The global pandemic continues to disrupt our work and personal lives. This has created both challenges and opportunities for small and medium-sized businesses, which need to be flexible and able to draw on expertise in all areas across their market and disciplines. Companies that can quickly restructure their business strategy will be in the best position to overcome the recession and respond to new opportunities.
Strategic Planning and Assessment Mitigate Against Recession
The current environment has created excellent opportunities for SMBs to respond more quickly to disruptions such as inflation and supply chain issues. SMBs must have a deep knowledge of their business and market to thrive in this new world. Strategic planning and ongoing assessment are essential disciplines in the face of ongoing uncertainty. That means knowing how the various pieces of your business function and what ties them together.
But some foundational work must be done for this effort to be effective. First, you must understand how money moves through your business. This is essential when you are forced to resolve issues caused by inflation and supply chain disruption. If you don’t have the resources on your team to answer those questions, you should consider engaging with an outside financial expert, such as a fractional CFO.
Once this financial strategy is in place, you can assess your situation and revise your business strategy. This will require data on each aspect of your business processes and projections of the impact of future disruptions. You need to assemble a prepared team to dig into the numbers and talk to people inside the company to find the best answers. To get the most from this process, an owner should consider hiring an outside, experienced facilitator.
Effective Strategic Planning in Uncertain Times
Strategic planning is still an essential tool in the face of the large, disruptive changes from the global pandemic. A strategic plan works from high-level questions down to operational details. It’s important to remember that a strategic plan is a dynamic document that helps you answer two fundamental questions: Where should you play? And how will you win?
The biggest impact of the global pandemic on strategic planning has been timeframe. No longer are companies thinking in terms of 3-, 5-, and 10-year plans. In the current environment, strategic plans should be revisited at least yearly, and business plans quarterly or even monthly. A business owner shouldn’t have to guess how certain decisions will play out. Your business strategy should give you a set of variables to play with and help you envision the future state of your company. An effective business strategy is both a roadmap for normal times and a gauge to assess new opportunities. And a strategic plan defines how that strategy is being deployed in your business right now.
Fractional Employees Help SMBs Fill the Gaps
An effective strategic plan is a good place to start, but it won’t accomplish anything if you don’t have the talent or capacity to put it into action. Businesses are facing one of the tightest labor markets on record, and the great resignation has made the market for qualified employees highly competitive. But there’s an upside to this shift in workforce demographics. Increased resignations have flooded the market with retired executives looking to apply their expertise.2 So, contracting a fractional or outsourcing C-Suite member is often the right solution.
Business owners should know it requires a particular mindset to work as an outsource C-Level provider. Being a fractional member of the team means you need to be able to get up to speed quickly and find places to make your influence felt. That means learning to advise and execute, often simultaneously. Not everyone coming from a full-time, big company background can do that in an SMB environment. You should look for a fractional C-Suite member who has proven they can adapt quickly to the needs of an organization of your size. And don’t be afraid to ask for references like you would from any other employee.
Ongoing Solutions for a Tight Labor Market
Challenges in the labor market are not going away, and many SMBs are just beginning to grapple with what this will mean.3 The first solution is to retain your employees, which may tempt you to do whatever you can to keep someone from leaving. But a discontented or unengaged employee is also a cost to your company,4 so it is best to have an alternative. A fractional expert can help you fill a key role and give you a perspective on what you really need. You may find you can get by with less or reshape that role with other full-time and fractional resources.
A second solution is to invest in a technology solution. If you can’t hire more people, then make the people you have more efficient. Businesses are now considering technology solutions that would previously have been out of reach. But these solutions come with a downside. While they promise dramatic improvements, they may require significant training, support, and customization to deliver your desired benefits. By some estimations, as many as 75% of the companies that have taken on one of these implementations see them fail.5 Those mistakes can set a company back months or years or even sink it completely.
This is another place where outsourced expertise can be of immense value. The solution provider will offer to help with the assessment, planning, and implementation, but they are incentivized by selling you their product in a profitable way. As a result, their solutions sound great in the sales presentation, but there are always unforeseen challenges and costs. You may need an outside, objective perspective to help you design the process, evaluate the technology solution, and implement the one you choose.
Bringing in an outsider with experience in technology solutions can provide invaluable perspective and expertise. While the right technology can greatly boost a business, these services will not answer questions you don’t know how to ask. And, if deployed too soon, they will only worsen your confusion and uncertainty. As with any significant change, a better strategy is to work with a team to design the process you need without committing to a particular solution. To lead or contribute to this process, fractional expertise can make the difference between success and failure.
Deploying a Dynamic Strategy
Now, more than ever, a business strategy needs to be a dynamic part of daily operations. The investment in a good strategic plan may seem high, but the benefits of doing the work will prove their value in the long run. This, coupled with the ability to bring in fractional expertise, can help SMBs succeed in the uncertain times ahead.
About Seth Morgan
Seth Morgan, founder, and CEO of MLA Companies is a strategic advisor to several companies, bringing insight and accountability to leaders. He also represents sell -and buy-sides in M&A transactions. Under his leadership, MLA has become one of the largest, most recognized CFO outsourcing groups in Southwest Ohio. Before establishing MLA Companies
Seth’s path has led through public accounting, private turnaround efforts, and entrepreneurship. Seth is a sought-after speaker, commentator, writer, and policy advisor. Having served as an elected official at both local and state levels, Seth has a unique perspective on policies, people, and their mutual impact on each other. Seth has an MBA in Finance from the University of Dayton.
About MLA Companies
MLA Companies is not a CPA firm that also does consult. They are consultants whose customized, value-driven approach offers processes and services that align to clients’ needs and future growth. Founded in 2006 by CEO Seth Morgan, they are financial experts positioned to understand a client and their businesses – to protect, guide, and empower. Clients who invest in building relationships with MLA Companies know that their purpose will not change, but their service offerings can grow as the business grows. At MLA Companies, the discussion with a client is centered around purpose and growth first – then finance and services second. Visit https://mlacompanies.com/
- Seth MorganFounder and CEO at MLA CompaniesSeth Morgan. (2022, April 21). The importance of a fractional CFO for startups and SMBS. StartupNation. Retrieved September 21, 2022, from https://startupnation.com/manage-your-business/accounting-finance-funding/importance-fractional-cfo-startups-morgan/
- The rise of the fractional CFO. FEI. (n.d.). Retrieved September 21, 2022, from https://www.financialexecutives.org/FEI-Daily/September-2021/The-Rise-of-the-Fractional-CFO.aspx
- Levanon, G. (2021, December 10). The top trends in America’s job market. Forbes. Retrieved September 21, 2022, from https://www.forbes.com/sites/gadlevanon/2021/08/17/the-top-trends-in-americas-job-market/?sh=50d89195c146
- Fechter, J. (2022, July 15). What is the cost of disengaged employees? HR University. Retrieved September 21, 2022, from https://hr.university/cost-of-disengaged-employees/
- 2 reasons why ERP implementations have high failure rates. Pemeco Consulting. (2022, August 19). Retrieved September 21, 2022, from https://www.pemeco.com/two-big-reasons-erp-implementation-failure/
By Seth Morgan, founder and CEO of MLA Companies