BAM Day 2 - How Forecasting Adds Value to your Advisory Services with Kathy Gregory

Anyway, well, it's 10 o' clock and so I'm going to get started. I'm going to share my screen again here.

It wants me to share a tab so that's what I'm going to do. You just have to sort of put up with me because I do want to show you things in Live Plan and so I'll just have to be switching back and forth a little bit differently. But welcome. I'm so glad you're here. If you haven't introduced yourself, please do so in the chat. I would love to know where you're from or where you're. Where you are today. It's fun to know. I'm in Eugene, Oregon where the weather is unseasonably warm today. Although as the years progress I feel like unseasonably warm starts to evolve and it's just getting warmer and warmer every year. So anyway, it's lovely day. I hope it's lovely where you are. We're going to talk all about forecasting today and this is a passion subject of mine. I'll introduce myself and let you know just a hair about my background because I think it matters to certainly when you think about a masterclass and what you're hoping to learn.

I spent my career before coming to liveplan effectively doing financial forecasting, doing some project management as well, and financial forecasting, primarily modeling and forecasting as well as some business process design.

Kind of all of that fits together when you're doing business management. But forecasting was always at the root of it and it is work that I just fell in love with it. It's.

It'S an unmatched experience when you can build a forecast model that actually lets you see ahead on critical financial information, especially profit and cash.

It's cool when you've got it built and you can actually see those numbers and know, oh, in three months I'm going to have about this much cash. I mean, it's never to the penny, but you can get pretty close and my profitability is going to be here and then it's even cooler. It takes it up like five cool factors. When you get the business rules working in your favor and they are used in that model because then you have a whole.

Organism almost that feeds itself based on the business rules. And that's why to me, the work was entirely addicting. It was, what can I learn about this business to feed the forecast both in terms of projections and the rules of the business. When do they collect cash? When do they pay? When are they actually doing that versus when they think they are or what their rules say. All of those things feed the model. And it's like this process of investigation to say, what more can I learn about this business? What can I eke out of the business owner, the business rules? And I'm going to pour that into the model and then I'm going to even have a better view ahead on profit and cash. That's the work. That's what it feels like, it's what it is. And it's really fun and addicting because it brings so much value, concrete value, actionable value.

And so that's why I love it. And that's what I'm here to share and talk about. I am just looking to see if there's any reaction to that or feedback before I start the actual, the rest of the thing. Okay, well, if you have reaction and feedback to that or if you are entirely surprised by that and didn't think that's what we were here to talk about, let me know. But that's what it is. So here's what we want you to learn today. I want to make sure we cover what, what makes up a full financial forecast, what comprises a full financial forecast, how you use a forecast for and with clients. That's really the, at the meat of this, right? How do you use the thing? What do you, what do you do? How do you do that?

And then I do want to cover how forecasting adds to value based pricing. And it's ironic that Mark is giving his other talk right now on how you build prices for your clients. Specifically, I am going to cover how forecasting blends into your value based pricing. And I've done a lot of work with Mark specifically to build sample bundles that are value based with wording that you can use. And actually our template for producing that is in his effective pricing product. So if you chose to use effective pricing, you could find our lifetime method template there and get to these bundles through that software. Or I've worked with him to build a sales brochure.

Based on his system and you could use that too. So, so all of that we're, we're, we shake hands with, with Mark's program. Excuse me, sorry.

Tea. It's still morning where I am. It's tea time. Okay, so I told you who I was and my background and what I love. And I, so then I came to Palo Alto Software is the company that makes LivePlan. LivePlan is our flagship product. I came to this company about five years ago, maybe six now after Having spent a bunch of time like five or six years actually.

Raising our daughter, I was able, I was fortunate to be able to just stop work entirely for that period of time and just be a mom. It was really awesome. I am still a mom, but I mean I was able to be a full time mom. And when I came back.

You know, five or six years is a long time. What am I going to do? And it turned out that this company is in my backyard literally of the town I live. This, this company that makes a forecasting product. Well, it's a full business planning product. But you know the meat.

The meat of a business plan is the words for sure. But the oomph of the business plan is the forecast. It's got to be right. And then of course that forecast is used also to manage the business over time. So here I have this company in my backyard that produced a software product with a subject that I had trade skill in and was really passionate about. And so I was fortunate enough to find a role here. So Palo Alto Software makes live plan. We also have a website called bplans.com that's just loaded with free business planning content. So if you are looking for that kind of content or more importantly as an advisor to clients, if your looking for just lots of business planning content, there's not only articles but there's videos, there's little tools and resources you can use. All kinds of B plans is just loaded. So B plans, live planning software and then we have this program that is one of the things that I did when I first came here is help build a program for folks doing strategic advising. Folks being business advisors and wanting to do strategic work like forecasting. So we have this program where we nurture you and train you. So that's who we are. So I would like to know if hopefully what you're here to learn today aligns with this. If it doesn't or if there's something really specific that you are hoping to.

