Tops Down budgeting is a budgeting method that starts with 📝Boundary Conditions for growth targets and runway, then fills in the level of expenses the company can sustain.
The method works from the company's overall goals toward its line items. The board and CEO first agree on limits such as target revenue growth and cash runway, and those limits set how much the company can afford to spend before any department plans its budget. Tops Down budgeting is the counterpart of 📝Bottoms up budgeting, which starts from each vendor, department, and account and forecasts future spending from past spend. In annual planning the two meet in the 📝Base Budget: the tops-down growth targets and runway frame a conservative revenue number, and expenses are budgeted bottoms up to fit within it.