Budget Adjustments and Financial Strategy

You’ve got 4%. Now what? That’s the salary increase budget you're working with for this fiscal year. Not 5%, not 6% just 4%. And you’re being asked to use it to reward performance, retain top talent, stay market competitive, fix pay inequities, and support internal mobility. Sound familiar? Here’s a strategic way to allocate that 4% budget across four essential priorities: 1. Merit & Performance (~60% of the total 4% budget or 2.4%) Performance still matters, but the days of providing the same salary increase to all employees is behind us especially if you have a pay for performance philosophy. Tight budgets demand sharper differentiation. High performers should see meaningful increases. Use a merit matrix that includes the performance rating to ensure the highest performing talent feels the recognition. 2. Market Adjustments & Pay Equity Corrections (~25% of total 4% budget or 1%) Data-driven decisions and analysis are essential here. Use them to identify jobs or employees that are underpaid relative to market or similarly situated peers, especially in high-demand roles or historically underrepresented groups. 3. Promotions & Reclassifications (~10% of the total 4% budget or 0.4%) Use this to fund promotional increases and grade reclassifications. Promotions shouldn’t cannibalize your merit budget. Make sure they’re meaningful pay increases to recognize significant job responsibility changes. 4. Critical Retention Reserve (~5% of the total 4% budget or 0.2%) Set aside an “emergency reserve” for off-cycle adjustments. These are your just-in-time retention tools for flight risks, counter offers, or mission-critical roles where losing talent would be costly. Use sparingly but strategically. Why it matters: Without intention, budgets get used up quickly and by the end of the fiscal year there is nothing left to spend on critical talent. Allocating your 4% with purpose ensures alignment to business goals and talent needs. It also helps you communicate more clearly with leaders about how the overall budget is aligned to the various reasons for pay changes throughout the year. Build in budget reviews quarterly. Your compensation decisions should be agile especially in today’s labor market. How are you allocating your salary increase budgets this year? #Compensation #TotalRewards #PayEquity #HR #HumanResources #MeritPay #Retention #InternalMobility #CompensationPlanning #WorldatWork #SHRM #CompensationConsultant #FairPay

Most budget debates sound like this: Let’s put $100K into Channel X because last quarter ROI looked solid. Translation: You’re gambling on a single point estimate. I introduce confidence bands, an idea borrowed from finance, to make marketing spend a calculated risk, not roulette. How it works: 1️⃣ Model Return Distribution: ↳ Take the last 12 months of channel ROI. ↳ Build a simple 80 % confidence interval (CI). ↳ GA4 + BigQuery make this a two‑line SQL script. 2️⃣ Assign Risk Tiers: ↳ Channels with narrow CIs = predictable (low risk). ↳ Wide CIs = volatile (high risk). ↳ Create three tiers: Core. Growth. Experimental. 3️⃣ Allocate by Risk Appetite: ↳ Core gets stable funding. ↳ Growth receives incremental budget as long as ROI stays within band. ↳ Experimental gets capped spend, think venture bets with predefined exit rules. Result: Budgets adjust automatically to performance volatility, not politics. One e‑commerce client reallocated 15 % of ad spend from volatile display ads to a stable influencer program and saw a 26 % lift in blended ROAS, no additional dollars required. Executives love it because it turns marketing magic into disciplined portfolio management. Which risk tier currently eats most of your budget? A) Core (predictable) B) Growth (moderate risk) C) Experimental (high risk)

