Developing a financial strategy is vital as a CEO. Doing so allows projections to be made for the coming months, including forecasting income and expenses, and can act as a crucial early warning system. Cash flow dips can be planned for, with the best times to start new projects identified and finance needs anticipated in advance. A financial strategy allows a CEO to assess progress and take steps to circumnavigate bumps in the road ahead.

1. ROB TOLLEY
LONDON
CEO and Co-Founder of Global Specialty Underwriters

2. How to Create an Effective
Financial Strategy as a CEO
Developing a financial strategy is vital as a CEO. Doing so allows
projections to be made for the coming months, including forecasting
income and expenses, and can act as a crucial early warning system.
Cash flow dips can be planned for, with the best times to start new
projects identified and finance needs anticipated in advance.
A financial strategy allows a CEO to assess progress and take steps
to circumnavigate bumps in the road ahead.
The Four Cornerstones of Financial Decision Making
• As a CEO, bearing in mind these four principles can be very
helpful when making important financial decisions.
• The first is the core-of-value principle, which identifies that value
creation is a function of returns made on growth and capital.
• Second, the conservation-of-value principle determines that only
increasing cash flows create value.
• Third, the expectations principle details how movements in a
company’s share price reflects shifts in stock market expectations
relating to performance and not just the company’s actual
performance.
• Finally, the best-owner principle stipulates that no business has
inherent value: instead, it has varying values to different owners
(or potential owners).

3. How to Create an Effective
Financial Strategy as a CEO
Creating Financial Projections
Monthly financial projections can be created by recording
anticipated income. This should be based on sales forecasts and the
expected expenses relating to supplies, labour, overheads etc.
Anticipated expenses relating to forthcoming projects should also
be included, and it’s a good idea to prepare a balance sheet
projection and a profit and loss statement too.
Successful CEOs like Rob Tolley know that incorporating several
scenarios in these projections can be a helpful way to assess the
impact of each

4. How to Create an Effective
Financial Strategy as a CEO
Ensuring Operational Efficiency
The efficiency with which operations within a business are managed
has a direct impact on the bottom line, so ensuring this needs to be
a part of creating a financial strategy. Streamlining is the key.
There are three main factors that influence operational efficiency:
human, organisational and technological. The first can be boosted
by promoting a positive work culture and developing effective
communication processes, while the second involves ensuring
effective organisational structures are in place. When it comes to
technology, this means the adoption and utilisation of tech – such as
automation, integrated systems and data analytics – that is designed
to enhance operational efficiency.
The Importance of Planning for Growth
A financial strategy should feed into and be informed by a clear
growth strategy. This means having a plan for profits made and
identifying ways of making sure that profit margins remain tight or
increase. The overall financial strategy should provide direction to
the business, and planning for growth is an important part of this.