The role of the virtual CFO in the strategic planning process is critical. The business is making decisions on a number of important elements determining its future.

  • Where will future growth come from

  • What impact will this growth have on margins

  • How do we protect/grow margins within our existing business

  • What operational resources do we need to support the growth

  • What impact will the growth have on working capital

  • How will up-scaling the business impact our break-even point

  • Which strategic options should be prioritised due to their meaningful impact on performance outcomes

These are just some of the questions that need to be answered during the strategic planning process. The virtual CFO will undertake the modelling to clarify the likely or possible scenarios that the business will need to accommodate.

Although the virtual CFO has all the skills required for the technical requirements of this role, he/she will also perform another critical element in this process. This involves testing the drivers of performance used in the modelling. Our experience is that this is an enormous learning curve for most SME businesses.

Naturally, the key managers have a very good understanding of what the key drivers of performance are. However, the virtual CFO will add two very important features to the management of key business drivers. These are:

  • The measurement and reporting of the key drivers to ensure a proactive focus of management on these activities

  • The analysis of these drivers to drive a deeper understanding of how their impact affects performance and how this impact may change over time (alerting management to other factors coming in to play)

Whilst the strategic plan is a key document in any business, it is not a static document. Business takes place in a dynamic environment and the key elements of the strategic plan need to be reviewed constantly. The virtual CFO provides the capacity to do this.

Our experience has shown that the development of successful strategic plans as represented by the annual 3-way forecast (the budget), is often a three stage process.

Year 1: The budget is developed from known but often untested drivers. It is an important document as much for being a framework for more effective review & learning as it is as a performance management tool.

Year 2: The learnings from Year 1 result in a budget based on a greater knowledge of the drivers of business performance. Variances to budget become more meaningful and more likely to result in performance review of key drivers.

Year 3+: The learning process never stops. The performance review of core business continues to improve whilst the learnings continue for new strategic areas of the business.

3S Synergy Group is a member of the Association of Virtual CFOs