Plan Your Personal Finances Like a CFO: Lessons from FP&A As a CFO, I live and breathe financial planning and analysis (FP&A). One thing I’ve realized is that many of the principles we use in corporate finance can—and should—be applied to personal finances. Here’s how you can bring CFO-level strategy to your financial life. 1️⃣ Think in Scenarios:  In FP&A, we always prepare for multiple scenarios:  - Best Case: Everything goes perfectly—bonus, investments thrive, no unexpected costs.  - Base Case: The most likely outcome—steady income and average expenses.  - Worst Case: Unexpected job loss or large expenses arise. Do the same with your personal finances. Create plans for each scenario. How much can you save or invest in the best case? What’s your safety net in the worst case? 2️⃣ Use the Right Tools:  Gone are the days of manual spreadsheets for advanced corporate planning. Tools like Anaplan, DataRails, Pigment, and Aleph have transformed how CFOs strategize. In personal finance, you can use tools like Mint, Quicken, or YNAB to streamline budgeting, track expenses, and analyze trends. But just as FP&A tools are only as good as the data they process, the same is true for personal finance tools. Consistent updates and realistic assumptions are key. 3️⃣ Measure and Adjust:  Financial planning is not a set-it-and-forget-it activity. Corporate finance teams constantly revisit and adjust forecasts based on new data. Similarly, regularly review your personal budget, update your goals, and pivot when life changes. 4️⃣ Prioritize ROI:  In business, we focus on return on investment (ROI). For personal finances, this could mean:  - Paying off high-interest debt first.  - Investing in education or skills that boost earning potential.  - Allocating savings to high-yield accounts or long-term investments. 5️⃣ Plan for Resilience:  Just as companies build cash reserves for downturns, your emergency fund is your personal financial buffer. Aim for 3-6 months of living expenses—more if you’re in a volatile industry. 🔑 The Takeaway:  Whether you’re managing millions in corporate revenue or your personal budget, the fundamentals remain the same: plan strategically, prepare for multiple outcomes, and leverage the right tools. 💡 This isn't financial advice! A friend encouraged me to share my thoughts on this. More on having the right friends another day.

Last week, I tackled one of the most critical tasks of the year—setting the financial roadmap for every property in 2025. Accounting wrapped up 2024 financials, and then the real work began. I sat down with the President of my property management company to pre-plan every property’s 2025 budget. Each line item was reviewed and approved by the director responsible for that specific number. Sometimes adjustments were made if the director presented a strong business case for change. These budgets were one of the most important things we did. They didn’t just set NOI projections—they aligned incentives across all teams. When a property won, the people driving that success won too. We were thoughtful about every number, but here are five key factors we considered: 1. Stabilization Levels A property undergoing a major CapEx business plan naturally had operating expenses different from that of a property that was fully stabilized. Understanding where each property was in its lifecycle was critical. 2. Last Year’s Performance We analyzed operating expenses to find areas to reduce costs without lowering quality—better systems, consistent employees, or completed CapEx projects often unlocked savings. We also focused on increasing operating income, believing strongly that each year we owned a property, we should deliver more value to residents and owners if leaders were effective in their roles. 3. CapEx Plans to Boost Income or Cut Expenses Sometimes, investing in CapEx reduces operating expenses long-term. Directors often provided business cases for these investments, like how updating common areas could reduce weekly cleaning costs. 4. New Systems and Upgrades Each year, we enhanced our systems with better technology, AI, and efforts to retain top talent. These upgrades impacted profitability and efficiency. 5. Projections and Trends We compared our current performance to lender projections and future proformas to see where we were trending and adjusted accordingly. Even if you owned just a few properties and worked with a third-party PM company, you should have had all your 2025 numbers locked in by now. It wasn’t enough to have a budget—you needed to understand it. No budget went perfectly, so communication on course corrections was key throughout the year. Finally, aligning incentives was crucial. Rewarding your PM company when they delivered on budgets created a winning partnership. Whether you were a GP, LP, owner/operator, owned 5% equity, or 100%—if you did one thing in 2025, it had to be this: understand your budgets. Everything flowed from there.

Good Budgets, Bad Budgets. If you are in corporate, and own a budget, chances are you are about to start the 2026 budgeting cycle. After spending over a decade building them, these have been my lessons to maximize success probabilities (unfortunately s%h£#¢t still happens): 👉 1. Align with your finance partner (if you are lucky to have one) ↳ Your relationship with your finance partner needs to be based on trust and mutual fair challenge, whilst be aligned on the principles for decision making. 👉 2. Define decision-making principles ↳ Will you build a budget that aims to over-promise (at the risk of under-delivering) or do you want to make sure that the budget is met, in which case you will likely need to under-promise. Find the right balance as you don't want to come across as a sand-bagger. 👉 3. Seek early-on guidance from your manager / Board ↳ Avoid getting inside a cave with your team for a month to reach an outcome, with no set course. Understand what people expect from you in 2026. 👉 4. Build your 'do nothing scenario' ↳ Draw accurate projections of your -business as usual- figures and identify how far these are from the expectations set on #3. If your baseline projections get you there, your higher up does not understand your area or is a sand-bagger. Either way, you got lucky. 👉 5. Layer your incremental bets for the year on top of your 'do nothing scenario' ↳ Build appropriate business cases for each of them, with sound sensitivity analysis. 👉 6. Identify risks and mitigations ↳ Ensure that the risks are quantified in € value. Identify potential mitigations and understand what you can do from today to reduce their likelihood of happening to 0%. 👉 7. Identify Opportunities ↳ Opportunities are different from bets. Opportunities are positive events that may happen without your direct intervention (i.e the exit of a competitor). Don't include them in your budget, but be mindful of them. 👉 8. Identify Dependencies ↳ If your budget achievement depends on other departments (e.g tech deliverables), make sure you seek proper hand-shake from your counter-part, and document the agreements. 👉 9. Lock-in the incentives system ↳Understand the budget rewards mechanics for you and your team. Ensure that these are fair and measurable on binary outcomes. Your main goal is, at a minimum, to hit the budget and ensure your team gets rewarded. 👉 10.Monitor progress against budget (once approved) ↳ Identify the main KPIs to monitor, and establish a review cadence. 👉 11. Course correct asap if your budget is deviating ↳ Identify the main KPIs and establish a review cadence. If budget deviates and no corrective action is taken, you are in the wrong place. These have been my lessons. I am yet to discover the extent to which these apply to budgeting in the start-up space. So far #1 has not been applicable 🤣 Do these resonate with you? Anything to add/remove? #budgeting #corporate