Take away from this hour, please put it in the chat box. And I would love to know what that is.

We are fortunate. I mean I'm gonna, I have maybe 10 slides and it'll go fairly fast. And then I'm gonna show you a bunch of examples and talk about forecasting and how you use the forecast. But I do think this background is, is important and it kind of level sets for everybody. Depending on your background and experience with forecasting this, these slides just sort of level set us.

Elizabeth is saying she cannot hear.

Can others put in their chat box if you can hear me, I think that people can, but. Oh, great. Okay. So Elizabeth just needs help maybe. Okay, thank you, Katrina. And Bill. Oh, Bill. Hey, Bill. Great.

Excellent. Today's objectives are great. I can hear. Thank you, Laura. Mark's people are the best people. You all are just so great. Okay, so I want to share with you a little bit of data because we work with millions actually of small business owners Life Plan. You know what, let me tell you that just briefly. If you're unfamiliar with Life Plan, this is important to know. Life Plan is actually a 40 year old product, not Live Plan as it is today. But we've had a 40 year journey to get here and I think that journey is important and cool for you to know. I'll make it brief. About 40 years ago, our founder was a journalist.

And he had actually graduated graduate school with his degree in journalism and was a writer and he found his way to writing business cases and he was writing for Stanford College for a while. They were doing an entrepreneurship program, doing some things and he was living in the Bay Area and eventually found his way to Apple where they wanted business cases for.

I mean, I could do a whole hour on what he did. But anyway, long story short, he ended up working for Apple building business cases and helping them do business planning and forecasting and business management in a contractor role. It was really cool. And he, through that process sort of built this product to productize his work because he was doing repeated work over and over and he finally figured out, wait a minute, there's a product here. Because so many people are trying to do this kind of modeling that supports business planning. There's a product here. So he built a product called Business Plan Pro, which is our legacy product. In the late 80s.

Over the course of time that became very popular. Fast Forward to about 2012 and business plan Pro was still a desktop product. And our current CEO and her business partners evolved that product to a cloud based product called LivePlan. So, so I think that's important for you to know because for a couple of reasons, our history is in teaching first of all and writing. And we have a real strong history and background in teaching people, users to what this work is of business planning, forecasting, financial management, all of this. It's in our roots. We're not just a app company hawking an app product. We're deeply educated in what this work is and we're really passionate about teaching it to people. So that's important because if you're learning and selecting what resources you're going to use it's important for your growth to. Because I've been in your shoes. I get it. You are trying to build a tech stack. Yes. But really on resources stack to figure out how am I going to serve these clients, what am I going to use to. To do what I need to do. So anyway, we, we work with you. We, we bring a, a ton of knowledge and a lot of support. So there's that. Then also we work directly with so many small business clients. Small direct to small business is our bread and butter and we understand them. We know what small businesses are after. But because we know that, we know they need advisors and that's why we work so passionately with advisors like you. Because at a certain point small business owners need help. They can't do this themselves. So that's what this data is about. And thank you for letting me rewind a little bit tell you that I think it's important.

Okay, so just a little bit of data. We are able to survey our small business owners all the time, but we do kind of a broad survey every year because we want to understand their pulse. We want to understand what they're thinking and what goals are. So for 2022 we asked what are your top goals? Increase profitability, number one. That makes sense. We are pretty sure and you can tell me what you think about this. But we're pretty sure that small business owners conflate profit with cash. And so while they say profitability, they probably mean cash because so many don't really distinguish that. I would love to, to know what you think about that. Yes. Yeah. Laura saying yes. So that's a problem actually we are solving in our product. I'm going to show you an example of that. But anyway it's nice at least to see that. But increase profitability, better manage and maintain financials. That's awesome, right? They want, they want to do that. They just don't know how you know that. And then these things that are interesting, they want to add employees, they want to add a new service, they want to apply for funding. All of that means they need to get a good forecast together to be able to plan for that correctly. So then we say great, we know what your goals are. How confident are you? Because not confident. Small business owners.

Don'T want help. They just. And you, you don't want to work with them because they, that becomes a hard relationship. You want people who are confident, they just know they need help. So we are always taking that pulse and confidence remains high. Even during COVID We actually this survey is actually from last November was the last time we did the big broad one. So even in the peak of COVID you know, it's this. So that's cool. Confident in the health of their business, confident in the stability of their industry, confident they'll see growth in 2022. So really cool. But then we say, okay, great. How many of you small business owners identified a new opportunity or changed your business idea last year? And 57% saying yes. So again, that means they need help. And then finally the pinnacle question. All right, what percent of you would like guidance from an advis? Because.

