Creating a budget may not be one of your highest priorities - especially in the early days of your company. Many founders wonder: Isn't it much more important to focus on building your product, hiring the best talent and defining your go-to-market strategy? We get that. However, investing some effort into your budget can be incredibly beneficial, especially during times of heightened risk and uncertainty.
A well thought out budget has a multitude of benefits: first and foremost, it can serve as your company's commercial roadmap. It is also one of the most crucial and simplest instruments of strategic alignment for all decision-makers and stakeholders of your company.
While some stakeholders may misuse a budget to show you what is not working, ideally it will help to align your business goals within the company as well as across your shareholders. A good budget will ensure that you'll have sufficient liquidity to fund your current and future plans, help identify and understand what’s working, as well as locate unnecessary cost drivers.
A good budget will help you to answer the following questions:
- What do you want to achieve (top-line goals, margins, profit, etc.)?
- When do you want to achieve it (monthly / quarterly / yearly development, seasonality, etc.)?
- How will you achieve your goals (e.g. product releases, pricing decisions, hiring key personnel, increasing marketing spend, etc.)?
- How will you finance it?
Our portfolio company Layer has not only built great tools for budgeting across teams and platforms (such as in Excel and Google-Sheets) but also created a lot of content around the topic.
A good starting point is the following 7-step list for the creation of a startup budget:
How to Create a Startup Budget in 7 Simple Steps * Layer Blog
Written by Mashal Mabood Don't forget to share this post A budget plays a vital role in the smooth execution of planned actions, whether a business or household expenditure, as every dollar is essential and can efficiently add particular value.
If you want to dive a little deeper, we recommend that you download the free budgeting survival guide (don't worry, it’s only 11 pages long):
How to Prepare for Budgeting Season? * The Layer Blog
Creating a budget is essential for any business, no matter what stage it is in. In essence, your budget is your company's financial roadmap, ensuring that you'll fund your current and future plans, understand performance and cost drivers so you'll make better financial decisions.
As with most things when building a start-up - since it is a lot about learning by doing, please find three budgeting templates that we consider very helpful:
Business Case Template * The Layer Blog
We've seen hundreds of startup business cases or financial models over the past few years and worked intensively with some of them. Even though every company is different and has specific requirements for their case or model, there are known good and bad practices to consider.
SaaS Plan Template Jan-12,Feb-12,Mar-12,Apr-12,May-12,Jun-12,Jul-12,Aug-12,Sep-12,Oct-12,Nov-12,Dec-12,Total 2012 Assumptions,SIGNUPS & PAYING CUSTOMERS SIGNUPS Signups beginning of 1st month:,0,Signups beginning of month,0,150,320,513,731,978,1,256,1,569,1,923,2,323,2,774,3,284,0 New signups ...
SaaS Financial Plan 2.0
Almost exactly four years ago I published a financial plan template for SaaS startups based on a model that I had created for Zendesk a few years earlier. I received a lot of great feedback on the template and the original post remains one of the most viewed posts on this blog up to this day.