The Influence Of FP&A On Business Decision Making
Show Notes
Welcome to FP&A Tomorrow, where we discuss financial planning and analysis, examining its current state and future prospects, with your host Paul Barnhurst.
The title sponsor for this week’s episode of FP&A Tomorrow is Abacum, the leading mid-market FP&A solution trusted by hundreds of companies to eliminate the spreadsheet struggle. https://www.abacum.io
In today’s episode, Paul sits down with Jon Laudie, to discuss integrating FP&A into strategic planning and decision-making across businesses.
With Jon Laudie, CFO at Zerorez, plunge into Financial Planning & Analysis (FP&A) and learn from Jon's rich experience and strategic insights. From his initial roles in investment banking to his current position as CFO, Jon shares valuable lessons.
Key takeaways from this week's episode include: :
Here is a concise summary of the key points from the discussion:
The transition challenges and learnings involved in moving to a CFO position, including dealing with complex financial operations and integrating multiple acquisitions.
FP&A functions are evolving to become more aligned with strategic finance, significantly enhancing their impact on business decision-making.
Emerging technologies are streamlining FP&A processes, making them more efficient and reducing reliance on manual tasks.
Strategies for FP&A professionals to become more strategic and operationally focused are discussed, including building relationships outside of finance and understanding the broader business context.
Quotes:
Here are a few relevant quotes from the episode about FP&A mastery:
“I think great FP&A in my mind is a function that is deeply integrated into the strategic planning and the decision-making of any organization.”
“We still come across things that surprise us, like, 'Oh, we didn't realize how this is or this contract existed.”
In today's episode:
[01:29] Introduction;
[02:56] Strategic integration of FP&A in business decision-making;
[07:23] Insights on managing complex financial structures as CFO;
[10:43] Strategies for addressing unexpected issues post-transaction;
[31:08] Advice for FP&A professionals to be more strategic and operationally focused;
[37:16] Techniques to ensure alignment across various planning activities within an organization;
[39:32] Rapid-fire session;
[44:15] Guest provides a personal touch to the professional discussion;
Follow Jon:
LinkedIn - https://www.linkedin.com/in/jonlaudie
Website - https://www.zerorez.com
Follow Paul:
Website - https://www.thefpandaguy.com
LinkedIn - https://www.linkedin.com/in/thefpandaguy
For CPE credit please go to earmarkcpe.com, listen to the episode, download the app, and answer a few questions. For AFP FPAC certification answer the questions and contact Paul Barnhurst for further details.
Full Show Transcript:
Guest: Jon Laudie:: Great fire in my mind, is a function that is deeply integrated into the strategic planning and the decision-making of any organization. There were huge problems to solve and the hunger for models and data to help paint the picture of different outcomes. I kind of fell in love with that and just looked for opportunities to get as much exposure to different areas of the business throughout those roles as I could be.
Host: Paul Barnhurst:: Your first CFO role, what has the experience been like so far?
Guest: Jon Laudie:: I've learned so much until the time I joined and right after I joined beat.
Host: Paul Barnhurst:: Jon Laudie, a finance professional, began his career at an investment banking and financial advisory company, specializing in M&A valuations. Later, he worked in FP&A, eventually working his way up to CFO at Zerorez. With a sharp eye for detail, Jon has achieved great success in his career while working for top multinational corporations such as Netflix, and in his upcoming video, Jon will share valuable financial insights gained from his experience on how to effectively manage and guide businesses from both a financial and strategic perspective.
Guest: Jon Laudie:: The last two years have been focused for me on the fundamentals, first, building the right structure for the team. I've always loved the business partnering aspect of what we do in finance and at FP&A, and that continues in the CFO seat. We still come across things that surprise us, like, "Oh, we didn't realize how this is or this contract existed."
Host: Paul Barnhurst:: Abacum is the leading mid-market FP&A solution trusted by hundreds of companies to eliminate the spreadsheet struggle. Visit abacum.io today and multiply the impact of your finance team. Hello everyone. Welcome to FP&A Tomorrow, where we delve into the world of financial planning and analysis, examining its current state and future prospects. I'm your host, Paul Barnhurst, aka the FP&A Guy. Each week, we are joined by thought leaders, industry experts, and practitioners who share their insights and experiences. Whether you're a seasoned professional or just starting your journey in FP&A, this show has something for everyone. Before we introduce this week's guest, I want to give a special thanks to our title sponsor for this episode, Abacum, whose support makes this episode possible. Now let's delve into the world of FP&A this week I'm thrilled to welcome to the show Jon Laudie. Jon, welcome to the show.
Guest: Jon Laudie:: Hey, thanks. It's good to be here.
Host: Paul Barnhurst:: I'm really excited to have you. So a little bit about Jon's background, he comes to us from the Salt Lake City metro area, much like me. He's currently serving as the CFO at Zerorez and he went to school at BYU. So, Jon, one of the first questions we like to ask people before we get into the background is, in your mind, what does great FP&A look like in the world today?
