The luxury of a blank check doesn’t exist in the budgeting process. Especially not for hyper-growth companies. There will always be more asks than there are dollars.
The best budgets balance spending for the highest priority needs, while also staying aligned with your company’s strategic goals.
At the same time, every team wants to influence the budget in their favor. The sales team requests additional headcount and training. The marketing team wants to run a new paid ad campaign. The customer success team wants to invest in new enablement software.
Whatever the request, revenue operations professionals must navigate internal politics to ensure that every team has the resources they need to execute on the company’s overarching strategy in the new year.
For RevOps leaders, budgeting means juggling the needs of different parties—getting them to play nice, despite their varied interests. Ideally, everyone on the revenue team will ring in the new year with an agreed-upon, cohesive budget. But reaching that level of alignment is a process of its own.
As Clari’s vice president of revenue operations, I’m very familiar with what it takes to build an effective budget. It’s my job to work closely with our sales leadership team and financial planning and analysis (FP&A) team to solidify our spending plans, while also ensuring we have realistic and achievable topline growth targets. Wherever we choose to invest will shape our company’s growth, and it’s a huge strategic play.
Some questions I ask to guide our budgeting conversations are:
- How can we get buy-in from all of our internal stakeholders?
- Are we prioritizing budget requests effectively, based on our goals?
- Do we have sufficient quota-carrying reps and quota dollars doled out to achieve our growth targets?
- How can we measurably prove the ROI of a new investment?
- What are the top requests, and how do those each support our long-term strategic goals?
- Have we explored our other options? Or are there alternatives we need to investigate further?
- How will we handle pushback?
- Who can offer influence and advocacy to drive us toward alignment?
To create our new year budget, I use these four tips to strike the right balance between internal diplomacy and our business needs:
- Evaluate every request through the lens of your strategic goals
- Practice the art of saying no, tactfully
- Prioritize investments with a data-driven business case
- Ensure the team can confidently put the plan into action
1. Evaluate every request through the lens of your strategic goals
A good rule of thumb for budgeting: If something doesn’t help you achieve your overall goals, it’s probably not worth investing in, at least not at this time.
Your strategic goals must form the core of your budget. It’s a simple, but effective, criterion that helps your team stay focused on what matters most to the business. Otherwise, you risk spending finite resources on initiatives that may or may not move the needle, leaving your company’s growth to chance.
Keeping your goals front and center allows you to objectively evaluate each funding request and determine whether or not a proposal will make a sound investment. That big-picture, strategic thinking is critical as you craft your budget.
Effective budgets consider both the short- and long-term effects of their investments. In practice, that could mean funding expensive initiatives that have a limited return on investment in the near term, but also have the potential for huge returns later.
Common examples include investments to enter new markets or geographies. While this is an expensive move up front, it’s also strategically important to your organization, your competitive differentiation, and long-term growth targets. Sure, the math might not look as alluring as other quick-win investment opportunities. But because a more costly investment like those examples aligns perfectly with your strategic goals, it can become a fully funded initiative.
On the other hand, some lower-cost and seemingly sound ideas might not earn funding if they’re not aligned with top business priorities.
I’ve seen this happen with even the most successful and passionate leaders. One example: An experienced sales leader wanted to fund a channel sales team, with multiple management layers and more headcount. Yet the organization did not have a strategic need for channel sales at the time, because our priority was maximizing direct sales motions exclusively. We discussed it, debated among senior leaders, and eventually did not fund the idea given lack of strategic alignment.
RevOps leaders deliver value in the form of strategic guidance and partnership that paves the way for growth. I’m a trusted internal advisor because I have the ability to zoom into the details, and also zoom out to see the broader landscape and model the potential outcomes of key decisions.
2. Practice the art of saying no, tactfully
There’s an art and skill to telling people no.
Even though no is a full sentence, when it comes to budgeting and building relationships with internal stakeholders, you should focus on explaining the why—i.e. the rationale behind your decisions.
For example, let’s say there isn’t room in the budget to hire 10 new sales development reps (SDRs). You’ll want to explain to sales leaders why that is. Perhaps there are higher priorities that the requester wasn’t aware of, or the business case that the requester presented wasn’t strong enough or supported by enough data. This scenario also creates a learning experience for sales leaders, giving them a better idea of what makes a strong ask and what good data looks like, improving their future requests.
