When it comes to maximizing profitability, Philip Varley, FCA and private pilot, reckons thinking like a flyer and applying this 12-point checklist is the way to soar through unexpected turbulence
What similarities are there between business executives maximising their company’s profits, and pilots successfully landing a plane? Pilots use checklists and standardised procedures, perform planning and risk analysis, and constantly monitor their position, to ensure that the unexpected can be dealt with in the air. A CFO should use a similar approach to ensure their business reaches its desired destination intact.
My most unnerving experience as a pilot occurred in a thunderstorm. Strong up- and downdrafts saw the plane rising and falling by 4,000 feet per minute, putting me in serious danger. However, by maintaining a level head, and using ingrained procedures, I was able to land safely.
Most FDs will be able to empathise with that predicament. Negotiating turbulence and dealing with sudden buffeting is all part of the job. For example, in a company, the loss of a major customer or withdrawal of a line of credit is the equivalent of a catastrophic loss of power. But navigating through turbulent times equates to successful profits growth. This article provides a 12-step checklist to avoid the worst conditions and maximize your profits.
1. Planning and plotting a course - the 13-week cash flow forecast
Flight plans include direction, altitude, and duration. The route is plotted on a chart with selected way points and the estimated arrival time identified. For a company this flight plan takes the form of the annual budget, which is a distillation of the strategic plan into numbers. The way points are identified in the 13-week cash flow forecast, the most critical document a company needs, since numbers don’t lie. Flying along the route requires constantly monitoring the flight instruments on the dashboard. FDs must constantly monitor their company’s key indicators on a financial dashboard.
This is an extract from the Finance & Management Magazine, Issue 206, January 2013.
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