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4 Areas for Small Business Finance Leaders to Focus On

4 Mins read

The past two years have seen unprecedented social change and disruption. From the pandemic to supply chain shortages to inflation, businesses have been facing one obstacle after another. This disruption demands new kinds of leaders capable of delivering purpose-driven strategies flexible enough to embrace digitalization and new ways of working. U.S. finance leaders are redefining their roles beyond focusing on boosting sales and revenue.

Today’s finance teams use data and insights to add value and shape the future, not just report on past numbers. They now name their top priorities as upgrading software and technology solutions to drive digitalization, integrating emerging technologies into their company, and developing new products and services. Instead of just being holders of the purse strings and keepers of historical records, finance leaders are now future-focused strategists and advisors capable of providing guidance and insights where their businesses need them most. Real-time analysis and predictive modeling and forecasting can help small businesses see around corners, rather than looking in the rear-view mirror, during this time of unprecedented disruption.

With that in mind, here are four ways that small business leaders can set up their organizations to thrive during this age of digital transformation.

1. Nurture non-traditional skills

Expanding the financial team’s skill set is crucial for staying a step ahead of the competition. As finance teams increasingly get asked to act as future-focused advisors, finance leaders should proactively nurture interpersonal skills and creative problem-solving. Research by EY found that CFOs and those in the finance function need to build up their people skills in order to be most effective. Developing “soft” skills based on emotional intelligence can happen through leadership courses and mentoring opportunities and significantly impacts their ability to become more empathetic communicators – effectively collaborating with others and creating a positive company culture. Since team members also need to be able to distill large amounts of data into usable information to best understand and predict our constantly changing world, investing in skills and training courses like statistics and advanced analytics will also prove supremely beneficial to small businesses.

In addition to upskilling existing employees, companies can also confirm these new skills are present when recruiting new employees. Ensuring that employee skills match the new requirements of the finance team will produce happier employees and a lower turnover rate. In a recent PwC pulse survey, they found that 77% of executives stated hiring and retaining talent was their most critical growth driver. And with the ‘Great Resignation’ in the U.S. expected to continue throughout 2022—the nation’s “quit rate” already reached a 20-year high—recruitment and retainment will likely remain a top priority.

2. Upgrade technologies

COVID-19 lockdowns in 2020 and 2021 accelerated the rise of digital customer services. Now, consumers expect instant transactions, self-service tools, and always-on support. Beyond boosting sales and revenue, our recent research found that U.S. finance leaders now name their top priorities as upgrading software and technology solutions to drive digitalization, integrating emerging technologies into their company, and developing new products and services. This highlights a defined and responsive approach to striving toward meeting customer expectations.

Another common focus is Artificial Intelligence (AI) and Machine Learning (ML). Almost two in five finance leaders (38%) say that AI and ML will have a major impact on creating or maintaining a competitive advantage for their business in the future. However, less than half (47%) say that their wider organizations are prepared for upgrading software, developing new products and services (46%), or integrating new technologies (46%). This lack of readiness could not only leave them vulnerable to a customer exodus—but also dangerous digital threats.

3. Prioritize cybersecurity

Compared to 2020, the number of U.S. data breaches in 2021 increased by 10%, in stark contrast to a worldwide decrease of 5%. It’s no surprise that Americans are more conscious of cybersecurity threats than their counterparts overseas. 16% of U.S. finance leaders believe that cybersecurity threats hold their organizations back.

Age is also a factor. As digitally-native older millennials, or ‘Xennials,’ ascend to financial leadership positions, they’ll have a greater understanding of online dangers than their predecessors and greater visibility into cyber threats than their younger peers. As a result, one-fifth (20%) of leaders aged 35-44 feel the danger of digital attacks is palpably impacting their business, versus only 9% of those aged 45-54. Meanwhile, 40% of finance leaders think that AI and ML will significantly impact cybersecurity over the next three years. But these powerful technologies are not ‘plug and play’ additions—they require specialist help to set up and maintain.

4. Commit to ESG programs

As we move ever closer to the U.S. target of net zero emissions by 2050, climate concerns are intensifying for both businesses and consumers. Now, four in ten Americans say they would boycott companies that fail to go green. That’s why finance leaders aged 25-34 are more likely to indicate that enhancing sustainability programs is a top priority for their organization than their elders. Small businesses that develop Environmental, Social, and Governance (ESG) initiatives and reporting focused on sustainability will be more in line with eco-conscious younger generations. Reducing waste through companywide recycling initiatives, prioritizing using sustainable vendors throughout your supply chain, or making contributions to causes that promote social good are all ways to appeal to both consumers, clients, and prospective employees.

Ultimately, to meet the demands of today’s business landscape, small businesses must diversify their expertise and recruit the right talent, as well as ensure they implement emerging technologies and purpose-driven programs. The essential characteristic of leaders who can take on these new challenges and responsibilities is versatility. The new generation of small business finance leaders must be able to balance the traditional and non-traditional finance roles to positively impact the bottom line of the business.

Terence Cummings is the Vice President Small Segment and Business Operations at Sage.

Finance leaders stock image by everything possible/Shutterstock

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