5 Killer Strategies Your CFO Must Do To Drive Value and Growth For Your Business

“We cannot become what we want to be by remaining what we are.” – Max DePree

Having spent many years partnering with CEO’s, Boards and Executive Leadership Teams to expand and transform businesses globally, one of the greatest challenge has always been finding new sources of growth (both organic and inorganic), closely followed by the challenge of balancing long-term growth with short-term shareholder (investor) pressures.

If you are a growth-focused business, you need a CFO who can navigate the way forward…..through better insights, appropriate speed and agility, and mature finance function capabilities that align with the strategic growth ambitions of your company.  Here are the 5 things your CFO should be doing:

1. Be the Co-Pilot and interact with the business as often as possible. It is increasingly important today that your CFO interacts with the business as often as possible. Value is about exceeding expectations. Being the CEO’s co-pilot and adding value beyond closing the books and reporting financial information is crucial.

Like the CEO, the finance function clearly has the need to talk with all the other functions in a company (Sales, Marketing, Development, Support, Operations, etc.). Your CFO must use that as a mechanism to get out and understand each component of the business and the people running them. That context and insight is the key platform that helps CFO’s drive value.

Tip: To allow the CFO capacity to do this and have the finance function move from being largely transactional to becoming more strategic, the CFO must ensure the finance Team is staffed appropriately for the future.  Do this sooner rather than later.  Don’t think 747, think F-111!

2. Create visibility and transparency. As the company grows, it acquires more stakeholders (employees, investors, advisors) who need to remain engaged in the business in order to play their role most effectively. When those different stakeholders are empowered with the right information, it leads to better communication between teams, more introductions from investors to potential customers or employees and an overall culture of transparency.  Tip:

• Invest in analytics and modeling software. Whilst transparency will give the business a clearer sense of what’s happening in the business at a point in time, analytics and modeling are needed to give organisations a more accurate understanding of what’s likely to happen in the future in different scenarios.

3. Report on KPI’s that matter.  Having well thought through KPIs and acting on them with the confidence that action will cause a change in performance is well worth the investment in time and corporate brain-power it takes to develop, select and test Key Performance Indicators.  Tips:

• Limit your KPIs to a select few! Steve Jobs once said: “Nothing can add more power to your business than concentrating all your energies on a limited set of targets.”
• Trends are more important than any data point… are things going up and to the right!
• Slim down what’s reported to the Board and Investors. Be sure you want to be reporting that KPI over and over again before you introduce it to investors.
• KPI reporting to investors is important but equally or more important is providing that transparency down to employees, especially the ones responsible for driving the KPI.

4. Build Scalability – Build systems and processes that can easily scale or absorb multiple paths of growth.  Scalability is one of the most important factors when starting a new business or hoping to take a current business to the next level. Successful business growth depends on a scalable business model that will increase profits over time, by growing revenue while avoiding cost increases.  The CFO must understand which capabilities will be required, assess the business’ current strengths and weaknesses, and work with the rest of the executive team to address critical gaps. Tips on how you can get and stay on a fast track:

• Build the right process and technology platform to support your company earlier rather than later. The technology and processes need to provide executives with real-time and objective information, good data and transparency about the numbers.
• If automating any of your production processes is possible – your business model can scale more efficiently. When system or technology changes are required, don’t try to fit that in as side project for people on your team. Utilise outside providers to manage that project.
• Working smarter is crucial. Outsourcing certain operations can save you time and help you keep costs down as your business grows. Bring in good people as soon as possible, utilising part time or contractors for as long as possible.

5. Develop strategies to raise funds to support growth. Fund raising and the related cash planning is an integral part of growing the business in most companies these days. Your CFO and the executive team must be constantly aligned on upcoming activities that affect your financial position.  Tips on fund raising for the CFO:

• Identify and root out any bias, making sure the CEO and/or executive team is asking the right questions and applying the correct filter to their decisions.
• Don’t let CEO’s chase the $’s and angle their pitch towards what they think an investor wants. This can create massive misalignment and issues down the road after receiving the capital
• Be aware that equity comes with more strings than just dilution. The process itself can be a time suck and after receiving capital you’ll have more reporting requirements and stakeholders to address.
• Equity should be supplemented with a revolving line of credit where possible to give as much flexibility to the company as possible

So if you want your company to fully realise the potential value of your growth ambitions, make sure your CFO does their magic in this critical role to provide insight, manage risk and help you make the dream become a reality!