A familiar scene: you’re on your way to a board meeting alongside your C-suite. You and your team have formulated a plan that could revolutionise the business, but you need board approval to get started.
You’re happy with it, the other executives are happy with it, but you need to convince the investors and, by proxy, the board. You glance over to your new CFO, who was a significant participant in the new plan. This is the first time you’ve had a CFO to help you, and you can’t help but feel worried that there may be something you’ve missed.
Have they done everything they need to do to get the board on side? Or could your whole plan go up in smoke?
If your new CFO is experienced, well-trained and competent, you have nothing to worry about. These are just a few of the CFO responsibilities they will have taken on:
Resourcing and feasibility
You can’t build a house without materials, and you can’t grow your business without manpower, money and time. Your directors will want to know how much this new project is going to cost, how many people it will require and how much time will it take, at a bare minimum. They will likely also have queries regarding the specifics of why it will require these resources, where they will be gathered from and why these resources would be best spent in this pursuit.
Your CFO should be able to provide the whens, wheres, hows and whys for your upcoming project, and be able to break it right down to the bedrock for the board.
Projections and forecasts
The other side of the resourcing coin is how much return the business will receive. Your CFO should have prepared a range of forecasts and projections to supply this information along with feasibly analysis.
At the end of the day, business is driven by earnings. Hard numbers and estimates (even ballpark ranges as long as they are accurate) are far more convincing useful to a board than nearly anything else. Your CFO will be the one who ultimately reveals the value proposition.
Your CFO will be the one who ultimately reveals the value proposition.
At this point, your CFO will have shown the board how much the business will be spending, and how much it stands to gain from the decision.
“That’s great,” says the chairman of the board.
“But what kind of risks are we opening ourselves up to by following this route?”
Every business decision comes with risks, and a major part of your CFO’s role is identifying, analysing and providing solutions to these issues. They might be something as simple as not finding a market for a new product, to as complicated as an upcoming bill in Parliament that will change the legality of one of your processes.
Your CFO will be the one uncovering these issues. This will give them the chance to develop financial solutions and present them to the board; this is absolutely integral to smooth approval from the investors.
You’re confident in the plan you are presenting, but why? Do you just have a good gut feeling? Of course not; you and your executives have based this plan on the best data you can get a hold of; a significant portion of which was provided by your CFO. This proximity to your foundational evaluation criteria makes their opinion invaluable when determining the quality of your plan.
This proximity to your foundational evaluation criteria makes their opinion invaluable when determining the quality of your plan.
Perhaps more importantly, the CFO will help you decide whether it is the best option available to you at the time. Evaluating multiple plans, weighing up the risks and rewards, and settling on the best option financially is what being a strategic CFO is all about. By being able to tell the board the alternatives you’ve considered, and why you’ve rejected them, you will be able to submit a far more watertight, convincing argument.
At the end of the meeting, after the plan is approved, the job of your CFO hasn’t finished. The board will expect ongoing reports, adjusted forecasts and general support and updates on how the project is progressing. This meeting is just the beginning.
The board will expect a lot from your CFO. But with the right choice of executive, you’ll get the convincing, data-driven plan that you need to impress your investors.