Forecasting More Profits For You and Your Clients

Transcription

1 Forecasting More Profits For You and Your Clients Presenter: Christian Wielage Accountants/Business Advisors Entrepreneurs Small Businesses Non-profits

2 Introduction: About me Christian Wielage Prior to joining PlanGuru, Christian was the Worldwide Plan Analyst for the Global Technologies Group at IBM. Preceding that he had a similar role with IBM North American Operations. Christian also has experience with Wachovia Securities (now Wells Fargo) and Strategic Advisors Middle Market Investment Bank. Since joining PlanGuru, he has helped hundreds of businesses, non-profits and financial professionals build more accurate budgets, forecasts and plans in less time.

3 Introduction: About Version 1 of PlanGuru was developed in 1999 to help accountants build simple financial projections for their clients. 18 years later, PlanGuru is used by thousands of Advisors, Businesses and Non-profits on projects ranging from SBA loan projections to 100-department operating budgets. At PlanGuru, we go beyond simply developing software Our job extends into teaching the process of better decision making through budgeting, forecasting and performance review concepts. We also train Accountants, Bookkeepers and Advisors how to market these services to clients. Partnering Organizations We also make it our mission to connect organizations that can work well together as clients or partners.

4 Today s Agenda ü Understanding the Marketplace ü Talking to your Clients Including a Client Presentation ü Introduction to

5 Why are we here? Very few Small Businesses have a meaningful budgeting, forecasting and performance review process. Without relevant experience: They struggle with the technical aspects of preparing this work. They fail to see the value and do not try. Very few Accountants & Bookkeepers generate revenue from providing these services to their clients Cannot reconcile the cost of delivering these services with what the client is willing to pay. This can change! $$$ Huge un-tapped reservoir of opportunity for these services $$$

6 Reasons for Projections 1) Big Decision Analysis Large investments Acquisitions Bid on large contracts 2) External Estimate Lenders Investors Business Partners Board of Directors 3) Strategic Planning Vision for the future Set high-level targets Risks & Opportunities Create contingency plans 4) Budget/ PR /Forecast Performance Review Budget vs Actual Comparison Accountability Rolling Forecast

7 The time-tested method for Better Decisions Build a Budget at the beginning of the year that sets goals for the team Do Monthly Performance Review Rolling Forecast to analyze all decisions with cash-flow Benefits of Budgeting: Sets the direction for the business, make big decisions Budget setting discussions unlock ways to improve performance Targets (with incentives) can drive improved sales or better expense/cost control Performance Review: Measure financial results in a comprehensive way with reports, charts, scorecards Compare results to budget, hold team accountable, reward performance & question past decisions Rolling Forecast: Tactical decisions should revolve around the forecast, understanding their implications Constantly understand cash position, make moves before it is too late Have more confidence and stability, less stress

8 Strategic Planning A Long-Term Strategic Plan Serves 3 Vital Roles 1.) It sets the direction for the future that the operating budget is aligned to achieve. 2.) It is a framework for a what-if exercise. Must identify their largest long-term risks/opportunities and understand their estimated impact Make tactical adjustments, long-term shifts and contingency plans Sensitivity analysis, scenario analysis, ratios, breakeven or business valuation. 3.) It serves as a personal financial review for the business owners They can look at their business in the same way they look at their stocks and bonds (when can they retire, should they sell?). Personal Cash Flow Analysis or business valuation

9 The Repeating Cycle of Success Jan Strategic Planning Process Typically performed in the middle of the fiscal year, sets the direction for future Dec Feb Budgeting Process In accordance with the high level parameters set in the strategic plan Performance Review Continuously reviewing general performance and against budgeted/ forecasted targets Nov Oct Sep Mar Apr May Rolling Forecast Accurate and tactical view of where the business is headed Aug Jul Jun

10 Types/Sizes of Engagement Mid-Large Company Engagements Situations with multiple departments, locations, subsidiaries, cost centers, etc. Multiple decision makers involved in the budget setting process Spend weeks or months in the budget setting process The time to prepare the monthly review may take a full week Culminating in 1 or more big monthly meetings Small Business Standard Review Spend between 1 to 4 days to choose projection methods and set assumptions for the budget at the beginning of the year Spend between 1 to 8 hours on preparing the monthly review and formulating pre-meeting conclusions and questions 1-3 hour review with client

11 Types/Sizes of Engagement Light Review Less than 1 day building the budget at the beginning of the year Spend between 20 mins to 2 hours on preparing the monthly review and formulating pre-meeting conclusions and questions Meetings are 30 mins to 2 hours. Maybe you simply prepare the analysis turn it over to the client, and don t hold a regular meeting Teaching, Training & Support For your clients that have in-house employees capable of managing this process you may just want to provide implementation and training process. The PG team can help. Flexibility None of these are cut and dry. For example, a company without cash concerns may only do a rolling forecast every quarter, less maintenance.