We want to uncover those folks within our ecosystem and try to get them over to advisors that can help them. That's a key part of our program. 78% saying yes. So that is a, you know.

It'S a data point that supports what we know by working with them, which is this. Whether or not small business clients tell you that they want forecasting and planning help. They do. They just do. They just don't know how to articulate it. They don't know what the words are. They don't even know it's on the menu. They don't know. But what they do know is once they find their accountant.

Now you do the numbers. That's what they know. Great. And it's been the weight on their shoulders for a really long time. And one of the first professionals they're looking to hire is their accountant and business advisor. And it goes right along in their brain. So whether or not they're articulating it to you, they're not going to come to you and say, I want financial forecasting. This is not words they know. But they know that you've got the numbers and they just assume that's what you do. And so it's a great opportunity for you. You just have to build it into your value based pricing the right way and come up with the language that meets them where they are so that they nod in agreement and be like, yes, that's what I want. So that's why it was such a natural fit to work with Mark. Because, you know, we know this, but how can we help expose that?

So yeah.

Patty. Oh, Bill is answering. Patty. Oh, great. Thanks, Bill.

And if that doesn't help. Yes, Bill, you're exactly right. So everyone please read what Bill just wrote to Patti. And we're gonna, we're gonna cover that. So I would love to know what is your experience with financial forecasting to date? And if you could just type that away right in the oh, we're not doing. Kent, we're not doing.

Oh, you're asking me who participated in the survey? Great question.

We survey our small business ecosystem. So we work with hundreds of thousands of small businesses in our ecosystem. They aren't all necessarily on Live plan. They're either in our B plans ecosystem or they are also live plan users. And we survey them. And this one went out to, I think, 3,000 people, and we had about 500 responses. Well, somewhere between three and 500, depending on the subset of the questions. Yeah. So that's who participated in the survey. Okay. And yeah, if you could just let me know what is your experience with financial forecasting? I would love it, and that will help me learn about you better.

So for those of you who are new to it, or even if you're experienced there, there are ranges of experience. Right. So some folks are still learning how to do the work of forecasting. Some are trying to find new ways to add value for your existing clients. Like you're experienced with it. But how can I plug value in to my menu for my clients? Some of you are looking to build a repeatable process that is efficient for you so that you can be profitable in the work. Because that is the one trick, and.

It'S the one trick with financial forecasting. When you are doing it for profit. You have to be careful because you can work a bazillion hours on every forecast if you want to. So you have to pare that back and you have to get yourself to a process and a system that will be just good enough to deliver value and insights, important insights, but not so much that you're, you know, losing your shirt on it. You have to still be profitable. So there's a balance. So then some of you are trying to train your team how to do the work like you know it. You put the things. But you need to train your team. And some of you are trying to scale up. So all of this we know you're wrestling with, and we have built a program and still are evolving that program upgraded all the time to get at all of these things. And so it's not just live plan and software, but it is a program that gets at all of this. So what makes a great forecast? And I'm going to get over to Live Plan and show you some things. But this is just one screenshot. And I know it's kind of probably small, you might have to squint a little. But I thought it was important to show it in just one shot. And I've Put red boxes around some things that I want to alert you to about things that make a good forecast. Because the forecast is at the meat of this work. So let's talk about what makes, what goes into it to the right product.

So first of all, when you do, when you build a forecast and work with forecast, you want to have a full profit and loss, cash flow and balance sheet, all three things. And it is important to have them in the statement format, not necessarily for all of the analysis you will do. You can look at individual metrics and compare metrics to each other, things like revenue and gross margin. And you know, you can look at individual metrics and do analysis by comparing. But at the end of the day you will need to produce in statement format the full P and L balance sheet and cash flow. You just will. And not even just for a business planning event, you will just need that for the business owner to feel confident about the work that you're doing. So you need to be able to have a system that lets you do the analysis and get at the statements as well. So this first red box in the upper left there at like what is that? 11 o' clock.

Is showing that Lifetime has this functionality for full P and L balance sheet and cash flow. That's really important. And the snap shot that you're seeing here is the P L. But if you scan your eye down the left hand side, I've put a box around the profit and loss. So this is the profit and loss view. But go all the way down and see where it says cash with the red box. We know, remember before we said business owners conflate profit and cash. They just do. And we know that because we work with them. And so that's the advantage of us because we can survey these small business owners, talk to them all the time, bring these insights, put it right in the product and it benefits you. So what we've built is, and I'm going to show you when we get over Lifetime. But what we've built is a view that lets you see your full P and L do the analysis right there and then have your cash running right alongside the bottom. So even that's, even though that's not.

