The first few months in a new CFO role can be challenging, not to mention overwhelming. There is so much to understand about a new organization but you may also be feeling the pressure to solve challenges quickly. It’s a tricky balance.
Making adjustments, without enough information, means you could be detrimental to progress in the long run. However, take too long to make changes and the rest of the executive management team may start to question your effectiveness.
The best approach is to start simple. First, understand the business landscape & priorities. Next, learn the barriers to meeting corporate & team objectives and finally assign the actions to move things forward. How this unfolds will likely vary from company to company but we like to think of the process in three steps:
- 1. Discover
- 2. Diagnose
- 3. Direct
Discover: Understand executive priorities, the financials and how the business operates.
In a ninety-day plan, learning the in’s and out’s of a company is the most involved part of the process and probably the most important. Depending on your experience level as a CFO, it could take a couple of days or a couple of weeks.
While you dive headfirst into the financials, start learning the short and long-term objectives of your new employers. You can do this by arranging meetings not just with the CEO but with every other member of the leadership team. These meetings will help give more context to your evaluation of the company’s financial situation.
The best use of time in these meetings is to understand, at a high level, the various responsibilities of each department and how they work with the finance team. Also learn the value that finance brings to each department, the level of involvement finance has with certain decisions and historically, how well the finance department has worked with other teams.This helps set a tone of collaboration and help a positive reputation as you help other departments achieve their goals.
(Building relationships with your own team as a CFO will also be important, however, these relationships will develop naturally over time. Understanding the larger picture and how your finance team fits into it, will be more useful during the first 90 days).
When it comes to grasping the organization’s financial health, here are the core areas you should focus on:
Cash Flow: Take the pulse of the current cash position and projections. It’s important to understand the financial runway you have if sales dry up. It’s also vital to uncover liquidity issues that the company needs to quickly resolve.
Accounting Practices: Understand how things are being done and what has happened historically. It’s vital to ensure there are no regulatory issues or other areas of concern that must be immediately addressed.
Audit Issues: Work with auditors or any auditing committee to review the process and all internal safeguards.
After taking in the financials and meeting with the leadership team, it’s time to understand how the business works and how it competes in the marketplace. This can take the form of product demonstrations, site visits or whatever method works best for grasping the external environment. In short, understand how the company makes money and future revenue plans.
Diagnose: What’s working and what needs to change.
After turning over every stone, it stands to reason that some of the current procedures and goals will remain. It’s also likely that there will be strong evidence to adjust some policies and procedures. The initial fact-finding mission you embarked on across the organization will help inform which path to take. Here are some high-level things to consider:
Financial Operations & Months end
Are people getting the information they need, in a timely manner, so they can make the proper decisions? If leadership teams are planning in the absence of sound financial data, it’s impossible to pick the best strategies. Some CFO’s in this situation pick a benchmark number of days to have profit and loss statements, the balance sheet, cash flow and schedules in the hands of people who need this data. It will provide a more honest account of the road ahead and how the company should react.
Overall Growth Strategy
Now that you have a grasp of the products and services, margins and how things get to market, you can have an impact on what strategies make sense now or later on. Is profitability more important than top-line growth? Are we building new products or acquiring other companies. Are we an early entrant in the market trying to get noticed or a legacy player trying to stay relevant?
Capital Needs
After understanding how the company is generating revenue, balanced against the short & long-term objectives, what amount of capital does the company need to achieve said objectives. Can you self-finance or do you need to raise money?
Systems & Tools
Do your team and the organization at large have the processes in place and the tools they need to achieve everything. Can you measure if they are on the right track? Over 75% of the time in top finance functions is devoted to data analysis and insights, investing in the right tools can provide a more successful future for the organization. Can you pull all the data you need (not just financial) to have a single source of truth?
Delegate: The Roadmap to Financial Success
The last of your 90-day plan should be spent addressing the areas of improvement and the high-level path of execution. The ideas should be aligned with the corporate objectives; hence all the collaboration and discovery you initiated in the beginning.
This roadmap should be a hybrid of long-term vision but also low-hanging fruit, to demonstrate some value early on. As the CFO you also need to anticipate any barriers to achieving these goals and ways to address them. This plan should be detailed enough that actions can easily come from it, but still allow for flexibility as internal and external variables shift and change.
The first 90 days can be a whirlwind but if managed well, they can be a significant opportunity to impact the future of your organization and your career. The key is having an open mind, learn & listen to all vital stakeholders, collect enough relevant data to make decisions, plan and execute. It sounds simple on paper but in practice is a significant amount of work. However, it gives you, your peers, your team and your constituents the best chance at succeeding now and for years to come.
