Planning & Analysis

Chart your course to scale your business

Many business owners we speak with say they want to be more proactive in how they run their business. They just don’t know what that looks like. Financial planning and analysis helps you visualize how your company can scale to deliver more sales, cash flow and profit.

We know that if we have a good planning and review and process in place we are much more likely to achieve our goals. This video will show you what that could look like for you.

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Download a sample financial plan

Financial planning and analysis helps founders chart their course for future prosperity. Many business owners I speak with say they want to be more proactive in how they run their business. 

We know that if we have a good planning and review and process in place we are much more likely to achieve our goals. This video will show you what that could look like for you.

There’s three parts to every financial plan:

  1. Set long-term goals
  2. Prepare the plan
  3. Continuously measure and update

Setting long-term goals states your vision of what you’d like your company to be producing economically for you, and when. Here’s some inside information for you: Every owner I speak with has one of two goals - either to sell their business within some timeframe or to maintain a certain lifestyle.

What we want to do is put some numbers and timing behind those expectations.We can work backwards and set financial benchmarks we need to hit along the way. Once that’s done, a founder can make decisions with greater confidence as they are following a path that is giving them regular feedback on how they are doing.

Here’s an example of a plan I put in place recently. A founder told me they’d like to sell their business for $10 million in the next 3-5 years. I know that multiples in their business are around two times sales, so we had to get to $5 million annual revenue. I got some other data on margins and growth rates so we could build out a P&L and determine cash needs.

With this info we can model revenue, expenses, personnel, capital purchases and anything else into a single integrated plan. We use a great cloud based tool called Jirav for our planning, which I’ll cover in a separate video.

The result is your typical forecasted P&L, balance sheet and cash flow statement. But there is more to it than just financials. We also want to track various operational key performance indicators and their impact on our financial performance. Here’s an example of how our software tracks those metrics.

When your annual plan is done it has to be integrated into your regular workflow. That means you’re meeting with your team to review and update it each month. These are the reports you should be reviewing:

  1. Annual Plan
  2. The Latest Estimate
  3. Plan vs Actual Variances
  4. Forward 12 months.

The annual planning process begins two months before year end and is settled after your year-end close. When done it’s locked in place and your performance is compared to it.

The latest estimate is when we make changes to the plan. Based on what’s happened so far this year, what is our latest thinking on how this year will turn out? Update the LE monthly to respond to changes in the business. This is probably the most valuable part of the planning process because it keeps the plan dynamic and helps you make better decisions.

Variances are the reports that compare how we performed against our plan. We track both operational and financial metrics for the month, year to date and projected year-end.

A rolling 12 month forward forecast gives us visibility beyond this year. This gets important in the third and fourth quarters when we start to think about what next year is going to look like. Having a 12 month view alerts us to any hazards that may be on the road ahead.

Here’s a pro tip about planning: people get better at it over time. Nobody is ever really sure where to start, so we make our best guess and refine it over time. We see over and over again that a regular rhythm of meeting monthly, updating the latest estimate and holding people accountable yields great financial results.

Hope you felt this video was informative. Be sure to check out our next video about the advice pillar and download a sample financial plan by clicking below.

Thanks for watching!

The Four Pillars

The Four Pillars

Learn about the Four Pillars of Every Great Financial Department.



More than just transaction processing. Properly maintain your company's mission-critical financial data.



Timely, accurate and insightful financial information to inform your decisions.



Practical advice, backed by financial data, to help you grow your business.

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