Guest: Jon Laudie:: Paul, I think great FP&A in my mind is a function that is deeply integrated into the strategic planning and the decision-making of any organization. I think more and more you see teams rebranding as strategic finance kind of naming themselves that instead of FP&A. I think that kind of appropriately captures the value that FP&A can and really should be providing to a business. So ultimately, strong trust and partnership are essential to delivering great FP&A. I think that enables FP&A to have a seat at the table and to be consulted daily and broadly across not only financial outcomes but also operational outcomes. So I would say great FP&A is kind of the body of all of that.
Host: Paul Barnhurst:: I appreciate that. I agree with you, about the strategy, the commercial. I've seen vendors use that as a way to describe their platform, a strategic finance platform instead of an FP&A platform. So curious to get your thoughts on how you see it changing over the next five years with technology and everything that's coming, where do you see FP&A going?
Guest: Jon Laudie:: I think FP&A has changed a lot in the last ten years and a lot in the last three years, and I think it will continue to change. I think great planning tools will continue to kind of take more and more of the day-to-day reporting and the manual work kind of away and automate that. I think that ultimately allows FP&A to focus on what it should be great at and what great FP&A should be, ultimately, which is partnership cross-functionally and providing the context and the story and the decision-making support and really the why behind things. So I see a continued evolution in that regard. I'm, at the moment, intrigued by some of the technology that is coming out that can enable that as we move forward from here, I think there will be some very interesting changes in that regard in the next couple of years.
Host: Paul Barnhurst:: I'm excited to talk a little bit more about that. I think it's amazing what we're seeing technically and how it could change the way we work and how it is changing the way we work, frankly, for many of us.
Guest: Jon Laudie:: Absolutely.
Host: Paul Barnhurst:: Can you give our audience your background? Tell them a little bit about yourself and how you ended up where you're at today.
Guest: Jon Laudie:: Sure. So I started my career at an investment banking and financial advisory firm focused primarily on M&A valuations and privately, publicly held companies. It was a fascinating role, and it gave me a look under the hood early in my career at the consolidated financials of lots of different companies. I learned a lot of critical skills in financial modeling, how to see the big picture of financial results, what they look like for a company, and how M&A affected and drove those. I also learned some great technical accounting in that role too as it related to things like goodwill and intangible assets and the other pieces of a transaction that often aren't considered or thought through as much. When I left that role, I chose to go in-house to a corporate FP&A team. So I started there a couple of years ago and then went in-house to corporate FP&A, and I continued to build my career there across different roles in corporate development, investor relations, and then corporate FP&A, various companies across various industries. I loved getting in-house and being able to dig into the details at a more granular level than what I was doing on the advisory side.
Guest: Jon Laudie:: There were huge problems to solve and the hunger for models and data to help paint the picture of different outcomes. So I kind of fell in love with that and just looked for opportunities to get as much exposure to different areas of the business throughout those roles as I could. A few years ago, I was approached about a CFO opportunity for a private equity-backed company in the home services industry, Zerorez, and this was somewhat of a departure from industries that I'd been a part of. But I loved who I met on the management team. I loved and felt a great partnership between the management team, the company, and private equity sponsors. So I was excited to stretch myself in some new ways, leverage everything that I had kind of gained through my FP&A upbringing, if you will, in those previous roles, and put that into a role where I'd have the ability to influence at a greater level. So here we are.
Host: Paul Barnhurst:: Great. Well, congratulations on that, that's exciting. It's been almost two years now. Is that right?
Guest: Jon Laudie:: Coming up on two years here in a few months.
Host: Paul Barnhurst:: The first question I have this being your first CFO role, what has the experience been like so far? Maybe talk a little bit about how it's been.
Guest: Jon Laudie:: Look, I've learned so much. For a bit of background, we were a founder-led company until the time I joined and right after I joined, we brought on a private equity partner. I mentioned that before, and they brought with them the company's first meaningful outside investment. So concurrently with that private equity partnership that we brought on, we also acquired ten other companies in one very complicated transaction. So all this kind of happened concurrently on one day in 2022. That significantly increased our size, and our financial bulk as an entity. A lot of what we've been focused on as a business the last two years has been integration of M&A, building infrastructure to support the new organization and we have the traditional private equity structure with the lenders, the credit agreement, the covenants, and we have to comply there. We're also really focused on profitable growth as we move forward, ultimately balancing the investment in top-line growth. Driving EBITDA, which is going to be critical for us as we move forward. So that's a bit of what I stepped into and kind of what we're doing as a business. Given the stage of the company and the acquisitions that we did at that time, the legacy finance infrastructure was light relative to what the new organization needed. So the last two years have been focused for me on the fundamentals first, and that's building the right structure for the team. One other big area of focus that I've spent a lot of time worrying about in my prior roles as I hadn't spent a lot of time clarifying in my prior roles, was focused on audit.
