68 Ventures is a holding company for numerous operating entities transforming the Alabama Gulf Coast and Florida Panhandle.
FP&A is central to this mission, says Joseph Clayton Business Analyst at the company. At 68 Ventures the FP&A team is tasked with analysis that is fueling multiple big ticket real estate deals. Specifically, FP&A oversees a due diligence process to “ensure we’re getting land at the value that we need in order to sell those lots at a profit to pay back our lenders, pay back our investors” alongside “tracking the schedule of the project.”
But Joseph’s career actually started in basketball.
With aspirations of playing in the NBA, Joseph played college basketball until injury cut this career short. After being warned off law as a profession, he found a passion for finance after a series of roles showed him the powerful role of “financial data is in the decision-making process.”
This inspiration of game-changing finance remains at the core of his mindset at 68 Ventures. He discusses the central role of finance in providing storytelling and business partnering in a complex holding company which has 17 different entities. The 68 Ventures brand comprises an entity purchasing land, another developing the projects, home building, to a landscaping entity and pest control company (companies include Truland Homes, Vault Mortgage, Southeast Plumbing and Gopest).
In our first episode tackling FP&A and the real estate sector, Paul Barnhurst talks to Joseph Clayton about:
- The key metrics real estate FP&A leaders need to obsess over
- The role of FP&A as interest rates rises impact homebuying after a sustained period at rock bottom
- The partnership and decision-making process of FP&A across a company with 17 different entities
- The whys, and how’s as 68Ventures went through a process of replacing manual Excel processes to choosing an FP&A software company – and the lessons learnt
- How to overcome an instinct to achieve complete accuracy in forecasting
Paul Barnhurst
Hello everyone. Welcome to FP&A Today, I am your host, Paul Barnhurst, AKA the FP& 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’ll provide you with actionable advice about financial planning and analysis. This is going to be your go to resource for everything FP&A. Before I bring our guest on. Couple reminders you can earn CPE credit for your CPA or other accreditations through Earmark. You can go to the app, download the episode when it’s available, answer the questions and receive that credit for your continuing education. And second, if you’ve been enjoying FP&A Today, we ask that you leave a review on your podcast platform of choice, apple, Spotify, wherever you’re listening to this episode. We’d really appreciate that. So with that being said, I’m thrilled to welcome today his guest on the show. I have Joseph Clayton with me today from 68 Ventures, welcome to the show.
Joseph Clayton:
Hey Paul, thanks for having me.
Paul Barnhurst:
Yeah, no, really excited to have you. So just let me give just a brief background and then I’ll let Joseph tell a little bit more about himself. So Joseph is currently located at Alabama. He works for 68 Ventures as a business analyst. He did his undergrad from Spring Hill and he earned his MBA from the University of South Alabama. So hey Joseph, could you give us a little bit more about your background? Maybe tell us a little bit about yourself and how you ended up where you’re at?
Joseph Clayton:
Yeah, definitely. It is quite an interesting and kind of unplanned way until how I found myself in the finance financial planning and analysis world. So like you said, I went to undergrad at Spring Hill College after growing up in Dallas, Texas, but moved to the southern Alabama area for college where I attempted to play college basketball actually. And starting off, when I went to school I was planning on going to law school. So I actually studied philosophy during my undergraduate career with the sole intentions of going to law school right after graduation. But it was actually sometime during my junior year I quickly realized that I did not wanna go to law school and it probably had to do with every time I talked to an attorney they warned me to not go so Yeah, once the confusion came in there I was kind of like, okay, well where I want my career to go? What kind of field do I wanna get involved in? And it was definitely kind of during my summer breaks where I was able to work in a few customer retail-facing roles and it was really there that kind of sparked my interest in business and especially having conversations with these entrepreneurial-minded business owners that I worked for it was real interesting to me. So I immediately began taking business classes throughout the remainder of my undergraduate career. And right after graduation I enrolled in an MBA program at the local university in the southern Alabama area. And it was really there kind of going through the different business cases and seeing how important finance and financial data is in the decision making process of the business, which really inspired me and wanted me to continue on in that industry. So now I found myself find myself as the business analyst here at 68 Ventures. And just real quick, we’re a holding company for numerous operating and development companies in the southern Alabama area and I get to play a part in our story and our mission of transforming the Gulf Coast. And I’m lucky to work with some great people and partner with various business leaders across a diverse set of industries.
Paul Barnhurst:
Great. And I appreciate that and I appreciate you giving a little introduction about the company. We’ll talk a little bit more about that and I can definitely see how background philosophy, a different way of thinking and then MBA could help you in your day to day. But I’m curious, you mentioned you started out wanting to play basketball in college and did you have a position you like to play? What’s your
Joseph Clayton:
Yeah, so
Paul Barnhurst:
Is there a team you like?
Joseph Clayton:
So I definitely used to be really good at basketball. Now it’s a different story where injuries and just lack of practicing over the years. But I played basketball my entire life ever since the age of three with hopes of going on to play at the collegiate level. So I was very fortunate to go to a small liberal arts college here in the Alabama area, continue on with my playing career. It was short lasted just due to injuries and wanting to focus on other objectives in school. But it was great. I played shooting guard and again, used to be pretty good but I don’t brag anymore. I haven’t played in a year or so.
