Annual Budget Builder

Workflow

1. Revenue Target Setting: Align on the top-line revenue target with the CFO using bottoms-up (sales capacity, pipeline, NRR) and top-down (market growth, board expectations) methods. Reconcile the gap between the two approaches. Deliverable: approved revenue target with methodology documentation.
2. Department Budget Requests: Collect budget requests from each department head including headcount plans, vendor spend, and project-specific investments. Provide templates with prior-year actuals and current run-rate as baselines. Deliverable: consolidated department budget requests.
3. Headcount Modelling: Build the headcount plan by department with start dates, fully-loaded costs (salary, benefits, equity, payroll taxes), and ramp assumptions for quota-carrying roles. Model the difference between approved headcount and expected attainment. Deliverable: headcount budget model with phased costs.
4. OpEx Consolidation: Consolidate all operating expenses into a company-wide P&L budget. Categorize by GAAP line item (R&D, S&M, G&A) and by department. Apply the Rule of 40 or burn multiple as a top-level constraint. Deliverable: consolidated P&L budget with department-level detail.
5. Cash Flow Budget: Translate the P&L budget into a cash flow budget accounting for billing mix (monthly vs. annual), collections timing, vendor payment terms, and capex. Calculate ending cash and runway for each month. Deliverable: cash flow budget with monthly runway.
6. Scenario Modelling: Build upside (+15% revenue, +10% headcount) and downside (-20% revenue, hiring freeze) scenarios. Define the trigger criteria for moving between scenarios. Deliverable: scenario matrix with trigger thresholds.
7. Board Approval Package: Package the budget into a board-ready format with an executive summary, key assumptions, risks, and comparison to prior year. Deliverable: board budget presentation and supporting detail.

Anti-Patterns

• Peanut-butter spreading: Distributing budget increases or cuts evenly across departments without considering strategic priority. Why: equal distribution ignores that some departments drive disproportionate ROI; budgets should reflect strategic bets.
• Budgeting from last year plus a percentage: Using prior-year actuals as the starting point and applying a blanket growth rate. Why: this perpetuates historical inefficiencies and prevents zero-based evaluation of whether each spend category earns its place.
• Headcount without ramp modelling: Budgeting for new hires at full-year cost without modelling start dates and ramp time. Why: a hire starting in Q3 costs half what a Q1 hire costs; failing to phase costs creates misleading OpEx projections.
• Missing the cash dimension: Building a P&L budget without a corresponding cash flow budget. Why: profitable budgets can still produce cash shortfalls if the billing mix or collections timing is unfavorable.

Output

On success: Produces the annual operating budget containing the consolidated P&L, headcount plan, cash flow budget, scenario analysis, and board approval package. Delivered as a version-controlled model with supporting documentation.

On failure: Report which department budgets are incomplete, what preliminary consolidation exists, and what decisions or inputs are needed to finalize. Provide a timeline to completion with dependencies mapped.

Related Skills

• rolling-forecast-updater -- Updates the budget assumptions monthly as actuals replace projections.
• financial-model-v1 -- Provides the financial model framework that the budget builds upon.