12 Be Your Client s Outsourced Finance Department 2.4 MM US Businesses by Rev 1,000, , , , ,000 0 THINK SMALL Your smaller business clients serve as the best market for this service The complexity of their business does not warrant a true CFO, but the core exercises that a CFO does are still needed. Smaller means easier. Huge market, millions of small businesses are not doing any budgeting and performance review. The smaller they get, the more that exist. See tremendous benefit because they are so deficient.

13 Be Your Client s Outsourced Finance Department There is opportunity in the Large Small Business area Get a huge leg up in the client acquisition process Pitching a low-cost Outsource CFO service will be a key differentiator when businesses are interviewing multiple CPA firms. Keep your clients, while they pay more. The accounting industry is changing rapidly, firms that do not respond will not succeed.

14 Presentation for Clients ü Help your clients understand all the benefits of hiring you to perform these exercises ü Juxtapose the new you versus the delinquent small business masses ü Show them concrete examples alongside this PowerPoint

15 [INSERT FIRM ICON/LOGO] Budget, Forecast & Plan for More Profit [INSERT NAME OF Advisor] [INSERT NAME OF FIRM] Prepared for: [INSERT NAME OF CLIENT]

16 [INSERT YOUR FIRM S HEADER] Don t fly blind! Simply reviewing historical financial statements is not enough! Taking the time to build budgets, do performance review and re-forecast the future drives better decisions. All important decisions should be made in the context of a budgeting/forecasting meeting weighting out the pros and cons in a systematic way with real data Successful Large Organizations make important decisions in the context of a budgeting, forecasting and planning process. Many large companies have hundreds or thousands of people directly involved in providing management with the projections. Accounting Department > Finance Department > Decisions Makers Operate like the Big Companies: We can help your team implement these time tested methods by providing our technical expertise and experience.

17 [INSERT YOUR FIRM S HEADER] Reasons to Build Projections 1) Big Decision Analysis Large investments Acquisitions Bid on large contracts 2) External Estimate Lenders Investors Business Partners Board of Directors 3) Strategic Planning Vision for the future Set high-level targets Risks & Opportunities Create contingency plans 4) Budget/ PR /Forecast Performance Review Budget vs Actual Comparison Accountability Rolling Forecast

18 [INSERT YOUR FIRM S HEADER] The time-tested method for Better Decisions Build a Budget at the beginning of the year that sets goals for the team Benefits of Budgeting: Do Monthly Performance Review Sets the direction for the business, make big decisions Budget setting discussions unlock ways to improve performance Rolling Forecast to analyze all decisions with cash-flow Targets (with incentives) can drive improved sales or better expense/cost control Performance Review: Measure financial results in a comprehensive way with reports, charts, scorecards Compare results to budget, hold team accountable, reward performance & question past decisions Rolling Forecast: Tactical decisions should revolve around the forecast, understanding their implications Constantly understand cash position, make moves before it is too late Have more confidence and stability, less stress

19 [INSERT YOUR FIRM S HEADER] Strategic Planning A Long-Term Strategic Plan Serves 3 Vital Roles 1.) It sets the direction for the future that the operating budget is aligned to achieve. 2.) It is a framework for a what-if exercise. Must identify their largest long-term risks/opportunities and understand their estimated impact Make tactical adjustments, long-term shifts and contingency plans Sensitivity analysis, scenario analysis, ratios, breakeven or business valuation. 3.) It serves as a personal financial review for the business owners They can look at their business in the same way they look at their stocks and bonds (when can they retire, should they sell?). Personal Cash Flow Analysis or business valuation

