Mapping the Business to the Financial Plan

I recently came across Ben Horowitz’s article, The Map and the Terrain, which discusses the importance of the interconnection between the financial plan and the business. I love this article, because it highlights the importance of both aspects, the financial plan driving the business and the business driving the financial plan. A good financial plan should navigate the business in achieving milestones while identifying the resources and constraints needed to scale at each growth stage. The unique business nuances should drive the inputs into the financial plan.

For example, when building top line growth targets in the financial plan, here are business questions samples that should be factored into the planning – Are there enough quota carrying sales reps to achieve the required new business to support the revenue growth? If not, how many new reps are needed to fill the gap, and how many months it will take for a new rep to contribute? Are there enough leads and pipeline to generate new business target? How many additional Customer Success reps are required to effectively manage the customer install base? Do you know the threshold of accounts one CS rep can manage, and at which point things will start to break? With all the investments in resources required to achieve the revenue target, how does that affect cash burn and runway?

I have illustrated an info-graphic below to visualize how identifying business levers and metrics should drive key strategies in mapping to a financial plan target.

Below, are some business questions a good financial plan should address.


Are revenue projections segmented by new, upsell/expansion, downsell, and churn.

Does the total sales quota align with new business projections

How much cash burn generates the new business projections

Cost of Goods Sold:

How do net revenue projections impact gross margins

How many CSMs will you need to manage revenue projections

How do you scale CSMs to revenue managed

Are your hosting costs linear to customer revenue

How can you scale customer hosting expenses

Sales & Marketing:

Are there enough leads to achieve revenue target

Have you identified the marketing events to build brand awareness and generate leads

Which marketing channels are the most affective

How many leads will generate X amount of MQLs

What is your MQL to SQL conversion rate

What is your SQL to Win Rate

What is your average win deal size

What is your sales cycle time

What is the new business seasonality between months and quarters

What is your sales rep quota attainment

How many ramped reps do you have

How long does it take for a new sales rep to be fully ramped

How many new reps are needed to achieve sales target

What is your LTV to CAC ratio

What is your sales efficiency ratio with S&M investment

Research & Development

What is total R&D expense to revenue ratio and how is that compared to similar companies at similar stages

What is the percentage of R&D expense on new development versus maintenance development

Are new products or features required to add customer value

General & Administrative

What is total G&A expense to revenue ratio and how is that compared to similar companies at similar stages

What are the investments in business systems to scale

At what growth rate will require new offices

What revenue amount are required for more support