Kenneth Fick, had it in his background to be in FP&A: His father spent 40 years in FP&A at Fisher Price.
Ken is now Vice President of Financial Planning Analysis at Citrin Cooperman which is a $350 million accounting tax and advisory firm based in New York. In this interview Kenneth discusses:
- Being a 20-year-old watching the chaos unfold at Circuit City which is now taught as an example of corporate failure in America
- While technical skills get you first roles, you get promoted through skills in influence and storytelling
- Becoming a leading name in FP&A through his writing – including a viral article about how to exactly define to a stranger what FP&A is, at a cocktail party
- His budget process and love of budgeting as a means of listening to the company
- Why it angers him that FP&A is being judged on predictions
- How fuzzy data is at the core of FP&A
- Linear regression and statistical modeling in Excel
Paul Barnhurst
Hello, everyone. Welcome to a brand-new FP&A podcast. I am your host, Paul Barnhurst aka the FP&A guy, and you are listening to FP&A Today. FP&A Today is brought to you by Datarails, the financial planning and analysis platform for Excel users. Every week, we welcome a leader from the world of financial planning and analysis and discuss some of the biggest stories and challenges in the world of FP&A. We will provide you with actual advice about financial planning and analysis today. This is going to be your go-to resource for everything FP&A Today. I have with me, Ken Fick. And I just like to tell you a little bit about him before I give him a chance to introduce himself. So, Ken and I met well virtually about six years ago, I was looking for a job and I’d reached out to Ken.
I said, hey, Ken, can I get some career advice? I think I offered him a Starbucks gift card and he responded back and said, no, I don’t want your gift card. But will you write an article for me? And my first thought was, I am a terrible writer. This guy doesn’t know what he’s asking for. And so, I said, sure, I’ll write you an article. And he published it on his website. I think it was Pierce to Fog at that time. So, I wrote one on BI and then he’s like, hey, would you write some more? And I am like, wow, this guy, I don’t know what he’s thinking, but sure. I will write a couple more and wrote a couple and actually started to enjoy it. And it kind of built from there. And so often I tell people is Ken helped me on my path toward where am I where I am today and got me involved in posting and writing about FP&A, so I’m thrilled to have him on the show today and I am grateful for what he’s helped me start. So, Ken, thanks for being on the show. Welcome.
Ken Fick
Well, thanks Paul. And thank you for writing those articles and even attributing a tiny part of your great success to me is a real honor. So, I appreciate it.
Paul Barnhurst
Oh, you’re welcome. Well, maybe could you start by just taking us a little bit, you know, telling us a little bit about your background, maybe a little bit about your career and how did you end up where you’re at today?
Ken Fick
Sure. I think in a person’s life and in their career, it’s more of a random walk, at least the most interesting people I know. It’s never a straight line. It’s more of a random walk. And my career, my life is really an example of that. So, out of undergraduate I had an accounting degree and ended up – my father was in FP&A for 40 something years at Fisher Price in Buffalo, New York. And, you know, he regretted not getting a CPA. So, I became a CPA, but I actually have never worked in public accounting nor would I. Nor would I ever want to sign a financial statement. I don’t think I am the guy that you want doing that. But, working for a couple of fortune 500 companies down in Richmond, Virginia for Circuit City which was profitable in the late nineties, just so you know. It didn’t go bankrupt then and then Capital One, and then went to get my MBA at the college of William and Mary.
And then from there, I guess I really started my career. I went into a company called FTI Consulting and they do forensic litigation and corporate structuring work. And I did that for about seven years as a director. And then I, I went and did a bunch of just really fun things, I guess, different things. So, I did a short stint in Fannie Mae in the economics department, just as a contractor, but I worked, there working with some of the best minds during the time in 2010, basically when Fannie Mae owned a majority of the houses due to the financial crisis, and worked with them for a variety of things. I had been a CFO and head of FP&A for a large company, ran a mortgage compliance consulting firm for a bit of time. Uh, and then eventually led me to several FP&A roles. And right now, I’m the Vice President of Financial Planning Analysis at Citrin Cooperman which is a 350 million accounting tax and advisory firm based in New York city. I am very happy. I just started that earlier this year. The people are great. The company’s great, and I I’m really excited.
Paul Barnhurst
Well, good. Well, thanks for sharing. It sounds like, you know, quite the adventure and different, uh, experiences throughout your, your path. And I like how you say it’s often a kind of a random walk, as we say, you know, very few people have this structured ladder, and they just climb it. So, I can definitely see that. So, I remember you mentioning, you started your career at Circuit City back when they were profitable, when they were still making money. And if I remember right, you started in a rotational program where you had several different roles. Can you maybe talk a little bit about that experience? What were some of the benefits of seeing the different areas of finance early in your career?
Ken Fick
Yeah. I highly encourage anybody in their undergraduate getting into some type of rotational program at a company, because it exposes you to different departments and different things, and you don’t necessarily know what you want to fully do. At least I didn’t when I came out of undergraduate, right? I mean, a lot of people get degrees and they’re getting, we’re getting better at it. But when you’re in your twenties, you know, you have a general idea, but people change many times these days and that’s perfectly fine. So, my first rotation was an internal audit at circuit city. Then I was a supervisor in their bank. Circuit city actually owned a credit card bank as many retailers did back then, which is incredibly profitable. I was there for a while and then ended up in strategic planning, which I wanted to be in anyway.