Paul Barnhurst:
Injuries and age will both have take their toll. So I’ll ask one more fun question cause I’m a big basketball fan and then we’ll get back to the interview. But do you have a favorite team as far as college MBA? I mean obviously other than where you went to school?
Joseph Clayton:
Yeah, definitely. So I’ve lived all over, but I mostly grew up in Dallas and finished up high school there. So I’m a huge Dallas Mavericks fan and I love watching basketball. It’s my favorite sport to watch. I love NBA, I love college. But my favorite NBA team is the Dallas Mavericks and I never forget when we won the championship and 2011, that was probably one of the highlights of my time. So what’s your favorite team?
Paul Barnhurst:
I’m from Utah, so I’m a jazz fan so I won’t hold it against you to be a Maverick fan. I get it.
Joseph Clayton:
We’re doing pretty good this year. We, we’ll be doing pretty good this year. Last year wasn’t too bad, so
Paul Barnhurst:
No, you guys got some good players, so, alright, getting back to the podcast, everybody’s probably going to be like, what are they talking about if they come in a little late? Exactly.
Joseph Clayton:
<laugh>, right.
Paul Barnhurst:
So I know you mentioned you’re a holding company, 68 ventures, if I remember right. I think you guys have 17 different companies. Correct. So you talk a little bit about how finance serves across the business. How do you support these different companies? What’s the model?
Joseph Clayton:
Right. So, I guess just to give an explanation of our business. So we’re a holding company for numerous operating development companies all along the Gulf coast. We’re mostly focused in construction, real estate and real estate development businesses. But our vision is to transform the Gulf Coast. And we do that by partnering with purpose-driven leadership and providing them with necessary resources to go out and cultivate an impactful company and then realize their full potential. And what we do at the parent level is provide those resources to where they can excel. And we do that through marketing resources, through technology, through offering financial and accounting resources, especially lower startup companies as well as marketing and just overall leadership and business strategy. So that’s how we play a role in the space. And originally our model was we were founded upon a vertically integrated foundation.
So it all kind of started at the parent level where we’re real estate focused, we’re going out and purchasing land and then we have another entity that develops that land. And then one of our other operating companies is, and our largest one is a residential home builder. So our development company would develop the land, sell those lots to our home builder. And then we also have other real estate related businesses that have the opportunity to capture business from there once that home is sold. So real estate brokerage, our title company, our pest control company, our landscape company, insurance, et cetera. So that’s kind of how the model started and that’s where we are today. But we’re kind of shifting to more of an entrepreneurial platform. We’re still going to be focused in real estate and construction, but we kind of want to explore adding different industries under different verticals within our portfolio.
So that’s kind of the overall of our business. But I guess to explain where finance plays a role is, I mean we’re, our financial department at the parent level is in every single step of the way across our portfolio. I mean we’re here as a resource to the other accounting finance teams across our portfolio and our operating companies to help with just basic level accounting and helping with software implementation, picking out the best accounting source that company needs to use in their industry as well as we help establish the processes and the financial reporting to where our companies are tracking their budgets on a monthly, quarterly, annual basis. And they’re reporting that back to us at the parent level to where we consolidate those reports and to summarize views to give back to our C-suite executives here who in decision makers to see how the totality of our portfolios performing.
Paul Barnhurst:
That makes a lot of sense and it sounds like you’re really buying these companies and helping make sure they’re running as efficient as possible on your end. It’s the finance, it’s the bookkeeping being a resource for them and that all makes sense. One other question I have is obviously a lot of your companies are real estate, I know there’s some others that are outside of that, but how does FP&A work in the real estate industry, how do you look at opportunities? How far out do you forecast? Maybe just talk a little bit about that. Cause I know from what I’ve heard and talked to people, it’s a little different than what you traditionally see.
Joseph Clayton:
Yeah, I guess you could say that maybe again, it still is certain, certainly like the other industries, but I mean I would say probably the number one differential factor, the one we kind of put more emphasis on is the due diligence process. And that goes for our development entities as well as our operating companies. But more specifically for the development companies. Because if we’re going out to purchase land, we tie up certain lenders and our investors to go out and purchase property. But we wanna make sure we’re getting that land at the value that we need in order to sell those lots at a profit to pay back our lenders, pay back our investors. And also, I mean really it, it’s at the due diligence level, which is highly critical in our industry as well as the way finance is also playing part is tracking throughout the schedule of that project.
So once that development starts, we’re making sure we formed the budget beforehand, but we’re making sure we’re hitting those timelines and those different phases and the goals within those phases and just making sure that if we have certain type of construction delays, we’re being proactive and we’re seeing those in real time and we’re able to adjust and combat any issues that are occurring. So I’d say the biggest thing is just in our due diligence process. And then two is just being proactive and make sure we’re performing at the level that we say we’re gonna perform. Just making sure nothing’s kind of getting outta whack or going a different way. Because if so, I mean that takes a lot into, it could be really, really costly just due to an interest carry we’re carrying on a loan. I mean that could really skew up the margins when the projects are finally finished.
