june 14-15 • boston, ma using scenario planning as a ...dso 40 total square footage eoy-10 960,000...

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June 14-15 • Boston, MA

Using Scenario Planningas a Strategic Tool

Enhancing your organization’s competitive position and theability to adapt to an ever-changing global environment

June 15, 11:00am

View presentation online at:

https://jpkgroupsummits.com/attendee3

Craig Pouliot – Senior Director, FP&A at Acronis

Business Forecasting and Analytics Forum

Craig Pouliot brings nearly 20 years of experience serving the healthcare, manufacturing,and software industries. He specializes in rebuilding the financial infrastructure to achieve

timely, accurate, and insightful information for companies ranging from pre-revenue tobillion dollar public organizations. Craig has been instrumental in raising equity, rightsizing

organizations, as well as working with Wall Street during the IPO process. He holds abachelor’s degree in Accounting from Franklin Pierce University and led the San Diego

State University Venture Capital Investment Competition (VCIC) team while completing hisMBA.

Company Confidential

Scenario Planning

as Strategic Tool

Craig Pouliot

CR Pouliot, LLC

C.R. Pouliot, LLC


»Nearly 20 years of experience serving the healthcare, manufacturing,

and software industries

»Specialize in rebuilding the financial infrastructure to achieve timely,

accurate, and insightful information

»Building scenario models to assist with:

□ Raising equity and debt

□ Rightsizing organizations

□ Mergers, acquisitions, and divestitures

»Educational background in Accounting and Computer Science

□ Franklin Pierce University

□ San Diego State University

About me

C.R. Pouliot, LLC


»Understand how to use a user defined scenario model for

strategic planning.

»Pickup some tricks on how to build a user defined scenario

model.

Goals of this Session

C.R. Pouliot, LLC


»Align management team on key assumptions

»Getting buy-in

»Pushing ownership of individuals to drive towards common goal

»One place to update assumptions and see output

»Easy to read color coding to differentiate various assumptions

»Memorialize targets and assumptions

Why driver based scenario planning as a

basis

C.R. Pouliot, LLC

Payroll Burden rate 19.6% Lessons each members take per month 1 5 Year 10 Year

Annual Comp Increase 3.5% Gaps in Instructors schedules 20% Revenue 37,715,356 165,907,997

Variable Comp Achievement 95.0% Cash 13,527,056 120,949,296

Credit Card Transaction fee 2.00% Minimum Mo. cash bal 617462 $617,462 Valuation

% of revenue paid by Credit card 25.0% Number of Fluency bays per location 10 Investment 5,000,000 1,146,137,887

DSO 40 Total square footage EOY-10 960,000

AP Days 35 Cost per sq ft (gross) 1.50$ Product Type License Maint Mo's

Learning facility sq. ft need 12,000 Perpetual License - B 80% 12

One hour class per location per month 30 Corp facility sq. ft need 5,000 Perpetual License - A 67% 24

Students per class 10 Maintenance renewals 0% 16

Price per class 12$ Practices each members take per month 3 Subscription - 1 0% 12

Subscription - 2 0% 24

Subscription - 3 0% 36

% of Jr and Sr. and Military students 10% Club fittings per location per month 10 Consumer 80% 36

Jr and Sr. and Military Discount % 10% Club Fitting price each 99$

% of non-members vs members using practice facility 10% Club repair per location per month 50 9,000$

% of non-members vs members using lesson facility 10% Price of each club repair 10$ 65%

Times active members rent per year 200% Price of one week rental 10$

% of new members getting fitness membership 20%

Average selling price of putting green 10,000$ Conference room rentals Full Day 600$

Month 1 100% Greens sold per location per month 1 Avg food add on $'s 300$

Month 2 90% Avg Accessories rented (i.e. projector) 100$

Month 3 80% # of New instructor memberships per month 3 Events per location per month 4

Month 4 80% # of students per month each instructor will bring in 5

Month 5 70% Instructor memberships 499$ Firness membership price 29$

Month 6 70% % of instructors not becoming members 10% Fitness membership per location 18

Month 7 60%

Month 8 60% Charity per member per year $ 1 Qty of training periods of use per location 0