Guest: Jon Laudie:: So completing the audit was one of the biggest priorities we had coming out of 2022. It was a crazy year from a financial perspective with all the M&A. So the audit process was frankly, a bit wild. As a franchise business, we have a regulatory requirement every year to file what's called a Franchise Disclosure Document or the FDD. One piece of that is the audit. So the audit gets kind of publicly filed every single year. We're not a public company but we do have that requirement where we have to file our financials by a certain date to make that timeline. So bringing together ten entities into one audit, all on a timeline was just a big challenge. One other thing, I've spent a lot of time in the last two years thinking about that I didn't realize I would be thinking about, technical accounting. I mentioned a little bit, that I started my career thinking a little bit about kind of that side of the M&A deals that we were valuing at the time. But purchase accounting, revenue recognition, accounting, lease standard accounting, all of these new kinds of ASC guidelines that I've been learning a lot about the last two years. Maybe we'll get into more, I'm sure, with some of the next questions but that's kind of a quick intro to some of the stuff that we've been doing, some of the stuff I've been thinking about, that's frankly quite different than my background was before this, and I've been learning a ton.
Host: Paul Barnhurst:: That's good. You've been learning a ton, and I can imagine rolling up ten companies all at the same time is a lot of work. I mean, I know some of them were probably small, some larger, but they still all have to be integrated regardless of the size.
Guest: Jon Laudie:: That's the truth. If only it were easier to integrate something smaller than bigger. It's kind of the same.
Host: Paul Barnhurst:: There's still a lot of the same process and steps. So what's been the biggest surprise since stepping into the role that maybe you weren't expecting?
Guest: Jon Laudie:: I think I wasn't expecting it to be as fulfilling as it is to work every single day with the other leaders across the business and we get into kind of how that parallels to FP&A just in general. But everyone as a team, at the executive team level, is kind of thinking about what's best for the business, period. And we all have kind of these lanes that we're focused on, focused on the finance, the accounting, delivering the projections and kind of the audit and driving good decision making and marketing is focused on acquiring new customers. But ultimately everyone sits at that table together and says, "Here's the overarching goal we have as a company and how do I support you and how do we support each other?" It's been fulfilling to work with them on that cross-department, cross-functionally, and just have a lot of collaboration. I've always loved the business partnering aspect of what we do in finance and FP&A, and that continues in the CFO seat. In fact, it even gets more pronounced, like the need for that becomes even bigger. And so I've enjoyed that a lot. I think one other surprise is how many experts it takes to successfully apply GAAP to our financials. I mean, we have partners across tax and audit, technical accounting, and international and transfer pricing. It takes a lot of outside support to work through regular day-to-day stuff, particularly, in an inquisitive environment where you're bringing in new companies and dealing with kind of that aspect. So I was certainly surprised at what that was going to take. I have found really great partners in the last couple of years to help fill in those gaps as we're growing.
Host: Paul Barnhurst:: That's why I just do cash-based accounting, business one nice and easy.
Guest: Jon Laudie:: No questioning it, that's for sure.
Host: Paul Barnhurst:: You mentioned kind of the surprise of just how much the partnering was there. Is that also kind of been your favorite part is working with the senior leaders so far in the role?
Guest: Jon Laudie:: I think it has been one of my favorite parts. I think another favorite part and perhaps least favorite part kind of in the same vein is, that I think every business experiences this, and we continue to find kind of legacy issues that need to be resolved. So an old contract or an old agreement or something that is a surprise and two years into kind of post-transaction, that big deal we did. We still come across things that surprise us like, "Oh, we didn't realize this was how this is or this contract existed." So I would say maybe being surprised is my least favorite thing. I don't think anybody in this field loves surprises but I also think that perhaps one of my favorite things is the fact that there's complexity and it's ever-changing and evolving, and we are getting curveballs thrown at us left and right. I really enjoy solving those kinds of problems and working through those complexities.
Host: Paul Barnhurst:: Talk a little bit about maybe the framework or process you use to work through one of those surprises, like someone drops on your lap, "Hey, we just found out about this contract and we're obligated to do X, Y, Z, or whatever it might be, what's your process to work through that surprise?
Guest: Jon Laudie:: I think that first and foremost, it's "Bring the right people to the table who have the context." I think a contract can get dropped and say one thing and have a lot of context behind it that helps you with the interpretation of what this really means. So getting with legal, getting with folks who were involved in the initial conversations if they're around and if they're not around getting on the phone with those people who are on the other side of that contract and bringing people together, one thing our CEO talks a lot about here is you want to have everyone in the same tent and not be on the outside of the tent kind of yelling in or on the inside of the tent, yelling out, but rather just inside the tent talking together and I think that is the number one approach I take. I've learned that, I credit that to him, is get the people together, sit down and have a conversation, and figure out what are the implications of this and what can we do to best abide by what the original intent was of any agreement, while also recognizing and understanding that the business may have changed. So there's potentially new nuance to the way we need to actually carry it out.
Host: Paul Barnhurst:: That's a good approach and always a good idea to pull the experts, as you said, into the room versus making our assumptions ourselves. We know it usually happens when we do that. We've all been there on that front. So it was been a year and a half, almost two years here. Talk about how FP&A has prepared you for the CFO role, maybe how it's prepared you, and maybe some areas where you feel like it didn't prepare you, a little bit of both sides there.
