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It’s March 2020, and many companies are facing the reality that the carefully crafted financial plans and budgets they started the new year with are suddenly, and dramatically, out of date. While it’s common to re-forecast after a quarter, it’s less common to have to revisit ALL your budget assumptions wholesale, as many organizations are now scrambling to do.

Furthermore, there is so much uncertainty in the business climate that it would be wise to run more than one forecast, to evaluate the impact of different scenarios on outcomes to find the best (or perhaps “least bad”) option. Time is of the essence and can make the difference between merely surviving a difficult period, capitalizing on competitive opportunities to come out ahead when it’s over.

This is stressful in any case, but the situation is made worse if you don’t have the right tools in place for your circumstances. In this blog post, QueBIT draws on its extensive experience in advising companies on their financial and operational planning systems, with 4 tips to help you make the best possible plan … to re-do your plan!

Tip 1: Assess the Situation

What do you need to know, who needs to be involved, and what tools will you use?

The big trade-offs are between “detail”, “quality” and “speed”.

• If you use a lot of detail, but don’t have a good tool to manage the data volumes, you will lose time on data manipulation and validation.
• If you need input from many contributors to ensure your plan is properly informed by business realities (high “quality”), but don’t have a good tool to support collaboration, you will lose time on coordination, communication and data consolidation.

If you have invested in a planning software platform, are using validated governed data, and have built good driver-based models that allow you to modify assumptions (such as headcount, productivity %, FX and interest rates etc), and can easily produce a P&L and cash forecast for different scenarios, then … CONGRATULATIONS! You are in good shape.

Here’s a decision table:

Tip 2: Analyze and Prioritize

What’s most useful to know, given limited resources? Assuming you feel like you are flying blind and need to get answers quickly, even if just at a high level, it is important to prioritize how you spend your time.

For example, if you have 4 business units, but 75% of your business comes from just one of them, just focus (initially) on that one.

Remember that more detail and complexity doesn’t always provide materially greater accuracy. When under time pressure, if you get an answer that passes the “reasonableness test”, it’s OK to go with it – at least on the first pass.

If Excel spreadsheets are all that you have to work with, take the time to apply some Excel modeling best practices. The web is full of good advice, for example this from Forbes.

If you are looking for other options, check out QueBIT’s blog post on Excel and State-of-the-Art Planning. Keep in mind that you can be up and running on a planning solution with working P&L, balance sheet and cash flow models in as little as 1 – 3 months, depending on your requirements.

Tip 3: Just Get your Answers

If Excel is your main planning tool, and you already have models of your business that can answer questions like “what happens if physical store sales decrease by 50%, but on-line sales go up by the same amount?”, then everything may be fine.

The only caveat is if you have outgrown Excel’s capabilities. If you are not sure, ask yourself this question:

If the answer is YES, then it is likely you have outgrown Excel’s capabilities. Your choices are to simplify your models, or to invest in a planning solution: both these options are explained in Tip 2 above!

Tip 4: Get more value from your investment

If you have already invested in a planning software platform (other than Excel), and it is not meeting your current needs, then what should you do?

All the major planning software platforms are designed to have broad capabilities to support all the different ways businesses plan. It is therefore rare that the problem is due to a technical limitation (even if it might feel that way!)

Here are the 4 most common scenarios:

For all these scenarios, the fallback measure is to use Excel to plug the gap. This may be adequate for your situation as described in Tip 3 above, but it is also an admission of defeat!

Here you are with the technological potential to perform quick and accurate what-if scenario analyses, share the data easily with decision makers, and increase the chances that your organization will not only weather the storm, but be in a position to grab opportunities that slower moving competitors cannot hope to capitalize on … and you are squandering it.

If you are not sure what to do, contact QueBIT. We have system healthcheck and training options that can get you on the road to productivity sooner than you might think!