Paul Barnhurst:
That is understandable. I can see what you’re talking about there. And it sounds like if I heard you two things, there’s the due diligence process, which is a little different. And then the second is really around the milestones. So it’s almost a little bit monitoring the operational <affirmative> in addition to the financial that the role. And you definitely see different businesses where they lean more or less on how much finance gets involved in operational. But if I was hearing that right, it feels like you definitely get pretty heavily involved, at least from a milestone and project tracking and those type of things. Some of the operational parts of the business,
Joseph Clayton:
Cause I mean these projects go on for quite, it could take two years to, you know, fully purchase raw land and then to when there’s a house built on top of that property. So it takes quite a while. And as we’ve seen just throughout the last year, I mean how one thing can just change the entire market where we’re just seeing through the pandemic where supply chain storage has occurred. I mean material prices are rising and just how quickly that happens and that can really affect a project that’s two years in length to completion.
Paul Barnhurst:
Of course I could see where the littlest things can have a big impact when you have a very long lead time to recover your investment.
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Speaking kind of investment, shifting a little bit, and recovering that obviously something you have to track is your KPI’s, what are those key indicators? So you know have a number of different companies, you have seven different companies, you have all these entities. I mean I know there’s a vertical integration, but at that corporate level, what are you looking at regularly and how do you decide what KPIs are most important with that many different businesses
Joseph Clayton:
Yeah, so there’s a process that we have at the parent company level across our accounting and finance team where we’re measuring our monthly performance across every single portfolio organization. So we have processes in place where we send out, okay, here’s your perfomance that you have to report to each month. So originally at the beginning of the year we have a budget locked in and then each month after let’s say the 10th business day, we expect a delivery back to us to see how our company performed. Was it in line with budget within budget or not? So that’s something we’re constantly tracking, just our monthly performance and how we can get that back to the parent company level as quickly as possible. And it takes time. Every company’s different. It may take a little bit longer than to close out the books each month, but we try to get that in a timely manner so we can consolidate that information and give that back to our stakeholders to see here’s here’s how our portfolio is doing on a monthly basis.
Here we are in line with budget, here’s where we are year at date and then where are we going for the rest of the year. So that’s something we’re always look at. That’s kind of the financial KPIs that we hold across every single company. But then when you get drill down to the companies across the various industries, you kind of see there’s different KPIs that we need to track. There’s one KPI we’re tracking at our construction company that we’re probably not tracking at our insurance company. So we have a whole different list of KPIs we track that are industry specific and one for example. So we just look at our home builder, we’re wanting to track our cycle time, so how long it takes from when we purchase that lot from that time to closing of that home. So that’s sold. So this is one way we track just because we wanna make sure our home builder is we’re building houses in a timely manner so we can deliver the proper expectations to our customer who, who’s purchasing that home as well as it measures too, are we improving better operationally?
The faster you build a home, the more we can get to more we can sell and hopes of increasing your top line demands there. And then another one too, at the home builder level, it was just a good indicator of just how much demand is out there in the market is our average sales price. And that’s definitely one that we’re going to keep tracking as time goes on. And there’s a lot of things in the market that’s up in the air with higher interest rates, stuff like that. We’ve been blessed with the last one or two years of just super high demand from the consumers but now with higher interest rates and you’re starting to see maybe a decline. So we’ll start to see if our sales price is dropping what the market demand really is. And there’s a whole other bunch of KPIs. I have a whole list of them here that we track at our global scoreboard meetings for our C-suite executives. But it goes on.
Paul Barnhurst:
I could imagine it gets pretty complex and it’s a challenge when you have 17 different companies of how you boil that down and folks on the key things. So I get that and I can also see where some real challenges with interest rates going up, some headwinds, monitoring that closely and seeing how does that impact us. Because for so many years here, interest rates have been rock bottom and that makes it much easier to buy a house.
Yeah, much more enticing. So it’s a lot nicer when I only have to pay this much in interest over 30 years versus how much?
Joseph Clayton:
So a much easier sale and we’re why we’re tracking that KPI so heavily across our home builder. But there’s various other KPIs we track across some of our different companies, especially some of our startup companies that have been startup mode for maybe just the last year. I mean obviously we’re always checking cash, especially the ones that were just startup. I mean they may be burning cash on a monthly basis. We need to make sure we have a high enough cash balance to cover that burn. If not, we’re having to run a model out to see how much do we need to inject into that company
Paul Barnhurst:
Cash burn. And I can imagine that’s a big one as well in a portfolio company So my understanding is you guys do quarterly reviews with your different businesses. Imagine with 17 businesses, that’s a challenging process. So can you talk a little bit about that? How does it work? How successful is it? Just walk a little bit through that process.
