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How to be More Strategic and Successful in 2023

October 29, 2022 by lauramills

The impacts of covid-19 will stay with us for the rest of our lives.

We’ve seen new businesses birthed with success and others thriving amid chaos. We’ve seen neighbourhood classics tragically lost, and others that struggle to survive day-to-day.

Critical points like these thrust every business owner from acting with strategic intention to reacting to curveballs. As we are coming to the end of 2022, most businesses are settling into one of three camps:

Thriving, but not trusting the success
Reviving but hesitant to make bold moves
Surviving and feeling battered, bruised and disillusioned

No matter which category you fall into, you likely are eyeing the rest of 2022 with caution. You’re optimistic but timid in your approach to making those big visionary goals you’ve made in the past. You may even find it hard to dream of a better future because it feels so out of touch with what is happening globally. You are not alone in those feelings.

Now is the opportunity to rewrite the rules and stop settling for less in your business. It is the opportunity to cast a strategic vision that is different from the past and to create more success and growth in your business and your life. Here are some ways you can make it happen.

1. Accept that change is necessary

Change is difficult, but it is for-ever ongoing for small-business owners. And change is happening at a frightening pace.

You’ve likely noticed that the old reliable ways of getting clients and serving them are faltering. The to-do list of things that need your attention is never ending. It’s time to put them to bed.

If change is already happening in your business, why not get ahead of it? When you are reacting to these changes, you treat the symptoms. The better approach is to embrace change to treat the problem.

By treating the problem, you employ change to work with you, not against you. People are likely to welcome strategic change now—especially if the change makes their lives better too.

One way to bring agility and innovation into your business is to implement a quarterly strategic planning and review process into your business. This planning keeps your efforts focused, actionable and accountable while remaining agile and able to shift as new learnings come to the table.

As part of the process, ask yourself these questions.

What would disrupt your business enough to change everything?
How can you be on the leading edge of that change?
How can the business be relevant and profitable five or even 10 years from now?

2. What does the customer really want / need?

The old rules of supply and demand have gone. Through issues with manufacturing and distribution, product-based businesses feel the pinch. Changing client needs and social distancing have left recession-proof businesses struggling. Service-based businesses are finding that their services are no longer crucial or needed. No business or business model has been unaffected.

The reason is simple: The customers’ needs and their problems are in a constant state of change.

Engaging in a conversation with your clients to identify opportunities is a perfect strategy moving forward. The strategy could be as simple as asking a probing question at the end of every client interaction. It could also be more involved such as surveys or quarterly client advisory groups, to follow a more formal process.

More than ever, staying in tune with the customers’ needs and the problems you can solve is imperative. It is the gateway for future growth and innovation.

3. Work smarter, not harder

Australian culture is all about hard work. If you have struggled to achieve your goals, you’ve likely heard someone telling you to work harder.

Since the rise of intellectual capital as a commodity in the 1980s, the ability to be successful is less about our ability to work hard. Many business owners have told me how hard they work only to find success seemingly out of their reach. Evidence that success is not about hard work.

Sure, success demands focus, determination and resilience. But I challenge the notion that hard work is one of the requirements. If it were, we would have more success stories to celebrate.

Working smarter is about leveraging the talents of people and collaboration. When you remove hurdles and bottlenecks in your processes, you promote ease. It’s the processes that are often the problem. That which is easy gets accomplished. That means being able to produce more revenue with the resources you have. You likely will see a boost to team morale and stop spending time putting out fires.

It leverages technology and systems to streamline the business, allowing it to run smoothly. According to Gartner Research, by 2024, organizations will lower operational costs by 30% by combining hyper automation technologies with redesigned operational processes.

Consider which elements of your client experience and service could be delivered through automation, saving critical points for human interaction and forward looking strategies for your business. The organisational efficiencies gained can offset growth investments and produce a more efficient team.

4. Profit is the aim, not a reward

One of the most misleading entrepreneurial and inspirational quotes is: “Follow your passion and the money will follow.” If only things were that simple.

If success is a reward of hard work, this quote puts profit on the same unattainable pedestal. Passion for what you do gives you fire in your belly and can bring a sense of contribution. At the end of the day, though, passion doesn’t pay the bills; prolific profit does.

By shifting your mindset around profit and other metrics in your business, a magical change in how you spend your day occurs. You start focusing on initiatives that produce results and impact your bottom line.