And did that for a little while there too. And what’s neat about that is, well, it opened my eyes. Actually, it was the first position, you know, that opened my eyes in regards to what management or what businesses or companies leadership need, because, you know, here, I’m like, you know, a 20 something years old and you know, I’m in internal audit and this is a $10 billion company. I’m just learning what am I gonna tell? What advice am I going to give? Long story short is that, you know, Tom, Dick and Harry were running the place and they were taking advice from a 20 something year old kid. And whatever it was, I’m like, holy moly. You know, now again, they went bankrupt. So obviously that probably wasn’t a good idea. But I learned to, you know, at the time I learned a lot about how businesses run and it’s not as hierarchical or structured as you think. One of the things I think you’ve heard me say before is I believe that most companies make money in spite of themselves. The disorganization, the data, the whole bunch of series of problems and fires you’re dealing with is just amazing. And it’s one of things I love about FP&A , because they get to, to try to put clarity around that focus and also predict it for the future.
Paul Barnhurst
No, I, I love that last part. You said about enjoying the fact, you get to put clarity around the process around the, mess that is often there. We’ve all seen it, every company, and I couldn’t agree more. We make money despite ourselves, and it’s sometimes amazing to go. We’re making how much profit? And Internally, we’re looking at things and going this feels this dysfunctional. This can’t be the case, especially when you first start your career and you start going to another company and another company you start realizing, oh, I guess this is how corporate America works.
Ken Fick
Right. The grass isn’t greener. I mean, I, I think, you know, we initially get an illusion that, oh, it’s going to be different at this company or this company. It is exactly the same. And in consulting, director strategy and transformation for Morgan Franklin, which is a midsized consulting firm here. And every time all my clients, oh, you know, we’re different. We’re, you know, it’s not that, you know, we’re, we’re horrible. Nope. You’re all the same. You know everyone has bad data or messed up data. There are just degrees of gray of, how good or bad you are.
Paul Barnhurst
No, that’s true. I will kind of funny story to that about how messy data is. I had a friend who started at a place I worked with and I told him, I go, our CRM is a mess. No, I’ve seen it all. He’s coming from consulting. And he’s about three days into the job. And he calls me, he goes, you didn’t tell me it was this bad.
Ken Fick
Yep.
Paul Barnhurst:
Like, okay, that validates, we are a mess, but I just laughed and said, no, no, I did. I tried to warn you, but you’re getting
Paul Barnhurst:
So yeah, it’s just, it’s how it is. There’s always challenges. So, you run your own website. I know you used to run your own practice for a while. FPandaexperts.com. Can you share a little bit of how you got started with that to a little bit about, you know, the website and what you hope people would take away from it?
Ken Fick
Well, I actually, got started in writing when I was at FTI consulting and actually published an article in The Journal of Accountancy. And, you know, I did a lot of research, and it was really interesting, fascinating to me. And so, I, I continued writing for other people in other places and I’m like, well, why am I, why did I just, I have some ideas why I just start running for myself as well, too? Because people are asking me questions. And, and a lot of times it’s just easier for me to say, hey, here, go to this website. You want to look at this article or this thing that I wrote, You know in order to, to learn more and to explain things. So, I’ve ended up writing about 30 different blog posts there. I haven’t really focused on in the past couple of years, but I did, I did it because I was independent. I was an independent consultant too for a period.
Ken Fick
And , you know, that, that was going to be a focus of working. I just ended up getting so busy and unfortunately consulting is either feast or famine and you know, I was so busy. I didn’t have time to build it. But it gave me a platform where I don’t have to be censored by anybody else by any editor or whatever. And it’s not that there’s anything controversial in it, but there was one article I wrote explaining FP&A to a person at a cocktail party. And it’s just, you know, it’s a simple thing, but actually that was probably, that is still probably my most popular piece, on the website. And it’s fascinating how just simple it was
Paul Barnhurst:
Now. I, I actually remember reading that piece. I think that’s one of the first things I read when I went to your website, I’m going, I’ll be interested to see how he describes it. So maybe talk to a little bit about that. How would you describe FP&A, to somebody at a cocktail party?
Ken Fick
Well, you know, most people aren’t finance people. I mean there are lawyers, whatever. So, you say, oh, I’m in financial planning analysis at X, Y and Z company, I’m like, oh, okay. You know, I have an investment guy that does all my stuff. Like, yeah. I, I don’t really do anything with stocks. I focus on a company. Oh, okay. So, so, you know, you know, you’re the guy that closes the books and cuts costs. No, not really, no. Not that guy either. You know, it’s a series of really discovering what FP&A is. FP&A I believe in any company is both reporting and analysis. So, it’s answering questions for leadership that they may not have thought of to begin with and providing insight into their business that they may not have on a regular basis. So, one of the things I’m doing right now for the company that I joined, they were just purchased, Citrin was purchased by a private equity firm called New Mountain Capital. And the business was run completely on a cash basis which is still a little shocking to me.
Paul Barnhurst:
50 million on a cash basis?
Ken Fick
Yep. And it it’s amazed me how many, I didn’t know this, but as we are requiring different accounting practices and a lot of them work on a cash basis. I was shocked yeah. So yeah, so we’re, we’re doing accrual based accounting now. I mean, we are accountants, so that should be straightforward. And you know, there’s things that on a cash basis that, you know, you focus on cash in the door, receivables. And on an accrual base with revenue and expenses, cash is important. You have a cashflow statement of course. But you know, it’s different. The revenue is different from cash to obviously accrual and what drives those numbers is slightly different. And we’re working through both reporting to our private equity owners, but also in leadership and saying, these are the metrics that drive EBITDA, and this is what we need to focus on to drive profitability.
