1.
Financial Management
Best Practices
Vince Zumbo, Chief Financial Officer
Patrick Burns, Vice President, Product Management

2.
Vince Zumbo - Bio
Chief Financial Officer
Career Experience:
 Joined Autotask January 2011
• Several venture backed technology companies
• Software, SaaS, telecommunications; semiconductor and systems
integration
• Sourced over $65M in venture capital and bank financing
• Successful M&A and IPO experience

3.
Financial Management – Best Practices
Goal:
Provide ideas and processes that will enhance the way you
financially manage your business
Area of Focus:
Business planning & control
Understanding facts (KPI’s) and cause & effect relationships
Rolling forecasts to gain visibility and align resources

4.
Financial Management – Best Practices
“…business is simply prioritization with limited
resources”
- Mark Cattini

5.
How Do You Manage Your Business Today?
How many of these can you answer “yes”?
 Do you have a formal planning process?
 Do you know what the drivers are behind
historical trending and forward looking plans?
 Do you know if resources aligned with your
revenue & profitability goals?
 Do you know which employees are more
effective than others?
 Do you know which customers or sources of
revenue are more profitable than others?

6.
Financial Management Components
Plan Process
Team
Collaboration
Revenue Sources
Expense base
Cash Flow
Introduce
Rewards System
for Value Creation

7.
Business Plan Elements
1.0 Executive Summary
1.1 Objectives
1.2 Mission
1.3 Keys to Success
2.0 Company Summary
2.1 Company Ownership
2.2 Company History (for ongoing
companies) or Start-up Plan (for
new companies)
2.3 Company Locations and
Facilities
3.0 Products and Services
3.1 Product and Service Description
3.2 Competitive Comparison
3.3 Sales Literature
3.4 Sourcing and Fulfillment
3.5 Technology
3.6 Future Products and Services
4.0 Market Analysis Summary
4.1 Market Segmentation
4.2 Target Market Segment
Strategy
4.2.1 Market Needs
4.2.2 Market Trends
4.2.3 Market Growth
4.3 Industry Analysis
4.3.1 Industry Participants
4.3.2 Distribution Patterns
4.3.3 Competition and Buying
Patterns
4.3.4 Main Competitors

8.
Business Plan Elements
5.0 Strategy and Implementation
Summary
5.1 Strategy Pyramids
5.2 Value Proposition
5.3 Competitive Edge
5.4 Marketing Strategy
5.4.1 Positioning Statements
5.4.2 Pricing Strategy
5.4.3 Promotion Strategy
5.4.4 Distribution Patterns
5.4.5 Marketing Programs
5.5 Sales Strategy
5.5.1 Sales Forecast
5.5.2 Sales Programs
5.6 Strategic Alliances
5.7 Milestones
6.0 Web Plan Summary
6.1 Website Marketing Strategy
6.2 Development Requirements
7.0 Management Summary
7.1 Organizational Structure
7.2 Management Team
7.3 Management Team Gaps
7.4 Personnel Plan
8.0 Financial Plan
8.1 Important Assumptions
8.2 Key Financial Indicators
8.3 Break-Even Analysis
8.4 Projected Profit and Loss
8.5 Projected Cash Flow
8.6 Projected Balance Sheet
8.7 Business Ratios
8.8 Long-term Plan

9.
Business Plan Elements
Our area of Focus today…
8.0 Financial Plan
8.1 Important Assumptions
8.2 Key Financial Indicators
8.3 Break-Even Analysis
8.4 Projected Profit and Loss
8.5 Projected Cash Flow
8.6 Projected Balance Sheet
8.7 Business Ratios
8.8 Long-term Plan

10.
Business Planning
Important Assumptions
Calendar or Fiscal Year?
 Timing – when do you do your
planning process Calendar year or
fiscal year
 Prioritization of initiatives
 Run rate business vs. new business
 Competition and cyclical variations
Have the Plan
in your business model
Completed by January 1
 Utilization % of your services
Assuming a Calendar
personnel
Year
 Fixed and variable cost structure

11.
Business Planning
Important Assumptions
 Timing – when do you do your
planning process Calendar year or
fiscal year
New Service Offerings?
 Prioritization of initiatives
New Sources of Revenue?
 Run rate business vs. new business
New Markets?
 Competition and cyclical variations Number of new customers
in your business model
signed up?
New or increase size of the
 Utilization % of your services
bank line?
personnel
 Fixed and variable cost structure List them out and Prioritize!

12.
Business Planning
Important Assumptions
 Timing – when do you do your
planning process Calendar year or
fiscal year
 Prioritization of initiatives
 Run rate business vs. new business What is your customer
 Competition and cyclical variations
mix in your plan? What
in your business model
% are new customers vs.
existing?
 Utilization % of your services
What are you going to
personnel
change in your business
 Fixed and variable cost structure
to change your mix?

