Welcome to FP&A Tomorrow, where we discuss financial planning and analysis, examining its current state and future prospects, with your host Paul Barnhurst.

In this episode of FP&A Tomorrow, host Paul Barnhurst delves into the dynamic world of financial planning and analysis (FP&A). He is joined by Josh Aharonoff, an experienced finance professional who has navigated the complexities of FP&A, accounting, and entrepreneurship. The conversation offers insights into the current state of FP&A and its evolving future, with practical advice for both aspiring and seasoned finance professionals.

Josh Aharonoff is a seasoned finance expert with a background in accounting and a wealth of experience in both big four accounting and startups. After obtaining his CPA and working in global banking services, Josh ventured into entrepreneurship, co-founding a startup and later establishing his own firm, Mighty Digits, specializing in outsourced finance and accounting services. Josh is also a prominent figure on LinkedIn, with nearly 400,000 followers, and runs a popular daily newsletter and YouTube channel.

Here is a summary of the key points from the discussion:

1. Understanding what makes financial planning and analysis effective and impactful.

2. Josh’s professional journey from big four accounting to entrepreneurship and becoming a fractional CFO.

3. Insights into the chaotic yet rewarding environment of early-stage companies.

4. Essential technical and soft skills needed to excel in financial planning and analysis.

5. How to leverage social media for professional growth and its impact on career opportunities.
   

Quotes:

Here are a few relevant quotes from the episode 

• "Great FP&A is quick access to data that does not conflict with one another and easy inputs to see different scenarios, different outcomes." - Josh Aharonoff

• "If you're working for someone and you're thinking of going off on your own, it's a good idea to try to pick up some clients while you're still working." - Josh Aharonoff

• "In FP&A, it’s crucial to understand how to put together a forecast that not only tells the future but also showcases the past and allows you to easily tell the story of where the company has been." - Josh Aharonoff

• "People think that you create a financial model once. Okay, now you're done with it. In reality, every single month you should be updating your assumptions. You should be analyzing what exactly took place." - Josh Aharonoff
  

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Website - https://www.mightydigits.com/

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In today's episode:

[01:38] Introduction to the show and welcoming the guest
[02:14] Josh shares his perspective on what constitutes great financial planning and analysis.

[02:44] Josh discusses his career journey, from big four accounting to starting his own firm.

[05:31] Josh explains why he enjoys working with startups and the unique challenges they present.

[06:54] Josh shares memorable experiences with clients, particularly with the company Chili Piper.

[09:25] Josh reflects on why big four accounting wasn’t the right fit for him and what he learned from the experience.

[15:51] Discussion on the biggest challenges of working with startups, including fundraising and constant evolution.

[21:48] Josh offers advice for those looking to start their own advisory services.

[26:05] Josh talks about his favorite aspects of working in FP&A.

[34:55] Josh shares his journey of growing a significant following on LinkedIn and being recognized as a top voice.

[40:12] Josh discusses his recent recognition by Microsoft and what it means to him.

[41:25] Quick insights into Josh’s technical and soft skills, favorite tools, and personal preferences.

[50:53] Information on how listeners can reach out to Josh and learn more about his offerings.

Full Show Transcript

[00:00:00] Host: Paul Barnhurst: What does great FP&A look like? What is great FP&A?

[00:00:03] Guest: Josh Aharonoff: Great FP&A is quick access to data that does not conflict with one another. For whatever reason, people just love seeing on your resume that you have big four experience. If you're working with people who, for whatever reason, bring you down, it's just going to be totally miserable. And the opposite is true. Also, if you're doing work that you don't really enjoy, but you just love the people that you're around, it'll make such a big difference and you'll enjoy the job so much more.

[00:00:27] Host: Paul Barnhurst: Watching the behavior and how quickly things have changed the last few years as we've had to fight inflation.

[00:00:35] Guest: Josh Aharonoff: The lower the interest rates, the easier venture capital firms can raise capital from LPs, the quicker they'll be deploying those capitals. They'll be calling up new capital. Do they match and make sense with regards to what things have looked like historically? I strongly feel that every FP&A professional should understand how a three statement model works, because I think if you understand how to create a three statement model, you understand so much of the accounting side.

[00:01:12] Host: Paul Barnhurst: FP&A guy here, have you ever wanted to level up your FP&A skills? Then check out the FP&A Guys Ultimate Course bundle at the FP&A guy.com. That's the FP and A guy.com and use code podcast to save 25%. Get started learning today. 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, and I'll be guiding you through the evolving landscape of FP&A. Each week we're joined by thought leaders, industry experts, and practitioners. This week we are joined by Josh Aharonoff. Josh, welcome to the show.

[00:02:06] Guest: Josh Aharonoff: Thanks, Paul. Great to be here.

[00:02:08] Host: Paul Barnhurst: Yeah very excited to have you. So we start every episode off with this question. From your experience and your perspective, what does great FP&A look like? What is great FP&A? 

[00:02:21] Guest: Josh Aharonoff: The way I would define that great FP&A is quick access to data that does not conflict with one another, and easy inputs to see different scenarios, different outcomes, allowing you to also compare those scenarios to what happened in the past versus what you thought would happen.

[00:02:41] Host: Paul Barnhurst: I like it make make sense. Why don't you tell our audience about yourself, your background, what you're doing today, how you ended up where you're at as your CFO guy, as your shirt says? 

[00:02:54] Guest: Josh Aharonoff: Sure. Yeah. I've had quite the wild journey. I graduated with a master's in accounting, got my CPA, and started off where many accountants feel is the golden place to start. And that is big four accounting. I did that for about two years. I was doing global, I was doing taxes for the global banking services and I didn't realize at the time, but it was really something I was interested in. It wasn't really something I was good at. So after two years, both the company I was working for and myself, we kind of had this mutual parting and I thought, oh man, I chosen the wrong career. I'm not destined to be an accountant. What was I thinking? So I created my own startup with two of my close friends. For two years. We did online language training via video chat. That was before Zoom and Google Meet was like a thing. So we were still using Skype and we dreamed of really scaling that to like anything that you want to learn, you could learn with a live one on one tutor. It was an amazing experience this time. I loved the experience, but as I like to say, it didn't really love me back so much. Really tough. A lot of assumptions that I thought about how to be an entrepreneur, how to grow a successful company. When it came time to validate, they just didn't really work out.