Month 9 50%

Month 10 50% Lenfth of special programs (months) 3

Month 11 40% % of renewals get commission 75% Program 1 299$

Month 12 40% New member 25$ new Program 1 memberships per location 25

Renewal rate 33% Renewing member 25$ classes for program 1 6

Practice sessions for program 1 4

Business Basics Lessons Financial projections

Building

Revenue Reconition

Classes (Classroom and Fitness)

Practices

Students Services

Memberships

CafeteriaCafeteria sales per month

Cafeteria Margin

Conference rooms

Putting Greens

Return rate table

Instructors

Fitness memberships

Charity

Specials

Commission / Spiff

Finished Product

C.R. Pouliot, LLC


»Breaking down major components

»Balance Sheet

»Cash Flow – direct vs indirect

»P&L

□ Sales

□ Revenue calculation (software)

□ COGS - variable vs fixed

□ Operating Expenses

□ Below the line

»Consolidated cost report – helps cash flow of in period cash or AP

Approach

C.R. Pouliot, LLC


Assumption Start»Start with the basics of your business

□ Currency rates

□ Variable compensation achievement

□ Payroll burden rate (by country/ region if applicable)

□ Annual compensation increase

□ Interest rate

□ Tax rate

□ DSO / AP Days

»As you build each component move each assumption to the main page

»Note: What I also like to do is have industry benchmarks for costs as

% of revenue as a reference for strategic planning

C.R. Pouliot, LLC


Sales Engine»Start with what Sales provides in their format – Easiest way to gain

