I often post on LinkedIn about FP&A.

But did you know I've never held an FP&A job?

I'm not "classically trained" as they say.

How I learned is different.

Sure, I had a finance background:

▪️ Consulting

▪️ Corp Fin (was 𝘴𝘰𝘳𝘵 𝘰𝘧 FP&A but still a new term back then)

But, I didn't really 𝙇𝙀𝘼𝙍𝙉 it until I was in Private Equity.

One of our portfolio companies was in desperate need of a Financial Model.

I'll never forget when the Partner at my firm said,

"𝗖𝗵𝗿𝗶𝘀, 𝘆𝗼𝘂 𝗮𝗿𝗲 𝗻𝗼𝘄 𝘁𝗵𝗲 𝗖𝗙𝗢 𝗼𝗳 [𝘁𝗵𝗲 𝗖𝗼𝗺𝗽𝗮𝗻𝘆]."

Uh... what?

One month ago I was a Senior Analyst.

I know 𝙉𝙊𝙏𝙃𝙄𝙉𝙂 about being a CFO.

****************

After the wave of panic subsided, I got to work...

Slowly but surely, I managed to cobble together:

▪️ an overly-complicated 3 statement model

▪️ with too many tabs

▪️ and tons of messy formulas

(I cringe at my skills back then, but hey that's life).

At first I didn't really know what I was solving for...

Funny enough, I was more comfortable with highly detailed analysis.

This "big picture stuff" was new to me.

****************

After many meetings, long nights, and iterations I figured something out.

🟢 𝗘𝘃𝗲𝗿𝘆𝗼𝗻𝗲 𝘄𝗮𝘀 𝗳𝗼𝗰𝘂𝘀𝗲𝗱 𝗼𝗻 𝟰 𝗸𝗲𝘆 𝘁𝗵𝗶𝗻𝗴𝘀:

▪️ Revenue

▪️ Gross Profit

▪️ EBITDA

▪️ Cash

Then it got easier.

I constantly kept those 4 things in mind when working on the model.

During meetings I knew the history and forecast for each.

I didn't sweat the small stuff as much.

Suddenly, I was becoming a "big picture person."

I was 𝘁𝗵𝗶𝗻𝗸𝗶𝗻𝗴 𝗹𝗶𝗸𝗲 𝗮 𝗖𝗙𝗢 in our meetings b/c I knew the critical points.


****************

The model for the next company wasn't so difficult.

I knew what to solve for.

And now I was helping the actual CFOs at the portfolio companies.

Was I a "real CFO" ?

Nope. I was still early in my Private Equity career.

But, I knew enough to be a 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗽𝗮𝗿𝘁𝗻𝗲𝗿 𝘁𝗼 𝘁𝗵𝗲 𝗖𝗙𝗢.

That was how I learned the basics of FP&A.

****************

Many years later, not much has changed.

I still keep in mind:

▪️ Revenue, Gross Profit, EBITDA, & Cash

▪️ I know the 3 statements in and out

🟢 𝗪𝗶𝘁𝗵 𝘁𝗵𝗮𝘁 𝗳𝗼𝘂𝗻𝗱𝗮𝘁𝗶𝗼𝗻, 𝗜'𝘃𝗲 𝗳𝗼𝘂𝗻𝗱 𝗲𝘃𝗲𝗿𝘆𝘁𝗵𝗶𝗻𝗴 𝗲𝗹𝘀𝗲 𝗳𝗮𝗹𝗹𝘀 𝗶𝗻𝘁𝗼 𝗽𝗹𝗮𝗰𝗲.

****************

All career paths are uncertain.

But if you're pursuing finance, start 𝘄𝗶𝘁𝗵 𝘁𝗵𝗲 𝗯𝗶𝗴 𝗽𝗶𝗰𝘁𝘂𝗿𝗲:

▪️ Revenue

▪️ Gross Profit

▪️ EBITDA

▪️ Cash

You can always drill down for more detail.

The rest will fall into place.

—Chris

If and when the time is right, I offer refreshingly straightforward Financial Modeling Courses for FP&A and Private Equity Professionals that have been recognized all over the world.  Check them out if you're interested (if not, that's cool too 👍).  Just click here.