- your true costs?
- whether you are making a profit or a loss?
- which products should be pushed to maximize profit?
3) Budgeting & Forecasting. Without targets and goals, it is difficult to achieve them. Growth has to be planned.
Thursday, May 5, 2011
6 Reasons why an Entrepreneur Needs a Strong CFO
Entrepreneurs who are fortunate to be facing growth pains know that growth hurts. Look closely at a successful entrepreneur facing serious business growth and you’ll notice they don’t sleep much.
There are many issues that face growing entrepreneurial businesses. Growth can kill a company if it is not managed properly.
What could go wrong when an Entrepreneurial Company is in Growth Mode? Plenty. Having a Strong CFO as part of your management team will minimize the possibility of failure and increase the probabilities for long-term, profitable success.
A Strong CFO can help a growing company in the following areas:
1) Cash Management. Growing companies have to properly manage their cash, or they will not be able to fund growth. Not managing cash and planning for cash needs can lead to failure.
2) Profitability Management. As Entrepreneur, do you really know…
4) Cost management. Every dollar spent should lead to more than a dollar in value. Is every dollar being spent being spent efficiently and effectively?
5) Controls. Money may be flying out the door and you wouldn’t even know it.
6) Decision making. Without timely and reliable information, you can’t make timely and good decisions.
Want to have the cash you need to grow, make money, and make better decisions? Hire a Strong CFO!
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1 comment:
I believe this is essential thinking for Entrepreneurs and young companies. I would argue that all these components fall into a Finance and Ops Strategy and Culture that should ideally be put in place as early as possible in a company's life.
From a Strategic perspective, the main reason an Entrepreneur and/or Startup needs a strong CFO is to ensure that a scalable and cost effective business model is established. Why is this important? The key is to optimize business performance starting in the early stages of growth and set a foundation to support strong margin growth and management in the future. A variabilized, flexible business model will grow in smaller proportion to business and revenue growth, contributing to margin improvements over time.
What a young company or Entrepreneur does not want is a business model where the demands of revenue and market/customer growth force the business model infrastructure to expand at or faster than that growth, resulting in degrading bottomline performance.
A CFO with experience in building finance and operations functions based on World Class practices, leveraging the best Technology, People, Processes, Delivery Model and Analytics can implement a flexible, nimble function that adds value, not cost, through the growth phase.
That does not imply that an Entrepreneur needs to implement an ERP, Shared Services Center, etc. But the processes designed and put in place in early stages should be done right the first time, so future migration and growth to larger platforms is accomodated more rapidly and easily.
Thanks for taking up this topic - VERY IMPORTANT.
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