Many business owners launch their company for one of three reasons:
1) They have a passion or purpose in a particular area and are compelled to realize their vision; 2) They observe a gap in the marketplace, or an unmet consumer or business-to-business need and calculate that it could be profitable and/or fulfilling to fill that gap; and/or 3) They want to be their own boss, to use their expertise to forward their own success, rather than someone else’s.
Whatever the reason, though, it’s typically not because they have a deep and burning desire to tackle financial strategy. In fact, the majority of about-to-be new business owners are not dreaming about “working the numbers,” they’re dreading it. They are focused on the product or service they want to provide, not the brilliant financial foundation they will build.
I started BottomLine Growth Strategies because I am passionate about “the numbers.” More than that, I am passionate about growing companies strategically and profitability.
It hurts me to watch smart people with smart ideas fail in the marketplace for want of a solid and smart financial strategy, and simply because it wasn’t the business owners’ area of expertise and it was cost prohibitive to acquire what was needed.
My vision is to provide business owners with small to mid-sized businesses access to the level of CFO talent previously reserved only for large companies.
In talking with business owners, I’ve noticed that often they don’t see the need for high-level financial strategy at the point when they need to see it. They experience that first blush of success and say, “My revenue is increasing! I’m doing great!” But, in reality, all revenue isn’t good revenue, and it isn’t long before a different story emerges.
I can’t tell you how many times I’ve heard statements like:
“My revenue is increasing significantly, so why don’t I have higher profits?”
“I’m growing, but I don’t have cash.”
“I’m putting money into increasing my customer base, but I’m getting a poor ROI.”
As CFOs, our job is to “peel back the layers of the onion” to understand the root causes behind statements like these.
Here’s a real example:
BottomLine recently began working with a client who indicated that while his company’s growth has been 20% per year for each of the last three years, his bottom-line hadn’t changed. As we analyzed the information, several interesting facts emerged: This company was a very successful construction company in a niche market. They had little competition. Historically, its customers were primarily large projects, but our client had changed the company’s strategy to also take on much smaller jobs. The smaller projects required more staff time than anticipated, based on the company’s experience with large projects. This naturally increased the cost of sales and operations on those projects. However, our client was using the same level of margins for these small customers as he did for large ones. No wonder the bottom line hadn’t improved.
We recommended that our client increase the margins on the smaller business to account for the additional time. Our client’s response was interesting and pointed to directly to the misconception many business owners have. He said, “Our revenue will decrease if we do that!”
And, yes, it’s true. Revenue may, in fact, decrease, but overall the business should be more profitable.
This case study demonstrates how dissecting pricing strategy can lead to increased profitability. It’s far better to have profitable revenue – revenue that improves the bottom line – than revenue that just looks good on paper, but doesn’t add to a company’s overall profitability.
Wouldn’t you rather have profitable revenue?
This is only one example of how high-level financial strategy can help companies grow profitably. But “peeling back the financial onion” is not something most business owners can do on their own. Nor should they. Business owners need to focus on their own core competencies and on their company’s total picture. They seldom have the time or the inclination to develop the skills necessary to serve both as CEO and CFO – not to mention COO, Marketing Director, Human Resources Director and the list goes on. Of all the responsibilities a business owner may take on out of necessity, CFO is the most difficult to master.
And that leads me back to the reason I launched BottomLine.
BottomLine’s CFOSherpas (your guides to strong, high-level financial strategy) have all been seated CFOs. Collectively, they’ve had countless and tremendous successes working with companies to improve the bottom line and achieve profitable growth. The entire reason we exist is to fill the financial expertise gap that exists in most companies – not because business owners are not capable of learning this role, but because they don’t have the time to learn it, don’t want to learn it and/or they inherently understand that it’s not a wise or profitable use of their time or talent. Most importantly, we exist because the point in time when a growing business needs a CFO most is typically years before the company actually has the cash flow to hire someone to fill that position full time. They desperately need the expertise and we make it possible for them to get through our “outsourcing” concept.
Companies that are right for our services include:
• Growth companies
• Companies with profitability and cash flow concerns
• Companies with underperforming accounting/finance teams
• Companies expecting to exit the market, or business owners who wish to exit the company, within the next few years (ideally, the exit planning process should be initiated about five years in advance of the planned exit)
Does this sound a little pushy? It is. Financial strategy is one of the most overlooked tools for business success, and bluntness is called for when profitable growth is on the line.