[00:04:06] Guest: Josh Aharonoff: So great experience, but unfortunately we had to admit defeat and go separate ways with the company. I then got involved in consulting. I wasn't sure what I wanted to do next, but I came across an opportunity to work for a venture capital firm that had this like bookkeeping, outsourced finance and accounting arm, and I thought, wow, this is the perfect balance I'm interested in. Like, what did I do wrong with my startups? I can connect with founders directly and my background is as a CPA. Hopefully I still remember a few things I can get back into the field. So I did that for a few years. Absolutely loved it. Learned so much in the experience, connected with dozens and dozens of startups. Learned a lot of the accounting side. And that was the first time that I got involved in the FP&A side. And then about five years ago, I decided to make the leap once more to that entrepreneurial life and start my digits. We do outsource finance and accounting work. About two years into that, I started posting content on LinkedIn. Now I've grown to close to 400,000 followers there. I have a daily newsletter with 80,000 followers as well a YouTube channel and all that good stuff. So that's what brings me to where I am today and the birth of your CFO guy.

[00:05:10] Host: Paul Barnhurst: Only 400,000 followers, is that it?

[00:05:13] Guest: Josh Aharonoff: I know I'm working on driving that number higher every day.

[00:05:17] Host: Paul Barnhurst: Well, congratulations, that sounds like quite the journey and experience from working to the big four to doing your own thing and building a following on LinkedIn and other platforms. Thanks. First question I want to ask you is you've run mighty digits for about five years now, right? 

[00:05:37] Guest: Josh Aharonoff: June 1st was our five year anniversary.

[00:05:39] Host: Paul Barnhurst: What is it that draws you to startups to early stage specializing in that area? What is it you like so much about that?

[00:05:46] Guest: Josh Aharonoff: I love the constant chaos and problem solving involved in a startup. So again, I've worked in multiple different company sizes. One extreme when I first started my career big four accounting. Thousands and thousands of people, systems, operating processes, delegation, everything really to the max. And then I've worked in small organizations like a startup where everything is a lot more fast paced. I love the idea how in a startup you're oftentimes wearing multiple hats, you'll do an action and you'll immediately see the impact of that action. I love that you're also constantly solving problems, that there isn't really a cookie cutter question or answer out there that you can just research. And I think that startup CEOs, they really go from having an idea in their head to validating that idea, to growing that idea, to going rapidly through different phases at a company. And that, I think is just so cool, being able to iterate as such and get ideas out in front of other people.

[00:06:48] Host: Paul Barnhurst: Got it. So you love seeing that iteration, that early stage of just kind of figuring it out, scaling and growing. And I'm curious, as you've worked with all these different startups, I know mostly in the tech space, do you have a favorite story, maybe from an experience where you felt like you made a real difference for a client, or just a company you love to see, grow, and work with?

[00:07:08] Guest: Josh Aharonoff: A few things come to mind. I've been working with one company. Their name is Chewy Piper. They're one of my oldest clients. I started working with them when they were just pre-series A. That's usually when we start working with companies, when they're in between series C and in series A, and they had raised like a few million dollars. And when I started working with them, it's the first time we really created a financial model in place. We really cleaned up a lot of their finance and accounting system. Now their post series B and sat on and every one of their board meetings that have a board meeting actually later this week that I'll be sitting in on. And it's just been so cool seeing them go through each and every single chapter. And with each chapter comes a new set of challenges and new set of growth initiatives and all of that. So I'd say they're one of my favorite clients. I can't say my favorite client because my other clients may be listening here, but that's been a really fun experience. And I'm also really close with the CEO, Nicholas, who I look up to a lot.

[00:08:02] Host: Paul Barnhurst: That's cool. I bet that's been a lot of fun to watch them scale and grow. And it sounds like as they continue to grow, they're, probably getting to that point where they outgrow your services and bring in a full time staff. Isn't that kind of that series B, series C, where you would typically see them start thinking about going in-house?

[00:08:22] Guest: Josh Aharonoff: That oftentimes is what happens. And it's really a mix. Sometimes a company by that point they'll make their first or second hire. They'll bring it entirely in-house. We'll shake our hands and say, great, you guys are on your own. It's been awesome working with you. It's very common that they'll hire like a first hire as like a VP of finance. And that VP of finance is a fairly senior role. You don't want that VP of finance really managing bank reconciliations or coding vendor transactions. So they'll continue working with a solution like ours, handling those other items while they focus on the bigger picture. And then sometimes I can show you Piper's case. We'll just continue to manage everything directly. We work with an amazing member on their team who's the Director of operations, who also gets very involved in a lot of things like this. Although he doesn't have a finance and accounting background, he's picked up a lot of it. So the combination of us and Scott on their team has really just been a great solution in that regard.

[00:09:17] Host: Paul Barnhurst: Got it. Makes sense. And I get every company's a little different. What solution and how they decide to solve these things as they scale. I want to step back a little bit though. You mentioned in your background and you've told this before, you really didn't enjoy big four accounting. You thought accounting was not for you. What was it you disliked about it? What did you find that wasn't a good fit for you when you got in and said, wait a second, I just graduated from school and I really don't like what I'm doing.

[00:09:46] Guest: Josh Aharonoff: So, before I answer, I do want to give a disclaimer. I have nothing against big four. And I think for a lot of people, Big four is a great career path. And I think also it was a great place for me to start my career for whatever reason, for better or for worse, people just do it for you.

[00:10:02] Host: Paul Barnhurst: I hate big four. Just I'm kidding.

[00:10:05] Guest: Josh Aharonoff: For whatever reason.

[00:10:06] Host: Paul Barnhurst: I never worked for him. I wasn't an accountant, so I can say that stuff. Fair enough.

