CFOs can increase company success by getting creative

It’s no surprise that CFOs and business executives can tend to be risk-averse. Businesses need look no further than the fate of large companies like RadioShack, Blockbuster or Toys “R” Us to see how quickly the landscape can change for an industry.

While these examples can send fear into the heart of any CFO, they also show how taking risks can lead to disruption that brings out entirely new industries. Companies that were willing to take big risks — such as video-streaming platforms, ride-sharing services and online shopping — changed the landscape and saw enormous success. It is time for companies to become creative and take calculated risks in order to survive and thrive, during economic highs and lows alike. Here are five ways to be creative to consider.

Invest in technology

2022 has been full of financial uncertainty, with rapid inflation, rising interest rates and fears of a recession. In a recent survey, 98% of CEOs said they were preparing for an economic recession. Fortunately, and while it may seem counterintuitive, a down economy is an excellent time to double down on new technologies. CFOs can advise and lead the executive team in determining where to invest for the most benefit to the company. 

Investing in technology will help a company weather the storm of a recession and emerge stronger on the other side. The COVID-19 pandemic highlighted the advantage some companies had when they were forced to adapt to social distancing and stay-at-home orders. In one study, about 70% of companies that were quick to try new technology said their responses to COVID-19 were very effective, compared to about 30% of companies that did not lead in new technology use. In a rapidly changing business environment, companies that were bold and aggressive in technology use had a leg up.

Invest in the workforce

In a bad economy, companies often believe workforce reductions are necessary for a business to survive. However, studies have shown that layoffs do not usually equate to higher profits, and they are doubtless bad for company morale. While the company is not saving enough money with cuts to make a real difference, it is losing money in the long run when it needs to rehire staff. In the estimated eight months it takes for new employees to become fully productive, the business is not getting the maximum value from its workforce. 

Creative CFOs should take a risk and find ways to retain their skilled employees while cutting costs. Keeping people employed isn’t just a feel-good solution that avoids painful layoffs: It also means the company holds on to the people it needs to make the business successful without needing to rehire and train new staff when finances improve down the line. 

Instead of looking to reduce personnel to cut costs, invest more in the current staff. Put technology to use that makes employees’ jobs easier and more efficient, such as automation and the cloud. As they spend less time on monotonous, repetitive tasks, staff can devote more energy to projects that are more engaging and enjoyable for them, leading to higher returns for the company. These investments improve profitability for the company and satisfaction for employees.

Ask the workforce to invest in the company

A company that has shown it will invest in its employees will have a loyal workforce in return. CFOs looking for creative ways to cut costs without cutting employees may consider asking the workforce to make some sacrifices to help the business make it through tough times. This can seem like a big risk, especially when it has been difficult to hire and keep workers. 

When your employees know that the changes being made are an effort to keep everyone at work, they will appreciate the company’s loyalty to them, and cutting costs will be a team effort. Make it clear that what is being asked of them is temporary, and put time limits on the measures. Perhaps company parties will be eliminated for the coming year, or employees will forego bonuses for a quarter. Some employees may also be willing to volunteer for furloughs or take a temporary pay cut. The executive team must be willing to lead by example and make the same sacrifices and pay cuts that they are asking of their employees. With these creative measures, leading from the top down shows staff that the company is a team that sticks together. 

Be ready for opportunities

When the opportunity comes for a company to take a big risk — and potentially reap a big reward — its leaders must be ready to strike while the iron is hot. 

Accurate financial reports and forecasting software can put businesses in the position to take advantage of these situations. Meaningful financial reports use the company’s data and give it to decision-makers in a usable way. With the best information at hand, leaders understand the company’s real-time financial position and are able to prepare for risks and opportunities that may come their way. 

Determine your appetite for risk

Taking risks as a company must come with a balanced approach. Not all risks are right for every company, and the timing and level of risk will make an enormous difference. 

Having the right financial information all along the way will ensure companies can make appropriate decisions on which risks will have the best reward for the company. CFOs can ensure company leaders have the best financial data and help determine what risks the company is willing and able to take. With this information in hand, CFOs help make key decisions on taking risks when the time is right.

Taking strategic risks can put forward-thinking companies in a strong financial position, even during a downturn in the economy. With accurate financial information and forecasts, CFOs can ensure their businesses are able to take advantage of opportunities to make big moves and stay ahead of their peers.