Optimizing Cash Flow & Simplifying Financial Models with Brian Lanier

Into a new company.

I have what I consider now a flexible playbook. Right. I'll have the number of things I look at. I start by asking a lot of this.

I've heard hosting in general, there's a lot of waste there. The challenge is everything's moved to the cloud, different pricing models and really understanding how to optimize. I think everybody's still figuring that out.

It turns out their hosting expense was about know how many customers they have or what the retention rate is when I get here. So you look at the, you look at your customer acv, you look at their retention rate and then I, that I go digging into the, the head count and I look at how many employees they have in each department, I look at the org chart. And so by the time I get done modeling this all out, a lot of times I have a better grasp on the business itself. You know, two months in that a lot of people have been there for years because I understand all the levers and where, how everything's working.

Yeah. And so it sounds like if I'm hearing a playbook, obviously flexible, but I love that it first starts with just asking questions, spending time with all the different leaders, the people going out on sales calls. And then when you feel like you start to have an understanding of the overall business, you'll go dig into each of the different drivers, each of different line items, and really try to understand what levers do you have to impact the business. Is that the way to think of it?

Yep, that's exactly right. And usually that'll guide you where to go. So you'll have some places you. A lot of times you'll start with cash because if you run out of cash, you're in trouble. And so you'll identify if you run a good trajectory or not. Once you figure out that you're not going to go out of business and the cash is okay, then you start looking at your other levers. So for example, one company I started with just their margin was horrible and I tried to figure out why their margin is bad. And it turns out their pricing just wasn't priced right. So the first thing to dig into there was taking a look at their pricing model and we ended up doing a significant price increase. Which one? That's another discussion. Ended up boosting sales with price increase as well. Because the way we rolled it out, another company I looked at, turns out their hosting expense was about three times higher than I would expect it to be for a company that size. So they just had millions of dollars wasted in hosting expense. And that was one of the biggest expenses and that's the first place we dug into that company. So usually once you can identify levers, it'll tell you where to start.

I've heard hosting in general, there's a lot of waste there. The challenge is everything's moved to the cloud and different pricing models. Really not really understanding how to optimize it. I think everybody's still figuring that out. Has that been your experience? I know you've worked with a number of SaaS companies that it's usually a little bit of a. There's some waste in a black hole almost.

Absolutely. It's such a big number and it's kind of hard to unravel sometimes. This particular company, they hadn't set it up in a way to take advantage of AWS's, you know, flexibility based on the usage.

Yeah.

And it was set up with a bunch of static VMs and it was set up in a way that There was about 5% usage on all the equipment they were paying for. And so just a whole lot of waste.

I'm sure they appreciate it when you're like, yeah, we can bring that down a million dollars or whatever the number. But you can. Yeah. Here's what we need to do. Just change the contract or start using different types of equipment or whatever it might be. But. Right. You implement some things and all of a sudden the numbers start coming down. So you mentioned often you're the first one to build a budget. They might have had a. If you came in after a transaction, like private equity, they have that transactional module. But that's not really a robust budget. It's usually like you said, historical data with some savings areas and some growth assumptions and not much more. They're not getting into what are the 27 software things that they have and, and different things like that. So what's that like when you're taking a company through that. That first budget? How do you kind of walk them through that?

Yeah. So there's. There's a lot to this. Right. So starting off on the expense side throughout the easy part, which is I. I'll go. And you try to tie it to the historical. To make sure that whatever you're building actually ties to what's really going on. You got to start off with. You're basically. You're putting the actual business model itself on paper. Right. And so you need to make sure that what you're forecasting is going to be accurate. And so I'll try to tie that to historical Actuals and then I'll go through and I'll try to find the right balance between materiality. So you're not modeling something that's, you know, $20 a year software.

Sure.

So you've got your buckets of other and things that you're not going to dig into. That's just going to be not useful. But I'll actually go through and I'll, I'll build this with the intention of saying that as we're going to go forward, this is going to be the operating tool that we're going to also integrate. So as we're doing monthly variances, say, well, why is software expense 10,000 over budget? Well, it's because Salesforce, the pay increase, we have too many licenses that we haven't planned on. And so you can identify like vendor by vendor, all your key expenses. You can then nail down what you expected to do and what your actuals said. And then you can actually have an operating plan to go back in and address it. So either, either salesforce is more expensive and I need to adjust my forecast and it's just better information, or you can say, oops, it looks like somebody issued a couple licenses we didn't need. Then you can identify the areas of maybe lacking some discipline in the business to go back in and actually attack it. Be more fiscally responsible. Right. Because you have specific things. You can go trace your budget to your actuals. So I build it with that intention on the expense side. Same thing with the headcount side. What I'll do is I'll go through and I'll identify, kind of put the org chart and spreadsheet and then I project it out in the future. And then you can see, well, how come R D? Is it more expensive? Right. Either you maybe gave somebody a raise or you hired somebody that wasn't in. Wasn't in the plan. But I actually like to, once you structure that out plan, I like to identify a seat number in the plan to everybody in the budget so that it actually makes it easier. If someone wants to hire and they say, well, we want to hire an implementation person, is it in the budget? Well, it's really easy if you've got a seat number there. If somebody Left seat number 25, seat number 25 is open if it's in the plan. And if there's no seat number available, then it's not the plan. So it makes it really easy to say is there an open seat number or not to hire? And then if someone shifts from one department to another well, he goes to an open seat and he vacates another seat, so you know which one's available. So it becomes a tool that's a lot easier to operate against so that you don't accidentally come to the end of a year and say, oops, looking back, how come we ended up half a million dollars over budget?

