Every business needs a strategic plan to grow and reach its goals. Strategic planning is a complex process that is not performed by the CEO alone. It is a team effort, and the company’s CFO is an essential part of that team. The CFO has experience and knowledge that will not only shape the financial strategy – it will shape the strategy as a whole.
What Will the CFO Accomplish?
- The first job of the CFO is to establish the financial goals and desired results of the strategic plan collaboratively with the management team. With those goals established, the CFO will document the underlying key assumptions that the strategic plan will be based upon and develop KPI’s to be able to measure the success of the plan. Throughout the entire strategic planning process the CFO should be the devil’s advocate challenging all aspects of the plan, in particular the assumptions used to develop the plan.
- During the development of the plan the CFO will work with various other business functional leaders to determine the financial aspects, expected revenue, expenses, capital etc. required from their respective functions. He or she will then perform financial modeling for worst case, most likely, and best-case scenarios utilizing the financial inputs from the functional leadership.
- Based on the information collected, the CFO will prepare a budget for the strategic plan scenario that will be implemented and executed upon.
- If the strategic plan is for the company as a whole, the CFO will develop comparative financials illustrating what will occur by performing the strategic plan versus not performing the strategic plan. The purpose of this is to ensure that the goals of the strategic plan will be met, and whether the incremental investment/benefits and ROI of the strategic plan are a better option than making smaller, incremental investments to achieve the long-term goals of the company by making small tweaks to the existing plan.
- If the strategic plan is incremental to the company’s overall plan (i.e. adding a new product line) then the strategic plan financials must be integrated into the overall financials for the company. This will ensure that synergies with the existing business are maximized, and the goals of the plan are achieved and flow through to the overall company financials. This will also allow the company to continue to have one overall set of financials for the entire business.
As you can see, the CFO is a key driver of the strategic plan. The CFO must be confident in the strategic plan. Steve Clark, CPA, MBA and CFO for C-Suite Impact CFO says “during my career as CFO, the CEO and/or Board would always look at me and say, “are you good with this”. The stamp of approval from the CFO is important.
The final step in the strategic planning process is to sell it to and get a buy in from the employees who will be executing the strategic plan. To be convincing the CFO needs to believe in the strategic plan and be confident that the financial and other insights provided have been fully integrated into the overall plan.
C-Suite Impact CFOs Can Help You Through the Strategic Planning Process
At C-Suite Impact, our CFOs have a broad range of knowledge, skills, and experience and can help you before, during, and after the strategic planning process. We have a suite of resources in our portfolio that you can access as well for all of your business needs. The C-Suite Impact Team will provide ongoing guidance and support for the health and growth of your business. Call us today to learn more.