A Call to Arms for Finance and Operating Executives

“The Chinese use two brush strokes to write the word 'crisis.' One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger—but recognize the opportunity.”
– John F. Kennedy

Given the sudden shift due to the pandemic, we're sharing this brief Must Do / Could Do list for financial and operating executives.

Must Do

• Update your cash flow forecast. And if your financial model doesn’t enable frequent and dynamic updates and scenario analysis, it needs to be rebuilt now. (If you need help, we have cash flow consulting experts on staff.)
• Deal with the facts on the ground. FEAR stands for "False Expectations Appearing Real." The CFO’s job is to be the most rational, grounded member of the C Suite.
• Press your case for long-resisted changes. Push for the elimination of unproductive, wasteful, ineffective programs and spend; implementation of rational controls that work for the business; and/or rationalization of pricing for products or customer relationships that are not profitable, ESPECIALLY in companies facing supply chain issues or inventory/product shortages. Your C-suite colleagues will be more receptive today than ever.

Opportunities

• Demonstrate your values. Your people will remember how your company responded to this health emergency. People are observing leadership behavior.
• Prioritize something other than this quarter’s numbers. Every public company CFO I know has projects they know would be accretive to long-term profitability, performance, and the happiness and productivity of their teams. But the constraints of managing to this quarter’s earnings defer or completely prevent their completion. Unless you’re in the video streaming, vaccine development, medical equipment, or food delivery business, nobody is expecting you to hit your numbers now. Capital investments that can be depreciated now, work that is technically an expense (e.g., customer, product, SKU level profitability analytics, pricing optimization, sales comp analysis) but is really an investment in the business, should be and really needs to be done now… The incremental spend will be a drop in the bucket compared to the global macro impacts on revenues and earnings.
• Assets are on sale, including other companies. For companies with strong cash positions and strong balance sheets, this is a great time to act.
• Evaluate whether and in what cases remote work arrangements would work AND be a strategic and profit advantage for your Company, and where they won’t work. There will be learnings from this experience that in aggregate could lower your real estate costs, broaden the geographically feasible range of your recruiting and hiring, and in aggregate reduce traffic, congestion, wasted drive time, and auto emissions in Southern California.

And, yes, we can help with all of this.

Historically, one of the positives of going to work for distressed companies as a CFO is that people actually listen, and the office of the CFO’s influence is enhanced. NOW, every company should be looking to the finance suite for measured, fact-based decision support. Please call us or use the form below if we can be of service, or visit our business stabilization and contingency planning page for more information.

– David Lewis, CEO