The Disciplined Management Process

The Disciplined Management Process

Presented by Steve Cook

About vcfo

• vcfo provides an integrated suite of finance, HR, technology and recruiting support through our team of consulting professionals

• Our goal is to improve operational performance and optimize productivity

Learn more: www.vcfo.com

Introductions

Mike Wilfley, COO, EVP• Oversees operations in all markets

– Austin, Dallas, Denver, Houston and Seattle

• Former Consulting CFO with more than 25 years of experience

• Extensive experience in building strong teams designed to execute complex strategic and operational plans in various industries

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Introductions

Steven A. Cook, Managing Director • Based in Dallas, Steve oversees

operations and business development for the North Texas Region

• An active CPA, Steve’s background spans nearly 40 years in financial and consulting industries

• More than 18 years experience as a president and CEO of finance and IT consulting firms and over 35 years as a practicing CFO, predominantly with large, publicly traded companies

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What we might accomplish today?

Management• Business Ownership/General Management• Departmental/Project/Career• Life (finances, kids, marriage, etc.)• Divide your notepad into three columns

So What … “I know all that already”• Vision• Execution• Communication (Catch phrases)

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The Management Process

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Shareholder

& Stakeholder

Value

The Management Process – Shareholder Value

• The business/project/process should not be an end itself – it should be a means to an end. Why are you working so hard and taking so much risk?

• Possible alternatives: going public, going private, giving to kids, retiring, building a legacy/culture, working forever

• Impact on strategic plan• Examples

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The Management Process – Strategic Plan

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STRATEGIC PLAN (3 YR. HORIZON) Shareholder

& Stakeholder

Value

The Management Process – Strategic Plan

Where do we want the business/department/project to be in 3 to 5 years out (or, at the end)?

Notice how I use more than just financial terms:

• A Strategic Plan is much more than a financial document

• The “pro forma” is at the end, not at the front

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The Management Process – Strategic Plan Sample A

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Page

Executive Summary ………………………………………………… 2Product Overview ………………………………………………….. 3Industry/Market Overview ……………………………………… 5Capabilities ………………………………………………………….. 9Operating and Growth Tactics ………………………………….. 10Key Operating Assumptions …………………………………….. 13Financial History and Projections (summary) ……………… 14

Exhibits1. Management Credentials …………………………………….. 152. Detailed Financial History and Projections …………...….

Unnumbered3. Marketing Materials ……………………………………………… Attached

Table of Contents

The Management Process – Strategic Plan Sample B

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Table of ContentsExecutive Summary …………………………………… 3The Enterprise …………………………………………. 5

HistoryManagementPhilosophyProducts and ServicesAssets

The Market & Industry ……………………………… 10Segment 1Segment 2Competition

Targeted Opportunities for Growth ……………… 12Key Operating Assumptions ……………………….. 12Use of Funds …………………………………………… 12Key Risks ……………………………………………….. 13Financial History & Projections (summary) …… 13Exhibits

Marketing MaterialsFinancial History & Projections (detailed)

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The Management Process – Tactical Plan

STRATEGIC PLAN (3 YR. HORIZON)TACTICAL PLAN (1 YR HORIZON)

Shareholder &

Stakeholder Value

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The Management Process - Tactical Plan

• What do we want to accomplish over the next twelve months that will move us correctly down our 3 – 5 year path?

• Again, more than a financial document. The financial piece is known as “the budget,” but it, again, should be at the back, not the front

• Every key “assumption” in the budget constitutes a “management lever” – representing something that management can “tweak”

• Therefore, for every key management lever, there should be a specific tactical plan to accomplish the desired result

• Budget should go to cash flow statement … all managers should know how to read a cash flow statement (versus a traditional P&L)

• Tactical Plan should also address incentive compensation plans – specifically what behavior do you want to incentivize and how

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The Management Process – Performance Monitoring

STRATEGIC PLAN (3 YR. HORIZON)TACTICAL PLAN (1 YR HORIZON)PERFORMANCE MONITORING (MONTHLY/

QUARTERLY)

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The Management Process – Performance Monitoring

• Again, operational not just financial• For every management lever (or assumption) deemed to

be important, some form of a performance management report should be developed

• Cash Flow – Incentive Compensation• Narrative – Executive Summary – top ten points

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The Management Process – Forecasting


QUARTERLY)FORECASTING (QUARTERLY)

Shareholder &

Stakeholder Value

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The Management Process – Forecasting

• Never change the budget … but don’t put your head in the sand

• Cash Flow – Incentive Compensation

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The Management Process – Risk Assessment


QUARTERLY)FORECASTING (QUARTERLY)RISK / OPPORTUNITY ASSESSMENT

(QUARTERLY)

Shareholder &

Stakeholder Value

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The Management Process – Risk Assessment

• “What you want to hear” forecast … “Sandbag” forecast? Either one is bad and may result in bad decisions

• Tendency is to respond that forecast is “down the middle”

• Only way to arrive at answer is to assess risks and opportunities

• Assess range of possible results – worst case, best case – compare to target

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The Management Process – Contingency Plan


QUARTERLY)FORECASTING (QUARTERLY)RISK / OPPORTUNITY ASSESSMENT

(QUARTERLY)CONTINGENCY PLAN (QUARTERLY)

Shareholder &

Stakeholder Value

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The Management Process – Contingency Plan • For every risk - how to minimize possibility and/or

impact• For every opportunity - how to maximize possibility

and/or impact• Assign names/responsible parties to each task• Feedback into next tactical plan

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• If you apply the process diligently (i.e. in a “disciplined” manner), it’s almost impossible to be surprised by an operating issue

• And, that’s the goal of a CFO (or any manager) – no surprises

• The goal is action. If you go through a planning process, or put a bunch of numbers on a report, but you never take an action, why did you waste the time?

• The job of a good CFO is to “turn the numbers into issues”• Management has to make the ultimate decisions• The CFO helps in focusing on the issues

• Vision/Execution/Communication

The Management Process – the Bottom Line

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CFO Key Responsibilities

Key Responsibilities of a CFO:• Disciplined Management Process – Design and

Supervision• Stakeholder Value• Strategic Planning (& multi-year projections)• Tactical Planning (& budgeting)• Performance Monitoring (including financial reporting)• Forecasting• Risk – Opportunity Assessment• Contingency Planning

• Bank Relationships, Treasury, Cash & Debt Management• Internal Controls• Valuation Monitoring & Exit Planning

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Contact us

Mike WilfleyCOO, [email protected]

Steven A. Cook Managing [email protected]

Want to learn more about how vcfo can help?

Contact:

www.vcfo.com

mailto:[email protected]

mailto:[email protected]

Thank you.

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