Plan Your Work and Work Your Plan– September 2017

This post involves strategy. The business plan translates the entrepreneur’s dream into a vision and expresses the pursuit of the vision through a mission statement. Positive execution of the mission statement is based on broad parameters of how the vision will be achieved over time. While the development of the business plan needs input from the CFO, it is far more than a document to achieve financing.
The CFO can contribute to an effective business plan in several ways. These include helping clarify the business concept; aid in SWOT analysis of competitors; formulating and assembling financial projections; and help avoid certain pitfalls encountered by many firms when they formulate a business plan.
When the CFO clarifies the business concept, we mean the CFO adds lucidity to the CEO’s vision. This effort entails an explanation of the products and services the business offers in terms that the average reader will understand. For example, rather than focus on scientific and engineering aspects of the business, the CFO may explain why the products are valuable to the customer. The CFO can also demonstrate the potential of the business model in ways that the reader can easily grasp. One instance may be to demonstrate growth potential by showing how steady increases in market share and/or pricing power over several years can drive sales and profit growth.
The CFO can contribute to a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of competitors in a number of ways. One is to identify the top 5 competitors, as well as competitors who may decide to enter the market at a later time. Another is to gather intelligence from suppliers, bankers, attorneys, and CPAs. The CFO can also scan competitor websites as well as internet message boards, Twitter, and Facebook. Moreover, the CFO can compile historical financial information regarding competitors. This can provide insights into benchmark development for the firm. Another way the CFO can be helpful is to get information on competitors from contacts at the firm’s customers. Finally, the CFO can describe the competition’s strengths and how they come to market.
A key responsibility for the CFO is to provide financial projections, including the underlying assumptions. Additional financial information the CFO should provide is breakeven analysis (units and dollar volumes); key financial ratios (liquidity, efficiency, profitability, capitalization); and financial strategy as it relates to funding, working capital management, and capital allocation priorities.
The CFO can be of great value in identifying pitfalls to avoid. This can be accomplished by:
1. Encouraging input from low level employees
2. Help employees understand how their current position relates to the business plan.
3. Avoid the temptation to use “hockey stick” projections, which are unrealistic and often dismissed by the readers of a business plan.

The business plan translates the entrepreneur’s dream into a vision and expresses the pursuit of the vision through a mission statement. Positive execution of the mission statement is based on broad parameters of how the vision will be achieved over time. While the development of the business plan needs input from the CFO, it is far more than a document to achieve financing. The CFO can contribute to an effective business plan in several ways. These include helping clarify the business concept; aid in SWOT analysis of competitors; formulating and assembling financial projections; and help avoid certain pitfalls encountered by many firms when they formulate a business plan.
Capitol CFO Solutions serves customers in Washington, D.C., Maryland, and Virginia. Please contact us for a free consultation.