And I really like this, the seat idea and kind of having an average salary for different seats, because I've been in situations where it's like, well, you want to hire someone, but you don't have that specific role open, so we're not going to approve it. You know, that type of mentality in a company, it's like, let people manage their business within the overall plan. You really care if it's a implementation person or an architect or whatever. Don't they know the business a lot better? That's kind of always been my thought is it's, you know, much more of that the overall. And let them manage the details. As long as they're hitting their numbers and they're staying in. Budget cares.

Exactly. One thing I tell my team a lot of times is I'll tell them, think in terms of opportunity cost. Every time you spend a dollar somewhere, it means you can't spend it somewhere else. So if you had a dollar to spend, how could you get the biggest lift out of that dollar? And so just because I've got a seat scheduled here, if it's somewhere better, then, you know, it just makes it kind of easier information for them to digest so they can see how to play with it and manage their own departments. That way you become a partner to them and not trying to tell them how to run their department, but you're enabling them to actually do a better job running their own department.

Yeah, well, I remember, you know, I first became a director, I had a hire to do, and everybody thought I'd hire, you know, a finance person. And I went out because the data was such a mess and got a data person. And I can deal with finance stuff easier. I can manage those relationships. I'm sucking all my time cleaning up this data. I'd rather have the expert there. And it was kind of, you know, I'm sure the role was listed in the Budget as a finance person, but I'm like, no, we need a data guy here. And in fact, when we hired him, he's like, no, I have no interest in doing finance. My mom's an accountant and I don't like it at all. I'm like, fine, as long as you can Clean up my data. I don't think I'll call you whatever you want. And so that's kind of the prime example that I use where it's like, all right, he's got to get the job done. That's what matters.

Y.

Within, you know, within the cost constraints you're given.

Yeah, exactly. And then to finish answering your question, now that's on the expense side. Now on the revenue side, there's. It's kind of the same concept. What you want to. The. The whole budget starts with the revenue. Right. So what you want to do is figure out how to make that as predictable as possible. And so you try to understand your sales pipeline. So how long does it take a deal to go through the sales funnel? What are your conversion rates? What's your cac? Right, right. So for every dollar as you go into marketing, how many leads does that turn into? And how many of those do you close at an average, you know, ACV per customer? And so then you can try to predict, well, if we're going to increase our marketing spend by half a million dollars, then how much is that going to translate into additional revenue? And so you, you try to figure out what your levers are on the revenue side as well, so that you can figure out how to drive that. And then once you figure out what you can predict on the revenue side, that determines what you've, you know, based on your margin and your other expenses that flows down and what's available to do the rest of your budget. That piece, a lot of times is kind of what kicks it off. And I always start with the sales of marketing teams because they got to sign up for it. And a lot of times they're the ones that you're working together to figure out if there's an area for improvement. Maybe on your. You can get a better response on your leads, maybe better quality leads. Betwixt some things, you can get a better close rate. And. And so you kind of work through with them to try to get as predictable as you can. Because once you, if you miss on the revenue side, then there's some expenses you planned on that aren't going to happen. And then, you know, then it's not as fun.

Yeah. As soon as you miss on the revenue side, it's. It becomes a challenge. You're. You're constrained the rest of the year when you know you've missed on top line.

Yep.

Talking to revenue, I have a question for you. You mentioned, you know, wanting to understand all those levers, but how do you Balance conversations with the team, talking to the experts versus just looking at the levers and what the data says. Right, because you want to involve the subject matter experts, they know what they're talking about. But there are always those times where you got the super optimistic sales guy, oh, yeah, we can do this. And you're just like, we haven't historically, we haven't been close to that. Why could we do that now? So how do you balance those two as you're having those conversations and, and working on the budget?

