I don’t know about you, but I find that when I build a budget model or growth model for a business, I really understand the details of the business and their Commercial and Operational plans.

I feel like I know the business model and the vision and their goals.

Which is great – it’s a good way to get under the hood and look at all of the details.

To see the detailed elements of each part of the business and what needs to work better to take the business to the level of growth they desire or to the next step.

The only problem with getting into the weeds, however, is then being able to see that bigger picture. 

Particularly when trying to work out if the assumptions withing the model or the incremental movements make sense.

I have found that this issue isn’t particularly uncommon and if I don’t include time to look at the bigger picture, something will get missed.

Something will make sense when looking at the details but will look totally bonkers when looking at the bigger picture.

Something will be picked up.

The first step for me, is to create a summary report, that shows year on year movements. 
Something like this:

Using a basic table like this, you can easily see the Year on Year uplifts and how the margins have moved over time.

I would expect your gross margins in particular to either be the same or improve YoY. 

I would also be looking for growth in Revenue year on year vs. the growth in other line items.  For example, if the business was in it’s 4^th year of trading, I wouldn’t expect the Headcount growth or salaries to grow faster or be the same as the growth in revenue – unless there was a strategic reason for this.

Obviously more details can be added into the above, especially cost of sales items, different revenue types etc.  But the above was just a demonstration of a year on year summary as a starting point when trying to get out of the weeds.

The second thing I do to try and review at a higher level, is the same as the above table, but instead of the financials, it’s the KPIs.

Obviously the main KPIs like customer numbers or subscription numbers, churn, conversion, usability metrics, marketing KPIs, traffic, etc.  But also ones that need to be calculated like CAC and LTV, or financial metrics.

Again, looking at the difference year on year and potentially working with the Operational teams who have to hit these targets – ensure that everyone is on board and the YoY movement is logical.

Finally, I like to spend at least 1-2 hours creating charts.  Excel line / bar charts.  Just lots of different charts over a period of time (prior year and next budget year generally) for both non-financial KPIs and Finances.

There is no hard and fast rule here – I just chart everything, really.  Sounds a little crazy.  But I usually find that charting lots of different data points can often really give good insight into what is going on.

Sometimes I see trends with prior year numbers that hadn’t been taken into consideration in the new year – like seasonality.

Or something that made sense YoY, doesn’t make sense when charting the MoM view.

Or – and this is the most common, particularly in fast growth – the chart looks like a hockey stick, like this:

And you have to ask yourself (and the business) is this reasonable?

One of my other personal favourites is headcount hires.  They all seem to be hired in the first quarter and then nothing in Q3 or Q4.  Is that realistic?

I confess, sometimes I don't do the last step (charting) and if I don't, I always regret it and have to go back, as something was picked up.  

Hopefully you find these useful.

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