Choice Points Encountered When Framing Finance Challenges

Choice Points Encountered When Framing Finance Challenges

Finance challenges should be prioritized based on choice points related to characteristics, solutions, impact, and resources.At some point or another, every business owner and executive will face finance challenges. Some will be fairly small with relatively minor consequences, while others will have potentially significant consequences in the future.

When facing these business finance challenges, you will encounter choice points in several different areas. These include how you define the challenge, the impact of the challenge, options for solutions to the challenge, and resources that can deliver solutions for resolving the finance challenge.

Following is a look at each of these choice points, as well as continuums of options that can help you achieve clarity when it comes to meeting business finance challenges.

Choice Point #1: Characteristics of the Challenge
Challenges can range on a continuum from low importance to high importance. You can generally wait to address less important challenges, while more important challenges should be viewed with more urgency. Challenge characteristics can also be viewed on a continuum of standalone and less complex vs. interdependent and more complex.

Choice Point #2: Impacts of the Challenge
Potential impacts of finance challenges can range from low risk to high risk, and low cost to high cost. If the impact of the challenge from a risk and cost perspective is fairly low, waiting may be the most viable course to take. But if the impact on profitability, cost structures, performance and shareholder value is potentially high, you should be proactive in identifying and implementing solutions to the finance challenge. You should also factor in accrued and continuing costs of not acting. These costs can include unnecessary expenses, reduced productivity and lost opportunities.

Choice Point #3: Characteristics of Potential Solutions
Solutions to finance challenges can be quick, easy and less expensive. But doing so doesn’t always deliver a correct solution. Another consideration is solutions can be viewed as a business expense, or a business investment with a measurable ROI. The more important the finance challenge is and the higher the risk it presents, the easier it is to cost-justify a higher-budget solution.

Choice Point #4: Resources for Resolving the Challenge
The resources and bandwidth needed to resolve finance challenges may reside in-house, or you may need to retain outside expertise, such as a provider of executive professional financial services. Also, resources may require low to high levels of experience and expertise.

It’s important to note that not all executive professional financial services providers are created equal. This is best illustrated in annual salary and benefit surveys for C-suite executives like chief financial officers. These surveys usually display a percentile format in which the highest-paid CFOs have more relevant experience, higher-level expertise, and complex challenge resolution skills. They have also worked at larger corporations than lower-paid CFOs.

How a Project CFO or Part-Time CFO Can Help

An on-demand CFO from a CFO services firm can help you analyze the choice points and continuums linked to successful resolution of pressing business finance challenges. This high-level financial professional will bring an objective, third-party perspective to your finance challenge, along with experience as a former enterprise CFO who has addressed multiple real-world business finance challenges.

An initial complimentary consultation with a part-time CFO or project CFO typically includes:

  • Reviewing considerations and choice points like those listed above.
  • Clarifying the nature of the finance challenge.
  • Discussing approaches to meeting finance challenges and various “what if” scenarios.
  • Prioritizing factors, impacts, resources and solutions for meeting finance challenges.
  • Clearly identifying target value expected from these solutions.

Concluding Thoughts

At some point, every business owner will face finance challenges — some small and inconsequential and others highly significant with major consequences. When facing these challenges, you will encounter choice points in several different areas, including challenge characteristics and impact, as well as options and resources for meeting them. An on-demand project CFO or part-time CFO from a CFO services firm can help you assess the choice points and continuums involved, prioritize the challenges and team with you to resolve the most pressing and high-value ones.

Arthur F. Rothberg, Managing Director, CFO Edge, LLC

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