That's a great question. So a lot of times what I do is when I build these models, I, I'll build them within such a way. I like to, I like to try to keep it simple. So I don't put complicated calculations in one cell. That's impossible for someone else to figure out what's going on. I try to kind of show my work so that you'll have levers built in. So they say, okay, now if we change this conversion percentage at this rate, it'll flow through this way. Right? And it'll kind of also spit out some metrics so that you can have your double checks in there. So I don't just build these models to where you can now have. It's easier to do your variance and operations against your plan to see where you're landing, but also so you can model some what if scenarios. When you identify your big levers, you can kind of build them in there so you can say, okay, now if our, if our close rate goes from 5% to 6%, what would that happen? And so you have to have a plan how you're going to get from 5 to 6%. But if we were to do that, what does that mean for revenue? And then so I build it all out and I kind of take the historical and I have everything as a reference kind of built out and ready so that when I sit down with them, it becomes more of a working session. Because you're right. Usually the sales guy is so optimistic. Well, there's, there's a mix. They're so optimistic what they can do, but they also don't want to sign up for more than they. Because they, you know, permissions is based on hitting target. So you're trying to balance both those things with them. So what I'll do is I'll sit there and we'll just kind of work through the scenarios and we'll just. So I can show them real time. Well, that means this. We've only ever done this, so let's not Sign up for that. It's a little too aggressive. Right. And so, so you're. You're providing them the information they need to make better decisions.

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Exactly. And you know, What I've had really good relationships with sales leadership before, where we'll actually sit down and we kind of work through this together as a team and we get there and it's great. But I've also had other people that view it as a negotiation. And so that's where by having the whole model and everything built out, I become the sniff test to see if it's reasonable or not. And so I can, I can temper it and give us a realistic target. And a lot of times, you know, they'll have their higher targets. So if they miss, we don't miss our budget. So you have the official budget plan, you have what they can hit, and then you kind of work all that out with them. But it's got to pass the sniff test.

Yeah, exactly. Like, you know, when you, you tie it all back to quota, the operational. All right, I want a 25% or whatever, the number 20 between quota and what I actually need to hit plan. And then there may be another stretch in there or whatever because, yeah, you got to derisk it along the way.

Exactly.

So, you know, next question I have, how do you make sure the budget. You talk a lot about this, but you mentioned you really like to make sure it ties to operations beyond just levers. Are there a lot of operational metrics you're bringing into your model or how do you think of that? Because yes, you can build models that have, you know, levers, but often those you're not careful, you're tying those levers to financial things, which are usually lagging indicators, not the levers you really want. So how do you make sure the operational side is involved?

I do that in a couple ways, actually. So let's take a good example. So product. A lot of times I've worked for a lot of different SaaS companies, so a lot of times you have a new product that's coming out, so you're gonna, once it's released, cross sell it into all your other customers or as an example. And so there's, especially if a private equity backer, they're going to want to see return on their investment because they pump millions of dollars in R and D. And so at some point you've got to model a little bit of an uplift from all that investment. And so operationally it'll tie into it because now you're going to figure out the timing of when it's going to be produced and then your go to market. Then when your sales team is going to kick in, you got to make sure that it's not cannibalizing their other sales activities. And so this becomes part of you sitting down and working with them and working through the plan. And so your go to market plan and your product plan is going to find its way into the budget model where usually I'll say, well, you think you're going to be releasing this and selling in March. Okay. So a couple quarters later, let's, let's have some delays. We're not going to be missing our target because you don't release the plan in time or because it's going to take sales a little bit of a learning curve to figure out how to start selling this as well. So you got to maybe let's say you got to budget another salesperson who's going to focus on this. So you got to get the extra cost in there, maybe a little marketing campaign spend that's going to go in there and the revenue is going to start kicking in when and how much of a ramp. And so, so operationally then you're going to be holding these people to their timeline of releasing and their go to markets on schedule. And are you hiring a couple months in advance so they can ramp up in time to start selling it? And so this all just kind of becomes another part of the plan where there's some financial targets, you can hold them on schedule. And, and that's a good example of a one way do for rd.

Sure. Yeah. Product really understanding that schedule and making sure you stay on because we've all been there where a new product release. Oh yeah, it's going to be Q1 of 2022, six months later. We're really close. You realize you've blown the budget at this point.

Yeah. And as soon as it's available, all of our customers are going to want it immediately. All right. Well, probably not.

Yeah, it's like what's a realistic ramp? Let's go look at the last three products we launched. Oh, 10% in the first year. Okay. Maybe that's a realistic number. And what was the cannibalization and all things you talked about? Right.

Yeah. And if we do that many, who's going to implement it and what's that going to do with the rest of our team capacity? Right.

You have to implement software. I thought it just magically always happened.

Well, if you do it right, I guess. Yeah. I haven't seen that too much.

No, I haven't either. I do a lot with FPA tools and as you know, if you put a planning software in place, it's an implementation you and I worked automotive. We all know that the, this stuff they were selling, you had to implement all that. It wasn't just a turn on a switch. And here you go.