Paul Barnhurst:
Yeah. No, that’s, that’s fascinating. Wouldn’t think of a company, you know, quite that big, you definitely see companies, you know, I worked on a project with one the company that, but you know, it was small size where they’re still on a cash basis or obviously running your own business. Right. You run it on a cash basis till you hit a certain size. It’s just too much. it’s not worth the effort.
Ken Fick
I agree.
Paul Barnhurst:
But that, that size that’s surprising. Interesting. So, switching gears here a little bit, going back to some of the articles you’ve written, one article you wrote over the years is that you had on your website is the overlooked skills for FP&A. Can you maybe talk a little bit about what those skills are and why you think they are overlooked?
Ken Fick
I think a lot of times, especially people younger in their career focus on the technical. And I agree that you get a job because of the technical, that’s important, but as you continue on, even, at a very early stage in your career, the focus needs to shift more to communication and the story. You know, we sometimes get too focused on wanting the numbers to reconcile and working the numbers, and using different tools, and less on what information are we trying to convey. So, for example, right now, our reporting package for Citrin Cooperman that I’m working on, it’s a great reporting package, but it’s very data intensive and not a ton of insight. So as a private equity owner, a lot of things that they’re looking for that I’ve I’ve learned through the years is okay, I understand that things could be good or bad.
I mean, nothing’s bad, but the numbers could show a tread. It’s not that they’re worried about that trend. They just want to know that you know about it. And that management has a plan to deal with it. And that requires storytelling. And that requires, you know, putting together. We don’t like PowerPoint, but you must get good at PowerPoint. You have to understand. Each presentation requires you to think about how your data and your information can turn into actions via insight. And then on top of that, you most typically in most FP&A organizations, you do not have power. Your power is purely influential. So, you can’t say cut this cost or grow this or do that. You, you have to inform the leadership and they’re the ones that take action. So it’s influence. And think those are, there’s a couple of skills, storytelling and learning to influence others that, at least earlier on are overlooked, but I think become very critical very quickly.
Paul Barnhurst:
No, thank you. I appreciate that. And I, you know, I agree with you that early in the career they’re often overlooked, right? As I’ve once heard it said, and it’s always kind of stuck with me, technical skills will get you your first job, those softer non-technical skills, the communication, the influencing, the storytelling, the leadership will get you promoted.
Ken Fick
Yeah. I agree with that.
Paul Barnhurst:
You know, and I think that that’s kind of what you’re getting at. And I also love the part where you said, you know, providing actionable insight, right? We’ve all been there. I remember one guy was telling me where he joined a company and he saw they were giving, I think it was something like a 60 page deck, 17 executives every month. And he went around with his controller at every single one of them and they found one of the seventeen had actually was using one page of it. And the first thing he did, he is like, we’re done. Like we don’t need to. We’re not a data dump organization. We’re here to provide data that drives insights that provides value. Because as you said, our value comes from influencing, not from running things.
Ken Fick
Right. It’s action. When I do a, I do a presentation several times now for scenario planning, which has become very popular given the COVID 19. And one of the nodes that I have in a five-node diagram is what triggers? So, like, let’s say, you know, your revenue gets hit and it goes down 20% like we did for COVID 20, 30, 50% within one month. Well, what you do? And you don’t have to necessarily have all the answers, but if you run a scenario analysis you are like what do we cut first? And what do we do next? A lot of restaurants unfortunately failed because of COVID because they didn’t have a plan to pivot to takeout. And some just couldn’t do it. I mean I think now we’re well into this and there is I imagine for many restaurants there is a really robust take-out business now in addition to dining.
Yep. Um, yeah, I mean, I, at least for my family, we used to eat out two or three times a week. We don’t, but we do order out and bring it home, um, that often. And we kind of enjoy it better, to be honest with you. And that pivoting, that plan to take a series of actions based off insight in the data, I think is what drives performance in a company. And that’s what we’re looking for to make our customers happy to make our investors’ money, and us to have a fulfilling life.
Paul Barnhurst:
No, that all makes sense. And I, I totally agree with you. Scenario planning became huge, and a lot of companies suffered because of lack of scenario planning and lack of cash planning, right? Those, those were magnified. I don’t know, 10, 20 times, you know, beginning of COVID I know they became a huge issue for us, and we had all of a sudden run a bunch of different scenarios and kind of scrambled to, to figure things out. I think everybody, you know, struggled through that period. Very few companies were really prepared for it. Some their industries were better positioned to manage it, but I don’t know that many companies had really saw that coming. Right.
Ken Fick
What’s interesting too, is that now we’re on the flip side of that. So that was all on the downside. Now In the U.S Economy, we’re booming. I mean, even now there’s just not enough physically, not enough people. And we’re trying to, to remedy that. And there’s also supply chains. I mean, there’s still boats. I, I live, uh, um, near the bay, which is a big inroad for, for ships importing to the us and it’s, it’s packed. And the west, and even, even we’ve worked through some of these delays in California. Um, logistics is a big thing too. So what happens when your demand skyrockets and you’re not able to hit it and is it, is it even profitable? So, car auto manufacturers can’t deliver cars because of a microchip. You know what I mean? Like, well, they’re holding up gigantic profits because of one piece .