Joseph Clayton:
Yeah, it’s definitely a fun process and it definitely takes some days when you have 17 different companies coming to discuss how they perform for the quarter. It’s definitely makes for some long days, but it’s very rewarding process. But how I’ve explained earlier, we have monthly deliverables where reporting each month how our company’s doing financially along with an executive summary that kind of gives us more context to the business, what really is happening in operations? Do we hire more people? What are the challenges and you see the next month et cetera. So it just gives more context to the numbers and this is what really happens in our business plan where business is the intent behind it is kind of a more from a contextual basis what’s going on. The business unit leaders at these companies come to 68 ventures with a presentation of just how we came ended with the quarter and what are we forecasting for the next 90 days.
But it really isn’t so much about the numbers. I mean because we’ve seen those numbers each month, we know where they at financially. But it’s more to kind of come into discussion about what’s going on in the business, what are the challenges that you’re starting to see and where are we going to end up remaining of the year. But also are we in line with the business strategy? I mean each year we’re setting out business plans where we have operational goals, a setting and even projecting three years out to where we wanna be and are we doing those proper steps in order to get there? And if there’s any headaches that are arising and challenges, that’s the time for them to discuss with us as business partners, how can we better combat these issues. So it’s, it’s a dialogue, it’s nothing too crazy. But it’s also making sure from our standpoint, our mission is to help these companies realize their full potential. So it’s us being good business partners and holding them accountable to the business plan.
Paul Barnhurst:
I really like what you said there at the end is it’s us being good business partners and holding ’em responsible to the business plan <affirmative>. Cause that’s a key part of finance and sometimes that can be a real challenge cause you wanna be a good partner, you wanna work with the business but when things aren’t going well sometimes you have to challenge the business and there has be some push to help them get where they need to get . So any experience there, any advice you’d offer when you’re in those situations that are challenging where you really have to push on the business for whatever reason? Anything you found to help in managing that from that business partner and relationship standpoint?
Joseph Clayton:
I mean I think what’s really awesome and advantageous from our perspective at the parent level, I mean we’re overseeing so many different companies and they’re all different and maybe in industry and how they perform every day, but a lot of them are facing the same challenges across the board that can be labor issues, material price increases you know name it. So it’s been great to be a part of those conversations, see where everybody’s coming from and be able to offer advice that where we’ve seen or maybe you should go use our other partner as a resource and he’s combated this issue this way. Have you thought about this? And also at our level too, we’ve been blessed with some great people around here who have a lot of experience across a wide amount of industries. So I think that’s really helpful. Just being involved in so many different aspects of business to where we can give better feedback and dialogue. If one of our partners is having an issue or having a challenge, we can talk through it. This is how this other person combated this problem.
Paul Barnhurst:
Got it. That makes sense And that’s great that you have good resources there to assist and help with that . So appreciate the answer there. I know you guys recently automated your reporting process and I’ve heard that you selected Datarails for that. Obviously they are sponsored for this podcast. What were some of the manual processes you had before you adopted a solution and what ultimately made you guys adopt a solution and moved toward more automation? What was kind of that driving point that made you go ahead and put a tool in place?
Joseph Clayton:
Right, yeah you just mentioning manual processes in the past. You’re giving me some flashbacks and nightmares but no man, that’s a good point and it’s a great question because I’m sure a lot of businesses are still undergoing a lot of manual reporting back to their business leaders, their managers or their holding companies, whoever. But kind of how I explained earlier, we have certain deliverables for each operating company to report back to us how they’re performing financially and beforehand, I guess just explain that was all a manual process. We set up these Excel templates with a profit and loss income statement view and just plain up in Excel where you know have columns with months at the top and then at the rows you’re kind of budgeted figures and then we’re tracking actuals to that. So each month that was an expectation to where the finance and accounting department would probably literally have to pull up their P&L and their certain accounting system, look at all of it, and then manually type each line item by line item how they performed.
And again, that would just take forever. That’s an expectation once a month and then you add on quarterly business plan reviews, the budgeting process. In totality, that takes up a lot of time when really that’s the area for automation. So we were able to purchase financial planning and analysis software Datarails and automate that financial process to where we have so many companies on all different types of accounting systems. But this software allowed us to basically integrate all into one database to where we can have that be the source of our financial or our monthly performance reports come out of there. Being able to, it links to Excel instead of having to type each month you press a refresh button and there’s your monthly figure, there’s your performance. And this is great too because it’s been able to increase our monthly reporting times by 15%, which is huge.
Just getting the information back to us faster to know, okay, we don’t have to wait 20 days out to see how we performed in the prior month. As well as this ensure data accuracy too. I mean beforehand when you’re manually keying in, if you wait a month and you go change an invoice date or you’ve just found this invoice or this bill and your mailbox or so and you’re finally typing in, it was for last month, I mean that’s not going to update and you’re mainly updated Excel workbook. So it’s been able to save faster times across all of our teams and ensure that we’re looking at the latest and greatest information and that’s getting back to us. And also the other business unit leaders across our organizations where they can see where they really stand and make decisions from there.
Paul Barnhurst:
If I was to sum up what you said, it really came down to the manual process was just not maintainable. You had higher chance of error, took a lot of extra time, it’s not fulfilling. Nobody wants to copy and paste. So being have the tool that automated that process just got you out of what I like to call Excel hell
Joseph Clayton
Exactly. And I mean the big objective for us was how can we get our teams to no longer just be performing data entry each month and when performing these reports, but really how can we spend more time looking at our data and performing analysis rather than just manually typing it in. So that’s been huge across all of our teams and they really appreciate the work and the more time they have to really look at and analyze how their business is performing.
