Amidst ongoing economic uncertainty, controllers and CFOs the world over are encouraging their businesses to scale back, shutter the proverbial windows, and brace for impact. But is hunkering down really the ideal move for your organization?
While you certainly need to prepare your company for the worst, you don’t have to do that at the expense of growth. By embracing a growth mindset, you can help your business thrive before, during, and after the economic storm.
The Three Pillars of the Growth Mindset
From a strategic perspective, having a growth mindset includes focusing on the following three key components:
Customer Retention and Acquisition
Customer retention and acquisition are foundational to the growth mindset. Maximizing the average lifetime value of existing customers will help the business maintain a steady cash flow during lean economic times.
Likewise, streamlining customer acquisition processes and keeping down the costs of bringing in new clients will provide the financial flexibility necessary to explore other growth opportunities.
After CFOs and controllers have addressed customer retention and acquisition, they can shift their focus outward.
Horizontal expansion is generally less costly and more practical than breaking into new verticals, although a CFO or controller who has embraced the growth mindset will strive to do both.
An organization can pursue horizontal expansion in several ways, including partnering with or acquiring adjacent businesses or releasing new products within its current niche. Alternatively, businesses can expand horizontally by targeting new customer segments or geographies. This strategy is particularly useful if a major competitor has recently scaled back its marketing efforts.
Creating New Businesses
CFOs and controllers who effectively master the first two pillars of the growth mindset will have the opportunity to explore new business opportunities. Understandably, attempting to launch a new breakout business during a recession may be the last thing on your mind.
With that being said, when your competitors scale back, they are creating a void in the market. You can acquire a foothold in this market by targeting underserved consumers and continuing to innovate.
How to Embrace the Growth Mindset
As a CFO or controller, you have to make a conscious decision to adopt the growth mindset. While the way in which you go about this will be unique based on the industry you operate within, the size of your business, and your organizational goals, there are a few things you must do to prepare.
Specifically, you should:
Prioritize Cost Optimization
Waste is the enemy of business growth, especially during times of economic uncertainty. Every dollar or labor hour that is wasted detracts from your ability to pursue growth opportunities and can compromise the efficacy of your strategy. With that in mind, you need to seek out and eliminate waste wherever you find it.
As part of your cost optimization efforts, you should consider adopting new technologies and processes. Upgrading your technology can provide the insights you need to accelerate decision-making and pinpoint waste.
Leading solutions may also include artificial intelligence (AI) and machine learning (ML) technologies, which you can use to orchestrate process automation.
Conduct Extensive Scenario Planning
When exploring new technologies, consider platforms that include scenario planning and prescriptive analytics capabilities. These technologies will allow you to explore a multitude of “what if” scenarios and identify the best path forward for each set of circumstances.
When conducting your analysis, prioritize scenarios that are most likely to occur and build a response plan for each potential outcome. If you already have a plan in place for events that are likely to occur, you will be able to respond quickly and maintain your growth trajectory even when faced with major hurdles.
Learn more in Scenario Planning for Finance Executives.
Engage in Strategic Decision-Making
CFOs and controllers need to fiercely pursue growth. However, they also need to mitigate risks and guide every decision by using real-time insights about the company’s financial health and performance.
To support strategic decision-making, CFOs and controllers must track a variety of financial performance metrics. Doing so requires a modern analytics solution that includes custom dashboarding and reporting capabilities.
Every organization already gathers an abundance of financial data. The most successful ones know how to put this information to use.
Using a Growth Mindset to Look Beyond the Storm
Whether the current economic turmoil leads to a full-fledged recession or not, one thing is certain: the economy will inevitably bounce back. When it does, businesses that transitioned into survival mode will take months (or even years) to rebound from their financial hibernation.
However, growth-minded controllers and CFOs will have put their organizations in a position to thrive.
The question is, which path will you take?
If you want to set your company up for long-term success in the face of economic downturns, you need to adopt a growth mindset.