How to Prepare Your Business for a Compressed Budget Planning Cycle

Financial and budget planning with chart report

There are several reasons why you may find your company starting the planning process for next year later than normal, including anything from a change in management to focusing on a strategic transaction to a significant change in your product or service portfolio. 

Regardless of the reason, managing a budget process in a compressed timeframe brings many challenges.

5 Steps to Prepare Your Business for a Compressed Budget Planning Cycle

  1. Ask for an extension
  2. Prioritize and reduce scope
  3. Dedicate resources and clear calendars
  4. Focus on alignment
  5. Schedule inclusive working sessions to expedite collaboration

1. Ask for an extension

You may need to ask your ask your founders, majority shareholders, or BOD for more time. This falls well within the category of “easier said than done.”

However, unless one asks, one does not know – and when you are preparing to ask the budget owners for a potentially herculean effort, you owe it to everyone involved to ask.

In addition, by asking, you will have an opportunity to not only explain the situation but also to reset expectations in terms of what output is reasonable to attain.

Moreover, a conversation with the majority shareholders may yield direct feedback on what they would like to see prioritized, which can be very beneficial moving forward.

2. Prioritize and reduce scope

The next step is carving out some time to prioritize what really matters for the company next year.

With a shorter timeframe to work with, how your budget team spends their time becomes even more meaningful.

To verify your priority list, the Board can be a valuable guide if they have not yet been approached. 

In addition to the Board, soliciting feedback on what matters next from your key leaders will be crucial to obtain their buy-in during a compressed planning cycle. 

Tips for prioritizing and reducing scope within a compressed budget planning cycle:

  • Define a short-list of primary goals for the company over the upcoming year and be able to write those goals clearly on a whiteboard to prove that they can be stated in a specific and succinct manner (think S.M.A.R.T. goals).
  • Trying to shorten the timeframe over which you budget from (for example, 12 months to 6 months) can help save time and foster a more agile planning mentality. There are several benefits to shifting to an agile approach, including being able to respond to current business results and unforeseen events faster.

3. Dedicate resources and clear calendars

After defining the primary goals and narrowing scope and timeline where possible, it is time to assign a project manager to coordinate the efforts over the compressed planning cycle. 

The budget project manager will be responsible for driving the rest of the process. The PM should be a dedicated resource with sufficient experience managing projects, developing budgets, and the ability to work with many different types of individuals across multiple departments.

To set your project manager up for success, they will need executive backing and corresponding communication to everyone involved that the upcoming budget planning process will need to take priority over other initiatives.

The first action of your PM should be establishing communications with the major budget owners followed by delivering at least a high-level timeline, with the best guess of the critical path of the budget plan that lies ahead.

4. Focus on alignment

The next step involves communicating the primary goals to the company while asking departmental leaders what they need to achieve these goals, especially from which other departments they are dependent upon for success. 

Tips for driving inter-departmental alignment during a compressed budget planning cycle:

  • Avoid the “big budget miss” by focusing on how your departments interact. What does Sales need from Marketing in terms of MQL’s to hit their goals?
  • Have your budget managers think in advance by sending them budget planning sheets that ask what departments they need deliverables from.
  • Have your finance team send pre-populated projections with last year’s actuals alongside major vendors used.

5. Schedule inclusive working sessions to expedite collaboration

The goal of the working sessions is to confirm alignment between the budget owners on how they are going to work together to achieve the primary goals. Each working session should have a C-level champion to ensure that all key members actively participate and prepare in advance.

This is done by inviting more than one department to a meeting at the same time. Using planning sheets, working schedules can be scheduled with departments that require inputs/outputs from each other.

These working sessions are intended to prevent silos, increase the rate of collaboration, reduce the number of meetings, and drive decisions of the budget owners now rather than later.

Tips for fostering collaboration within a compressed budget planning cycle:

  • Schedule working sessions with departments that share multiple dependencies
  • Create a budget calendar with key goals or milestones that need to be accomplished per week. Use colors to highlight gating actions and milestones.
  • Have the PM lead a daily huddle with key budget team members that adjusts priorities based on what happened in the prior day.

Final Thoughts on Preparing Your Business for a Compressed Budgeting Cycle

Developing a budget under a compressed timeline is usually a stressful exercise, but there are some steps that can be taken to increase the chances of ending with a relevant budget delivered on time.

Given that business models and circumstances are unique per company, the above is not intended to be a one-size-fits-all approach but rather offer some practical call outs to help you prepare for a compressed planning cycle. 

If you are still in need of some guidance, Bridgepoint Consulting is here to help your company adapt to a shorter budgeting or forecasting timeline by managing the process and partnering with your key budget owners. 

Need Budgeting Support?

At Bridgepoint, we offer a full suite of services with seasoned consultants from a variety of industries who are prepared to assist your organization with budgeting, forecasting, strategic projects, and navigating key transitions in your company’s life cycle.