How a true P and L is set up, when you're doing your analysis and your work, it's just really important if you can see, oh, here's my profitability running here and right underneath it is my cash. Now there's no confusion, crystal clear to that small business owner. Profit is one number, cash is another number. Great, we're going to go and figure out how to manipulate those, but I'm going to show it to you exactly that way. It makes it really crystal clear and you're not having to build that comparison yourself. And then I'm going to show you how this works in Lifetime. So don't worry about the columns yet, we'll get to that. But just these red boxes I wanted to highlight. And then the other thing is the ability to not only work live on the screen, but also produce things for your client. You have to produce deliverables for your clients because. So in the upper right hand corner you see this download and print has a red box around it and that's to illuminate that all in one screen. You've got this ability to have all three statements. You've got this one that you're looking at is the P and L, but we've got the cash bar there. And then the ability to download a print because again, back to value and back to pricing and back to service based work. You have to provide deliverables every month. You just do. Because. And maybe you're going, yeah, I already know that. Like, I know this is the work I do, but if you don't know it, I'm just sharing. Like clients are all about, what have you done for me lately? What, what you know, sure, I'm on a monthly price with you, but what'd you do for me last week? What'd you do for me? And so if it's only conversation, even though the conversation is the most value, it 100% is, it doesn't matter because they're going to walk away from that and be like it was just a conversation. You have to provide a tangible deliverable. So download and print helps you put some reports together even if they're not. They don't end up being the real meat of what you do. Then at least you can turn over the client. Be like, here's the thing. So, all right, that's a snapshot and I'm almost done with this slide situation. And then we're going to get over.

So the combination of this dynamic.

Experience of the software plus our program, which is a step by step process for doing this work.

Gets you to the things that you need and I'm going to show you examples of this and then I'm going to talk about forecasting as a trade skill and sort of the information that you need and how you build it and what that feels like. But the. So these are just samples of that. We have a business Prof. Full business process task based down to like 5 minute tasks to get this work done in a, in a workflow, Meeting agendas and scripting for all of the key meetings that you would do. And these meeting agendas and scripting are the free resource that you get today. And I'm going to be honest and tell you, I don't exactly know how those are being served up to you if they're coming from Mark and Sarah in a package or if we are linking them here during the session. So if Cassie is hearing me, which I know she is, if you can, or if Annie's here right now, if you can get that answer and, and let me know and we'll get those resources to them. Like I said, I don't know if we're just putting the link right now in the chat or if Mark and Sarah are delivering those in like a package. But there's four, there's three meeting and judges and scripting and there is the task list.

And before we cut over life plan, just kind of this one last.

Concept is your own practice. So we're going to look at forecasting and talk about it. But there's also the evolution of your engagement with your client because that is part of this. So you have to think about this forecasting work. As I show you things and talk about it, you might begin to get panicked that it feels like a lot and it feels like a big thing to produce quickly. First of all, it's not. But secondly, forecasts by their very nature evolve over time. They just do. Even if you weren't trying to make that happen, they just do. Because every month you analyze the forecast. And as you analyze the forecast and get findings from it, that analysis feeds updates that you will make to it and those updates make the forecast stronger. And so that very nature of the work combined with the fact that you need your engagement with your client to grow and evolve over time, you just do to bring them more value and help them grow. So this makes such a marriage of a great service to provide, which is why you're here, I'm sure, learning about it. But this image depicts sort of what goes on in the first 12 months of the engagement when you time it out and sort of think about it methodically. So in the first month you're just sort of, or I'm sorry, in the first. Yes, in the first month you are just kicking off with your client and getting the initial forecast built. Then the next two to three months you're really focused on making sure that forecast is Right. Is the model work? Are the assumptions that you put in it feeling right as the actuals come back, is the model working? That takes a few months to get right. That's totally normal. Then for the next four to six months, then you're really. Once the model's right, now you're perfecting your cadence with your customer and your conversation and your meeting, really your review meeting. How does that go? How do my conversations go with my client? Are they receptive? What ways do I have to talk differently? All of that.

And then you are uncovering problem areas in the business and just refining things. Then after that, after six months, you can grow, you can set stretch goals, you can evolve it even farther. And then if you do tax, you want to always leave that window for tax prep. So.

Just be okay with the fact that forecasting isn't like a switch you flip. It's not like compliance based work. It's not like accounting. Accounting is like these tasks or these transactions happened and putting them in and I'm done. And it's immediate. This is not immediate. This evolves over time and really does become an organism. The forecast, it's a, it's sort of a living thing. That's why it's called life plan. But it really is alive. So that's what it'll look and feel like in this slide. I just said all those words so you can get that later. And let's cut over then and look at some things and these slides you'll get as a follow up.

