Budget
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Budget

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?

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While you will never be able to predict the commercial development to the extent a corporation can, a well-planned budget will help you to track your progress in the context of your goals and will help you to create an even better budget for the next period.

Readings

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:

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):

Templates

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: