Chief financial officers and their teams will play a critical role in the re-launching of their businesses in the coming weeks and months. As the only member of the executive team who is both a financial expert and strategic thinker, you will play a critical role in not only ensuring your company’s survival but positioning it for the future in a post-COVID-19 world.
How should finance chiefs approach the current crisis? While every situation is different, the following guidelines will prove invaluable as we emerge into a new world order.
CFO will play a critical role in not only ensuring your company’s survival but positioning it for the future in a post-COVID-19 world
1. Continue to over-communicate
The CFO’s voice is the most critical one during a crisis, arguably even more critical than the CEO’s. When constituents need the unvarnished truth, they turn to finance chiefs. You should be communicating with your employees, investors, customers, and suppliers on a daily basis. Make sure parties who will play a vital role in your organization’s long-term success are fully informed and excited by your vision for the future.
2. Take care of your team
As a leader, you are responsible for the well-being of your team. While you cannot solve all their problems, this is a time to show compassion and patience, even while you continue to expect optimal performance. But consider the challenges that members of your team are facing. If they are a parent of a school-aged child, their days might be consumed with ensuring their children are intellectually challenged and engaged. This is a full-time job. Other team members may be taking care of an elderly parent, a sick spouse, or experiencing any number of other challenges. Be sympathetic and flexible to these circumstances while still asking them to work to their potential.
Also, don’t forget the person in the corner office. As much pressure as you are feeling, he or she is probably feeling more. While it’s true that their job is to inspire confidence, they are people first, and they have the same roles as the rest of us: parent, spouse, sibling, child, and citizen. Check in on the boss and let her know that you have her back.
3. Develop a liquidity plan
If you are among the small number of CFOs who have no short-term cash flow challenges, then count your blessings. But for the rest of you, this is the time to assess where you are heading and what you need to get there. What is your current access to capital? Do your investors have the wherewithal and desire to support you right now? Are your bankers willing to be flexible in delaying loan payments? How much revenue can your sales team generate in the next 90 days and how much of it is collectible? Have you spoken to your suppliers about stretching payables? Obviously, you don’t want to put an essential business partner in a perilous financial position, but if you can stretch things 30 or so days, that might make a significant difference.
Also, keep in mind that the cheapest form of capital comes from improving operational efficiency by reducing expenses. This might be an ideal time to evaluate your expenditures and determine whether or not they are truly necessary for your survival. If not, jettison them.
4. Take care of yourself
While it may be tempting to work 18 hours a day for the next few months, such an approach is not sustainable for more than a few weeks. Make the commitment to daily exercise (even 30 minutes a day will make a difference), eat right and get lots of sleep. You know – the things that you have always known you should do, but probably did not. If your kids are home, this is a wonderful opportunity to spend quality time with them. I’m having dinner with my family every night for the first time since… well, ever, and it has enabled me to focus when I return to work.
If time allows, consider developing new skills. If you’ve always wanted to learn to speak Spanish or Chinese, but were always too busy, why not give it a shot now? I have friends who are learning to play the guitar or who are catching up on the reading they had set aside or put on a back burner.
5. Engage in Scenario Planning
Let me ask you a question. Since the start of the crisis, how many predictions have you made? And, how many of them have been correct? That’s what I thought.
While obviously none of us has a crystal ball (and if you do… please share), as a finance chief you have the next best thing: a strong analytical mind. So, work with the rest of the executive team and develop a wide range of possible outcomes, and then a financial plan that will help the enterprise not only survive but thrive. We live in a golden age of financial planning and analysis. There are amazing tools available for CFOs and their teams to run different assumptions. But don’t get caught up in “analysis paralysis.” You don’t need to run 100 different sets of assumptions to develop a window into your organization’s future.
6. Show strength
If your company is financially stable, the opportunities you have are unprecedented. When it comes to M&A activity, it has been a seller’s market for a long time. You may be able to merge with some exciting companies at a more reasonable valuation than BC (Before Covid). The artificial intelligence strategy you know you should have adopted but did not? This might be the time to employ it, as it could give you a permanent competitive advantage. What about all those young engineers you wanted to hire but could not afford? Well, they are still as smart as ever, but they are suddenly more available. It’s a risky strategy but flexing your muscles when others are showing weakness can pay dividends.
7. Rethink your business model
Virtually every organization, from the neighborhood barber shop to the Fortune 500 company, will have a different business model when the new world emerges. This is the time to reinvent your organization from the ground up. This is a true cross-functional project, so work with your heads of product, sales, and marketing, and really define your company. Start the process without pre-conceived ideas of what your company should look like. There are no sacred cows - this is an opportunity to build the company that will thrive in the new reality. It is one of the most intellectually challenging exercises you will undertake in your career but is also a golden opportunity for you to have an impact.
Chief financial officers today are positioned to help transform their organizations like never before. As a finance chief, you have the leadership skills, the financial expertise, the strategic thinking and the operational aptitude to guide your company through a once-in-a-career renaissance. CFOs of a generation ago would not have been prepared for this challenge. But you are. The world needs strategic leaders, not accountants. Take this opportunity, rise to the occasion and make a difference.