By Rudi Scheiber-Kurtz, CEO of Next Stage Solutions, Inc, a leading on-demand financial management advisory firm.
Are you tired of reading about the economy, the uncertainty, the election, Greece and the possible fall of the Euro when all you want to do is grow your business?
So many uncertainties and yet how do you calculate them into your forecasts? To CFO or not to CFO is firstly about whether you make the choice, or not, to work with a CFO and secondly, how to augment the missing expertise or skill set to work with your trusted CFO and/or Controller so not to harm sustainability and growth. Believe it or not, the right CFO can make all the difference. In this article we give you ideas and a checklist how to identify CFO capabilities that stretch way beyond the conventional CFO boundaries. We will explore ways to access or augment expertise without compromise.
Let us take a few minutes to explain why a CFO is so important to your growth and why you should invest in such a solution! What do your current finance functions look like?
Are any of the above people your partner who can offload some of your responsibilities so you can spend time ON the business? Do you gather information and problem solve 24/7 and have to make all the decisions on your own? Does the finance staff even have the time to work ON the business with you and what might be the barriers to your growth?
You see, with the right CFO you can actually delegate important executive level tasks. Controllers are very important in that they keep you compliant, give you the financial, monthly reports, take care of payroll and reconcile your bank statements, important but mostly tactical. The VP of Finance oversees the tactical side and provides administrative and HR support.
Let’s discuss the other side of finance, the strategic, forward–looking and value creating aspects of finance. Here are some examples of what your Accountant, Controller or VP of Finance do not do or help you with, but the CFO will:
The list above exemplifies what a cross-functional, modern CFO must bring to the table and where small and medium size companies make the biggest concession in hiring a ‘Jack of all Trades’ or one person who can do it all. They can’t, it is that simple. For them, a part-time team solution involving a CFO, Controller and Accountant is appropriate. To maintain sustainability or achieve growth, especially in a sluggish economy, you must consider alternative resources appropriate to your stage and size of company. You want to have most of the above items checked to eliminate business performance gaps.
Think about your strategy, expectations and goals and how you are going to achieve them before you go out and start a search for a CFO or Controller. Consider the next level of financial sophistication to meet your objectives and goals so that the value-driven support benefits your business growth and increases your valuation.
So often we see CEOs struggling with this issue of what the CFO should bring to the table and what a Controller takes care of. Should they be strategic? Why are they not interested in your vision? Why do they never have the time?
The reasons vary by business, often we see that the CFO has to oversee all finance functions and is simply bogged down with all the daily, transactional tasks. The CFO should help you grow the business in a sustainable manner. If s/he spends time working on monthly reports, then you are compromising and overpaying, because that is Controller work. In fact, a team will bring you more bang for the buck than one person who will accomplish some of the tasks some of the time. You may also consider augmenting the current CFO’s tasks or skill set with a consultant who can provide you the additional expertise needed to move your business forward. Frankly, no CFO knows everything in today’s complex business world, so budget for extra support to access the needed expertise.
In the table below we have identified key questions and expectations you want to set when searching for a CFO or identifying the resources gap between what you have and what you need. Again, when the CFO is allowed to focus on the value drivers of the business, the results are value creation driven. It takes soft skills to successfully achieve the hard skills. Communications is an important attribute and soft skill for a CFO to have, since the metrics and expectations (hard skills) you set for the employees are relationship based and require buy-in from all employees to succeed.
Once you create this gap analysis you will want to consider how to augment the missing capabilities. Let’s say you are a company with under $20M in revenue. You can rarely justify a fulltime CFO. The team approach to finance including a part-time CFO, Controller and Accountant is very effective. CFO Turnover is still close to 18 months and ends up a very costly event for a business. Think hiring bonuses, severance pay and more. The CFO you have currently may no longer have the right skill set, especially since you want to double your growth over the next three years. Often s/he has become your trusted advisor but you easily can eliminate business performance gaps with a consultant. A CFO Consultant is often better positioned to provide you frank and objective feedback on issues and problems that need fixing, whereas a fulltime employee might be more cautious.
Yes, it is a paradigm shift in how we think about the finance function and how much to expect from them. On the other hand, how we conduct business today has also shifted and gotten more complex. Tomorrow’s companies need to be agile and fast in making changes and corrections on the fly.
To CFO or not to CFO is an important decision to make for you and having the right CFO and finance function is where a profound difference will break down the barriers to growth. Take action today, evaluate your finance team, perform a gap analysis, budget for the appropriate resources and make the necessary corrections sooner than later.
Next Stage Solution benefits its clients because we set very high expectations for the CFO role, the FUTURECFO™, who brings the GPS of Finance™ tools and methodologies to the discussion. Our CFOs understand how to parse out the financial responsibilities so that you benefit from a strong compliance side with a Controller, to the business insights, metrics and growth opportunities from the CFO. Our team approach gives you seamless support when you need it with capital efficiency and highest productivity. And no, you will not find our CFOs or Controllers doing Sudoku in their office!
With our assessment tools, we help eliminate business performance gaps and define the right finance functions for you. We’ll have a conversation about how to reach your aspirations and solve the upcoming challenges.
Articles of Interest Related to the FUTURECFO™:
For CFOs, A Move Past Finance – Wall Street Journal | July 31, 2012
As your Business Grows, don’t hesitate to hire a CFO – The Globe and Mail | June 18, 2012
Where Finance Efficiency meets Business Insight – 2010 IBM Global CFO Study: Where Finance Efficiency meets Business Insights | March 6, 2012
Moving from CA to CFO – A Competency Framework | Queen’s University | 2010