Building a budget: a masterclass

Want to build a budget for your business that is actually useful? We assembled three experts to show you how

In our latest FinOps seminar, we brought together three FinOps experts to talk about budgets.

 We focused on:

  • Why you should build a budget and how to make it useful
  • How to build a budget
  • Systems, tools and software to help you set a budget


Our experts are:

Ju-Vern See (Co-founder Quantico)

Your budget is a finance plan that everyone in your organisation will work towards. It will engage individuals and teams across the company, as well as external stakeholders and investors.

There are several reasons for building a budget, but they fall under two key umbrellas:

  • Operational
  • Fundraising


Operational budgeting:

Forecasting for fundraising:

  • Selling the dream to investors – Your budget shows investors what their ROI will be; if they give you $100,000 now, what can they expect to get in 5 years’ time? It will also show the market share you are going to capture.
  • Supporting the amount of fundraising – The budget shows how you will spend the money you raise.

Normally, you will perform these two types of budgeting a different times. In many instances, companies build a budget for fundraising, but then scrap it to pave the way for an operational budget.

Here are some more things to remember about your budget:

  • A fundraising budget will typically take a ‘top-down’ approach. It is not applicable for everyday use.
  • Investors usually discount forecasts by 20%.They know people exaggerate! 
  • You need a budget that your teams can back. Setting a budget requires your teams to communicate with you and each other.
  • Balance ambition with credibility. Promote how great your company is, but don’t make promises you can’t keep.

Remember: your operational and fundraising budgets can be different but they must tell a cohesive story.

Sophie Conaghan (Freelance Finance Director)

The when part is easy. Start now!

It may seem a bit strange if you’re in a boot strapped business with no cash to be talking about budgets. However, you’re likely to need to build a financial plan before you can go out and get funding from investors.


Now, on to the how.

There are five essential components to any budget:

These components will make up the structure of your budget and give you something you and your stakeholders can agree to.

Let’s look at these components in turn and understand how you bring each one into your budget.

1. Time period

Pick a time period to start working on – one that is relevant to your business at its current stage. You may only want to think about the coming month ahead, or you might be starting to put in place a five-year plan for investors.

2. Business plan

Think and then put down the key milestones and timings for your company that your budget will need to reflect. You can also think about the dream you want to sell to investors.

You will need to pin down the founder or the leadership team and help them agree on a few milestones. It’s not set in stone, however. Assure them that things can change. You just need a starting point. Remember, you are driving the process of establishing a budget, not waiting for them to tell you their plans once they’ve already started carrying them out. 

Here are some of the things you will need to know about:

  • Timing of new products – development and launch stages
  • Timing of new geographies
  • Plans for new premises
  • Hiring plans
  • Cash flow strategy
  • Breakeven point
  • Ideal cash runway/cash low point

Essentially, your financial plan is the translation of the business plan into Excel (or whatever software you’re using), so you need to use the latest and most accurate data.

3. Key business drivers (KPIs)

Your KPIs are vital for understanding how your business works and is the cornerstone to producing practical financial planning and analysis (FP&A) in the future. It’s critical to ‘get under the bonnet’ early and try to work out what drives your company’s financial results and how you expect them to change over time.  

Here’s how to discover the metrics you need to focus on:

  • Talk to each of your team leads and use your accounting skills to articulate the base factor driving the various costs and sales patterns. These will be your model inputs when you get to that point.
  • Track each factor as a KPI and update them in your rolling forecast


4. Costs

Examine your costs over the proposed time period.

A sizeable proportion of your costs will be fixed overheads, but with built-in step changes, such as a new office. Some costs will grow with staff numbers as your business expands. Cost of sales is affected by gross margin.

5. Revenue

Forecasting your revenue over your chosen time period is the big puzzle of budget setting.

It’s going to be an educated guess. As long as your estimates are backed up and supported by reliable data, it’s good enough.

Work with your founders or the leadership team and your sales team to decide who owns each part of the revenue model. Get agreements upfront on who is responsible for hitting each target.

Remember: it's better to have something than nothing. You'll never regret starting your budgeting today!

Bode Bamkole (Account Director and Alliances Manager, CCH Tagetik)

The right software for your budgeting initiative depends on the stage of your business. If you’re just starting out, investing in the kind of bespoke accounting packages used by large multinationals is clearly a waste of money!

Find the right tool that matches your stage:

  • Startup planning tools
  • Mid-market
  • Scaleup
  • Enterprise-level


Software is there to help you with the budgeting process, not do it for you. Here are the things that software can do:

  • Automation – the manual, boring stuff! E.g.currency translation, CF statement
  • Control – building a scalable process through workflow and audit trails. As you grow, with more stringent reporting requirements, you need to have more control
  • Visualisation – Dashboarding and reporting, making your budget easier to understand
  • Security – Software gives you a single source of truth, rather than arguing who has the most accurate spreadsheet
  • Information and data – Quality and quantity of data, not necessarily all your financial information. It’s essential to have everything in one place
  • Value-adding – automate scenario analysis, allocations, planning
  • A building block for business partnering – If you do all of the above, finance can promote decision making in other departments, such as sales
  • Drive change – better decision making and planning


It’s not there to put people out of jobs or take over the process. Bringing new systems into your company is just one part of the transformation as your business grows. You need to have your building blocks and core data and systems in place first. People will still have the lead role in decision making. They will need to interpret the data the software generates. People will be incharge of setting goals, not the other way around.


When to bring in software

If you implement the wrong software at the wrong time, it can add to the confusion rather than solve it, especially if you don’t know how it works under the hood. For example, with predictive analysis, you need to understand why and how it gets to the predicted number.  

For startups, spreadsheets are helpful as they are simple to customise and share and are low cost. However, as your company grows, your spreadsheets will struggle with the volume and will begin to creak.

Bringing in new software takes time and costs money, so it’s best to look at it as a Return on Investment (ROI).


Use software to combat a pain point:

  • Are your team wasting time doing manual tasks?
  • Is there too much data in your workbook that makes it slow to load or causes crashes? 
  • Do you need one ‘true’ data rather than lots of data in different places?


Remember: software is an enabler, not a replacer.

Find out more from Quantico

I hope this article has been helpful as you build your budget.

At Quantico, we’re a team of FinOps experts. That’s Finance Operations – where finance, operations and technology meet. We provide in-house finance teams to fast-growing businesses just like yours, giving you the systems you need to scale without the admin and hassle.

If this sounds like the way forward for your business, visit our site today.