𝗗𝗼 𝗬𝗼𝘂 𝗛𝗮𝘃𝗲 𝗔𝗻 𝗜𝗡𝗖𝗢𝗠𝗘 𝗢𝗿 𝗔𝗻 𝗘𝗫𝗣𝗘𝗡𝗗𝗜𝗧𝗨𝗥𝗘 𝗣𝗿𝗼𝗯𝗹𝗲𝗺? ➖ 𝗦𝗵𝗼𝘂𝗹𝗱 𝗬𝗼𝘂 𝗙𝗼𝗰𝘂𝘀 𝗢𝗻 𝗚𝗿𝗼𝘄𝗶𝗻𝗴 𝗬𝗼𝘂𝗿 𝗜𝗻𝗰𝗼𝗺𝗲 𝗼𝗿 𝗖𝘂𝘁𝘁𝗶𝗻𝗴 𝗬𝗼𝘂𝗿 𝗘𝘅𝗽𝗲𝗻𝘀𝗲𝘀? Most financial advisors often preach the gospel of: 👉 Cut this and that expense! 👉 Never show your face in a restaurant. 👉 You should not even smell that Java coffee! Let’s just agree that some go overboard. In the end, you will feel constrained, shackled, and out of any options to enjoy your money. Anyway, life should be enjoyed! But, are these financial advisors wrong? Maybe, maybe not. Probably, you need to stop your reckless spending, or ➖ you might be having a different money problem altogether. One thing most miss out on is looking at the other side of the coin: Your income. There are two types of money problems: 1️⃣ 𝗔𝗻 𝗜𝗻𝗰𝗼𝗺𝗲 𝗣𝗿𝗼𝗯𝗹𝗲𝗺 You don’t earn enough to cover your needs or achieve your goals. The solution? ➖ Focus on increasing your income through better opportunities, side hustles, or skill upgrades. 2️⃣ 𝗔𝗻 𝗘𝘅𝗽𝗲𝗻𝗱𝗶𝘁𝘂𝗿𝗲 𝗣𝗿𝗼𝗯𝗹𝗲𝗺 You earn enough, but your spending habits outpace your income. The solution? ➖ Control your expenses by budgeting, cutting unnecessary costs, and living within your means. 💡 Both problems demand attention, but knowing which one you face is the first step to financial freedom. This debate is much like the diet vs. workout argument in fitness. Which one matters more? 🤔 The answer is simple: 𝗕𝗼𝘁𝗵 — but at different stages of your financial journey. 1️⃣ 𝗖𝘂𝘁 𝗘𝘅𝗽𝗲𝗻𝘀𝗲𝘀 𝗙𝗶𝗿𝘀𝘁 (Short-Term Defense) 🛡️ When you are starting out or trying to regain control of your finances, cutting unnecessary expenses is your quickest win. ✔️ It helps you save more. ✔️ Frees up cash for emergencies or debt repayment. ✔️ Builds financial discipline. Think of it as tightening the leaks in your financial bucket. After all, it’s pointless to earn more if your money is just draining out. 2️⃣ 𝗚𝗿𝗼𝘄 𝗬𝗼𝘂𝗿 𝗜𝗻𝗰𝗼𝗺𝗲 (Long-Term Offense) ⚔️ Once your expenses are in check, the next step is increasing your income: ✔️ Upskilling or starting a side hustle. ✔️ Building passive income streams. ✔️ Leveraging investments to grow wealth. Growing your income allows you to aim higher—achieving financial goals faster, creating a buffer for luxuries, and building wealth that lasts. ➖ "𝗬𝗼𝘂 𝗻𝗲𝗲𝗱 𝘁𝗼 𝗯𝗲 𝗮𝗴𝗴𝗿𝗲𝘀𝘀𝗶𝘃𝗲 𝘁𝗼 𝗺𝗮𝗸𝗲 𝗺𝗼𝗻𝗲𝘆 𝗮𝗻𝗱 𝗱𝗲𝗳𝗲𝗻𝘀𝗶𝘃𝗲 𝘁𝗼 𝗸𝗲𝗲𝗽 𝗶𝘁." - Ray Dalio 💡 The Key? - Balance. ➖ Focus on expense management for stability while pushing aggressively to grow your income. Over time, your income potential will outweigh the benefits of cutting expenses ➖ but the discipline of both ensures you thrive in any financial season. 👉 𝗦𝗼, 𝗪𝗵𝗲𝗿𝗲 𝗔𝗿𝗲 𝗬𝗼𝘂 𝗙𝗼𝗰𝘂𝘀𝗶𝗻𝗴 𝗧𝗼𝗱𝗮𝘆? 💰The Example Below Is In Kenya Shillings➖ $1=Kshs 130