Paul Barnhurst:
No, that is huge. The more time you can spend analyzing than preparing data.
Exactly.
Everybody wins in that situation. The employee, the managers leadership because you get more value for what you’re paying for. Nobody wants to spend all day doing manual processes. It’s, it’s not fun. So that is great that you’ve got real value outta that. So how are you using it? Are you using it for financial and non-financial reporting or maybe talk a little bit about what kind of reporting and beyond just the P&L and the different companies, are there other things you’re doing with datarails?
Joseph Clayton:
Right. So we’re mainly using it for the financial reporting process and what’s so amazing about this software, it’s always evolving. We’re also very early stages into it. We just implemented this about a year ago. It takes some time kind of getting comfortable and transitioning people from the old way to utilizing this new software. Some people get accustomed to doing how they were before. So it takes a little bit of time to implement across the team and get it all set up, make sure it’s all accurate. But ever since we implemented, it’s been great. But again we’re mostly using it for our financial reporting processes. But what’s been a really big value add is all the data visualizations capabilities that a platform like this has to where our business unit leaders across our companies and even here our C-suite executives can look at this information in real time accurately in a very quick, easy summarized view through a data visualization.
And this is also really awesome I mean, especially what I’ve learned throughout business is there’s a lot of presidents and business unit leaders out there that they’re not always diving into their financials, they’re thinking more high level strategically. They may not even know how to look at a P&L and really see what’s going on. But what we’ve been able to do is put these quick executive dashboards together for each team to where they’re being able to get email every day a click report or they’re going into their login through the software and seeing where they stand for that day, where they’re forecasted to be end of the year. And if there’s any gaps they need to strategically think through it’s there in front of them.
Paul Barnhurst:
Executive dashboards, and having that ability to quickly get that snapshot is huge. I can see it’s obviously providing a lot of value for you. I know it’s still early and a lot of work to do, especially when you’re implementing it across 17 different companies with different accounting systems and all those things. That’sa long time to get that all worked out. So I can see that you’re still going through that process and finding ways to continue to improve the value you received from the tool. So that makes sense to me.
Joseph Clayton:
It’s ever growing. That’s awesome. There’s always a software is always updating to where there’s new tools and new applications there that will better help us and suit our needs. And I guess from a timely investment it’s totally worth it where it takes time setting up that process. But then once you get there, I mean it’s a click of a button and your data’s flowing right to you and you can see where you stand. So it’s like we talked about earlier, the importance of that due diligence process, setting things up correctly first, then you kind of finally see the fruits of your labor after it’s all said and done.
Paul Barnhurst:
I love what you said there about setting things up first. Cause any digital transformation, any software program that you’re putting in, you wanna make sure you understand the strategy, you manage that change management. But the third one and I think is often forgotten is you gotta make sure your house is in order so to speak the data and then it’s all going to come together. So last thing you want is to get done and then have no value from your tool. And nobody ever wants that
Joseph Clayton:
And that was our biggest issue. I mean we’re a company with numerous companies below us, we have 17 operating companies, but we also are involved in development process where we have maybe 30 active developments going on at once with all different books and we need to see where they’re at, what their cash needs are, how they’re performing. This tool’s really allowed us to see the big picture. And that was, I remember the first question when I came to 68 ventures, well are you familiar with business intelligence? I mean that was kind of our problem. Just we have so much data out there but we just need to make sense that we need to clean our house and able to pull it accurately and then be able to make those insightful decisions from it.
Paul Barnhurst:
I think that’s a challenge a lot of companies face. You gotta synthesize the data and like you said, be able to make intelligent insights just critical. So speaking a little bit about this experience sounds like it’s gone really well for you guys. How do you think about ROI for an investment like this? How are you determining, are we getting our money back? Was it worth the time we spent? How do you guys think about that?
Joseph Clayton:
. No that’s something we know we, we’ve been asking ourselves all the time and we definitely see the benefits of all the costly investment and the time investment too to, it’s freeing up again our time. We’re getting reports a lot faster from our operating companies. It’s freeing up our personnel and the accounting and the accounting departments and finance departments across all the operating companies to more time to be analyzing that information, providing better information back to their stakeholders. But I would say really the major ROI, how you really measure that is through time and it’s what it’s giving you. I, think it’s hard, it’s hard to really quantify that in number but I think just from the time investment, I mean it’s a capital investment, you have to purchase the software but if you look at it, you’re freeing out people’s time.
Maybe they’re maxed to capacity at a hundred percent of their time by just doing bookkeeping and manually typing and reporting. But you can free up their time by 50% and that’s huge. And maybe beforehand if you stuck to those manual processes, maybe you would have to hire on another team member to keep up with all the information that’s going on, especially as your business grows. But what’s been awesome is just levering the software to free up more people’s time. And we’ve been seeing the massive ROI on our investment. It’s been great so far and we’re looking forward to the more information it provides us.