Beverly is saying the resources you provided to Mark and his team are attached to the session for download. Oh, that's perfect. Thank you, Beverly. I didn't know that. So hopefully everyone knows that the resources that we're giving.

Are attached to the session and you can download them after we're done here. And it should. You should see four resource guides, which are three meeting agendas with scripting and the full task list. Yes.

So.

Just before we cut over, I just want you to think about the services that you provide now and how those can be translated to value. So, you know, right now you might be providing business planning, but your client doesn't value business plans. Like they don't really know what that means. It's easy to list that in your service offering and say, oh, I do business planning. But they don't really. But if you say, if you articulate that in terms of no, we're going to help you turn your goals into an actionable plan, that's a business plan. Oh, okay. All of a Sudden, I value that. Right. So I want to just leave you with that one example of what your service offerings might be and the actual value that you're bringing your client. Just let that marinate in your head. Now we're going to go. I want to show you forecasting, and then we're going to come back to this, because after having seen it, I think this example or this exercise of what your service might be and what your real value is will.

Be more meaningful to you. So let's cut over, and then I come back to this.

Oh, great. Annie's here. Annie put all of this together. Thank you, Annie.

Great. So I'm going to. Just bear with me. I have to.

Do the share process again to get to live.

There we go. Hopefully you see that?

No, so sorry. It won't let me share my whole window. It's making me tabs. There we go. Okay. And I'm going to make the screen wider, too, so you can see more. How do we feel about that? Good. All right.

So this screen should look familiar to you. It's the screenshot I just showed you, but without red boxes.

This is where we're going to spend most of our time, because I want to show you what you do with this forecast and how you get here.

There's lots more of Live Plan to see, but this is a masterclass about forecasting, not a master class about how to use Live Plan in full.

But I can tell you that the meat and the heart and soul of it is this forecast. So anyway. And there are lots of ways to learn about the rest of life plan, too. So I want to start by showing you what you do with this, because that is a better way, I think, than just going through a bunch of buttons and telling you about what they do. So if you can understand what you can do with it, then how it gets built makes a lot more sense, I think. And also what you can do with it translates to any other product you use. It's not just Live Plan, because this is just forecasting. This isn't Live Plan use. This is the trade skill of forecasting. It all should, at the root of it, it should all pretty much feel the same, because what you're really just trying to do with the forecast is be able to see ahead on the main financial metrics that drive that business.

Those will always be profit and cash. Right.

They will most often always be elements of the balance sheet, equity and other things. But after those metrics, you start to. With all the rest of the financial metrics, it Starts to become business dependent. And by that I mean not every business will even have every metric that matters. So for instance, some businesses are completely cash basis and they don't have AR for instance. So while AR days and total AR are really, really important metric for businesses that have it, some businesses just don't. So you start to get into metrics that where you, you have to align what is this business model with the available metrics to use and track and come up with the ones that really, really matter for that business. So that's one of the first pieces of the work is understanding the business model enough to be able to know that. So in your work of getting to know the client, you are gathering the information, the business rules about that client to understand how, what their business is comprised of. And then you're using those business rules in the forecast. Let me just show you this and then I'll show you examples of where those rules live.

So in the P and L view, I've got my. This is my full P and L and I'm going to open it up all the way. These arrows will open it up all the way the way. So you can just see this particular business is our demo account and it is a massage therapy business.

So you can see that it's revenue lines. I'm gonna. Let's start with Reven.

That is interesting.

Okay, so its revenue lines are sports massage, deep tissue massage, personal training, nutrition and lifestyle planning, product sales, and then this thing called shockwave therapy. So that's kind of specific to this business. But that's good.

Because these are the strategic items that this business is looking at for growth. Now its chart of accounts to record transactions.

Will look different and more detailed. Usually.

This is a good place for me to ask you all a question and please type in your chat box. How do you set up? Well, I don't want to know how you set up a chart of accounts. That's too big of a question.

Do you put strategic thought into the chart of accounts? Do you have a standardized system? Do you have multiple revenue items or do you just want to have sales as only one? Like I'm curious about that, about, about how much strategy you put into the chart of accounts to be used as a management tool.

Versus just a compliance depends on the client's reporting needs. Okay, that's a perfect answer. So what I'm going to say is, and I'm going to read these. A lot depends on the client and what is important for them to track. I normally ask the customer how detailed the Information is they want. Oh, okay, that's interesting. Yes. Revenue is different for the type of businesses. Yes. Multiple strategies. Okay, this is great. So for the person all, many of you are saying, I asked the client what they need.