[00:10:10] Guest: Josh Aharonoff: For whatever reason, people just love seeing on your resume that you have big four experience. It's very similar, I think, to like the CPA exam. Both of those I think, don't really add any specific value or skill sets. It's more just like a badge that you can wear saying, hey, look at what I accomplished. So you should have a high level of confidence that I can accomplish great things with you as well. The reason that I wasn't so into it, the biggest reason, was I really just didn't get along with the people around me. And there's so much you don't know when you first join a job. I never thought that the people that I worked with would have such a big impact, but coming out of that experience, I really just understood that you could be doing the most fulfilling, exciting work in the world if you're working with terrible people, which I won't go that far. They weren't terrible. But if you're working with people who, for whatever reason, bring you down, it's just going to be totally miserable. And the opposite is true. Also, if you're doing work that you don't really enjoy, but you just love the people that you're around, it'll make such a big difference and you'll enjoy the job so much more. So I think the biggest issue was the fact that, like just the people around me, I didn't feel a good connection with, I didn't have a good connection with my manager. I didn't feel like he was really looking out for me or anything like that. That I think was the number one issue. But the second issue, which was okay, that was something that I had an issue with.

[00:11:24] Guest: Josh Aharonoff: They also had an issue with me. I wasn't really so good at my job, and that was the fact that I didn't really understand how wide and vast of a field finance and accounting is. When I graduated, I thought, you go to big four, you go to big four. You accomplish everything your restaurant career. Now you go from big four to private or whatever. And big four really just gives you two, maybe three options audit, tax and maybe advisory. But that's a lot less on the accounting side. So I thought to myself, I'm either going to be a tax professional or I'm going to be an auto professional. There's nothing really in between. And I thought tax would be cool because it's very practical. I can maybe open my own, like, you know, CPA office one day and do tax returns for people. But there's just so much research involved in the rules that are constantly changing, and it's just so ambiguous. It blows my mind that the government makes it so difficult for you to not only file your taxes, but just understand what you need to report on your tax returns to be in compliance. And I'm a numbers guy. I give me a spreadsheet, I'll get lost in hours, give me an article with technical information. I'll barely be able to read the first, you know, 2 or 3 sentences. So I think that was probably one of the biggest challenges for me. Not really just understanding what I was good at and just complex tax documentation was definitely not a good fit.

[00:12:41] Host: Paul Barnhurst: Makes sense. So there was part of there's some cultural things people. There was definitely the tax side in that that wasn't the right area in accounting even if you were in accounting. So just a number of things all came together to say, wait a second, this is not working for me.

[00:12:55] Guest: Josh Aharonoff: And it's one of those things where like while you're going through it, you're like, oh, this isn't so bad. Yeah, I'm okay. And then like, after you go through it, you look back and you're like, wait a minute. That was not an experience that I really enjoyed. That was not an experience for me. So hindsight is 2020 for sure.

[00:13:11] Host: Paul Barnhurst: Yeah. Totally agree. I worked at for a company that everybody I talked to after they left, they stayed in touch with a lot of them. They'd be like, you realize how bad it was. Like, I feel free now. Like just you could see a total difference. Like what? What took me so long? For sure. Because often when you're in something that's a real challenge, you just kind of grind through it. Yeah, that you're not a good fit for whatever. And then you look back after when you're in a better, healthier spot for you and go, wow, that really was not good for me for sure. And and it made me nothing. Nobody did anything wrong, just wasn't the right fit. And sometimes it could be it was a bad environment. Right? Both of those.

[00:13:49] Guest: Josh Aharonoff: Definitely. And I do want to stress again that a lot of times it's not a good environment for someone, but it could be a great environment for someone else at the same time hundred percent. I've also worked with tons of companies, and I've just come across companies that are just like, it doesn't matter who you are, this is a bad environment.

[00:14:09] Host: Paul Barnhurst: So yes, there are roles and industries that are just not good fits for certain people. And then there are just unhealthy companies that really aren't good for just about anybody for sure. And you know, you gotta the one you run from when they're just a completely toxic culture. It's just never a good environment. The other one, you may be there for a while, but you got to figure out what's going to make you happy. What are you good at and where are your passions are? And we've all worked with great people that are not necessarily a good fit for the role they're in. I had someone that worked in FP&A and just was not a good fit for FP&A, but was a great person. It's like, okay, you need to find where your strengths are and where you're going to be happy, because if you're not happy, it's really hard to do great work.

[00:14:57] Guest: Josh Aharonoff: For sure. I think all the time. I have a close friend who was laid off from a job, and he spends a year looking for the right opportunity, and we're all we were a little bit nervous for him, and maybe 4 or 5 years ago he accepted a role. And ever since then he has been climbing and climbing and climbing. I feel like it's literally every week that he's getting another promotion. The company is also doing amazing. He's managing tons of people and it really just put into perspective for me of, hey, one opportunity may not be right for someone, another opportunity, same industry, same type of work could be that jackpot for you.

[00:15:32] Host: Paul Barnhurst: Well, and so much also depends on finding the right manager. You know, fitting your style, the right people you're working with because you could be in a role and with a certain manager, you're loving it. And with the next manager you're like, I'm out of here for sure. This isn't working. That's a big factor. It's really interesting. And so going back to startups here for a minute, I want to ask you, what's the biggest challenge about working with startups that you've experienced? What do you find is kind of that biggest challenge? You're working with companies at such an early stage?

[00:16:03] Guest: Josh Aharonoff: So there are a few things. One of my favorite things in working with a startup is also one of the biggest challenges, and that's just the constant state of chaos. There's never just a period for the most part of calmness, we're going to continue doing what we're doing. It's always your reinventing yourself. It's always they're hiring ten people. They're firing five people. It's this constant state of evolution, of iteration of what got me here is not going to get me there. That could certainly be a really big challenge. Similarly, every startup until you get to series D, until you start going for break even IPO or whatever, they really have what I like to call a terminal illness. They have a date that the doctor says, hey, you guys are going out of business. If you don't raise capital or find a way to inject more funds into the business by this specific date. Now, ideally, you know when that date is a really strong ahead of time you don't want to be taking by surprise. I've seen that happen a few times. It's never pretty, but that stress of needing to constantly raise capital fundraising in many ways is a huge distraction. It doesn't necessarily help the company actually grow in terms of finding product market fit, in terms of building the culture. It's something that you just need to do in order to survive. So I think the fundraising process, especially in the climate that we're in today, with interest rates being so high, could add a lot of stress on a company, whereas another company that's a lifestyle company, maybe it's not growing as quickly. They're self-funded based off of customer receipts. They won't necessarily have as much of that challenge.

