How did you come of age in your company?
Did you start it in the garage? Take it over from a previous generation? Hired gun?
What’s your background? Is it sales, marketing, operations, finance?
I am a hybrid. I’m an operations guy that can market well and sell well enough. I did not grow up in business with a finance first mindset. It was not a strength of mine. I had to learn it over time and through hard lessons. You only need to learn the cash flow hustle or almost miss payroll once to understand how getting a handle on finances should increase in priority.
In Acumen, a majority of owners and CEOs come from a sales or operations background. The rainmaker or implementer as the owner allows a company to grow and scale.
In public markets, the trend has shifted where strategic financial leaders are becoming the next CEOs. This is not true in private businesses. Sales and operations win the day, and that’s OK. The size and scale of private companies are not as complex financially compared to public companies.
No matter how you came up in business, finance and financial performance need to be a core value and driver in your company. Many of you have values that talk about excellence and caring for your team. Financial stewardship belongs in those buckets with product and service delivery.
You think this is obvious, but it isn’t. Many companies are just working hard until there isn’t enough work. Then owners sell their way out of it or buckle down and wait until “the economy” changes in their favor.
Why did sales go up? “I’m not sure, but we’re riding the momentum.”
How do you feel about finance?
You can answer this yourself by looking at your finance department and top financial hire. Is it the “office manager” who runs HR, AR/AP, all administration, and makes sure you aren’t making the staff crazy?
Is it a bookkeeper that comes in once a week to pay bills and run one report?
Have you gotten to the point of having a Controller? (but this person doesn’t get to sit in your executive team meetings, that’s not who they are)
Does your VP of Operations manage the office accountant?
What does your current setup say about how you feel about finance?
Define your Financial Mindset
You need a financial philosophy other than, more coming in than going out. “Scaling Up” author, Verne Harnish, says, “Revenue is vanity, profit is sanity.” It’s amazing to see companies that have revenue growth goals but aren’t sure how that affects profitability. Profit is why you are in business. Don’t let revenue be your guide.
If you are like me and finance isn’t your first love, then you must learn and hire a strategic financial mind to come alongside you. Your company may not be able to afford a CFO or controller. There are many opportunities to engage your accountant or outsource CFO brainpower that’s affordable. YOU own the financial stewardship and performance of the company. But you don’t have to do it.
Make it Visible
If you don’t value it, your team won’t either. If you don’t make it visible, budget it, dashboard it, scorecard it, measure it, talk about it, then your team won’t either. What gets inspected is expected. Expect financial performance from your team.
In our Acumen monthly council meetings, partners present their business plan and financial performance several times a year. Unless you have a formal board, the only person you are accountable to is yourself. Adding a layer of accountability and fresh eyes asking you hard questions can confirm you are doing things right or alert you to yellow and red flags that you can’t or don’t want to see. How are you holding yourself accountable?
As your business grows up, your financial acumen needs to grow with you.
If you are looking for a place to grow, apply today and see if you are ready to join an Acumen team.
March 22, 2019