Storyteller and number cruncher

Stores that previously had no online presence need to boost e-commerce. Restaurants become delivery services almost overnight, and office work takes place only in the virtual world: Change has taken on an unprecedented pace, and many organizations must transform to survive in the new reality. These dislocations have had a tremendous impact on revenue, costs and profitability, but one thing hasn't changed with all the transformation: Companies still need to plan and weigh the benefits against the risks in all their dealings.

For as long as people have been trading, they have sought to minimize risk. Some companies are said to be too cautious. But the covid pandemic, rapid digitization, the rise of startups, and the demand for omnichannel sales and service have left them with little choice but to invest in change. But one task remains: Weighing the risks and benefits.

At the same time, the CFO also has opportunities that lie in the proactive pursuit of positive change. A CFO must be clear about the causal relationships: Is the upward trend the result of a new product, service offering, or other investment? Is it worth continuing to invest?

At the same time, the old adage "gambling reaps rewards" needs to be reconsidered. Investing in business areas or products should not resemble gambling. The basis for taking this "gamble" is therefore usually planning. Modern software solutions that include all the functions to perform what-if analyses and make it possible to develop comprehensive, data-driven strategies can help here. This is especially important when the future seems as unpredictable as the here and now.

Good CFOs become the author of the corporate story, the storyteller. They have to communicate their plans to their colleagues, who have little to do with finance, in a convincing and understandable way. The task is to literally turn the facts and figures into a story. This story is by no means a product of fantasy; it is backed up with all the important details on budget utilization and preparation, with forecasts and financial controls. It can then be dynamically compared with actual results. 

CFOs act as a trustworthy and knowledgeable voice of reason. They confidently speak a language that all colleagues understand, that is, even those who do not come from the finance sector.

Investment plans must be rooted in a careful understanding of profit and loss, balance sheets and cash flow. In doing so, companies need knowledge not only of the known drivers of their business, but also of the new ones. A leading European retailer is a good example here. For solid planning, store managers know three factors: sales figures, personnel costs and hours worked. Without this foundation, the balancing act between staffing needs and demand cannot be managed, resulting in either missed sales opportunities or high staffing costs. 

However, analyzing these relationships in concrete terms requires some mathematical knowledge. If managers have access to tools that give them an overview of how many employees are needed and when, they don't have to guess and can make informed decisions, which in turn makes their work much easier. We can all develop and implement strategies that increase our chances of success while minimizing risk. Today's CFO is in the driver's seat: as storyteller and attentive guardian of the numbers.