Can Finance Become a Strategic Partner into the Small Business?

Much has been written About how financing organizations can become strategic partners with the companies they support. While purported experts point to many different frameworks, scorecards and key performance indicators, etc. as the keys to bridging the gap between finance and business, these trite ‘solutions’ have done little to earn fund the strategic business partner it attempts to be. Worse yet, pursuing these ideas have placed fund associations on a treadmill where they expend energy and resources (e.g., time and money) finally to get nowhere while the problem persists. So if you are still searching for a silver bullet or quick fix to this apparently incurable problem, stop reading now.

Given the time, money And effort, you might be a bit demoralized as well as speculating that the finance-business chasm cannot be crossed. Paradoxically, the connection between finance and the company has been under fund’s proverbial nose for a while – source allocation. A significant concerted effort to optimize a company’s resource allocation finally empowers finance to develop the bridge between strategy and finance. This discipline called corporate portfolio management functions to actively manage the business’s resource allocation for a portfolio of optional investments. All companies allocate their funds – hardly any optimize their resource allocation. Finance is uniquely positioned to enable this because they sit at the nexus of information and information needed to undertake a corporate portfolio management campaign.

From Resource Allocation to Strategy

First, it is worth Knowing the link between resource allocation and plan – they are the same. Where you allocate your funds is the strategy. PowerPoint presentations, speeches by senior leadership, strategy bullets well framed on a wall, etc. are interesting and possibly useful, but they are not your company’s strategy. As an example, if your stated corporate strategy is to get the most engaged and loyal clients (this sounds great, right?) but you allocate all of your investment dollars to getting new clients, your strategy is truly around customer acquisition. This Three ways that Kuran Malhotra helps businesses to succeed is a really simple example but clearly shows the dichotomy that may and frequently exists between a real and stated strategy.