4 Ways to Think Like a CFO
There’s a bottom line that every business owner comes to at some point: “I know finances are important but I just don’t have the time to spend.” While coming to this conclusion is an important realization for any business owner, I keep seeing it painting them into a corner where they feel they have to keep going it alone or strap their budget with the salary of a specialized CFO or an equivalent.
What many business owners might not realize is that as smart, seasoned and resourceful business professionals, they already have the tools to be their own CFO. By incorporating a few simple, strategic thought processes throughout the day, business owners can protect their business, promote growth and create funding options for now and into the future without the legwork and budget constraints of hiring a financial specialist.
Here are four easy ways business owners can put on their CFO hats in order to promote success growth.
1. Be proactive about tomorrow’s budget needs.
A successful business is a growing business, and eventually that growth may be checked by unplanned budget shortfalls. A CFO has already accounted for those shortfalls and made plans to combat them with a bevy of lending options and solutions he or she has researched and already contacted.
Why not wait until the need becomes apparent? Timing. If a business owner isn’t ready to act at a moment’s notice because of the extra time needed to establish a lending solution or make a plan, that same owner may lose a potentially favorable deal.
2. Be prepared to protect today’s assets and opportunities.
Owning a business can be difficult, and a CFO often helps monitor and safeguard a company’s financial state, introducing possible liabilities and vulnerabilities.
One of the best ways to protect a business legally is to create distance between a business owner and the business by incorporating the business as a separate entity and maintaining corporate records. Because a CFO doesn’t have a law degree (usually), seeking legal advice for any and all contracts that a business signs is paramount in fulfilling this role.
3. Seek out individuals with complementary skill sets.
Every CFO will have gaps in knowledge concerning some of the most important aspects of his or her business, and a good CFO will actively search out individuals who will help dam those gaps. From accountants to attorneys, successful business relationships create potential working partners who can take over tasks that a CFO has no prior knowledge of.
By ignoring these potential conversations and relationships, CFOs will find themselves without any good advice when they need it the most. No one knows everything, and a CFO should assemble a group of business relationships that can combine a pool of useful knowledge that business professionals can leverage when needed.
4. Focus on return on investment instead of the cost of the investment.
For many businesses, $100,000 is an intimidating number to invest. But if a business owner concentrates purely on the cost, he or she will often talk themselves out of spending that amount, ignore the return and miss the opportunity. CFOs, however, concentrate on the return.
For example, if a potential business expansion requires a $100,000 loan but the return will be $200,000, a CFO will focus on the extra $100,000 brought to the business, not the $100,000 required to access that return.
Business owners often also forget that there are many more cost-effective lending solutions out there. By using an investor or lender, a business may take the risk without emptying their savings. Smart CFOs take advantage of this fact and use other people’s money to grow and fund the business.
Wearing the “CFO Hat”
It’s amazing how much more we can accomplish by simply changing a mindset. Business owners can take on the responsibilities of a CFO without sacrificing efficiency and productivity in day-to-day business operations. Concentrating on proactivity, preparedness and profits enables business owners to make sound financial decisions that help them build for the long-term.
For more in-depth tips and strategies for adopting the CFO mindset, take a look at our new webinar, “Smart Funding for Your Business.”