Integrated Planning

If you were to describe 2022 in a single word, what would it be? “Unpredictable” might top the list. “Volatile” or “turbulent” certainly fit. “Uncertain,” “changeable” or even “capricious” all work, too. Between rising interest rates and inflation, supply chain slowdowns and news of a possible recession on the way, 2022 has brought its share of challenges to finance professionals.  So in a year like this one, how do you plan ahead? In today’s climate, will the processes and approaches you’re used to suffice? And can you keep your business growing or should you be focused on maintaining the status quo? To get a sense of exactly that, Vena Vice President of FP&A Tom Seegmiller hosted "Cash or Growth: How To Build a Long-Range Plan for Turbulent Times" (now available on demand for members of Vena’s Plan To Grow platform). In this latest episode of The Exchange, he met with panelists Kim Eaton (Operating Managing Director at Vista Equity Partners), Buu-Linh Tran (Vice President of Financial Solutions for Marcum Technology, LLP) Brian Hyde (Director of FP&A for Maverik, Inc.) and Jake Hodgman (Managing Director of Vista Equity Partners). During the session, they all had plenty of words to share about the current market. And the panelists offered up four tips for financial professionals currently trying to build their own businesses’ long-range plans. 💡 Key Takeaways: No two businesses are alike. Start with a close understanding of how current market conditions affect your specific business and industry, from critical KPIs to ground-level concerns. Trust the processes, data and metrics you already have in place—but don’t be afraid to become more rigorous in driving improvements as you try to stay on track. Be realistic with your targets based on your current business constraints. Then communicate your long-range plan effectively so that everyone is working towards the same goals. Tip 1: Understand Your Business Needs Today, an array of market realities are playing out on the organizational level. But they also affect every business differently. So the first tip our panelists had: Take a closer look. Find the story behind your financial numbers, to understand how the bigger market issues are affecting your business at a granular level. Only by knowing that will you be able to understand your business needs. But how do you find that story behind your financial numbers? Understanding the key KPIs that are in play right now for your industry is a good place to start, suggested Kim. And she said drawing on your network—both inside and outside of your organization—will help give you comparison points to work with. “Go to your boards. A lot of boards of directors typically work across lots of companies, so they can be a great validation and source,” she suggested. “And where you have banking relationships, don't be afraid to ask them. They're always asking you for information—go ahead and ask them. Because they also have a different lens across multiple companies.”   Meanwhile, Brian suggested keeping a close eye on every part of your business, to get a sense of the ground-level issues each department is facing during these turbulent times. Having people who understand each level of the organization available at the table during your planning sessions can help you understand where you should be putting more attention as the market continues to change. “I think it's critically important that you have analysts embedded across the organization, in as many different teams and departments as you can,” Brian said. “Sometimes that means you have one analyst assigned to multiple departments and that analyst needs to be in all the meetings.” That person can bring information back to the finance team, he explained, adding key intelligence as you set targets and formulate your long-range plan. FREE What-If Analysis Template for Excel Try our Financial Modeling Template to model different monthly forecasting scenarios and view variances between forecasted inputs and scenario models. Tip 2: Don’t Throw Out What’s Already Working With a view into the current market and how it’s affecting your unique business, you can begin to set the targets and lay the guardrails that will make up your long-range plan. And for Buu-Linh that starts by making sure the basics are covered. This means knowing whether processes you already have in place are agile and efficient enough to make it through turbulent times before you even start the long-range planning process. “From an operational perspective, you want to take this opportunity [to] look at how the accounting operation is functioning. How efficient and effective it is,” she said during the panel. “Yes, we can talk about guardrails, we can talk about capitals, but at the end of the day, I work with clients on the ‘plumbing’ side of this, for lack of better word—getting the bills paid, managing that process.”   Trusting all of the processes, data and metrics you have in place is a big part of creating a long-range plan that’s going to be effective—whether it’s a turbulent market or not. The difference, Kim pointed out, is that you need to be more rigorous during times of crisis—driving improvements in order to stay as efficient as possible. “Look at what's going well [and] what's not going well. Go back to those KPIs and what we know drives the business,” she said. “What are the things that historically have always kept the business humming or have been the areas of investment? And challenge those areas of investment and make sure that they're the right ones. There’s an opportunity to double down on those things that are working well and then identify areas where you can drive more efficiencies or pull back.” From there, she continued, it’s all about prioritizing based on what you find. But the same underlying philosophies you’ve always depended on should lead your way—whether you’re in a time of boom or bust. Tip 3: Be Realistic With Your Targets Of course, part of planning is setting targets. And in times of turmoil, some adjustments to those targets may be necessary. “Things are changing very rapidly,” Brian pointed out. “And if, for example, your construction plan was 30 more units this year, you need a dose of reality and it probably needs to be 20. Because the supply chain just isn't there.”   This is where getting too focused on the way you’ve always done things could be dangerous. Going after unrealistic targets, he suggested, could burn your people out as they aim to achieve what may be impossible in today’s climate. “I think it’s really important to just be honest with yourself, take the ego out of the equation, reset expectations as needed and then just keep communicating. Make sure that we're all on the same page,” he added. In his own business, while the annual plan is set in stone and doesn’t change often, Brian and his team are constantly updating their forecast based on inputs from across the business. Supply chain issues, especially, have meant they’ve recently had to continue adjusting on the fly. “We're also providing a lot more input tools to different business units,” he added. “We're watching these feasibility deadlines really closely and they're all changing, so we have to provide them with a mechanism to go in and change those dates, save them in a central spot so that we can extract that and inform the rest of the organization higher up.” This is just one area where it helps to have the right technology in place, Buu-Linh added. “It really helps bring that data together and to be able to quickly forecast monthly, doing what-if scenarios,” she said. Tip 4: Know How To Effectively Communicate Your Plan It's not enough to create a long-range plan that’s resilient to the current times. You also have to be able to communicate that plan and put everyone in your organization on the same page so that you’re collaborating towards a shared set of goals. For Jake, communicating your long-range plan starts with learning “the language of your stakeholders.” “Your stakeholders probably have different appetites for information, the way they consume it and what's important to them,” he said. “You may have people who are really concerned with, ‘Where did that quarter end up?’ [or] ‘Where did that month end up?’ And they’re going to dig into where the actuals landed.”   It’s important to bring in other data besides just financials when you’re telling that story, he added. HR data, for instance, can help stakeholders come to a better understanding of the struggles underway and what’s coming around the corner. “It’s helpful to get an understanding of the things that are going to give you information so you can influence and make decisions on ultimately what the financial outcome is going to be,” he added. Long-Range Planning Unpredictability may seem like the antithesis to precise planning, but by relying on the processes you trust and staying on top of every part of your business, you can begin to build a plan that meets your needs and get everyone working towards the same goals.  By setting realistic targets and communicating everything effectively, you can get through these volatile times with agility and grace. Just don’t forget to add some flexibility along the way. Because who knows when the market will evolve again? Long-Range Planning During Turbulent Times Check out the full episode of “Cash or Growth: How To Build a Long-Range Plan for Turbulent Times” on demand on Plan To Grow to start planning for the long term.