The CFO'S Perspective

When to Use a ‘Decision Tree’ for Business Planning

Originally published: 2/15/2021
Updated: 3/4/2024

For those not familiar with the term, a decision tree is a flow chart that works through all possible response options in a scenario to analyze resulting outcomes. Basically, it is a visual version of an “if this then that” statement across all possible alternatives.

The “branches” off each decision alternative that result use data analysis to forecast the most likely outcome of each decision. When one decision leads to another decision that must be made, that branch splits to continue extrapolating the effects of each subsequent decision. The result is a tree-like diagram (hence the name) that is easy to understand and interpret.

Decision trees can be more conceptual in nature or have numbers to back up decision scenarios, as is the case of pricing changes affecting revenue figures. For decision trees with complicated calculations, a software program can assign values and probabilities to streamline decision-making. A decision tree is a critical part of strategic planning because it allows decision makers to analyze the effects of a significant change throughout different areas of the business.

Topics: Data Analysis Planning Analysis Leadership Growth Forecasting Risk Management Change Management Strategy

The Biggest Financial Shifts of 2023

As companies continue to battle unexpectedly high inflation and economic uncertainty, understanding this year’s prevailing trends across financial forecasting, fintech stacks, procurement, and customer attribution can help them to increase revenue and market share. Our ongoing research and conversations with other c-suite professionals in the industry have revealed several key shifts in these areas that can affect not only how a CFO does their job but also how their organizations develop and execute on strategic plans.

Topics: CFO Responsibilities Change Management Strategy Supply Chain Technology

How does Uncertainty affect a CFO’s Role?

It is being mentioned on the news, among coworkers in team chats, and over dinner with family day after day. It is keeping Americans (especially business leaders) up at night. In fact, every client meeting we have these days has some discussion around it. What is it? Uncertainty.

Today’s culture is wrought with uncertainty that is absolutely sweeping through every industry. Rising inflation, COVID surges, interest rate hikes, a dramatic increase in the cost of living, the war in Ukraine, and a potential recession all have business leadership mired in a constant state of uncertainty. From professional services and hospitality to tech and manufacturing, uncertainty is taking a toll. And unfortunately, it does not show any signs of dissipating any time soon.

In response, many organizations have begun leaning even more heavily on their CEOs and CFOs to guide them through these tumultuous waters. Consumption patterns have changed, new buying trends have emerged, and supply chains have become murky, reducing confidence levels in business forecasts. And amid it all, CFOs are being asked to manage cash flow, oversee new business priorities, and aid in constantly shifting strategic planning initiatives.

Topics: CFO Planning Leadership CFO Responsibilities Change Management

How Do I Let Go of an Underperforming CFO?

According to CFO.com the most common reasons for a CFO change are:

  1. As a follow-up move to a CEO change
  2. A voluntary decision to pursue a better opportunity
  3. To get the right personnel in place to take a growing company to the next level

The article goes on to say, “Finding out precisely how many finance leaders have been asked to take a hike in the wake of accounting fiascoes, earnings disappointments, failed mergers, or unsound investment decisions is trickier, since most of them are effectively silenced by generous severance packages.” While this article speaks directly to publicly traded companies, the same rationale holds true for private companies. We know that firing a CFO for performance-related reasons is by no means the most common reason for separating. However, it is difficult to pinpoint the percentage of companies that have let their CFO go due to underperformance because neither party is going to readily admit that was the reason for dismissal. However, it certainly happens. And when it does, the process poses a uniquely difficult scenario.

Firing an executive of any sort is a daunting task, but letting your CFO go provides an added host of challenges. Since companies task their CFO with the financial management of the company a CFO may possess critical financial knowledge and planning information that can be lost when they are terminated.

Topics: CFO Staffing HR Leadership Change Management Interim CFO Transition

Should I Sell My Business Now or Wait?

Our CFOs get asked about business exit options a lot, especially these days. Business owners that are looking to step away to pursue other endeavors, interested in cashing out to get the full value of their hard work, or nearing retirement all wonder when they should make their move to maximize their gain.

While last year’s expected Federal tax rate increases did not happen, there is still lingering apprehension around the timing of exiting your business. So, though the urgency we witnessed last year has dissipated, the ongoing question still remains: should you sell your business this year, next year, or not at all?

Topics: Mergers and Acquisitions Change Management Strategy Start-up

The Great Resignation – The Accelerated Evolution of Work

A prospective consultant told me that he loved what he did during a recent interview. He had been working up the ranks for a long time, continually added skills and experience, and was in a place of high trust and value to his organization. He shared with me that he loved his profession had excellent skills but was not interested in working 70 hours a week at this point in his life and career. He asked, "Were there other options?"

Topics: Trends Change Management

How Do I get My Accountant to Come Back to the Office?

Employers that want their employees back in the office again are asking themselves the question, “How do I get my employees to return to work?” However, many employees are asking their employers, “Why should I return to work?” in response.

The resulting dichotomy has created a sticky situation for companies that are facing labor shortages and revenue challenges well over a year and a half into this crisis. For key departments like accounting and finance, the pressure is further elevated because these kinds of skilled roles are a hot commodity right now, making them even harder to replace.

Topics: Trends Staffing HR Leadership Change Management Transition COVID-19

Why A Business Change of Ownership Needs CFO Services

At CFO Selections, we work with many types of companies, from the large and complex to those more straightforward and easier to understand. They have vastly different finance and accounting structures. One size or type certainly does not fit all.

Topics: Planning Change Management