Here's how to prepare a top-down budget, develop departmental budgets, and align them into a final version. 🔹 Step 1: Build the Top-Down Budget This is the high-level financial blueprint that sets overall targets based on company strategy. ✅ Set Revenue Targets – Use historical trends, market forecasts, and sales projections. ✅ Define Profitability Goals – Establish EBITDA, net income, or margin targets. ✅ Allocate Cost Budgets – Assign spending limits for OPEX, CAPEX, and COGS based on efficiency benchmarks. ✅ Incorporate Strategic Initiatives – Account for expansion plans, new hires, or tech investments. 👉 Outcome: A broad financial framework that guides all departments. 🔹 Step 2: Develop Departmental Budgets Each function refines its budget within the top-down framework, ensuring alignment with company goals. 📌 Sales & Marketing – Adjust ad spend, sales commissions, and lead generation costs. 📌 Operations & Supply Chain – Plan production costs, logistics, and inventory management. 📌 HR & Payroll – Account for headcount changes, training, and benefits. 📌 IT & Infrastructure – Budget for software, cybersecurity, and digital transformation. 📌 Finance & Admin – Adjust for taxes, compliance, and office expenses. 👉 Outcome: Realistic departmental budgets that reflect operational needs and constraints. 🔹 Step 3: Align & Close Gaps Now, it’s time to bring everything together and refine the budget. 🔍 Identify Discrepancies – Compare department budgets with top-down targets. Are we over budget? 🔄 Negotiate Adjustments – Collaborate with teams to find cost efficiencies or revenue improvements. 📉 Scenario Analysis – Run best/worst-case scenarios to stress-test assumptions. 📊 Final Adjustments – Ensure spending aligns with strategic priorities before approval. 👉 Outcome: A final, balanced budget that supports company objectives while remaining realistic and achievable. 🔹 Key Takeaways ✅ Start with strategy – Set high-level targets first. ✅ Engage departments – Their input ensures accuracy and feasibility. ✅ Close the gaps – Align financial goals with operational reality. 🔗 How do you approach budgeting in your organisation? Drop your insights below! 👇 If you want to master the budgeting process, join our FP&A Operating System course. https://lnkd.in/dsZsQGEn   Or become a member of our Corporate Finance platform and enjoy all courses [11 hours of video, 600 pages of tutorials, 70+ Excel models].  https://lnkd.in/dsYj22ks

