Contemplating the Importance of Financial Strategy in Uncertain Times

“You’re not a wartime consigliere, Tom. Things may get rough with the move we’re trying.” – Michael Corleone (The Godfather)

This may be a little dramatic; but, I got your attention, didn’t I?

All small business owners know that it’s important to think ahead and anticipate operational and financial moves before they occur. And while we may not be at “war”, the reality is that businesses are battling to? maintain their profitability and relevance in their respective industries while concurrently navigating the following:?

• Inflation. Inflation continues to impact consumers long after the pandemic has been declared over.
• Interest rates. They continue to be at historically high levels which dampen a company’s ability to borrow.
• Lack of Qualified Workers: It continues to be difficult to hire a qualified worker in many areas, including accounting and finance.
• Positive Cash Flow: Firms in the business services (B2B markets) and consulting industries continue to struggle maintaining positive cash flow despite lay-offs and technology implementation intended to make operating procedures more efficient.
• Political Climate: And let’s not forget the impact of the upcoming November elections!

As we enter the second half of the year, entrepreneurs need to rely on their finance leads in order to prepare for any number of possible scenarios. Fractional CFOs and full-time CFOs are acknowledging the need to plan appropriately and wisely for the remainder of the year.?

In a survey conducted by PwC last month, 58% of CFOs are emphasizing prudent financial planning and how a company’s mission statement influences the way in which all departments support the business. This is in contrast to how most entrepreneurs and the SMB community staff its finance function which focuses more on the bookkeeping and financial reporting.??

So what should an entrepreneur do next?

1. If you don’t have a formal forecast prepared, do so immediately.?
2. If you don’t have Key Performance Indicators (KPIs) as goals for your company, implement them immediately.
3. If you don’t have an internal resource, such as a Fractional CFO, who can focus on preparing the forecast for the second half of the year and KPIs, invest in this immediately.

Being prepared is always essential in business and in conflict. So make sure that your biggest investment — your business — has all its fronts covered and is ready to prosper.?

Take-away: If you feel you’re not adequately prepared for what may or may not happen in the second half of this year, contact Brian at [email protected] or 917-528-1832 x2.?