In my August episode of the Bold Moves Webinar Series, I discussed money in terms of how it translates into a flight plan. Regardless of where you’re at in business, you need the funds to implement plans and the money in your household to do what you want, when you want. We call this freedom.
Starting with a clear destination, chartering the financial flight plan, and executing well every day will make the difference between achieving financial outcomes or not.
Define Your Destination
Start with the end in mind. So let’s start with the destination: What do you want out of your business? When you step back from operations, what do you see yourself doing? Why is this outcome important to you?
The answers to these questions establish the financial outcomes that are needed in your business.
Now lets take it up a notch in clarity. To achieve the target destination, how many customers do you need, what is their purchasing behavior in terms of frequency and average amount, do you need to extend your market presence online or geographically, what about new/existing products and services, and new ways of working? Paint a picture of your destination starting with the marketplace, customers, team members/operations, and support capability to make it easy.
The best practice is to do this every year as you conduct planning going into the next year (like now for the 2023 impact).- Design a Clear Financial Flight Plan
Now that you established your destination, lets lay out a visual of your journey. Across the top for a three to five-year horizon, write down the number of new customers acquired, total customers, and delivery team members for each year.Beyond your current baseline, think about key client acquisition alternatives. Are there bold moves that you’ve been thinking about but are unsure of? What are the big sites for online marketing, building sales forces, events, and what else especially if its not typical in your industry? At this stage do not overthink things, just lay it out year to year.
Do the same for operations. Can you source talent across geography? Do you need to diversify supply chains or extend delivery into new territory? Have you established your company’s best practices like the “Toyota Way” where its effective and team members consistently use know-how? What about automation opportunities if you just had the money?
Draft a future organizational chart at the destination to gain even more clarity.
Now with thing 1 and thing 2 taking shape, what type of support services must you have so that you do not hit a stall point in your flight? Think through the leadership team, the management team, talent/HR, finance & accounting, technology, and legal. Lay out the big steps across the flight plan.
What does it take to be the employer of choice so that you don’t have people problems?
Missing any of these will cause CEOs to get stuck including getting into legal trouble in some cases.
With the multi-year view of objectives, customer acquisition, operations, and support services, put the financial numbers to the test. This is the spreadsheet work that many smart and successful CEOs do not love. Have your strategic and financial specialist do this. Create a baseline model then run “what-if” scenarios to figure out the best path.
Make sure that your financial flight plan integrates the four measurements of financial success – higher revenue, more profit, positive cash flow, and the value of your business. Examine how each scenario plays out to ensure that you have plenty of fuel/cash for the full flight.
You get bonus points in your financial flight plan when you benchmark against the top 20% of competitors in your industry. Doing so illuminates opportunities. Once top percentile performance is achieved you gain options, are able to raise capital, and optimized the value of your business.
Optimizing the valuation and the non-dependency of the business on you is the way you get paid twice when you pass the torch.
- Execute Well Every Day
Now its time to take flight.
Before implementing new projects or components to the way you work, make sure that every team member is on top of their current responsibilities. It doesn’t make sense to add new components if the current ones are not well managed or in the performance zone.Frequently employees do not have the information to know what is important or if those responsibilities are in the performance zone or not.
The best practice is to teach people to manage their numbers. Establish a daily dashboard for each employee that is aligned with the destination objectives. The dashboard will include both non-financial and financial measurements. Kaplins Balanced Scorecard is a good example of this.
Teach team members to proactively take action that day when their numbers are over or under the expected outcome. Literally to stay on flight plan like the gauges that pilots and navigators use.
As team members gain confidence flying, taking the next step through projects makes sense and is feasible from a capacity standpoint. The best practice is for each manager to identify no more than three next-step priorities, map out their actions for each step, then lay out the timeline across the 90-day sprint using a Gantt chart structure.
Priorities must be measurable as a Key Performance Indicator, have an established timeline, and include the financial/labor resources mapped out to be useful.
This level of planning and follow-through elevates employee engagement. Instead of being overloaded, they know where they stand every day, they are empowered to take action, and they know where they are going next. Plus, many employees grow from being intimidated by the numbers to being clear and confident so that their future is even brighter.
The multi-year flight plan and follow-through align functions to work as a whole.
How Foresight CFO Is Different from Other Outsourced CFO Services?
At Foresight CFO, our Growth CFOs do Destination work with CEO business owners globally. We deploy Growth CFOs in 3-person teams to go well beyond what anyone CFO could ever do, Schedule a 25-minute Discovery Consultation with me