Yep, exactly.

I, I agree. I've been in those where we can do this many a month. Not in, not with that many people, not in any world I've seen.

Yep, exactly.

And, and so, yeah, just so much of that checking. How do you ensure your, your team, so you've talked about, you know, you come in and look a lot of, a lot of this stuff, but your team, that you have, your FPA people, how do you ensure they take that operational focus and understand the levers and are really being business focused versus reporting or financial?

Yeah, I think a lot of times this is a training thing. So a lot of times in these meetings they're sitting with me and they just kind of go through the motions with me at first until they feel like they can fly solo. But sometimes it's a mind shift of just, here's, here's some metrics and we. Your job's done once you produce a report and you're done to. Okay, now let's really start thinking in terms of partnering and understanding the business. And so, you know, you're more of a, like an almost a consultant of helping them understand the layers of business and how it all ties together. Because the other thing is you have some departments that are really good at their area of focus, but they don't see how that's going to impact other departments. And they just don't see that the bigger picture, which is our job of tying it all together.

Totally agree. I still remember one time we had had a really rough financial year and the product person's like, can you come present the financials to our product people? And they didn't realize we were basically losing money. And it was, we were churning a bunch of customers and it was an extremely challenging time and a lot of them came. Thank you. Now I understand why they're honest so much to deliver this product like nobody had connected it to them to see, oh, if we don't do something, the company's in trouble. And, you know, it was a really good reminder of the importance of helping connect the overall picture. You don't have to get into all the details. There's times when you can. But making sure they understand enough that they know how important what they're doing is and how it's impacting the business. Because sometimes people don't even realize that, oh, that's having a material impact like what's the big deal? I'm a couple months late. We have plenty of other products. You didn't see what was in the plan.

Yeah, actually it's a great point too. A lot of times companies struggle with siloing. Right. Each department is kind of siloed and that's one good way to get them all together is if everyone understands a plan, they're working on it together, then you can have discussions about how they impact each other department and, and sometimes that whole where do you spend that dollar? Sometimes one department gets it, means another department doesn't. So you know, horse trading and stuff like that. But if you're all working on it together, that helps break down some of those silos as well.

Agree. And so I want to ask another question you mentioned. You, you start by learning the operations and you really dig into the, to the model, particularly digging into the model and understanding of the drivers. How does that help you understand the business? Like after you do that you feel like you understand the business a lot better than you did with just the operational side or how do the two help you?

Yeah. So we think as one example it can impact the sales motion too. Like sometimes you have recurring revenue and you have one time revenue and you can see where some of the discounts are coming in. And as you break it down by you can see, well, we have one product we didn't realize is losing money or one segment that's super profitable that's kind of masking this other aspect over here. Just recently I found over here that we had been discounting about 40 to 50% implementation limitations. So we should have a healthy margin but we're almost breaking even. And so just by having this information it helps shine lights on different things where now that can impact the sales motion and things that we're maybe discounting to which why are we doing that way. And, and so just by identifying all these again it's going back to levers by if you don't shine a light on it, you don't even know where to pull a lever. And so this can, it's not just on the expense side, it's on the whole sales motion and approach and bundling versus a la carte. And so which product to which maybe one product's price wrong or maybe sometimes I've even discontinued a project a product before because it wasn't profitable and didn't even realize it was pulling the whole business down because people thought it was strategic. And turns out I was just draining the business.

Yeah. And, and I'LL share one example that you reminded me of and this is one that kind of with the help of audit was discovered. But just understanding the business, we had a situation where they were writing off a discount we were giving to FX currency because the customer is paying us in Canadian and most of our customers paid us in USD. And the auditor is like, yeah, really, that's really a discount. Because your contract was either said hadn't specified a currency, but you were expecting to get paid in USD. The fact they were paying you in Canadian, every other customer's paying USD, you have to write that off as a discount. Nobody knew because it had been booked every month to the FX currency adjustment line. And so we dug into it and come to find out all those customers were older and we were in a market that was declining a lot. So even with the discount, they're still paying more than the new customer. So like, all right, we'll just leave it. But understanding the business and being able to dig into it really helped us realize, yes, like people are like, well we're giving up 30,000amonth at discount. Well, if you bought all new customers, you would have been giving up 50,000. And then it's like, oh okay, I get it. Like they're at a price that's like double what it is today. Because it had been a rapidly declining market and it was just a really good reminder of really understanding everything. The immediate reaction is, well, let's just issue all new contracts in USD. They're going to renegotiate the price if we do that. And what will that mean? Let's look at the average price today. And so it was a really good reminder of how you need to look at everything.

