businessBusiness Coachingbusiness growthFinanceM&Asmall-businessStartups: Effectively Communicate Your Budget

January 15, 2021by Mikerash0

For many businesses out there, January is the time to get approval on the coming year’s budget. Assuming that you have prepared a great budget, the next task at hand is to communicate it and get it approved. Below are some tips for ensuring your budget is understood by your investors as well as by your team.

Your Investor(s)

After an investor has given you money, the annual budget approval is one of the largest remaining controls that the investor has over how you run your business. With that being said, you need to put forth the time and effort into preparing a great budget and then communicate the budget. If you do not spend the time and effort to anticipate their concerns, you will likely get sent back to the drawing board.

What Are Investors Looking For?
Strategic Goals & Objectives

What strategic goals and objectives is your business looking to achieve this year? What new projects will you set out on? This is a basic starting point for how most investors will read your budget. Focus on the high points such as:

  • We will launch product “B”
  • We are raising a new round
  • We will achieve “X” number of customers
  • We will achieve break-even

Capture the entire year in 4-5 key goals that make sense for your business.

Assumptions And Targets

How will you achieve the goals you listed above? What monthly or quarterly targets do you have to support these goals? What assumptions are you making about your performance? The budget must model the reality of how your particular business operates. Here are two examples:

  • Your company sells through its own internal sales team: You will need to model your sales cycle. How many leads do you need at the top of your funnel to generate “X” number of sales at the bottom?
  • Your company sells over the internet: You will need to model your conversion funnel: How many visitors do you need to drive to your website? What conversion rate do you forecast for visitors converted to members converted to paid? Once you have a paying subscriber or user, how long will they remain an active paying customer?
Staffing Plan

In a large majority of businesses, people costs are by far on of the biggest line items on the budget.

What are your projected new hires by quarter, and why do you need them (THIS SHOULD BE TIED TO YOUR PROJECTS ABOVE). In this environment you should not be increasing headcount unless you absolutely need them to achieve the strategic goals you listed above.

KPI’s & Metrics

KPI’s and Metrics are related to your targets and assumptions. Compile a list of your top KPI’s and secondary metrics that you track and improve upon. It is important to share this list with your investors to show that you are measuring your progress with the appropriate metrics.


How much cash will you use this year? What is your minimum cash balance, is it too low? Keep in mind: Cash is KING

Company Outlook

We understand that it is difficult, especially for young businesses to forecast one year out. However, your investor and board will not be able to approve the budget unless you can provide them with visibility into what happens after the coming year.


What will happen to cash if you finish under your sales plan and finish with higher expenses than planned? The budget model you provide should easily allow the ready to play with and create these types of scenarios. This is important as the likelihood of them happening is high in young businesses.

Investor Conclusion

Provide a copy of the budget well in advance of when you will be asking them for approval. This allows them the opportunity to review and present questions. Also offer 1 on 1 meeting time to ensure they fully understand everything, and you can answer their questions at that time.


Congratulations, you just received an approval on your budget! Now, you must act-quickly to ensure it becomes a reality. Your team must know who is responsible for what, and clearly understand the targets that they are shooting for.

In an ideal situation much of your team has been involved in preparing the budget, but even in a small startup not everyone will know the targets. They NEED to know.

Here are three keys to making the budget a reality with your team:

Bottom Up Thinking

When you build your budget model, think from the bottom up. As an example, think about how you will drive “X” number of visitors to your website per month. That way when the time comes to assign targets to your team, the targets reflect what your employees are actually responsible for on a day-to-day basis.

Employee Ownership

Assign the metrics and targets to the appropriate team members. They must be made accountable for delivering them.


Your team must have measurable deliverables each month. Do not wait until the end of the year. At a bare minimum the team should be delivering on a quarterly basis but we highly recommend deliverables monthly. Give your business the best opportunity to adjust in a timely manner.

In Closing

Keep in mind that communication is crucial to the success of your budget. As a manager or business owner, you will be measured against the budget. Get your team members engaged, ensure that they understand the targets, and more importantly how to achieve them successfully.

MCDA CCG can help you and your business create a highly successful budget model for your startup business. We can assist with helping you create, and implement world-class metrics. Contact us today for a no-obligation discussion. Call us at (714) 872-2393 or complete the form below.

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