(2) SRD Prod model: Example of completed Driver window for product profile definition
(3) Sales Representative Hiring Plan
(4) General & Administrative Employee Hiring Plan
Examples of Expense Driver Windows
(5) Partially complete Employee Benefits Expense
(6) Commission Expense Driver for Sales from Sales Representatives
(7) Advertising/Marketing Programs Expense Driver window
(8) Accounts Receivable Driver window
(10) Sales Representative Contribution Analysis
(12) Financial Statements Report
(1) Driver Cell Instructions
The following Driver cell instructions are included in the Instruction sheet of WynPlan. Note that ALL “Driver” cells are to be found in the WynPlan
Driver sheet.
(2) SRD Prod model: Example of completed Driver window for product profile definition
Note that unit amounts are entered for the first THIRTY SIX months in the yellow Driver (Data Input cells) indicating the expected sales performance of a Sales Representative selling Product 5. (This is Step 3 in the process). The shape of this selling profile is indicated in the graph to the left of the Driver data. Step 4 completes the process by specifying Unit Sale Price and Unit Cost per fiscal period over the life of the Plan.
(3) Sales Representative Hiring Plan
Note the combination of yellow Driver Input cells and orange Driver Selection cells. ONE unique Product Profile is attached to each Sales Representative and the Selling Index is used to increase (or decrease) sales performance of base profile. The starting month of each Sales Representative is determined by the Precedent Sales Representative Driver coupled with Months after (or before) Precedent. Note that the Precedent Driver can be (1) Plan Start Date or (2) Start Date of any other Sales Representative. Start and end dates are calculated and displayed in protected cells. Recruiting fee is defined by Sales Representative; however the method of payment (cash or accounts payable) for ALL recruiting fees is based on the method selected in orange Driver Selection cell.
(4) General & Administrative Employee Hiring Plan
Note that hiring plans for ALL departments contain full time employees and contract employees. In ALL cases, the Precedent Driver is selected from (1) Plan start date, (2) Start date of any other employee, (3) triggered by the TOTAL number of Sales Representatives or (4) triggered by Sales Revenue level. As an example of the flexible nature of the Precedent Driver feature, consider, in the above example, the case for the full time CFO and the need for an interim CFO. Initially the CFO is included as a full time employee when the revenue running rate reaches $5 million per year. As can be seen above, this is expected to occur during January 2011. In the meantime, an interim CFO is required to start ONE month after the Plan Start date and leave ONE month before the full time FCO starts. We accomplish this by “linking” these two events by an equation in the “Duration” cell for the Interim CFO. In the above example, the result of such an equation happens to be NINE months, but note that this is the result of an equation, the result of which changes when we change each of the underlying assumptions. Using this approach ALWAYS results in the Interim CFO leaving the month PRIOR to the start of the CFO.
(5) Partially complete Employee Benefits Expense
A similar process is used to enter all expense Drivers. Step 1 is always the inclusion/exclusion question. If the particular expense is NOT to be included, the balance of the expense window remains covered over and you simply move on to the next expense. Should you wish to include the expense, select and enter “YES” in the date selection cell in Step 1. This action then opens up the Driver requirements for the next step and the process is repeated for the remaining steps. A note regarding the “Planning Increment (months)”, shown in Step 5 above is in order. The concept of “Planning Increment” is used throughout WynPlan and refers to the “granularity” of the driver data and you may select 3, 6 or 12 months.
In the above example, Method 1 (Dollar amount per department employee) was selected as the planning method for this expense, which will be paid in cash (i.e. immediate cash decrease consistent with month of expense). Based on the months delay selected in Step 4, the expense starts on March 2010 and therefore, Driver data (Step 6) also starts on March 2010. The first THREE periods of expense Driver data is ALWAYS configured by MONTH, so in the above example, the monthly expense per department employee is required for March 2010, April 2010 and May 2010. Following the THIRD month, what follows is based on your choice for “Planning Increment”. In the above example, MONTHLY Driver data is required for the TWELVE month period starting on June 2010 and continuing through May 2010. If you had selected “3” as the “Planning Increment”, then the requirement would have been for MONTHLY Driver data for the THREE month period starting on June 2010 and continuing through August 2010.