Guest: Jon Laudie:: Interestingly, there were some times at the beginning of my time in this role when I felt like I wasn't remotely prepared for what I was doing. What I knew and had built my career was traditional FP&A work. I wasn't doing much of that and I was focused on building accounting infrastructure and getting the right systems in place and some of that was just nuanced. Every company is going to be at a different stage if you're stepping into that CFO seat. Our focus was accounting, infrastructure leveling up, getting the right systems in place, getting the right processes and controls in place, and hiring a team to support the existing team we had. Well, I've mentioned this before, working through the audit, working through the right outside partners to figure out some of the more complicated GAAP stuff, onboarding new audit partners, etc. So all of that was new to me outside of my wheelhouse, and not directly related to my experience in FP&A. That said, I look back on the last two years and say, I realized that my experience in FP&A uniquely positioned me, I think, to be successful in accomplishing those things. I've been able to build a structure and a team focused on the fundamentals because I know what the planning analysis side can do, and that I know it can be so much more impactful when the accounting side is all correct and accurate and set up functionally.
Guest: Jon Laudie:: So the FP&A North Star of being at the center of every decision-making moment and bringing data and analysis to every decision, partnering and influencing the business, all those things, all those have been critical in my ability to be successful over the last year, just as a member of the executive team and working with that group. but also I think beginning with the end in mind, in terms of having the ability to sort of create an accounting infrastructure that will enable great best-in-class FP&A. I do think that has uniquely helped me over the last year as well to think about where we're going. So maybe the last thing I'll add here, working with bankers on covenant compliance and private equity sponsors, and investors on adjusted EBITDA, and EBITDA adjustments reporting. There's a lot of jokes about adjusted EBITDA. But working through the annual budget process, all of those things are still happening and table stakes a little bit for the day job here too. So I would say that stuff did prepare me and a stronger accounting background would have, would have been helpful to me. But I don't think it was critical to me being able to find my feet here.
Host: Paul Barnhurst:: Now, a word from our sponsor. The FP&A process is broken. You know it is and I know it is. Putting together management reports takes forever. There is a growing demand for operational insights, and running scenarios or preparing budgets will inevitably break your spreadsheets. It doesn't have to be this way. Abacum is the leading mid-market, FP&A solution, empowering hundreds of finance teams to eliminate their spreadsheet struggle with automated reporting and forecasting. With Abacum, finance teams can see every financial and operational KPI in real time, forecast revenue more accurately, build headcount plans, budget their spending more effectively, and run any scenario with just one click. Abacum is the most scalable FP&A solution for finance teams. If you want to double your output half your reporting time, forecast your performance, and become a strategic partner to your business, visit abacum.io today. Got it. So it sounds like FPI gave you a real appreciation for how important it was to have clean data, to have the accounting, the systems, that infrastructure in place so that you can be a data-driven culture that's helping inform and guide the business. Is that fair to say?
Guest: Jon Laudie:: Absolutely. I would even say I put my little flavor and my pitch in as we were working through kind of core values and rebuilding some of that with our new organization in the last year and fought hard to have data-driven analysis as one of our core values where we're data-driven company and so I got my little flavor in there and it stuck. So it's now part of who we are, at least on the whiteboard and on the wall. We're going to strive to live to that every day. But I agree, I think data-driven analysis and decisions are core to what I believe and are core to what we will be doing here as a business.
Host: Paul Barnhurst:: How critical is it to have the right systems to be able to be data-driven? I mean, I've seen companies we've all been there where data is a mess and you try to be data-driven. To me, it seems really hard. What's your take now kind of really have to come in and how to put some systems in place? Probably, seen several different companies, how critical is it to get those systems right to be a data-driven company?
Guest: Jon Laudie:: It is everything. You can't do it without it. We're fortunate here to have a great in-house CRM that houses a lot of our data. Operational KPIs, it's rich data that we have for our business for both the franchise side as well as kind of our franchisees. We can see their data and help support them by analyzing it with them. But that data isn't necessarily easily attained. It lives on these tables. But getting that data out and creating insights from it is still a challenge. We're working on systems right now to improve that and make that easier for the business to get that data, get it trended, and pull out the insights. Accounting data too, you talk about systems on the accounting side and ERP and kind of the evolution from QuickBooks to NetSuite to whatever you may be on, the data availability and the ability to slice and pull out what you need is also so critical. We operate a lot of different departments and a lot of different locations around the country and the world, frankly. So being able to pull unique panels for every single piece of the business and manage them at that level, it's not possible with the wrong system. So I do think the investment in tools is just so critical to being able to do what we're talking about.
Host: Paul Barnhurst:: I agree with you. As I like to say, you get the right people in place. You have a process-driven, oriented, constant process improvement type culture. Then if you put technology in with that kind of magic can happen. You need the technology to be an enabler, but you can't look at it to just be your solution.