Paul Barnhurst:
That makes a lot of sense. Great to hear the ROI as you mentioned, is all that time saved. You got people maybe I’d have to hire another person. It’s hard to exactly quantify. I get it. And as finance people we always wanna put a dollar on it and we try our best to, but sometimes you gotta look at it holistically and it comes obvious that it’s paid for itself. And that can be a challenge. especially us for us, number nerds as I like to say.
Joseph Clayton:
Say, especially if you’re,
Paul Barnhurst:
I’ll at least call myself one,
Joseph Clayton:
Right? Yeah. Especially if you’re doing manual processes now and you’re trying to sell your managers, Hey we should look into this tool, but it, it’s a huge time saver and it’ll pay you back major dividends.
Paul Barnhurst:
Well everybody loves a good time saver. So thank you for sharing a little bit about that. We’re gonna switch gears here a little bit. I know we’ve been talking for a while now and we have a few more questions here for you. This next one, this is one we like to ask everybody as you look at FP&A, I know you’ve been working as business analyst and supporting finance, a little bit of operations, but what do you see as the biggest challenge in FP&A today? Just you know, speak to that your company could speak to that more broadly. And then the second part of that is what do you see as the biggest opportunity? What’s out there in both of those challenge and opportunity?
Joseph Clayton:
Yeah, I would say the biggest challenge that I face when it comes to an FP&A and financial modeling is maybe I’m just too OCD but I wanna be a hundred percent accurate when I’m modeling out a certain scenario. But that is clearly not the case and clearly impossible. But that’s one of my biggest challenges. I’m always wanna know the exact information I need to make my proper assumptions to see what if we’re gonna acquire a company or we’re gonna expand to this geography and this business, what it would really look like a year or two, three years out. But it’s impossible to be a hundred percent accurate in some of your assumptions. But that’s one thing the president of our company has been really advising me is you don’t have to be a hundred percent accurate really as long as your directionally correct. So that’s probably the biggest advice. That’s one of the greatest pieces of advice I’ve had so far in this role is just when it comes to financial modeling. It’sokay not to have all the information at first. You can still come to make assumptions and then as long as you’re directionally correct in your conclusion and you can see the ROI on a certain investment or whatever you’re modeling out. But I think for me that’s my biggest challenge. And I’m curious your thoughts on that too?
Paul Barnhurst:
Great question. So first talking to the challenge, as I like to say, if I could forecast perfectly, I’d be sitting on the beach somewhere as a millionaire, I wouldn’t be working in finance. We’re not sooth sayers, we don’t have a crystal ball. It really is about assumptions and grounding our assumptions in reality. Reality and validating them. And as you said, being directionally correct. I made that point the other day. It feels great, we all love it when you’re like, oh I was spot on this. But the reality is that’s not really what’s expected for us. The idea of the project is to give us enough comfort that we’re gonna get a return, that we’ve reduced risk, that we can make intelligent decisions based on the data. And as your boss said, which was great advice, be directionally correct, So for me, I think the biggest challenge, I would probably say there’s two.
One is the amount of data we deal with in the world today. <I mean I was on a webinar this last week and I did some research and in 2022 alone we’ll create 94 zetabytes of data that’s 94 with 21 zeros after it. Every two years. The amount of data we have is doubling in the world. Think of how long the world’s been around now. Now we’re doubling it every two years, . So I think dealing with data and being able to boil it down and find insights is a real challenge. I think it’s a huge opportunity as well. And then the other is really continuing to ensure that we’re focused on being business partners and value creators. It’s easy to get caught in the spreadsheet and the numbers and all the financial work and that’s important and there’s nothing wrong with spending time on that, but if we’re not taking that and giving the insights and providing the value, we’re missing out on that huge opportunity. And I think it’s a challenge sometimes in finance to really get that seat at the table and make sure the business sees us as a value creator that they trust us that we’re the trusted business partner, not just the ones they have to go to get something approved or to get a report.
Joseph Clayton:
Right. No, exactly. I mean you said there is a lot of data out there and sometimes maybe that’s my issue. Sometimes there’s so much information and I wanna be able to quantify it all and my assumptions. But I think it’s getting to that point, you’re kind of differentiating between finance people or in the daily details kind of in the weeds. But to add value, we need to be able to think more higher level, I guess , what are we trying to accomplish with this question that we’re asking in this certain model? But no, that was a great point.
Paul Barnhurst:
We gotta be more strategic and think big picture not just in the weeds. And that was very hard for me in my career. It helped me back for quite a while. Cause I’m good analytically, I’m very detailed. I love working with numbers and I had to remind myself, okay, my boss doesn’t want all the details, he wants me to get to the point. I had a few times that to tell me, just get to the point Paul, what are you talking about?
Joseph Clayton:
So yeah,
Paul Barnhurst:
I had to learn that one the hard way. Right. That’s a big challenge. But yeah, like you said, that’s where the opportunity is. Be more thinking, more strategic, more high level. I think that all goes into as well as knowing before you perform an analysis, what’s your objective? What’s your business question, what’s the problem you’re trying to solve? So really it’s kind of, again, like we talked about, setting up things perfectly or setting things up correctly at first.
