Strategic planning in finance for growth means avoiding trendy fads. Instead, it requires an ongoing down-to-earth approach in order to create value.
Idealism is fine if it’s counter-balanced with pragmatism to improve business performance.
Continually, you must be practical in asking the right questions about your current status.
So identify your barriers and determine the realistic solutions as opportunities for growth.
There are at least seven steps for strategic planning in finance for growth.
1. Determine whether your current approach is adequate for growth.
Whether it’s through organic growth or via mergers and acquisitions, make sure you’re making the right investments for growth.
Furthermore, analyze your costs to see if you have the right processes in place in order to make the right decisions about spending money.
2. Consider restraints holding you back
True, sometimes there are external marketplace problems you can’t readily solve such as legal, regulatory or tax issues. But there are solutions from which you can benefit, especially internally.
Typically, there are at least six questions to ask:
— Do we need better cash flow?
— Do we need new products?
— Do we have the right human capital?
— Do we need to change your company’s culture and mindset?
— Do we have the right business processes?
— Do we need to change your marketing?
Once you determine the restrictions, strategize on how to solve them.
3. Clear the table of your biggest headaches
Virtually all businesses suffer from uncertainties. The trick is to fully analyze the uncertainties and alleviate them.
Here’s an example:
One of the most under-rated of our nation’s presidents helped the nation heal from uncertainty during a major crisis. That was President Gerald Ford in Watergate. He had great wisdom and the courage to do the right thing.
One of his major acts would cost him reelection.
At the time, many Americans didn’t appreciate his pardon of President Richard Nixon. What Mr. Nixon did caused a Constitutional crisis.
But historians later agreed Mr. Ford’s action was the fastest approach to end the nation’s long nightmare.
President Ford’s most-used phrase to solve problems: “Let’s clear the table and move forward.”
So whatever your major headaches are, identify them. Implement solutions with brilliance and tenacity.
4. Know where you’re spending the most money, and analyze your return on investment
Look at your biggest expense. Ask yourself: “How is it working?”
Then, determine how you can get a better ROI. This simple act can often dramatically improve your immediate cash flow.
5. Evaluate the big picture of your company financial objectives
Determine if your current strategies will help your company reach its financial goals. Many companies unfortunately implement the wrong behavior.
The behavior must synch with the goals to obtain the desired results.
If you suspect you’re on the wrong path, start an internal dialogue by asking questions. You want participation from all concerned executives.
6. Identify your marketplace threats and leverage your financial planning and analysis capabilities
Examine the strategies of your competitors. Are they making moves that threaten your company’s future?
Consider your financial planning and analysis alternatives in order to cope and triumph over your threats.
7. Continually evaluate what isn’t working
You might be targeting the wrong sector or customers. Keep mind Pareto’s Principle: 80 percent of the effects come from 20 percent of the causes.
For instance, 80 percent of your problems are created by 20 percent of your customers. Or 80 percent of your sales are derived from 20 percent of your customers.
But are the customers profitable enough?
Determine what functions aren’t scaling your business and generating returns. Then, do something about it.
As famed entertainer and well-to-do businessman Bob Hope used to say: “Get it done.”
From the Coach’s Corner, here are additional relevant tips:
You Can Creatively Manage Your Cash Flow 7 Ways — If you’re taking the pulse of your business, of course, the first thing to consider is your cash flow. If your cash flow is poor, you feel poor because you can’t pay the bills nor can you use money for what you’d like to do. Your image can also suffer with vendors or with customers, if you don’t manage your cash flow.
Profit Margins: 11 Tips to Increase Sales and Minimize Markdowns — Imagine being able to sell your products at full or nearly full margins. How would you like a dream situation – not having to mark down your products? It’s important to develop and implement responsive, multi-dimensional strategies to maximize your sales.
6 Tips to Turn Your HR Department into a Profit Center — At least 50 percent of a company’s profits are contingent on employee problems. If you have challenges in one department, odds are you have HR issues in other departments. In fact, human capital is the No. 1 reason why CEOs lose sleep. Many businesses often need an objective source of information and expertise from critical thinkers. It’s true you can turn your human resources department into a profit center.
For the Best Cash Flow, Manage Your Inventory Costs with 8 Tips — With proper inventory management, you can lower your expenses and increase your cash flow. For many businesses, it means taking a look at your inventory costs.
“About the time we can make the ends meet, somebody moves the ends.”