Guest: Jon Laudie:: Absolutely. I agree wholeheartedly with that. I think evolution is real too. On day one, it's not going to look like that. So as you said, there's "Get the people in place" and then there's "Get the process." But then the technology to support all of it, technology will look like v1 to V 700 and we might be at B seven right now. There's just so much more that can always be done.
Host: Paul Barnhurst:: I've come to believe we've for the last decade we've heard a ton of digital transformation. I feel like it's much more of a digital evolution. It's not a one-time event. It's not a transformation. We should be constantly improving and figuring out how we drive further on the data and that digital structure. I think sometimes we think it's just an event. I just got to get past this implementation and then it will all be good or I just got to get past this integration and then it will all work, rarely ever is that the case.
Guest: Jon Laudie:: No, it's a step one and there's ten more after it.
Host: Paul Barnhurst:: Pretty much always the case. So you mentioned you're at Zerorez. I know that's a franchise or business. Can you talk a little bit about how that model works? Tell our audience a little bit about that structure and maybe what are some of the key metrics that you monitor as the CFO?
Guest: Jon Laudie:: Franchising has been a brand new business model for me in the last few years, I've learned a lot about this. I realized I know infinitely less than most others who've been in the game much longer than me. but sharing kind of a few thoughts. As the franchisor, we aim to sell franchises, and franchises to franchisees around the country and now the globe. We were in the UK just this last year, in Canada, the last couple of years. So just getting underway internationally, we then receive the franchise or royalty back from our franchisees as they grow their business, basically a percentage of revenue. They're essentially paying for their access to the brand to all of the support functions that we provide as the franchisor to them. A few things that we provide to our franchisees and always can. By the way, we are aspiring to be better at all of this that we do training on the actual Zerorez way, what is the Zerorez system and the process that we go by, What is the way that we represent ourselves in the market, and training on all of that is one very important thing that we do. We provide marketing support to our franchisees, a quarterly playbook that says, here are the campaigns we're going to run, and Houston, you should run the same thing that Atlanta's running and we can align because then the marketing team can create creative assets that are available to everybody that support these campaigns.
Guest: Jon Laudie:: So creating alignment and sort of saying, here's the playbook for the next quarter, brings everybody together versus a lot of people creating independent sort of work and work streams rather than benefiting from the system. So that's another thing that we provide and simple things also like how to set up a chart of accounts and manage your profitability and your accounting system and paint a picture of what others have been able to do in terms of at a million in revenue. This is kind of how you should look in your PNL and at 2 million in revenue, this is how you should look in your PNL, and here are ten data points that sort of support where others were along this journey. So franchising is that it's all of that together. We, as the franchisor, strive to support our franchisees in growing their businesses and in the journey as they build their businesses, as is often the case with some franchise owners, certainly, is with us. We also have some franchises that we operate that are corporate-owned. So corporate-owned bases, if you will, corporate-owned locations. We also run it in cities that we own and so we have a fleet of vehicles. We hire technicians, we do marketing to acquire customers on our own.
Guest: Jon Laudie:: Again, the franchisees are independent business owners. They kind of run in their own stream, in their own city where they've acquired their franchise. Then we separately are sort of running our own. That creates this opportunity for learning. That's really unique because we can learn what's working and not working for us. Tulsa, Oklahoma, and sort of pass that data and insight along to somebody who's running Oklahoma City. and we create this kind of network or this system network effect of learning that we're able to be more impactful in the training that we provide by actually doing the work as well. So KPIs, it's what are the revenue growth in our total system, what is the growth rate for each of our franchisees based on their age, one-year-old, two-year-old, and three-year-old. We do cohort analysis on kind of the group from 2005 and the group from 2012 and how are they performing. We target our franchisees who we can help the most in any given year and assign a coach to go and support them. So it's generally a revenue-based KPI trend that we're monitoring at the highest level, but we do get well below that and look at some operational KPIs like how many vehicles are in the fleet, and how many technicians you have.
Guest: Jon Laudie:: So one ratio is kind of text per van, how many technicians do you have per van in terms of hiring to make sure we're not overhiring or don't have enough folks marketing metrics around how many jobs are booked, kind of the leading indicator. Then there's the funnel of somebody who might cancel or reschedule to ultimately get to a how many jobs are completed job average, which is like you know, how much revenue per job. We kind of monitor that from front to back. Maybe the most important one that we really monitor and push hard every year during our awards and annual conference for our franchisees is this NPS score. We are proud of the NPS score. We're in homes every single day, thousands of homes across the country. We pride ourselves on being best-in-class and a different experience for those people who are using our product. So how do we measure that? Well, we ask for reviews and surveys from our customers. We strive to be a best-in-class, NPS score. So I would say on the whole, there's a lot, I just said, I think around KPIs but we're monitoring on the franchise side, certain things and on our corporate-owned locations, sort of other things. But ultimately it's the same KPIs that everyone's doing when they're running one of our operations.