I suggest you don't. I suggest you tell the client what they need based on what you learn about their business. This is the difference between compliance based work, accounting work, bookkeeping work, accounting and bookkeeping. And this type of work, which is strategic and isn't controllership like financial forecasting isn't, but it kind of is. It has flavors of controllership. So you need to be in a position of saying, all right, client, I'm going to learn about your business and then I'm going to tell you what you need in terms of reporting based on what I learned about your business. Not ask, tell.

Because they don't know. They don't know. I would be shocked if business owners actually know what they need for reporting. Like actually no, they might tell you. They might answer that question. I bet you they do. But they don't really know. They're looking for you to tell them what they need. And in absence of you telling them they're gonna make it up. They don't know and they don't want to look dumb to you. Right. They value your respect.

More than you maybe realize. And you are in a position of being expert and they have hired you to be the expert, in fact, and are paying you for that. And so. And they, they are worried that you will think they are ignorant. That's. All of this is true, 100% true. Whether or not you see it, I don't know. But that's all true because they know that you have trade skill and are professionals. And so all of this is going on. So if you ask them what do you want, they're going to come up with some answer and it's probably not going to be the right one. So if you can learn about their business and say, all right, you for this business, I. The questions to the small business owner are.

First of all, tell me what you sell. Just that's easy. What do you sell and who do you sell it to and who and what do you rely on to get that done? Those are really at the core of trying to figure out their revenue from a strategic perspective, not from a compliance perspective, but from a strategic. Like, we're going to help you manage your business. You need to understand this. And as you learn that stuff, you will start to see broad differences in things that will eventually become revenue streams. And they're different because.

They would probably have widely different gross margins, for instance, or they would. They're sold by different people maybe, or the work is performed by very different people. All of these things contribute to revenue lines that you then want to expose and treat as their own. Now on the chart of account side, you can be as detailed as you want. Over there you don't want to have sales only because then you won't be able to map to Live Plan and get the comparisons that you need to do the tracking. But you can be overly detailed over there. And then Live Plans mapping will map and I'll show you, I'm going to show you that in just a minute. So that all forecasting should be this way. Whether or not you use Live Plan, you should understand about the business. What do you sell, who you sell it to, how do you sell it, who and what do you rely on to get that done? Figure out the revenue streams, what those revenue streams need to be for. For.

Being able to track strategic growth. You're not going to get them right the first time 100% you won't. You're going to try something, then you're going to do your first month of comparative analysis and you learn and you'll know after the probably the third month. Remember the roadmap I showed you. But the first, second, third month are going to be really good times to say, okay, I put these revenue streams but I'm finding that we want to have a conversation actually about this other thing and I don't have that captured here. And it seems to be strategic enough. Let's make a revenue stream this for that and then let's map it. So let me show you that.

How that works in livecom. But any product you work with should work this way because you need, you need to be able to have a separation between the forecast and be as strategic as you need to be over here. And the accounting let those things map and be really flexible about that on the fly. Like be able to change that on the fly. So in live time we've got sports massage, for instance. We've built up the things that contribute to the number are the billable hours and the hourly rate. And we put that in Live Plan. It asked us in a wizarding exercise and we put that in. So we had this number. Deep tissue massage is also on billable hours. Personal training might also be, I can't remember nutrition and lifestyle now is on unit sales. So LivePlan will give you choices of revenue types and put in the business drivers that build that. So some things will be unit sales, some things will be billable hours, some things will be subscription. And I don't think we have a subscription example here, but some things will be subscription.

Yeah, looks like we don't.

Why that's not working. Must be a hop in conflict. Are you seeing me click this and it won't open? I think maybe Hoffman doesn't always like this. Anyway, so here's this. Now the mapping is its own thing. And do you see that up here? So I'm connected to QuickBooks. I've already connected. It's pulled in my actuals. Live Plan pulls in up to three years. That's another fundamental thing you want with forecasting. You want to be able to have ready access to and use prior balances.

Not only to do your analysis but to build your first forecast. You want to see that. So Live Plan, once you connect it to QuickBooks or Xero, it pulls in up to three years of history. It's available in Live Plan. You can use last year's balances to build the first forecast. That's a chance choice you can make. You don't have to, but you can. Then once that's filled, it's built. And now I'm connected. Now my mapping is here. Do you see my mouse? I'm clicking mapping now. Live Plan says. All right, I see all of your chart of accounts in the left hand column. I'm listing them in the right hand column are the matching Live Plan data points. And you can change these on the fly. The live plan, the thing that the chart of account is synced to chart of account. So you can see that in this one there's a lot. This is income, the income accounts. There is a lot more detail over in the chart of accounts. There are nested accounts under massages, other things, but we've simplified that on the live Plan side and I can on the fly change that any way I want. And the mapping will filter the data and present it in different ways.