Paul Barnhurst:
Yeah, there’s having a hypothesis, following an approach versus just playing with data to play with data. Right. You wanna reason to it most of the time. Next question I have for you here, this is one we like to ask everybody and it’s can you describe a time you experienced a failure at work and what did you learn from that, that experience? It could be an analysis that went wrong or something you tried to implement that didn’t go as planned. And just to give you a little background, the reason we like to ask this question is really we look at it as long as you learn from something, it’s not really a failure. And so we’re asking people, what did you learn from a time when things just didn’t as planned? Cause we’ve all had it. I know I’ve had my fair share.
Joseph Clayton:
Right. No, I mean it’s a good question. The way we learn is through trying something and failing and then learning over and over again. But I think a time that we experienced failure kind of, and this is a good point just to communication, communication from the finance department to our stakeholders, to our teams. Anybody else. I mean it kind of has to do with implementing our software. I mean people get so used to accustomed to a certain way and if you don’t communicate with them clearly we’re changing this process, we want do you start reporting it this way? I mean a lot of things you get outta whack. The output, the report you’re trying to generate may look completely different when you attended. It may just not be accurate. So maybe that’s the time when we kind of rolled this out and maybe didn’t explain perfectly or more in better detail of this is the tool we’re using, this is how it works, we want you to report this way. And it’s all learning experiences. But that’s one thing I’ve learned just being in business the last few years is just communication. Everybody communicates differently. You need to know your audience. And I think that’s a learning lesson every day with something like that.
Paul Barnhurst:
It definitely is. And it sounds like if I’m to summarize, as you rolled out the software, there were some challenges around communication and there was a real lesson that reminded you the importance of just communicate, communicate and communicate. Again, you can’t really over communicate. Yeah, no I, I’ve been there as well where sometimes a failure to communicate or even if you think you communicated a failure for them to recognize there’s a misstep there can really result in some pain. So I agree. We learn that every day, right? Learning to be better at communicating is something that helps us in every aspect of our life. Professional, personal,
Joseph Clayton:
And then communicating, Hey, we’re rolling out this software. Maybe a little bit of headaches up front, you having to learn maybe a new tool, but this is how much value it’s gonna add to you in the future. And I guess our problem was we just didn’t communicate the value add in the beginning. I mean everyone recognizes it now. How much saving them time, more accurate. Our presidents of every single company is happier with the faster reporting times. But we could have done a better job explaining that up front, but it’s all learning lessons. We got plenty of them here, especially across so many different companies.
Paul Barnhurst:
I have plenty of learning experiences myself and yes, anytime you can clearly articulate the benefit, it will help make those processes easier. So that’s a great point there. So now we’re gonna get a little more personal. This is kinda a fun section we have and this is a question we ask everybody. What is something unique about you that you could share with our audience? Something we wouldn’t find online, something that’s just kind of makes you unique.
Joseph Clayton:
So actually I said I grew up in Dallas, Texas mostly, but that’s probably not the full truth. I’ve actually moved quite around a lot of the United States early in my life. I think I’ve lived in, I have to lose count, kinda like I lose count how many companies we have sometimes. But I think I lived in about four different states and some of ’em three different times moving back and forth and some two different times. But I’ve lived in, I was originally born in Baton Rouge, Louisiana. Lived in Colorado, I lived in Dallas, Texas, I lived in Florida and now I’m in Alabama. So I guess that’s five states right there. So I moved around a lot. People always ask me if I’m military family. No, just my dad was actually in finance. Just opportunities came relocation. And I guess another fun fact from there is I actually went to three different high schools, but I actually finished at the high school that I started and one of those other high schools was in a different state. So
Paul Barnhurst:
Now you said fun fact. Was that really fun when you were in high school and had to switch that off?
Joseph Clayton
Oh it was fun. I got made a lot of friends, especially with social media today. My followers increased across all the social media apps. So that’s been a huge plus.
Paul Barnhurst:
That’s a great attitude. Cause I know a lot of times teenagers that’s really hard to be moving a lot when you’re in high school.
Joseph Clayton:
So what’s something unique about yourself that you can share?
Paul Barnhurst
Oh, let’s see. Couple things I’ll go with. I once met Jimmy Carter, I was on a flight coming back from London and he got on the flight and he actually took the time we ended up taking off a little late cause he went around and shook everybody’s hand on the plane. Wow.
Joseph Clayton:
So
Paul Barnhurst:
That’s amazing. That was kinda cool. And the funny story to that, I’ll add a little bit to that. The guy next to me from the US, he is probably older than me and he looks to me and he goes, who is that? And I was just like, okay, I can understand if you’re from another country. I had no idea. But come on, you should know who Jimmy Carter was. He’s a pretty recognizable face. And I’m like, I was like, I’m pretty sure that’s Jimmy Carter. You can see the secret service there.
The, yeah. So correct me if I’m wrong, he was the, grew up on the peanut farm, is that Yeah,
Joseph Clayton:
Correct, correct. Georgia I believe.