Ultimately, you’re rejecting someone’s idea, which can land harshly. At the same time, it is possible, with care and thought, to lessen the blow and increase understanding. The more effort you put into keeping working relationships intact, the more dividends you’ll reap throughout the year as you continue working together.
Turning no into a productive conversation can salvage your working relationships and also open the door to discussions about alternative ways to achieve the desired outcome. This is especially important as business priorities evolve over time.
The beginning of the year might not be the right time for a particular request. But, as the year progresses, there may be opportunities to allocate funding for projects that were initially declined.
3. Prioritize investments with a data-driven business case
The team building your budget receives a barrage of funding requests, and many of those requests come with hefty price tags. That’s a lot of proposals, people, and personalities to manage.
With such a huge volume and wide variety of requests, how do you distinguish between the nice-to-have items and the mission-critical business initiatives?
Data.
The entire budgeting and planning process revolves around many related data-driven models and KPIs. In my experience, the best budgeting plans have a mixture of top-down expectations, fully supported by bottom-up model building.
For example, your top-level goal might be achieving XX% YoY growth or bringing in $XX in revenue. Bottom-up models will show how the revenue team will execute on those goals. Those models might also outline the more specific things that need to happen, such as increasing pipeline generation or conversions by X% to meet your numbers.
It’s important to illustrate the overall business case and the quantifiable outcomes of each ask.
In other words, a well-constructed, cohesive model is your best way of making a budget request and backing up the need for a piece of the budget. This applies to both the sales team and the teams who support sales, like the deal desk team. Let’s look at a few examples:
- For the sales team, it’s common to create a quota capacity model or review account coverage ratios to defend the need for additional staff, and also show why it's important to hire them at certain intervals throughout the year.
- For sales support roles, it’s key to leverage models that balance the supply of working hours or capacity with the demand—i.e. incoming work. In many revenue organizations, a deal desk or order management team may evaluate case volume and ticket information to show the existing team’s workload, how much of a 40-hour work week is spent on requests, and forecast how much incremental work will arise as the company grows.
When a leader can approach the budgeting team with a well-developed model that outlines measurable results for the business aligned with overall goals, it’s a much more attractive investment. The better a team lead can explain their rationale for funding with data and projected outcomes, the more likely they are to receive that funding.
Alternatively, teams that simply want more budget without making the case will have more difficulty getting that request approved. This dichotomy between want versus need is also key. It’s not enough to just want a slice of the budget. You have to prove the true need for that budget.
Taking a data-driven approach to budgeting helps remove personal opinions and biases from the equation, and focuses your decisions on hard facts and concrete numbers. Every solid investment has a solid business case to back it up.
4. Ensure the team can confidently put the plan into action
The budgeting and fiscal planning process doesn’t end at finalizing your numbers. After all, your budget is just a plan on paper until humans put it into action. The bets you’re making are just assumptions until your team makes them a reality.
It's inevitable in every budgeting process that someone was told no, or "we can do this or that, but not both." What’s important is feeling confidence in your number, and communicating that confidence across the entire revenue team, including sales, marketing, and customer success.
Your team collectively put in hundreds of hours of their best work to build data-driven perspectives and do what's right by your internal stakeholders. Although you may not have accounted for absolutely everything, it's leadership’s role to lead, rally, motivate, and inspire the team to do everything asked of them. Even if they have to do it with fewer staff, tools, and support than they initially requested.
Sometimes, that can be a tough sell, especially when people or teams don’t get exactly what they want. To gauge whether RevOps has instilled collective confidence in our budget, I pose the following questions:
- Does each team know what resources they’re getting and how to maximize those dollars, roles, and services?
- Does the full revenue team know we as a RevOps team did our best to advocate for and address every department’s needs?
- Is our budget championing our company’s big strategic goals for the company and also clearly illustrating how our choices support that strategy?
- Has the budgeting team demonstrated how all puzzle pieces fit together?
Even after the budget is created, there’s still more work to be done. Next, it’s up to the revenue leadership team to inspire the revenue team to go forth and execute on the plan. Ideally, the revenue team is fired up and excited about next steps, rather than dwelling on what wasn’t included in the budget.
The bottom line is this: You can’t budget without also encountering internal politics. The best RevOps leaders constantly balance hard skills and soft skills to deliver a truly balanced budget in time to launch the new year.
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