Budgeting: An Important Part of Running a Business

Marla Noel explains why budgeting is not just a finance exercise but a core business discipline for cash flow, decision-making, and growth planning. She walks through how to build a practical budget from real historical data, how to account for revenue, expenses, salaries, and cost of sales, and why the process should start early enough for leadership review before the new year. In this solo episode, Marla focuses on one main topic: building a realistic annual budget that helps a business avoid cash shortfalls and stay aligned with its goals. The guidance is especially useful for owners and leaders who need a budget that is detailed enough to use, but flexible enough to reflect real-world changes.

Key topics

• Marla explains why budgeting should begin in September and be finished in November so leadership can review it before January.
• She frames budgeting as a tool for cash control, target-setting, and decision-making, not just a spreadsheet task.
• Revenue should be budgeted line by line based on business type, whether services billed by volume or products sold by unit.
• She stresses using last year’s numbers as a starting point but not copying totals without understanding what drove them.
• Any projected revenue increase should have a reason, such as price increases, new salespeople, new services, or a new division.
• Expenses should be estimated using a 12-month view, with unusual one-time costs excluded unless they are expected to recur.
• Cost of sales belongs below revenue and should include direct costs tied to production or delivery.
• She warns that revenue growth can strain cash flow if customer payments lag behind payroll and other obligations.
• Marla recommends building cash reserves equal to six months of administrative expenses as protection against disruption.
• Budget assumptions should be documented in the spreadsheet so anyone reviewing it can understand the reasoning behind the numbers.
• She says the finished budget should be reviewed by the CEO and, if applicable, the board before the fiscal year begins.

Timestamps

(0:28) Why budgeting matters and what this episode covers
(1:27) Cash flow, targets, and the danger of running out of money
(2:19) Why budgets are estimates, not perfect predictions
(3:20) Starting with revenue by business type
(4:17) Justifying revenue growth with real strategy
(5:11) Using prior-year data to estimate expenses
(6:06) Handling unusual expenses and separate salary planning
(7:30) How seasonality affects revenue and cash flow
(8:25) Accounting for inflation and rising business costs
(8:54) Linking aggressive growth goals to staffing needs
(9:53) Why Marla recommends six months of cash reserves
(10:53) Calculating cost of sales for product businesses
(11:50) Separating direct costs from administrative expenses
(14:18) Comparing against prior-year numbers and reviewing the draft
(15:43) Aligning the budget with profitability and business goals
(16:42) Capturing assumptions inside the spreadsheet
(17:35) Sharing budgeting responsibility with department heads

Action Items

• Start the budgeting process early, ideally in September.
• Use prior-year financials as the foundation for next year’s budget.
• Write down the assumptions behind every major revenue and expense estimate.
• Separate salary planning from the rest of the budget if that makes the process clearer.
• Check whether projected growth is supported by staffing, pricing, and operations.
• Review the draft budget with leadership before the fiscal year starts.
• Build or protect cash reserves, especially for administrative expenses.

Patricia and Marla talk about Patricia's firm and how she created a business she enjoys with the people she appreciates and the clients she cares about.

Years ago, Patricia decided to buck the system and go with what feels right when creating a business that she enjoys. Part time, remote, clients via zoom and a heartfelt caring for both employees and clients.

• She works the way she wants to work and wants to help people understand why they must plan in advance for the inevitable, start young and prepare and decide how you want your world and your estate to look like.
• We delve into the importance of hiring a coach and working with a business group like WPO, Women Presidents Organization to work on the business versus in the business.
• Patricia has a few business books she recommends, and podcasts are her time to enjoy.

KPIs are supposed to improve performance—

Marla Noel breaks down how to build KPIs that actually motivate people, align with strategy, and help you grow without turning measurement into a morale problem.

For business owners and department leaders, this episode cuts through the KPI noise and gets practical fast. Marla shares why the first number is often just an estimate, why employee buy-in matters more than perfection, and how one client went from aiming for 45 outreach touches to landing on a realistic 28 after the team defined what “outreach” actually meant. You’ll discover:

• How to introduce KPIs without triggering fear or resistance
• Why leading indicators often matter more than lagging results
• How to choose the right KPI count so everything important does not become nothing important
• What it means for KPIs to align from the company level down to managers and employees
• How to build a follow-up system so KPIs do not become “the flavor of the month”

Marla also shares practical examples for sales, client outreach, blog posts, contracts, gross margin, and net profit, plus the difference between stretch goals and numbers that are simply unrealistic.

If you’ve ever struggled to get your team to care about metrics, or worried that your KPIs are measuring the wrong things, this conversation gives you a clear path forward. She also points you to two helpful resources: Measure What Matters by John Doerr and Drama Free Management, by Marla Noel and Pete Fowler, which includes a KPI template you can use with your staff.

The big takeaway is simple: KPIs should drive focus, accountability, and growth—not confusion, fear, or box-checking. Perfect for founders, managers, and leaders who want measurement systems that people will actually use and trust.

Timestamps

00:28 – Why KPIs matter for business owners and managers
01:05 – How KPIs can scare employees if handled poorly
01:35 – Using a trusted business coach to introduce KPIs
02:05 – Starting with estimates when the right number is unknown
03:05 – Examples of financial and activity-based KPIs
03:39 – Defining what counts as outreach before setting the target
04:39 – Why 45 was too high and 28 became the stretch goal
05:39 – Leading KPIs vs. lagging KPIs
06:39 – Why leading indicators are more actionable
07:32 – Lagging metrics like sales, billable hours, and signed contracts
08:02 – Why three to five KPIs is usually enough
08:32 – Aligning KPIs with business strategy
09:32 – Why follow-up keeps KPIs from becoming a fad
10:14 – Monthly reporting, spreadsheets, and KPI software
11:14 – Reviewing KPIs with executives and employees
11:44 – Books Marla recommends for KPI planning
12:39 – Marla’s recap: keep KPIs useful, focused, and motivating