Paul Barnhurst
Gotcha. Okay. Yeah, that’s how I know Jimmy Carter
Paul Barnhurst:
Yeah. 1970, I believe it was he 76 to 80 I think. And then it was Reagan.
Joseph Clayton:
Right. Okay. What year was this when you saw him?
Paul Barnhurst:
Oh, when was this? It was been 2008 when I graduated from grad school. Date myself a Little bit. Yeah, that’s not too long.
But yeah, no, it was really fun. It was a cool experience. So this is another one of my favorite questions as you can guess. I’m a big Excel nerd. You can see all the books back there. Yeah. So we’re gonna ask you what’s your favorite Excel function or formula could even be a feature, but what do you like best about Excel?
Joseph Clayton:
Yeah, I love this question. It’s funny I mean my answer is easily Index Match. It’s probably the function I use all the time daily. But I love seeing the memes across LinkedIn saying are you more of a VLookup or an index match kind of person. But I used to be VLookUp, but once I went index match, never looked back. So that’s been a great function and I love it. And then I guess another fun, just kind of more simple formula or function of Excel. I just love using the equals sign as in does this cell equals this cell in order from all my check references. So I mean that saves me a ton of time just setting those up early on the front end. And then I recently discovered a little while ago Power Query function and Excel and that’s been a huge game changer. So those are probably my top three kind of uses of Excel.
Paul Barnhurst:
I can get that equals for the checks, the index match and the power query. Power query is a game changer for me as well. Oh that’s great. Yeah, I think it’s funny cuz everybody in the Ask function, they say index match, they have to be used together even though they’re two separate formulas and you can use V look up match and you can actually use X look up match. Right? I just think it’s interesting how we’ve associated the two. It’s always, they’re kind of married in a sense, right? Yeah, yeah.
Joseph Clayton:
<laugh> had a few years where I forgot the match part. I’m like, wait, why didn’t they give me what I wanted? So I’ve definitely married the two
Paul Barnhurst:
<laugh>. Oh I, I’ve had my share of mistakes when it comes to that formula and trying to figure out why it’s not working right. And a whole host of formulas but that’s pretty common. So last question here, we’re at near the end of our time. So if somebody was starting their career today and they wanted to work, say FP&A, what advice would you offer to them?
Joseph Clayton:
I think my best advice to someone who’s won again to FP&A or who is currently working in IT and wants to advance their skills is just be open, open to learning I mean. What I’ve learned so far is business is so complex and there’s something I’m learning every single day and I’m blessed to be at a parent organization where I can see across various different businesses, very different, different organizations and industries and there’s a lot going on. I’m not an expert in one industry at all, but I’m a student of business and I think that’s what kind of the mindset you have to have is always being a constant learner. Because when you’re diving into a company to perform a model, you’re really learning, you know, need to learn that business right there. And it’s challenging, but that’s so rewarding. I mean kind of embracing that challenge and getting through it.
And that’s kind of your reward right there. But just being a constant learner is my advise. Be eager and just embrace the challenge as well as if you’re want to get, wanting to generate better financial modeling skills is starting to dive into Excel a little bit. I mean I had no Excel or financial modeling experience before going into my master’s courses and really came out with little to none either. But I’ve used my outside resources and really the best way I learned is just having a problem and then working through it. I mean, I remember one time I asked professor during my graduate career, how can I be a better Excel? He’s like, well you really need a problem. You know, can’t really just open an Excel document and just start you know. Here’s the sum function, here’s this, but you need to have a problem that you’re trying to solve. So it’s definitely a learn by doing, but that’s the rewarding part.
Paul Barnhurst:
It is definitely one of those things you learn by doing and well said about being a lifelong learner serve you well in every aspect of life. And it’s a great advice for anyone at any stage of their career, not just beginning. So really appreciate that. Last, just one last kind of question here. If somebody wants to follow you or reach out to you, is any way they can contact you, find you on LinkedIn or anything you’d like to share as far as that goes?
Joseph Clayton:
Yeah, definitely. I’m on LinkedIn, I think I wanna say linkedin.com/ Joseph Clayton as well as my email is Jay Clayton@68 ventures.com. Any hate mail is gone out through our cybersecurity system. So please say all my nice things as you’re emailing me
Paul Barnhurst:
Sure will all be good things. So appreciate you sharing that with us. And just a reminder to the audience that if you wanna earn CPE credit, your continuing education credit for this course, you can go to Earmark and you’ll be able to answer a couple questions and get credit for listening to this podcast. And then the final reminder, if you enjoy FP&A Today, we’d love for you to leave a review on whatever platform you use. Apple, Spotify, Google, wherever you’re listening to it. And then last and most importantly, Joseph, thank you again for being on the show. We’ve really enjoyed having you. I’ve enjoyed the conversation as I’m sure our audience has. So thanks again.
Joseph Clayton:
Yeah, thank you Paul. Absolutely. I’ve been a big fan of this podcast, so thanks for all the work you’re doing.
Paul Barnhurst:
Well thank you. I appreciate that. Nice of you to say that.