Um, you know, and I understand why if someone wouldn’t buy it, I understand why they would be asking, selling it. But you know, now they can’t. It’s harder for them to capture that profitability that demand or, and even out flank their competitors. Right. Everybody’s in the same situation. Even to the point just chaos. I forgot what it was. There was a ship that was headed to the port of Baltimore and a bunch of high-end custom luxury cars. I don’t know if there were Jaguars or land Rovers. I don’t know what they were luxury sure. To cut a long story short, it caught on fire.
Paul Barnhurst:
Yeah, I heard about this
Ken Fick
I mean, it’s horrible. I’m, I’m sorry it happened, but I’m like, well, imagine that imagine if you have a custom
Paul Barnhurst:
Lamborghini?
Ken Fick
I don’t know. Yes. I don’t know. I’m pretty sure they don’t make a Lamborghini they don’t, they’re very customized. I’m guessing. I just imagine they’re not pushing these things out the door, you know, like 500 a day. So now, now you get back to the drawing board, so great. You have insurance money, but you just, you know, your customer right is not getting their Lamborghini as, as they wanted it. And they’re going to have to wait probably another year in order to get whatever it is, or they buy it used or, or whatever. I mean, that’s a supply chain track. It’s a scenario it’s planning. What if right? And I think that’s great about the FP&A profession is you’re naturally curious and in a company as an accountant would focus on the past, you can focus on the, what if, and you can focus on the possibility. Um, and I just enjoy that.
Paul Barnhurst:
No, I do too. It’s, it’s always fun to kind of see the, what if and what a company can accomplish. How do you, how do you better deploy that capital to grow the business?
Ken Fick
You know, and that’s one thing we need to be aware of as in FP&A. We’re providing forecast and running scenarios, but we are not providing predictions. A prediction underlines the fact that there’s nothing you can do to change the future. That it’s inevitable. And that’s not, that’s just not true. I mean, a forecast implies that, you know, you’re giving them information based on where the wind is blowing right now. And the management is to make an action, to derive the future that they want from that. In FP&A the natural thing is you don’t want your forecast or budget to come true. You want it to be better than that. You want actions that you can take and, and the management can take to change the outcome to the outcome that they want, or that, that you’re seeking. And that part of the possible it’s something I’ve done for many companies. I did it in consulting, it’s elusive, it’s difficult because it’s very qualitative and not quantitative. But I found the companies that are able to develop those plans like that, and understanding is, are the ones that achieve that are the most successful.
Paul Barnhurst:
Now, I, I love that how you said it’s about, you know, the art of the possible, and it’s not about hitting the budget. The goal is to exceed it and it’s to help guide the business. Right. You know, you hear the term a lot nowadays of finance should be looked at as a value creation. And if all we’re doing is predicting, then we’re not adding value. The value creation goes comes in and analyzes that data and finds something that’s an actionable insight that you can help derive to improve top line, bottom line, whatever piece it may be of the overall portfolio of the company.
Ken Fick
Well, one thing you mentioned too, which is we get focused on is very much revenue. But you mentioned expense, and it’s the allocation of capital. So, in my business right now, it’s not unusual for professional services, our cost of revenue, our cost of it sold are, is salary. I mean, that’s, you know, where service is firm, that’s what we do. But when you think about it, this business is highly seasonal. So, we have a very big tax season, and then we have a big audit season. Right? But yes, I mean that’s common, well, you don’t have enough people going into April. Okay. Then you die down, you have too many people, do you let these people go? That doesn’t make any sense? You know what I mean? You need them for later on, but it’s the matching of the expense with the revenue matching of the capital outlay to the revenue earned. It’s a difficult game and there’s tradeoffs, and that provides a great deal of profitability, efficiency, and growth for a company and especially in a booming market.
Paul Barnhurst:
No, that, that makes sense. And I could see that, and I talk about matching it. I can see in a very seasonal business like that, where you have those peaks and valleys, how important that is to match it and to make sure you staff appropriately and you figure out how to, you know, keep the staff with because you can’t lose them all. You can’t be all right; we will have you for these three months. And then, hey, come back in three months. Right. Doesn’t work that way.
Ken Fick
Right. And you have to, and you have to have them motivated. So, what do they do for the three or four months that there’s downtime or do they cross to tax and audit and consulting? Some of them can’t you know, and then also you don’t want to burn out. I mean, one thing that we are dealing with, which is interesting is burnout. I mean, these people are doing loads of hours or required to work weekends to get the tax returns out and so on. Okay. Now, you know, you breathe. It’s a couple of weeks after tax season here and like, okay, well if they reevaluate themselves, like, do I want to do this again? Maybe just leave. And I want to be in public accounting anymore and you need to keep them motivated, interested, and effective in the slower periods because you know, the demand is going to be coming up later on.
Ken Fick
Right. And you know. It’s a very qualitative thing. It’s a very career thing. It’s a very personal thing. And that’s one reason with COVID, I’m really happy that we’ve become as a country, more flexible and to work remotely. And I love the idea that it doesn’t matter. Like my company is based in New York city. My office technically is New York City and Rockefeller center. I live in Annapolis, Maryland. I didn’t even see them. I have yet to see my boss in person, I see him on video calls. And I woke up to New York city, but they don’t care if I am in New York city or not. You know, and I think that is something that as an FP&A professional is great, but it changed the game in regard to matching the resource or the expense with that revenue of where it needed to be.
