Stop Planning Your Business with MapQuest

E#49: In this solo episode, Scott breaks down how small business owners should rethink budgeting and planning. Traditional annual budgets still have value, but they quickly become outdated as conditions change. Instead, Scott explains the power of rolling forecasts and continuous planning—regularly updating assumptions, reviewing performance, and adjusting direction based on real data. He walks through common mistakes businesses make, like treating budgets as a once-a-year exercise, planning only for the “middle,” and ignoring owner bias, and shares how scenario planning and clear metrics can help owners stay between the curves without overcomplicating the process. The core message is simple: budgeting isn’t about being right—it’s about being prepared, learning faster, and making better decisions so your business isn’t running on hope-based finance.

Book Recommendation: This is Beyond Budgeting by Bjarte Bogsnes
Find out more about Scott Geller: 
www.capitisadvisors.com
www.pathpredict.com
https://www.linkedin.com/in/scott-geller-cfo/ 

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Transcript

Welcome And Today’s Focus

Scott 0:00

But I found if you don't quantify what that means and how you get there, if you don't put those metrics around it, you're guessing and you don't know how you're doing. Hello, and welcome to Budget Your Business, the podcast for small business owners who want to financially plan for every aspect of their business. I'm your host, Scott Geller. Today, I decided to provide my own perspective around business planning for small businesses. Every business needs several components in place for success. There's operations, cash, profitability, capital, HR, sales, IT, people. I can go on and on. How do you pull those components together, prepare for the future, and set yourself up for success? Budgeting and planning. And that's the topic that we're going to talk about today. I'm going to provide a little breakdown of how I think about business planning and how I work with small clients to accomplish planning. Who remembers MapQuest? You had to go somewhere, you could put in the address of where you're going, the address of where you want to start it, and it would give you the dirt or the route, you would print it out, and you would take that with you. It was like completely new to everybody. It was great. Traditional budgeting is put printing out or printing out your plan for the year, January to December, and that's what you're gonna do. You're looking at revenue and expenses. You do it once a year, and then you're set. Well, it's okay, there's nothing wrong with that, but I don't think anybody really prints out MapQuest anymore. They've expanded, they've improved on that. They went from MapQuest to Google Maps, where you could put in a location, and Google Maps would give you a couple different options. That is budgeting, that is looking at a lot of the different factors within your business and how they interplay beyond just the revenue and the expenses. So you have a couple different paths that you can look at, and maybe it's still one time here, but you're looking at those paths to determine what is the best route for my business. You're looking at debt, you're looking at cash flow, you're looking at funding options, distributions, timing, you're putting together goals, you're thinking about what are those new initiatives in my business, you're thinking about trade-offs in your business. What is your strategic focus for the business? Maybe you're even thinking about that multi-year direction and the North Star. Maybe you're even talking through this and thinking about it with your entire business. Because if you're doing that, then you're thinking about what different options do I have? How many different ways can I get to the grocery store? I can take the interstate, I can take side roads, I can take the interstate to a certain point and hop off because I think maybe traffic's going to be a little bit rough in that time of day. The early Google Maps, they would give you a couple different options. Really, today, how do people use it? They're in their cars, they have a live interactive screen in their car, or maybe they're using their phone. And Google Maps, or maybe Waze, is giving you live traffic updates. Maybe you're on the interstate for a mile and a half, and all of a sudden it pops up and says, Oh, we found out a better path for you. Or consider this: it's the same time but fewer miles, and it adjusts in real time. That is the future. That is where small business needs to be planning. That's where small businesses need to eventually or try to get to. And that is what's called rolling forecasts, is one way of describing it. Another is beyond budgeting. That's a term that was created several years ago, and it's kind of it's a growing wave of looking at finance, not just as I'm printing out the map quest in December, and I've got January through December, and that's where I'm going to go. It's consistently looking at your plan, consistently updating your plan, and thinking about what do the next 12 months look like? Because if you're in May and you're only looking at April, the other advantage is if you if you create one plan for the calendar year, things change, right? Everything changes. So