[00:17:34] Host: Paul Barnhurst: And a guy here today I want to talk about the FP&A guys Ultimate FP&A course bundle. This bundle includes over ten hours of content recorded by Ron Monteiro and myself. Many templates and great lessons to make you a better FP&A professional. The content includes FP&A business partnering, how to manage tough conversations, build world class relationships, and hold the business accountable. Includes modern Excel, which is a real game changer for the way you'll work in Excel. Excel tables the gateway to modern Excel. Power query Query. A game changer for transforming your manual processes and loading data, and then dynamic arrays. Next, we cover modeling design principles. In this course, we talk about the importance of designing models in a certain way and how important it is that you think about design. And last but not least, driving value through smart analysis how you can conduct data analysis to be a better FP&A professional. Go ahead and sign up for this bundle at the FP&A Guide.com. That's the FP and A and a Guy.com. Use the code podcast to save 25%. Get started learning today. You know, I could tell, most of us are young when everybody's like, interest rates are so high, They're about average historically. But given the last 15 years, 3% and 7%, that feels super high. Right. It's amazing what happens when you get used to basically virtually free money when you consider a 2% inflation a year, right? 1% is pretty close to free on a true basis to all of a sudden 4%. That's a 400% increase. It's amazing to watch how it's changed behavior so quickly, and it's almost no different than kind of the long term average for interest rates. I always find it fascinating, that whole conversation and watching the behavior and how quickly things have changed the last few years as we've had to fight inflation. I'm sure it's had a huge impact on your business for sure.

[00:19:48] Guest: Josh Aharonoff: Definitely a really big impact. I think the correlation between interest rates and start up funding, it's like just direct. So the lower the interest rates, the easier venture capital firms can raise capital from LPs, the quicker they'll be deploying those capitals. They'll be calling up new capital. The easier of a time startups will have, and raising additional rounds and getting higher valuations. I never really understood or appreciated just how much of a connection there is until this recently happened because again, we started the firm five years ago. I'm about 12 13 years into my career, so I never really experienced something like this.

[00:20:23] Host: Paul Barnhurst: Yeah, well, that's exactly it. It's if you haven't experienced it, how do you know? You kind of have to go through it. You can hear about it, but it's so different when you experience something yourself versus you read about it or you hear somebody tell you about it. It's not the same.

[00:20:39] Guest: Josh Aharonoff: I feel like being in an election year. Also, I've heard plays a big factor in just the economy as a whole. And there's just like less risk until it's who's going to be the new president. So I'm waiting to see how that will change as well.

[00:20:57] Host: Paul Barnhurst: Especially any regular, heavily regulated industry. But in general, companies will wait to make their investment decisions. Once they're comfortable, they know who's going to be in charge. Makes sense because that changes the economic, the government regulation, the landscape. Right. Are you going to have a split Congress in the US? I mean, there's also, you know, we have a lot of global people listening. We'll be clear. We're talking about the US here. But who's your president? Who's in charge of your Senate and your house? Is it a split government? All those things impact regulation, the economy. And so it's really interesting to watch that uncertainty puts a lot of people on pause, like, I'm going to hold this money till I'm a little more confident in the decisions that will be made and how they'll impact my business for sure. Question for you. You know, you've worked with a lot of startups. You've done a lot of funding. What advice would you offer for somebody listening? They've done FP&A. They spent a lot of their career in it, and they want to start a firm offering advisory services. What advice would you offer them? That seems to be a common path these days of a lot of FP&A people saying, I'm going to do advisory services, fractional CFO, whatever you want to call it.

[00:22:11] Guest: Josh Aharonoff: So I think those who already have an FP&A background are way ahead of the game. I think the best way to grow a firm is, oh wait.

[00:22:22] Host: Paul Barnhurst: I said woo woo. I'm excited. I'm I'm there. I should have done this. And though woo woo.

[00:22:27] Guest: Josh Aharonoff: I think not not only knowing the FP&A side of things, but I think if you also know the accounting side of things, you'll be able to pick up so much more business around month end. Close and the accounting operation items like accounts payable, management, invoicing, management, payroll management and so forth. So I think just understanding both sides will help make you more rounded. And a lot of times you'll work with a client in one capacity and their needs will grow and you'll start working with them in another capacity. I think if we're just talking about advisory services, though, the biggest thing for me in FP&A is really understanding how to put together a forecast that not only tells the future, but also showcases the past and allows you to easily tell the story of where the company has been working. Then directly with management, the board of directors, investors understanding what are the key metrics that they're tracking, what inputs do they want to tweak, and then what are the results of those inputs, and do they match and make sense with regards to what things have looked like historically? Being able to build this robust financial model, that's in essence, your hub of all the information that you need from where the company has been and where the business is going. To me is the biggest part in just FP&A, let alone opening an advisory services platform.

[00:23:44] Host: Paul Barnhurst: What advice would you offer to somebody who wants to start offering advisory services? Is maybe worked in FP&A, and they want to go out on their own. What are some of the things they should be thinking about?

[00:23:55] Guest: Josh Aharonoff: So a few things on that. I think if you're going off on your own, the most important thing is that you first have enough customers to be able to survive being on your own. And I like to think of that as like a valley of death, a chasm that you need to, in essence, cross where you have enough committed monthly recurring revenue, where you don't necessarily worry about, am I going to be able to do this on the long term? So if you're working for someone and you're thinking of going off on your own, as long as your contract doesn't state that you can't work with clients on the side, I certainly wouldn't recommend you poach any clients, but it's a good idea to try to pick up some clients while you're still working. That's actually how I started my digits. I was working nights, I was working weekends, I was working crazy hours. But eventually that paid off and allowed me to go off on my own. If you're offering advisory services specifically, consider also learning the accounting side of things, because a lot of times you'll start working with a client who needs, let's say, FP&A services and their needs will expand to also need bookkeeping services, accounts payable, management, invoicing. If they're not working with you, they're working with another firm And odds are that firm also offers FP&A services. Lastly, in terms of offering FP&A services, it's really crucial that you understand how to build, just like an incredible financial model, one that tells you an entire story of where the company has been, as well as the entire story of where the company is going. And you should be able to easily tweak those levers to understand what that future will look like. And then as the future takes place each and every single month, you should be able to understand why did this take place compared to what I thought would take place and what changes do we need to make?

