6 Business Trends CFOs Should Follow in 2020
To remain competitive, it is imperative to consider key trends in the market. As finance leaders, you must stay up to date on marketplace trends in not only finance and accounting, but also across the entire business. As you head into 2020, consider the following trends, their potential impact to your business, and how you may work across the organization to implement them to improve your business and profitability accordingly.
Trend #1: Using Business Intelligence (“Big Data”) to Create Actionable Information
Collecting and analyzing data on your customers, vendors, inventory, services, etc. can provide significant insights for your business. Data can be analyzed to create meaningful and actionable information to improve your decision-making ability leading to improved profitability. Business intelligence software tools to collect, analyze, and report on data collected are now more affordable than ever.
Specifically, data can be utilized to:
- Improve competitive advantage
- Improve reporting for better planning and decision making
- Improve operational efficiency
- Provide marketing solutions through data-driven marketing
- Understand the habits and profitability of customers
- Understand the costs and profitability of product/service lines
- Better understand risks associated with your business through identifying root causes for failures
While considering business intelligence, it is also key to ensure that your financial information is organized to provide you meaningful reporting. Consider revamping your chart of accounts to reflect your current (and potential changes) to your business model. Better financial data through reporting can provide compelling and significant insights through dashboards to visualize impacts
Your COA should:
- Reflect your business model – a better match will provide the right information to make reliable, effective, and timely business decisions.
- Create an opportunity for more informative reporting and to provide the right information for key metrics.
- Include enough detail in your reporting to make effective business decisions
- Continue to update your accounts as your business evolves.
- Provide less of a struggle when preparing financial information for reporting and taxes.
#2) The Acceptance of Electronic Payments
Electronic payments are becoming an expectation in the market. The advantages include time savings (quicker cash flows and no need to deposit customer payments) along with providing for a potential competitive advantage. Electronic payment options are the preferred method for customers, creating a competitive advantage over other businesses who do not offer this option.
Along with the advantages noted, it is also important to consider cybersecurity risks and ensure appropriate security measures are in place with the payment system and storage of sensitive customer information. Another obvious factor is transaction fees. To alleviate the impact to your profitability, consider embedding costs into customer pricing.
#3) Drawing From Experts Found Within the Gig Economy
The gig economy can create a competitive advantage for your business. Why not bring in a contractor or “fractional” resource for a project (strategy, business development, finance, HR, etc.) rather than hire for the long-term and pay benefits when this doesn’t meet the business need? This is a fast-growing trend and expected to be half of the US workforce in the next three to five years. By engaging with consultants/contractors, your firm can reap the benefits of expertise on an as needed basis. (Learn more: “How One CEO Grew His Business by Leveraging C-Level Consultants.”)
#4) Allowing Employees to Work Remotely to Increase Productivity
Space and infrastructure can be a restraint for a small business in terms of costs and commitment. With available technologies (laptops, smart phones, video conferencing, etc.), the ease of working remotely is greatly increased while staying connected with customers and co-workers alike. Not only will your business reap the benefits of cost savings, various studies have shown that employee productivity and satisfaction are increased through telecommuting. In addition, this option provides the allowance to hire the best talent from across the country or even the globe.
#5) Implementing Customer Review Management
Managing customer reviews of your business is of increasing importance with the significant increase in e-commerce. It is no longer an accessory but must be a key component to business development. In addition, since smaller organizations tend to have limited marketing budgets, this is more important than ever since your customers (individuals and businesses) rely heavily on prior customer experiences.
I recommend collecting and analyzing this data within your business intelligence tool to review for key words and sentiment that impact your business reputation. Again, this information can be utilized to drive marketing campaigns directed to customer loyalty and retention.
#6) Committing to Strategic Change
As industries and businesses change due to changing trends, processes should change alongside the business. To remain competitive and survive in today’s environment, businesses must change along with rapid technology changes, to meet the needs of their target market, and any relevant changes in the industry/economic environment. Along with these changes, businesses must reevaluate their processes and implement appropriate changes to ensure success.
Strategic change may be necessary from manufacturing, product/service delivery, accounting, and internal controls to name a few. Thus, it is critical for management to identify what trends are relevant to success for their business, implement, and continue to evaluate the environment they exist in.
Make it a priority to stay on top of these trends in 2020. Feeling overwhelmed? <Contact us!> We’re standing by, ready to help.
About the Author
Ann Wilson, Senior Consultant, Fahrenheit Advisors, brings more than 20 years’ experience in accounting/audit, project, and change management in a variety of industries to Fahrenheit’s clients. Ann possesses a wide range of experience, including, budget/forecasting, cost reduction/avoidance, reporting & analysis, financial/trend analysis, risk management, asset management, Sarbanes Oxley, SEC reporting, and more. With her background, Ann is able to help our clients assess and improve their financial and accounting functions, processes, and systems. Ann particularly enjoys process/continuous improvement to help our clients create efficiencies, reduce costs, and achieve desired results.