20 [INSERT YOUR FIRM S HEADER] The Repeating Cycle of Success Strategic Planning Process Typically performed in the middle of the fiscal year, sets the direction for future Dec Jan Feb Budgeting Process In accordance with the high level parameters set in the strategic plan Performance Review Continuously reviewing general performance and against budgeted/ forecasted targets Nov Oct Sep Mar Apr May Rolling Forecast Accurate and tactical view of where the business is headed Aug Jul Jun

21 [INSERT YOUR FIRM S HEADER] Budget, Forecast & Plan for More Profit We will be your Outsourced Finance Department At ABC Accounting we are experts in building budgets and plans, let us do the heavy lifting for you. This will enable you to exclusively focus your time on the value adding discussions and thoughts, not complicated model-building. Because we are so much more proficient than the other firms, we can deliver this service at a price-point that our competition simply cannot achieve. We will facilitate and optimize the performance review process to focus on what is most important. Drive the necessary discussions, ask the important questions. Simply show up to the meeting and we will have the analysis ready for discussion. Our experience with a diverse group of clients gives us a unique and insightful perspective that an exclusively in-house team would not have. Share best practices in respect to optimizing your budget and financial review process. Develop actionable conclusions like specific cost/expense saving recommendations.

22 [INSERT YOUR FIRM S HEADER] On-Going Analysis Good cop, bad cop We will act as your bad cop and ensure continuous budgeting accountability among your employees. Be ready on a dime We will be able to walk into a meeting and be ready to have a discussion on the present and future of your budgeting plans at any time. A common language When you budget and use ratio analysis and business drivers, decisions can be made using a common language backed up by real numbers and analytics.

23 [INSERT YOUR FIRM S HEADER] Not About Getting it Right A common objection: we cannot predict the future The correct response: that doesn t matter Budgeting is about creating a direction to work towards. In the forecasting process we set a baseline. As we see that certain assumptions will not pan out, we can calculate the variance and apply that to the baseline. With this we will always have a good idea of where we stand. Managing to a Targeted Profit People make different decisions in order to hit their targets. The little things add up. Example: There is a trade event coming, they can spend $2,000 at the printer they always use or they shop it around and save $800.

24 [INSERT YOUR FIRM S HEADER] It is the process, not the end-product, that adds value. The Magic Report Doesn t Exist: Everyone is looking for a tool that will instantly produce information that will yield better decisions. Unfortunately, that is a fantasy. Regular Budget/Performance Review: There is only one place to start for any business that is serious about making better decisions: - Starting the year with a line-by-line budget setting process - Monthly Performance Reviews w/ Budget vs Actual comparisons - Monthly Rolling Forecasts Cultivating a Better Decision Making Process: Yes, of course, this will take some time, but as time goes on, your business will start making better decisions.

25 [INSERT YOUR FIRM S HEADER] It is the process, not the end-product, that adds value. Line-by-line budget setting exercise Systemically discuss all parts of the business to identify room for improvement, this will spark conversations and ideas that would never be discussed otherwise An IT revolution has opened up huge cost savings possibilities. We work with a number of different companies and see a wide variety of cost/expense reducing solutions. Make targeted adjustments to businesses to reach the goals set in the budget Challenging decision makers to go on the record stimulates a deeper understanding of the business A series of tangible goals/targets give employees something to shoot for. Push the team to go above and beyond with financial incentives that make sense for the business

26 [INSERT YOUR FIRM S HEADER] It is the process, not the end-product, that adds value. Monthly Performance Reviews w/ Budget vs. Actual comparisons Comparing what happened to what we thought was going to happen can enable your team to reshape their understanding of the mechanics of the business When key decision makers are forced to go on the record, they have a greater sense of personal responsibility to figure out how to make their number or figure out what is truly wrong so that improvements can be made Team becomes proactive, not reactive Making more targeted adjustments to the business to reach the goals set in the budget and consider strategic changes when necessary

27 [INSERT YOUR FIRM S HEADER] It is the process, not the end-product, that adds value. MonthlyRolling Forecast Actual results replace the budget for past months and the remaining periods are re-forecasted. Information cultivated in the performance review will help set targets. What assumptions were right? What assumptions were wrong? Revise Forecasting Methods to become better over time. Provide managementteam with an accurate rolling cash forecast. Enable you to be ready for any expected cash shortfalls. What is REALLY going to happen? Centerpiece of the tactical decision making process

28 (888) Contact Info: Christian Wielage Accountants/Business Advisors Entrepreneurs Small Businesses Non-profits