What is Fathom's GoalSeek?

It’s no secret that the past few years presented challenges for business owners in every industry, from lockdown regulations to inflation, staffing, or supply chain issues. Difficult times are a catalyst for business owners to learn more about their business’s financial position and look for ways to make improvements. Reading a set of financial statements is not enough for most people to understand what actions they need to take and “selling more” isn’t a default fix for every financial woe.

Our favorite feature out of all of the financial planning, budgeting, and forecasting applications on the market is Fathom’s Goalseek. We’ve found this feature helps translate financial information into an interactive planning tool that really helps business owners know what drives their business. 

It is important that the leadership team has 1 to 3 financial areas they are working to improve or refine at all times. Those targets and strategies should be communicated to the rest of the team so everyone is pushing to achieve the right results.

What is Goalseek? 

Goalseek is a function where you enter a desired output to determine the required inputs needed to produce that result. There are complex calculations involved so the use of a software solution is required. Fortunately, accounting is a logical language and there are only so many variables that impact certain account types. 

Seeing the inputs themselves, although useful, does not maximize the benefit of the data. Being able to interact with those inputs and tweaking them to develop a plan of attack is where the power comes in. That’s what Fathom’s goalseek delivers. 

Configuration is Critical

Fathom will need to be connected to your accounting system to pull in the data required to perform the calculations. Although connecting to your accounting system is easy, most accounting system’s chart of accounts are not set up in a way that Fathom will need to truly harness its power. 

If you simply connect your accounting system and try to use Fathom your results will be misleading. That will result in wasting time chasing goals that are not going to achieve the results you desire. 

Your accounting team must configure the accounting system to be capable of producing accrual financials required by GAAP at a minimum. You can do a lot with a normal GAAP configuration but can’t easily project future results without knowing fixed versus variable costs. Since GAAP doesn’t look at the data in that way, additional setup is required. 

We recommend coordinating with your accounting team to make these changes or start working with a team that can assist you in upgrading the power of your accounting. You’ll still need to be able to produce normal financial statements while also being able to parse the data for financial planning systems. This isn’t easy for a non-accountant. 

There are two main areas your accountant will focus on: all accounts have proper “account types” configured and additional accounts are created so that fixed and variable costs can be tracked. You can then group the related accounts together so you can still report the regular GAAP financials. Your accountant may also start to utilize Tracking Categories (Xero) or Classes (QuickBooks) to be able to plan for specific lines of business rather than only looking at the business as a whole. 

Fathom’s Goalseek

Once your data is configured and is feeding into Fathom you can jump over to the Goalseek feature and start unlocking what drives your business.

We’ve recorded a 5-minute video that shows the goalseek function in action. We briefly look at what drives your Gross Profit Margin, Profitability Ratio, and Cash Flow. You’ll see that these somewhat abstract calculations, when presented in an email or are spoken, come to life and offer a great visual of what are the important areas to focus on in your business as well as crafting specific plans of action to achieve a desired goal. 

So your next focus is to identify your financial strengths and weaknesses. Build on your strengths and counter your weaknesses. Think about where you want your business to be and why. What should you be targeting and when do you want to get there? 

Looking at all of Fathom’s Goalseek options and what the result really means can help you identify the most important items you need to Goalseek. Resist the temptation to focus on too many areas. One can be enough to start with. What is your biggest weakness and work up a plan of what you can do to improve that area. 

Once you are in the habit of coming up with action plans from your accounting data, you can think about working with multiple Goalseek scenarios. The important takeaway is to start. Pick one and start now. 

Conclusion

If you learn one new tool to help manage your business’s financial performance in the upcoming year, we highly recommend you look into Fathom. Goalseek is just one of many financial tools the application provides. We’ve outlined some other core benefits this solution offers in this article. But, as you can see, if you only used one of Fathom’s features, Goalseek is where I’d start.