June 14-15 • Boston, MA Ensuring Financial Planning ... · Ensuring Financial Planning Success &...
Transcript of June 14-15 • Boston, MA Ensuring Financial Planning ... · Ensuring Financial Planning Success &...
JPK
Gro
up
June 14-15 • Boston, MA
Ensuring Financial Planning Success
& Avoiding Common Pitfalls
Assessing common and unique financial planning pitfallsand discovering relevant and proven concepts
June 14, 11:00am
View presentation online at:
http://www.jpkgroupsummits.com/attendee3
Ed Goldfinger – CFO at Veracode
Ed Goldfinger is a seasoned financial executive, with over 25 years of financial leadership
experience. Goldfinger is currently the CFO for Veracode, a fast growing, venture-backed
organization in the Boston area that provides automated web and mobile application
security, delivered as a cloud-based subscription service. In this role, Goldfinger is in
charge of leading and managing Veracode’s financial direction as well as providing
strategic, operational and analytical insight to the business and overseeing legal, sales
operations, services and investor relations. In this role, Goldfinger is in charge of leading
and managing Veracode’s financial direction as well as providing strategic, operational and
analytical insight to the business and overseeing legal, sales operations, services and
investor relations. Goldfinger is a graduate of the Wharton Undergraduate program at the
University of Pennsylvania, and he was a CPA in the State of Connecticut.
Business Forecasting and Analytics Forum
And Avoiding Common Pitfalls
Ed GoldfingerJune 14, 2016
2016 BUSINESS FORECASTING
AND ANALYTICS FORUM
7 Years
9 Years6 Years
5 Years
2 Years
4 Months
3 Years
Where does a Planning Process Go Wrong?
• Make planning a Finance exercise
• Create financial plan concurrently with (or in advance of) determining strategy
• Take a “bottom up” approach (aka, the food fight method!)
• Start late and just sort of wing it
• Don’t plan for contingencies (assume all goes to plan and unprecedented metrics are achieved!)
• Be arbitrary on where investments are made (peanut butter method or squeaky wheel approach)
• Use Excel
• Plan at too high a level so no one knows what is in and out of plan
• Don’t get buy-in from business units and functions
• Don’t plant the acorns of the future
As a Senior Leadership Team, based on Strategy
• Establish growth target and profit target
• Difference = cost investment
• Allocate cost investment; reserve holdback!
CurrentYear
PlannedYear
Cost Investment
Sales Marketing R&D
Services Product Mgmt G&A
Holdback
Based on Strategic and Operational Priorities & Benchmarks
Note: same applies for Business Units – determine at highlevel what growth and profit aspirations are and allocate resources
Strategic Considerations• New markets
• New products
• Distribution
• Competition
Operational Considerations
• Marketing plan
• Sales model
• R&D roadmap
• Headcount
• Capex
• Balance sheet items such as AR and inventories
• Financing plan
• Select peer group– Competitors
– Peers
• Compare key ratios– Growth
– Gross margins
– Operational expense as a % of Revenues
– Balance sheet metrics (DSO, DII, Capex, etc.)
• OK to be different!– But good to understand where and why
Your company
Your company
Your company
Your company
Your company
Provide top and bottom line targets to plan owners (BUs or functions)
• Require that targets are achieved within planning system (preferably NOT Excel!)
• Allow flexibility on how to achieve
• Any incremental asks recorded separately outside the system with justification
Cost Envelope
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Determine company targets; allocate investmentsstrategically
1
Provide top andbottom line targets to BUs and functions that support company level targets reserving holdback
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3
Have detailed operating plans prepared by BUs and functions within their targets – identify risks, issues and wish list but hold outside of plan
4Consolidate plan and confirm within target; review key assumptions and metrics and ensure reasonable continuity between past and future;
5Based on review of detailed “wish lists” and justification, allocate some portion of the holdback as necessary and have built into the plan, preferably not in Q1.
6 Ensure milestones and metrics clearly identified by BU and function for measurement and accountability.
North Contingency Total Corporate Total
America EMEA Asia Market Operations Corporate Contingency Company
Revenue 600 200 50 (50) 800 - - 800
Cost of Sales 180 60 20 (20) 240 - - 240
Gross Margin 420 140 30 (30) 560 - - 560
Sales 120 50 20 (5) 185 10 - 195
Marketing 60 30 10 (5) 95 20 - 115
Research & Development - - 30 30
G&A 30 20 10 - 60 20 15 95
Total Opex 210 100 40 (10) 340 80 15 435
Operating Income 210 40 (10) (20) 220 (80) (15) 125
Illustrative Plan
• Not designed for in-depth planning
• Version control is a nightmare
• Prone to mistakes
• Not scalable – at some point becomes unwieldy
• Not access privileged; confidential information like salary
• Updating with actuals for forecasting can be complex
• Many cloud-based, easy-to-implement planning systems now available at reasonable cost
0
50
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2010 2011 2012 2013 2014 2015
Revenue($ Millions)
The problem with this…
30%
23%
19%
16%
14%
0%
5%
10%
15%
20%
25%
30%
35%
2011 2012 2013 2014 2015
Revenue Growth
…is this!
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013 2014 2015
Revenue($ Millions)
30%
23%
18%
14%11%
7%
7%
7%
7%
5%
5%
5%
4%
4%
3%
0%
5%
10%
15%
20%
25%
30%
35%
2011 2012 2013 2014 2015
Revenue Growth
Acquisition
New Product
New Geography
New Channel 30% 30% 30%30%30%
"Someone's sitting in the shade today
because someone planted a tree a long
time ago," Warren Buffett .
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(It means you’re making important trade-offs and tough decisions!)