The leadership team of your company might already be top-notch when it comes to the behavior of customers, the most up-to-date technology and the latest industry trends.
But without smart, forward-thinking leadership, even the most organized company can find itself facing a lack of growth or sudden problems without clear solutions. Both public institutions and private companies need smart leaders in those moments to assist in decision-making and guide the overall strategy.
Here are a few areas of focus for financial leaders steering their companies or public institutions in 2023.
Keep That Rainy Day Fund Stocked
The best time to bolster lines of credit and financing is when you least need to do it. Investors and financial institutions tend to avoid giving out raincoats when the rainy day arrives. But for financial leaders seeking capital sources when their fiscal health is highest, the emergency fund will be in times of real trouble.
Many financial leaders had decided they didn’t need to worry about big changes. Then the pandemic came along and reminded everyone that no amount of confidence or success can prepare a company for an unpredictable global event, whether it’s a pandemic, a war, or climate change.
Watch Your Spending
Yes, the old adage holds true that you have to spend money to make money. And using capital intelligently opens doors and creates opportunities that would be impossible without dropping some cash.
However, a wise financial leader understands which options an institution can afford — and which ones should be left on the table for rosier fiscal years. Budget managers serve as a vital check and balance to the strategies invented by executives or board members.
It’s the person ultimately responsible for the budget who needs to be the realist in the room filled with entrepreneurs dreaming big. Sometimes they dream too big, and it’s the budget manager who speaks the truth everyone else needs to hear.
Stay Up To Date On Industry-Specific Finances
Not every industry follows the same financial model, timetable or regulations. Financial leaders need to understand not only the big-picture of the surrounding economy, but the specific forces driving — and sometimes undermining — budgetary success.
Just as the nascent crypto currency sector can’t be compared with the hot dog stand industry, a budget manager for a local government needs to understand different fiscal implications than the same job for an oil company.
When financial leaders truly understand such nuances, it simplifies future discussions about investments and loans — while improving their credibility and that of their company or institution.
Identify The Metrics Investors Care About
An always-useful way to improve a company’s trajectory is through identifying strong performance or other metrics that showcase positive trends. That becomes crucial when looking for institutional investors who want to see clear evidence of a company — and its strength compared to peers in the industry.
Such metrics are often available only to financial leaders because part of their job involves talking with a mix of research analysts and investors, all of whom need data on how one company compares to another.
Learn Internal Indicators Of Success
Finance leaders also have a unique opportunity to identify indicators of success, especially those that are operational.
Through a strong understanding of the operational metrics required for big profits, financial leaders can offer strategic guidance that boosts the probability of success for both private companies and public institutions.