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How to Align Budgeting and Strategic Planning: 4 Key Tips

Which came first, the budget or the strategic plan? Budgeting and strategic planning are inherently connected, but many businesses require a stronger connection to help them achieve their goals. Unfortunately, these two discussions should be better aligned, as two completely separate groups of people often conduct them.

Unless your marketing strategy and budget are aligned, you will not have a good idea of how to best allocate your spending and make the most of your marketing investments.

How can you align your 2023 revenue goals with the marketing budget? Here are a few best practices to help guide you through the process.

Setting your 2023 revenue goals and aligning budgeting and strategic planning

We’ve talked in the past about  setting SMART goals for your marketing . Your revenue and growth goals for your business will directly influence the marketing strategies you choose and the budget you decide to allocate to achieving these goals.

While it sounds great to set the goal of doubling your revenue, this goal isn’t attainable if you aren’t willing to allocate enough of your budget towards making it a reality.

How are you going to meet your goals? Decide on the specific marketing tactics you’ll use to achieve your marketing goals based on what has delivered a positive ROI in the past and which new strategies you believe will work in the future.

All of these strategies may not fit into your plan once your budget comes into play, but it is important to have an idea of which strategies you believe will give you the best chance of success. For any initiatives that didn’t make the cut, make sure you keep a backlog of those items for future reference.

Budgeting and strategic planning allocation questions to ask

Budget allocation will depend on the tactics you use as part of your overall strategy. Once you have prioritized the tactics you’d like to use, there are a number of questions to ask to determine the budget necessary to include each of these tactics in your overall marketing strategy.

The answers to these questions will also help determine the overall budget necessary to accomplish your goals:

What is the impact of each of these tactics?

While each individual tactic should fit into your overall marketing strategy, it must also be able to prove its ROI on its own. How will each tactic contribute to your revenue growth or other marketing goals?

How will you measure them?

Set clear KPIs for  measuring your marketing tactics . If you struggle to quantify their success, you’ll struggle to justify their place in your marketing budget.

How much time will they require?

This question pertains not only to how many employee hours you’ll need to dedicate to see them deliver a positive ROI. You should also consider whether this project will take longer than your typical budget cycle to produce real results. If this is the case, it doesn’t disqualify it, but you must include this consideration when allocating your marketing spend to it.

What is the estimated cost of these activities?

How much of your budget must be allocated to be successful? Some tactics, such as marketing automation software, have a fixed fee you must budget for. Others, like content marketing and social media, may see more success the more budget you devote to them (up to a certain point).

Once you have answered these questions, you can begin to prioritize what percentage of your budget should be devoted towards fixed expenses, such as software and employees, and to determine how you should allocate the rest.

This second part should have some flexibility to be tweaked as some strategies show more promise and others don’t deliver the ROI you expected. However, don’t pull the budget from tactics too soon. Most marketing strategies take time to see real results.

Adjusting your approach on the go

It's essential to ensure that you set well-defined expectations regarding budgeting and planning. But, it's relatively easy to get ahead by setting tricky targets sometimes. This common mistake can happen for several reasons, for example, the ever-changing market conditions. 

One of the safest ways to alleviate this issue is by reviewing your budgeting and strategy planning every quarter. Even though you should have a yearly plan, tweaking your goals every few months is a bulletproof way of solving newfound issues. Revisiting your designs also ensures that the discovered problems don't get a chance to develop.

The main advantages of budget and strategy alignment

Aligning your budget and strategic planning is undeniably compelling. This is especially true because no matter how successful a company is, the resources will always be limited. 

A bridge between budgeting and strategy will help you make informed decisions on significant spending and cuts. However, this alignment can also indicate which new initiatives deserve your support and investment. Therefore, this arrangement is ideal for making decisions based on factual information and clear objectives.

Another crucial aspect of combining these two factors is that the finance department will better understand strategic operations, resulting in superior handling of company resources. The alignment of budget and strategy can prevent excess spending across multiple projects, making it a priority for businesses of all sizes. 

Making the case for your 2023 marketing budget

Often, you will need to fight for your marketing budget every year. This is especially true when you are fighting to increase your budget, which most marketing departments are.