And the efficiency is, and the effectiveness is just the same, if not better, because I don’t know about you Paul, but like, I mean, I, if I don’t turn off my computer, so I’ll go eat dinner. Oh, just do an email and I’ll come back. It’s like two hours later, it’s like 10 o’clock, you know? And like, it’s because I never turn off my computer. Right. It’s always on. So, it’s only a quick thing. Well, when I go into office, I literally shut down my computer. Right. I mean, I don’t want you, but that’s what I do. And put in my backpack and head out in the car or whatever. I just don’t want to boot it back up again you know when I get home. Um, so I, I definitely work more now than I did previously.
Paul Barnhurst:
No, I, I think a lot of people do, right. One they’re not commuting when you’re working from home. And two, like you said, it’s easier to just, oh, you hear the email, or you go check your computer real quick and then you find yourself working for a while before you know it. So, I, I think there’s a lot of truth to that. You also get some flexibility that you didn’t have before I’m going to run out and do this here and I’m going to run out and do that, which is great. Yeah, exactly. And it allows everybody to kind of have that flexibility they need with these hybrids and remote and these changes we’re seeing. So, I know you’re fairly new at your company, but I’m curious, you know, where you’re at today. How do you think about performing your budget and your forecast? What’s kind of your process for budgeting and forecasting. Are you doing rolling forecast beyond budgeting? You know, what’s, what’s kind of the way you think about it.
Ken Fick
Yeah. I’m, I’m actually developing a plan for budget for this, this year, which will probably kick off in about August, September timeframe. But I want to actually talk a little bit about my previous employer Berkeley research group, and it’s a great company, but it was fascinating due to the fact that they didn’t need an FP&A person. And I was hired into it. So, I went through a whole budgeting process and the CEO is a great guy. He comes in. That’s great, but this is my model, and this is what we’re doing. I’m like, oh, okay, well, why, why did you even ask? So, you know, it spent three months, you know, building a model and talking to people. And at the end of the day, it was, it was his model and we just had targets.
And I’m like, that’s again there’s nothing good or bad about that. It’s just that, you know, intrinsically obviously there’s less buy in and so on. So, they didn’t have a budgeting process. They didn’t have anything else like that. Most typically that’s not how companies should work or do work. And you know, what I think that I’m gonna put in on here is we will have, I’m still a big fan of, of regular budgeting. So that means a 12-month calendar you plan for, for the next year. But then you have frequent reforecasts within the budget. Because the budget sets the measuring stick as to where we want to be. And it provides investors information. And so on. As of a point in time and I, I love the idea of rolling forecast and 12 to 18 months that no, that’s great. I just like doing an actual budget first, at least once a year, and then adjusting that. Because the budging process requires a lot of time from management and people on the lower levels to think about their business.
And I think if a forecast is set out or done too frequently, you’re doing less thinking and more robotic automation and putting in data and with a budgeting process, I intend to review the performance of each of the divisions departments and so on, sit with them and just ask them about their business. What do they think? You know, what do they see? You know, and you get a lot of the, the good information for management and for yourself of how to model the business, where the business is going and how to achieve their goals. And a lot of budgeting is just listening. It’s just listening. Um, and then you, you know, putting together a plan and a plan requires thought, just like we talked before about communications, right? Communication is you have to sit there and think what story do I want to convey?
And then you have to do that at the department level, the division level, whatever, to show that I I have this under control. Like Let’s say, one of our divisions is tax. Okay. So, whoever’s heading tax, you know, well, you know, looking at your business, I know you’re going to be busy in April, but you know, what are you doing in the rest of the year, right? And how are you going to manage your people, manage your staff, manage yourself, manage your time, manage resources maintain effectiveness. And then do you actually intend to grow it? I mean, is there opportunity within this space? And if so, how? And are you working with marketing to achieve your goals? And that insight from a leadership and investors is very important and when things change and they will always change and some people always be like, well, I don’t know why we do a budget, it changes.
It changes the next day. It’s useless. Well, it’s useless. It’s, it’s intentionally wrong. I mean, as we talked about before, it’s intentionally wrong. It’s a point in time where you have to focus on your business and what you’re seeing and what you think is going to happen. And it could be influenced by statistics. And I’m a big fan of that. So, what is the seasonality of the business? Do you want to have just a linear growth path, is there, you know, fluctuations in it and so on and how how’s it going to grow? But in addition to that, just, you know, all customers are different for everything. Uh, and what do you see from your customers and how are they going to buy from you? Uh, what channels are they going to use? And these are all great questions.
And I think a budgeting process requires you to think about, I should say. And then, you know, I, I love the, the, you know, one plus one plus eleven, two plus, uh, 10, and so on going through those as well too on a monthly basis, because that’s how we report and accounting reports on a monthly basis. You know you can manage it even better for us. We can get hours billed. So, we actually can go down to individual weeks or days, but there’s when you go down to of two fine of a granular detail with data, it’s like, well, not everyone is their time as they should on, even though they’re required to. So, there’s fuzzy data. Bryan Lapidus from the AFP likes using that. The term that I use frequently is fuzzy data and fuzzy data. Doesn’t need to be perfect to be insightful and helpful.
Paul Barnhurst:
Uh, you know, there there’s a lot to unpack there first. We actually had Bryan on the show last week and oh, wonderful interview with him. So we’re looking forward to that when it’s released. But uh, you know, first kind of the whole idea of fuzzy data, nobody gets a hundred. No data is a hundred percent, right? It has to be directionally correct. And it has to be right enough to allow you to make good decisions because the cost to get to that last percent or that next percent, each incremental percent gets more and more expensive. And at some point, it’s no longer worth it. So, you just have to learn to operate in a little bit of a gray area. But second, I loved how you talked about, you know, the planning process and I’m not a huge fan of budgeting, but you have to have some process target setting.