13.
Business Planning
Important Assumptions
 Timing – when do you do your
planning process Calendar year or
fiscal year
 Prioritization of initiatives
 Run rate business vs. new business
 Competition and cyclical variations
in your business model
 Utilization % of your services
personnel
 Fixed and variable cost structure
How does competition
impact your plan?
-Pricing?
-Geographies?
Services?

14.
Business Planning
Important Assumptions
 Timing – when do you do your
planning process Calendar year or
fiscal year
 Prioritization of initiatives
 Run rate business vs. new business
 Competition and cyclical variations
in your business model
 Utilization % of your services
personnel
 Fixed and variable cost structure
What is your employee
utilization rate ?
What should it be?
What are your
Benchmarks?

15.
Business Planning
Important Assumptions
Fixed Costs (e.g.):
 Timing – when do you do your
-Rents
planning process Calendar year or -Utilities
fiscal year
-Insurances
 Prioritization of initiatives
 Run rate business vs. new business
Variable Costs (e.g.):
 Competition and cyclical variations -People costs
in your business model
-Travel
 Utilization % of your services
-Marketing costs
personnel
Otherwise known as
controllable costs…
 Fixed and variable cost structure

16.
Revenue Model Components
a) Run rate business vs. new business
b) Recurring vs. One Time Fees
c) Cyclical variations in your monthly
model
d) Attrition or Churn
e) Pricing and Discount Strategy

17.
Cost Model Components
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
Base run rate of existing + new labor + any
increase pool
Fringe benefit rates
Employee turnover
Utilization %
Sales costs & commissions
Marketing promotions
Travel
Facility costs
Utilities and insurance
Legal fees

18.
Summary Financial P&L Model
Revenue
Managed
Services
Billable hours
Maintenance
Cost of Sales
3rd Party
Maintenance
Agreements
Direct labor
Software
licenses
Sources of revenue
Fixed & variable
costs with direct relation to
revenue generation
Gross Margin
Operating
Expenses
Indirect
Labor
Marketing
Sales
EBITDA
G&A
Expense base of fixed and
variable expenses
and indirect labor

19.
Fine Tuning Will Be Required
• Are we
burning
cash or
generating
cash?
• Sources of
Revenue
• Predictability
• Competition
Cash
Required
or
Generated
Revenue
Assess the
Risks
Mitigate the
Risks
Profitability
• Are we
profitable?
• Have we
prioritized?
Cost
• Are we capital
efficient?
• Have we
prioritized?

20.
Summary Financial Cash Model
Accounts
Receivable
DSO = Business
Health
Capital
Cash Flow from
Operations
Equipment
Cash
Balances

21.
Financial Management Components
Real time KPI
Review
Cause & Effect
What's working
and what's not?
Plan Process
Team
Collaboration
Revenue Sources
Expense base
Cash Flow
Introduce
Rewards system
for value creation

22.
Top Ten Key Performance Indicators
All Compared to Plan AND to Prior Year Results
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
New Business Bookings MRR
Net Business Bookings (after attrition)
Recurring Revenue (Invoiced customers)
Gross Profit Margin
Operating Expenses
EBITDA
Headcount
Utilization Rate
Cash Balances & Debt Ratios
Accounts Receivable DSO (AR/Revenue X # of days)

23.
Other KPI’s You Need to Consider…
Revenue and Cost per Employee
Cost of Customer Acquisition
Months to Break Even on Sales and Marketing Costs
Average Revenue/Billings per Customer
Attrition value and % of Recurring Revenue
Current Ratio
(Current assets/current liabilities)
Customer Survey Results
Average Selling Price
ROI on Sales and Service Personnel
Break Even Point in Revenue

24.
Financial Management Components
Real time KPI
Review
Cause & Effect
What's working
and what's not?
Plan Process
Team
Collaboration
Revenue Sources
Expense base
Cash Flow
The “Plan”
is Fixed
Introduce
Rewards system
for value creation
“What if” Analysis
Other markets
New Sources of
Revenue
Other Funding
Sources
Rolling
Forecasting
Spending
Resource
Alignment
Reassess Cash
“Planning”
is an on-going
process

25.
Rolling Forecasts & Continuous “Planning”
Are Essential to Sound Financial Management
• Are we
burning
cash or
generating
cash?
• Sources of
Revenue
• Predictability
• Competition
Cash
Required
or
Generated
Revenue
Assess the
Risks
Mitigate the
Risks
Profitability
• Are we
profitable?
• Have we
prioritized?
Cost
• Are we capital
efficient?
• Have we
prioritized?

26.
Summary Dos & Don’ts
 Do a Financial Plan &
create a culture of
financial management
 Don’t put the plan in a
draw to be forgotten after
completed
 Do know your KPI facts
vs. plan and prior year
 Don’t fail to act on what
your KPI’s are telling you
 Do continuous planning
through rolling forecasts
 Don’t manage your
business without a sound
financial roadmap

27.
PERFORMANCE
DASHBOARDS
Patrick Burns
Vice President,
Product Management

28.
Performance
Dashboards
 Access to KPI’s and
trending data
 Pre-configured but
customizable
 Flexible analysis
features
 Extensible to multiple
data sources