Your Complete Guide to Annual Planning (Part 1): The Kickoff

Our five part series on Annual Budgeting for Tech Startups

Aug 17, 2023

∙ Paid

Are you a founder who’s been asked by your board to pull together something called an “annual operating plan”?

Are you attempting to turn that theoretical hockey stick graph from your Series A pitch deck into a real plan of action?

Did you recently realize that “Budget” is not just a rental car company?

If you answered “yes” to any of these questions, you’re in the right place. Today we’ll cover what the annual planning process is, why it’s important, and some best practices for getting it (close) to right.

As annual planning season approaches for those of us on December year end schedules (T’s & P’s to all the try-hards on, like, February year ends, or whatever) Mostly metrics is launching a FIVE part series on the budgeting process.

Part I: The Kickoff (today’s post)

Who’s involved in annual planning?
Bottoms up vs tops Down forecasting
Guiding questions and guardrails

Part II: Building sales capacity

Modeling out rep ramp time
Pod ratios: Business Development Reps, System Engineers, and Sales Managers
Quota deployment and over assignment (shhhh!)

Part III: Designing a marketing budget

Modeling Pipeline Coverage and understanding the marketing funnel
Working with your CMO to develop a “GL pick list”
Programs vs People split

Part IV: Costing out the P&L

Modeling headcount as an input, and a driver
Forecasting non-people costs
Developing a mutually exclusive list of expense types

Part V: Bringing it all together

Modeling P&L by cost type vs P&L by department
Checking your outputs: CAC Payback, ARR per head, cash runway
Five year plan tie in

The guide comes from thousands of hours on the job, designing annual plans for multi billion dollar tech companies. And it’s strongly influenced by the hundreds of hours spent with my entrepreneur friends who are building their first budgets.

Mostly metrics