Budgeting and financial planning in startups and scaleups

This interview is based on an episode of the torq.partners Finance Podcast featuring guest Florian Blaschke, a partner at torq.partners and co-founder of HRCast. The full episode is available on Spotify and YouTube as a video podcast.

How and when should you start the budgeting process—and who should be involved?

The process begins with a clear framework, well-defined goals, and consistent assumptions regarding currencies, KPI definitions, and inflation. It should be based on reliable actual figures and begin at least three months before the start of the fiscal year, so that iterations are possible and boards can make decisions before the end of the fiscal year. The team should include management, sales, HR, operations, and product/tech. Finance should not work in isolation but should orchestrate collaboration to ensure genuine buy-in.

How do you balance top-down guidance and bottom-up planning in this context?

Both approaches are combined and made transparent: the top-down approach sets the ambition and direction, while the bottom-up approach provides a reality check. They meet in the middle, thereby enhancing the quality and commitment of the planning.

Why is workforce planning a challenge—and how can a specialized tool like HRCast help?

This involves confidential, personal data and complex logic related to employee onboarding and offboarding, non-wage labor costs, and salary components. Excel reaches its limits when it comes to collaboration because versions, permissions, and data silos are difficult to manage. A specialized tool simplifies collaboration, access rights, and the data infrastructure.

How should one deal with apparent accuracy in personnel cost planning?

Pragmatic. You don't get bogged down in minor details when the phased deployment of FTEs has a much greater impact. Time is allocated to the major drivers, not to secondary positions.

Where does Excel reach its limits in the budgeting process?

With increasing complexity, numerous stakeholders, version control, and rights management, the administrative burden rises sharply, and the risks of errors and delays increase.

When does it make sense to switch to a planning tool, and why?

With about 100 employees, multiple locations or subsidiaries, and a true top-down/bottom-up process, a planning tool offers significant advantages. It supports more frequent re-forecasts, integrates with source systems such as CRM, and offers features such as scenario analysis, anomaly detection, and pattern recognition.

What prerequisites does the team need before implementing the tool?

Responsibilities and processes have been clarified, the data foundation has been aligned, and there is a shared mindset for effective planning. The tool does not replace the process; it enhances it.

What kind of structure works best in Excel models?

Inputs and outputs are kept separate, and an integrated model comprising the income statement, balance sheet, and cash flow statement ensures consistency. Scenarios and cross-checks are standard; the logic is intentionally kept simple; visualizations make it easier to understand; and drivers can be measured later using actual data.

How detailed should financial planning be—and what are some common mistakes that can occur?

Pragmatic and cash-focused. At a minimum, receivables and payables are planned because EBITDA is not the same as cash, and a cash-based perspective requires balance sheet assumptions. Typical mistakes include management getting involved too late, details overshadowing the benefits, assumptions remaining unclear, and departments planning in silos. This leads to wasted time and weak commitment.

How can you prevent a "headcount spiral" between departments?

Finance sets the framework, coordinates dependencies, and prioritizes the big picture. Clear communication and coordination prevent individual plans from escalating one another.

How do you prepare the budget for the board, and how do VC and PE expectations differ?

The board values a clear summary with a coherent narrative on growth, efficiency drivers, and assumptions; detailed questions are anticipated and thoroughly documented. Private equity expects realistic three-statement projections that are cash- and covenant-oriented, while venture capital focuses more on ambitious growth in early stages.