A 2018 Cone/Porter Novelli Purpose study found that “78% of Americans believe companies must do more than just make money; they must positively impact society as well.” This marriage of purpose and profit is an instance where everyone wins. Clients love supporting social impact; businesses can be profitable and improve their community and world in the process.

For many of my clients, bringing profit up on the priority list, even with reduced revenue, is the defining element of rebuilding business stability.

5. Be a confident leader who empowers others

The entrepreneurial trials of the economic crisis have shaken the confidence of even the most experienced entrepreneurs. We are questioning everything in our professional and personal lives. Whispered conversations with other entrepreneurs over the year let us know that we are not alone in that journey.

With this period of reassessment, the future feels less certain. That uncertainty erodes our confidence to take risks and make bold moves. Past success, “knowing” and being right are pillars in the old definition of confidence.

Be careful—that shaken faith also seeps into our teams’ bones. They want something to champion.

There is good news that can breathe new life into your confidence. You do not need all the answers. You do not even need to know the “how” beyond “what is the best next step?” And, you don’t even need to be right.

Empowering others is what defines the success of top leaders. What got you here has centered around who you are and what you can accomplish. Those accomplishments won’t fuel the future. Relying on your efforts alone is a limiter when scaling your business — even in strong economic times. The old definition of confidence was about what you could do. Your future confidence needs to be about your team and the belief in what the team can do.

For 2023 to be the beginning of your comeback story, you need to take action differently enough to move the needle in your business. Make bold moves that advance and protect your business. Marry your vision to these tips, and you could be looking at a successful year.

Peter O’Sullivan, The CFO Centre

Why SME’s shouldn’t ignore Risk Management

September 11, 2022 by lauramills

Many people think that risk management is only for large corporations. This is not the case! Risk management is a NECESSITY FOR EVERY BUSINESS. The hard part is to properly align risk management processes to each unique organisation.

The world is undeniably riskier. Change is ever more rapid, and this has been accelerated by COVID. Increasing digitisation of business processes will inevitably increase cyber-security risk. The world is still highly connected, and McKinsey estimate that supply chain shocks will reduce profits by 42% of annual EBITDA profits every 10 years. Geopolitical risk, climate change, border closures and business disruptors (new business models, social media etc) will all play a part.

• RISK MONITORING

It’s important not to let risk slip off the radar, and for to you be aware of possible issues. Talking to people in your industry can give you insights from other perspectives. Being sucked into day to day operations can leave no time to think about strategy and risks. Moreover, when implementing these strategies, try to consider the related risks by staying close to your business analysis and industry trends. Talking to a CFO, who with a wealth of experience and a fresh pair of eyes may give you new perspectives and insight!

• RISK APPETITE

Decide how much risk you are willing to accept. This depends on the operational and financial strength of the organisation, as well as the business strategy and your risk versus return profile. What’s the takeway? Risk is part of doing business, but make sure it is within your limits, and you are in control.

• RISK MANAGEMENT

Understand how to mitigate risk, e.g. insurance, experts, financial tools or internal controls.
Work on simple scenario modelling to understand implications and solutions. Simple cyber security audits can also be useful.
Curtail activities that exceed your risk limits.
Restructure staffing so that owners/managers have some time to think about risks and strategy.
Ensure risk management is embedded in the organisation.
Ensure internal controls are in place so you have confidence that risks are controlled and reported.

Risk management is a must do. To be successful it needs to be correctly sized, using appropriate techniques. If this is not done, risks can damage or destroy the business. Too complex and it will detract from the real world task of running the business (and probably wont get done anyway!).

Gary Campbell is a CFO Centre Principal based in Melbourne, Australia, advising SMEs on finance, strategy and governance. He is a qualified accountant, MBA, and graduate of Australian Institute of Company Directors. He can be contacted on [email protected]

3 Steps to Scaling Your Business Through Reporting

August 30, 2022 by lauramills

A client recently said to me: “I want to grow our business and stop the cash burn – how do we do this? When is it the right time to invest and grow?”

What a tough question to answer. Each business is at a different stage.

We spent a day examining his business and determining what the growing pains were. He had started the business a few years ago and it grew from scratch.

It was generating a great turnover and growing but they never had any cash.

“Why?” he asked.

