Unlocking Business Growth with FP&A

If you run a startup or small to mid-sized business, you already have a significant amount of knowledge regarding business finances. Under your leadership, your business has likely reached extraordinary benchmarks. But you may be wondering—could your business go even further?

The answer is YES! Even already successful organizations can craft new strategies for previously unimagined goals, and one of the most surefire ways to begin this journey is through financial planning and analysis.

Because collecting and organizing financial data takes so much time (think about the hours spent putting numbers into spreadsheets), financial analysts only spend about a quarter of their time providing value-added analysis. This means if you want to maximize business growth, you’re missing a crucial finance professional on your team.

Enter the financial planning and analysis (FP&A) expert. Here, we’ll discuss how an experienced FP&A leader can help your business exponentially.

What Is Financial Planning and Analysis?

Financial planning and analysis evaluate past, present, and future data to help businesses make informed decisions about all financial-related topics, from profit margins and financial health to growth forecasts and financial modeling.

While accountants and financial controllers document financial data like company spending and budgets, FP&A professionals interpret the data to help with the following:

• Improving the allocation of resources
• Making business decisions
• Strategic planning

Data visualization is only the first step in making informed decisions based on numbers. It’s critical to have finance experts who can interpret and analyze the data, too. While it’s possible to manage your finances with a small finance team, your business needs the FP&A process to maximize growth and realize its full potential.

FP&A analysts, managers, and directors report to the chief financial officer (CFO). If you don’t have a CFO, your business may consider hiring an outsourced or fractional CFO to experience all the benefits of a sound finance department.

Goals of Financial Planning and Analysis

Financial analysis and planning experts have several objectives in their roles. They include:

• Evaluating how past financial results and present activity affect future investments and assets using financial ratios
• Handling special projects like market research and mergers and acquisitions (M&A)
• Increasing revenue channels
• Reducing financial risk
• Optimizing cash flow
• Supporting company leadership in making the best business decisions

FP&A teams also prepare budgets and forecasts. They also use variance analysis, or the difference between actual behavior versus forecasted or planned behavior in budgeting or management accounting, to identify how to optimize cash flow.

Then, they provide revenue and net income guidance to shareholders based on their forecasts.

Steps of the Financial Planning and Analysis Process

FP&A is an ongoing cycle with the following steps:

• Collect financial data and non-financial data
• Data analysis of the company’s financials to uncover insights
• Communicate key insights to senior management through financial reporting
• Forecast and adjust business plans based on insights and KPIs
• Model new assumptions
• Execute strategies or revised plans

At the end of the fiscal year, you close your business books and start the process again. Although the process can analyze your entire business, you can also use it to examine a particular business unit or department.

Typical Financial Planning and Analysis Responsibilities

FP&A teams must prepare the following financial statements yearly for stakeholders:

• Balance sheet
• Cash flow statement
• Profit and loss statement (income statement)

Additional responsibilities of FP&A teams include the following:

• Aligning and defining business strategies
• Budgeting and financial forecasting
• Decision-making support
• Determining the impact of various resource allocations on short- and long-term objectives
• Financial planning
• Identifying problems with existing plans
• Performing scenarios to prepare for company or market condition changes
• Risk management

Generally speaking, your FP&A team will build financial models using data to predict future cash flow, expenses, and income, streamlining operations. This allows businesses to create actionable strategies for ultimate growth.

How Does Financial Planning and Analysis Affect Business Growth?

By now, it should come as no surprise that an FP&A team unlocks your business’s growth potential by analyzing financial data and creating business strategies from uncovered insights.

These experts can also show you how to achieve better business results and improve productivity, both of which will increase profitability.

Additionally, the FP&A team is instrumental when launching new products and product pricing, targeting new markets, or expanding internationally.

Best Practices for Financial Planning and Analysis

Some best practices for planning and analyzing your finances include:

• Anticipating reporting changes
• Automating reports and KPI tracking to generate template-driven reports and KPI dashboards so the information is easy to read
• Combining human resource and capital allocation plans
• Developing a rolling forecast process, like a 13-week rolling cash forecast
• Focusing on drivers and not small details
• Measuring the financial impact of strategic objectives
• Mitigating risk and uncertainty
• Using FP&A tools to model what-if scenarios

Common Financial Planning and Analysis Pitfalls

While beneficial for making business decisions, FP&A isn’t without some pitfalls, such as:

• Lack of Data Quality
• Time-Consuming Data Collection and Aggregation
• Over Emphasis on Historical Data
• Insufficient Cross-Functional Collaboration
• Over Complicated Models

However, this isn’t to say you should forgo FP&A solutions altogether—just the opposite. You should use the FP&A process to expand your business while investing in data quality, implementing robust planning tools, fostering better communication, and ensuring your FP&A function is aligned with the company’s strategic goals.

Learn About The William Stanley CFO Group Team

Michelle Delker is the founder and CEO of The William Stanley CFO Group. With nearly twenty years of experience in corporate finance, she is a finance leader in the Tampa region. Michelle founded The William Stanley CFO Group to help startups and small to mid-sized businesses:

• Diversify offerings
• Increase financial performance and value
• Manage risk
• Strengthen margins

Joining her is Robyn Keithley, the VP of Operations, who brings similar financial management experience to the team. Robyn helps clients use real-time data in financial planning processes to drive growth and profitability.

Partner With Financial Planning and Analysis Experts Today

A financial planning and analysis team is a must when you want your business to grow beyond its current boundaries and reach its fullest potential! Without the proper expertise, you may leave significant opportunities on the table for your competitors to capitalize on.

Want to learn more about our FP&A professionals at The William Stanley CFO Group? Contact us today for a consultation!