You Have A Strategic Plan But Now What? The Benefits Of A Virtual CFO

INTRODUCTION:

Having updated our plans for the next 12 months and beyond, going through these with our team yesterday so that they could see our goals and understand where we want to head, it reminded me of a valuable service we offer our clients. I'm talking about the service known as Virtual CFO.

This is something that proactive small business accountants should be doing where it's needed for those businesses that are looking for direction and guidance along the way through external support. It's no good having a business plan if nobody is going to follow through.

So how would such a service be rolled out?

Figure 1: The road to business success can be rocky.  The concept of Virtual CFO services offered by small business accountants Sydney and Dubbo is no longer futuristic - they are here and now.

1. Where You Are Now

Firstly we would review the most recent financial statements an tax returns. By running through the balance sheet and profit and loss statement we will be able to see how the business is performing in key financial areas and get an understanding of what the cash cycle looks like including marginal cash flow and net variable cash flow.

Critically these findings need to be explained to the client so that they can be more easily understood. Accounting mumbo jumbo won't help anyone much!

It's possible that the financial statements may need to be rearranged into the right order so that more accurate measurements can be taken into the future. If so, notes of actions to correct this will be made and advised.

2. Where You Want To Be & When By

A brief business valuation assessment will be made. As experienced business valuers we will have a pretty fair idea as to the strengths and weaknesses driving or hindering its value.

• As a client we will want to understand:
• Where financially do you want the business to be in 5 years?;
• What is your picture of financial freedom?;
• If you had unlimited resources, what would be the top 3 things you would fix and what would their impact be?;
• What are the listed goals?

If you want to get the most out of your small business accountant Sydney and Dubbo, making sure they know what your end game is will see advice that is more informed and relevant. Advising somebody with the full picture is always easier than providing direction with only some of the objectives that are short term.

Figure 2: Why do people do this with their business and not monitor their plan? Might seem exciting but the results can be very painful.

3. How You Intend To Get There

Once the overall objectives are established, the critical numbers will be identified as to what they will need to look like over this period of time. What-if scenarios can then be modelled out using three way budget software so that profit and loss, balance sheets and cash flow forecasts can be projected on a monthly basis allowing for seasonality and other timing differences.

Targets are set and then a One Page Strategic Plan will then be formulated. Team involvement is encouraged here for valuable input.

Here is where we list a series of various 90 days projects.

4. The Plan Moving Forward

Having worked out what the end goals are, now we need to have a plan moving forward by arranging the 90 days projects or action plans in order of priority. There will always be some areas that can be identified as 'quick wins' so that momentum builds quickly and provides confidence that the effort put into effecting change is producing real results.

The quarter's plan will show who, what and when which will be reported on at the first board meeting.

Figure 3: Not having a plan can lead to this!

5. Board Meeting Agendas

The virtual CFO service is also about acting like an independent board member so that the plan can be analysed to see if planned versus actual is aligning.

Typically an agenda for each quarter will look like:

• Results for the Q1 (Q2, Q3, Q4);
• Actuals versus Budgets;
• Roadblocks that are hindering progress;
• Next quarter's targets;
• Adjustments to existing plans and budgets.

CONCLUSION:

A Virtual CFO will not be for everybody. If you feel that having a small business advisor that help you through the maze of establishing what it is you really want, what you need to do to get there and then help you keep on track, think of the enormous benefits that can result.

Are you up for the challenge?

If so, let's get in there and roll the sleeves up!