Yeah, Let me give you two more examples actually that it's. And these are things that people never even saw until you shine a light on it, until you identify. Right. So one of them was we at a company were trying to accelerate cash collections. And so what we ended up doing is basically financing the cell sell a multi year deal, work with a third party partner. We pay for free financing up front. And so the customer gets a monthly payment and we get all the cash up front. Well that turns out that fee that we're paying ended up being about $2 million a year. So it was a really expensive way to try to accelerate cash. And no one had any idea how much money that was costing us. That's just lost revenue would have gone straight to the bot, straight to ebitda. Right. So that's one example of people didn't even realize the impact of that decision until I got here and shined the light on it. Another operational thing is there was one time on an implementation team, once you start reporting and getting some good data on it, you notice that numbers were lining up. We dug into and it turns out these implementers were basically working two days a week because the way the process was set up, it just. So it ended up introducing the question that operationally we figured out a way to squeeze in two customers per week instead of just one and doubled the capacity. And all a sudden the numbers lined up better. But people had no idea the team was only working effectively two days a week.

Sign me up.

Yeah, right.

Yeah. It's amazing when you really, if you really dig into things, if you have good capacity models, you know, for people's work, the things you'll learn. I mean, one company, like I said, we did that, we did capacity models all across the board and they come to us, can we have a new hire? You know the answer. Yeah, but I had to ask. Okay, well you can ask, but the answer is still no until you can demonstrate there's a need. And it was really nice to always be able to go back and say, okay, well what's your model tells.

Exactly. And it gives you predictability too. When you're, when you're modeling, if we grow to this many customers or increase sales this much, then you know at what point you need another implementer or you need another support person.

Yeah. Really understanding those ratios and also being flexible, realizing rarely are they linear. There's usually step increases or there's a point where there may be a big cost for whatever reason. So when you're dealing with the budget, are there any keys or advice you'd offer to others? Maybe they're going through the first time modeling a budget. What would be those couple key keys that you would tell them to building, you know, a really robust budget model.

Yeah. So I think some of my main points that there's a little things that'll help is one, keep it simple. So you're at every line item that you're identifying significant revenue line item, if it's by product or however you're segregating the revenue. Every expense line item, you're identifying the key drivers. Right. So you're building those levers in, you know, if it's by the number of customers is going to drive it, number of employees is going to drive an expense. You're understanding really a way to line those levers up with the true business itself. So what you're putting on paper is an actual model of the way the business is actually as close as possible gonna actually function. The second thing is really team up as much as you can with the people because a lot of times it's gonna be an educational thing for them. If they've never done it before, some people will resist because it's uncomfortable. And this accountability thing for the first time is not fun. But if you're working with them and if it's a kind of a team thing, they're not only gonna learn more about their department and improve their performance anyway, but they're going to have more buy in to where it's not going to be a fight going forward. Where if they miss a budget all of a sudden it's like, well, but he gave me a number that was wrong in the first place. And now you're arguing about the merit of the model, right? There's more buy in. You built it together. That's going to come in huge later. And then the other thing that I've mentioned before is I kind of. There's some cases where you'll actually kind of step out your logic so it's easier to follow the way you build a model. You kind of see rather than a really complicated formula or one kind of goes, you plug something in and goes into this magical black box that's going to spit out an answer that's nice and simple six months later. You know, go back and try to figure out what you're thinking when you built it, or if you ever have to hand it off to somebody else, they won't be able to replicate it and it's easier to break anyway. So whenever I build these things, there's always an assumed amount of buying a new business or divesting something or there's the stage of businesses I enter. Usually you're trying to come up with a new product. There's so much change that you try to build this thing, so it's easy to change and adjust as you go.

So you're telling me I shouldn't be using a lot of custom functions and vba and lambdas and all that kind of stuff.

I would recommend against it.

I've definitely, I think everybody goes through that phase where you're like, you're proud of yourself because you build something that's complex and you're looking at the formulas. Then you realize, okay, I have to explain this to somebody or this has to be maintained. And the, the more experience you get, you realize just how important simplicity is. One of my favorite quotes that I love and I don't know where it originally came from, but simple is hard, complex is easy. It's often a lot easier to throw that complex formula in there than to think of how to break it apart and make it flow in such a way that you can explain it to others. And so I just, I love that emphasis. I think if we'd all focus a little bit more on being simple. It's always been a challenge in my career. I'm tend to be very detailed and can get complex in a hurry. And I have to remind myself, is this really worth it? Am I actually driving any value here? And often the answer is no.

Yeah, absolutely. And you know, on that note, maybe if I could add one more hint of something that's a good tip for me is, is remember materiality because it's easy to sometimes get down to the too granular level. And all sudden now every. I like to update my forecast model every month. You do a month at close, drop in the actuals, add any changes in headcount or any changes in the business. And so you've always got a real time forecast. And I usually build it in about, you know, four to five years of the future. So you've got the rest of this year plus how that's going to extrapolate. Even though you haven't done next year's budget, if everything stays the same, you know what this is going to look like four years from now. So as I update that every month, it shouldn't be such a cumbersome thing that I have to sit down in my office and close the door for a week to update the model every time. Right? You want it to be as quick as possible to keep it real time. So you got to remember that concept of materiality where you're not going down to this really teeny little product that has a little bit of revenue. Put that on autopilot so you don't have to worry about levers on that thing because it doesn't matter.

