How to build business understanding as FP&A Manager
I learned over the years how to build business acumen - quickly.
If you are an FP&A Manager, THIS is the question to ask:
“What would you like to know about your business to help you make better decisions?”
Let me explain:
It helps you learn the business.
As FP&A Managers, we need to know more than just what goes into the revenue forecast and how to put together the financial package every month. We need to deeply understand the business model and how strategies translate into action plans. And we need to know how those action plans get tracked and measured - even if it’s an “operational” (a non-financial) measure.
Why?
Because we can only become strategic advisors to the business if we understand it. It’s that simple. Looking only at numbers with a $ sign attached isn’t enough anymore. Instead, FP&A must analyze operational metrics that could predict revenue and expenses (leading indicators). And the best way to learn which ones matter the most is by asking the teams who generate them.
It’s an open-ended question that encourages people to think deeply.
That’s because people can get stuck in their day-to-day challenges and miss taking a step back to look at the big picture.
It shows that you want to help.
You demonstrate that you don’t just care about your own goals but see it as your responsibility to help your business partners achieve theirs. That builds the relationship and will likely be reciprocated in the future.
You asked the question but didn’t get many good answers?
Here is a good follow-up:
“Assume it’s a perfect world. We have unlimited resources and can get every question answered. What would you like to know?”
This follow-up is effective because people sometimes get stuck in a scarcity mindset. They think that certain things are impossible when in reality, there is a path to get there.
Some great responses I got when I asked this question were:
“I wish I would know how much our new TV campaign impacted last quarter’s revenue growth.”
“I’d love to know how our planned international expansion compares to other roll-outs we had in the past. But I don’t know how to make them comparable.”
“It looks like our online sales increased whenever a country went into a lockdown because of Covid. But I’m not sure if there is a correlation.”
“I need to estimate projected sales of a new product I’m planning to launch. But I don’t even know where to start.”
“We will sell less next quarter overall, but we should be able to sell more of our expensive products relative to cheaper ones. How can I estimate the impact? I think it’s called ‘Mix Analysis’?”
If you’d like to learn more about FP&A, I offer help in three ways:
1️⃣ Subscribe to my free newsletter “FP&A Tuesday” here.
2️⃣ Listen to 75 bite-sized mini lessons and get FP&A advice on the go.
3️⃣ Join my live online course FP&A Bootcamp to master FP&A in two weeks.
