenarios in real-time with clients, showing exactly how each decision ripples through their financials. No more spreadsheet gymnastics or gut-feeling guesses. Ultimately, the founders who survive uncertainty aren't the ones with crystal balls—they're the ones with clear models and decisive action plans. And we're glad to be the builders 🧱

𝗪𝗵𝘆 𝗪𝗲 𝗦𝗵𝗮𝗿𝗲 𝗢𝘂𝗿 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹𝘀 𝗮𝗻𝗱 𝗔𝗰𝗵𝗶𝗲𝘃𝗲𝗺𝗲𝗻𝘁𝘀 with the Entire Company (And Why You Should Too) For a long time, I thought transparency was risky.  • What if people panic?  • What if they misunderstand numbers?  • What if it creates anxiety? Then I realized something: 𝗢𝗽𝗮𝗰𝗶𝘁𝘆 𝗰𝗿𝗲𝗮𝘁𝗲𝘀 𝗳𝗮𝗿 𝗺𝗼𝗿𝗲 𝗳𝗲𝗮𝗿 𝘁𝗵𝗮𝗻 𝘁𝗿𝘂𝘁𝗵 𝗲𝘃𝗲𝗿 𝘄𝗶𝗹𝗹. So we started sharing our financials.  • Openly.  • Regularly.  • Context included. Here’s what changed: 1. People stopped guessing. They started thinking like owners. 2. Costs became intentional. Trade-offs became visible. Decisions made sense. 3 .Transparency didn’t weaken authority. It distributed responsibility. Of course, numbers without context can confuse. So we explain why, not just what. Because trust isn’t built by protecting people from reality. It’s built by inviting them into it. If you want accountability, share the information people need to actually take it.

Don’t treat your budget for your accounting firm as a constraint use it as a target 🎯 Most firm owners think of budgets as a “worst-case limit” on spending. I recommend something different which is to use your budget as a strategic tool to build the business you actually want ✨ Here’s how to do it… Step 1 – Define Your Goals First 🥅 Do you want more profit, more personal time, or to create a specific impact? Be clear as your budget should be built around your vision, not just numbers. Step 2 – Work Backwards from the Future 🔮 Look 3 years ahead and map where you want to be. Then reverse engineer the numbers back to today. This gives you a clear bridge from now to then. (Make sure you document your assumptions!) Step 3 – Pay Yourself Properly 💷 Always include a notional market-rate salary for yourself as director - even if you don’t take it. Your business model must be sustainable with you built in otherwise you’re pricing based on free labour. I know this isn’t technically correct if you are taking dividends however this isn’t about technical points, it’s about building a business model that works commercially Step 4 – Focus on Gross Margin and Capacity Direct salaries including the proportion of your own notional salary for client work should sit above the gross profit line. But don’t stop there you need to test whether your team (and you) actually have the capacity to deliver the work you’re budgeting for. Step 5 – Model Income Realistically - Split recurring vs one-off income. - Break revenue targets down into actual client wins (e.g. “2 x £1,500/month clients and 5 x £300/month clients”), not vague percentage growth. - Factor in seasonality and conversion rates as growth isn’t always linear. Step 6 – Don’t Forget Churn Clients will leave. Build expected churn into your budget so it doesn’t catch you off guard. That way you’ll know how many net new clients you need each month. Step 7 – Consider Cash Flow & Risk A budget that looks good on paper can still fail if the cash doesn’t come in quick enough. - Map out ins and outs to ensure you won’t run out of cash (Float Cash Flow Forecasting is brilliant for this) - Build scenarios…best case (target), base case(realistic), and worst case (minimum viable). This gives you insight on what’s likely when actuals don’t match the plan. Step 8 – Review, Learn, Adjust Each month, compare actual vs budget. Don’t just note the difference ask why, and make decisions to bring things back on track (or to go after more opportunities). For me, a budget isn’t about limiting ambition it’s about engineering the firm you want to own three years from now. Used properly, it’s one of the most powerful tools to focus your energy, align your team, and build lasting value 🙌 Save this post for the next time you sit down to plan your numbers. ✨ That way you’ll stop budgeting for worst case and start budgeting for the business you actually want to create. 🦩🦩