Strategic Budgeting For Scaling Up Your Business By Jonah Balfour Running a business requires managing multiple simultaneous activities – ranging from product development, to marketing and sales, all the way to including managing your team and human resources. But underlying all of it, are the financials that enable the business to operate. At the foundation of every business is a budget that determines how much the business can spend and what specific areas of focus and activity your company will pursue. A business without a budget is like a ship without a rudder, it will float from place to place without a clear direction. Most budgets that businesses operate are built for specific periods of time – monthly, quarterly, or for a specific year. However, limiting budgets in this manner can also limit your business’ ability to grow or prepare for the future. That’s where Strategic Budgeting comes in. This concept helps businesses plan for long-term, future growth and to adapt to emerging technological and business trends. Contents hide Purposes and Examples of Strategic Budgeting Processes for Strategic Budgeting How to Optimize Your Business for Strategic Budgeting Purposes and Examples of Strategic Budgeting A strategic budget can help you tackle several key challenges. Product Development Developing a new product from scratch is a time and resource intensive task. It requires teams with large capital demands and can take an undetermined amount of time. You might budget a six-month period for development, but developing something in the real world doesn’t always work according to plan. Building product development into your strategic budget will ensure that your development team has the resources it needs over a sufficient amount of time to bring your new product to market. Long Term Goals and Forecasts As you look two, five, or ten years into the future, your business should have clear targets of what you want to achieve – whether that’s in revenue, profit, number of customers, or any other metric. Planning for those goals will require determining estimated budgets that will be needed when those goals or KPIs are achieved. How large of a team will you need to achieve those goals? What costs will your business incur to support those targets? Strategic budgeting can help you estimate future needs and provide a map of how to get there. Long Term Investment in Physical Resources If you need to invest in physical assets – a new office, a manufacturing plant – you will first need time to locate, acquire, or build those assets. In addition, you will need to plan ahead to fund their purchase or construction, as well as understanding the needs of future budgets for their operation. Budgeting Future Funding A forward looking, strategic budget is also a critical element in building a plan to source funding for your business. How much will it cost to achieve your goals and how much funding, either in the form of investment or debt, is required. Processes for Strategic Budgeting As you look to build out a Strategic Budget, here are several concepts you should keep in mind to guide your process. Heavy on Goals, Lighter on Details Strategic budgets are valuable tools in helping your business identify and plan for long-term goals. So as you determine your budget, focus on where you want your business to be in the future. However, you don’t need to plan for every detail you need to get there, rather focus on key milestones and estimates. Strategic budgets should serve as frameworks that can be adjusted with the fine details provided in your regular annual budget. Inclusive, Feedback Driven Process While it’s easy to think that a long-term budget can be created in a management-first, top down approach, it’s vital to seek the input of your wider team. Sit with team leaders from across your business and organization and find out where they want the business to be in the future, how they think it can get there, and what resources they will need to achieve that. Avoid Risks, Seek Opportunities As you build your long-term budget and strategy, keep two different factors in mind: what risks do you face, and what are your future opportunities? Your business is constantly facing risks and opportunities, but the current landscape can be dramatically different from the future. This is a great opportunity to consider how technology and other business trends are impacting your business and what long-term plans you can make to adapt. How to Optimize Your Business for Strategic Budgeting Beyond building strong processes and following best practices, there are steps you can take to optimize your business for Strategic Budgeting. Modernize your Tools New, digital platforms are emerging to help your business accelerate growth and become more flexible and agile for the future. These tools can help you automate many workflows that currently demand time consuming, repetitive tasks. As the business landscape evolves and is impacted by new technologies, integrating nimble digital tools into your workflows will better help you prepare for strategic opportunities in the future. Increase Visibility into Business Operations An additional advantage of modernizing the tools you use to run your business is gaining better visibility into operations. Whether that’s how much you are spending, or understanding how your business is performing, any strategic plans need to be based on a clear view and access to data. Insights and Analysis The ability to prepare for the future depends, of course, on an accurate picture of the past and present. With increased visibility will come the ability to more accurately analyze your businesses spending and performance and utilize those learnings in your strategic budget. Gain Insight into Your Spending with Mesh Payments Mesh Payments can play an integral role in helping you modernize your spending, allowing you to gain visibility into your company’s expenses and better prepare a forward looking strategic budget. To get started, sign-up for a demo of Mesh Payments and find out how you can take control of spending, automate key finance tasks, and leverage key insights to cut costs. Get the latest blogs from Mesh by subscribing to our newsletter Manage Your Payments With Full Control & Visibility Get Started Jonah Balfour Jonah Balfour is a Content Manager at Mesh Payments. He has experience creating content for multiple tech companies, and previous experience managing PR campaigns for emerging startups. Originally from Los Angeles, Jonah chose to leave the ample sunshine of Southern California to study at the University of Wisconsin. He is an avid fan of both Star Wars and Star Trek, and spends most of his time chasing after his two young daughters.