Scaling without financial alignment is growth in reverse. Here's how to optimize strategy, accelerate growth, and hit goals. As businesses scale, aligning financial strategy with short-term objectives and long-term vision is critical for sustainable growth. I've worked with many companies that was growing fast but struggling to keep financial goals in sync with their rapid pace. Here's how I’ve helped them recalibrate and accelerate growth:    1. Re-assessing the Budgeting Process: - We dive into their current budget - Identify inefficiencies, misallocated resources, and cash flow bottlenecks. By focusing on forecasting and creating more flexible budgets, we made sure the company could stay agile, even during rapid change.    2. Aligning Department Projects with ROI: Instead of treating each department's initiatives in isolation, we developed a framework that measured and tracked Return on Investment (ROI) for every key project. - Each department was aligned to strategic financial goals. - Projects that didn’t generate strong returns were optimized or postponed. - ROI prioritization became the backbone of decision-making.   3. Setting Clear KPIs and Milestones: - We defined key financial metrics for both short-term and long-term. - This allowed departments to align their actions with tangible outcomes. Knowing exactly how their work contributed to the broader financial goals, employees were on board, engaged, and proactive. Results: Cash Flow Improved by 25% in just 3 months Project ROI Increased by 30%, with higher returns on departmental investments Long-Term Financial Strategy now aligned with short-term operational goals The Takeaway: Financial alignment isn’t just about controlling costs—it’s about ensuring that every department, every project, and every dollar is pushing your business toward your ultimate goal. When you align your budget with ROI-focused projects, you achieve growth faster and smarter. If you need help developing and executing a financial strategy DM me Please share your thoughts in the comments Follow me, Beverly Davis for more finance insights  #FinanceStrategy #BusinessGrowth #ROI #Budgeting #FinancialGoals #StrategicPlanning #Founder #CEO

I’ve experienced the dot-com crash, recessions, and supply chain meltdowns. But widespread tariffs? That’s a first for me. One thing hasn’t changed,  You can’t control the macro. What you can control is how fast you understand the impact, And how quickly you adjust. Take a breath.  Then run this 4-point check on your investment strategy: 1️⃣ Sync with Finance Pressure on COGS changes your budget reality-get aligned before cuts happen without you. → How do higher costs affect our profitability targets and growth constraints? 2️⃣ Know your product-level ROI Some SKUs will get hit harder—don’t let blended metrics hide the problem. → Which products are now margin-constrained, and can we pivot spending? 3️⃣ Re-price your CAC thresholds Your cost to acquire has to flex with your margin structure. → What can we afford to pay to acquire a customer and still hit payback or LTV targets? 4️⃣ Design new plays Old promotions won’t work if the numbers don’t hold. → What bundles, promos, or new channels can we test now-so we’re not scrambling later? You don’t need perfect foresight. You need fast iteration. If your data isn’t structured to answer these questions on the spot,  you’re not ready. YTD profitability can tank fast.   Once it does, clawing back for the rest of the year is an uphill battle. And if you’re not ready, your budget will be the first on the chopping block. The companies that outperform in chaos don’t guess better - they operate better. They know their numbers. They adapt without panic. And they move before someone else asks. * * * I talk about the real mechanics of growth, data, and execution. If that’s what you care about, let’s connect.

𝐈𝐬 𝐲𝐨𝐮𝐫 𝐛𝐮𝐝𝐠𝐞𝐭 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐞𝐝 𝐟𝐨𝐫 𝐠𝐫𝐨𝐰𝐭𝐡❓ I’ve evaluated hundreds of startups and found one thing in common among those who struggle to secure funding: their budgets don’t support growth. As a founder, your budget isn’t just a financial tool but the backbone of your growth strategy. Here are 8 questions to ensure it’s built for scalability and success: 1/ Is there room for strategic opportunities? ↳ Growth often demands agility. Ensure your budget includes a contingency fund for unexpected, high-impact opportunities. 2/ Are you investing in top talent? ↳ Scaling requires the right people in the right roles. A forward-thinking budget prioritizes hiring, retention, and upskilling. 3/ Does innovation have a seat at the table? ↳ Allocate funds for testing and experimentation to stay competitive in product development, technology, or market expansion. 4/ Are you leveraging smart financing? ↳ Growth often requires capital. Assess whether your debt is a strategic enabler or an obstacle to scalability. 5/ Is your cost structure scalable? ↳ Fixed costs can limit growth. Focus on flexible, variable costs that can adjust as your business scales. 6/ Do you have actionable financial insights? ↳ Decisions grounded in data are critical. Invest in tools that offer real-time insights to optimize spending and predict growth trends. 7/ Are you planning for the long term? ↳ Short-term budgets are reactive. A growth-oriented budget anticipates needs and risks over the next 3–5 years. 8/ Are you monitoring ROI relentlessly? ↳ Every expense should support growth. Set clear KPIs and measure returns on each dollar spent. 💼 Key insight for founders: - A growth-ready budget is dynamic and requires regular alignment with your vision and market conditions. What’s your top budget priority for driving growth in the coming year? ------------------------------ 📢 Stay ahead in fundraising, entrepreneurship, and VC strategies!  Follow Leon Eisen, PhD for actionable insights, tips, and expert guidance.