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How to be More Strategic and Successful in 2023

Published: by lauramills
How to be More Strategic and Successful in 2023

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:

  1. Thriving, but not trusting the success
  2. Reviving but hesitant to make bold moves
  3. 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

Published: by lauramills
Why SME’s shouldn’t ignore Risk Management

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

Published: by lauramills
3 Steps to Scaling Your Business Through Reporting

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.

Under the Spotlight – The CFO as a Strategist

Published: by lauramills
Under the Spotlight – The CFO as a Strategist

The Roles of a CFO

Our CFOs have all walked the walk, playing leadership roles in fast growth businesses in every sector. The Strategist role of your CFO is to help you define what you really want from your business and work with you to devise the strategy to make it happen. This includes attention, in the current climate, on future-proofing your business to adjust to market conditions. There has never been a greater opportunity to grow through acquisitions and purchase competitive businesses at below market value. Financing terms are also incredibly competitive. A CFO can help you navigate the options and set yourself up for recovery and success.

What is The Strategist?

So, what does ‘strategy’ or ‘being strategic’ mean for Business Owners, Directors of Boards and Management? Often this concept is confusing as the roles relating to strategy are not clearly defined. In in the case of SMEs, the owner is often the Director and Manager of all things. This can be stressful for the owner as there are many elements to juggle. So, how does the owner cope with these increasing demands made upon them?

In general, Directors ‘set’ the strategy and ‘monitor’ its implementation whilst Management execute or implement the strategic plan usually with the development of a tactical or business plan within the strategic intent of the organisation. The CFO traditionally is responsible for the overall high level financial resourcing of the plan. This may include (and not be limited to) modelling high level scenarios, ensuring adequate cash flow for the life of the plan, developing appropriate financial risk management controls, investigation of strategic funding options and developing three way financial forecasting models for at least five years. This not a function that can be effectively carried out by a financial controller or bookkeeper. They will be managing the day to day resources and accounting for these resources via many reporting methods.

Align with your purpose

Strategy is an essential growth mechanism for an organisation to create value for its shareholders (FP) or service to communities (NFP). The perception of what ‘value’ is needs to be efficiently communicated to all stakeholders as this may vary or be interpreted differently by the varying sectors within the organisation’s business community. The development and execution of strategy is not without risk. A proper (fit for purpose) and robust risk management process must be in place for the plan to yield successful outcomes.
The part-time CFO in conjunction with the CEO and Board (or owner/s in SMEs) can assist in the above imperative process to create value and must be aligned with the purpose (why the organisation exists) statement. Often a review of the previous strategic plan needs to be undertaken to assess its success and limitations. This informs the future planning element, and to ensure that the valuable aspects are retained. Moreover, other less successful outcomes are redesigned or eliminated.

Directors of large entities and owners of SMEs must be ‘strategically intentional’. In addition, senior management must be ‘strategically managed’ by the CEO or equivalent. The Board or Owner ultimately holds all responsibility for the strategic success of the organisation. They employ the CEO to execute the set strategy. If the owner is the CEO and wears all the hats, then there is considerable demand placed on the owner to execute the strategy. The first item on any Board agenda should be the reporting of strategic progress against the set objectives by the CEO. It is not uncommon for the CFO to present the Finance report at Risk and Audit (or Finance) Sub-committees of the Board. The CFO would work closely with the Chair of the Risk & Audit Committee and CEO and ‘own the magic numbers’ of the organisation. In an SME, the Financial Controller (or external accountant/similar) would carry out this function and liaise closely with the Owner on a more regular basis.

Get your numbers in order
Informed and insightful decision making can only be made if the magic finance numbers are accurate and informative. Reporting should thus be tailored and customised for the type of organisation (large, medium, and small enterprises). This is where the CFO can truly add immense value. A ‘one size fits all’ approach just does not work in today’s challenging, diverse and financially demanding business environment.

Written by Dr. Andre Van Zyl, Regional Director (QLD) – The CFO Centre

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

Published: by lauramills
22 Ways a CFO Can Help You Create A Winning Strategic Plan

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:

  1. Gain a full understanding of the business and its operating procedures.
  2. 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.
  3. Agree on milestones and break down the plan into annual and quarterly targets.
  4. Conduct a fresh SWOT (Strengths, Opportunities, Weaknesses, Threats) analysis bringing the plan up-to-date.
  5. Conduct a new PEST (Political, Economic, Social and Technological) analysis bringing the plan up to date.
  6. Carry out a full competitor analysis to understand in detail what is and isn’t working in the market.
  7. Explore opportunities for effective market research to enable innovation and development of new products/channels to market/operating procedures.
  8. Identify key players in the business.
  9. Identify skill gaps in the business.
  10. Agree financial incentive structures to retain and motivate key members of the team.
  11. Identify five key metrics for determining what the future course of the business should look like.
  12. Agree on the exit or succession strategy.
  13. Develop a clear, coherent message (vision/mission/purpose) to staff and to customers.
  14. Work with the senior team to ensure individual department goals are aligned with the big picture strategy.
  15. Agree on a who/what/when set of objectives for all department heads.
  16. Implement accountability protocol for every member of staff.
  17. Determine methodology which allows the senior team to course correct periodically when a change in strategy is required.
  18. Agree on delegation of authority to department heads to spread responsibility across the business and to free up the CEO’s time.
  19. Create a feedback route so that strategic goals are regularly shared with staff
  20. Develop a set of relevant KPIs (Key Performance Indicators) and a system which allows for regular (daily/weekly/monthly/annual) monitoring and reporting.
  21. Develop a long-term efficient tax structure for the business and for key employees.
  22. 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.

