It's 2022. Let out a long, deep exhale. Together, we've made it through the first full pandemic-era planning cycle--and now we're on to the second. But before we dig deep into the next cycle, let's look--with Vena VP of FP&A Tom Seegmiller--at how businesses fared in the first.
After concluding our survey of more than 175 business leaders, we released our findings in our 2021 Industry Benchmark Report: The State of Strategic Finance. We sat down with Tom to get his take on those findings. He talked about the financial health of organisations, what finance leaders need to do to find growth opportunities and much more.
How did organisations do financially in 2021?
TS: We learned that most organisations were in a better financial position than at the start of the COVID-19 crisis. When we reflect on how much uncertainty there was back in March 2020--and of course so much was unknown at the time--could anyone have predicted where we would be today? I'm not sure I would've bet that about half of organisations would be in a better position two years later. It was certainly great news to hear. It was interesting to learn what these business leaders believed was the main cause of their organisation's stronger financial position.
What did these business leaders believe was the main cause?
TS: The majority of them thought that market growth was the catalyst for their increased revenue. But if it was something that's largely out of their control, it begs the question: Are they as financially healthy as they should be? Now I don't necessarily label this as a product of luck--we saw some leaders cite product initiatives, and a small number attributing mergers and acquisitions to their revenue growth--but for most businesses, it didn't appear that it was a product of anything they did themselves, but rather general market growth. Which makes me believe--based on more of what we learned--that opportunities for growth are still available for many.
Watch the video to learn Tom's three tips for finance planners.
To watch the full episode of CFO Confidential: The Rise of Strategic Finance, featuring Vena CFO Darrell Cox, Kansas City Chiefs CFO Dan Crumb and Climate Pros CFO Patricia Burkland, become a Plan To Grow member and join the community.
What leads you to believe that opportunities for growth were missed?
TS: We found that businesses simply weren't forecasting often enough. What's more important is that they weren't forecasting as often as they would've liked to--understanding that forecasting should happen monthly at a minimum, but it didn't happen. For businesses that weren't forecasting at that frequency, it's difficult for them to establish a clear, solid long-range plan and the steps to get there. When opportunities arise, they can't be quickly identified and capitalised on.
We also discovered that more than half of businesses weren't using agile planning or scenario planning. This means fewer insights for their finance leaders to uncover, making it much more difficult for them to identify growth opportunities for their organisation.
What do finance leaders need to do to find those opportunities for growth?
TS: Be curious--always. It's about doing everything you can in finding those opportunities for your organisation. You need to investigate every area of your business operations and you need access to more information, both financial and operational.
Start by asking questions about everything operations-based--not just the numbers. Questions such as, "Why are we doing this? How does it optimise our future?" They help you get a more intimate understanding and knowledge of your company.
But the work of finance leaders, strategically, focuses mainly on the communication itself of these opportunities to their business. To be an extraordinary finance leader, you finish by translating your uncovered insights into actionable insights. Only then will it translate into improved financial results for the business.
To find out what next steps you can take to future-proof your organisation, download your FREE copy of The State of Strategic Finance: Vena's 2021 Industry Benchmark Report.