After reviewing the business financials it was quite clear that the internal systems were not in place. He could not possibly understand the profitability of the products they were selling due to these inadequate systems.

Therefore they could not take the next step.

The first question I asked was: “Where do you want to take this business – what’s your goal? To build up the business and exit down the line, or are you looking to exit now? Or is this business a keeper if we can generate a great RoI?”

The response was: “We don’t know the numbers or where this business could get too as we have no clarity on the numbers”.

Something I see very commonly here in the SME businesses I work with – no clarity around the financials.

Next Steps

Step one for this particular client was to build a reporting framework around their products to determine what was profitable and what as not. If there were non profitable products (or those that deliver little profitability), should we dump them or only include them bundles in the online offering?

Step two: Build a fully flexible 3-way financial model (P&L, Cash Flow and Balance Sheet) for the next 3 years. Play around with the assumptions, i.e what other products can we put into the offering to customers?

Step three: Monthly reviews against the plan – what worked, what didn’t work and the whys around both.

The right time for a business to grow is when they can balance new customer demand with their internal systems and processes. Moreover, in the instance of this client, increasing recurring revenue streams. Growing faster generally costs more per customer as they need to engage more expensive channels within the business model.

Scalability is about continuing to engage customers with new offerings, and to engage new customers with your offering to the market.

To scale a business one must consider how the business model will affect the bottom line when you expand operations. If you have low capital expenditure and can grow your business with the same revenue / expense % it is much easier to deliver greater numbers in the long term and provide greater options to your customers.

It is early days working with this client but the potential is endless.

22 Ways a CFO Can Help You Create A Winning Strategic Plan

August 1, 2022 by lauramills

Creating a well thought-through, comprehensive strategic plan is an arduous task. However, it is fundamental to businesses of any size. It can increase your profits, increase your chance of success, help tackle challenges that arise and assist in securing funding as and when required.

Thinking through objectives and likely outcomes which may occur many years down the line is, by nature, challenging. But it is the hard work up front which makes for lighter work down the road as well as a better chance of profits and reaching your goals.

Creating a solid plan

An experienced CFO (Chief Financial Officer), in particular, our part-time/as needed CFOs, can make a significant contribution.

Our CFOs often find their clients have done some good planning and strategic thinking but need a devil’s advocate to ask the right questions and help to steer the ship in the right direction. Being a CEO without a high level ‘finance person’ to bounce ideas off can be tough. CFOs often possess a different albeit complementary set of skills to CEOs.

We highly recommend you take the time out to work through the detail of your business plan. It is rare to see a company succeed if it doesn’t have a robust plan.

The CFO Centre will provide you with a highly experienced senior CFO with ‘big business experience’ for a fraction of the cost of a full-time CFO. Your CFO will work closely with you to develop your strategic plan and your timetable for implementation to:

Gain a full understanding of the business and its operating procedures.
Work through the existing strategic plan with you and make necessary changes to build a plan which clarifies how the company’s objectives can be realistically achieved.
Agree on milestones and break down the plan into annual and quarterly targets.
Conduct a fresh SWOT (Strengths, Opportunities, Weaknesses, Threats) analysis bringing the plan up-to-date.
Conduct a new PEST (Political, Economic, Social and Technological) analysis bringing the plan up to date.
Carry out a full competitor analysis to understand in detail what is and isn’t working in the market.
Explore opportunities for effective market research to enable innovation and development of new products/channels to market/operating procedures.
Identify key players in the business.
Identify skill gaps in the business.
Agree financial incentive structures to retain and motivate key members of the team.
Identify five key metrics for determining what the future course of the business should look like.
Agree on the exit or succession strategy.
Develop a clear, coherent message (vision/mission/purpose) to staff and to customers.
Work with the senior team to ensure individual department goals are aligned with the big picture strategy.
Agree on a who/what/when set of objectives for all department heads.
Implement accountability protocol for every member of staff.
Determine methodology which allows the senior team to course correct periodically when a change in strategy is required.
Agree on delegation of authority to department heads to spread responsibility across the business and to free up the CEO’s time.
Create a feedback route so that strategic goals are regularly shared with staff
Develop a set of relevant KPIs (Key Performance Indicators) and a system which allows for regular (daily/weekly/monthly/annual) monitoring and reporting.
Develop a long-term efficient tax structure for the business and for key employees.
Identify key outsource suppliers/advisors and, in particular, corporate finance contacts

This process will instil a deep feeling of confidence both within the senior team and throughout the rest of the business.