[00:25:36] Host: Paul Barnhurst: So I'm curious, your background was accounting. Was it really hard when you started your own business to get into the advisory side? You started mostly offering more of the accounting, right?

[00:25:45] Guest: Josh Aharonoff: So I actually started working as a fractional VP of finance, which was really just on the FP&A side. And I was fortunate that in my job, right before I went off on my own, I was exposed to both sides. I really started just on the accounting side, but I very quickly picked up the FP&A side and I absolutely loved it.

[00:26:05] Host: Paul Barnhurst: What did you love about FP&A? What's your favorite part about FP&A?

[00:26:09] Guest: Josh Aharonoff: My favorite part by far is the conversations that you have with the people at the top of the company. You get incredible transparency into who's on their team. I love just seeing like, how much does each person make? How much does a CEO paying him or herself? You understand also the growth strategy. What are the channels and levers that the company is investing in in order to grow the company? And you get to have these like brainstorming sessions directly, oftentimes with the CEO going back and forth, making that CEO's vision become a reality on a spreadsheet. That's by far my favorite part.

[00:26:47] Host: Paul Barnhurst: I love the business partnering side and those conversations you have. I totally understand what you're saying. That is the most enjoyable. I mean, I love a good variance commentary, but not quite as much as those conversations. So when it comes to FP&A, I know you're a big believer that FP&A needs to be able to build three statement models. Why do you think that is so important in FP&A?

[00:27:11] Guest: Josh Aharonoff: Oh boy, here we go. We're going to have a battle right here now, right? You're going to tell me these statements are not needed. Three statements aren't needed, I promise you.

[00:27:20] Host: Paul Barnhurst: No.

[00:27:21] Guest: Josh Aharonoff: Well, I do believe that three statements unlock a huge amount of value. But you also helped me understand that not all businesses have three statement models. And that's okay. So I'll first make the case for why I think you need a three statement model. When you have a three statement model, you really encompass every aspect of the business. You encompass the profitability of the business and the cash flows of the business. And the cash flows is not really something that you need to forecast out separately. Instead, you forecast out the changes to your profit and loss and balance sheet, and then creating a statement of cash flows. With the indirect method, you could easily showcase what your cash flows will actually be. So that's probably the biggest reason why I love three statement modeling. And it's also really helpful when you connect your financial statements to your accounting software, where you could easily pull in actuals and refresh that information at the same time, I will say I have come to appreciate that not all companies need a three statement model. In fact, as companies grow in size and complexity, it may not even be feasible to manage a three statement model. Instead, you have all these different departments and all these different groups in charge of just a specific aspect of a financial model, whether that be the revenue, whether that be the headcount, whether that be the cost drivers or anything else. And a lot of times a company will have their own Treasury department just responsible for managing the cash flows instead of having that tied into a three statement model. So I would say earlier stage companies SMS, three statement models I think are totally the way to go. Larger companies fortune 500. I could understand that a three statement model may not be applicable.

[00:29:02] Host: Paul Barnhurst: And why did you say here we go. Do you want to give the backstory on that one? Were you expecting me to attack you or something?

[00:29:08] Guest: Josh Aharonoff: So once upon a time, I posted a post on LinkedIn that was titled ten Forecasting Mistakes. And one of those forecasting mistakes was not including all three statements in a financial model. And you commented on that post in a respectful way, but also challenging me saying, Josh, I have to be entirely honest, in my career I actually never worked with a three statement model and I've seen tons and tons of companies not have a three statement model in place. And I think that's okay. And you and I then went a bit down in the rabbit hole in the comment section where I said, hey, I got to be honest, I've never really heard of this before because all I know is startups and SMEs. Yep. And I asked you walk me through, how does that work? And then I said, well, how would you again forecast cash flows? And you helped me understand the fact that a Treasury Department, once a company gets to a certain size, would instead be responsible for that. So I've come to appreciate the fact that not all companies really need a three statement model.

[00:30:04] Host: Paul Barnhurst: Yeah. And it's really interesting that conversation because I have it all the time. It's not just you. And people need to understand the three statement. I think we can all agree with that. You need to understand the inner workings of them. How different changes impact cash balance sheet. But it's so interesting how different it is depending on what size of company you support. Like you said, right? I pretty much can guarantee you. We all know Apple isn't trying to roll up a three statement, right. As we talked about, it's the Treasury. And so it's really interesting to see how different FP&A can be and how different our perspective can be depending on where we've worked. And so I love that conversation and just the importance of the three statement, because I'm a huge believer like you, people need to understand the three statements regardless of whether you're modeling or not. And to me, that's the first in one of the most important things of FP&A. And if you're working in startup like you did for most of your career, you better understand and be able to build a three statement or you're not going to last long in a startup environment because, you know, watching that cash flow closely in that forecasting is critical. I'm sure you've seen more than one company probably die on the vine because of a cash flow issue, for sure, right? They can't get funding until they have to shut down. I'm going to guess that's probably the most common one you see is funding is drying up. Nobody wants to invest at this point.

[00:31:29] Guest: Josh Aharonoff: Definitely. I will add this one tidbit that a three statement model doesn't always make sense for every company. However, I strongly feel that every FP&A professional should understand how a three statement model works because I think if you understand how to create a three statement model, you understand so much of the accounting side of a business where the profit and loss connects to the balance sheet. How when you make a change in one area, another area can specifically be affected. A lot of times I see FP&A professionals. They could do some really dangerous things with the spreadsheet, but they don't really understand the fundamentals of double entry accounting and journal entries. And when you really understand that other side of things, it just unlocks so much more capabilities and value in your career. So I would say every FP&A professional should understand how to create a three statement model, but not every company should have a three statement model.