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Exactly.

Not going to matter.

Yep.

I totally agree with you. It's easy to get caught up sometimes on those little things that don't matter, learning to just let them go. Especially when you come from an accounting background where you had to tie everything out to the penny, and now all of a sudden, there's all this gray. That's a hard transition. I still remember a accountant I had. He was great, and I asked him if he wanted to be an FP analyst because I was hiring a role. And no, no, no. I did that once. That's just all funny money. Like, you're just making up numbers. No, thanks. I like it to actually be black and white and tie out. I'm like, all right. Yep, you're good at what you do. I won't even ask you again. Like, I get it. You know, there's. There's definitely a lot of truth to that, of being able to focus on the big picture. Some value there. So I want to ask you one other thing before we move into our standard questions. I wanted to spend a minute on M A. You've done. You've done a lot of M A Divestitures, acquisitions, also selling the whole company. Any. Any thoughts you can share there of just managing that process, especially for FP and A people. How can they either be involved or make sure it goes smoothly? Just your thoughts in general. We could start with, you know, from when the deal is happening to integration, wherever you want to go with that. I'll kind of leave that open and just spend a few minutes.

Yeah, let's. How about I give you two answers? That one on the buy side, one on the sell side?

It'd be great.

Yeah. So let's say on the buy side, it's actually a lot of the same concepts that I'm talking about now, but on a. Call it a much more rushed, simpler. Simpler level because you don't have as much data. But I like to do the same thing. But if you can, before you make the acquisition, I like to kind of already build out a little bit of a model where I understand their revenue streams and I understand their history, and I can start to kind of predict a little bit of Their understand their headcounts. And if I can kind of build out a little miniaturized version of this thing, a lot of times I've actually kind of had a model built before I acquired the company, so that I already know that, hey, we don't need twice as many accounting people that we've got. I can already identify. We're going to get rid of three accounting people, two IT people, and how that's going to mesh with the company and where that's going to tie in. And so you've already kind of got like a hybrid for your due diligence. You already can forecast the revenue for your acquisition, figure out how that's going to tie in. So that is your building, your plan on how that's going to that your board's going to hold you accountable for the acquisition. You can already kind of have that ready to go before you acquire them. Gives you a lot of visibility in their business. And I've even acquired some businesses where I know more about their business than they do by the time we acquire them. Right. So same concept we're talking about, but just a lot less information, a lot shorter time frame, but same kind of principles. Then on the sell side, what I would say for FPA guys, a good thing to think about is begin with the end in mind, especially if you're like a private equity company where you know eventually you're going to sell well, there are a lot of those metrics that you know you're gonna have to have in place and tracking at the time you sell the company. So I'll already set up a way far in advance if you're gonna sell. In a couple years, I'll already be tracking our ARR and our GRR retention metrics and your cac. You kind of build in the reporting and you build in the all the benchmarks and everything in advance that you're reporting on. So it's on autopilot. So when you need that information later, it's a muscle that you've already toned and you already know what you're doing. And at the same time what you measure gets improved. And so you can start your plan from the beginning. Anything you're measuring is way to improve the business that's gonna determine what your business is measured on at the time of sale. So you start in advance and you kind of build your whole function around what's going to matter in a couple years.

I like that. And it's so important that reporting side, because they're going to ask you every question imaginable. And if you have good data, it's going to be a lot easier. You're still going to get some surprises and some late nights. That's just the sales process. But if your data is a mess, every night's going to be a late night as you're trying to cobble it together and try to make sense of it. Like, well, I gave. What number did I give them before? Because it's not centralized. You're like, well, this tie to what they had before. Am I going to get all these new questions?

Exactly.

Yeah. It sounds like you've probably been through one of those where you're like, I wish I had better data.

I learned early and wasn't going to make that mistake again. In fact, the first time the bankers took too heavy of a role. Instead of me doing a lot myself, they kind of produced some reports. So I spent a lot of that due diligence process just tying out the information they sent with our data so that, you know, you could have confidence in the numbers and it was a lot less sleep for a couple months.

Yeah, I can imagine. You're like, okay, definitely not doing that again.

Yep.

All right, so we're going to move into. We have some standard FP&A questions we like to ask everybody. They're ones where the idea is just kind of give a quick short answer that we're looking for here. And first we're going to start with, from your. Your experience, what is the number one technical skill that FPA professionals should master?

