In this fourth episode of our 10-Part Strategic Planning Intro Series, we are taking our first deep dive into strategic planning and budgeting. We are walking you through what you need when it comes to budgeting in the strategic planning process, as well as providing a free template to get you started.


What we cover in this episode: 

  • 1:05 – Introduction to Jaime Staley
  • 3:40 – What is a strategic budget?
  • 5:07 – Why do we need a strategic budget?
  • 10:55 – Do I approach this like a personal budget?
  • 18:10 – Where do I start?
  • 22:50 – Who should be involved?
  • 25:00 – How often do I revisit the strategic budget?

We have created a free, budget template that will help you get started with some items to consider as you work through your own budget.

strategic plan budgeting

DOWNLOAD THE FREE TEMPLATE: Strategic Budget Template

This free template will give you a baseline for the budget items you should include in a strategic budget.

Please consult with your CFO or advisor when finalizing this budget and beginning to implement a plan. 

What is a strategic budget?

A strategic budget takes a look at the money needed to support achieving the goals in your strategic plan. This budget takes a big picture, long-term approach, which should then be broken down further and monitored regularly. The focus of strategic budgeting, therefore, shifts away from the trivial details of budget-building and into such matters as strategic direction, risk management, competitive threats, growth options, and reallocations of resources to higher-growth areas.

The intent behind this type of budgeting is to develop a long-term plan that supports a vision for the future position of your entity. Your goal is to make this budget challenging but achievable to reach your long-term objectives.

As we covered in the first few episodes, you want to consider your revenue goals, net income goals, etc. Committing to a desired net income goal will greatly increase your chances of achieving lasting business success. Then, it’s time to think about all of the expenses that are in the pipeline. Your strategic budget should include all revenue and expenses to ensure it’s aligned with your strategic plan. 

Why do we need a strategic budget? 

Budgeting plays a vital role in the strategic planning of a company which ensures appropriate financial and operational activities to be performed efficiently in order to increase profits. Typically, if you have a plan in place, your chance of success is much greater. We are big proponents of putting your plans down on paper. This ties back to the roadmap we created for the business overall … at this point, we’re just getting more granular. 

There is an airplane analogy in the business world that we like to highlight when it comes to the importance of planning and business strategy. This also applies to the budgeting process.

  • Option 1: If a pilot has a general idea of the final destination, they can take off, look for landmarks and cross their fingers that they’ll get there. 
  • Option 2: Alternatively, that pilot could start with a plan before taking off, asking questions like, “What information is available to me now?” and “What’s the weather like?” With a clear plan in place, during the flight, the pilot is able to make course adjustments, stay on track and arrive safely and timely. The same is true in business.

Some business owners see this as a nice-to-have item rather than a must-have. But we really stress the importance of making time for this. The hours spent setting goals and creating this plan are crucial to the success of your business. Your odds for success are going to skyrocket when you have an idea of what you are doing and a plan of how to get there.

Do I approach this like a personal budget?

There are two parts to a strategic budget. There is a budget that is based on your Profit & Loss statement (aka your P&L) and then there is your cash-based budget. 

You are probably most familiar with personal budgets, which are very cash-based. Businesses, on the other hand, are looking at revenues and expenses and looking at items on a Profit & Loss statement when pulling together a budget. This isn’t to say that cash flow is not important, but you need to consider the revenue and expenses relevant to the business that will allow you to reach your revenue goals. 

After establishing your budget based on the P&L, you will notice that some items aren’t going to show up, like loan payments. This is caused by the definition of an “expense” in accounting and there may be cash needed for items that are not reflected on the Profit & Loss statement. Whether it’s an expense or not, in “accounting-speak”, you still have to account for it. This is why a cash flow budget is also important.  

You can create separate budgets or keep both together, showing a line item at the bottom of your P&L budget that details additional cash going out or coming in unrelated to revenues and expenses. It is up to you and a personal preference. If you have cash flow issues, you will likely want separate budgets, but if you do not have cash flow worries, you may be fine with a combined, higher-level strategic budget.

strategic planning and budgeting

Where do I start?

It depends on how long you have been in business. If you’re just starting out, there will be much more estimating, research and questions. You will likely be estimating things like how many people you’ll need and expenses associated with the revenue goals but it is better to start with an educated guess than to just start blindly. 

Now, if you are an established business, you have historical performance and data on which you can rely. Even if you are changing your business model, you can still use that as a starting point. 

After you establish your revenue goal, think about the expenses that will accompany that goal. What expenses and costs directly or indirectly correlate? If you have that historical data, you can make adjustments based on that. If you don’t have historical data, leverage industry benchmarks to get your best estimate. 

It’s also always a good idea to buffer 5-10% extra for those things you aren’t considering or the smaller things you might not want to create individual line items, like office supplies, team appreciation gifts, etc.

Again, remember that you don’t want to set such high goals that they just frustrate you and your team. It’s not beneficial to set high goals with no backup, based on lofty wishes. You want it to be realistic while also challenging yourself. 


Who should be involved?

You want to surround yourself with experts. Mentors and advisors can help you learn more about your business and extract the information you need to grow your business more efficiently.

If you have a team, you should utilize that resource as well. Share your vision for the business with your team and get feedback. Collaboration is huge and can really only benefit you as a business owner. Your staff knows the day-to-day operations of the business and you should be utilizing this knowledge so you have the best information when creating your budget. 


How often to revisit the strategic budget?

This is something that should be looked at about twice per year. As far as managing the business, you will want to break that down into your annual budget and look at it monthly, weekly, or daily depending on your individual needs. 

You will also want to consider seasonality. As you get further into the year, you can pull a Year to Date (YTD) report because timing is an explanation for many inconsistencies when you’re looking at the budget on a month-to-month basis. You’ll get a fuller, more complete story as the year goes on.



Strategic budgeting is crucial to business success. It’s the high-level planning that is needed to ensure you have set proper goals and have allocated your resources as effectively as possible to meet them.

In this episode, we defined what a strategic budget is, why it is important, how to get started, who should be involved and some great nuggets of advice as you complete your strategic budget. 

Completing this exercise can lead to many great discussions and a deeper understanding of your business. Managing and monitoring your strategic budget is also crucial to make those course corrections as we discussed in the airplane analogy. Monthly evaluation will give you so much insight and give you a chance to correct as needed. This process empowers you as a business owner to make the right decisions because you’ll have the information you need to make the necessary management decisions.

Links mentioned in this episode:    


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