buy-in is through familiarity

»Build revenue engine off of sales sheet

Q1 Q2 Q3 Q4 FY15 Q1 Q2 Q3 Q4 FY16

B Licenses 9,334 9,927 8,922 9,177 37,360 8,691 13,516 14,205 17,579 53,990

B Renewals 3,678 3,558 3,506 3,465 14,207 3,625 4,784 4,531 4,966 17,906

Subtotal B 13,012 13,485 12,428 12,642 51,567 12,316 18,300 18,735 22,545 71,896

A Licenses 529 619 651 1,177 2,977 582 994 1,250 1,323 4,149

A Renewals 1,201 1,458 1,305 1,467 5,430 1,084 1,600 1,768 2,261 6,712

Subtotal A 1,730 2,077 1,956 2,645 8,407 1,666 2,594 3,018 3,584 10,861

ABC 261 212 200 301 973 239 250 363 346 1,197

ABC-RNW 2 115 130 195 442 139 164 162 262 727

SPLA 89 148 188 217 642 160 189 382 402 1,133

BaaS 1,903 926 852 754 4,436 893 1,240 1,661 2,288 6,082

BUA 395 266 107 36 805 13 12 0 0 25

DRaaS 2,506 1,575 1,631 2,502 8,214 1,683 1,489 1,695 3,293 8,160

Cloud 5,156 3,242 3,108 4,005 15,512 3,128 3,343 4,262 6,591 17,324

Online-Business 888 1,085 1,003 1,095 4,070 1,073 1,346 3,315 4,067 9,801

Online-Consumer 1,689 1,426 2,309 2,416 7,840 2,091 2,483 1,397 1,505 7,476

Online ` 2,577 2,512 3,312 3,510 11,911 3,164 3,829 4,712 5,572 17,277

Consumer Offline 1,295 1,096 3,210 2,066 7,666 1,397 1,177 3,937 2,594 9,106

OEM 1,535 11,922 1,460 1,794 16,712 1,420 1,643 1,897 2,171 7,131

Total 25,306 34,333 25,474 26,662 111,775 23,091 30,886 36,561 43,057 133,595

C.R. Pouliot, LLC


Revenue EngineJul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 FY16

B

License

Billings 4,068 3,520 6,616 4,350 4,814 8,415 31,783

License - 80.0% 3,255 2,816 5,293 3,480 3,851 6,732 25,427

Maintenance - 20.0% 814 704 1,323 870 963 1,683 6,357

Revenue

License 3,255 2,816 5,293 3,480 3,851 6,732 25,427

Maintenance 25 84 157 245 315 411 1,238

Total 3,280 2,900 5,450 3,725 4,166 7,143 26,665

Avg. Maintenace Term - 13 Months

Renewals

Billings 1,319 1,382 1,829 1,417 1,531 2,018 9,497

Revenue 47 144 258 374 480 606 1,909


A

License

Billings 418 339 493 202 169 952 2,573

License - 67.0% 280 227 330 135 114 638 1,724

Maintenance - 33.0% 138 112 163 67 56 314 849

Revenue

License 280 227 330 135 114 638 1,724

Maintenance 4 14 24 34 39 51 166

Total 284 241 355 169 152 688 1,889


Renewals

Billings 437 414 916 528 597 1,136 4,029

Revenue 16 46 94 145 185 247 733


C.R. Pouliot, LLC

Costs

C.R. Pouliot, LLC


»Modelling varies significantly by industry

»Variable costs

□ Manufacturing – BOM cost tab with cost increases driven by assumption page

□ Consumer goods - may pay affiliate commissions

□ Software - royalties based on sales volume

□ Merchant fee rates based on volume of CC transactions

□ Other fixed costs

COGS

C.R. Pouliot, LLC


»All departmental costs from services and support costs in COGS

through operating costs

»Build costs by function (Service, Support, R&D, Sales, Marketing, G&A)

for all operating expense accounts in your chart of accounts.

Functional Costs

C.R. Pouliot, LLC


Cost build exampleFcst. Fcst. Fcst. Fcst. Fcst. Fcst.

Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

Employee Costs

Payroll (Employees) 2,284,287 2,451,230 2,605,314 2,724,147 2,838,770 2,920,864

Payroll (Sub-Contracted & Temp) 43,917 43,917 43,917 43,917 43,917 43,917

Payroll (Annual Bonus) 133,031 137,951 145,205 151,756 160,016 164,760

Payroll Services Fees - - - - - -

Payroll Taxes 463,396 496,536 526,765 550,231 573,580 589,890

Recruiting Fees 20,000 20,000 20,000 20,000 20,000 20,000

Total Employee Benefits - - - - - -

Business Liability/Workers Comp 6,368 6,833 7,263 7,594 7,913 8,142

COBRA - - - - - -

Continuing Education 1,353 1,353 1,353 1,353 1,353 1,353

Dues and Subscriptions 2,535 2,535 2,535 2,535 2,535 2,535

Payroll Severance - - - - - -

Employee Costs 2,990,986 3,198,621 3,392,784 3,543,048 3,690,684 3,795,143

Professional Fees

Accounting Fees 26,000 27,000 28,000 28,000 28,500 29,000

Consulting 6,000 7,000 8,000 8,000 8,500 9,000

IT Service and Support 23,000 23,500 24,000 24,000 24,250 24,500

Legal Fees 25,000 25,000 25,000 30,000 30,000 30,000

Professional Fees 235,335 250,911 262,281 274,225 280,283 286,135

Facility Costs 627,649 662,146 697,987 724,556 754,249 779,387

Marketing 43,300 44,100 44,900 45,300 45,700 46,100

Travel 40,700 40,700 40,700 40,700 40,700 40,700

Other Costs 16,500 16,600 16,700 16,700 16,750 16,800

Total Costs 3,954,470 4,213,078 4,455,352 4,644,529 4,828,365 4,964,265 C.R. Pouliot, LLC






□ Including Capex

»Personnel cost build

□ Small organizations – Use active headcount and model in hires

□ Larger Organizations – Use average cost per head to drive cost increases based

on existing workforce

> Potential to build volume dependencies to drive personnel cost

increases

Functional Costs

C.R. Pouliot, LLC


Staff planningFcst. Fcst. Fcst. Fcst. Fcst. Fcst.

Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

Headcount 5 6 7 7 8 8

Employee Costs 64,325 70,238 74,731 75,671 88,058 88,161

Professional Fees - - - - - -

Facility Costs 105,520 105,720 105,923 106,129 106,339 106,551

Marketing - - - - - -

Travel - - - - - -

Other Costs - - - - - -

Total Costs 169,844 175,958 180,654 181,801 194,396 194,712

total Capex - - - - - -

Staffing: Comp Hire date Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16

Position 1 40,000 9/24/2015 3,333 3,333 3,333 3,333 3,333 3,333

Manager 100,000 2/10/2014 8,333 8,333 8,333 8,333 8,333 8,333

VP 200,000 9/22/2014 16,667 16,667 16,667 16,667 16,667 16,667

Position 4 35,000 10/27/2014 2,917 2,917 2,917 2,917 2,917 2,917

Position 5 30,000 3/1/2014 2,500 2,500 2,500 2,500 2,500 2,500

Position 6 50,000 8/1/2016 - 4,167 4,167 4,167 4,167 4,167

Position 7 35,000 9/1/2016 - - 2,917 2,917 2,917 2,917

Director 125,000 11/1/2016 - - - - 10,417 10,417

C.R. Pouliot, LLC





for all operating expense accounts in your chart of accounts including

Capex






increases

»Operating expense costs can be average costs or exit depending on

the nature of the expense

»Be careful of allocations!!

