The end of the year brings a familiar routine: an offsite meeting to hammer out goals and priorities for the coming year. But from where do these guiding principles stem? What is anchoring the direction of the company? What are the “North Star” goals?

Strategic financial planning sets a clear direction, making calculated decisions on major pivots and aligning every department with top-tier outcomes. This is where the “W Process” covered in an earlier insights article comes into play—an approach that combines top-down and bottom-up planning to create a cohesive, actionable financial strategy.

Let’s drill down further on that process for even more clarity. 

Step 1: Top-Down – Setting the Big Goals

The first step in the W Process is to establish your anchor—what are the key outcomes/results the business must achieve next year? These can range from revenue growth to profit expansion or breaking into new markets. The idea here is to hypothesize key objectives at a high level. Bring those to the offsite meeting. 

Department heads can then walk away with clearly defined goals attached to each of those hypotheses of key priorities by group. Only now are they armed to build accurate budgets. Keep the focus on specific, actionable priorities. From here, concrete objectives can be broken down into measurable steps.

Once the big goals are set, department heads come back to the office and begin building budgets based on those priorities, ensuring the financial strategy is aligned with the company’s overarching goals by a deadline set by the CEO. 

Step 2: Bottom-Up – Connecting Actions with Numbers

After identifying the key actions at the offsite, the next step is to bring those goals down to the numbers. This is where the “bottom-up” element comes in. Department heads need to assess how their actions will align to meet the company’s financial targets.

For example, if there are shortfalls in the initial numbers, a detailed review can open up new possibilities for closing them. It becomes a group hunt to find the dollars needed to cover all initiatives appropriately. Department heads work with their teams to identify any gaps between their goals, budgets, and action plans. Everyone has the opportunity to align on strategic action, proactively address any perceived risks, and start the team with clear numbers that funnel up to company growth objectives. 

Step 3: Analyze the Gaps and Achieve Alignment

After the bottom-up numbers are submitted, the CFO reviews the entire plan to find any discrepancies or gaps. This phase is critical. It is where departments work together to achieve synchronicity between their budgets and the overall financial strategy. This is not just about finding where the numbers do not align; it is also about understanding why certain gaps exist and what trade-offs or adjustments are necessary to close them.

Step 4: Refine and Sharpen the Plan

Once the CFO has analyzed the gaps, the process goes back down to department heads for refinement. At this stage, there is an opportunity to challenge assumptions, identify risks, and ensure alignment across all departments. This is where every part of the organization buys into the plan. With that alignment, the execution of the financial plan is set for success.

Step 5: Finalize and Lock In the Plan

By the time the new year rolls around, the goal is to have a fully finalized financial plan ready for action. Ideally, everything from the sales plan to the HR and marketing plans are locked in, with clear goals, quotas, and activities defined. The successful financial plan cascades from the high-level goals all the way to the front-lines of the organization. The key to success here is process discipline year over year.  

With this process in place, early-stage growth companies can tie everything together to create cohesion across all departments. This level of strategic financial planning is a disciplined, collaborative approach that sets the company up for success in the year ahead and far beyond.

AVL Growth Partners is a fractional finance, accounting and human resources services company supporting early-stage growth companies in pivoting to the next level of growth. We serve clients across the U.S. with offices in Denver, Austin, and Atlanta. For details, visit avlgrowth.com or connect with us at hello@avlgrowth.com.