Efficiency is a trait businesses prize in CFOs, but it’s essentially a backward-facing skill. It relies on using the resources you already have and getting the most out of them. Effectiveness, on the other hand, is a forward-facing quality; it’s rooted in setting new goals and acquiring new resources. Being an efficient CFO is good, but being effective in your role is what propels your company forward. Here are five habits CFOs should cultivate to become more effective in their roles.
Thorough Industry Knowledge
There’s no way around this fundamental tenet of business: Knowledge is power. The more you know – not just about finance, but about your specific industry and its needs – the more capable you are at serving your organization’s needs. Understanding the rhythm and flow of your particular business lets you prepare for growth in ways that a textbook approach can’t. To understand your business better, work with other department heads and C-level executives to get a handle on their priorities. Learn the CEO’s big-picture plans thoroughly. Find out what the R&D team is working on for the next quarter, the next year, the next decade. Talk to the marketing team to see how they’re going to bring in more revenue and what they need to make it happen.
Firm Grounding in Data
Every CFO knows the power inherent in numbers. Facts and figures speak volumes to those who know how to listen, and the most effective CFOs use those figures to develop meaningful metrics. By understanding and coordinating the data behind everything from marketing revenue to production and distribution costs, you’re able to see the true value of every aspect of the business. Data analysis has become more complex as data itself has proliferated, so work with your IT team on developing tools that let you manage data and understand it at a glance. Big data applications are revolutionizing how CFOs work, and if you aren’t already using these tools, it’s time for an upgrade.
A trap many CFOs fall into is looking at their company’s current realities and projecting them into the future. A small company may have modest overhead now, but as it grows and builds new regional branches, that picture changes dramatically. A CEO of an organization in the middle of restructuring might develop a scarcity mentality that limits future growth goals. Avoid this pitfall by honing your skill at deep vision and think years ahead of your current position. Distant goals still matter, and setting realistic ones gives you time enough to build the solid foundation your organization needs for lasting growth. To get a clearer view of the future, build in tools that give you greater revenue predictability and look to your organization’s past to understand the ground it’s already covered.
Across virtually every industry, the strongest CFOs are the most adaptable. Flexibility lets you take advantage of growth surges yet protect the company from losses during economic downturns by becoming more efficient. Build flexibility into forecasts and use the wealth of data you have at your command to become more agile.
Strong Networking Skills
The best CFOs don’t isolate themselves in an office; they talk with peers, learn from mentors, and participate professionally via seminars and conferences. Make time to learn, to teach, to connect with others. Inspiration comes from many sources, and the more conversations you have, the more likely you are to find that spark of inspiration that leads to growth.