Consider what your goals are and what the success of those goals will mean for the company as you make decisions on the overall marketing budget for 2023.

As you embark on the process of budgeting and strategic planning for 2023 , the important thing to remember is that these two considerations should always be made together. Your budget should help determine which strategies are viable for the coming year and your strategic plan should help make the case for your budget needs and allocation.

Looking for more best practices on aligning your budgeting and strategic planning? Check out our free Strategic Marketing Plan Starter Kit, which includes templates for putting together a powerful marketing plan for the coming year.

Author: Nathan Harris

Nathan Harris is the founder and CEO of New Perspective digital marketing agency.

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Executive Perspective

Modern Finance

Strategy and Operations

Excel Essentials

Data and Tech

How To Align Your Budget With Your Business Goals

Table of Contents

Whether you're playing a game of chess or helping to grow a business, strategy is key to making every move the right one. So how do you decide your next move when you have no visibility into the strategy at play?

If you're part of a finance team, you may find yourself in exactly that position during budgeting season--building out your budget without a strong view into business goals and objectives. Without that, you're left moving your pieces and assuming the game hasn't changed, making critical decisions on where to allocate resources for operations and growth without any kind of roadmap.

That's why budget alignment with business strategy and KPI or goal setting is a critical part of a successful budget --and key to achieving your organizational goals. It's also how you ensure you have the right resources and team in place as you work to meet your overall objectives, reallocating resources as necessary to meet those goals.

Budget alignment will empower your organization to reach its strategic goals--and that's something the whole company can get behind. So how do you make that happen? In this blog post, we'll look at:

• Why should your budget be aligned with organizational goals?
• 3 steps to achieving budget alignment

Why Should Your Budget Be Aligned With Organizational Goals?

If you don't have visibility into your organizational roadmap already, it may be time to start advocating for it--or even asking for a seat at the table so that your team can fully support your business goals from beginning to end. When making your case, consider three reasons why your organization should be making alignment a top objective this budgeting season:

1. You'll make the budgeting process less of an administrative task

When true alignment is achieved, your budget moves from a job that needs to get done to become an operational extension of your overall strategic planning process.

2. You'll allocate resources more intelligently

Even in high-growth companies, resources aren't infinite--and spending them unwisely is just unhealthy business practice. Every leadership team is going to have to make tough decisions on where to spend and where to cut as well as what operational and growth initiatives are worth investing in. Budget alignment helps you prioritize or provide portfolio options for that spending so that financial allocation decisions are based on your company objectives--and not just the loudest voice in the room.

3. You'll have more money when you need it

Without a deep understanding of company strategy, your finance team won't be able to model or advise on resource requests, including the headcount, tools and other resources that will empower your organization as it turns strategy into results. Teams will be left scrambling when the time comes--something that can lead to employee burnout and stunted progress, or force teams to adjust plans in a silo to accommodate for the resources available rather than taking a holistic organization-wide approach.

Without alignment, it's easy to spread your money too thinly across too many projects and end up without enough cross-functional resources to get things done across the line. It's in the best interests of everyone in the organization, then, to make sure alignment is achieved.

3 Steps To Achieving Budget Alignment

What is the relationship between strategic planning and budgeting in your organization?

If a strategic plan outlines where your business is going, the right budget should smooth the path--allocating resources holistically to operationalize your strategies. The following steps can help achieve that, to ensure your budget supports your organizational goals:

Step 1: Keep Your Eye on the Long Term

Whether you budget annually or have a rolling budget, your long-term strategy should be a sounding board to your process early on so that you're able to prioritize the right resources and programs. Most business goals are going to take longer than a year to reach fruition so even an annual budget can't take into consideration the full picture. By keeping strategy front of mind during all of your team's long-term planning, you'll be able to ensure it trickles down to fuel your ongoing budgeting needs. But how do you do that?