So that's the mapping. So I'm going to go back to the forecast. So I've got my revenue categories built, I'm synced, I'm mapped.

Now I want to do my analysis though. And that is presented in the same view. So you can see where the columns are blue. Those are months in the rearview mirror. And so my actuals are available here. When I open this up, I can see my actuals versus my forecast and my net change. So now I've got the thing, I've built the running Balances my variance analysis all in one view. And I'm working with the client on this variance analysis to say, all right, how did. Let's look at what you did last month, and let's see where the opportunities are and the trouble spots. Because at the end of the day, what this work is about, even though the modeling is fun and addicting, what the work is about is seeing where do I have gaps between what I forecast and what I did, what are those gaps and why? And that's where the heart of the conversation lies. So you are scanning, which this is probably work you do. Now, I'm sure your accounting software, all of them, has the.

The budget versus actual analysis that exists. But what it doesn't have the ability to do is let you update and have trued up. So first of all, it doesn't true up running balances on its own, and live plan does. And any forecasting product you use should do that. And then it doesn't.

Provide an easy way to update that, because that's the exercise. You want to expose the gap, have the conversation wherever these gaps are and identify with the client what caused the gap. And there really only are two.

Answers or two types of answers that exist. It's pretty simple. It's either something's going on in the business that is working or not working. So if the gap is in the negative, there's something not working. If the gap is in the positive, if they exceeded like this one 44%, something worked really, really well. So what is that? What went on? And that's the conversation. That's the advisory conversation right there. What went on in the business? Business owner, tell me, dig in. Ask a bazillion questions. What happened? They might say, oh, yeah, this. Whatever happened, they're there, they know, but they're not pausing to think about it. So you have to bring this evidence and make them pause and talk to you and dig in. Keep digging, keep digging, keep digging. That to me was always, that's the most fun. That is so fun because then you have all these clues and evidence, and then you take what works. So the business owner, let's say the business owner says, oh, yeah, we.

Beefed up our product line for nutrition and lifestyle planning and made this change, and we sold more than we thought. That is an example. Or in this one, that is negative 15%. Yeah, my personal trainer was sick. They got Covid or they got us cold and they couldn't come. Oh, shoot. Well, what risk does that expose? So you don't just take that one Answer and say, okay, let me change the number. Nope, talk more about that. How many talk. Talk to me about your trainers. And what do you do if. If a trainer gets sick and now your bench is low? What are you doing about that? That's how the advice works. And then so you have the conversation about what's going on in the business is either working or not working. Then you take the results of that conversation. Whatever change you're helping the business owner make, you reflect that change in the forecast. So it's the variance exercise. And then you're reflecting changes going forward. So you might, on this personal training, come in and say, oh, then what we should do if you have a weak bench, for instance, is reduce your revenue projections for the next two or three months until you fix that problem and then go fix maybe your payroll or something to reflect that something. But you'd have a tweak, you'd have an adjustment to the forecast.

That's the exercise. So that's one of the two types of the two versions of the conversation. That's one, something's going on in the business. It's either working or not working. The other type of the conversation is maybe my goal was wrong. Maybe my forecast was just. My projections were just wrong. They were either too aggressive or too weak. And I just need to fix that. I just, I set my projections too weak. And that happens all the time.

Usually what happens is people are overly conservative with revenue and they are afraid to make confident projections.

And so they're lower that you might think the opposite. You might actually think people are bullish on revenue, but they're not actually people. They talk big, but when it comes to typing a number in, they actually get really conservative. And so sometimes then you have to push and set some stretch goals. So that is the exercise you are trying to get to this conversation of. Is it something that's going on in the business that's either working or not working? Or is it something in my projection or my business, my forecast model, that is just wrong?

So that's the exercise. And I only focused on revenue in this example. And the reason I did that is because revenue is the key. When you're building your forecast categories, and I'll just scroll through and show you all of these, revenue sets the stage for everything else. Once you take the time to figure out what your revenue forecast category should be, your expense categories and all the other things that feed the cash flow on the balance sheet sort of just fall into place, it's revenue that sets the stage for Everything in a forecast. So once I get that right, then I can come down and I can continue and say, well, all right, what kinds of cost of goods sold? Do I want to have a cost of goods sold row for every revenue category or multiple ones or do I just want one that usually makes itself pretty known? It's revenue that's the big one to sort of get right. And then your below line expenses, below the gross margin line expenses.

