Budget season is upon us. Time to roll up your sleeves, get out the spreadsheets, and brace yourself for a lot of negotiation.
There’s no steadfast, one-size-fits-all way to budget for your company or department. Because of this, it’s common that you’ve made some budget decisions that you came to regret. Mistakes are good—they’re one of nature’s most persuasive teachers—but nobody likes making mistakes, especially if they follow you the entire fiscal year. So before you start building your case for next year’s budget, learn from these three budgeting mistakes and save yourself the time and, most importantly, that sweet, sweet cash.
SaaS Budgeting Mistake #1: Not asking for the money you need
Sometimes the line between greedy and asking for what you need can be thin. But it doesn’t have to be. If you build a strong case each investment, you’re not being greedy, you’re being proactive. One of the most critical parts of budgeting is allocating enough funds for the expenses you’ll need, and the ones you may not foresee. How to get ahead of this? Plan, plan, plan. Rule number one is to start as early as possible. The earlier you start, the more time you’ll have to adequately research and build a strong case that clearly explains the “Why?” and the ROI behind each investment.
Pro-tip: When it comes time for you to pitch your plans, make sure your slide deck is 🔥. Your strategy is exhaustive, so why not put as much effort into your presentation? A well-designed PowerPoint is a visual representation of your well-designed budget.
How are you contributing?
Each department should have a clearly defined charter so you can set clear goals and expectations to budget for. If your team’s roles are foggy, your case will be just as clouded. Answering the following questions will allow you to craft your organization's charter. For an in-depth example, check out this blog post to learn how we defined our Customer Success team’s charter.
- What critical business functions does your team drive (adoption, retention, lead generation, etc.)?
- What metrics do you use to track success?
- What are your team’s goals this year?
- What are the company’s overarching goals?
- What role will your team play in helping your company achieve these goals?
Taking the time to clearly define this, no matter what organization you’re in, will pay off in the long run and in ways far beyond just budgeting.
What sacrifices can you make?
“You need to be able to give something up if your budget is limited. Rather than skimping on items that make your team more efficient and effective, I would recommend curtailing what you can cover.” - Nick Mehta, Gainsight CEO, in his blog post, “The CEO’s Guide to Under-budgeting for Customer Success and Destroying Shareholder Value in the Process.”
Look at your strategy from a different angle and think about the things you don’t need. What could your team do without in order to make the budget stretch further? Maybe you foresee yourself needing more headcount, but also want to invest in a software solution. Depending on the functionality of that potential software, it could be a replacement for additional headcount. Maybe your team is taking on a lot of duties that could be moved to another team’s charter. For example, if you’re in the Customer Success department and your CSMs are overloaded, maybe some of the work could be divvied up between Support and Services—if their workload permits.
SaaS Budgeting Mistake #2: Not working cross-functionally
Proper alignment between departments has to be a priority when you’re planning next year’s budget. If you avoided Mistake #1 by creating a charter for each department, you’re already halfway there. Once your roles and responsibilities are defined, it’s that much easier to recognize who to loop into your decision-making processes.
Are you buying software next year? Do you have new projects that will be fueled by your existing software? If so, IT needs to be part of the conversation. You’ll need their manpower and mind-power to help you implement these things and this could result in a confusing, “whose budget does this come from?” scenario. Loop them in early on so you can both allocate budget accordingly. If you’re in IT, be proactive and learn your fellow department’s initiatives in advance so you’re not blindsided.
Sales and Marketing teams typically have a close relationship, but this should expand to include all departments. Even if your departments may be siloed off, your team’s goals still need to support the company’s overall goals. Whether you’re an executive that oversees multiple departments or a specialist, you need to work cross-functionally so every cent counts. Customer Success, Sales, and Marketing should all be aligned on their goals. Are you targeting new markets this year? Is your Post-Sales team adequately staffed to handle this? These are the types of questions you should be coming together to solve together.
SaaS Budgeting Mistake #3: Not investing in the future of your organization
Earlier, we stressed the importance of cutting things from your budget that you can cover in other ways. To emphasize Nick’s quote, don’t skimp on investments that will make your team more efficient and effective. In this case, we mean software, operations, and personal development opportunities for your team. You’re only as strong as your processes and the people you have in place to run them.
It’s worth the time and effort it takes to evaluate the many software options out there because of the profound impact it can have on the future of your org. Choosing the right software will add efficiency, advance your strategies, and boost growth. Meanwhile, choosing a “good enough” solution can set you back. Take the time to thoroughly research all of your options and invest in a solution that will suit your current needs but also puts you in a position to scale your processes over time.
It doesn’t stop there though, you also need to set yourself up for success by having capable Operations teams. These people are necessary if you want to get the true return from your investment. What are the most critical software solutions you use today? Do you have a strong Operations team keeping you on the right track? Invest some funds in growing your Ops team and if you’re missing them in certain areas, budget for at least one additional team member.
Another key area that is often under budgeted for is personal development for your team. Every person you add to your team is an investment, so why let them become stagnant? Not only is it a great way for every team member to contribute fresh ideas, but it boosts their satisfaction. You’re invested in them, therefore they’re invested in your company. Any valuable industry conferences happening this year? Send them there. What about opportunities to learn leadership or management skills? Give them the opportunity to grow as individuals and you’ll both reap the rewards.
There’s no time like the present
Now that you know what not to do, get out there and build a strong case for your budget. Ask for the things that you know you need and be ready to prove why you need them. Don’t go it alone—work with your other departments to create cohesive budget plans that will move your company forward. Remember that you’re only as good as your team and your processes, so invest in them both. All you have to do is get started now.
Budgeting for Customer Success in the next fiscal year? Check out our popular webinar, How to Budget for Customer Success: 2019, to hear our CCO, CIO, and CFO answer as many of your burning questions as time allows!