The Role of the CFO in Small Business

Whose job is it to make sense of all of the business numbers?

It isn’t the bookkeeper’s job. This is a clerical function. It isn’t the accountant’s job. That is to make sure that the bookkeeping is accurate, that records reconcile and financial reports are completed on time. It must be the Chief Financial Officer’s (CFO), whose primary responsibility is to manage financial risk by analyzing the data, developing proactive strategies and tracking performance outcomes.

But who really needs a CFO? Everyone knows that only large companies have CFOs.

Actually, this perception is not true. In fact, there are few businesses of any size that can afford NOT to have a CFO! Having a CFO on your management team will help you with:

  • Creating Your Business Strategy
  • Financial Modeling and Analysis
  • Performance Monitoring
  • Maintaining the Business Dashboard
  • Budget Deviation Analysis
  • Refining Strategy and Managing Change

Each of these functions must be performed on a routine and timely basis regardless of what size your business is. These functions also require specific skills, knowledge and experience to be effective. For most smaller firms, they are not functions that are performed on a full-time basis.

Securing this level of talent is going to cost a lot – – or is it?

Welcome to the age of the part-time CFO, a talent pool of senior level strategic planning and financial management expertise that is available when you need it, how you need it and where you need it. In addition, because the CFO’s primary contribution results in improved business performance, the cost is often more than covered by the resulting savings and increased profitability.

Did you know?

“…that PAYG Strategic Consulting offers part-time expertise in helping organizations with financial modeling, performance measurement, expense control, acquiring funding, risk management, mergers, acquisitions, divestitures and business management information systems?

Launched in 2012 and expanding throughout India the firm specializes in working with small and mid-sized firms that will benefit from the finance and strategic planning expertise without the full-time staffing expense. Contact PAYG Strategic Consulting for more information at ajit@mypayg.com.”

 

https://www.toptal.com/finance/business-plan-consultants/how-great-business-plan-consultants-create-value

BIQ’ (Business Intelligence Quotient): 5 Things Your Company Can Do NOW

With a multitude of IQ’s being used in trying to measure peoples’ all-round success, namely, IQ, Emotional IQ, Social IQ, and the most mystic of all, the Spiritual IQ – it seems to make sense to do the same for business or companies – in order to quantify their performance 360-degree, not just from a ROI perspective, but from a customer/end-user experience perspective. As trivial as it may seem, this is by no means an easy task. Viewing a company as a conglomerate of people performing in various roles, and driven by a set of business processes, the accuracy of such an IQ extends beyond numbers. The words “win-win” create business value only when the business benefits of easier, faster, simpler, sharper decision-making capabilities by all users – from the corporate to the front desk – are realized when they are needed most. To this effect, here are a list of High-Fives that enables companies of any size and industry vertical to raise the bar on BIQ or Business Intelligence Quotient:

1. Encore the fact that BI is everybody’s business: This is a key driver in BI adoption and empowerment by all users of a BI solution – from the corporate staff to the customer/end-user. Hence, educating that better BI means better decision-making that lead to efficient actionable analyses, across the company spectrum (i.e., about the why and what of a BI Solution) is a KPI in getting all of them eye-cued. A unified view of the contextual customer is the KPI for a higher BIQ.

2. Data, Data Everywhere! But I Can’t See It No Matter How I Do My Search? Follow this as both the means and ends of adopting BI: Companies must be able to trace and track the silos of data that is present in various forms – from paper to prediction – across the length and breadth of the companies’ resources. Then a robust BI Solution can help all of this data to be “refined” to derive the right information that is useful to the right user at the right time. So, the sooner your company gets going for the “gold data rush”, the faster the time-to-insight which is the taken to analyze and arrive at “decision points” that when implemented can help in a better business/operational efficiency.

3. Enumerate the potential of BI as an innovative invention of a superior customer experience: BI helps in providing autonomy to the customer/end-user by way of self-service functionality combined with interactive and responsive controls that place the power to drive the business solution in those users’ hands. And companies should focus on differentiating between customer and end-user in terms of Power Users and contextual business roles. This is the new dynamics of being “customer-centric.” Proper enlisting of users vs. roles vs. business needs and maintaining the “independence and isolation of data/metadata access and presentation” is vital to a higher BIQ. And this is where managed-metadata comes into play by allowing some of the business context to be custom-defined by the end-users! By correlating customer/end-user centric aspects with their existing BI Solutions in place, companies can efficiently manage their metadata and streamline their business processes, companies.

4. Right time information is the NEW BI imperative and it prevents the data burst: From real-time to right time, time and data truly don’t wait for any user today! This can be both real-time and point-in-time, or just-in-time-relevance and authenticity of information enables efficient use of the same and is essential to a better BIQ. And the ability to integrate/inter-operate with multiple existing solutions and data sources provides a value beyond revenue. Nothing is more critical to a business than the consistency, currency, and protection of all of its data-cum-information in a way that is secure, reliable, and available anytime, from anywhere, and by anyone authorized. To this effect, companies must layout security & GRC policies as per requirements, right from the early stages in their operational life cycle (A typical plan starting from concepts all through to customization). This ensures that the data/information life cycle goes in sync with the business process life cycle. Enforcing multi-factor authentication, distributed data replication, and/or data federation/syndication; rich search analytics, and industry standards-based architecture go a long way in getting the right data at the right time in the hands of the right user, or what I call the R-R-R rule.

