As a financial planning consultant with experience developing and implementing 5-year strategic financial plans for Fortune 500 companies, I've recently had the opportunity to create the first-ever 5-year strategic plan for the categories within a Consumer Product Business Unit. This project required extensive collaboration across category teams and functional groups to deliver a foundation for strategic growth.
Throughout my FP&A experience, I've developed both top-down strategic plans (working from overall growth targets to build plans that hit specific CAGRs) and bottom-up strategic plans (building from individual items, properties, or product types to reach consolidated growth rates). In this article, I'll share the proven steps that can help you develop an effective corporate financial planning process that drives measurable business growth.
The Strategic Financial Planning Journey
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Key Takeaways
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Table of Contents
- Outcomes from a Proven Financial Planning Process
- Step 1: Consult with Research and Insight Teams
- Step 2: Focus on Strategic Initiatives
- Step 3: Embrace Progress Over Perfection
- Step 4: Maintain Financial Rigor
- Step 5: Follow a Strategic Timeline
- Step 6: Leverage Modern Planning Technology
Outcomes Companies Achieve With Effective Financial Planning
When companies implement a structured corporate financial planning process, they often see transformative results. For example, one Fortune 500 consumer products company I worked with was able to identify $50M in new revenue opportunities by taking a more strategic approach to their 5-year planning process. They achieved this by:
- Allocating resources more effectively based on data-driven growth projections
- Identifying and investing in emerging market opportunities ahead of competitors
- Streamlining operations by aligning financial planning with strategic initiatives
Step 1: Consult with Research and Insight Early
This is a critical part of the corporate financial planning process. It's essential that the resources dedicated to building your strategic and long-term financial plan work closely with the research team and product teams to identify strategic initiatives and understand their business impact.
How to implement:
Start with Early Research Engagement: Begin by submitting your research requests at least 6 months before your plan delivery date. This gives your team adequate time to gather comprehensive data and conduct thorough analysis.
Create Clear Research Briefs: Your research brief should outline specific needs without overwhelming detail. Provide clear guidance on data requirements, competitive analysis needs, and market trend information you're seeking.
Maintain Regular Communication: Set up bi-weekly check-ins with your research team to review preliminary findings and adjust course as needed. This ensures alignment and allows for timely refinements to your research approach.
Tip: Provide context and empirical data whenever possible
If you are part of a large corporation or you are evolving as a business, it's possible that the research team may be overwhelmed by data requests if not properly staffed. Don't assume your product managers already have the latest research or are aware of the latest trends. Make sure you have empirical data whenever possible to back up your strategies.
Step 2: Focus on Strategic vs Tactical Planning
This can be a tricky proposition for product managers, as focusing on tactical solutions to sell more product and keep costs low is what they are more accustomed to doing. The key is to elevate the conversation to long-term strategic thinking.
How to implement:
Create Dedicated Strategy Space: Schedule separate meetings for strategic planning, away from operational reviews. This mental and physical separation helps your team shift from day-to-day thinking to long-term vision.
Focus on Key Initiatives: Guide your team to identify 2-3 major strategic initiatives that could transform your business. Less is more – having fewer, well-resourced initiatives increases your chances of success.
Take the Long View: Evaluate opportunities based on their 3+ year market impact. Look for initiatives that could drive substantial revenue growth while creating lasting competitive advantages.
Step 3: Embrace Progress Over Perfection
For many first-time 5-year strategic and long-term financial planners, simply starting the process is a significant achievement. Consider it more about the process vs. the result.
How to implement:
Set Achievable First-Year Goals: Break down your planning process into clear phases. Start with smaller, achievable goals that build confidence and momentum in your first planning cycle.
Create Learning Opportunities: Document key assumptions as you make them and review them quarterly. This creates a valuable feedback loop that improves future planning cycles.
Plan for Change: Build flexibility into your plan from the start. Consider creating scenario analyses for different potential futures, helping your team adapt to changing conditions while maintaining strategic direction.
Step 4: Build Strong Financial Foundations
Make sure you have a strategic and financial partner comfortable in both the building and organizing of strategies as well as building the corresponding financials.
How to implement:
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Build a Comprehensive Financial Model: Start with a model that captures both high-level strategy and detailed financials. Include revenue projections by product line, cost structures, and capital requirements.
Create Clear Evaluation Criteria: Develop standard metrics for assessing initiatives. Consider ROI thresholds, payback periods, and risk assessments to maintain consistency across evaluations.
Balance Optimism with Reality: Find the sweet spot between ambitious growth targets and fiscal responsibility. Use historical data and market research to ground your projections while leaving room for strategic growth.
Remember to balance "pie-in-the-sky" optimism with typical financial conservatism to understand what the actual needs would be in the most likely scenario to bring about high growth with fiscal responsibility.
Step 5: Follow a Strategic Timeline
Long-term and strategic financial planning should eventually become a year-round exercise that is incorporated into the normal forecast and budget cycle of any business unit.
How to implement:
Map Your Six-Month Timeline Work backward from your delivery date to create a realistic schedule. Focus your early months on research and data gathering, middle months on strategy development, and final months on refinement.
Assign Clear Ownership Designate a dedicated resource to oversee the planning process. This person should sit within the business unit but remain focused on strategic planning rather than daily operations.
Build in Review Cycles Schedule monthly check-ins to track progress and make adjustments. This prevents last-minute rushes and ensures alignment throughout the process.
Having a dedicated resource that sits within the business unit, but outside the daily functional finance tasks has proven to be a prudent way of tackling the balancing act between the strategic and long-term process without disrupting the business flow.
Step 6: Leverage Modern Planning Technology
While many corporations and divisions within large corporations still use Excel for their budget/forecast/long-term planning needs, modern ERP software has become increasingly accessible and valuable.
How to implement:
Assess Your Technology Needs Review your current planning tools and identify gaps. Consider whether your Excel-based processes are still serving your needs or if it's time to explore more sophisticated solutions.
Choose the Right Platform When evaluating new technology, prioritize integration capabilities, ease of collaboration, and automated consolidation features. Look for solutions that will scale with your business.
Plan for Successful Adoption Create a realistic implementation timeline that includes proper training and testing. Start with a pilot program in one business unit before rolling out company-wide.
Modern planning platforms can help you build more robust long-term financial models by:
- Offering flexibility and easy consolidation of financial records over multiple years
- Incorporating Artificial Intelligence to assist with predictive projects based on multiple growth factors
- Streamlining data transfer to corporate systems
- Reducing manual effort in reporting and analysis
Additional Resources
To further develop your corporate financial planning expertise, we've compiled some valuable resources:
Industry Best Practices and Guides
- The Corporate Financial Planning Process - A comprehensive guide covering fundamental concepts and methodologies
- Corporate Financial Planning Fundamentals - An in-depth overview of key principles and strategies
- Career Development in Corporate Financial Planning - Insights into the skills and knowledge needed for financial planning roles
Tools and Templates
- Hemingway App - A free tool to help improve the readability and clarity of your financial planning documentation
- Our FP&A Resource Library - Access templates, guides, and case studies from our consulting practice
Professional Development
- Financial Planning Association - Professional organization offering certification and continuing education
- Association for Financial Professionals - Resources and certification programs for corporate financial planning
- Strategic Finance Magazine - Monthly publication covering latest trends in corporate financial planning
For personalized guidance on implementing these resources in your planning process, our team is here to help.
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