A CFO is vital to your business, as they’re in charge of making the best financial decisions for the company. If you don’t have a CFO and are taking on the duties of one yourself, then you need to exercise caution to avoid mistakes.
A mistake in carrying out your CFO duties could cause your business to miss out on critical opportunities for growth and lose revenue. Here are a few common CFO mistakes and how to avoid them.
Making Budget Cuts with Unrealistic Targets
Making budget cuts is meant to reduce business expenses and increase revenue. Done right, it will greatly benefit your business. However, you could greatly disrupt it instead if you create unrealistic cost reduction targets or if you make cuts without preparing provisions to maintain performance.
For example, you might see marketing as non-essential and scrap the budget for it. However, this can have several negative impacts on your business and result in a net loss.
Set realistic budget cuts and find viable, alternative ways to continue operations. If you’re cutting your marketing budget, do so by using cost-effective marketing methods like digital marketing.
Using Unsustainable Cost-Saving Approaches
Many businesses take drastic measures to optimize costs (such as budget cuts) during economic downturns. More often than not, they fail to maintain these measures because they come with heavy repercussions to growth, employee morale, and customer loyalty.
You need to take sustainable approaches to building your cash reserves. Making incremental changes to the way you run your business gives you time to see if the changes are beneficial, employees time to adapt, and provides the best long-term outcomes.
The changes you make could be something as small as simplifying your business processes or reallocating resources away from underperforming investments.
Expanding allows your business to grow, create more sources of revenue, and attract new customers. However, it can also slow your business down, and expanding without a solid plan can mean less profit.
Expansion comes with risks, and if your business isn’t running smoothly already, then it’s better to focus on what your business is already good at.
Scale up in areas where your business performs best. This way, you’re making fewer but safer investments in ventures you’re likely to succeed in. It also differentiates you from competitors that offer a wider, more general range of products and services.
Neglecting Innovative Technologies
If you don’t pay attention to trends and new technologies, you’ll miss out on profitable opportunities for growth. New technologies enable you to better meet consumer demands, scale your business, address inefficiencies, and gain an advantage over your competitors.
Getting new technologies to aid your business may seem like a mere convenience and therefore an unnecessary expense. However, they can more than make up for their costs. Automation, for example, could greatly increase profits by reducing operational costs, increasing productivity, and minimizing human error.
Avoid These Mistakes with Our CFO Consulting Services
Quadrant Advisory has a team of highly experienced business consultants ready to help you. With our CFO services, you’ll avoid mistakes that could hinder your business’s growth and get the benefits of hiring a full-time CFO at a fraction of the cost.
Schedule an appointment today by filling out our contact form.