[00:32:26] Host: Paul Barnhurst: Looking to level up your career and build skills that make you stand out to FP&A hiring managers. How about earning a certificate from a world renowned business school, Wharton Online and Wall Street Prep have partnered to create an eight week online financial planning and analysis certificate program. You'll learn the art of forecasting, analysis, business partnering, and financial storytelling from Wharton Online's world class faculty, coupled with first hand exposure to technical and interpersonal skills with real world applications as practiced in top corporations, space is limited, so level up your career today and use the discount code the FPA guy 300 to receive $300 off tuition. That is the FPA guy, 300 to receive $300 off tuition. Learn more by going to https://wallstreetprep.wharton.upenn.edu/. Yeah. And I would go probably challenge that a little bit. I think everybody should understand the workings of the three statement, whether they're comfortable building all the details of it or not. I'm not as worried as long as you understand the workings and how they interact, which if you do, you can figure out the mechanics of building one, because I think the mechanics are a little more nuanced than really understanding the accounting behind it. If you haven't built them. But that that's for me coming from the large. But I totally agree with you. You have to understand the workings completely. They're with you. Of the accounting behind it, I've worked with many FP&A people that don't understand the accounting, and it just creates problems because you need to be able to have those conversations.

[00:34:11] Host: Paul Barnhurst: You need to be able to look at the PNL and say, something's not right here. Was there an accounting that was done? If you can't figure out anything else? Okay. What was done in accounting? What's the accrual? What assumptions did we use? Like I supported a business and our numbers were just way off. And it came turned out they were using a very high level process for the accruals and not taking any of the timing into consideration. And we're having these huge swings of like 10% in our revenue from the accrual. And I'm like, no, no, no, this is a business that has timing and walking through. Here's why and all the different impacts of that. And so understanding the business, understanding the accounting and how it ties together makes you a better, much better FP&A professional. I'm fully with you on that. So I'm going to switch gears here again a little bit. We talked about this at the beginning. You have 400,000 followers or almost 400 on LinkedIn probably over 400 by the time this is released, at the rate you're growing, right? He's like, I hope so. You were awarded a top voice. Talk about that journey. How has it helped you be a better finance professional? How's it helped you in your career?

[00:35:16] Guest: Josh Aharonoff: So I think that ties in to the comment that I wanted to slightly challenge a little bit more that you just mentioned of the fact that it's important to understand the interlinking of the three financial statements, but not necessarily important to be able to create a three statement model. And the way I see it, there are really three levels of learning something. The first level is taking that knowledge in from one of your senses or all of your senses. You see something that someone says, you hear something, whatever it is, and so forth. The second level, to me is actually doing something, and you'll always have this ceiling where you won't be able to truly grasp something until you actually do it. You think you'll understand it, but then when you start doing it, you realize there are all these different edge cases that you didn't really think through and through fighting through those edge cases. You really understand it so much more. The third level of understanding something I like to say is to be able to then teach it back to someone else.

[00:36:17] Guest: Josh Aharonoff: So great fortune cookie I used to have in my wallet that said to teach is to learn twice. So my journey in posting every single day on LinkedIn, the first six months or so, it didn't really turn out. I wasn't really getting much engagement, but I kept at it. I learned a lot more. I actually started working with you and you gave me some tips and advice, which I think was really my turning point. And it was through posting about these topics that I learned so much more. Even a topic of just like how to read a profit and loss. I always understood it, but I didn't really understand the interlinking, the details of the different sections of the patterns that you could actually see in a profit and loss. So my favorite part about this journey is that I have just learned so much, not only through teaching, but through people then responding in comments, oftentimes challenging me, saying, hey, you actually didn't get the full picture here. It's really something else. That's just been the most rewarding part for me.

[00:37:13] Host: Paul Barnhurst: I love that, and I agree with you, when you teach something, you really know it. There's a there's a lot of value in being able to teach something, and I've definitely been challenged along the way too, by people like, I disagree with you here or this doesn't make sense, or have you thought about that? And there's times when you may discard what somebody says, and there's other times when it really hits you and you're like, oh, I never thought of it that way. And you want to dig deeper and it helps you as well as having to prepare stuff. If you're trying to teach something, you have to really understand it. Totally, totally agree with you on that. So I'm glad the journeys helped you as much as it has. You have a favorite moment from, you know, kind of posting and building a following? Is there kind of a moment where you're like, wow, that really, kind of hit home for you?

[00:37:58] Guest: Josh Aharonoff: Few exciting moments. There were a few posts in the very beginning that, like, you know, took off in the sense that it got like over 100 engagements. And that was my very first time that I ever saw that. That was just like, whoa, this is so cool. I've had some really cool people engage with my posts before, one of them being Microsoft Office themselves. They apparently have like a LinkedIn page and like I post something on Excel and they actually, like, commented on it. That was really cool. I've had also a few posts go like mega viral and get like over 12 million impressions and one of the mega viral posts. In fact, a few of them I posted not really thinking anything of it yet. It would do well. It would maybe resonate and like someone would text me saying, oh my God, I love what you just posted. This is incredible. And I would check the stats on it and be like, whoa, this is crazy. This is really going viral. I guess one thing though that comes to mind, I was trying to do a post on Excel keyboard shortcuts. I have like dozens of them now, but when I was trying to do the post, I was really thinking to myself, how can I make this in a way that's not only highlighting my favorite keyboard shortcuts in Microsoft Excel, but also making it in a way that's just, like, visually appealing, and also a way that you could understand even more about the topic through the way it's presented visually.

