Happy Halloween. 🎃
Last week, we attended the FP&A Summit in Boston hosted by our friends at Finance Alliance.
We had a blast and met a ton of talented FP&A professionals, including CFOs.
Many of them are knee-deep in not-so-fun Annual Planning processes.
Are you or someone you know feeling overwhelmed by Annual Planning too?
In collaboration with Jirav, we have Annual Planning resources below that can help you:
And in the spirit of Halloween, we’re going to share some scary stories related to our Annual Planning experiences.
This post covers our top 5 scary Annual Plan stories you want to avoid:
- Headcount submissions that make zombie armies look small and cute
- Being hunted by key stakeholders left out of the planning process
- Lack of version control causing heads to roll in the boardroom
- Creating revenue targets that scared the sh#t out of Sales teams
- Submitting a Plan that only FP&A worked on and NO ONE would touch
You may have had similar experiences before (the horror).
If you haven’t, take notes and do everything you can to avoid them like the plague.
Let’s get spooky. 👻
Scary Story #1: New Hire Zombie Army
Our Annual Planning kick-off started with this innocent statement from our Executive Team:
“Let the department owners tell us what they think they need next year.”
Translation: ZERO company goals, KPIs, or guidance whatsoever.
How many new hires would you request with ZERO restrictions?
We would make it rain new FP&A team members, because why not?
Guess what every department from Marketing, Sales, Product, and Operations did?
Submitted a wish list of new hires that TRIPLED our headcount population.
Which would have caused our company to run out of money in month 3 of next year.
This didn’t fly and required us to redo the entire budget from scratch.
Scary Story #2: Angry Stakeholders
We take great pride in involving all key stakeholders across our companies in Annual Planning.
But inevitably, there’s always one that gets missed.
In this story, it was an Australian engineer who owned millions of dollars in capital spending (CAPEX).
Not knowing this, we assumed capital spending would keep pace with Revenue.
When we reviewed the draft with Engineering, guess who spoke up?
We actually needed to DOUBLE capital spending because of a new product launch.
This caused us to solve for a cash flow target miss by reducing other departments’ spending just before the final submission.
Not fun for us, not fun for our departments, and not a great way to build a relationship with Engineering.
🔥TIP: Be thorough and verify ALL assumptions with humans, not algebra.
Scary Story #3: Version Control Causes Heads to Roll
There’s no bigger stage than the Executive Team Annual Plan review.
And we messed up.
We received this statement from our CTO right as we began our awesome presentation.
“I don’t recognize these numbers.”
We had a laundry list of Annual Plan scenarios with names longer than American Football play calls.
Although we were organized, a simple date formatting issue caused us to use an older version of headcount.
We used MONTH.DAY.YEAR format, so November 10th, 2011 was 11.10.2011 (thanks USA).
We had counterparts in Europe, and they swapped the day and month around.
As a result, we used the headcount report from October 11th, 2011 (thanks Europe).
Simple misunderstanding and a big mistake.
🔥TIP: Use universal date formats like YYYY.MM.DD (our choice) and overcommunicate.
Scary Story #4: Sales Targets that Scared Sales Reps
It’s fun making up Sales targets for next year.
Anyone can make their company look good on a spreadsheet, including us in FP&A.
But guess whose livelihood (aka commissions) is based on hitting these targets?
Your Sales Team.
If your Sales Team was not involved in setting these targets, what happens?
They’ll have zero clue how to achieve them
And likely will tell you to go pound sand.
Scary Story #5: An Annual Plan Made Only by FP&A
Many of us have been there.
Your Annual Planning process started too late.
But you need to submit something to your Executives and Board before the year starts.
Here’s an easy solution.
Have FP&A create the entire thing in a matter of days.
As you can imagine, we hit our deadline without a problem.
Unfortunately, we also got incredibly negative feedback from our department owners.
They would not touch this FP&A Annual Plan.
The result? Being asked to redo the Plan from the bottom-up.
And yes, we re-submitted from the bottom-up, with feedback from department owners, in record time.
Not too shabby.
🔥TIP: Start planning early and involve department owners from day one.
Conclusion: You Can Avoid a Horror Show
Annual Planning can be a scary process.
Dive in head first, learn best practices, and avoid mistakes made by others.
It won’t be easy at first, but focus on getting a little bit better every year you do complete one.
Before you know it, Annual Planning will feel like a trip to the beach.
Okay, maybe not that pleasant but definitely better than a scary Halloween tale.
Just remember you’re not alone—everyone has a scary Annual Planning story.
Now go have fun making your Annual Plan a big success. 👊
Ready to take on your scary Annual Plan head-on? Anything else we missed?
Let us know by replying to this post with your experiences and thoughts.
Now go have fun making an impact on your business and your career!
Drew & Yarty
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PS: This post was written by humans 💪