You will move out of the chaos and into a more serene working environment where each of the cogs, which make up the bigger system, is able to move in harmony.

Don’t leave success to chance.

If you’d like to find out more about how we can help your business with a strategic plan, phone Venu on 1300 447 740 or watch this quick video on How It Works.

17 Reasons Why You Need a CFO To Help You Exit

July 4, 2022 by lauramills

The CFO Centre will provide you with a highly experienced senior CFO (Chief Financial Officer) with ‘big business experience’ for a fraction of the cost of a full-time CFO.

This means you will have:

One of Australia’s leading CFOs, working with you on a part-time basis
A local support team of CFOs, plus
A national and international collaborative team of over 750 CFOs sharing best practice (the power of hundreds)
Access to our national and international network of clients and partners

With all that support and expertise at your fingertips, you will achieve better results, faster. It means you’ll have more confidence and clarity when it comes to decision-making. After all, you’ll have access to expert help and advice whenever you need it.

In particular, your part-time CFO will help you to ensure that your business has planned and prepared for an exit. The sale process would be managed efficiently to minimise challenges on price, and prevent advisors’ fees from absorbing too much of the sale price.

For example, your CFO will:

Help you to implement your strategy for growth and exit
Identify where value can be maximised and eliminate unprofitable or low profit activities
Ensure that shareholders’ interests are protected through a shareholders’ agreement
Explain what incentive arrangements are available for key management and introduce them. These could include bonus plans aligned to the business objectives or option plans
Ensure that property is held in the most appropriate manner for the business and any potential acquirer, freehold or leasehold, length of tenancy
Review pension arrangements to identify any funding or future liability issues
Review contracts and trading terms to ensure they are in place, up to date and enforced
Identify risks to the business from suppliers and customers on whom the business may have become reliant and plan to spread the risk
Improve the accuracy and timeliness of management information
Introduce systems and controls to increase confidence in the integrity of the accounting information
Improve and/or introduce forecasting processes and procedures so that budgets and forecasts can be used as dynamic planning tools
Identify means of improving margins and reducing overheads to improve profitability
Ensure compliance with PAYG, Superannuation, GST, Income Tax and Company Tax legislation while seeking ways to reduce the overall tax burden to you and your business
Introduce you to corporate finance, legal and other advisers to help with all aspects of the exit preparation and process
Project manage the exit process internally so that it minimises the disruption to other staff and their continuing responsibilities
Create confidence in the acquirer and their advisers so that they have limited opportunity to attempt to negotiate the price down or increase warranties from you
Help you achieve the freedom you want after the efforts that you have invested in growing business

How much better would you feel when you engage a top calibre CFO to work with you on your exit/succession? Get in touch with us today – 1300 447 740

Photo by fauxels

Who is Working for Whom?

July 2, 2022 by lauramills

A rhetorical question for you – “Is the business working for me or am I working for the business?”

Before you answer, perhaps it may be opportune to really reflect on where things stand for you and your business, and what you would like to achieve this year for both.

The thought of taking some time out for reflection may sound like a “nice thing to do”, however it can be a very powerful exercise. Since Covid hit, have you made time (with no distractions) to REALLY reflect? Or have you been swept into the new financial year with hardly time to a take a breath?

Time to reflect

The practice of Reflection can be an excellent way to provide you with a sense of calm and clarity, allowing you to get clearer on:

What is most important to me personally? (ie what do I value most?)
Am I living the life I choose? If not, what is stopping me?
Why did I start or buy the business?
Are those reasons still valid and aligned with what I want now and for the future?
What does the business need to look like to support my vision and goals?

When you are clear on what is most important to you and the life you would like to live, you can then look at your business through a different lens. It allows you to honestly question whether the business, in its current state, is an enabler or distractor from achieving your personal goals.

Reflection paves the way for truly effective business planning. This starts with YOU and PURPOSE rather than the business itself. With renewed clarity you gain from personal reflection, your plans for the business may start to look very different. For example:

Reducing business dependency on you (or “key people”). This frees you up to spend more time with family or more time to pursue the things that make you truly happy.
Exit or succession planning to facilitate your retirement or next project. And we know this often takes longer to successfully implement than you think!
Realign the business to better reflect your personal values (such as ethical, social, or environmental considerations).

