The adage, if you fail to plan, you plan to fail, couldn’t be truer today in the world of business. As an entrepreneur, a big part of your business’ success is planning. A plan helps you determine your goals and set the course for your business. So, how do you create a strategic financial plan and execute it in a way that helps your business succeed in an increasingly competitive business environment?
What is a Strategic Financial Plan?
A strategic financial plan outlines the steps you need to take to achieve your business goals. It essentially informs the what and how of your business strategy – what are your business goals and how do you get there. A strategic financial plan helps you allocate your resources such as your capital, investments, and human resources over a specific timeframe to achieve the goals set out in your strategic business plan. It describes each initiative, resource, and metric, needed to transform your business vision into reality. A typical strategic financial plan will focus on your projected revenues and expenses, capital budgeting, and cash flow management.
Let’s take a look at the key characteristics of a strategic financial plan:
Establish relationships between profit metrics and cashflow needs
Align operational plans with financial statements to reveal their impact on the business's bottom line.
Inform optimal investment decisions by modeling alternative business scenarios.
5 Steps to Getting Started with Strategic Financial Planning
Strategic planning is complex is time-consuming, moreover, the intricate details involved demand financial expertise. Consulting with a CFO services firm can help you chalk out a winning strategic plan for your business. We’ve listed a few basic steps to help you get started:
1. Establish Your Vision:
Like all sound business plans, strategic planning is also rooted in the core vision of your business. You must outline the vision for the company, and your product/solution focus, and define what success will look like.
2. Set SMART Goals
Set goals that are specific, measurable, attainable, realistic, and timely. These could be either short-term or long-term or a combination of both. While goals are important to have, unless they are implemented and tracked, they are nothing but words on paper.
3. Define your Execution Strategy
Once your goals are set, it is time to chalk out a strategy that will help you achieve those goals. Your execution focus should:
Inform your short-term and long-term strategy
Inform your product/solution focus
Incorporate changing customer preferences and strategies
Define how you will improve shareholder value in the long run
Set the tone for revenue growth
4. Get the Right People
Your strategic financial plan means little if you do not have the right people to execute your vision. Financial experts, accountants, and senior leaders are key to executing your strategies. For small and medium businesses, hiring the right financial expertise could be a time-consuming and expensive proposition. Therefore, a CFO services firm can help you create and execute a winning strategic plan.
5. Measure, Optimize, and Repeat
Your plan will not be effective unless everyone is on board and doing their part. This calls for close performance monitoring and measurement to ensure you’re on the right track. It’s also important to build accountability and continue collecting relevant data to help with your future planning as well.
How a CFO Partner Can Help
Although strategic financial planning is a key concern for the entire business, especially the CEO, it often involves complex knowledge of finances and financial processes. A CFO is undoubtedly better positioned to create a viable, successful strategic plan that can help you achieve your goals as a business.
For small-mid-sized businesses, hiring a full-time CFO can become expensive and counterintuitive. A CFO services firm can help small and medium businesses reap the benefits of deep financial expertise at a small monthly cost.
More importantly, CFO partners can help you establish a governance structure, operationalize your financial framework, and incorporate technologies and analytical tools that make your plans sustainable and successful.
Conclusion
Today, more than ever, organizations need to move beyond traditional or textbook practices to stay ahead of the competition and a CFO partner can be your biggest ally when it comes to getting ahead of the competition. Strategic planning, goal alignment, and decision-making are all integral to building a successful business and a CFO partner presents an opportunity for innovation.
A CFO partner helps you streamline processes through technology and analysis tools, which promote integration between finance and broader business objectives. Ultimately, forward-thinking CEOs must identify where within organizations it makes the most sense to bring external expertise that delivers meaningful results.