The Most Common SMB Budgeting Mistakes & How to Speed Up the Budgeting Process - Finance Silos

The Most Common SMB Budgeting Mistakes & How to Speed Up the Budgeting Process

Small businesses tend to run full steam ahead with projects and advancements. Growing revenue, bringing on employees, and seeing hard work pay off are all standards for young and successful companies. But when budgeting season comes, many are left with unrealistic goals, time constraints, and future challenges that they are forced to think about.

Not only is budgeting overwhelming for growing companies with limited resources, but it can also bring out many of the flaws and realities that companies didn’t want to face beforehand. Here are 6 of the most common mistakes made by SMBs during fiscal planning and tips for how to speed up the budgeting process:

1) Time

Every budget has a deadline and no matter how big the team is or what type of budgeting system was chosen, time is always an issue. Deadlines arrive faster than anticipated, and on-the-go changes from the company always cause more work than anticipated. When multiple budgeting contributors are involved, a lot of time ends up being spent on coordinating and compiling, which comes at the expense of actual budgeting time.


Spendesk. One of the best time management solutions out there built specifically for finance teams. The platform enables teams to take control of all spending within company cards, expense reimbursements, invoice management, automated accounting, and most importantly, control over time management.

2) Not Focusing on Data

Smaller and newer companies tend to make this mistake much more than established businesses- but it can happen to anyone. It usually occurs when finance teams focus on hard numbers and known expenses they have for the coming year instead of the complete budget. Not only is it an incomplete picture that doesn’t tell the whole story, but it also focuses on the numbers that have the biggest chance of changing and making the budget and forecast inaccurate.


Using similar companies’ budgeting models and advice, in addition to reviewing last year’s numbers (plus adjustments), will put the organization in the best position to create an accurate yearly forecast.

3) Not Using Automation Solutions

SMBs have many legitimate excuses as to why they don’t update their budgeting solutions: Out of the budget for a small company, the finance team is too small or works part time, they are unaware of the benefits, or no time to implement it, are all reasons why SMBs tend to stick with outdated and inefficient budgeting systems.

Although many of these reasons are legitimate- solutions do cost money and it takes time to implement it- there are a wide variety of FP&A solutions available that can help solve all of the companies’ budgeting issues.

Top FP&A Solutions:

For SMBs of all kinds Datarails is one of the best solutions. With a native Excel interface and a fast implementation time, companies will start seeing ROI very quickly. For large organizations, Vena is the complete financial planning platform with above average workflows.

4) Unrealistic Budgets

When finance teams aren’t fully connected to everything in the company, this can produce budgets that are unrealistic that don’t properly fit each department. Unlike the other common blunders, this scenario is more likely to occur in medium and large companies, or those with a new or inexperienced finance team. Each department has its own needs and goals which will constantly change throughout the year and if budgets don’t reflect that flexibility and evolving needs, the budget will turn out to be extremely off the mark, and harm the company’s finances in the process.

5) Value

Value comes down to efficiency as well, but from the opposite side. Overspending on multiple finance solutions is not only a waste of money, but can also overcomplicate the finance teams’ job performance. The last thing a small company needs is a budget that is too complex for their own good.

6) Overpowering Biases

For young companies with small or new finance teams, it is very hard not to let biases influence financial data. One- person teams always have an agenda, whether it be wanting to please the CEO or just human mistakes and influences that are easier to miss if nobody else audits it. Budgeting is not a fun task, as spelling out all of the costs can be a real momentum stopper to the full steam ahead mentality of young companies.

Part II: Speeding up the Annual Budget

After establishing the 6 most common mistakes that SMBs tend to make, the next important way to improve the budgeting process is by speeding it up. The average time spent on yearly budgeting reports is five full weeks according to a recent survey about the budgeting process. While this was the average time, 11% of respondents said it took over three months to complete it at their companies! In fact, a full 92% of professionals are frustrated with what they go through to create budgets.

These numbers come from a survey of 500 CFOs conducted by Datarails, a leading budgeting and forecasting automation software solution. While companies of all sizes don’t enjoy the budgeting process, small business leaders seem to dislike it the most as oftentimes they don’t have the time, infrastructure, or experience to do it as efficiently as their established counterparts. Reducing the time it takes to complete the budgeting process is critical in making finance employees happier, getting more value from their work, and helping the company be more prepared for the new budget. Here are 5 ways to create a more efficient and less stressful budget.

1) Move to Rolling Forecasts

Instead of intense weeks of work all concentrated at the end of the year, rolling forecasts break down the work (usually monthly) and focus on maintaining the yearly budget with periodic updates. This not only reduces the stress and frustration of the budgeting process, but it also keeps the stakeholders and executives informed all the time, creating more accurate and professional budgets and forecasts as the year goes along.

2) Use Software to Improve Performance

Chances are if the company is ready to move to rolling forecasts then they are more than ready to move to budgeting and planning software solutions. The main reason why 92% of finance professionals are frustrated with their budgeting processes is because of all of the manual work involved.

FP&A software solves exactly this by eliminating the vast majority of manual entries and reviews. By consolidating all of the data from different systems, a finance team can save hundreds of hours of work, and having past data and industry wide statistics available will help teams make the most accurate decisions.

3) Communicate Objectives Early On

The yearly budgeting process becomes chaotic rather quickly. Even with technology and rolling forecasts, which reduce the time and manual work, during the budgeting season, it never seems like there is enough time.

Well in advance of the budgeting deadline, identify everyone who takes part in or reviews the budgeting process and go over goals and objectives. A general 3 step process to follow is:

1) Identifying clear strategic objectives- what the top goals are in a measurable way

2) Identifying clear financial objectives- how the company is going to reach the goals, also in a numerical and measurable way (ex. increase sales by 20%, raise the marketing budget by 15%, etc.)

3) Defining the time it will take to create these objectives (ex. 1 week to create the plan, 3 days for review, 2 weeks for final sign off)

4) Coordinate Meetings

The next step is actually making time for the budgeting process and the meetings that need to be done based on the objectives laid out. This is especially true for meetings with CFOs, executives, and stakeholders. Their time gets filled up quickly, especially around budgeting season, so creating meetings and communicating the importance of the timing to the overall financial picture is key to avoiding bottlenecks at the end of the deadlines.

5) Back up the numbers

Thanks to renewed market volatility and the speed of change that happens in young companies, what once seemed like unthinkable budgeting and forecasting numbers, is now realistic and achievable. However, stakeholders often want more proof than optimistic expectations from enthusiastic executives, and when each minor decision is scrutinized, it can add on many frustrating hours to the budgeting process.

The best solution for this is external benchmarking. This will test your own numbers to see if they are accurate and achievable and also prepare the company for stakeholder meetings in which there are external benchmarks to back up company decisions based on competitors of similar sizes.

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