What does a $540M CFO actually do? A talk with Margarita, CFO of Endeavor.

Summary

In this insightful conversation, Margarita shares her expertise on financial planning, emphasizing the importance of precision, data analysis, and operational drivers. She discusses common financial challenges, such as inaccurate projections and the difficulty of tracking real-time data. Margarita stresses the need for collaboration between finance and other teams, highlighting that finance should not be seen as opposing but as a supportive force. She also explains how to create realistic financial plans through detailed assumptions and constant iteration, adjusting as necessary to ensure business success.

Takeaways

• 😀 Mistakes in financial management should be addressed immediately with clear explanations of why they need correction.
• 😀 One of the most common financial challenges is the collection and accurate reporting of data.
• 😀 Accurate financial planning requires a detailed understanding of the company's historical performance and realistic growth assumptions.
• 😀 It's crucial to understand the operational drivers that impact financial outcomes, not just the financial figures.
• 😀 Financial planning should be iterative—track progress regularly and adjust assumptions as needed.
• 😀 If a company has grown at a certain rate in the past, assuming a dramatic increase without justification is unrealistic.
• 😀 Scenarios and milestones help manage expectations and track progress towards achieving goals.
• 😀 Finance is not meant to oppose other teams but to work collaboratively to support business growth and financial accuracy.
• 😀 Milestones and scenarios are effective tools to validate assumptions and prove or disprove unrealistic financial goals.
• 😀 Collaboration between finance and other departments is key to ensuring accurate and achievable financial planning.
• 😀 Regularly revisiting financial plans and adjusting them based on real-time data is essential for long-term success.

Q & A

What is the primary financial mistake companies make, according to Margarita?

The primary mistake companies make is failing to address and correct financial errors as soon as they are discovered. Margarita emphasizes the importance of fixing mistakes immediately and explaining why they occurred.

Why is it important to understand financial numbers inside out?

Understanding the numbers is crucial because it allows teams to monitor, control, and ensure precision in financial planning and reporting. This ensures that any discrepancies or issues can be quickly identified and addressed.

What challenges do companies face when it comes to financial planning?

Many companies face challenges in accurately collecting data, creating realistic financial reports, and making accurate financial plans. These challenges often stem from unclear assumptions or improper scenario planning.

How can companies make their financial planning more accurate and realistic?

Companies can improve their financial planning by having clear, detailed assumptions and tracking their historical performance. They should also align financial growth expectations with operational drivers and adjust their plans based on real-world data.

What does Margarita suggest about making financial projections?

Margarita advises companies to avoid overly optimistic growth assumptions without a solid, well-supported plan. Financial projections should be based on clear assumptions and a deep understanding of the company’s performance and market conditions.

How should a company handle conflicts between finance and other teams, such as the go-to-market or founders' teams?

Margarita recommends using scenarios and milestones to help teams understand and test assumptions. This approach encourages collaboration, ensuring that all teams work together rather than seeing finance as an opposing force.

Why is iteration important in financial planning?

Iteration is crucial because financial assumptions are often based on predictions that need to be regularly tested and adjusted. As conditions change, financial plans should be adjusted to reflect new realities and to improve future accuracy.

What role do milestones and scenarios play in financial planning?

Milestones and scenarios allow companies to test their assumptions and measure progress. These tools help verify whether growth and profitability goals are achievable and adjust the plan accordingly if assumptions prove incorrect.

What is Margarita's perspective on the relationship between finance and other teams within a company?

Margarita believes that finance should not be in opposition to other teams. Instead, finance should support and collaborate with other teams, especially when it comes to setting realistic goals and assumptions. Finance should work as part of a unified team.

How does Margarita suggest companies deal with unrealistic growth expectations?

Margarita suggests challenging unrealistic growth expectations by asking for detailed explanations of how the company plans to achieve those goals. If the projections are unsupported, they should be revised, and the focus should be on achievable and data-backed goals.