How to leverage the "budget season" to maximize your top line

Understanding both best and worst-case scenarios throughout the year is in your best interest. As effective revenue leaders, always have projects in place that contribute to your bottom-line earnings. Ensure these projects are tangible and executed strategically to enhance revenue streams.”

Richard E. Brown

Although daunting for some, budget season has always been a therapeutic and comforting time for me. It’s when our focus shifts to the outlook for the upcoming year. This is when we create comprehensive game plans involving contingencies, market nuances and gap analysis and align projects to meet potential objectives and stretch goals. We diligently put everything in place to view things in three dimensions: mitigate risks, address issues head-on and navigate relationships that contribute to the community's perceived value of the organization.

Although it can be exhausting and tenuous due to the meticulous details and demands, there’s a certain beauty in it. This process also brings us closer to our colleagues and the individuals we’ve enjoyed working with throughout our careers.

Amid this, one thing has become evident to me — many organizations, especially news media startups, stumble over a particular challenge. They view revenue growth as a simple linear function.

While it might appear overly simplistic to be a substantial topic, let’s examine a typical scenario involving a startup in the news industry aiming to increase its revenue. Whether the objective is to increase audience size or boost sponsorship sales, the path is far from linear. Achieving an arbitrary 10% year-over-year growth requires a deep dive into the organization’s intricate financial ecosystem, the opportunities it presents and the audience and community it serves.

There are also several factors to consider. What’s the year’s active account or subscription goal, and when do they need to be active? It’s also essential to understand the weekly pace needed to achieve that goal, the time it takes to close new deals, deal length and tenure. This level of detail matters greatly during budgeting season.

Revenue and cash flow are other pieces of the puzzle. If you sign an annual advertising deal in the middle of the year, only half the revenue will manifest through the fiscal year. So, a 10% growth goal should actually be more in the 20-25% range.

Here’s another vital factor that’s often overlooked — churn and lost accounts. Some organizations struggle in the first quarter of the upcoming year, making it improbable to achieve the corresponding revenue objectives right from the start. What happens when advertisers don’t renew their deals or subscriptions lapse? This can disrupt the carefully planned revenue growth.

This is a common occurrence in the world of budgeting, but for those new to the process, it’s crucial to address these aspects meticulously. Churn and renewal rates should account for another 5% to 10% addition to your growth target, pushing the original 10% to a potential 30-35%.

Now, let’s discuss contingencies essential for sustaining growth because with growth comes costs. Imagine a scenario where one sales executive or manager is managing too many accounts. Planning for an additional sales executive halfway through the year might become necessary. Contingency plans should be in place if the original strategy doesn’t pan out, ensuring an effective EBITDA. These plans also need to cover turnover in various departments and unforeseen expenses.

Understanding both best and worst-case scenarios throughout the year is in your best interest. As effective revenue leaders, always have projects in place that contribute to your bottom-line earnings. Ensure these projects are tangible and executed strategically to enhance revenue streams.

Budgeting season also allows the synthesis of strategies, products, and projects. Questions about how to improve or adjust can be raised. Develop hypotheses regarding potential changes and implement projects to test them throughout the year.

Like a litmus test, budget season challenges your strategies, subjecting them to stress tests and potentially revealing areas for improvement. This period serves to ensure the cohesiveness of your models and gain a comprehensive understanding of the dynamics within your community and market.

In some aspects, budget season takes on the role of an exercise, refining skills and thought processes. It strengthens the ability to foresee changes in the news media world and the revenue department's functionality.

If you love this season, that's fantastic. I hope it’s an effective and well-thought-out planning process. But for those who might be new or find this season overwhelming, don’t hesitate to lean on your colleagues and ask questions. This experience unlocks a door that can't be closed, giving you a broader understanding of your organization. You gain a deeper appreciation for the contributions of everyone involved, connecting you to the bigger picture you serve.

Richard E. Brown is a News Media Alliance Rising Star recipient, the former director of renewals and digital sales strategy at LPi, and the former director of digital operations and sales of the Milwaukee Journal Sentinel. He recently served as the head of digital subscriber churn for Gannett | USA TODAY NETWORK and is now the senior director of retention for The Daily Beast. He is a member of the board of directors for the Wisconsin Newspaper Association Foundation and is the owner of RE Media Holdings, LLC. Richard is available for consulting and can be reached at www.richardebrown.co