□ Create its own cost category if you do not already have one

Functional Costs

C.R. Pouliot, LLC

Cash Flow

C.R. Pouliot, LLC

Direct Cash Flow($000's) 01'16 02'16 03'16 Q1'16

Actual Fx Actual Fx Actual Fx Actual Fx

Collections 15,790$ 8,407$ 10,206$ 34,403$

Payroll (5,003) (5,076) (6,113) (16,191)

AP (7,854) (2,281) (4,172) (14,306)

Net Cash From Operations 2,934$ 1,051$ (79)$ 3,906$

Capex (425) (325) (414) (1,163)

Operational CF less Capex 2,509$ 726$ (492)$ 2,743$

Debt Payments (1,570)$ -$ (750) (2,320)

Almaz - - - -

Symantec - - - -

Tax Payments (127) (598) 99 (626)

Non Operational outflow (1,697)$ (598)$ (651)$ (2,946)$

Net Cash activity 812 128 (1,143) (203)

Beginning Cash 8,147$ 8,959$ 9,087$ 8,147$

Ending Cash 8,959$ 9,087$ 7,944$ 7,944$

($000's) 01'16 02'16 03'16 Q1'16

Actual Fx Actual Fx Actual Fx Actual Fx

Collections 15,790$ 8,407$ 10,206$ 34,403$

Payroll (5,003) (5,076) (6,113) (16,191)

AP (7,854) (2,281) (4,172) (14,306)

Net Cash From Operations 2,934$ 1,051$ (79)$ 3,906$

Capex (425) (325) (414) (1,163)

Operational CF less Capex 2,509$ 726$ (492)$ 2,743$

Debt Payments (1,570)$ -$ (750) (2,320)

Almaz - - - -

Symantec - - - -

Tax Payments (127) (598) 99 (626)

Non Operational outflow (1,697)$ (598)$ (651)$ (2,946)$

Net Cash activity 812 128 (1,143) (203)

Beginning Cash 8,147$ 8,959$ 9,087$ 8,147$

Ending Cash 8,959$ 9,087$ 7,944$ 7,944$

Use payroll cost forecast from consolidated costs report for in period

payroll costs

Use your AP Days calculation for all other costs plus capex and debt

30 days ~ prior months non payroll costs

C.R. Pouliot, LLC











increases

»Operating expense costs can be average costs or exit depending on

the nature of the expense

»Be careful of allocations!!

□ Create its own cost category if you do not already have one

Cash Flow

C.R. Pouliot, LLC

Balance Sheet

C.R. Pouliot, LLC


»Balance sheets vary significantly

»High level builds

□ Cash is your solve

□ Roll Retained earnings forward from P&L

□ AR is driven from collections timing and sales

□ AP is driven from P&L non payroll costs plus capex

□ Accrued liabilities can be driven as % of total costs

□ Deferred revenue built from revenue engine

□ Debt

Balance Sheet

C.R. Pouliot, LLC

Tips

C.R. Pouliot, LLC


»Keep account numbers in file hidden as to allow for easy updating of

actuals

»Add spaces into formulas to allow for easy digestion

□ =(Z13/$A$20*0.6)+(AO21/$A$20)+(AO13/$A$20*0.4)

□ =(Z13 / $A$20 * 0.6) + (AO21 / $A$20) + ( AO13 / $A$20 * 0.4)

»Wrap formulas for nested calculations using “alt + Enter” in formula bar

»Cut assumptions and paste into assumptions tab

Tips

C.R. Pouliot, LLC

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C.R. Pouliot, LLC

june 14-15 • boston, ma using scenario planning as a ...dso 40 total square footage eoy-10 960,000...

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