as you go through the year, that plan becomes not as valuable all the way to completely obsolete. You may you may plan on on growing your business 5%, and then part of the way through the year, maybe a competitor comes to you and says, Look, I'm thinking about selling. Well, that budget, your budget is out of out of out of date, right? There's no you probably weren't thinking about buying your closest competitor. Well, now you've got to reforecast, re-budget, and replan for your business. So it's that highly recommend that 12-month rolling forecast. Always looking forward, always updating your assumptions. This might be monthly, it might be quarterly, whatever works for you. So you're shifting from do we hit a number we set back in December to what do we learn over the last couple of months? And how can we roll that into the business to continue improving our forecasting and our planning? Another good habit to put into place is think about that monthly or quarterly as toll gates. Think about checkpoints and not necessarily fixed endpoints. So think about maybe every quarter, I need to take another look at this. In that way, your decisions are they're triggered by data and not necessarily emotion. Your planning becomes lighter, becomes faster, becomes more strategic in thinking about your business and planning for the future. Look, volatility isn't the problem. Being unprepared is. Businesses stop at MapQuest and they wonder why they're surprised constantly. So, what do a lot of businesses get wrong about budgets? Let's talk through a couple mistakes that I see with budgets or with businesses budgeting. One mistake is treating budgets as a calendar event. Annual budget budgets are artifacts of tax cycles and old management theory. Reality doesn't reset on January 1st. The budget isn't wrong. The process is outdated. That map quest that you printed off might not be working anymore when you hit backup. Or you're thinking about, oh, you know what? Actually, I need to stop at this, I need to play put a stop on my path. In Google Maps, Waze, you put that in there. In your business, think about it the same way. Another mistake is confusing planning with control. Owners want certainty. Budgets do not and will not create that certainty. They create optional paths. Look, life is 10% what happens to you and 90% of how you react. A rigid budget removes your ability to react. Mistake number three is planning for the middle only. Businesses typically will plan for the straight road, not the edges. If you think about the edges, you think about the curbs. One end is might be massive growth buying a competitor. The other might be scaling back your business, scaling back your workforce. Think about what those curves are. Think about where your business could go on the high and the end, because that's going to help you understand what the stress points are for your business. Because growth can break a business just as fast as a decline can. And if you're not thinking about massive growth, then you're not thinking about those toll gates or those triggers that you're going to hit that are early indicators where you might be getting close to those curves. COVID is an excellent example of this. Nobody had COVID planned, and I mean it's hard to plan for COVID. But think about those massive events. What would happen if 30% of your business dropped out of sight, went away immediately for whatever reason? Doesn't it sometimes doesn't even matter the reason? But think about what you would do. How would you react? It gives you foresight into putting together a plan than just reacting. All right, mistake number four is knowing, admitting, and hedging against your own bias. Every business owner has a bias. Know what your tendency is. Are you risky or more conservative? The Bruce Lee quote that I really like is mistakes are always forgivable if one has a courage to admit them. Admit to yourself, know what your bias is. Because being conservative or risky is not a mistake. But not admitting it to yourself is a mistake. And that's what's going to get yourself in trouble if you don't admit it. You have to think about hedging yourself. On the risky side, think about how much risk are you truly able to are you truly willing to take and compare that to how close you are getting to the all-in bet. On the conservative side, quantify what you're willing to give up. If you're super conservative with your business, that's okay. There might be a new service, there might be a new business line. There might be that competitor that you're willing to buy. And if you're conservative, maybe you don't want to go down those paths. And that is okay. But quantify what you're willing to give up. Because if you just operate within the silo and ignoring your own tendencies, then that's going to damage your business. It's going to put more risk on your business, even if you're a conservative business owner. If you're a riskier business owner, make sure you understand what that risk that you're you admit or you realize how close it's getting you to that all in bet. The typical CFO's question is why not? The typical CFO's question is what if? Back in episode 26, we had on Patrick Butler, and he talked about how much time he spent in his business on scenario planning. And he even admitted, I probably spent too much