Every private equity firm needs to have the finance function of their portco optimized through a 100-day plan. In most cases, the job is placed in the hands of the portco CFO, whom you hire to develop their version of the plan.
The problem with this is that the CFO will have to spend some 100 days just putting the plan together. Then they'll take who knows how long to implement the plan. That's a common occurrence with most companies, and it's never the CFO's fault.
The CFO simply doesn't have enough time. They have to juggle too many responsibilities, and developing a 100-day plan will take up too much of their time. They will have to forgo every other daily task if they are going to create a proper plan.
That’s precisely why with companies like Consero, the finance and accounting function can be fully optimized in the first 100 days. We help CEOs and CFOs develop and implement a proper plan, and they can thus focus on the strategic work that will put the business on the path to big returns.
The CFO no longer has to handle the entire plan on their own – we help them develop and execute it. We will adequately manage and upgrade the firm's finance and accounting function. The procedure itself only becomes a portion of their time, and they also get the necessary tools to support them in all other efforts for the company.
They can focus on:
- Growing the business
- Increasing enterprise value
- Identify key value drivers
- Develop a roadmap for growth
- Insights gained from customers
- Market and competition analysis
- The influence of suppliers and stakeholders
- Management perspective
- A thorough understanding of your position in the market
- What do initiatives look like and what is the justification for them?
- What are the resources required for achieving them?
- What are the possible risks involved, and how can they be alleviated?
- Outcome focused – defined outcomes are required, and employees need to work toward reaching them. This method is used when changes are progressive, and the employees have experience.
- Practice focused – specific behaviors and actions expected to reach desired results are required. This method is used when radical changes are necessary, and employees are inexperienced.
Furthermore, with all of Consero’s help, the time to reach a return on investment becomes much shorter. You get better data and improved measurements that drive the business forward.
Now, let’s take a look at how all of this is achieved. Let’s see how a proper 100-day plan is developed.
Steps to creating a proper 100-day plan
As you probably already know, a usual 100-day plan can help you:
However, to obtain all the benefits of a 100-day plan, you need to create it in the right way. Now, the problem always lies precisely in the part where you need to create an effective strategy. Many CFOs stumble because of all the weight that comes with the creation of the plan.
There are so many things they need to worry about, and that’s where we come in to help. Let's explain:
First, you need to determine what kind of plan you want to have. Each private equity firm is different, and each has different goals. Consequently, your plan needs to consider that.
Mainly, you need to consider the macro factors that affect your business:
All of these facts will enable you to reach a consensus on the strategy for the entire company. The strategy, on the other hand, will have to include both financial and non-financial objectives, as well as a multidimensional view of business opportunities.
You will have to consider several important things:
From all of that, you will get an estimated value that these initiatives will create. Then you will be able to develop an action plan that includes things like timelines, interdependencies, and key metrics.
In the end, we should also mention that you need to decide if you’ll be outcome or practice focused:
Now, let's see what makes an excellent 100-day plan overall.
Key elements that result in a good 100-day plan
- Early operating perspective development
- Value creation levers prioritization
- Constant measurement and monitoring
- The human component
- A unified voice in communication
The most important part of a sound 100-day plan is its operating perspective. That's why it's ideal to start developing it early on.
Areas for improvement and action items need to be identified from the operational and financial benchmarks of the asset.
If you think that creating value needs to be achieved early in the investment life cycle, then you need to emphasize operational diligence. Financial due diligence should come second.
The priority should always lie in prioritizing your value creation levers. You need to identify and prioritize the ones that have the highest impact on your business.
Furthermore, it’s best to include a few long-term projects and several easier ones in the overall plan.
A 100-day plan can only be successful through consistent tracking and measuring of key performance indicators.
The board members and upper management need to agree on standard financial metrics and operating metrics.
If you include operating metrics, you send a signal to management teams that the focus does not solely lie on financials.
Most, if not all private equity firms choose to be either actual coworkers or leaders with their management teams. You need to decide which role is better suited to your firm and specific situation. The decision should be based on the amount of confidence you have in the management teams.
As we’re talking about the human element, our advice is to focus on having the right talent. It’s imperative for a successful 100-day plan.
The last crucial thing is to have an effective communication plan. Private equity firms always need to communicate with management teams regularly, which is why proper communication is required. What's more, there needs to be a single voice in these communications, and specific and definitive accountabilities need to be set.
Many private equity firms have leveraged Consero’s Finance as a Service in their 100-day plan. By working with Consero, you can accelerate the timeline to getting an optimized finance & accounting function. Having the right people, processes and systems in place will enable the executive team of your portfolio companies to focus on the long-term strategy that will grow the business.