[00:39:22] Guest: Josh Aharonoff: And LinkedIn has this thing where everything is really presented in a portrait mode. Youtube, you know, you tilt your phone and it'll be in landscape mode. So the challenge to me was, how can I make a keyboard that is in a portrait mode? Because keyboards go sideways and I was going back and forth and I was actually away with some friends in Canada, and when we went to pay for the meter, the keyboard on the screen was in a portrait mode, and I took a picture of it and I sent it to my designer, and I'm like, this is the style right here. This is how we should post it. And I posted that and I told all my friends on the trip, I said, guys, in 24 hours this will have over a million impressions. Mark my words. And it actually did. It was like just under a million impressions. But for, you know, the sake of the goal, I think it also hit it. That was probably one of my favorite experiences.

[00:40:08] Host: Paul Barnhurst: Cool. Thank you for sharing, I appreciate that. And speaking of Excel, I've heard you, recently have been recognized by Microsoft. Do you want to share a little bit about that? That is.

[00:40:17] Guest: Josh Aharonoff: Correct. Yeah. You know, I had always dreamed of becoming a Microsoft MVP. And so many of the people that I've been following for what feels like just decades have been a Microsoft MVP that I always said to myself one day, like, wow, I know that it'll be an incredible accomplishment if I ever actually get to that level. So the way that the program works is you have to be referred by another MVP. So there was someone in my network who I saw recently became an MVP, and we'd engaged before and we would chat. And he's also a fellow LinkedIn creator. So I reached out to him and I said, hey, do you feel comfortable, you know, nominating me? And he was like, look, why don't you start posting a little bit more on your YouTube journey? Let me know when you feel ready. I'll go ahead and make that referral. And I don't want to overstep any boundaries. So I started posting more on on YouTube. And then he reached out saying, hey, I'm happy to make the introduction. It was about a three month process, and I eventually got the email saying that I'd been accepted, and it's just been really surreal ever since.

[00:41:16] Host: Paul Barnhurst: Well, congratulations. I know that's a huge honor, and there's not a lot of people in the world that get that. So keep up the great work you're doing there. Have one more question about Excel. Then we're going to move into our kind of what I call a rapid fire. We just asked some quick, quick questions with short answers and to get to know you section. The first thing is what what would you like to see Excel add next? Last couple years they've been making a ton of changes. Is there somewhere you'd like to see them go? Something you think is missing in the tool?

[00:41:44] Guest: Josh Aharonoff: I think the biggest thing that we're all on the edge of our seats waiting to see what happens is when Microsoft excels, AI capabilities will truly take off in terms of data management. And they do have Copilot right now. They do have some sort of like forecasting tools that can allow you to predict what the future will look like. I'm talking about like I upload a profit and loss in any sort of format. I'm chatting with something in Microsoft Excel to confirm how this data is structured. I'm attaching a general ledger, and I'm getting a board report in a matter of seconds that Excel is telling me this is what happened. This is how it compares to a prior period. This is how it compares to your budget. This expense went up. This expense went down. We're definitely going to get there at some point. But I'm like, I just can't wait until we do.

[00:42:36] Host: Paul Barnhurst: See what's interesting. I see a lot of stuff coming with Python, the machine learning huge things with AI. You think a code interpreter and things like that. Just how much easier it will be. The data science things. I think that's what I'm most excited about is when they really start integrating the AI with Python, because that's coming as well. So there's just so many different areas. It's an exciting time to watch. I mean, the Excel of today is not the Excel of two years ago, five years ago, ten years ago. It is a different tool, even though it has the same shell and it's still a desktop application.

[00:43:12] Guest: Josh Aharonoff: I would add one more thing to that. I think along the same subject, and that is Excel's data visualization capabilities. There are a lot more powerful tools. Power BI is more powerful. Tableau is probably on the opposite side of the spectrum of like, one of the most powerful tools out there. At the same time, I think people oftentimes love just staying in Excel and the ability to have unstructured data and change it and link it up to a graph is a huge value add. But I find that charts, graphs, dashboards, all these things, you really have to know what you're doing and, you know, bend your way around the block to put together a really nice dashboard and a chart. And Excel doesn't really make it so easy to do that. Now. I'm happy in many ways because of that, because a lot of people will purchase my dashboards and everything because it's not so easy for them to do. But I feel like at some point in the future, we're going to see the ability where you could easily just be a plain text, say, I want a dashboard that looks like this, that's connect to this data that has these colors, and I could change these inputs and the information will update and so forth.

[00:44:12] Host: Paul Barnhurst: Sure. I definitely think there's a lot of, opportunity there in dashboards as well. A lot of directions they can go and exciting time. We'll be fun to have, a chat again in five years and see where spreadsheets are at, where Excel's at, what else is out there, because it's just such a rapidly changing technology landscape right now. All right. So here's the rapid fire section. The goal is to keep these answers short, ideally no more than, you know, ten to 20s some of them may only be as as little as a word. So we're going to start here with what is the number one technical skill for FP&A professionals to master Excel. All right. What is the number one softer human skill for FP&A professionals to master.

[00:45:02] Guest: Josh Aharonoff: Collaborating with others.

[00:45:05] Host: Paul Barnhurst: I like it all right. If you could wave a magic wand and change one thing about FP&A, what would you change?

[00:45:13] Guest: Josh Aharonoff: Allowing it to be a degree that you could actually get, rather than something that you just like fall into through another degree?

[00:45:21] Host: Paul Barnhurst: I like that I haven't had that answer. I like that one. Basically making it more of an educational program out there so people could learn about it and prepare for it at an earlier age. Yeah, there's.

[00:45:30] Guest: Josh Aharonoff: Just like no path similar to, like, becoming like a product manager. You can't really major in something like that. You kind of have to like fall into it. And it's like, not an easy thing.

[00:45:39] Host: Paul Barnhurst: Yeah, that's what I did. There was an opportunity to get promoted. They hired me for the role and I fell into it. But so I get it. What is the one software you cannot live without in FP&A?

[00:45:50] Guest: Josh Aharonoff: I think I'll just keep all my answers to Excel.

[00:45:53] Host: Paul Barnhurst: I knew you were gonna say that. I'm like, he's gonna say Excel. I almost didn't even ask that one. Are you currently using generative AI, and if so, how?

[00:46:03] Guest: Josh Aharonoff: not so much on the finance and accounting side of things, but a lot of times I'll be preparing a LinkedIn post, and I'll need to do a lot of research and just understand a lot of different definitions, examples and working with ChatGPT in order to like produce a viral infographic is really helpful.