You have to have that kind of annual whenever it might be beyond just a high-level rolling forecast, you really have to think about things. And I think, you know, that’s one of the reasons you’re passionate about budgets and I think they do that. They force you to spend a lot of time thinking about the business and planning and that’s where the real value comes from is that process. Like you mentioned, there’s a lot of listening that takes place. It’s where you learn about the business. More in depth, you’ll learn about the needs, you know. Often with the rolling forecast, especially if you’re doing kind of R and OS (risks and opportunities) risks and outlooks and things like that, you don’t get that level of depth. You don’t get the level of thinking. So, I agree with you that that process really does help with that thinking and planning so that you’re prepared to go through the year. Not that you’re right. Not that you have a number that’s going to be right, right. Because if I could predict what companies were going to do at a hundred percent, I’d be at the stock market right now. It wouldn’t be working as a planner. You know, I wouldn’t be doing the career I’m doing,
Ken Fick
I think I’ve told you before, I’m a horrible at it. Like, I mean, just in finance, your privileged information on finance, I’ve never done this, but if I, you know, sometimes it’s done on a Post It note, you know, God, I should buy now, you know what I mean? Or sell now . Every time when I’ve done that I’ve been disastrously wrong. Like, you know, oh, we’re going to have a blowout, you know, revenue numbers. And they’re going to report to the street and we missed it by a penny or I don’t know what it, and it tanks and I would’ve, I would’ve lost money, you know? Predicting the stock market or anything like that is challenging to say the least.
Paul Barnhurst:
I mean, it’s, it’s about planning, it’s a process and a discipline. It’s not about being right.
Ken Fick
Well, it’s also about aligning too. So one thing I find with budgeting is aligning the operating plan with a strategic plan. Most companies have like a five year plan or whatever. Well wait a minute. It has to actually, how are you going to achieve that? And you have to make sure those targets are in place and that you’re telling your people. Some of the worst budgeting process that I’ve been through with companies is where they actually don’t tell the, the team, they don’t say, well, just give us about the best you can do, which is the worst thing to say. And that means, you know, it’s all, you know, horse trading and then low and behold, the business produces a number to the board. It’s Y. Well, we think what we were thinking, it’s going to be Z,. Why the hell would you say that? OK, so that’s fine. Then you have to go back again and like, oh, these are the targets we need to at least achieve. And then it just delays everything, right. I mean, and the best is when you can align that to a larger plan to what the business is trying to achieve. And then you set out reasonable targets. It’s usually the best alignment and best resource allocation as you had mentioned before.
Paul Barnhurst:
No, I, I agree that whole alignment in addition to planning is being able to align from your strategic down to your operational, because if you’re not careful, they get disconnected in a hurry. And that causes all kinds of problems when you have finance planning in a silo, which I’m sure we’ve all seen. I know I’ve seen it where, well, we didn’t sign up for that number. Where’d that come from?
Ken Fick
Right. I don’t own it.
Paul Barnhurst:
Yeah. It just becomes a big mess because nobody wants to own the number.
Ken Fick
Right. And then, you know, I, I want to just talk a little bit more about fuzzy data as well, too. Mm-hmm <affirmative> and, and ownership of the data. And you’re always going to have some people, whenever you do a presentation say, well, that’s not the number I saw or that’s not the number it is . I am like, okay, well what, what, whatever it is, whatever the quote unquote right number is, what are we trying to achieve? And a lot of times I see people with fuzzy data. At Circuit City we, we had, counters We could see counters for the number of people coming in the store and leaving the store. And they were horribly bad. I mean, because someone put a box in front of it or whatever, and you know, you have, you know, 700 people go in and two people leave which is clearly wrong.
Ken Fick
You know what I mean? I mean, things like that.. But not all of it was bad. A lot of it was really good information and it helped to explain to management the business, but you had to, you had to cull through the data and then, you know, and then there was, there was always, um, at the senior leadership, like, well that’s never right. Well, no, it, it’s not right. And certainly not for all of them and for a lot of them. But, you know, I was able to call back down to, let’s say about a hundred stores of which we were getting great insight into daily fluctuations of people coming in and out of a store and why. And adjusted our hours and adjusted our planograms accordingly because people coming in let’s say on a Sunday are different than people coming in the afternoon on a weekday or after 5:00 PM later in the week. And they’re looking for different things generally, and it was extremely insightful. So don’t throw the baby out with the bath oil. Well I think it’s not big bath oil, bath water.
Paul Barnhurst:
Hadn’t heard that. We’re have to remember that one, the bath oil. I’ll try to find a way to use that.
Ken Fick
Yeah. That wasn’t even close to right, sorry!
Paul Barnhurst:
Totally fine. But you know, that’s a great point about so often they’re like, well, the data’s bad. It’s like, well, there are problems with the data that doesn’t mean the data is bad. You don’t just throw it all away. Like you said, you can often cull good information out of less should say imperfect data. Because it’s never going to be perfect. You can still get good insights if you wait for perfect data, you’ll never make a decision.
