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Planning In Chaos & Beyond

Planning In Chaos & Beyond

This is a transcript of a presentation by Jim French, Founder & CFO of IFI Professionals.

Recently, we've seen businesses thrown into chaos. They're asking themselves, do I need to redo my plan? Do I have enough cash runway to get me through this? Which assets do I need to protect? Which assets can I invest? How often am I going to need to redo my plan?

Is your business in a state of fear, (like I am in this bee suit) with your hands covered, your face covered, and your body covered? Or do you have a plan in place that's allowing you to execute while chaos swarms around you? One that allows you to remove your gloves so that you can feel and execute, or remove the hood, so you can see clearly, and see what's ahead of you?

Hi, I'm Jim French, Founder of IFI. Today we're recording in front of my beehives, so that we can share with you about how you can execute amongst chaos. As you see, the bees are all swarming and flying around, and we've got a plan that allows us to execute. We're also going to share with you the three steps that we guide our clients through on how to execute and improve their planning process.

Successful businesses that leverage this planning process follow a circular process, which includes four steps. There's building your plan, executing against that plan, measuring the results against that plan, and analyzing the differences. Then you're able to start that process again. Most businesses don't have a strong FPandA side of their business, and so they're not able to do this continual planning. But if you follow these three steps, we'll be able to help you not overextend your business, or when chaos happens, get yourself in a death spiral.

The first step in this process is building out a cash flow. We look at this typically being about 16 weeks, or eight to 16 weeks. Most businesses have done this. Where we started and made this different is we'd actually broken out what we refer to as high probability items, and then low probability items. We do this both on the inflow side, and on the outflow side. By breaking these elements into those two components, it allows us to know where our baseline is, so we understand where we're making a gamble, which are low probability items, and where our baseline is (or our core business,) which are our high probability items. And so, things that fit into your high probability may be maintenance streams. On the outflow side, it may be payroll, it may be rent. Lower probability items may be things like new business opportunities, a new location that you're able to expand into, a new business line that you may be looking to add. And so by building this cash flow and breaking it out, you now will have a foundation to grow onto the next steps.

The second step is, taking those high probability items, and modeling them back out. This may include listing down the customers, it will be building the drivers, it will also allow us to model out what the revenue looks like, and what the cash looks like. And so now those items will be able to be broken down. On the expense side, this may be breaking our payroll down by department, into what we look at as the high probability components, and then the low probability components.

The third step in this process is building out the model around the lower probability items. This is things, as we talked about before, like new business opportunities. But you want to model that out. So you understand, if we take on this new business, this is the margin we're expecting in the first six months, or the first 12 months. And then you're able to adjust that as you go.

By leveraging these three steps, businesses are able to execute faster, react quicker to business change, and are able to start planning and training their people on how to drive against this methodology.

Now that we've talked a little bit about the journey, let's talk about how we go on that execution. While we break it down into two steps, we actually look at this as things that are driven by people, processes, and technology.

So the first step in this process is what questions we need to ask. And the second step is, what are the steps that we're going to go through. So the questions we need to ask are, who's going to be driving, who's going to be leading this process so that we can build out our plan? What technologies are we going to use to drive this plan? We don't have to use a powerful technology. If we're small, we can use something as simple as Excel, as long as we're getting into the process of doing it. The next thing we're going to ask is, how quickly are we going to be able to get our responses back against that plan? How quickly are we going to be able to measure those responses? If I get my results from last month at the end of this month, well then that's too long to do a monthly cycle, right. The last step is, how often are we gonna remeasure, and readjust our plan?

The next process that we talked about is really the steps that we go through. So this is where we actually name the person that's going to be driving this, we then go ahead and determine, is this going to be isolated up at the executive level, or are we going to bring this down to the department level? And at the department level, who's going to be involved in those processes? Then we're going to go through, and actually determine the technology, and start implementing and building out our plan and our model. We're then going to go ahead and build out those KPIs that are associated with the model. Because we built the model, we should be understanding what are the driving factors of that, how are we going to measure that? We then are going to go through, and we'll have to make adjustments to my accounting process so that they can produce those KPIs for us, and validate that those KPIs are accurate. This may include other things besides income statement and balance sheet elements. It may include what are my bookings, it may include what is my anticipated margin. But we're going to go ahead and put those processes in place. Next, we're gonna go ahead, and we're actually going to start building our plans, and start educating our managers so that they know how to execute against these plans, and know how to tell when something has fallen off the rails, or chaos has struck. We also need to teach them how to adjust, and how to fall back to that baseline position. And as we talked about before, the ability to fall back quickly to that baseline position is going to allow us to restart building our processes and our business back up. The slower we react, the slower we will miss that.

Additionally, chaos also leads to opportunity. So again, if we're slow to react, we may miss an opportunity that was open right to us. I

If this information was helpful, we'd love to tell you a little bit about how we are helping our clients, and how we may be able to assist you. We'd love to learn a little bit about your planning journey. We actually assist on a few different levels. At IFI, we've been helping our clients through their different journeys for the last six years. We can share with you a little bit of how we can help you through your journey. We start with something as simple as, we can help you decide what your plan is. We can help you model your plan. We can help you select the technology you should be using at the current point in that plan. We can also guide you as you go through this plan, to help you out. And finally, we can actually act as an outsource FPandA. We can actually act as an outsource FPandA department for you, to help you leverage and execute against your plans, manage your plans, validate your plans.

So why don't you go ahead and reach out to us at, and set up a meeting so we can talk to you about your planning journey. And I'm going to go ahead and step away from these bees that are starting to swarm me, because I have a plan.