Manager School Series - Year-End Leadership Mastery
- This Week: Budget Season Survival Guide - Financial planning for managers
- Week 2: The Manager’s Holiday Party Playbook - Team building during celebrations
- Week 3: Setting Your Team Up for Q1 Success - Strategic planning
- Week 4: Managing During the Holiday Slowdown - Practical tips for December productivity
- Week 5: 2026 Vision: Trends Every Manager Should Watch - Forward-looking insights
December brings many challenges, but none more dreaded by managers than budget season. Whether you’re planning for next year or defending this year’s spending, financial planning is a core management skill that no one teaches you in “leadership” training.
Do you know how much money it takes to make a successful delivery? Do you have enough funding to hire the team you need? Do you have enough budget to sustain the team for the time you need for the delivery? What about funds for follow-up work for the team?
These questions from the Finance Pillar of management are crucial for your success. Yet most managers stumble through budget season without a clear framework.
Understanding Your Financial Landscape
Before you can plan a budget, you need to understand how your organization is funded and how money flows through the system.
How is Your Organization Funded?
Are different teams funded via different clients? Some organizations (specifically contracting firms) must keep detailed accounting of the time specific people spend on their projects. Typically, this relates to how the company bills its clients.
In those cases, keep all people billing to the same contract/client on the same team. Why?
- It’s easier to see spending for that client
- It makes it easier to limit the blast damage if that client leaves
The Budget Planning Framework
Here’s a step-by-step approach to budget planning that works:
Step 1: Map Your Current State
- What’s your current headcount and their fully loaded costs?
- What are your non-personnel expenses (tools, travel, training)?
- What revenue or value does your team generate?
- What’s your cost per delivery or outcome? Add up the cost of your team + other.
Step 2: Plan Your Future State
- What headcount do you need to achieve next year’s goals?
- What new tools or capabilities will you need?
- Are there one-time investments required?
- What’s your growth trajectory?
Step 3: Build Your Business Case
- Connect every expense to a business outcome
- Show ROI where possible
- Prepare for the “what if we cut 10%” conversation
- Have data to support your requests
Understanding Headcount vs. Budget
There’s an important distinction many new managers miss:
Headcount is the number of people you have on staff or plan to hire. Budget is the money available to pay for those people and their expenses. Some firms give you a dollar amount and say “hire what you can afford.” Others give you specific headcount numbers. Understanding which model your company uses is crucial for planning.
Contractor vs. FTE Financial Planning
The financial implications of contractors vs. full-time employees are significant:
When to Use Contractors Financially:
- When you’re not sure about follow-on funding
- For extremely specialized skills that you don’t have in-house
- When you need to scale quickly without long-term commitments
- During uncertain business conditions
The Hidden Costs:
Don’t make the mistake of thinking a contractor and FTE are interchangeable financially. Contractors need spin-up time, knowledge transfer, and eventually spin-down time. The amount depends on the complexity of the job.
Preparing for Budget Conversations
When presenting your budget, remember your audience cares about different things:
Finance Teams Want:
- Detailed breakdowns and justifications
- Historical spending patterns
- Risk assessment and mitigation plans
- Clear ROI calculations
Executive Leadership Wants:
- Strategic alignment with business goals
- Competitive advantages gained
- Risk reduction achieved
- Simple, clear recommendations
The Budget Defense Playbook
At some point in your career, you’ll have to deal with budget cuts. It’s easier to get a better outcome for your business (and you) if you walk in with a plan.
When budget cuts are proposed, have this ready:
- Priority ranking of your initiatives (what gets cut first)
- Impact analysis of each potential cut
- Alternative solutions that achieve similar outcomes for less money
- Risk assessment of operating with reduced budget
Budget Season Action Items
This week, make sure you can answer these questions:
- What does each team member cost (salary + benefits + overhead)?
- What value does your team create for the business? By value, try extremely hard to get that into a statement like “We generate $X million dollars because we do Y for the firm.” It’s best to think through this before you need it and ask your leadership if it helps clarify that statement.
- Where are you spending money that doesn’t directly support your goals?
- What investments would have the highest ROI?
- How would a 10% budget cut affect your deliverables?
Next Week Preview:
The holidays are coming, which means office parties, team celebrations, and the delicate balance of building culture while maintaining professionalism.
See you next week!
-Frank