Ken Fick
Well, and that’s why when I worked, I was working on a accounting to FP&A guide for the association of AFP – association of financial professionals with Bryan. And that’s one of the hurdles that we see in the FP&A world of people in accounting wanting to move into FP&A. And you know, in FP&A we generally don’t reconcile. I mean, we, we do reconcile things, but one thing about accounting, it’s nice. We’re very structured. There’s debits and credits, you know what I mean? And you know, when it’s done or not done, there’s accruals, there’s stuff in there as well too. But generally we try to tie things. And in FP&A, you have to release that and that’s a starting point, but you know the future doesn’t tie to the past, it, it may rhyme. Just Like history or history. It never, you never want to repeat history, but it certainly does rhyme. It’s certainly similar. Right. Um, when you look at geopolitics and stuff like that, unfortunately we’re going through war, you know, right now and the poor people in Ukraine. It’s like, well, well, yeah. I mean, it sounds very similar to things we’ve already seen before in other wars and it’s unfortunate, but you know, it rhymes.
Paul Barnhurst:
Yeah. No, I appreciate that. So couple more questions here. I know, we’re been going for about 40 minutes, but, we just have a little more time here with you. What would you say is one of the achievements in your career that you’re most proud of? Maybe something you would give in a job interview?
Ken Fick
Oh gosh. What am I most proud of? I guess I’d say as an actual achievement. Um, gimme one second here. Um, what did I achieve? You see the reason this is kind of a hard question is typically I measure my performance based on the results of others, of what I helped them achieve. And what they were able to, to do to do, or would I help them to do, or would I, uh, train them to do
Paul Barnhurst:
Could even if maybe something you’re proud of that you helped somebody you help the team achieve not even necessarily yourself, cause that’s often very rewarding in itself.
Ken Fick
I, I think some of the, uh, biggest achievements that I’ve had in my career is nothing specific, but in individual projects, like one thing that I think was fascinating is that when I was working in a contract position at, uh, Fannie Mae in the economics unit, uh, is they, they had the largest, they were the largest homeowner in the US. I think I mentioned that. And how do you dribble out houses? Let’s say in Detroit house prices are dependent on what was already sold. So if you put a whole bunch of houses on the market in Detroit at the exact same time, you’re going to tank prices. There’s just too much supply and demand. So how do you? But Fannie Mae still needed to get rid of these houses And so what is the right number to put what houses in what markets, in what areas, um, on the market at the right time to not downwardly impact price?
Ken Fick
And how long is that going to take? Um, and at the time you were using things that were advanced then, like Google Trends, and that’s now it’s common, but we were looking at, you know, searches on Google and on the different geographic areas. And that was informing the data, the economists in regards to what to do. And did I specifically do anything or achieve anything? No, there was, that was definitely all of that, but I was a part of that and I found it fascinating. I found it helpful. It was insightful. And in a way, I guess I, minorly influenced the, the financial wellbeing of a lot of people by helping them work through that problem and not do something that is, would be inherently overreaction again, you know selling all the houses at once, uh, and making an informed choice.
And that’s one reason. I think I, when I look at bad management of any company, one of the things that I look for is universal cuts. So let’s say, you know, revenue is down. Well, everybody, every department everyone has to has to cut their, their headcount, the cross by 10%, the peanut butter spread, that person is clearly a moron. I mean, I’m sorry. But if that is coming from the CEO of a company, you, you need to move because that is never the right answer that you, especially for accounting, you know. Just because you lost 20% of your revenue. The transactions may have gone down, but doesn’t mean you still need to close the books. There’s a platform that you need to maintain, and there’s also areas that you should invest in that you’re cutting. It’s the worst thing and you have to think about it. And, you know, that’s, I guess one of the things that I’ve learned in my life is that’s, that’s a huge red flag to me whenever hear about that in, in a public company or a private company. You know, in, in any type of planning and anything else like that, that’s usually the worst decision.
Paul Barnhurst:
Yeah, no, I, I agree. And I remember, you know, early on in COVID we were given targets as businesses. Hey, you got to see achieve this in savings. Revenue is down. And we went through strategically and said, okay, what’s the impact. If we do this to this group and some groups, there are people we, you know, unfortunately had to layoff in other groups, we put people on four day work weeks, right? We looked at each of our different teams, whether it was account management or call center or operations and said, what’s the right thing to do here and left it up to the managers, rolled it all up and said, okay, now we need to do a little bit more to get to this number. What’s the next steps. And I remember, you know, how stressful it was, but we really tried to balance what’s best for the business and how do we help our people versus just, all right. Just cut everything and let’s move forward every right. That never turns out well.
Ken Fick
No, and it’s interesting, you see that talking about the war in Ukraine for a second. And you see that with the two opposing armies. Like, so I guess Ukraine has the US and NATO with training previously, since the Russia annex Crimea and so on. And the US military style is very autonomous units. And, you know, as an officer, you’re given a goal, you know, take the city or whatever, but how you take the city is very, very open. Because one, you know, the no plan has ever made it through execution. But planning is essential, right? Um, so you, you get there just like a finances analogy of war there, right? You land in the middle of Ukraine in a forest or whatever, whatever plan you had is wrong. You know, you have an objective and you have a general idea of where you need to go, but that officer and those people, those men that are fighting this need to be extremely flexible in achieving that. And you can’t have a general sitting there yelling at you. It doesn’t, it doesn’t work. It works. I mean, you see it does it, but it’s not effective. And there’s a lot to say about that in, in a company. And that’s really great that your company that you worked for when you went through that, did that because that’s a very thoughtful way to do it.
