Got to Get Ahead (of Business Growth)

Written by Carol Coughlin. Posted in Financial Strategy

If you’re a CEO who wants success, there’s no doubt you put a significant amount of time, energy and passion into growing your business every single day. But whether you are taking your first steps toward business growth, or are already realizing profit, you have an even bigger task at hand:

Not only must you focus on growing your company today, 
you must get ahead of your growing company – today.

One of the most tragic mistakes companies on the growth track make is to simply keep pace with growth. CEOs need to understand that keeping pace with growth is actually the first step toward falling behind it. Once you find yourself acting from behind your company’s growth, you are not controlling it. It is controlling you. And when your growth, not you, is calling the shots, you’ll be more prone to make potentially devastating financial missteps.

How can you tell if you’re acting from “behind growth?”

Simple. You will be making reactionary decisions, rather than working proactively. The only way to avoid missteps that can literally send your company into a tailspin is to think ahead of growth; to plan your strategy before you need it. In other words, you must always access the upcoming growth mountain, with all its dangerous cliffs and hidden crevices, before you start to climb. Even more, you need to act ahead of your growth, packing the resources and supplies you will need for the future now.

This forward-focused action includes getting your financial strategy for growth in place ahead of time by bringing in a CFO long before the summit of the mountain is even in sight. The problem is that most companies wait too long to consider this move. They are growing fast and furious, and have likely already fallen behind growth, by the time they bring in a CFO to create a strong financial strategy.

But how do you know when it’s time for a CFO? How do you know it’s not a little too soon?

It’s not easy to make the decision to bring on a CFO. But the CEO who has stayed a step ahead of growth from the start has far greater clarity about every aspect of their company. He or she is better able to see and properly analyze the warning signs that indicate it’s time for a CFO.

What are the warning signs that it’s time for a CFO?

Although the signs may seem fairly clear, they are often missed. After all, crisis and overwhelm seem normal when you’re behind the growth eight ball. But out in front, you have a better chance of recognizing early on that these warning signs are more than “normal” business challenges. You can more easily see that they are indicators that directly call for a higher level of financial strategy. For example:

  •       • If you are not getting relevant, accurate and complete financial information, it’s time for a CFO.
  •       • If you want to scale up, but you’re not sure of best approach to take, it’s time for a CFO.
  •       • If you’re experiencing too many unhappy surprises (like cash crunches), it’s time for a CFO.
  •       • If you’ve been in business 3 to 5+ years and you still do not have a five-year plan, it’s time for a CFO.

Situations like these are clear signs that it’s not too early to consider a CFO, and that it may be close to being too late. The primary obstacle to taking action is usually cost. How does a growing company – or one that wants to grow – afford a hefty CFO salary?

Growing companies need to be prudent with resources. They must ensure that every person hired is exactly right for the position, because there’s no room for waste.

What we’ve discovered is that once a CEO has determined it’s time to bring on a CFO, the CFO he or she can afford may not be experienced enough to handle the job. This is where CEOs need to be careful. It can be too easy to bring on someone who seems to be almost a CFO, simply because the cost of a real CFO is too high. Some CEOs also make the mistake in assuming that simply because someone has a CPA, they will make a good CFO. In fact, many CFOs are also CPAs but most CPAs are not CFOs. Here’s the difference:

CFOs are responsible for developing the financial strategies that help companies navigate growth and grow profitably inaddition to being responsible for the overall accounting.  As we said before, growing companies need to be prudent by putting the right person on each task. When you recognize the warning signs that it’s time for a CFO, you must also recognize that only an experienced CFO will do. Any other choice will have you back behind your growth in short order.

This is where outsourcing becomes your most valuable stay-ahead-of-growth strategy.

Outsourcing Allows Companies to Stay Ahead of Growth Within Budget

What makes outsourcing the role of CFO so attractive is that you get deep expertise at a far lower cost. In this sense, outsourcing is not even close to a make-do, interim or stop-gap measure. It’s the savviest option. Outsourcing allows you to acquire the highest level of CFO experience with less financial investment and without making a long-term financial commitment.

CEOs who choose to outsource avoid stretching their budgets too far. They are free to pull back or to move forward as needed, and they can focus in on solving their company’s most pertinent financial strategy questions. In short:

Outsourcing is a smart choice for a variety of key positions.
It allows the CEO to act ahead of growth without getting too far ahead.

Today’s business environment moves fast and mercilessly. It’s all that most companies can do to simply keep climbing. But if you want to grow your company in a way that results in profits, you will never be able to merely put one foot in front of the other. You will need to make the commitment to pick up the pace, to dig in and stay ahead. You will need to make decisions you may not think your company is ready to make. Most importantly, you will need to act like the CEO of a growing company, finding ways to build your company’s strength without busting its budget.

You will need to act like the smartest version of the company you want to become.

Tags: , , , ,

Carol Coughlin

Carol Coughlin founded BottomLine Growth Strategies, Inc., in 2006 as a way for small and medium-sized businesses to access the same high-level financial and operational expertise that gives large companies a distinct advantage. Using her own extensive corporate experience and willingness to sit in the hot seat as a catalyst, Carol helps BottomLine Growth clients climb to the summit of their success.
business-journal brava top-100 spirited-women circle-of-excellence ceos