Building trust with your team in the first 100 days
Dive into the essential questions to ask about your forecasting, budgeting and KPIs in your first month as a new finance leader – helping you to build reliable foundations, avoid early blind spots, and set yourself up for confident decision‑making.
Contents
In this insight, part of our guide to your first 100 days as a finance leader at an entrepreneurial SME, we focus on the key information to find out about your forecasting, budgeting and KPIs in your first month. Visit the hub for more on navigating risk, building trust with your team, and shaping your first few months with confidence.
Forecasting and budgeting
Using simple, regular forecasting will help you spot when cash might tighten, when extra investment may be possible, and it will support better day‑to‑day decision‑making. Even a basic forecast can strengthen your liquidity planning by highlighting issues before they become urgent.
Cash flow forecasting will also help you identify where cash can be freed up to support growth, whether that is through improving debtor collection, adjusting stock levels, or better managing payment terms.
“A chairman I once worked with gave me some great advice. He said, ‘You need to know three things: know your numbers, know your numbers, and know your numbers.’ When you walk into the boardroom, you need to know them verbatim. Not just the current month’s results or the quarterly position, but the outlook for the rest of the year and the years ahead. And you must be ready to answer any ‘what if’ questions on the spot.”
Matt Wakerley
CFO, Inspiretec
You will need to make sure you have answers to these four questions:
1. Are budgeting and forecasting assumptions clear and timely?
Having clearly defined assumptions will ensure that all stakeholders understand the basis for the budget or forecast and can make informed decisions. Failure to do so can lead to confusion, misinterpretation, and ineffective decision-making.
2. Do you understand your performance drivers?
The more you understand what drives revenue and costs in your business, the more you can zoom in on driving growth and finding efficiencies.
3. How confident are you on your data quality?
Access to rich data can improve the quality of budgets and forecasts. For example, using
external data about the likely performance of a sector can inform your budget or forecast.
4. Is your software suitable for building a reliable forecast?
Whatever tools your business currently uses, the focus of the forecast produced should be on accuracy, consistency, and keeping the forecast simple enough that it can be updated quickly each week. An overly complicated forecast will become inefficient and ineffectual if it is not understood by the users and takes too long to update.
When pulling together forecasts, instead of aiming for several highly detailed scenarios, start with one clear base case and one sensitised (downside) case, possibly considering a Reverse-Stress Test approach. This approach considers what factors may impact on the business and ultimately lead to the business no longer having the cash to sustain operations.
Ultimately, the key is that forecasting should be easy to maintain; provide information that can be understood and trusted by the owner/CEO; and give early warnings of cash pressure or flag opportunities.
How well is your budget understood and used across the business?
In many entrepreneurial and SME businesses, the budget only gets attention during the annual budgeting exercise. For a budget to be effective, every department needs to understand it and feel part of the process.
Take time early on in the process to involve department heads or leads in setting the budget. Depending on their previous experience, this may be new to them, so taking the time to explain the assumptions behind the budget and agreeing in practice how the numbers translate to their department is key. This involvement builds buy‑in and makes it far more likely that teams will work with the budget, not around it.
It is important that there is an understanding of how small operational changes, new customer wins, delays to production or deliveries, or unexpected costs can quickly derail the original plan if they aren’t communicated.
Regular check‑ins at monthly department head or management meetings can help each department stay on track, help communicate and understand variances, and ultimately remain accountable for delivering their part of the financial plan.
By establishing this cross‑department collaboration early, you can keep your forecast more accurate, reduce surprises, and strengthen confidence in the numbers across the business.
Reviewing your KPIs
As you approach the end of your first 100 days, you’ll have established a comprehensive knowledge of what success looks like for your business and finance function.
This will allow you to confidently update your finance function’s KPIs, ensuring they’re aligned to your current strategy and overall vision. Doing so will put you in a position to critique and improve the reporting and board pack, allowing stakeholders across the business to make informed decisions.
To start to select the right ones for you, you can ask these key questions.
1. Are the current metrics aligned to your strategy and business vision?
Many businesses will have a strategy focused on ‘growth’ - but is that growth of revenue or profit; of customer numbers, or average customer spend; of product range or of repeat orders; of existing geography or new territories? Make sure you pick KPIs that clearly align to what you’re trying to achieve.
2. Are they a mixture of leading and lagging?
Lag indicators track results happening now or in the past, such as revenue. They are easy to measure, but too late to enable corrective action.
Lead indicators track a current activity that will change future performance. Lead indicators are fallible, as it can be tricky to pick ones that will definitely change future performance, but they provide a view of likely future performance and can be an early warning of any corrective action.
3. Are they appropriately spotlighted?
If your key metrics are lost in the noise, they won’t get the attention they need. If your strategy is about profitability but your internal updates always spotlight revenue, people will chase revenue... and your margins may pay the price.
As an incoming finance lead, it is likely that you will make changes to the finance function’s strategy or plans. So, it’s essential to review KPIs to ensure you’re measuring what you value, not valuing what you measure. This will give you proper visibility of your progress towards your goals.
