The last few years in business have changed much of the way we work. You can no longer rely on existing processes as market conditions demand that we review our whole business. This includes the review of, operations, customers, products and channels. This process will help you to improve forecasts, create a more resilient business and drive profitability.
1. Improve forecasts by building flexibility and foresight into your plans
CFOs and the finance team need to be able to respond swiftly to rapidly changing business needs and market conditions. When approaching business plans, you need a level of flexibility and adaptability to leverage opportunities and minimise risks.
Making the right decisions for your organisation quickly and with a high degree of accuracy requires access to an elevated view of integrated business data. To build this robustness and improve forecasts, you need to perform ‘what if’ scenarios. This involves querying existing measurements, to determine the impact even slight changes could have on your forecasts.
You can only achieve this level of flexibility when data sources give you a full view of the enterprise. CFOs that are succeeding on this front are employing an enterprise performance management (EPM) tool. You need an EPM tool that uses automation and predictive analytics to accelerate planning, forecasting, and reporting. Additionally, this will help bridge the gap between existing data sources in one unified platform, helping you to drive performance and build a resilient business.
2. Review Resource and Capital Allocation and Adjust Go-to-Market Strategy
CFOs that have access to the right data and analytics, can identify new pathways to profitability. As mentioned earlier, it is a critical time to review operations, customers, products, and channels for insights.
Use data to inform your business decisions, including which new opportunities you should explore. Once you have identified areas where you would like to increase your exposure, support this through the reallocation of capital and resources. Similarly, trends regarding products, services, locations and/or performing demographics should influence and trickle down into your go-to-market strategy.
Some CFOs are also taking advantage of a zero-based-budgeting model, rather than relying on data from previous years. The ZBB model requires that all expenditure be justified and informed by strategic business priorities that will dial-up performance.
When setting out on the pathway to profitability, the main thing to realise is that there needs to be a shift in mindset towards creating revenue for the business and away from traditional ‘cost-cutting’ agendas.
3. Continuous Improvement and leading by example
Finance is in a unique position to create value for their organisations, as often significant improvements and transformations can be made on the margin of existing operations.
Driving profitability and building a resilient business requires the mobilisation of the entire workforce.
Toyota is recognised globally for its commitment to process improvement, ‘Kaizen’ (Japanese for continuous improvement). The onus is on all staff from top executives to warehouse workers to identify ways they can improve processes, increase efficiency, and standardise procedures. Astoundingly, Toyota receives over 1 million ideas each year and claims to implement 90 per cent of them.
We are not suggesting that you implement every idea, but it is the role of the CFO to determine which ideas and improvements will benefit the bottom line. CFOs can support managers to clarify the value of initiatives. The CFO can establish a cohesive approach to assessing and measuring performance – ensuring that the company follows through on activities and changes that truly add value and improve performance.
In challenging times reviewing the way you operate and making small adjustments can positively impact your bottom line. If you are finding it difficult to improve and transform internal processes why not contact us at Minerva Partners?
We are a Management Consultancy that is laser-focused on business transformation, and we assist CFOs and transformation specialists every day to improve their data management, budgeting, forecasting, and planning, allowing them more time to focus on business growth and strategy.