• Consider introducing a strategic budget. Strategic budgeting expands the budgeting process past a year to add a more long-term view to the budgeting process. Less focused on detailed line items, such as spending and revenue, it centers specifically around your company's goals when it comes to competitive threats, risk assessment, growth opportunities and where resources should be reallocated to support growth.   
• Break down the organizational silos. Organizational silos can make it difficult to allocate resources efficiently for the long term. Tools such as scenario modeling or zero-based budgeting can help you break down your silos and funnel your strategic plan directly into your budget so that your future goals drive every budgeting decision you make. 
• Use the right technology. The right technology solutions can make it easier to visualize your budget over the long term, compare it to actual performance and use modeling to see how it all might come together.   

Step 2: Get Your Leaders Involved Early

Ensuring your budget is fully aligned with your latest company goals means getting your executive team involved early--whether that be in the strategic planning process or in the subsequent budgeting process itself. Ideally, this will provide the transparency and insights necessary for your team to allocate resources accordingly. But it's not always as easy as it sounds. So how do you make that executive involvement happen?

• Advocate for early strategic involvement. By involving finance in the formation of your company's strategic goals from the start, you'll have visibility into those objectives before your budget even gets off the ground. This will help you build out alignment earlier in the process and make executive involvement a natural part of the process.
• Center your budget around data-driven storytelling. By framing your budget within a larger narrative--the future success and growth of your company--you're making it a key driver in the story your company is trying to tell. Data-driven storytelling can help you showcase that bigger picture, letting you demonstrate how your budget will impact business initiatives and empower success--something already inherently of interest to your executives.
• Make it routine. To prioritize your budget for your strategic team, make it part of their regular routine--not just a single information dump. Determine how you're going to interact with each stakeholder and then put it in their calendar so that it becomes a normal business process. That way, you can provide ongoing visibility into the budgeting process, introduce reforecasting processes so that the plan never seems stale and stay available for any questions along the way.

Step 3: Measure Your Success and Repeat It

Identify the metrics critical to measuring progress on your company objectives to better understand how your budget is helping you achieve them. Both financial and non-financial metrics will be key to understanding how your budget is succeeding--and give you the insights you need to adjust the next forecast or plan and to make rolling changes based on what's working and what's not. Visibility into these metrics and successes will also help drive buy-in to the budgeting process and give cause to align it with your strategy. But where should you start?

• Measure what matters. If you want to tie your budget to actual performance and understand how well it's adding to your organizational goals, you need to know which metrics to follow to ensure you're getting it right. You could use a CPM software to keep your measurements in a secure place. Outward-facing metrics--market share, customer satisfaction or your net promoter score (NPS)--can be useful, as can internally focused metrics such as top or bottom line. But depending on your organizational goals, you may also choose to look at more purpose- or value-driven metrics such as lives impacted or jobs created.
• Tweak as you go. While you should always have an eye on the endgame, the market is going to change and your business goals along with it, providing you with new challenges, opportunities and demands to address. By continuously measuring your budget success, you'll be able to make the necessary course corrections to stay flexible to change. Versioning can help with that, allowing you to move fluidly from the initial version of your budget to the most recent or from your annual or rolling plan to your longer-term strategic plan--allowing you to see the changes you made, comparing and contrasting and understanding where you may need to make adjustments.
• Look at team and employee performance. While aligning your budget with your overall organizational goals is always the first step, once that's achieved, you can also begin to consider linking budget performance to individual and team performance as well. This adds even more focus and transparency to your budgeting process and offers you a chance to course correct--or celebrate success--at the team level.

With executive involvement, a view to the long term and ongoing measurement along the way, you'll be able to build better alignment into your budgeting process and put your company on the right path to strategic growth. 

Just remember, aligning budget to strategy isn't just a "nice to have." It can make the difference in whether your company achieves its larger objectives--and how fast it meets those goals.

Find out how Vena can help you build a better budget .

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About the Author

Evan webster, senior area sales manager, vena.

Evan Webster is an experienced sales professional and storyteller with a passion for innovative technology. He currently serves as a Senior Area Sales Manager at Vena and previously worked as a Content Specialist. He continually strives to inspire finance professionals to become strategic business partners and is dedicated to helping them automate and streamline their planning processes so they can make better decisions with reliable, data-driven insights—enabling meaningful growth for organizations across the globe.

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