Growing Businesses and the Accounting Function

A Visionary Entrepreneur has the talent to build an amazing business from scratch, while overcoming multiple obstacles along the way. Many visionaries do not give enough attention to the accounting function as they grow their business into a successful enterprise.

A small business as it grows needs to ensure that it manages its cash - accrual accounting and month end closes are not critical - focusing on building your business is.

As a small business becomes a big business, it is time to stop treating the accounting function as a necessary evil or as a means to an end, but as a critical and crucial part of your business.

Successful businesses need accurate and timely information from their accounting department that will allow them to make appropriate and profitable business decisions. Receiving incomplete and possibly inaccurate accounting information 45 days after month-end does not benefit the business.

As companies grow, they classically underhire in their accounting department. Thinking that they are saving money, they are delaying the inevitable.

Process. Procedures. Controls.

Companies that have not focused on these three words while they were growing had better start. These three words are the basis of accounting for larger companies. These three words will provide managers and owners with accurate, reliable and relevant information to be able to make appropriate, timely and profitable decisions.

If you find yourself in the situation as I described, do not despair. Your accounting department can deliver. You need to you put in place a plan to quickly to remedy the current situation.

How?

While many companies believe that hiring people to fix an accounting department is the right approach, it may not be the first step to take.

From my experience, when a company needs to fix its accounting department, the first step to take is to bring in a team of accounting consultants to put in process, procedures and controls. This can be very effective in ensuring the growth of their company. Companies that fix this problem first, and then hire the right people for their department, are in a much better situation.

The challenge of being a Visionary continues as your business grows. Building an effective and efficient accounting department will allow you to have the information necessary to continue being that successful Visionary.

Founderitis

foun-der-i-tis [fown-der-eye-tis]

- noun
an entrepreneur that has grown a business from startup, facing insurmountable odds, that cannot understand that the world has changed around him and that he needs to face up to the reality that if things don't change, the business will die.

Last week I interviewed an executive that is currently looking for a new opportunity. Since he left his previous employer, he has been subject to a number of consulting mandates where the businesses were paralyzed by founderitis. I thank him for sharing this term with me.

Is there a cure for founderitis?

In many cases, the cure requires a founder to realize that they have founderitis. Most often with founderitis, the disease will not let them realize that they have it.

This is because most founders believe that they can fix their business problems. They've fixed problems before - They can fix them again. They feel that outsiders don't know their business like they do, so they cannot really help.

A major symptom of founderitis is the need to be in control. For many entrepreneurs, their business defines them to such a great extent that they cannot believe (or do not want to believe) that their business can do better without their omnipotent control.

So, they live their lives trying to own 100% of a pond (or puddle) as opposed to a lesser but significant portion of a lake (or an ocean).

There is a cure - it requires going through the realization that others may be able to help them achieve their goals. It also requires building a team of management and advisors, or even a board of advisors, to be able to see clearly and come up with a strategy to continue to grow and thrive.

Most successful long-term entrepreneurs have surrounded themselves with management and advisors to allow them to achieve the success they have worked so hard for.