Note that when Driver data is entered for the remaining YELLOW driver cell above (labeled Jun 2014), the RED message at the bottom of the window will change to GREEN and indicate that “Required Driver data is complete”. This is as shown in the following expense Driver window.
(6) Commission Expense Driver for Sales from Sales Representatives:
The Commission Expense driver window follows the same sequential “Step” approach for all expenses as outlined above for Employee Benefits.
Note that in the above example ALL required Driver data has been entered.
(7) Advertising/Marketing Programs Expense Driver window
The Advertising/Marketing expense allows for an additional revenue channel by specifying a revenue/Expense multiplier as well as months lag between expense and revenue.
(8) Accounts Receivable Driver window
The A/R Driver window allows for separate planning for (1) Receivable from Sales Representative sales and (2) Receivables from sales from Advertising/Marketing Programs. Accounts receivables performance, as measured by DSO is variable over life of Plan.
(9) WynPlan Ribbon
Activate macros and click “Show WynPlan Ribbon” button.
The ribbon (shown below) appears at the top of the Drivers sheet.
The short-term goal is to “fix” the TWO RED cells shown in the ribbon by changing and adjusting various Drivers so as to improve on the current negative cash position. The iterative process of changing and modifying Drivers is sometimes referred to as “WIFing the Plan”. All adjustments are entered on the Drivers sheet and the impact of each one may be observed on the WynPlan ribbon. As you continue with this process, you will start to develop a feel for the sensitivity and inner workings of your plan which better prepares you to understand and communicate the plan to others.
(10) Sales Representative Contribution
The Output report contains a Sales representative Contribution analysis which is driven by the following selected drivers, shown in the Drivers sheet.
The inclusion (or exclusion) of each of the TEN Drivers above, is determined from orange Driver selection cells. Based on drivers selected as above, the Sales Representative Contribution report is as follows:
(1) Driver cells
(2) SRD Prod model: Example of completed Driver window for product profile definition
(3) Sales Representative Hiring Plan
(4) General & Administrative Employee Hiring Plan
Examples of Expense Driver Windows
(5) Partially complete Employee Benefits Expense
(6) Commission Expense Driver for Sales from Sales Representatives
(7) Advertising/Marketing Programs Expense Driver window
(8) Accounts Receivable Driver window
(10) Sales Representative Contribution Analysis
(12) Financial Statements Report
(1) Driver Cell Instructions
The following Driver cell instructions are included in the Instruction sheet of WynPlan. Note that ALL “Driver” cells are to be found in the WynPlan
Driver sheet.
(2) SRD Prod model: Example of completed Driver window for product profile definition
Note that unit amounts are entered for the first THIRTY SIX months in the yellow Driver (Data Input cells) indicating the expected sales performance of a Sales Representative selling Product 5. (This is Step 3 in the process). The shape of this selling profile is indicated in the graph to the left of the Driver data. Step 4 completes the process by specifying Unit Sale Price and Unit Cost per fiscal period over the life of the Plan.
(3) Sales Representative Hiring Plan
Note the combination of yellow Driver Input cells and orange Driver Selection cells. ONE unique Product Profile is attached to each Sales Representative and the Selling Index is used to increase (or decrease) sales performance of base profile. The starting month of each Sales Representative is determined by the Precedent Sales Representative Driver coupled with Months after (or before) Precedent. Note that the Precedent Driver can be (1) Plan Start Date or (2) Start Date of any other Sales Representative. Start and end dates are calculated and displayed in protected cells. Recruiting fee is defined by Sales Representative; however the method of payment (cash or accounts payable) for ALL recruiting fees is based on the method selected in orange Driver Selection cell.
(4) General & Administrative Employee Hiring Plan
Note that hiring plans for ALL departments contain full time employees and contract employees. In ALL cases, the Precedent Driver is selected from (1) Plan start date, (2) Start date of any other employee, (3) triggered by the TOTAL number of Sales Representatives or (4) triggered by Sales Revenue level. As an example of the flexible nature of the Precedent Driver feature, consider, in the above example, the case for the full time CFO and the need for an interim CFO. Initially the CFO is included as a full time employee when the revenue running rate reaches $5 million per year. As can be seen above, this is expected to occur during January 2011. In the meantime, an interim CFO is required to start ONE month after the Plan Start date and leave ONE month before the full time FCO starts. We accomplish this by “linking” these two events by an equation in the “Duration” cell for the Interim CFO. In the above example, the result of such an equation happens to be NINE months, but note that this is the result of an equation, the result of which changes when we change each of the underlying assumptions. Using this approach ALWAYS results in the Interim CFO leaving the month PRIOR to the start of the CFO.
