For a growing business one of the most often overlooked areas is financial leadership. A Financial Leader fills a very important role for small businesses that are experiencing or looking to experience rapid growth. Most often the question is when; after all most times rapid growth is what most small businesses or startups are searching for. The answer isn’t straight forward. Industry, stage of the business and short terms goals, all influence the answer.

For many small businesses the number one focus is sales. Which in and of itself is great. But more likely than not your business model is not one in which your customers pre-pay your invoices, you have been extended 60 terms on all your payables and the banks/investors aren’t concerned about free cash flow. This is when the vision and experience of a CFO and help foresee cash constraints and find solutions to solve these issues. During periods of rapid growth all the sales in the world will not take your business to the next level, in some cases dramatic increases in sales can put you out of business.

Hiring a seasoned financial executive will allow your organization to leverage your   experience in both identifying and overcoming strategic challenges and at the same time avoiding potential impediments to growth. The vision and guidance a professional can offer is critical for startups as they are managing the growing pains of increased revenue, employee count and overall complexity.

A great financial leader will also help you understand the drivers in financial terms. Where is your business growing profitably and more importantly, where is it unprofitable. They can help grow areas of the business and at the same time minimize or mitigate margin compression, identify areas of cost reduction and focus on improving the bottom line of the organization.

So to answer the question at hand, why your organization should hire a CFO, especially a growing one:

Planning:A good CFO can analyze the current mix of business and provide insight on how a sales strategy can be implemented given the goals for growth. In today’s world a plan that you can’t fund is referred to as a pipe dream.

Position:For growing companies with large capital requirements a good CFO can properly align the company’s cash resources to the plan of the organization.

Capability:The health of your balance sheet most importantly, your capital structure is a key determinate of the capability of the organization. Getting out of alignment can have severe negative consequences further down the road while the organization is in growth mode.

Communication:The ability of a CFO to instill confidence both internally to leadership as well as externally to investors, partners and banks is a key trait that one must possess.

Execution:A strategy not executed is a strategy. Without proper execution of financial leadership you can sell yourself out of business. The role of the CFO and Finance is to properly align its execution of the strategy with everyone else.

Having a sound financial leader will enhance the overall value of your organization. The CFOs ability to instill confidence, improving earnings, supporting projections with meaningful insight and portray the business in such a manner to derive the most value for your company are all tangible items you will derive from engaging a CFO.

For most small to medium size companies a full time CFO is not practical. For a fraction of the cost you can augment your executive team by engaging a strategic partner who can focus on your vision and growing your company while minimizing the cost impact. Often times, a CFO will pay for their own time with cost savings alone.

Overall, a CFO can add great value to your organization both tangible and intangible. If they are willing to take the time and learn and understand the companies’ goals and objectives they can be key to attaining them.

If you are interested in learning more about how Lavin Group works as a strategic partner to help them accomplish their goals please email us.