As Leaders, we're often eager to jump right into the numbers and start building a meticulous budget. However, before we dive into our spreadsheets or open up our budgeting software, it's critical to first grasp the S.M.A.R.T (Specific, Measurable, Attainable, Relevant, and Timely) strategic and operational goals of our startup or fast growth business.

This is the foundation for creating a realistic, potent budget that truly backs your business's growth ambitions.

So, why are these goals so critical to budgeting?

Aligning Business Objectives

A budget isn't merely a financial tool—it's an operational roadmap that should reflect the company's S.M.A.R.T strategic goals.

If your budget isn't attuned to your business objectives, you could end up navigating the wrong financial course, irrespective of how well-structured your budget might seem.

Your budget isn't there to set the goals of the business or create the vision.  This exercise should be completed by leadership team long beforehand.

Ensuring Financial Feasibility

Having strategic and operational goals lets you assess if they're financially feasible.  Your budget is there to check if your businesses goals make financial sense.  If they don't, then the leadership team can tweak (or sometimes pivot!) the goals so that they do make financial sense.

By integrating these goals into your budget, you can play out various scenarios and ascertain if the company's ambitions are financially realistic.

Particularly with a new product or channel or geography, you need to reforecast different options, especially if cashflow is tight, as it often is with smaller and newer companies.

Garnering Leadership Buy-in

Budgets aren't merely a Finance Department's responsibility. They're a collaborative effort involving all departments. By aligning the budget with S.M.A.R.T business goals, you ensure that leadership understands and backs it. In this way, the budget isn't just a financial target—it becomes a collective target.

It's very difficult to get the leadership teams (and therefore all teams) buy-in if the budget isn't based on the goals that were discussed and agreed beforehand.  You are much more likely to get buy-in if you work together to achieve the same goal.

So, how do you kick off a budget for a startup with these considerations in mind? Here are three steps:

1. Understand the S.M.A.R.T Strategic and Operational Goals: Engage with leadership and key stakeholders to frame clear, realistic S.M.A.R.T goals for your company's future.

2. Create the Budget: Utilise these goals as a foundation for your budget. This phase involves a lot of number-crunching, scenario-testing, and feasibility checks. It's an iterative process—be prepared to revise and fine-tune.

3. Get Buy-in: Once your budget aligns with the company's goals and is financially viable, present it to the leadership team. Explain how it underpins business objectives and outlines the financial trajectory towards these goals. The aim is to ensure everyone understands and commits to the budget.

Remember, budgeting is a strategic process that charts your startup's path to growth. Starting with a comprehensive understanding of your S.M.A.R.T operational and strategic goals won't only lead to a more effective budget but will also cultivate a stronger, goal-driven culture within your startup.

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