11 Jul, 2021
We know advisors are helping to drive business growth using Fathom’s reporting, analytics, and forecasting tools — but how is it a game-changer for their clients? What happens when actionable insights drive operations in a volatile environment for commercial creative industries?
Since launching Forecasting, we are seeing advisors help their clients in all sorts of exciting ways. Jim and his advisory team have built one of the most detailed and powerful forecasts we’ve seen. The insights available through Fathom’s forecasting tool mean Grand Rapids Ballet’s CEO, Glenn, can put on the best ballet productions possible, as well as flex and adapt operations according to seasonal cash flow. Here’s how they did it.
The seasonality of our business makes cash flow critical. Tools like Fathom are critical now. We have to be smarter as we move through this new world.
Why did you decide to outsource your accounting?
Glenn: We took our in-house accounting function and outsourced it six or seven years ago. There were two reasons behind this decision: one, it gives an organisation like us better control when a third-party has oversight of the books, and this does a lot for the trust that the board has in us. And, secondly, when you work with a company like Fusion, you're also getting their perspective. We would never have found Fathom. We would never have the insights that we now get. What Jim can bring to me and the board is, "Here’s what’s going on out in the world, and here is how you can benefit by implementing it".
Your forecast is incredible. How were you doing that before Fathom?
Glenn: It started with a poorly thought out spreadsheet that I just sent to Jim and said, "How do we make sense of this?" That spreadsheet is static and doesn't evolve throughout the season. You set sales goals, you set expense goals and as they change, your Excel spreadsheet does not. When you look at the monthly financial reporting in Fathom, that really shows us where we're at on our journey, and it constantly updates.
You set sales goals, you set expense goals and as they change, your Excel spreadsheet does not.
And you’ve built every ballet production in Fathom's forecasting tool?
Jim: Yes, we made a Microforecast for every production. Glenn had some great information on wages and other costs, and then we were able to go through the revenue and look at where we see ticket sales in different periods. From here, we're able to move those around if for some reason an event isn't going to happen in July, it's now going to be in August. It's really easy to just shift that on Fathom’s Business Roadmap to August and everything is ready to go.
How long did it take you to build out a full forecast for those productions?
Jim: We probably spend just as much time as we do in a normal budget process, but the beauty of it is we're building out three years at a time. By default, Fathom is doing a three-year forecast, and so that's going to keep saving us time as we go down the road.
What are some of the business challenges you face as an arts organisation?
Glenn: We have underlying business expenses that go all year long. We have a 40,000 square foot dance school campus. We have a million-plus payroll. Those expenses are there. What Jim can do is to go, "Look at what your productions are doing. Look at your individual line item expenses." Those things have to fund the overall organisation.
Sixty to seventy percent of our revenue comes from things we sell. The other 30% comes from donations. Managing those numbers correctly is critical because we are very much a seasonal business. The Nutcracker production in December is 30 to 40% of our total revenue. So, we have to know how we're pacing and we have to know how each individual production is doing. We do some productions that are ‘art for art's sake’ because it furthers the art form, enriches the dancers, and enriches our audience. And so, managing all that is critical to success; that's the constant struggle for any arts organisation.
And Fathom helps with your cash flow planning?
Jim: Yes, we set up Microforecasts that were specific to revenue streams. The school and season tickets are an interesting example, because a lot of that revenue from a cash perspective will come in two or three months before we recognise the revenue.The beauty of having a forecasting tool that allows you to touch both the balance sheet and the P&L at the same time is that we can show that cash hitting the bank and then we can show the revenue recognition when we need it to show. But it's not affecting cash again, because we already have that cash. So, we were able to set up those Microforecasts for each of those.
What other features of Fathom’s forecasting are you using?
Jim: We've used Drivers in the employee wage area. Glenn tracks his wages by department; artistic, business, production, marketing, and the school. We put those employees in with their wages, then we can set up payroll so that we know what months are going to be three payrolls versus two. The dancers have their own schedules. They may get only one week on their contract this month and they may get three the next month.
So that was all put in by drivers and formulas, and we've used a combination of the Microforecast and the Drivers to bring it all together. And then, we just went into the main forecast baseline and said, "Okay, well we know what maintenance is going to be. We know what accounting is going to be." We just built all those baselines in the main forecast. Anything that we think may have to shift, is in either a Microforecast or in a Driver.
How are you combining Forecasting with Reporting to communicate with key stakeholders?
Jim: We have a finance meeting once a month where we give the finance committee a set of reports containing a dashboard of some key data such as what the different revenue and expense lines are doing against our targets and how we're doing against the year before, as well as what's in the bank.
But in the end, we always have this forecast report. It's showing us the actuals and then our projections. Every month we're going to play with this forecast; it’s a living, breathing thing.
I always put a little snippet at the bottom of every one of these forecasts that shows how cash is being affected, because things may be going to the P&L that aren't hitting cash, or there may be things hitting cash that aren't going to the P&L. I call it my forecast/cashflow, because it's a forecast of where you're going to be, but it's also showing you how your cash is going to go up and down at the same time.
The seasonality of our business makes cash flow critical. What the company’s board has liked about this is that this is the most accurate way to predict our cash flow, and so we will be able to tell you in plenty of time when we may have a cash crunch.
Glenn: These are live entertainment productions. So you can forecast as best you can on historical data, but we can monitor it on a show-by-show basis, month-by-month. The seasonality of our business makes cash flow critical. What the company’s board has liked about this is that this is the most accurate way to predict our cash flow, and so we will be able to tell you in plenty of time when we may have a cash crunch.
What I'm most excited about is rolling KPI thinking into our monthly planning and seeing how that informs our decision-making going forward. Maybe we'll identify that the lighting vendor we used is ‘killing it.’ And maybe we need to look at that and tweak that, but we're going to need a full year of working with this to see the strength of what this system will do.
How confident are you for the future of the Grand Rapids Ballet?
Glenn: Oh, I'm totally confident! We'll be back and doing big Nutcrackers and big Cinderellas, and other big performances. I have been on calls with my dance cohorts in my national and international groups that went out of business. They did not survive.
Tools like Fathom are critical now, we have to be smarter as we move through this new world. You have to be sharp running your business to survive. That's where tools like Fathom and collaborations with people like Jim are critical to the fact that we're still here today and we'll be here tomorrow.
Tools like Fathom are critical now. We have to be smarter as we move through this new world.
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Our thanks to Jim and Glenn for their valuable time. If you'd like to find out how Fathom can help you or your clients monitor the numbers that matter and plan for the future, get in touch with our sales team or start your free 14-day trial using the link below.
Written by Andrew Webb
Andrew is Fathom’s Content Strategist based in the UK. He has a background in journalism and has worked for companies like the BBC and HuffPost, as well as start ups in education and technology. Andrew has also published 5 food books and makes a great pie.