What’s next?

If “more of the same” doesn’t sound appealing to you, take time to reflect on your Why and personal goals. You can then consider and plan how your business will support you in achieving the life you desire.

CFO Centre is a worldwide group, united by the common Purpose: “To help you live the life you choose by defining and delivering on the numbers that REALLY matter”. Click here if you’d like to find out more about how it all works.

Why Your Business Will Fail Without A Plan

June 21, 2022 by lauramills

Do you know how much revenue your business is going to deliver in the next year? What’s your profit forecast? How many goods/items will you be able to deliver to your clients? How many man hours will you need for each month to make this happen?

It is common sense that all activities in the business have a financial consequence. Many business owners’ responses to these types of questions is “How could I know?”

Well, it would be gold to predict the future operations 12 months ahead. CEOs and executives would be able to plan just enough resources to cater for it accordingly. However, nobody is 100% accurate in their predictions.

Moreover, if we plan the business operations activities at the beginning of the year and manage business according to these plans with disciplines, our results won’t be too far from our predictions. We call this process “Budgeting”.

Case Study

A client I have been working with recently, is turning over in excess of $30 million with 12 business segments and over 200 employees. The business adopted a “top-down” approach to budgets many years ago. Most of the managers didn’t even know how to check their budgets. Effectively, their budgets had been not very informative.

I was brought in as the interim Chief Financial Officer to implement a set of more suitable budgets within short period of time.

After investigating their databases and legacy systems, I managed to extract relevant mega data with the help of query tools. Furthermore, I suggested that the Activity Based Budgeting (ABB) approach would benefit them in the long run.

What happened next

Planning meetings were held with all business managers to identify daily activities and 12 month action plans
Identifies cost pools and cost drivers within each business segment
Extracted, transformed and loaded historical data from and to the relevant databases
built customised data models to quantify the business plans
Time series analysis, multi-factor regression analysis and stress-testing
Presented findings and action plans to all business heads in language everyone could work with
Tested the numbers with various scenarios
Conducted retrospective forecasting

As part of the budgeting journey, we highlighted the business improvement opportunities and the ways in which to realise them. In fact, this was pushed by the Activity Based Budgeting.

Consequently, the senior executives were thrilled with the “Porsche budgeting experience”.

What does it mean to you?

Budgeting is a disciplined management process that every business needs to achieve the optimal commercial outcome.

A part-time CFO will review and build out your business plan so that your budgets and forecasting make commercial sense.

Lastly, it is never too early to start planning, and it is never too late to roll out budgets into your everyday business management.

Written by Clinton Cheng, CFO at CFO Centre Australia

Step Back and Allow Yourself to Dream

April 7, 2022 by lauramills

The Challenge

One of the toughest challenges for owners of SMEs is to be able to stand back. To look at their business through a wide-angle lens and identify what it is they really have.

When you started your company, you almost certainly allowed yourself to dream. Every successful business operator needs ambition. But as we’ve seen, all too often those aspirations become bogged down in the everyday grind of keeping a business afloat.

Because quite often, the day-to-day distractions and diversions that inevitably surround the running of a successful business get in the way. This affects sensible, objective evaluation and strategic decision-making. Crucially, important opportunities can go at best un-exploited and at worst, un-noticed.

If this resonates with you, what can you do to change the status quo? Ultimately you need an extra pair of hands at a senior level to free up your time and allow you the time to dream.

The Solution

The key could be a CFO (Chief Financial Officer). Whether that is promoting from within, hiring a full timer for a large business, or using a part-time CFO making it affordable for SMEs.

A CFO can be that extra pair of hands to free up your time by ensuring the smooth running of the finance function. They will also being a senior sounding board, taking on some of your worries as well as:

help decode your dream
turn your dream into a plan
be the one to hold you to account to make it happen.

Great CFOs are catalysts. They can help you break the pattern of linear growth and get you what you really want on an expedited timetable.

Your dream is achieved by developing a concise roadmap based on what you want to achieve. The role of the CFO is to help you identify and unlock that potential. Thus, freeing the dream and making it a reality.

Of course this is not to suggest that success comes easily. Business challenges are usually complicated and risky. That’s another reason why potential isn’t always realised.

If you’d like to learn more about how our part-time/as needed CFOs can help you unlock and realise the true potential in your business, please contact us

Tag: business