Creating an annual budget for the new year is a typical end-of-the-year processes for startups and private companies. Unfortunately, with the incredibly hectic schedules facing CEO’s and entrepreneurs here in the San Francisco Bay Area, this is often a crucial business process which is often overlooked.
The article below by George Bell of General Catalyst Partners (a venture capital firm based in Boston and San Francisco) has some excellent pointers on how a budgeting process is really a triangulation of a variety of perspectives (i.e., product development, marketing, finance, operations, etc.). He also highlights how critical it is to have a independent CFO who can lead the process in partnership with the CEO.
Here are some the key tips that he recommends:
Develop your own view early.
Get immersed in the bottom-up view.
Develop your biases — and express them.
Encourage open disagreement.
Create a cushion.
Deal with the hardest issues head-on.
Create assumptions and content to market the budget.
The budget should drive the management dashboard.