Home Articles 5 secrets every CFO needs to know about strategic execution of a...

5 secrets every CFO needs to know about strategic execution of a business strategy

0

How often do we find ourselves caught in day-to-day business tasks and then suddenly stop to consider if we have actually achieved anything? Sound familiar? We reflect on whether we have met our daily work priorities and suddenly realise we are way off track.

Worse still, we come to the realisation that not only are we off track for the day/week/month but that the business strategy that was developed for six months is completely obsolete and has largely been ignored.

It seemed pretty good at the time and everyone bought into it. We cry out in unison and it dawns on us that we are not travelling too well. Where did it all go wrong?

Having encountered this situation time and again with many businesses and their stressed out staff, I would like to share some CFO secrets with you that may well go a long way in remedying the situation should it happen to you as well as providing the most appropriate response when it occurs.

Secret #1

Business strategy should not be the personal domain of company directors. Business strategy really must be cascaded down throughout your business to ensure that each staff member is aligned with the common organisational goal and that everyone is pulling in the same direction.

By communicating strategy effectively, not only are you selling what you believe in, but you are making it part of every staff members role and thus creating a sense of accountability. Each staff member will thus realise, that their measured efforts are connected to strategic execution and that they are a valued part of the organisational goal. Now that will be pretty empowering. Communicate it all… the vision, mission, values, strategic goals and risks and see how the transparency leads to positive strategic results.

Secret #2

Financial modelling is probably the most powerful strategic and risk management tool a CFO could use and its benefits to company owners, directors and managers is immeasurable. A major benefit of building financial models is that the business can consider the effect of multiple business scenarios (both good and bad) and gain clear insight as to effect it will have on its trade and future potential.

Market leading financial and forecasting models have the benefit of providing fully integrated financial reports (three-way financials: Cash/Funds Flow, P&L and Balance sheet) and also include Graphical, Statistical and Dashboard data for executive decision making. This tool is a CFOs greatest canvass in mapping out the effects of business strategy over an extended period of time and in the identification of risks along the way i.e. it becomes a risk mitigation tool by default!

Secret #3

All too often, business objectives are rolled out into set tasks and processes with limited focus on measured outcomes. If we back ourselves with the investment of our time and effort in developing robust business strategies/plans, surely we should consider the desired outcomes on a continuous basis? Too many businesses get caught up in mundane day-to-day tasks and lose track of what they are really trying to achieve.

If desired business outcomes are set at the beginning of a trading period (suggest quarterly in addition to yearly), a sense of direction, priority and focus will be an underlying approach when considering the activities required for each day. So let’s set the goals with clearly defined outcomes that can be measured in a set period. You will be surprised with the outcome! Here’s a tip: ask your managers “What are you working on today to help us achieve our strategic goals?”

Secret #4

Calculating future business value is an untapped gem! Often overlooked until its too late, business value is generally only considered when the owners suddenly decide its time to plan for the exit or when an investor comes knocking on the door.

Would it not be fantastic to have regular access to this data and then develop a strategy around increasing business value? Many businesses are independently valued on the ‘multiples of profit’ methodology (as its all about profit isn’t it?) but very few ever consider that its actually easier and more relevant to focus on increasing “the multiple of profit” as opposed to just focussing on profit alone.

As referenced in Secret #3 above, its smart to have the outcome in mind in determining a business’ valuation potential. Too many business owners miss out on this unique opportunity that facilitates strategic execution. And here is another little tip: build a business valuation driver into your monthly financial reports and get a feel how it maps out when compared to the financial model.

Secret #5

“Live” data is of such benefit in measuring adherence to strategic goals and targets that it can almost be used as a business navigation system. If businesses only knew the benefits of displaying and providing staff with real time data they would surely realise that its probably one of the best facilitators for adherence to strategic objectives. With real time data comes real time strategic measures and the shared accountability of achieving satisfactory business outcomes.

It’s really not that difficult. Modern technology allows for the capturing and display of real time data using mobile and desktop applications as well as visual displays (one of our clients has real time data captured on multiple screens throughout their offices- it was just a small capital investment and the return has been significant). By dissecting strategic goals into expected daily/weekly outcomes, the business will be able to respond to fluctuating trading situations during any given day and ascerta in whether it is on track to meet its KPIS, targets and goals. Quite simple… yet not widely used.

With over 20 years national and international executive experience, Alan Sharfman, Founder and CEO of iDeal CFO Solutions, is a dynamic CFO Consultant and Trusted Strategic Advisor. By using a tailored and engaging approach, Alan has successfully assisted some of Australia’s fastest growing companies in the planning, implementation and execution of their business strategies. Having spent many years as a leading corporate CFO and then company director, Alan has a broad range of commercial skills creating a wonderful balance between strategic management, risk mitigation and financial excellence. With an energetic and holistic approach, Alan focusses on “connecting the dots” between company goals and their desired outcomes. This knowledge base has resulted in Alan being a sought after business mentor.

Alan Sharfman, iDeal CFO Solutions
Alan Sharfman
Get unlimited access to our FREE business tools…

Need to raise capital? Want to become a more persuasive presenter? Want to master social media? Is it time to overhaul your website? Unlock the library to get free access to free cheat sheets and business tools. Click here for free business tools.