12 Principles of FP&A


Welcome to this week’s installment on financial planning and forecasting! Head over to our Youtube channel and take a look at this article from Strategic Finance learn more.

In this week’s planning and forecasting segment, we want to talk about this article we saw in Strategic Finance about the 12 principles of strategic planning, or as they call it financial planning and analysis. It’s really good article with practical steps to follow, and it follows along with the process that we use here at Harvard Grace. We’ve shared a link here (see above)! There are 12 principles listed, and we’re going to talk about a few of them today, but be sure to read the article to dive in further with your team.

Step number one–the first step is always the hardest–formulate your strategy. Then you want to translate that strategy into actionable steps. Identify the resources that you’re going to need to execute on your operational steps, and then document the operational plans. The next step: translate the operational steps into what the financial results will be, because financial results is actually how you’re going to measure whether or not you’re successful. You can’t go in there thinking you want to increase revenue by 10% without documenting some steps about how you’re going to do that. You’ll be able to tell whether or not revenue went up 10% or not, but that’s not going to tell you how you got there. So you have to document these steps first thing.

When you develop your strategy, understand your strategy might be wrong. Learning to do this in your organization is a process, and you will get better at it month over month or quarter or over quarter, depending on what time period you decide to go about this. Each time you plan, you want to go through these steps, translate your strategy into operational steps, then translate that into the financial impact you expect to have, the actual projection of what you think these steps will have on your financials. Then you can measure from there.

Measure often. Make corrective steps midway through your plan, while it’s ongoing. You don’t want to wait till the end of the year and think, “well, our strategy didn’t work.” You want to know it a lot sooner than that, and most of your leaders and your board of directors will want to know what happened well before year end. Besides, you don’t want to lose that period of time, so make your plan, enact your plan, and measure, measure, measure. If measurements aren’t coming up, then circle back and amend your plan.

This is the kind of planning and management we help companies with. We guide them through this process and work with them as independent financial executives on their team. If we can help you in that way, book some time with us now! W’d love to talk with you.

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