You know, become really apparent. They're usually fixed things like, you know, rent, utilities, insurance. One thing that a lot of folks do that scale this up is they actually create a live plan forecast template. Now we don't have anything called a template in lifetime. You won't be able to go and find the word template, but they think of it that way. They keep one software license aside basically that has their basic template. Especially if they niche. How many of you niche do you niche? If you do that, they, they create a forecast template or a forecast shell I guess is a better word that they like. And then they copy that and use that as a, as a shell baseline for, for others. And that gets them going, especially for expenses. It's a nice way to do it. And then you leave. You know, revenue can be customized, but certain, you know, basic expenses always happen.

So the expenses make sense. And then we get down to the bottom here we see the running net profit and we see that.

For.

The, for the live forecast.

Columns, we see the actual there against the forecast and then we know that because the action being used in the run number, my go forward balances are true. And that is another key thing you need with your forecast. With whatever product or tool you use, you want the prior months to true up and dump in so you can see the variance and all the things. And then you want that number to roll through.

Your projection and true up your running balances, if that makes sense. So you want to true up, you're running net profit. Do you see how 2022 is live? And this 7000 is a, is a blend of my actual to date blended with my forecast. That's what I need. Because if I don't have that, your forecast gets out of date very quickly and then cash is also trued up. So I've got a blend of where actuals ended and my go forward picks up. And that's just coming straight from the accounting. It's coming straight from the cash balance in accounting.

So that's a lot about, about forecasting. I shoved a lot of information at you. I want to go back to this slide and I have to end right on time. So I want to be cognizant of that and I want to just share with you about this value and then I want to tell you you that if you want to take a much deeper dive, if you want practice building forecasts, we have a forecasting masterclass coming up on June 2nd and you can join that and you will spend five hours with us in big group and small group practicing building forecasts. Building a forecast against a business case.

Using it for analysis. It all the things like you learn all the deep things.

So when we think about this value.

Oops, I am not doing this right.

Do this real quick. There we go.

So we said business plans becomes turn your goals into an actionable plan.

You don't want to write financial forecast on your.

Services list because the client doesn't know. I mean they might know what that means, but they don't. That's not really the full value. The full value is visualize your profit in cash so you can make confident decisions. That's what you're learning to do.

Benchmarking. There's benchmarking in LivePlan. We get our benchmarking data from the Profit Sense product. We display it and I didn't show it to you, but there's a whole benchmark tab that you can compare industry benchmarks against forecast and against actual results. So benchmarking. You might be tempted to throw benchmarking into your value list. Clients. That doesn't mean anything to them. But see how you compare within your industry that matters to them. Make that the thing in your value based list and give that a value. Month end reports. Don't we all love it? All the compliance folks are like yay, month end reports. I did all my transactions. Isn't it beautiful? Look at what I did. Clients don't care. They don't know what that means. They don't know what the reports are for. Even if they tell, even if they're like ooh reports. They don't know. They don't know. So but you're going to give them performance reports for management and other stakeholders. That matters. Because here's what we know about small business owners because we work with them and we survey them. Their fear, their worry is.

Doing it right. Looking good to their management team and their employees. They tell us that every time you survey them. What are your biggest worries? Doing it right. They worry about getting it right and they are looking to you to help them get it right. They don't know. And that's why they have hired you.

You might be tempted to put a business one sheet and pitch. You can get to that in lifeplan. We have a. We have a business one sheet in a place. I didn't show you. They don't necessarily know what that means, but they do know the value of having a business summary for investor pitches. That's important. And what's cool in LivePlan is you're doing all these numbers anyway for the forecast and so they flow right into those pitches and you just click a tab and they're there. So it's really scalable for you. And then finally, with one minute left, loan preparation, like, yeah, okay, that they do get. But present the strongest plan so you can receive a necessary cash injection for growth. Doesn't that sound a lot more exciting? That's what they're after. So this has helped with some words when you think about what your real value is. And then these are the bundles that we built with Mark. This is the brochure you can get through us. This is our demo company, which you don't need. And this is our masterclass. So. So if you want to spend time doing, like working with us, it's four or five hours in small groups. This is the class to do that. And Melanie. Yes. It's by NAICS code. We benchmark for any NAICS code. Any U.S. nAICS code that you can find. It's just simply by NAICS code.

And I am at time, so we have a booth. If you go to our booth now, Cassie and team will be there to show you things, answer questions. I don't exactly know how the booth works, but they will be there. So if you head over to our booth, you can talk to us. And I super appreciate your time and I hope you're learning a ton with Mark.

And I'm just looking at final questions, so I think you should leave now, though. I don't want to make you be late for anything, but I'm going to just hang out here and look at questions as you leave.

Great. And it was a. It's a pleasure. Again, Mark's people are the best people. You all are terrific.