The Top 4 Mistakes People Make When Planning

Published: by lauramills
The Top 4 Mistakes People Make When Planning

A strategic plan is fundamental, it sets out the company’s strategic direction. It defines its main operating and financial targets, the actions it will take to achieve those objectives, the new initiatives and investments planned, and their impact on the company’s performance.

The top mistakes business owners can make when it comes to planning are:

  1. They don’t have a plan at all
  2. They don’t have a formal plan, it’s in their head which is difficult to share with others
  3. They don’t have an implementation timetable attached to their plan
  4. They don’t have a mechanism in place to conduct regular reviews

Without a comprehensive, up-to-date strategic plan and an implementation timetable, companies may be missing out on opportunities for growth and not realising their full potential. A formal plan can be an extremely valuable tool for managing and growing a business, as it allows a company to recognise its strengths and weaknesses.

Chaos Reins

Not spending quality time on strategic planning usually leads to a chaotic working environment. Our clients often talk about ‘not feeling in control’ and ‘not really knowing what is coming around the next corner’. When the plan is weak, business owners tend to operate without the same sense of conviction as those who allocate time and expertise to the planning process. Our CFOs often find that 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.

Helping Hand

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/MDs. It is natural for business owners to bring people into the company who see the world in the same way they do. However, it is often more valuable to have key members of your team who possess very different skills to your own.

Constantly doing the same things in the same way with the same people will usually lead to achieving the same results. If you are worried about whether you have the right team in place to fulfil the vision you have for your business, or whether you have the funds you require, or whether your business plan is sufficient to reach your objectives, then we would recommend you take the time out to work through the detail. It is rare to see a company succeed if it doesn’t have a robust plan.

Our part-time CFOs often work with clients who started off with intentions to run a business and have ended up working in a job. However, with the right business plan in place and a robust implementation approach, the business owner is able to run the business without getting drawn too far into the day-to-day details. Contact Us if you would like to discuss your options.

How A Strategic Plan Will Change Your Business

Published: by lauramills
How A Strategic Plan Will Change Your Business

Strategic Planning is the key to the success of any business, no matter its size or age but it’s said that many small to medium-sized businesses don’t have a plan of any kind.

What is a Strategic Plan?

The strategic plan sets out:

  • the company’s direction and priorities;
  • its main operating and financial targets,
  • the actions it will take to achieve those objectives,
  • the new initiatives and investments planned, and
  • their impact on the company’s performance.

Nearly a fifth of SMEs say they prefer to keep plans in their head, according to research by Close Brothers Asset Finance. Mike Randall, CEO of Close Brothers Asset Finance, says, “It’s concerning that so many small and medium sized firms do not have a strategic business plan.  Without clear direction, they may be missing out on opportunities for growth and not realising their full potential.”

A formal plan is an extremely valuable tool for managing and growing a business as it:

  • clearly communicates the company’s priorities
  • ensures all key staff are working towards common goals
  • sets the focus on key objectives
  • delegates actions and accountabilities amongst employees
  • ensures that decisions made will benefit the long-term company goals
  • allows a company to recognise its strengths and weaknesses.

Failing to plan is like planning to fail

Strategic Planning is an area SMEs should be focusing on.   Furthermore, a plan is only useful if it is reviewed regularly to ensure it meets the current and future needs of the business.  It’s vital business owners regularly review their financial strategy to ensure they have the right funding in place to meet the needs of their business, at its current stage of the business lifecycle.

Most CEOs and MDs simply don’t have the time to spend on quality strategic thinking and to document and communicate that thinking in a way which allows the whole business to buy into the vision. Harder still is managing and implementing the business plan. Significant strategic course corrections are commonplace in fast-growing companies. These should be embraced. The tricky part though is in managing regular change. That requires a combination of time and specialist knowledge.

There is an art and science to effective business planning. Getting it right brings a real sense of clarity and direction to a business. This is where an experienced part-time CFO can make a significant contribution.

There is an art and science to effective strategic planning. Getting it right brings a real sense of clarity and direction to a business.

Business Plan for Funding

It’s likely at some point in your business journey, that you need access to funding. Whether that be to scale faster, expand into other territories or buy other businesses.

External funding could be via banks, non-bank lenders, venture capitalists, and angel investors.  None of these are unlikely to look at any funding request that isn’t accompanied by a very solid business plan.  It defines exactly what you want to achieve, and how you plan to achieve it across a set time period. It’s a sure-fire way to ensure that growth targets and plans are being met.

However, business owners will struggle to formulate a concrete business plan without firstly ensuring that their strategic plan is solid and robust.

Our team can assist in creating and implementing a solid strategic plan and/or business plan that paves the journey for your business. Click here to find out more, or contact us on 1300 447 740.