[00:46:23] Host: Paul Barnhurst: All right, here's the get to know you section that finishes kind of the technical rapid fire there. So now we want to get to know a little bit more about Josh. What's your favorite hobby or passion outside of work?

[00:46:35] Guest: Josh Aharonoff: Man, I forgot that those things exist with how busy I've been, but I've always had a knack for cooking. This may not be considered cooking, but I love sushi and I love making sushi as well.

[00:46:46] Host: Paul Barnhurst: My daughter loves sushi. She's loved it since she was like five and we've made it a few times. We both like sushi, so I'm a sushi fan, so I know where I'm coming. When I come to New York in October, I'm going to come find you Josh, for some sushi.

[00:46:58] Guest: Josh Aharonoff: Please do. We gotta meet. All right.

[00:47:00] Host: Paul Barnhurst: It's a plan. What is one book? If you could only recommend one book. What's the book you're going to recommend to our audience?

[00:47:07] Guest: Josh Aharonoff: I really enjoyed Never Split the Difference, okay. Which is a book on, people think it's about negotiating and manipulating others, and it certainly can be used that way. It's more about understanding how to establish rapport with someone and how to create a mutually beneficial outcome when you're both having a conversation about something.

[00:47:30] Host: Paul Barnhurst: Agree. I've, listened to the book and I had an opportunity to attend a small group session with the author where we got to ask a Q and A Christopher Voss.

[00:47:39] Guest: Josh Aharonoff: Oh, really? Cool.

[00:47:40] Host: Paul Barnhurst: Fabulous book. It was a really cool opportunity. A lot of fun. Nice. Favorite travel destination? If you could go one place in the world, you're leaving tomorrow. Where are you going?

[00:47:49] Guest: Josh Aharonoff: I'd love to visit somewhere like Alaska. I feel like that would be a really cool place to visit.

[00:47:55] Host: Paul Barnhurst: I have been to Alaska highly recommended. I used to have family that lives there. It's a lot of fun. Pretty amazing. We all see a grizzly bear almost bounding across the whole road. It's actually, I think was a black bear, but you know, nonetheless a bear. And then if you could have dinner with one person alive in the world who you taken to dinner other than me, of course.

[00:48:17] Guest: Josh Aharonoff: I would say Elon Musk. Why? I'm just amazed at what he has been able to create in terms of the various companies, in terms of the successful track record that he's had, in terms of what he continues to put out now. People have their qualms with Elon Musk. And I may not say the same thing in terms of him being a role model as a family man, though I don't know the details of that. But just in terms of an entrepreneur, I think he's easily the greatest entrepreneur of our generation.

[00:48:49] Host: Paul Barnhurst: Yeah, what he's accomplished in the business world is amazing. Regardless of what you think of politics or family or right, we can all find things of everybody that we don't like or that we could question. But you can't question what he's accomplished and you could surely learn from it. So you're not the first to mention him, and I'm sure you won't be the last. He's a fascinating figure for sure. All right. If you could offer one piece of advice to our audience to be better at FP&A, particularly be a better business partner. What's that advice?

[00:49:24] Guest: Josh Aharonoff: It could just be one.

[00:49:26] Host: Paul Barnhurst: It'll give you two if you want. I'll give you two.

[00:49:28] Guest: Josh Aharonoff: I think again, number one for me is really getting really, really good at Excel. So that is understanding the different functions that are available, understanding data structures, the difference between structured data and unstructured data, understanding how to take something and convert it into a table to transform that via Power Query. I'm amazed at how few people even are using Power Query with how incredible it is. I would also go so far as to say really getting good at keyboard shortcuts, because again, when you're partnering, when you're working with the CEO and he or she starts describing a specific way in which he wants to grow the business or forecast whatever, you don't have the opportunity to say, okay, just give me one second, let me go. You got to be like conducting a symphony on your keyboard to easily make what that person is saying come to life to maximize your time. So Excel is the number one thing that I would say. The second piece of advice is understand both sides don't just understand the F side of things, because there's so much you'll be leaving on the table. Really understand how financial statements are produced. Understand the difference between cash and accrual accounting. Understand journal entries because that will all make a huge impact in the forecast that you build.

[00:50:40] Host: Paul Barnhurst: Got it. Thank you. Appreciate that. And so we got Excel and then understanding also the other sides of that I love the shortcut example a lot of great information in there. If someone wants to get a hold of you wants to learn more about you. After listening to this they're like, I want to be the CFO guy. How do they get Ahold of you? How do they learn about you?

[00:51:02] Guest: Josh Aharonoff: so a few ways. You could always send me an email at Josh at yourcfoguy.com, as long as you send me a genuine email and it's not, hey, can you hire me or can I sell you this thing, I will respond. You could also work with me in any of the number of offerings that I have. Whether you need fractional finance and accounting support with many digits, whether you are looking for finance and accounting, templates, resources, courses, or joining my newsletter at yourcfoguy.com or Or we have an Excel plugin that will give you access to all of my templates, all of my dashboards. And we're constantly refining. We're just about to release the capability where you could customize that information, build a financial model or any of these dashboards with your custom inputs and data connected. That company is called Model Wiz. You can check us out at model Wiscombe.

[00:51:49] Host: Paul Barnhurst: All right. Well, thanks for, providing those different ways. We'll put that in the show notes. And thanks for joining me. It's always fun to chat with you, Josh. I know we've got to know each other quite well over the last few years, and looking forward to finally meeting you in person later this year.

[00:52:03] Guest: Josh Aharonoff: Me too. And I do want to just add one thing that I forgot. March 1st is when we launched our YouTube channel we just released, I want to say, our 24th video. It's been so much fun, tons and tons of work, but I really am just loving the process. So if anyone is looking for some free resources to grow in their career, I definitely would recommend that you check it out.

[00:52:21] Host: Paul Barnhurst: All right. Great. Well appreciate that, Josh. And on that note, we'll go ahead and let you go. 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 FP&A certification. Take the quiz on earmark and contact me, the show host for further details.