All business owners have an accounting department. This department varies in size from the owner’s spouse “doing the books” to a staff of 10 all processing the company’s transactions. Almost without exception, companies are missing the strategic financial person – the CFO. This person looks more forward than backward. He or she manages the financial risks of the company. This person is also in charge of financial planning, banker and investor relationships and safeguarding the financial assets of the company.
The CFO is very different than the controller.
- A CFO spearheads the effort to raise money. Either through the banks (debt financing) or through investors (equity financing). My bank colleagues tell me that the number 1 reason a loan is turned down is the presentation the company makes, not the underlying condition of the company. We know how to deal with the banks.
- The CFO is responsible for finding efficiencies in the company’s operations. This should be a value add of at least 1% to 2% of sales – money that automatically drops to the bottom line. This is especially valuable to my clients where I am not with that client every day. It gives me the advantage of a fresh set of eyes.
- The CFO works with Sales and Marketing, helping realign the product mix. One of our goals as CFO is improving the gross profit percent. We do this through product sales analysis, vendor renegotiations and revising sales commission plans.
- The business world is a very perilous place. We have to constantly scan for threats and eliminate/reduce them as we come upon them. For example, when is the last time you sat with your insurance agent and asked him what coverages do I have for employee theft, embezzlement, storm damage. It is easy to become complacent and assume the coverages are all in place. We have to manage these risks – and our insurance agent relationship.
- Coach to managers. The business owner is usually the rain maker and needs to spend his time making the company bigger and more successful. All managers need coaching to be better leaders. This is a my role with many of my clients – and it helps create better leaders.
- We work with the CEO/owner to help plan strategic growth. We are usually the one person that can challenge the CEO in making big company decisions: Do we invest in this new product line? Do we add a new regional location? The insights and challenges of a CFO will result in better decisions.