If you’re leading a function in a start-up or scale-up (or your a founder with a leadership team) at some point you’re going to be asked, “Can you put together a budget for your area?”. And if you’re not a finance person, startup budgeting for leaders can feel a bit… daunting.
Startup Budgeting isn’t about trying to impress the CFO with formulas or financial jargon. It’s about mapping out what your department needs to do its job and tying that back to the company’s overall goals, as well as your operational goals.
Here’s how to approach Startup budgeting in a way that’s strategic, realistic, and actually useful for decision-making.
Start with the Strategic Goals
Your company should already have clear strategic goals. Ideally 3-5 goals that are longer term (1-5 years). Examples of strategic goals include:
- Reach product-market fit
- Hit £100k MRR
- Expand to a new market (be that domestic or internationally)
- Improve gross margin by 5%
- Raise Series A in 12 months
So as a starting point, you need to understand what those goals are and which ones your department contributes to directly.
Consder how your team impacts these goals? Then what part of the plan are your team is responsiblee for delivering?
This step sounds obvious, but many department budgets fall down because they’re disconnected from the bigger picture.
Define Operational Goals for Your Area
Once you’re clear on the business goals and which one(s) your team can contribute to, translate those into operational goals for your team.
For example – If the company wants to grow to £100k MRR, then your ops or marketing team might need to, reduce onboarding time by 30%, or launch paid acquisition in two new channels, or even support 3x customer volume without extra headcount
Write these operational goals down. These become the why behind your startup budget.
List What You Need to Hit Those Goals
Once you have all your operational goals listed, reverse-engineer what resources you need to achieve those operational goals. The resources that most department leaders need are things like:
- Additional headcount
- Tools and software
- External support (e.g. agencies, freelancers)
- Budget for campaigns, events, content, etc.
- Staff Training
- Travel
Once you know what resources you need, map it out by month. You’ll need to ask yourself (as somone like me, a CFO will definitely ask you!), Is this spend it critical? Does it directly link to a goal? Can I justify it if cash is tight?
If you do this exercise broken down as per above, then you should be able to answer these questions quite easily. This is the perfect way to do startup budgeting for leaders.
Build in Assumptions and Dependencies in your startup budgeting for leaders
Every Startup budgeting for leaders has assumptions baked in. Examples of this includes things like:
- Hiring a new team member in May
- Getting access to new tooling by Q2
- Hitting a target conversion rate
Be transparent about these assumptions and what you need when so that you can hit your operational goals. Add notes or comments in your spreadsheet. It makes your budget easier to trust, and easier to update when things shift (because they will shift).
It also helps he leadership team to prioritise. If you can’t achieve a particular operational goal without a particular spend, then the business can decide (particularly if cash is tight) that it’s worth investing in this area or not.
Own Your Startup Budgeting for leaders
Once your budget is submitted, don’t just forget about it.
Each month you want to review what you actually spent vs what you budgeted.
You also want to consider any unexpected costs and what’s working or not working.
When reviewing you may realise that you can reallocate budget for better impact
If you’re leading a team, this is part of your leadership responsibility. Not tracking your spend is one of the fastest ways to lose trust with founders and finance. If you are on top of it, as suggested above and you make positive adjustments you are demonstrating strong leadership skills.
You don’t need to be a CFO to create a good departmental budget — but you do need to think like a business leader.
Start with the strategy, define what your area needs to deliver, and plan your resources to make that happen. The budget is just the financial version of your operational plan.
And if you’re part of a start-up leadership team and want help building a functional budget that aligns to your next stage of growth, we do this every day at Fast Growth Consulting.
👉 Book a free call here: fastgrowthconsulting.com/consulting