Host: Paul Barnhurst:: Got it. So if I hear that, it feels like on the financial side, it's a lot around revenue and just revenue growth cohorts understanding how they're performing corporate franchise. From the customer's perspective, NPS is critical. Sounds like that's kind of a North Star for you guys or the customers are happy at the end of the day and then operationally, it's those standard things you'd think about. But in your case, the funnel from "Hey, you booked" to "Did we actually get a sale and what does that look like." Then efficiency, are our franchisees being efficient so we can give them advice if they're not saying, hey, it looks like you guys have overhired or under-hired or help ensure that they're being as efficient and profitable as they can be within the guidance and the industry.
Guest: Jon Laudie:: Absolutely. Paul, one thing that's really interesting when you're working for a publicly traded company, you're always looking at your comps in the public markets and saying, okay, where's their sales and marketing as a percentage of revenue and R&D and DNA? And are we in line? And private companies sometimes don't have the luxury of comparing themselves to comparable companies. But in this franchise system, we have our own little network of this where we know, as a percentage of sales, how much should the technician labor be and how much should this other be. So quickly we can jump on, do a review, and say, man, you're like 4 or 5 points higher than you probably ought to be on this one thing. We see a lot of other folks who can do this for XYZ reason for 4 points less. So let's revisit the pay plan, let's revisit how many we're hiring. I think all of that is really interesting in the franchise world that support system and that network of people getting together to say, here's what I learned, and here's how you can benefit from that. It's been interesting.
Host: Paul Barnhurst:: I bet. We've talked a lot about the business operations. It leads me to a question I wanted to ask, in your opinion, what are 2 or 3 things FP&A professionals can do to be more strategic and operationally focused?
Guest: Jon Laudie:: I think first, build a relationship with people outside of finance. Go to lunch with the department leader, and ask to join a marketing overview from someone in marketing to learn the tactics behind what they do. I did this once. I have an example of a time when I worked at Ancestry. It was transformational to me at that time in my career. I had a simple 60-minute overview from one of the marketing managers at the company, and he taught me the basics of SEM, SEO, Facebook advertising, content marketing, display advertising, just the very simple this is how we do what we do. I, certainly, am not a marketing tactician and will never pretend to be one, but I got the 101 from somebody who's in the practice, doing it at the company where I worked and ultimately that simple knowledge helped me to get a better understanding to put context behind the numbers I was seeing and preparing every single day. So suddenly the analysis and the lifetime value analysis, looking at Google versus Facebook in terms of the cost to acquire the customer, and what that means in terms of their lifetime value. Suddenly I had so much more context and understanding around the dollars that were going to the places they were going in the PNL. So first, perhaps get outside of finance, build a relationship outside operationally in the business, even outside of just a day job analyzing them. But like 101 teaches me about product marketing or product management or engineering to some extent teaches me about the processes you're using for the engineering sprints.
Guest: Jon Laudie:: I think that it all has a multiplying effect for sure. A second one that comes to mind, step back and look really big picture and force yourself to do this. Maybe once a quarter, just step back and look differently at the business. I think one great way to do that and you wouldn't do this every quarter obviously, is just to build a model of your business as though you were a stock analyst, lay out the historicals for the last three years, and build out the next five years, again, super high level five line items on the PNL, R&D, sales marketing, G&A, Cogs, revenue, EBITDA, net income. Get to a cash flow and sort of say, what do I think this business is worth? That simple exercise forces you to think about really at a high level, where are we going? What do our projections say we're going to be at? Where does the efficiency fall in our PNL, and what are the levers that actually drive value for the shareholders and then I think a little buy, sell, hold analysis on your own company is a great way to be more strategic and just have that bigger picture perspective. Maybe I leave it at that. I don't know if that addresses a couple of points.
Host: Paul Barnhurst:: Hey there, it's your host, the FP&A guy. Today I'm thrilled to talk to you about Plan Buddies, where professionals meet excellence. This isn't just any community. It is a community run by and for planning professionals. Our Plan Buddies were all about fostering connections, sharing knowledge, and providing mentorship among FP&A experts. Ready to elevate your career? Visit plan-buddies.com and become a member today. And here's a special treat. Use the promo code which is ‘The FP&A Guy’ for an exclusive 25% discount on your first-year membership. No, definitely. That's helpful. I appreciate that answer. I have just a couple more questions and then we're going to move to kind of what we call a rapid-fire section. So as CFO how do you ensure that your different plans are aligned throughout the organization? You have strategic planning, you have financial planning, you have operational planning and we've all heard about the silos and disconnects. I'm sure you've seen it in your career. So I know, you play a critical part in making sure that it's aligned and that everything kind of hangs together how do you help ensure that happens across the org?
