A Masterclass in Annual Planning: Budgeting for Hypergrowth

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Oct 14, 2024

Dive into the intricacies of budgeting for hypergrowth companies. Explore essential strategies for building sales capacity and optimizing team performance. Learn about the critical interdepartmental collaboration vital for effective annual planning. Discover tips for managing expenses, setting quotas, and ensuring sufficient support for sales teams. Uncover key budgeting tactics that adapt to rapid growth and market changes. It's a treasure trove of advice for navigating the complexities of financial planning in dynamic environments!

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INSIGHT

Annual Planning as Training Camp

Annual planning is like a training camp, preparing the organization for the next year.
It involves assessing possibilities and fitness levels for the challenges ahead.

INSIGHT

Key Groups in Annual Planning

Company-wide planning involves five groups: product/R&D, marketing, sales, customer success, and customer support.
These groups interact in a cycle, each providing feedback and influencing the others.

ADVICE

Bottoms-Up Budgeting

Build a bottoms-up budget by forecasting revenue and costs with activity-based assumptions.
Start with the most granular level (atomic unit) and perform price times quantity calculations.

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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:

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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.

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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

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