Chief Financial Officer (CFO), when read slowly, magically conveys the weight of the responsibilities the designation endows. Sometimes a CFO has to work outside his territory to ensure the company is financially sound. A CFO normally spends his day planning the company’s direction and monitoring strategic business plans. He/she has to participate in key decisions and mitigate risk. This makes CFOs a really important part of company. In fact, there is a lot you can learn from them.
The most useful skill you can learn from CFOs includes the ability to handle investor relations smoothly, especially when you’re new to the field. On that note, CFOs Gennady Barsky, Kenneth Coleman, and Hans Vestberg provide 5 expert tips on how to sweeten investor relations.
Balancing the buy-side and sell-side
Both buy-side and sell-side analysts are important. Your focus on either of the analysts depends upon the situation and time. If you’re more concerned with prospective stockholders, your ear should tilt more towards the buy-side investors. If you’re more concerned with equity research, investment ideas, you should heed the sell-side investors more.
Plan your interactions
As a CFO, you’ll be burdened with a number of questions from investors when you talk with them. In fact, you might run out of answers, and that does not look good. Gennady Barsky suggests devising a ‘playbook’ that has all the potential questions an investor can ask with perfect answers.
“About 80% questions asked by investors during various interactions are common. If you have a sound understanding of the company’s business model, these 80% question would be the ones you can easily answer,” says Gennady Barsky. CFOs should plan and structure everything, emphasizes Hans Vestberg, “Structure is enormously important in order to manage the complexity and size that we have.”
Every development should be communicated
CFOs need to ensure the company’s capital, earnings, margins, and other parameters are communicated to stakeholders whenever a milestone or an important development is made. Stakeholders have made considerable investments in your company and they want to know your gameplan, the objectives you wish to meet in a given time. “In case there is an incremental change to your model, a CFO must be able to cite the milestones affected by that change,” suggests Gennady Barsky.
Kenneth Goldman advises to let go of hubris when dealing with investors or when working with your team. “Avoid complacency. What occurs at a lot of companies is hubris. I’ve been at firms where everything was going up, however, we let hubris affect the team and missed some of the key trends,” advises Kenneth Goldman.
Cross-functional professional development is a must
CFOs need to think out-of-the-box as well if they wish to see the business grow. You need to see the big picture, a well-rounded view of your operations. It’s why cross-functional professional development is important. It helps you learn about all the business functions. This will help you communicate better with various assets in your company and it will instil leadership and managerial qualities.
Dealing with shareholders and analysts of the both sides can be a piece of cake if you earn their trust with good results, smooth communication, and respect. Being a good CFO is not a huge challenge if you’re good with attention to detail. We suggest you inculcate the same characteristics in yourself if you wish to become a good CFO who can deal with investors and analysts with expertise.