The CFO'S Perspective

Business Contingency Planning for the New Era

In 2018 we published an article titled “How a CFO Will prepare Your Business for Unexpected Events.” In it we outlined 19 types of unanticipated events that could negatively affect your business and provided advice on how to develop a contingency strategy that would help your company prepare for any kind of disaster or disruption it might encounter.

Do you know what was not included in that list? A pandemic.

This was not simply an oversight. It was an indication that a global health issue was not on anyone’s radar. It was unthinkable in 2018 that one highly contagious illness could sweep through country after country, shutting down economies and causing destruction. No one was preparing for a global pandemic.

And yet, another interesting observation stands out to us. While the word “pandemic” was never used to address that specific kind of business disruption, the many outcomes of the pandemic were addressed. Loss of a business owner, financial hardship, loss of customers, new government regulations, political unrest, supply chain disruptions, loss of salespeople, and transportation issues were all named as possible unexpected events that could have a significant impact on a company.

Topics: Planning Forecasting Strategy

How Much Will Raises Be This Year?

With so much economic uncertainty the employment landscape in 2022 will likely remain tumultuous. Information about how many people are employed, where, and for how much is going to continue to dominate the business news headlines. And much like last year, compensation will be at the forefront of many employees’ minds as they watch their cost of living increase and worry whether their pay will keep pace.

Of course, for the nation’s unemployed, discussions about how compensation may fluctuate this year remain inconsequential. And for small businesses that have been doing their best to absorb rising costs without laying people off or shutting down, the idea of giving raises this year is likely going to be a moot point. But for middle management, executive leadership, and HR personnel at mid-sized to large companies, the question of what to expect in the way of raises remains critical to business planning.

So, what should you plan for a raise this year?

Topics: Recruiting Economic Trends Hiring Planning Staffing Financial Projections HR Budgeting Forecasting Expenses Salaries

Is It Time to Downsize Your Business?

Downsizing is never a light topic to broach, but for businesses that are financially compromised or experiencing a reduction in demand, it is important to fully understand before any strategic planning can begin.

Downsizing is often tied to a reduction in headcount. Headcount is more than just a number, which is why downsizing should be approached with the utmost care and consideration. Knowing why a company should downsize, what kind of risk is associated with doing so, and how to avoid common mistakes is key to increasing the likelihood that your reduction efforts will be successful.

Use this guide to get a better understanding of the implications of downsizing and help inform your strategic planning as it relates to both maintaining your business and preparing it for sale.

Topics: Economic Trends Mergers and Acquisitions Planning Staffing Leadership Forecasting Expenses Profit Margin Assessment Strategy COVID-19

The Convergence of Accounting and HR

Companies that understand how finance and HR overlap and foster a relationship between the two are better poised for long-term growth than their less informed counterparts. The reason behind this is simple – knowing when and how to leverage your CFO to assist with hiring and employee retention can improve profit margins, encouraging sustainable long-term growth. Additionally, encouraging collaboration between these two vital areas of the business improves workplace culture across the entire organization.

Topics: Recruiting Finance Accounting Trends Hiring Planning HR Leadership Budgeting Forecasting Strategy

When to Use a ‘Decision Tree’ for Business Planning

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 decisionmakers 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