Not Everyone Can Lead the Strategic Planning Process
A strategic plan is a roadmap for the managed growth of a company. This process can be managed by an experienced CFO or other outside facilitator. At the end of the day, a CFO is a strategist and can skillfully lead the process, freeing the business owner to focus on participating in the process.
Developing the plan begins with determining where resources should be focused. The CFO will also need to determine what resources are required for the company to achieve its growth goals, and if the company has those resources or if resources need to be acquired.
There are four key building blocks that will need to come together to create growth for the company:
Revenue
Growth means increasing revenue in some way. To do this, investments may need to be made in sales and marketing, new locations, or even the acquisition of another company. It will need to be determined what strategies, including sales and marketing methods, will provide the best ROI.
Whatever strategy is chosen, revenue after the implementation of the growth initiative needs to be projected. If the strategy involves a new location or a company acquisition, a break-even analysis will need to be performed based on the investment amount and projected revenue. If resources are allocated to more sales and marketing, the company’s customer acquisition cost needs to be determined so that the revenue increase can be projected based on what resources will be invested.
The CFO will also determine if those resources will come from cash on hand, or a bank loan or other source.
People
The revenue growth plan and projections will drive a personnel plan – what new people are needed for sales, marketing, operations, customer service, etc.? Does the management team need to be expanded?
The entire management team must also be equipped to manage company growth. As a business grows – both in revenue and in size of operations and staff – all facets of the business grow in complexity. Managers may need to develop new skills or enhance their current skills, or specific skills may need to be outsourced.
Process
As a company grows, the management team must ensure that operations maintain efficiency. More sales mean more production, customer service, financial management, and more. The plan needs to address the following:
• Demand will need to be met without maintaining too much inventory.
• Customer service should not suffer due to volume.
• Costs will need to be controlled and not increase disproportionately.
• Cash flow must be continuously and accurately projected and managed.
• Systems need to be sufficient to handle capacity.
Strategy
A strategy needs to be designed that encompasses all the above elements. This is a complex process because all the elements interact, and also have costs that need to be projected.
An effective CFO will lead the design of the entire strategic plan, considering all factors and creating all necessary projections. Additionally, according to Ken Fruscella of FocusCFO, “the CFO can help build the strategy into the DNA of the organization and ensure that specific tactics of the company are aligned with the long-term strategic plan.”