Paul Barnhurst:
Yeah, no, I, I was, I was appreciative for that as challenging as it was that we were able to figure it out ourselves and do what was best for the business. So, uh, next question here, this is kind be a little more of a personal question, but we like to ask everybody this question. What’s something that not many people know about you, something they wouldn’t find online. Something they’d find interesting?
Ken Fick
This is going to be funny. So I guess I was a candle and giftware expert through high school and part of college. . My parents owned a couple of franchises of a company called Wicks and Sticks, which is no longer, um, you know, around. And we’d go to, to gift shows and so on. I helped them with buying and running the stores and so on. So, um, you know, it’s, it’s interesting. I encourage it. Like when I look to hire people, I look for people that have done some type of service business, either a waiter or waitress, retail, because people are difficult. And I think actually we’ve gotten better and worse post COVID and as a population, but it requires a great deal of finesse when you’re dealing with the public and requires restraint.
And, you know, one thing that you, that I find of people that have gone through that. And I like that as well, too, is that they’re not concerned about ego. They’re less concerned about ego. Like, you know this whole thing, this whole will Smith slapping thing. Well, you know, why, you know, why, why did he do that? Why did he feel he was disrespected? Who cares? My kids disrespect me some days, I mean, I’ve never, if you’re a parent, you know, but how you react to that is what matters. And in, in your career, you’ll be quote unquote or feel slighted, disrespected, whatever you feel, whatever it is. The one thing to note is that that is your emotion. That is not somebody else’s emotion. You choose to have that emotion. And when you’re dealing with the public and you have that training, you’re going to get exposed to that multiple times to a degree of certain numbness. And I’m not saying I’m perfect, Paul. I mean, I I’ve messed up many, many times.
Paul Barnhurst:
We all have
Ken Fick
But as I’ve gotten, it gets a little bit older in my career. I’m like, I’ll take out the garbage you paying me. I mean. I have no ego. You want to red ink, this that’s great. Have fun. You know what I mean? It doesn’t bother me in the least.
Paul Barnhurst:
No, I will always think of you now as the candle and giftware expert.
Ken Fick
Thankyou you, Paul. No, I don’t know anything about it now, though, that was like 25 years ago.
Paul Barnhurst:
Story kind of funny. I’ll tell this real quick. I know we’re, we’re short on time, but so I used to do a service for a lot of wedding receptions. Okay. I did them all the time. I worked out a place that did a ton of banquets, you know? And so I was sitting with my brother at a friend’s wedding and we were both single and I was probably in my late twenties at this point, maybe 30. And he was in his, you know, kind of mid to upper twenties. And we, all of a sudden, he had worked at the same place for a couple years. We found ourselves critiquing, like the table settings and how everything was laid out. And just two guys sitting, two single guys doing this. And all of a sudden I turned to them, I’m like, what’s wrong with us? What have we become? You know, that we’re sitting here picking up,
Ken Fick
Analyzing the table setting
Paul Barnhurst:
Table settings and the decorations. And I just, we had both worked so many of them it was almost, you know, second nature. So that’s what I thought of when you mentioned, you know, the candle and giftware expert. So
Ken Fick
I didn’t know that about you. That’s fascinating.
Paul Barnhurst:
Yeah, probably not one, many people know, and I just shared it with everybody. So there you go.
Ken Fick
Now everybody knows.
Paul Barnhurst:
So, uh, last question here, before we let you go, this is one we like to ask everybody, what’s your favorite Excel function and why?
Ken Fick
Well I use the most frequent I use is the same one that everyone else uses is V lookup. But, my favorite are the, linear aggression estimates in scatter process, so on and those equations, um, because it, I think like now Excel is that forecast button, right? And it gives you that, which is a great, very quick analysis. But then if you dive in a little bit deeper, you could do a polynomial and a Rite of other things to fit the curve. And I don’t use it as often as I’d like, but that’s my most favorite function.
Paul Barnhurst:
No, that’s great. That’s a great set of functions. I remember when I learned how to write all of them, versus just having them chart themselves one time for a project and took me a long time to figure out, oh, you can actually write every single one of those statistics functions right In the cell. And I’d build some dynamic things where I could dump in new data and see what was going on instead of, oh, I click this little button. It reruns every time. Now you just click the forecast button. Right. They’ve made it a lot easier.
Ken Fick
It did
Paul Barnhurst:
Those are really valuable. I think statistical analysis is underused in FP&A
Ken Flick:
I agree. I agree with that as well too. And they, they think, you know, there’s a lot of judgmental forecasts, which is, which is great, but I think statistical forecasting can inform the judgmental forecasting. Um, and unfortunately I think we’re not as good at math as we think we we’d like to be. Um, and that’s one of the reasons,
Paul Barnhurst:
No, I would agree with that. And I know that’s, that’s the case for me. And then also I think the other challenge is finding good clean data sometimes. Especially if you’re dealing with accounting data, that’s always been, my challenge is there’s so many outliers because of accruals and things is trying to get it to the point where you actually find a correlation or something that’s of value.
Ken Fick
Oh, absolutely. I agree with that.
Paul Barnhurst:
Yeah. I think I know we’re at the top of the hour, so we’ve used up our time here, but thank you so much for being on the show. Really enjoyed visiting with you, Ken, and we will look forward to release of this podcast here in the near future.
Ken Fick
Well thank you for having me on Paul and enjoy talking to you and enjoy the FP&A profession, call anytime.
Paul Barnhurst:
All right, sounds good. Hey, you have a great day. Thanks again, Ken.