Our client, a prominent player in the Mexican Food Industry, was facing challenges in aligning their annual budget with their long-term strategic vision. Despite being profitable, the company recognized the need to proactively plan for the future due to disruptions in the supply chain caused by the pandemic and increasing competition in the industry. The CEO, under the board’s mandate to think long-term, sought CFO-level expertise to address these challenges and establish a foundation for a 5-year strategic plan. The company struggled to connect the bottom-up budgeting process with the top-down strategic vision, and the absence of a CFO prolonged the difficulties.
To overcome these challenges, the company engaged 8020 Consulting to provide immediate support for the annual budget and facilitate the development of a 5-year plan.
8020 Consulting’s Solution
8020 Consulting provided a consultant with CFO-level expertise to support the annual budget and develop a 5-year strategic plan. The consultant collaborated with executive leadership and the finance team over a 3-month engagement. The objective was to bridge the gap between the top-down strategic vision and the bottom-up financial model.
The consultant recognized the need to rebuild the Cost of Goods Sold (COGS) model, managed by junior financial analysts, to forecast profitability accurately. A new COGS model was developed, allowing price and quantity adjustments at the SKU level for precise profitability forecasting.
Simultaneously, the consultant worked with executive leadership to evaluate proposed business efforts, rationalize marketing budgets, forecast sales and consider the impact of headcount changes and capital investments. Multiple scenarios were created for the budget.
Through collaboration with 8020 Consulting, the client successfully bridged the gap between their strategic vision and the financial model. The consultant revised the COGS model, accounting for pricing impacts, which gained approval from the board. This provided a foundation for the executive leadership to finalize year-one strategies within a model guiding the long-term strategic plan.
Additionally, the engagement resulted in the hiring of a new CFO. As a result of the consultant’s efforts, the client received a functional COGS model, an approved annual budget and a 5-year profit and loss (P&L) forecast. Furthermore, the consultant provided the client with an outline of steps to achieve their growth targets.
Overall, with the support of 8020 Consulting, the client overcame their challenges in aligning their budgeting process with their strategic vision. They now have a solid foundation for short-term and long-term planning, empowering them to navigate the market landscape with confidence and pursue sustainable growth.