I don't know if this is going to be called a technical skill, but here's the one thing that I see that a lot of people struggle with is learning the art of the sniff test. You do an analysis, especially a new guy, you do a lot of analysis, you produce something, and then if it just doesn't make sense or something's off, you need to be able to realize and learn pretty quickly if it looks right or not, or if you need to go back and challenge some assumptions. Last thing you want to do is produce a report and have people say, yeah, that's not right.

I love that one. And I've been in that situation and I've worked with people that don't have that skill. And it's painful when you're like, okay, our total revenue last year was 100 million. You just report reduced a report of 2 billion. And you didn't question why it's wrong. You know, like, I've seen that. And you're like, okay, you just don't have that skill. So, so important. I really like that one. I haven't had that one. Given is the number one, but I like that one. What about soft skill? What's the number one skill?

Collaboration. Especially a lot of times if you get someone who's not used to the budgeting process or doesn't have the. I call it sophistication to know how to kind of predict their own business or you can know what their levers are to help coach them through that. Build them up to be a business partner.

I like it. Collaboration so they can be a better business partner and really work with the business. Next one. Are you currently using Generative AI?

You know, not very much really lightly and I do want to get more into that.

So how do you think about that as a CFO for your finance department? I know it's been all that's been talked about for the last 18 months. So how are you thinking about it?

The two main things I think about is one, I want to. There's. I guess entry level would be figuring out how to automate a lot of things that currently are done manually. That's the first thing I want to start with. Second thing would be want to make sure that we're careful to protect our data.

Yeah, that's a huge one. Data is a big. The privacy and being able to automate things. So maybe we'll have you on again at some point and see how you've implemented it because it's definitely an area of finance is still trying to figure out what are all the use cases. How does each company. Right. Better use it. It's exciting time for sure.

Hopefully by that point I'll also be the next step which is going to be like predictability and using it for analysis. We'll see.

I think we'll get there. It's exciting times. I. I'm really excited. We have, you know, OpenAI has announced their new models coming out called Strawberry and they say should have complex reasoning which is kind of level two of their five levels to get to artificial general intelligence. And so it's just really interesting to see. I'm like curious to see if they can deliver on that. Exciting. A little scary, but exciting for the most part. Do you have a favorite Excel shortcut? You know, we have to ask in this Excel question. This is a finance audience.

Yeah, no, that's a good question. I use a lot of them. I. I guess I use Control Shift L a lot to filter and unfilter things. I guess you know what I use all Day long. Is alt F or is F4 for. For your static versus variable formulas.

Yep. Dollar sign control. I use Control shift L all the time. That's one of my favorite.

And then I'll have so many files open all the time. All the alt tab, all day long.

Yeah, been there. I know. So, yeah, those. Those are three. I definitely use a lot as well. I like that. All right, so this one is just kind of a fun one to see what people answer. If I gave you the ability to wave a magic wand and change one thing about fpna, what would you change?

Well, probably not the answer you're looking for, but for me, and especially last couple companies I've been to, it would be somehow to get the ability to get really get cleaner data. Because everywhere I go, the big struggle that we always have is the unreliable data that you got to fix and keep clean. And that just makes the whole job, everything else, so much harder.

Yeah. So I saw a great quote that made me smile. I don't know if you've ever seen the quote. There's a quote by George Bach that says, all models are wrong. Some models are useful.

I like that.

And the other one was, nobody's data is clean, but most data is still valuable.

Yes.

Was kind of the idea, kind of a play on George Box. And I'm like, that's. That's a good point. At the end of the day, like you said, you've never come into a company and been like, oh, clean data. It's all right here. This is perfect.

Yeah.

And so it's just. It's learning. And I agree. If we could wave a magic wand and make all our data clean, I'd love that. But the reality is it's not. It's making sure it's useful. Yes. You have to do some cleaning, and there's a level. But I'm going to guess you've never left the company and go, wow, our data is now perfect.

Yep. Never. And in fact, like, I'll even tell people sometimes, like, hey, there's probably about a 5% variance in the report I'm saying here. But if I'm telling you that our retention rate is 83%, it's plus or minus 83%. It's. It's good enough that we can make decisions based off of it.

Yeah. And. And that's what. Really what it is. Is it good enough to make decisions on most of the time? Yes. Sometimes no. And that's when you have a big project, when you come in.

Exactly.

All right, so we're going to move on to the get to know you section. So we have four questions here. This is just for audience to get to know you a little bit more personally. So no finance here. Favorite hobby or passion that you have.

You know, growing up, that was. The answer was easy. I was. Baseball. I love baseball. When you get older, it's kind of hard to find. Find a pickup game of baseball somewhere. So now it's kind of shifted to the outdoors. I like hiking and just doing outdoorsy stuff and Salt Lake City is a great place for that.

