The Cycle of Annual Planning: A Comprehensive Guide

In this solo episode, CJ provides a comprehensive guide on annual planning and delves into the complexities of budgeting for hypergrowth companies. He covers topics such as building sales capacity, modeling out rep time, over-assignment, designing marketing budgets, and costing out the full P&L. He discusses the role of various departments in the annual planning process, including R&D (Research & Development), marketing, sales, customer success, and customer support. The podcast highlights the significance of headcount in budgeting, the intricacies of sales capacity modeling, and the necessity of interdepartmental collaboration. CJ offers practical tips for managing expenses, planning for future growth, and ensuring that sales teams are adequately supported to meet their targets. The episode is a deep dive into the strategic and operational aspects of financial planning in high-growth environments.

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SPONSORS:

Leapfin is accounting automation software that automatically prepares and posts reliable journal entries. High-growth businesses like Reddit, Canva, and Seat Geek choose Leapfin to eliminate manual tasks, accelerate month-end close, and enable accounting leaders to provide faster insights to help their companies grow. To automatically standardize your revenue data with measurable business impact, check out leapfin.com today.

Mercury is the fintech ambitious companies use for banking and all their financial workflows. With a powerful bank account at the center of their operations, companies can make better financial decisions and ensure that every dollar spent aligns with company priorities. That's why over 100K startups choose Mercury to confidently run all their financial operations with the precision, control, and focus they need to operate at their best. Learn more at mercury.com.

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.

NetSuite provides financial software for all your business needs. More than 38,000 thousand companies have already upgraded to NetSuite, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you're looking for an ERP platform ✅ NetSuite: https://netsuite.com/metrics and get a customized KPI checklist.

Maxio is the only billing and financial operations platform that was purpose built for B2B SaaS. They're helping SaaS finance teams automate billing and revenue recognition, manage collections and payments, and put together investor grade reporting packages. 🚀 Request a demo at www.maxio.com/runthenumbers for 10% off your first year.

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@cjgustafson222 (CJ)

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TIMESTAMPS:(00:00) Preview and Intro(01:20) Sponsor – Leapfin | Mercury(03:54) Key Stakeholders in the Annual Planning Process(06:02) Bottoms Up Versus Tops down Budgets(09:00) Creating a Budget Envelope(12:53) Sponsor – NetSuite | Maxio(14:50) Building Sales Capacity(17:00) Quota to OTE Ratio(18:07) Ramping(21:00) Over Assignment(23:08) Seasonality(24:56) The Sales Pod and Surrounding Resources(26:45) Sales Capacity Planning Mistakes(32:25) Marketing: Generating Pipeline Coverage(33:23) Over-Assignment in Marketing(35:01) The Marketing Funnel(38:34) Setting the Pace of the Marketing Pipeline(39:30) Tracking Marketing Costs(41:05) Common Mistakes with the Marketing Budget(43:42) Expenses: Follow the Headcount(45:53) A List of Possible Expense Types(49:05) The Three Buckets of Cost of Goods Sold(50:16) Cost Benchmarks at Department Level(53:47) Laptops(54:22) Annual Bonuses(56:14) Tips for Budgeting for Hypergrowth(1:02:08) Wrap