Portfolious

I’ve been tasked at work to come up with an 18 month rolling forecast. I think several companies have moved or are moving to a rolling forecast methodology. It’s far more accurate than budgeting once a year, and it can be used as a management tool.

I believe that most companies do not budget properly. Budgeting is that once a year painful exercise where people are asked to submit expense budgets based on some high level revenue target (usually without many objectives for how the revenue will grow), budgets submitted lead to an EBIT (earnings before interest and taxes) that’s far too low, management adjusts income statement from a high level, finance cuts expenses, budget managers hate finance, and the budget is fairly useless 1-3 months into the year.

Sound familiar?

I think a lot of businesses find themselves in the right place at the right time, often performing well simply because they’re in a good market with growth. Ideally, if your market is growing, the pie is getting larger, and you just have to keep doing what you’re doing to grow your revenue.

In this economy though, reality hits for a lot of businesses. Historically, the company grew and management took credit. Obviously, they’re doing something great. Now, with the market sizes (think of the entire pie) shrinking in most industries, blame the economy. But can you do that?

I had a great meeting last week with our new product marketing vice president, and our goal was to develop a new framework for making decisions at our company.

About a year ago, we played around with the idea of developing a marketing plan, integrating that  marketing plan into the budget by asking these questions:

1. What products should we develop?
2. What new markets should we look at?
3. What acquisitions should we make?

What is one tool an analyst needs to have to make his or her life easier? The excel array. It is truly a lifesaver! If you want to work with data in excel, you have to learn to use it.

It’s very difficult to describe an array. imagine this…you have 38 cells in Column A and 38 cells in Column B. You want to divide all of the column A by Column B and sum them. You can do this two ways

1. Divide A/B in Column C…add at bottom

2. enter the formula =sum(A1:A38/B1:b38) and hit Ctrl+Shift+Enter to exit out of the cell

My title is so strange, Manager of Business Analytics. Business Analytics??? what is that? If I polled everyone I knew about what department that was in, I bet only about 50% would get it right.

I sit in finance, and because of that, I think a lot of functions (e.g. Sales, Marketing, Ops) are hesitant to seek my help because it seems like I’m always looking to save money.

Although this is true, I’m always interested in what’s best for the company. I will objectively review the facts and provide an unbiased view. Are departments that are measured on top line or margin performance always looking for an unbiased view?