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How to build a board-ready business budget

October 31, 2017
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You won’t be faulted if you’re nervous about your first …or your 20th…annual budget presentation to your Board of Directors. The time and effort that’s been put into finalizing the financial and operational business budgets thus far has been significant. Analyzing countless scenarios, reviewing ratios and possibly making significant changes midstream.


From Part 1 of this series, you plan to enter the Board Room fully prepared and ready to speak to the alignment of the budget with the Board’s strategic goals. Obviously, it’s also essential that you’re confident that your budget numbers and ratios are solid and completely accurate. This isn’t the time for a formula error to trip you up.

In Part 2, I went a little deeper and spoke to addressing the bottom line profit information first, then touching on the major assumptions made and any significant risks that the profit level projected won’t be achieved. The what-if planning you’ve done will have you ready to field questions and present alternatives should revenue goals not come to fruition.

Be sure to have the mechanics of your presentation ready to go. Ideally, scope out the room ahead of time and do a dry-run with your slides and handouts, perhaps even with a trusted colleague in the room to provide you with feedback. Just as with anything that’s being reviewed or audited, have your information match the order of your presentation and any exhibits or details indexed for easy reference.

The Presentation

The Directors and Chair are your colleagues, not adversaries. Understand this and you’re set. Study the Board of Directors members, know their areas of expertise and any gaps you may need to fill in. Board members are vetted and each likely has experience with running companies and looking at financials. They just might not do it day to day any longer or with your company’s data.

Anticipate Board questions and the level of detail you should go to during your verbal presentation, as well as in your handouts. These will get you familiar with your audience and reduce any tension you may feel.

The Visuals

Board members have fiduciary responsibilities to your organization, just as you do. They need to know the disposition of the major revenue streams, CAPEX projects (capital expenditures), and how significant expense areas affect your projections and bottom line.

A chart of maintenance expenses year-over-year integrated with your business budget values can show how it matches or deviates from a trend. If it deviates, verbally explain why and if necessary, how your business budgeting process helps or hinders your company’s mission. Include an exhibit in the materials you distribute that supports your explanation such as a graph with both revenue and maintenance cost over time. Show the effects of maintaining an old machine versus leasing a new one.

KPIs and other metrics are useful to quickly illustrate an expected jump in your bad debt expense or even a hike in employee engagement. ROI (return on investment) is a hallmark of justifying CAPEX projects. A similar process could be used to explain transitioning to implementing SaaS solutions (software as a service). Competitor analysis and industry norms may explain why you’ve taken a certain path. If your new approach varies from those benchmarks, there’s even more reason to bring it up.


Now that you’re ready, scrap 80% of what you plan to present. All right, I’m kidding. I wish it were that easy!  Weeding out information is just as important, or perhaps more so, than choosing what to put in. It’s natural for financial leaders – or anyone – to want to show the hard work that they and their team have done, perhaps unwittingly wanting to justify the company’s own ROI in them.

Using the chart that shows the flux of your revenue and maintenance expense is an example here. Showing two values or indicators on one table is useful in that case. Other times, it might result in information overload. We’re used to reviewing dashboards daily to check the status of several items at once but the Board isn’t, at least not with your data. Trying to make too many points with one graphic can cause eyes to glaze over. Where you can, simplify.


One last thing before I wrap this up. No surprises. Just as you don’t want to learn after the fact that there was an ongoing error in the depreciation tables that threw expenses out of whack this quarter, the Board of Directors doesn’t want any big surprises either. If your budget doesn’t align with the Board’s strategic direction, they need to know why before you get in the room. If the budget aligns but there’s a potential product recall in the works that may affect your main product line, let them know before you get in the room.

Conveying reams of data to a diverse Board of Directors isn’t an easy task. Board Members are well schooled in their areas of expertise but they aren’t all likely to have a detailed understanding of financial reporting and regulations. Put things in context. Charts, graphs and other visual aids promote discussion and accelerate the review of the budget that you present. Good luck!

Describe your first experience presenting to your Board of Directors. If you haven’t done one yet, what skill or process can you focus on improving if you needed to make a presentation to them next month?

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