time, too much time trying to think about every possible outcome for my business. That's probably not the best use of your time. It's probably not the best use of use of your financial resources either. Because scenario planning can be a time suck. It can absolutely take up too much of your time. That's where you can go back to the road, right? The curbs in the road. Are you getting close? Which can you set what those curves are? And then can you stay within the lane, right? Can you stay in the middle? You start drifting a little bit of the other one way or the other, and you see how close you're getting to one of those two different curves. So, how do you use scenario planning properly? Well, first, know what your assumptions in their business are, know what your business drivers are, and then have a tool that helps you move those levers. Identify what some early warning signals are, identify some trigger metrics. Look, all models are wrong, but some are useful. Find yourself a useful model that incorporates your primary, your key business drivers so that you can flex those up and down and you can see what that does to your business. But going back, don't overdo it. Don't spend all your time scenario planning for every possible outcome. Just keep it between the curves. This approach makes planning easier. Preparedness reduces fear, decisions become calmer, and you stop overreacting to noise. We started with talking about the map quest and just having revenue and expenses in it. Hopefully, you're starting there. Some think about what their business can do, but don't necessarily put numbers around the plant. And that is truly key. It's truly critical. Because you've got, if you don't put numbers around it, then you're going to lose focus. You're going to lose sight of where you are versus where you're where you think or want to be. Some examples might be putting in expense reductions, identifying specific pricing changes, hiring decisions. What does a gross margin look like in six, nine, to twelve months, but without the interpretation, are really going to be incomplete. This the three statements are table stakes. Make sure you have that income statement. Make sure you have at least a rough, I recommend a detail, but a rough balance sheet. And make sure you're planning out for the cash flow. So a cash flow statement or 13-week cash flow predictor. That CFO thinking, that's the multiplier on top of this. Putting all bringing all of this together so you have a planned process that you can use that pulls up all the numbers that you need. So that when you have a budget, you're putting numbers around the strategy. You have metrics. You have metrics to reach the strategy. You know when you're going to reach the strategy, you know how you're going to reach the strategy. You know how you're going to reach the goals. The goals by themselves are useful, but I found if you don't quantify what that means and how you get there, if you don't put those metrics around it, you're guessing and you don't know how you're doing. It's not just revenue and expenses. Tie in the cash, tie in the debt, tie in the accounts receivable, the accounts payable, capital purchases, the entire financial picture. You've got to tie all of that in if you really want to be prepared and understand what the future is going to look like. Budgeting isn't about being right. It's about being prepared, about knowing your numbers, about learning faster. It's about protecting your biggest assets, your business. If you fail to plan, you're planning to fail. Your business deserves better than hope-based finance. Planning doesn't remove uncertainty, it gives you control over how you respond to it. Move on from MapQuest by continually update your forecasting and upgrade your financial planning. So every every episode, we wrap it up with three tips that a business owner can put in place. I'm going to narrow mine down today and give you three right here. Plan monthly or quarterly first. Number two, always look out NTM, which is next 12 months, and challenge what you think you know. So those are my three for you. A book recommendation I'm going to share this time ties directly into what we're talking about. And it is This is Beyond Budgeting by Bearte Bognis. This is a little bit on the technical side. It is more of a financial book than a you know typical business owner book, but it's relatively short, it's only about 150 pages, and it really captures the beyond budgeting in continual forecasting. Highly recommend it. At least give it a shot, see how much you can get through it, uh, because I think it'll help you with your with your business planning. So that's it for today. But I do want to prep for our next episode here. I want to throw out there, it's our 50th episode, and I'm having a CFO panel coming on board to answer questions, provide their insight, and I think it's gonna be really cool. I think it's gonna be really exciting having the this panel of incredibly uh experienced and successful CFOs providing their insight on a variety of questions that I hear from business owners and I think will be very pertinent to your business. If you found something useful today, I hope you share it with somebody else, or go out and listen to another show. I'm Scott Geller, and I hope you join me next time for budget your business.