(5) Partially complete Employee Benefits Expense
A similar process is used to enter all expense Drivers. Step 1 is always the inclusion/exclusion question. If the particular expense is NOT to be included, the balance of the expense window remains covered over and you simply move on to the next expense. Should you wish to include the expense, select and enter “YES” in the date selection cell in Step 1. This action then opens up the Driver requirements for the next step and the process is repeated for the remaining steps. A note regarding the “Planning Increment (months)”, shown in Step 5 above is in order. The concept of “Planning Increment” is used throughout WynPlan and refers to the “granularity” of the driver data and you may select 3, 6 or 12 months.
In the above example, Method 1 (Dollar amount per department employee) was selected as the planning method for this expense, which will be paid in cash (i.e. immediate cash decrease consistent with month of expense). Based on the months delay selected in Step 4, the expense starts on March 2010 and therefore, Driver data (Step 6) also starts on March 2010. The first THREE periods of expense Driver data is ALWAYS configured by MONTH, so in the above example, the monthly expense per department employee is required for March 2010, April 2010 and May 2010. Following the THIRD month, what follows is based on your choice for “Planning Increment”. In the above example, MONTHLY Driver data is required for the TWELVE month period starting on June 2010 and continuing through May 2010. If you had selected “3” as the “Planning Increment”, then the requirement would have been for MONTHLY Driver data for the THREE month period starting on June 2010 and continuing through August 2010.
Note that when Driver data is entered for the remaining YELLOW driver cell above (labeled Jun 2014), the RED message at the bottom of the window will change to GREEN and indicate that “Required Driver data is complete”. This is as shown in the following expense Driver window.
(6) Commission Expense Driver for Sales from Sales Representatives:
The Commission Expense driver window follows the same sequential “Step” approach for all expenses as outlined above for Employee Benefits.
Note that in the above example ALL required Driver data has been entered.
(7) Advertising/Marketing Programs Expense Driver window
The Advertising/Marketing expense allows for an additional revenue channel by specifying a revenue/Expense multiplier as well as months lag between expense and revenue.
(8) Accounts Receivable Driver window
The A/R Driver window allows for separate planning for (1) Receivable from Sales Representative sales and (2) Receivables from sales from Advertising/Marketing Programs. Accounts receivables performance, as measured by DSO is variable over life of Plan.
(9) WynPlan Ribbon
Activate macros and click “Show WynPlan Ribbon” button.
The ribbon (shown below) appears at the top of the Drivers sheet.
The short-term goal is to “fix” the TWO RED cells shown in the ribbon by changing and adjusting various Drivers so as to improve on the current negative cash position. The iterative process of changing and modifying Drivers is sometimes referred to as “WIFing the Plan”. All adjustments are entered on the Drivers sheet and the impact of each one may be observed on the WynPlan ribbon. As you continue with this process, you will start to develop a feel for the sensitivity and inner workings of your plan which better prepares you to understand and communicate the plan to others.
(10) Sales Representative Contribution
The Output report contains a Sales representative Contribution analysis which is driven by the following selected drivers, shown in the Drivers sheet.
The inclusion (or exclusion) of each of the TEN Drivers above, is determined from orange Driver selection cells. Based on drivers selected as above, the Sales Representative Contribution report is as follows:
As you evaluate the above report, or any of the other Output reports, you may become aware of some eyebrow popping numbers. Remember that behind every number is a story; it is up to you to understand the story! (Wynism No. 24)
Finally, some good advice found on the Instructions sheet of WynPlan spreadsheet.
As you complete the process and prepare yourself for the final plan deliverable, reflect and learn from the two truisms of financial and business planning, namely:
1. Always Under Promise and Over Deliver
2. The BEST way to predict the future is to make it happen.