How to use budgets to focus your company

🛠 THE CFO EFFECT PLAYBOOK (Part III)

How to use budgeting to force prioritization (Step-by-Step)

Step 1: Anchor on strategy

Before you look at numbers, ask:

• What are the company’s 3–5 strategic goals this year?

• What bets are we making to win?

This creates a north star for prioritization.

If a budget request doesn’t clearly tie to one of these goals → it’s noise.

Step 2: Gather initiatives, not Wishlist

Instead of asking departments, “What’s your budget request?”, ask them:

• What initiatives are you proposing to support strategy?

• What’s the expected impact of each?

• What resources (money, people, time) are required?

This reframes the conversation from “how much do you want?” to “what will this initiative achieve?”

 Step 3: Score & rank initiatives

Use a simple prioritization framework. One I like is ICE:

• Impact: How much does it move the needle on revenue, margin, valuation, or strategic positioning?

• Confidence: How likely are we to execute successfully? Do we have the talent and bandwidth?

• Ease: How complex is this? How long before results show up?

Give each initiative a score and rank them.

 Step 4: Allocate resources to the top initiatives

• Fund the highest-priority bets fully.

• Delay or kill low-scoring ones.

• Be ruthless about opportunity cost.

Remember: every “yes” is a hundred “no’s.”

Step 5: Communicate the trade-offs

This is the step most companies skip.

Once the budget is set, leadership needs to clearly communicate:

• What got funded (and why).

• What didn’t get funded (and why not).

• What the company is focusing on this year.

Transparency builds trust.

It also stops the endless lobbying and second-guessing.

Practical Example

Let’s say your company has three big strategic goals this year:

1. Enter a new market.

2. Improve gross margin.

3. Strengthen customer retention.

Departments propose the following initiatives:

• Sales: Hire 10 new reps to attack the new market.

• Marketing: $2M campaign to build brand awareness.

• Ops: New automation system to cut costs.

• Product: Launch loyalty features in the app.

• HR: Expand benefits to improve retention.

Now apply prioritization:

• Sales hiring → directly tied to new market entry. High impact, high confidence → fund.

• Ops automation → supports gross margin improvement. Medium ease, high impact → fund.

• Product loyalty → supports retention. Medium impact, medium confidence → delay.

• Marketing campaign → big spend, unclear direct tie to goals → delay.

• HR benefits → nice to have, but low direct impact → kill this year.

The budget makes strategy visible.

It says: “Here’s what matters this year. Everything else waits.”

Dealing with pushback

Prioritization creates friction. Teams will argue:

• “But we need this to succeed.”

• “Last year we got X, why not this year?”

Here’s how to handle it:

• Anchor every decision back to strategy.

• Show the scoring process (Impact, Confidence, and Ease).

• Be transparent about trade-offs.

When people see that decisions are based on logic, not politics, they’re more likely to accept them.

Even if they don’t like them.

Practical tips to make it actionable

1. Run “Budget Battles.”

   • Put initiatives side by side.

   • Force departments to defend impact, confidence, and ease.

   • Make trade-offs visible.

2. Create a kill list.

   • Every year, identify at least 2–3 projects to stop funding.

   • This frees up capital and signals focus.

3. Fund fully or not at all.

   • Don’t spread dollars thin across too many initiatives.

   • Half-funded projects rarely deliver.

4. Use a One-Page summary.

   • After prioritization, publish a one-pager:

     • Strategic goals.

     • Funded initiatives.

     • Deferred initiatives.

   • Share it with the entire org.

Here’s the pattern I’ve seen from my experience:

• Average companies spread resources thin to avoid conflict.

• Great companies make tough calls, double down on fewer bets, and communicate clearly.

In fact, I’d argue the main value of budgeting isn’t the accuracy of the numbers.

It’s the clarity of priorities.

Numbers will change.

But priorities, once set, give the whole company direction.

Takeaway for you

As you go into budget season, don’t treat budgeting as a department’s Wishlist consolidation.

Treat it as your focus mechanism.

Ask:

• What are the 3–5 things that truly matter this year?

• Which initiatives directly support them?

• What gets fully funded, and what dies?

If you do that, your budget becomes more than a spreadsheet.
It becomes a strategic tool that sharpens the company’s focus and ensures resources go where they create the most impact.

Next Week’s Episode:

🔜 The Step-by-Step Playbook to Forecast, Resource, and Run the Engine

Next we will discuss how the best finance leaders build engines through budgeting.

Most teams treat budgeting like a wishlist.
Great CFOs treat it like oxygen control: what powers the core, and what starves.

Next Sunday, I’ll take you inside the “Budgeting the Core” play.

The core is the quiet system that pays the bills, funds your bets, and keeps the company breathing.

Be ready because it will be highly technical and packed with actionable insights.

We will cover:

✅ The one decision that instantly exposes which “must-haves” aren’t
✅ How elite CFOs turn driver trees into focus
✅ The simple guardrail that stops pretty P&Ls from becoming cash traps

Because top finance leaders sharpen priorities.

If you’re ready to turn budget season into a clarity machine, and make your core unshakeable, you can’t afford to miss this episode.

Disclaimer:
This content is for informational and educational purposes only and should not be construed as financial, legal, or professional advice. Always consult with a qualified advisor before making any business or financial decisions. The author and publisher disclaim any liability for actions taken based on this content.

Talk soon,