Guest: Jon Laudie:: It's a tricky one. I think FP&A has to play that role because FP&A has a seat and again, as we defined at the very beginning, should have a seat at all of those and all of those conversations to be best in class. So we're a bit early in that at our company right now in terms of the maturity model on FP&A but we look forward to getting further down that curve. As of right now, I think the most effective thing that can be done and that I've seen done, and that we're trying to do right now at Zerorez, is to create an annual planning process, which is financial but also operational and strategic and during that journey, create a ten-year plan, kind of a three-year plan, and then a one-year plan that starts the journey to the three-year plan. I think, then meeting after that is set defining annual goals, annual kind of what I'll call rocks, like here's the big things we're going to accomplish for the year. Then stepping into the first quarter and saying, okay, Q1, here are the three things that we're going to do that achieve that put us on the path, and then Q2 and then Q3 and Q4, and doing that quarterly with the entire kind of cross-functional team together. When I say the entire team, I don't mean every employee, but the leaders of each department. I think we have found and I've found that to be the most successful way because everybody's laddering their goals up to the total company goals.
Guest: Jon Laudie:: Generally, that drives people rowing in the same direction. I think there are occasionally times when we'll still think we're rowing in the same direction but somebody's doing something in direct contradiction to somebody else. It's going to drive the wrong outcome. So not only meeting quarterly on those kinds of big rocks, here's what we're going to chase, and here's what my department's going to do to ladder up to those company ones. But I think then just meeting weekly and checking in, okay, how's my status on this rock and this rock and this rock and talking through what we're running into and challenges we're seeing from the finance side or marketing representing that from the marketing side or ops. So bringing all of that together, kind of at the right cadence weekly forces that alignment to make sure we don't get two months down the road, realizing we both can work on a project that's driving kind of the different outcome. So I think that organizational structure around what I'll call strategic planning in general with kind of starting with the long-term vision, stepping that down to kind of the three years and then the one year to build to the three years, and then stepping down to the quarters to build to the one year and then checking in weekly on the quarters. It requires everyone to be at the table to do that. But I think that is effective, and that's what we're trying to build.
Host: Paul Barnhurst:: I feel like I hear you talk about it's starting long range and just filtering it down and making sure everybody's involved throughout that process that needs to be. I get not every employee in the company is going to be strategic. Then measuring that performance. When you say it that way, it's it sounds so simple. It starts with the big picture and just layer it all in, get down to whether that's weekly, daily, monthly, whatever your lowest level that you need to understand that is, and then have those conversations hold people accountable, review the metrics, and keep adjusting.
Guest: Jon Laudie:: That's right. And. As FP&A evolves at our company, even at any company, FP&A has to play a key role in this process. Modeling out the outcomes, ensuring that those rocks are that the company's executing against the highest value outcomes for the goal. FP&A is the one who helps ensure that's happening. So I think they play a critical role in being the shepherds of that strategic planning process.
Host: Paul Barnhurst:: I agree. I think they're a huge part of that. CFO helps guide that FP&A needs to be there and be involved in all those processes as if FP&A is just doing a financial process and not the rest, you're going to end up with a lot of, I think, problems and misalignment. I mean, who hasn't been in a meeting where somebody said, I don't recognize that number? If you've been in FP&A, you've been in plenty of those.
Guest: Jon Laudie:: Absolutely.
Host: Paul Barnhurst:: That's what we want to avoid. So this next section. These are rapid-fire, so we want to go through them quickly and get a few seconds to answer each one of your answers. There may be a sentence of why and we'll run through them and then we're going to move to our get to know you section. So you are ready?
Guest: Jon Laudie:: All right, ready.
Host: Paul Barnhurst:: Which one do you prefer, Google or Excel?
Guest: Jon Laudie:: Definitely, Excel.
Host: Paul Barnhurst:: I don't even know why I asked that question with FP&A people, but at least the product people I had the other day, I got some Google.
Guest: Jon Laudie:: Got some Google? I will say Google has transformed, Google has changed the way we do presentations. There is value there, but definitely, Excel.
Host: Paul Barnhurst:: Got it. Do you have any FP&A platform you're using today?
Guest: Jon Laudie:: Great question. We do not and that is something we're in the middle of evaluating at the moment. So we're talking to kind of some early-stage tools, which is interesting. I mentioned this kind of earlier, seeing what is being developed now. I think in the past, I've used Adaptive and Anaplan and IBM planning and analytics and Hyperion and kind of some of those tools. Stepping back earlier into the maturity curve. You look at mosaic and data rails and kind of some of these earlier-stage FP&A tools, it's been fascinating.
Host: Paul Barnhurst:: Great. I'm glad you enjoyed it. We'll look forward to hearing more about that where you end up going on that. So next question is are you guys currently using generative AI?
Guest: Jon Laudie:: Not leveraging this yet? I like that some newer tools incorporate this but it's not in our day-to-day.
Host: Paul Barnhurst:: Got it, fair enough. What is the number one technical skill that FP&A professionals should master?
Guest: Jon Laudie:: Financial modeling, Speed in Excel shortcuts, and I'll also say data manipulation like big data manipulation in Excel.
Host: Paul Barnhurst:: Got it. I like that one. That's a good one. What is the number one soft or human skill that they should master?
Guest: Jon Laudie:: Building trust and confidence in you as a partner. No ego, just striving for the right outcome for the business no matter what.
