The role of the successful CFO in an entrepreneurial company is to enable the CEO to fulfill their vision of building a successful company and creating success. Entrepreneurial CEOs who achieve their vision of growing great companies and creating success view their company’s finance function as a key enabler for the CEO and the company to be successful. The role of the CFO in an entrepreneurial company is to make a good CEO a great CEO. This is achieved through providing to the CEO financial leadership to shield the CEO from having to focus on financial risk. The CFO is an enabler to the CEO’s vision by ensuring the financial and operational aspects of the business provide the CEO the necessary support for decision making.

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The value of a company is the result of the earnings and related cash flow that it generates over time. Taking steps to increase earnings and cash flow increases company value. Increasing earnings typically requires making investments before the company realizes the future returns derived by the increased earnings and cash flows on those earnings. Earnings for this purpose are typically referred to as EBITDA which means earnings before interest, taxes, depreciation and amortization. The amount of value that is created by the investments ultimately depends on the investments made and the amount of future cash flows generated, which results in the company’s return on invested capital (ROIC). Therefore, value creation is ultimately driven by a company’s ROIC, revenue growth and the ability to sustain both over time.

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Surveys show that greater than 75% of companies have done nothing or very little in regards to succession planning. Business leaders who want to stand apart realize that successful companies have continuous value beyond the current leadership.  Having a mindset that you are preparing a company for an eventual sale gets leadership to focus on improving the overall business.

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Progressive financial management enables business leaders to view business finance and operations through a set of strong binoculars versus a rear-view mirror. In addition to the static annual budget, it is becoming imperative for companies to integrate rolling forecasts as a critical tool for managing business operations.

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Business owners rank access to capital as the most important issue facing privately held companies. A highly-skilled CFO Consultant can significantly increase your company’s chances of obtaining the needed financing. According to a poll of 1,221 entrepreneurs released this month by Pepperdine University, in the past six months, only 17% of loan-seeking businesses with less than $5 million in annual revenue landed bank financing, and 37% of respondents from privately held companies with revenue greater than $25 million have successfully secured bank loans during this same period.

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Many entrepreneurs spend their entire lives creating a company and then watch their life’s work slip away in a downturn. Few realize it at the time, but the single most important decision of their career may be whether to engage a CFO Consultant as a “turn around advisor” to help when their company falls on hard times.  The traits the CFO Consultant must bring to the table include significant financial and operational expertise as well as experience in handling restructuring or crisis situations.

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CEOs, owners and management of small to medium-sized businesses know their business and their customer needs very well. However, most businesses in this category have financial management needs that are beyond the knowledge, expertise or the experience of the in-house accounting staff. Most businesses in this category do not need either the large cost or the full time commitment of a permanent CFO. Turning to your CPA firm may help with limited scope matters, however, CPAs lack both the skills and experience that a talented and experienced CFO brings to the company. Companies in this category in general do not understand the benefits of engaging a CFO Consultant. CFO Consultants with the right skills and industry experience bring financial expertise to these companies at a fraction of the cost of a full time CFO. The ROI to companies that engage a CFO Consultant can be huge.  

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One of the most important issues companies face is how much to charge for their products and/or services. Pricing strategies impact every aspect of potential growth and financial success. Pricing strategies should be examined on an ongoing basis to determine if overall objectives are being achieved. Having the proper financial benchmarks and well defined growth and profitability goals are critical to sound pricing policies and practices.

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Once found mainly in federal contracts, bonding requirements have become more widespread and require significant financial discipline. Unlike a lender, which is concerned about a borrower’s overall financial stability, a bonding company focuses a company’s ability to perform on a specific job(s). The surety wants assurance that a job is on course with project estimates as to time, costs and estimated gross margin. In the short term, a surety will view a contractor’s job status schedule more importantly than the company’s overall financial statement.

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The main aim of financial management is to successfully achieve the various goals a company establishes at any given point of time as to growth, debt levels, profitability, cash flow, investments, etc. From an organizational point of view, the process of financial management is associated with financial planning and financial control. Financial planning seeks to quantify various financial resources available and plan the size and timing of expenditures. Financial control refers to monitoring cash flow. Managing the sources and movement of funds in relation to a budget or forecast is essential for a business.

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