How to Create a Budget for Large Organizations

Here's how I'm doing budget planning this year. First - let me be real. I’ve struggled to build budget models that are both practical and aspirational. And I've learned from lots of "doing it wrong." They need to be grounded in reality—actual data, actual constraints—but they also have to make space for growth. Without that, it’s just a spreadsheet exercise, not a plan for the future. Over time, I’ve found a framework that works—one that’s helped both in scaling a service business and a software one. It starts with this truth: Growth is King. Growth isn’t just a goal; it’s the compass, the drive, and the path forward. It answers questions like: -> Does this decision help or hurt our growth rate? -> Are we investing in the right places to unlock future growth? Growth creates its own momentum—and its own challenges. The “S Curve” of scaling means every growth milestone presents a new set of problems to solve. Success requires starting the next curve while still climbing the current one. Every budget needs to reflect the centrality of growth. It is the goal, the guide, and the reality check. With that in mind, here’s how I am building our FY25 budget: The 3 Financial Plans 1. The Base Plan (60% confidence): This is the plan grounded in reality but pushing toward growth. 🔸How to make it: - Use the average revenue growth from the last 4 months as your driver for the next 12. Retain growth gets hard over time. This isn't a slam dunk. This is still hard, but achievable. It's based on reality - what you have done before. - Build hiring, bonuses, and investments around maintaining that growth rate. - Base budgets for sales, marketing, and engineering are modeled top-down. This is the budget everyone sees. It’s hard, but it’s achievable. It becomes the foundation. 2. The Stretch Plan (10% confidence): This is the “stars align” plan, designed to break out of incrementalism. It’s where you push beyond comfort zones and bet on the extraordinary. How to make it: 🔸Increase your base plan revenue growth by 20%. 🔸Assume perfect execution: GTM firing on all cylinders, flawless teamwork. This is where magic happens, but only if you’ve got the right conditions. Who sees it? Only the management team—don’t show this widely. This is for dreaming, not managing. 3. The Worst-Case Plan (90% confidence): What if we miss? Planning for setbacks allows you to stay steady in the face of turbulence. How to make it: 🔸Decrease the base plan revenue growth by 20%. 🔸Keep burn steady from the base plan (most important part) 🔸Focus on cash flow to understand the financial runway if growth slows. This plan isn’t about panic; it’s about clarity. It answers, "what happens if we don't hit the goal and have already made investments." This is the, "I can sleep at night" plan. Do we have the cash to sustain? It ain't perfect. But it is directional right and the team aligned. Stay Supered⚡ -Matt P.S. I'll send the budgeting template via DM. Let me know via comment.

Static budgets are insufficient for most long-term planning. Rolling forecasts effectively complement annual budgets, allowing organizations to adapt more quickly. Here's the framework I use. 1. Define the Objective Understand the purpose of the rolling forecast. Identify who will use the forecast and for what decisions. 2. Determine the Time Horizon Decide how far into the future the forecast should go. Choose appropriate forecast increments (weekly, monthly, quarterly, yearly). 3. Assess Forecast Detail Evaluate the risks of inaccurate forecasts. I always ask "what's the cost of being wrong?" Invest more effort for higher accuracy if the consequences of poor decisions are significant. 4. Select Contributors Who are the contributors and who are the stakeholders? Include those who are the point-people on getting, sanitizing, and preparing the data. In one large telecom company I worked with, there were close to 30 department heads accountable for their rolling forecasts. They were responsible for delegating responsibility within their groups. 5. Identify Key Value-Drivers Focus on critical business drivers and dimensions rather than every line item. Determine both quantitative and non-quantitative elements that drive value. 6. Vet Data Sources Ensure data quality and accuracy. Use reliable sources to feed into the rolling forecast. 7. Establish Scenarios and Sensitivities Utilize 'what-if' analyses to explore various financial outcomes. Update scenarios as new information becomes available to stay current. Be careful not to create too much noise in the forecast to distract from what's important. 8. Track Performance Actualize the forecast and monitor variances between actual and forecasted performance. Understand the causes of deviations and adjust strategies accordingly. What other steps would you include?

