For most of my relatively short career, I have been into, or closely associated with, financial planning and analysis processes. Even when in roles not directly responsible for FP&A, I had some involvement in the planning processes. I have learned a lot in my career, including successes and setbacks. Based on my experiences, here are five key points FP&A professionals should keep in mind in a planning cycle:
Process is more important than outcome: One of the most important part of any business planning process is the process itself. The thinking, coordination, prioritization, challenges, etc., rather than the output, presentations or the mammoth spreadsheets. Give the process its fair share of time and worry about outputs later. Presentations are also important, but remember: A right plan presented poorly is still better than a wrong plan presented impressively.
Discuss more with business units: Invest more time with people in business units who are directly responsible to make the plan happen and generate revenues. Equally, speak more with folks in those teams who need to support the plan, e.g. sales, marketing, HR, legal, etc. In a planning cycle, most of us spend more time speaking to our colleagues in finance than with people who will make the plan happen.
It’s not all about the numbers: In fact, it has very little to do with numbers. One of the mistakes I made (and sometimes still do), is to start and end with numbers. Most of our presentations and other plan-related material talks only of numbers. On the other hand, an ideal planning activity is about:
- Understanding the current situation of the business.
- Having even better clarity of where we want the business to be.
- Drawing a road map of actions, changes which need to happen to get there.
- Breaking these actions into strategic and tactical changes, short term and long term, with owners and timelines.
- Translating all of the above in financial terms to arrive at the numbers.
“It’s a finance plan”: Dread these four words! Socialize the process, thinking, methodology and numbers as much as possible with all plan stakeholders. A plan irrespective of how thoughtful, thorough and correct it might be, is meaningless unless it has buy-in from business units.
Plan for a planning cycle: Have a small plan about each planning cycle, write the key steps, milestones, timelines, responsible parties etc. and share with those who are involved. Give each part of the process its fair share of time while remaining flexible for the unexpected delays and bottlenecks.Amit Singla is assistant vice president finance for CPA Global, India.