Budgeting isn’t just about crunching numbers; it’s a tool for alignment and clarity within a team. In my work as a Fractional CFO supporting businesses with revenues between $3M and $50M, I’ve observed recurring challenges tied to a lack of alignment on financial decisions. These challenges often highlight a disconnect between leadership and teams, which can lead to inefficiencies, missed opportunities, and frustration.
Here are two real-world examples from my recent experiences that illustrate how budgeting can serve as a bridge to align teams and drive better decision-making.
Case 1: Misaligned Marketing Spend
One operations leader I worked with shared their frustration:
“I don’t understand the point of a forecast. Someone arbitrarily created one for us, and I don’t know how to use it.”
Later in the same conversation, they added:
“We can never align on how much we should spend on marketing. The CEO always wants to spend more, and I, as the operations leader, want to spend less.”
From their perspective, these were separate issues. To me, the answer seemed clear: a budget. They felt disconnected from the forecasting process, which seemed like an academic exercise rather than a practical tool for the business. As their CFO, it was my role to bridge this understanding. I reframed the forecast as a budget, explaining its dual purpose:
Setting clear spending parameters: The budget becomes the agreed-upon framework for decisions, resolving debates like whether to spend $3,000 or $30,000 per month on marketing.
Facilitating strategic discussions: During the budgeting process, the team can align on key priorities—how much marketing to do and what profit targets to hit.
Of course, there can be flexibility, but the budget is a starting point. For example, if there’s a marketing campaign costing $12,000 but the monthly budget is $5,000, the team can decide to pool budgets from multiple months to fund it. This flexibility allows the business to stay agile without losing sight of the bigger picture: the annual budget total cannot change without re-evaluation.
Additionally, the budget provides a framework to react to fluctuations in revenue. If the company exceeds sales targets, the marketing budget can be expanded. Conversely, underperformance triggers a conversation about dialing back expenses or reallocating funds.
Case 2: Budgeting in a Family-Owned Business
Another client, a $40M family-run enterprise, faced a similar challenge. The patriarch CEO had always run the business intuitively, keeping financial details private. When I suggested creating a budget, his response was:
“We’re too small for a budget, and we’re not a Fortune 500 company. Why do we need one?”
In a separate conversation, the sales leader expressed a different perspective:
“I don’t know how much I should spend on marketing each year to achieve our sales targets. I base it on historical data, but if I exceed targets, I’m rewarded, and if I miss, I take the heat.”
Here, the sales leader needed clarity and alignment on expectations, while the CEO viewed a budget as unnecessary. My role as CFO was to connect the dots: the budget wasn’t just for the CEO—it was for communicating his vision to the rest of the team.
The sales leader needed guidance on how much they could and should invest in marketing to achieve goals, without fear of overstepping or underspending. A budget provided this clarity, giving the sales team confidence to act decisively while ensuring their efforts aligned with the CEO’s vision.
Budgets as Tools for Communication
These examples highlight a key point: our role as advisors extends beyond numbers. It’s about communication. A budget isn’t just a financial tool—it’s a mechanism to translate the company’s goals into actionable steps for every team member. It bridges the gap between strategy and execution, giving everyone the clarity they need to move forward confidently.
When implemented effectively, a budget fosters:
• Alignment: Teams understand priorities and resource allocation.
• Clarity: Decision-making becomes less about gut feelings and more about strategic choices.
• Agility: Businesses can respond proactively to changing circumstances while staying true to their financial goals.
As advisors, our ultimate job is to facilitate this alignment, ensuring that every team member, from the CEO to the sales leader, is on the same page and working toward shared objectives.
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