GTM Finance: Role of Finance Redefined

GTM Finance is a fairly new area. It is new in more ways than the new job posts you have been seeing on LinkedIn Jobs in the past couple of years. It redefines the role and responsibilities of Finance, the required skillset, as well as the way Finance interacts with the GTM organization. And in my humble opinion as a Finance leader with a couple of decades of experience, it’s a very welcome change.

Why did GTM Finance come about?

GTM Finance emerged for a good reason. In a traditional model, Finance typically interacts with the GTM organization on a set calendar basis: once when developing budgets, and monthly/quarterly to analyze Sales and Marketing results and variances vs plan. Finance would have little interaction with the GTM organization day-to-day. This type of “performance management” by Finance is not conducive to building high-growth organizations. Focusing on analyzing the already achieved results means you are adopting a “wait and see” approach. Waiting for the period to end and only take remedial action after a reporting period ends is problematic in a dynamic startup environment:

1. Startups are dynamic by design, they need to quickly adapt to changing market conditions, experiment, and pivot. Traditional Finance is reactive not proactive, putting it in conflict with the agile way a GTM organization is expected to operate.
2. You inevitably focus on lagging vs leading indicators and try to fix the past issues already reflected in the actual results. Past performance may not be reflective of future results. It’s true for public companies and it’s especially true in a startup environment. To be a value-add partner, Finance needs to be in the game every step of the way, as early as possible, vs trying to sort out what happened last quarter and what this could possibly mean for the quarter(s) in progress.?
3. When Finance is chronically late to the game it means GTM does not get the needed analytical support for their decision-making and may lack the tools to identify risks and course-correct in time. Needless to say this can cost the company a lot of money and shorten the cash runway.
4. Budgeting discipline is important, but it is rarely possible or effective for a startup to make a plan for the year and stick to it. Without Finance intimately and consistently involved in GTM on a day-to-day basis it is difficult to make needed resource reallocations and/or budget revisions in a timely manner.?

GTM Finance emerged in response to the issues above. The goal of GTM Finance is to create an alternative model that makes Finance a valued contributor to GTM. Its role is that of a strategic thought partner responsible for GTM performance alongside Sales and Marketing. Since its emergence as a separate financial discipline, GTM Finance is quickly gaining traction with hundreds of specialized GTM Finance roles flooding job boards.?

If your organization does not have GTM Finance yet, I recommend CFOs act quickly and build these capabilities sooner than later. In addition to the obvious benefits of becoming a better partner to the GTM organization, the growth engine of the company, and improving revenue and cost metrics for the company overall, consider the existential risks of missing out. There are plenty of? analytical tools that GTM teams are already using to dig into their performance, identify gaps, and optimize for efficiency. AI will only make it simpler. If Finance does not make itself indispensable by integrating with the GTM, it may find itself reduced to the role of policeman and financial report generator –? a less than desirable outcome for any self-respecting finance leader.

Responsibilities of GTM Finance

There may be nuances depending on the business model, industry, and company. GTM Finance is usually responsible for the following:

1. Strategic planning, budgeting and forecasting: GTM Finance collaborates with sales, marketing, revenue ops, and product teams to develop and execute specific financial strategies that support GTM objectives, and translate overall strategy into quantifiable revenue projections and targets for the GTM organization. It also synthesizes and manages headcount and expense forecasts.
2. Performance tracking: GTM Finance collaborates with the GTM leadership in developing definitions, methodology, and frameworks relating to KPIs. I observed over my career that this area is more problematic than it may seem. There could be multiple ways people understand CAC, LTV, conversion, and even the basic term “revenue”. Don’t overlook the seemingly boring exercise of assuring everyone speaks the same language when talking about metrics. GTM Finance also leads weekly, monthly, and quarterly financial reporting, including KPIs relevant to GTM organization. Finally, GTM Finance plays a key part in preparation of financial presentations and reports for the executive leadership and the Board.
3. Financial analysis: GTM Finance leads in-depth analyses to support decision-making across sales and marketing functions. This responsibility could mean a lot of different things depending on the company. For me monthly and more in-depth quarterly business performance reviews were the most useful and impactful:?
4. Resource allocation and ROI analysis: GTM Finance develops models to allocate and deploy company resources efficiently to support GTM initiatives. It evaluates return on investment (ROI) of various GTM tactics and marketing channels.?
5. Pricing strategy: GTM Finance leads the analytics behind pricing optimization strategies to improve revenue and profitability
6. Compensation structure and quotas: GTM Finance proposes compensation structure balancing incentives to maximize salesforce motivation to meet revenue targets and a healthy unit economics. It also assists Sales leadership in developing quotas for members of the sales team to meet the revenue targets.?
7. Process improvements: GTM Finance identifies opportunities to enhance financial processes related to GTM activities as well as proposes certain improvements to the operations and processes of sales, marketing and revenue operations teams based on data analysis.
8. Ad hocs and special projects: I don’t think it is possible to make a complete list of such special projects, they will be defined by GTM priorities and pain points. My past experience includes financial analysis of new market expansion, economics behind product launches, in-depth customer analysis, competitive analysis, CRM implementation support, data analytics to refine the ICP, predictive modeling, etc.

Building GTM Finance

To be successful, a GTM finance leader will have to expand their skillset, invest in relationship building, change their mindset from performance management to growth, and align their individual KPIs with the GTM team, which sets them apart from the rest of the Finance organization.?

1. Self-Education: First and foremost, Finance leaders need to learn how Sales and Marketing sausage is made. You will need to understand marketing channels and channel strategy, channel performance metrics, sales pitch and strategy, tech stack of the GTM team, sales process and funnel, terminology GTM organization is using, KPIs, customer journey, and a lot more.? Becoming a thought partner without getting into the nits and grits of sales and marketing is mission impossible. My advice is not to be shy to ask questions and own a certain level of GTM illiteracy - I have never seen a situation where sales or marketing crew would not be willing to teach you if you are willing to learn and did your homework to the best of your abilities.?
2. Revenue Responsibility. If you step into GTM Finance shoes and you are invited to the GTM table, embrace it. You are no longer G&A so you share responsibility for any decision you helped GTM spearhead and for any strategy you analyzed and recommended. This is a mental shift, so I can’t recommend how to do it best. Just do it. It is the only way to build an equal thought partnership relationship with your GTM colleagues.?
3. Organizational Changes. In my experience, having a separate GTM Finance team is not necessary. This role could successfully exist inside the FP&A team, have dual reporting to Finance and GTM leadership, or even reside inside the GTM with a dotted reporting line to the CFO. It is not about organizational structure as much as it is about having a dedicated resource whose job is to support GTM on a day-to-day basis. The day-to-day part is really the only requirement, because as I mentioned earlier, interaction only at the end of the period is no longer sufficient.?
4. Relationship Building: Traditionally, Finance limits its involvement in the GTM to reporting. There is a certain imbalance in this situation. GTM teams must feel constantly on the defense, trying to negotiate unrealistic revenue targets, defend budget misses, not being heard when changes in market conditions warrant revisions to the targets or budget. It may take some time to build genuine trust, nurture a true partnership, and overcome the biases which traditionally exist between Finance and GTM. But, patience and perseverance pays off.??

Becoming a strategic thought partner to the GTM organization sounds very appealing as a high level mission statement. The reality is that you don’t get a seat at the table because you want it, you earn it. It is hard work, including relationship building, learning the nits and grits of sales and marketing, and getting used to the idea of sharing revenue responsibility with the GTM team.