The following is a guest post from Tom Voiland, CFO, Strategist, and Business Leader.

Each year, most companies go through what’s called “budget time.” We’ve all heard the proverbial: “I can’t make a decision until after we do the budget!” But what exactly is meant by budget time?  The lion’s share of companies think budgeting refers to an Excel model built 10 years ago containing an Income Statement forecast repurposed year after year. Executive management will simply take last year’s numbers, and increase or decrease them by certain percentages and the sales budget will almost always increase!  The budget’s done!  Now onto running the business like we did last year!

Unfortunately, budgets often end up shelved in some server directory or thrown in a desk drawer. Worse yet, many budgets aren’t completed until months into the new fiscal year. If the budget IS used, it’s rarely compared with actual results, which is the main reason the budget is completed in the first place. Thus, the entire effort oftentimes adds little to no value and takes precious time and energy away from running the day-to-day business.

In order for budget time to make any sense, it must include an element of strategic thinking. Enter strategic planning. Sans strategic planning, Lewis Carroll’s famous refrain from Alice in Wonderland will apply to the business: “If you don’t know where you’re going, any road will take you there.” Strategic planning precedes the budget, and is the qualitative roadmap to reaching next year’s financial goals. It follows then that the budget is the strategic plan expressed in quantitative terms. Both must be bound together to add any real value to the other and to serve as a guide for executive management’s execution of business operations.

So what does strategic planning look like? We’ll explore that here, and we’ll go into further detail in our next post.


The strategic planning process begins with a meeting, the product of which is called the Conceptual.  This meeting(s) should take place at a predetermined date no later than two months before a company’s fiscal year end. It’s also important that all company decision makers attend. In preparation for the meeting, all attendees should coalesce their high level thoughts regarding the company’s goals and objectives for the coming year.


For the meeting to be efficient and effective, an agenda must be created. The main focus of the agenda is discussing overall operating goals for the coming year.  Examples could include: “Grow the core business and launch a new product or service,” or “grow sales without adding sales resources, with the remainder of the model remaining steady.” There are many examples, but they should essentially be at a very high-level.


The meeting is led and facilitated by the CEO, president, owner—whoever has ultimate responsibility for the success of the company. Not unlike a brainstorming session, the facilitator will ask the attendees to provide their input of the company’s qualitative and quantitative objectives for the coming year. The attendees should be prepared to defend their input. What follows is a team effort to create and agree to next year’s goals.

Once the goals for the coming year are established, it’s time to create a high-level set of numbers to serve as the benchmark for next year’s budget. Typical elements of are sales projections, cost of sales, gross margin, recruiting (headcount), loaded payroll costs, marketing dollars, and capital expenditures.

High-level financials

The outcome of the meeting is a strawman of the company’s overall goals and objectives for the coming year, as well as the associated high-level financial numbers. Whoever is responsible for taking minutes should create a memo that lists the salient points of the meeting. The memo should be sent to all attendees for review, and to provide any suggested edits. Once the CEO, President, or owner approves the document, The Conceptual is born, and becomes the high-level operating plan, the roadmap, for the coming year, signed off by the leaders of the organization.

As you can see, the Conceptual is focused on the big picture goals of the company. Most importantly, the Conceptual’s financial goals serve as the overall benchmark for the budget.