Host: Paul Barnhurst:: Love it. Great answer. So thank you for that. Now we're going to move to the section we call the Get to Know You section. So these are a little more kind of personal, so our audience gets to know a little bit more about you. So what's a favorite hobby or passion that you have?
Guest: Jon Laudie:: This changes over time. But right now, I've, in the last five years or so, gotten really into mountain biking, and I moved into a house a few years ago. It's right next to some trails, at a trail system and I love it. I get out on the trails as often as I can, and that's been a lot of fun lately.
Host: Paul Barnhurst:: Any great stories or experiences from these rides that you can tell our audience?
Guest: Jon Laudie:: I've gone over the handlebars a few times and realized my mortality. "Keep the wheels on the dirt", is my motto.
Host: Paul Barnhurst:: I've cracked a helmet before. So I can relate. Always a scary moment when you're looking at it and going, that could have been my head. What is one book you would recommend to our audience?
Guest: Jon Laudie:: Right now I'm reading Atomic Habits. I love it. I think the mindset shifts that this book recommends can meaningfully change the way that we operate both at home and at work. I love that book.
Host: Paul Barnhurst:: Great. I've heard great things about it. It's on my to-read list, so I'll have to pick that one up one of these days here. What's your favorite travel destination? Where are you going if you can go on a vacation for a week?
Guest: Jon Laudie:: I love to travel. Perhaps my favorite recent trip in recent history was going to Puerto Rico with my family over Thanksgiving last year. Close to the beach, very low-key, beautiful weather and some great family time always makes a trip a little bit better, at least for me. So that's hard to come by this sometimes. So I think if I could do a trip again this year, shortly, that's what I'd choose.
Host: Paul Barnhurst:: Nice. Puerto Rico with the family, that'd be fun. If you could have dinner with one person who's alive in the world, anybody in the world, who are you picking?
Guest: Jon Laudie:: This a great one. I grew up as a kid in Kansas City, and I became a huge Kansas City Chiefs fan. I would love and I'm not going to say Travis Kelce or Taylor Swift. I would love to have dinner with Clark Kent. He's the CEO of the Kansas City Chiefs. For decades it felt like as a Chiefs fan, growing up and I mean for decades, it just felt like there wasn't a lot to cheer for as a Chiefs fan. But the last ten years have been amazing, the last 5 to 6 in particular. I would love to hear him talk about how he's built that organization and what they attribute their success to in the recent decade.
Host: Paul Barnhurst:: I would love to sit down with Andy Reid from that organization, have dinner with him, and just hear a story. I know players love to play for him. I think he's rated as the number one coach players want to play for in the league.
Guest: Jon Laudie:: I think whatever they've done culturally is working and it's kind of fascinating. It's fun when it's your team.
Host: Paul Barnhurst:: It's always fun when it's your team. It's fascinating to see how big of a role culture can play. I don't think we always realize it. Often we forget and think, well, it's just about the systems or the metrics or the processes or execution and all important. It's not one or the other, but culture is a critical component over the long term.
Guest: Jon Laudie:: Absolutely.
Host: Paul Barnhurst:: The last question here before we let you go is, if you could offer our audience any advice to be a better partner for FP&A, if you could give them one piece of advice, what would it be?
Guest: Jon Laudie:: This will probably be a couple of things wrapped up into one but keep an open mind always, and be proactive in bringing solutions to leaders in the business before they ask for it or better yet, before they even know that there's an issue to think about. I think if you do this, you'll have people at work who are champions for you, for life, and it'll drive significant growth in your career.
Host: Paul Barnhurst:: You said that. I couldn't help but think of something. Carl Seidman said one time. He called it, one of the best things FP&A professionals can do is learn to anticipate where they think the market's going. So you can run those different analyses anticipating what people need. If one of your employees comes in and hey, I was looking at this, I noticed all this, I put this package together so you could review it without you asking them, how would you respond?
Guest: Jon Laudie:: I mean, it's just a game changer and that's someone that I want next to me all the time.
Host: Paul Barnhurst:: That's the guy, you're gonna be all right. I'll tap him to move up. That's someone I want or that person, guy or girl, whoever it is.
Guest: Jon Laudie:: Absolutely.
Host: Paul Barnhurst:: Well, thank you so much for joining us. We'll go ahead and put your LinkedIn profile in the show notes. So if anyone wants to reach out to you, they can contact you there. But thanks again for sparing a few minutes with us today. I enjoyed chatting with you.
Guest: Jon Laudie:: Thanks a lot, Paul. It's great to chat always. I appreciate it.
Host: Paul Barnhurst:: All right, thanks.
Guest: Jon Laudie:: See you.
Host: Paul Barnhurst:: Thanks for listening to FP&A Tomorrow. If you enjoyed the show, please leave us a five-star rating and a review on your podcast platform of choice. This allows us to continue to bring you great guests from around the globe. As a reminder, you can earn CPE credit by going to earmarkcpe.com, downloading the app, taking a short quiz, and getting your CPE certificate to earn continuing education credits for the FPAC certification. Take the quiz on earmark and contact me the show host for further details.
