I received a record number of warm holiday messages the last few weeks, which inspired me to send out my own uplifting, seasonally appropriate, religiously ambiguous, gender neutral, culturally sensitive greeting.
(There should be a picture below. If it’s not, enable photos in your email)
I hope everyone has a great end of 2017 and a wonderful New Year! Now to today’s topic:
Topic of the Week: Budget Blunders
When the Amazon prime boxes start piling up in front of everyone’s home, it only means one thing: It’s budget season.
Given there are only five business days left in the year, I’m hoping your budgets for 2018 are wrapped up. If not, I do not envy your finance and accounting folks.
To commemorate the end of another dreaded budget season, I thought I would share with you some of the biggest mistakes I see when reviewing company budgets.
1. The current pipeline does not support next year’s revenue projections.
2. Sales rep productivity is overstated due to bad assumptions around sales cycle length and the time it takes a new rep to get up to speed.
3. No customer churn is factored into the budget.
4. The cost and time required to navigate customers through sales, implementation and ongoing support are understated.
5. The expense build is top-down vs. bottoms up, failing to capture all the odd and end expenses for the year
6. There is no cushion built in to the budget for revenue misses or unexpected expenses and capital expenditures.
7. The available option pool doesn’t support the hiring plan.
8. The impact of working capital on cash availability is understated.
9. Sales commissions & bonus structures are improperly forecasted.
10. Debt repayment and interest schedules are improperly forecasted.
11. Feedback and buy-in were not solicited from the appropriate internal team members.
12. Due to the above-mentioned errors, a budget must be meaningfully reforecasted in early Q1. (Not the best way to start the new year…)
I hope everyone has a great weekend and fantastic end to 2017.