The budgeting process as a #CFO superpower -- I know, everybody hates budgeting, but it's that time of year and -- the budgeting process is ultimately how strategy gets operationalized -- and it's owned by finance. Savvy CFOs use the budget to drive focus, alignment and execution - one CFO renamed budgeting to the "mobilization process". Here's what I've seen CFOs do to make the budget a superpower, they use it to: 🔘 Force clarity on the realignment of the business model that needs to happen to enable. your strategy/investment thesis. 🔘 Drive clarity on the strategic assumptions that underpin the strategy -- which ones are hard (you can fund) and which ones are squishy (you have to test) 🔘 Drive clarity on the critical capabilities need to execute the strategy (know which capabilities are differentiated advantage capabilities vs. threshold -good enough- capabilities) 🔘 Create choice-making that takes dollars aways from parts of the business are efficiency plays (vs. growth plays and transformation plays) - zero basing can help here. 🔘 Bring workforce planning forward so that budgets can be set with a realistic view of the workforce and spend -- and realign your workforce to take head count out of the efficiency plays and realign to growth and transformation plays). I'm always amazed that most companies do workforce planning after budgeting when the workforce is the majority of your budget. 🔘 Drive cross-functional alignment and resource tradeoffs, coordinate dependencies and create opportunities for collaboration. 🔘 Enable organizational agility by establishing slush funds for unforeseen opportunities or risks and setting up dynamic triggers to reallocate resources quickly across functions or business units. 🔘 Create focus and set the stage for high execution. Budget is where the rubber meets the road when it comes to strategy and CFOs need to use the process to pressure test, align and energize the organization whether it's a formal process or an ongoing process. Budget is what knits strategy to operations and execution. If nothing else, using some of these ideas will make budgeting more interesting than last year +5%.

Learn about Departmental Budgeting 👥 Departmental Budgeting is one of the best ways to build a bottoms up budget that is both accurate, and defensible But the process can be complex & labor intensive, especially if it’s your first time Let’s do a deep dive on how you can create a departmental budget ➡️ What exactly is Departmental Budgeting? Departmental Budgeting is the process of preparing a budget based off of the inputs from Department Heads ➡️ When Should You Prepare a Departmental Budget? There’s no right or wrong time, it can all depend on your: ⚫ Size of your company ⚫ Amount of departments ⚫ Transparency level available to Each Department Head ⚫ Tools & systems in place for tracking & forecasting The general idea is that Departmental Budgeting is something that companies start to think about as they grow to a larger number of hires ➡️ How Do You Prepare a Departmental Budget? Step 1 → Start by Understanding the Existing Structure of your Data Do you have your P&L set up so that each department has it’s own section? Or do you utilize a CLASS feature, allowing you to drill into an added dimension to see departmental figures? Step 2 → Outline Who will do What Once it’s clear how your data is being tracked, make a list of each of your department heads Ask yourself… 🤔 Who will be accountable for each department? 🤔 What information will be shared with them? 🤔 What is their level of knowledge with Finance & Accounting? Step 3 → Export your Existing GL Information In order to best provide a projection… you’ll want to first provide any information on what is CURRENTLY happening in their department Step 4 → Prepare intake forms Now that your department heads have information on what is CURRENTLY happening… it’s time to provide them with a form in which they can enter in new spend for your forecast. This is typically done via what is called an “intake form”. Step 5→ Forecast your Headcount by Department Now that you have your expenses forecasted by department, it’s time to move on to the last and most important area of your opex… Headcount. Here you’ll want to showcase who is currently in each department, and all of the associated details with each hire, leaving room for department heads to enter in new hires. Once you have all of this information collected, you can combine each intake form into your Financial Model === It’s important to remember that Department heads most likely don’t have a strong Finance & Accounting background, so they may need your assistance in completing this process Once you are finished - don’t stop there! Provide ongoing reporting to ensure that the company continues to stay aligned on it’s plan, and it’s progress against that plan. These are my suggestions from my experience preparing Departmental Budgets - what would you add? Let us know by joining us in the comments below 👇