We have never before experienced a situation where the rate of change in so many disparate elements of our sporting business landscape has been so rapid, coupled with uncertainty about how long the situation will last. It is the combination of these two things that make this current time so different and challenging.
Although we are in a time where the big picture is all important, sporting finance leaders are doing their best to sustain their businesses for the job security of staff of all kinds, and keeping the crucial passion alive for fans.
While some other business functions are experiencing a quieter time, for the finance function it’s busier than ever, ensuring that their sporting business retains its competitive edge, for the present – yes – but also in preparation for when we start to come out the other side.
And the recurrent themes on the lips of the sporting finance leaders that we work closely with just now?
Scenario planning and re-forecasting.
For sport, there is currently no end of ‘what if?’ scenarios. When will seasons be recommenced, and in what format? Will events start to take place but behind closed doors, with no ticket revenue? Will any furloughing be lifted all at once, or gradually throughout your business? Can sponsorship agreements be picked up where they left off? Will fans be reluctant to attend in usual numbers for some time to come? The list goes on and on.
As a business, Eureka Solutions believes in sharing best practice, so here are a few learnings we have gleaned.
The first important (and difficult) thing to do is to get your head around the concept that the current external environment is highly changeable and that you can’t change that, don’t waste time on things that you just can’t control. None of us like to feel we are purely reactionary, but here and now the most proactive thing we can do is regroup and prepare how we will react to different possible scenarios – ensure you illustrate to your board the financial implications of those scenarios and reactions, and base this as much as you can on real data rather than guesswork.
This constant scenario planning can be labour intensive and those of us with planning and budgeting capabilities built into our core business systems will find it much easier than those of us that don’t and that are reliant on spreadsheets. According to Vertana Research, companies that use dedicated software instead of spreadsheets are likely to have a better planning and budgeting process that is more accurate.
Systems that incorporate finance, ecommerce, CRM, procurement and more – in one central database – can draw on real data and use in-built intelligence to show the implications of different scenarios business wide. They can then produce illustrative reports that present scenarios to the board and enable the quick decision making required.
As leading providers of NetSuite (a 100% cloud-based financial management system) to sport related businesses we are seeing the value of this in practice, with the Head of Finance of one football club customer commenting that he wouldn’t like to think how he would have dealt with the demands of the current situation with the legacy on-premise business management system they had previously.
NetSuite also offers additional functionality for advanced planning and budgeting, which really comes in to its own when there are so many potential variables – allowing you to illustrate any number of ‘what ifs’ – and we are finding that many customers are enquiring about this as a priority for them just now. Particularly those with complex multi-faceted sport, leisure and venue-based businesses. Based on real examples, having this system in place provides the potential to reduce the time spent on the planning process by around 38%, reduce the time spent on generating reports by around 32% and improve forecasting accuracy by around 12%.
Organisations that don’t have this technology will no doubt be putting it on their ‘to do’ list now that we are in a situation where its value is tangible – however – whether you have it or not, the key to scenario planning is to focus your energy on only your most important KPIs and business performance levers.
Keeping your focus on only the key KPIs and business levers gives you a simpler, cut down financial model for this period of time, and allows you to see clearly the effect of different actions on these key areas without becoming unnecessarily bogged down.
Then, for each scenario, look at best case, worst case and average case. You may not be able to avoid the worst case – remember that we are not worrying about what we can’t control – but you can at least be prepared for it and thus minimise potential losses or damage. The right software can allow you to demonstrate the effect of each scenario across all areas of the business.
Good scenario planning can require some out of the box thinking – it requires many perspectives and engaging the wider team – the finance team doesn’t have to do all of this themselves! This is an opportunity to share with the wider management team the importance of having reliable data, across not only the finance function but their functions too.
Sporting businesses that will survive will have the knowledge to undertake effective scenario planning and act decisively. Again, this can come back to the technology you are using, but accurate data just means superior, faster decision making for all.
Another important point that can’t really be avoided just now – what if you or any member of your team are out of action for any reason – is your data accessible and in a format that is easily interrogated by your fellow directors? Again, this can come back to the technology you are using - if your systems aren’t completely accessible from anywhere as NetSuite is, do try to plan and organise for this – it will significantly reduce your count of sleepless nights!
There is no question that there is clear and measurable value in adding scenario planning re-forecasting to your overall financial planning activities, not only just now but as a matter of course. But, if your process is not automated, you risk trading the value of it for the man hours necessary to do it effectively manually.
For some this is exactly the time to be looking at new solutions, for others it is the time to get their ducks in a row for when things ‘normalise’. If you would like more information about NetSuite or NetSuite Planning and Budgeting, or would just like to discuss your general business management software pain points with the expert team at Eureka Solutions, please contact Senior Solution Consultant, Alan Miles, on email@example.com or 01355 581960.