Yes, it is. I am totally with you. Do you have a baseball team?

The Mets, unfortunately, has been painful.

I'm a Dodgers fan, so I will. I'm okay with the Mets. You didn't say the Yankees.

Yeah, that's true. But see the dodgers, ever since 1988. I mean, I was heartbroken when you knocked us out of the playoffs. I still hate the Dodgers. I'm sorry.

That's okay. I don't really care for the math. So we're. We're even there.

That works.

All right. What is one book you can recommend to our audience to read?

You know what? Most recently, the one I read that I really got into was Principles by Ray Dalio. What I enjoyed about that, that's. It's not really like a specific self help skill type book, but every once in a while it's kind of good to kind of step back and look at a macro level, at a bigger trends and pictures and. And Principles by Reed Dalio kind of did that. It was an interesting read.

Yeah. I. I don't know if I got to listen to all of it. I checked that out from the library. I remember listening to quite a bit of it on tape and it was definitely a good read. And a little more big picture.

Yeah.

Versus some of the books. They're giving you very specific things to do.

Exactly. Yeah. And I. I tend to usually read the kind of more specific books and so this was a different thing for me. I liked it.

Got it. All right. If you could go anywhere in the world tomorrow, where are you going?

Probably Italy. I've never been to Italy, actually never been to Europe, but I think Italy would be a funny Europe.

You're gonna have to change that.

I know. Never been. I actually never went to Hawaii until for the first time a couple years ago.

So I haven't been to Hawaii. I've done Alaska and Europe, so.

Nice. Yeah. I've got some catching up to do.

You know, we all go different places. Like I said, Hawaii's on my list, so I get it. All right, so next one. If you could have dinner with one person in the world today, who would you pick and why? And just so our audience knows, if you're watching this on video, we're both smiling because we worked at the same company at different times. We had an ecentric CEO, so we joke that that's who he would take to dinner.

Right, Exactly. But other than him. So the other person I might go with, and this is going to be, again, not like a FPA centric person, but I think Nate Brazzi, if you've ever heard his standup materials. That guy makes me laugh. So the first thing comes to mind is he'd be fun to have a.

Meal with, so you're gonna get a good laugh. You need to go have dinner and just relax and enjoy the humor. I like it.

It's good to let loose every once in a while and just enjoy life.

I'm totally with you. You got to do that sometimes. Otherwise, it's. It's not much fun. I still remember somebody I worked with. Somebody referred to him is basically, I can't remember the you they used to count. Somebody who was like, a totally uptight person can. He just didn't know how to have fun. And the guy was trying to tell him, you got to relax. Like, you're gonna drive everybody you work with crazy because you're so. You're. You're wound so tightly, and everything has to follow the rules 100% that people are going to be miserable around you. And it was a good, good lesson to see that importance of finding that balance in life. You got to be able to laugh and have fun.

Yeah, exactly.

All right, so we're heading into our last section here. We just have two questions for you, and then we'll wrap up. So the first one, if you could give one piece of advice to our audience to be a better FPA business partner today, what should they be doing? What would that advice be?

My advice would be, know your audience. Your goal here is actually to make a difference. You. You can add value to a company in a big way that no one else can. And so your goal really should be to be making a difference in the company. So it depends on. You're going to work different if you're talking to a board full of private equity guys who are really good at math and in the spreadsheets versus some guy who's an implementation director who's really good at making sure people show up on time and enter the Phone. So if you know your audience and you can tailor, you're providing information that's really valuable, but you're doing that for a reason. And so to make a difference, you're going to approach your director of implementation different than the board. But every time you're presenting information, it's with a goal of accomplishing something.

Two things I love there. One, know your audience and two, make sure you know that goal. When you're presenting something, what are you trying to accomplish? And to know what you're trying to accomplish, you also have to understand your audience because often how you accomplish it is going to be very different. Depending on the audience. Are they fact based motion? What kind of, what type of material do I need to bring in that's going to resonate with that audience? Because it's going to change.

Yeah. When I'm trying to get the board to, to approve, you know, $2 million funding to help us get through this next year's plan, it's a lot different approach than when I'm trying to convince the implementation guys that is people need to do twice as many implementations in a week as they've been doing the last five years.

I can see those being a little different. You know, if someone wants to contact you or learn more about you, what's the best way for them to do that?

Right now the best way is probably LinkedIn. So if you reach out to me, I'll respond. That's probably the most reliable way to get a hold of me right now.

Yep. And I think that's the way we connected was through LinkedIn. And for this podcast back, you were pretty quick on responding and I appreciate that. So thank you for joining me, Brian. I've enjoyed chatting with you. I know our audience will really enjoy the message you shared. I appreciate all the practical advice you gave. So thank you for carving out some time for me today.

Yeah, no problem. It's been a pleasure.

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