5. Consider BI as a strategic solution for your business: BI is more than just a decision making tool. For any company, it is an evolving solution that re-invents itself based on customer/end-user experience, to adapt to the customer/users’ changing needs from time-to-time. Thereby, it extends beyond intelligence to become a strategic decision-making enabler. Companies must keep this focus when deciding on a BI Solution – one that can adapt to current and future business requirements. By doing this the return-on-customer will be higher, which is an intelligent metric for quantifying Success-both in terms of business value and customer/end-user experience. This requires a self-adaptable BI solution that enables a greater degree of self-service BI. A “best-fit” IT solution based on gap-fit analysis, in terms of access optimization, embedded analytics, SaaS-enablement, and operational BI capabilities accelerates the operational efficiency. This again raises the BIQ – BETTER INSIGHTS YIELD BETTER RESULTS.

3 Signs You Need A Cfo Role In Your Small Business

CEOs and business owners: do you need a CFO? Can you afford not to have one? These are the three signs to watch out for:

1. Your growth (or lack of growth) is out of control

Here are two scenarios:

  1. Your revenue has increased faster than you were prepared for. You’re quickly realising that your financials are becoming too complex for your company’s accountant to handle.
  2. You’ve seen a downturn in a successful enterprise. You need to make a turnaround to assure the business’ survival.

These scenarios are as different as different can be. But they have one thing in common: your growth is out of control. Either scenario is a sign you need a CFO.

If you’re a victim of your own success and are seeing your growth spiralling beyond expectations (e.g. 20 to 25 per cent year-on-year increases in revenue), a CFO can put the policies and strategies in place to ensure that you remain legally compliant with your new revenue streams as well as capitalise on your expanded turnover.

If you need a quick turnaround for your business, a CFO identifies where you are leaking capital and, more importantly, helps you devise a strategy to plug those gaps and ensure your enterprise isn’t driven into the ground.

In short, if your growth is out of control, you need a CFO.

2. Your business has become too complex to handle

You have too many staff. Your revenue streams are too complicated or too numerous. You are investigating new markets, perhaps overseas, and you need tax and legal advice. In any business life cycle, there comes a point when complexity becomes a burden.

A CFO lifts that burden. They have the skillset and experience required to ensure company efficiency. They can revamp your accounting processes, develop reports and forecasts to make sense of the variety of data now available, and perhaps most importantly, they can take command of the financial aspects of your business at every level.

In any business life cycle, there comes a point when complexity becomes a burden.

Usually this complexity is tied to revenue, but there are exceptions: a business with a $20,000,000 revenue that sells over 5,000 different products in multiple physical stores will almost certainly need a CFO. But a business with the same level of revenue with only 10 products and a single physical location may not. Complexity comes in many forms.

 

In short, if you are noticing your business is creaking under its own weight, you need a CFO.

 

3. Your strategy is no longer keeping up with your business

Many businesses start by hiring a bookkeeper. Eventually, they move on to a company accountant, and then on to a financial controller. The progression at these levels is quite simple: bookkeepers close books, accountants provide additional complexity, and controllers can provide reporting. But there’s one thing that a CFO does that these financial professionals don’t: strategy.

Rather than relying on lag metrics alone, CFOs can forecast and budget; they can strategise and provide insights into your business: what you need to do to keep growing.

This is why hiring a CFO is often seen as a watershed moment for a business. It’s a sign that you’re ready to become a leader in your industry. Leaders need forward-thinking strategy. A CFO provides that.

In short, if your strategy is no longer adequate, you need a CFO.

Summary

To summarise, if you are experiencing:

  • Fast or slow growth,
  • High levels of complexity,
  • Increased company size,
  • The need for increased strategy, or,
  • The desire to become a leader in your industry,

Then you need a CFO, contact us at ajit@mypayg.com to get more details how you can bridge the gap

Raise your Business Intelligence Quotient (BIQ)

In your quest to grow from a good to a great company, and ultimately an ‘intelligent’ company, there are some specific steps you can take to ensure BI success. Keep in mind that a successful increase of your Business Intelligence Quotient will not only measure ROI, but all around company-wide performance as well. Viewing a complete 360 degree picture will allow you to see your company as a whole, with each individual performing in various roles, driven by a specified set of business processes. The accuracy of your BIQ extends beyond the numbers. Value is ultimately created when the benefits of your solution are realized by each person and throughout every process, making a more efficient, streamlined organization overall.

1. Business Intelligence is everyone’s business.

Start with educating your staff on how better BI will improve decision-making and efficiencies across the board. Knowing why it’s important and what it will improve will increase the likelihood of buy-in and a higher BIQ at the end of the day.

2. Success depends on how well you can make your data work for you.

Having access to data and numbers will not be useful unless you have a way to refine it into useable information and analytics. From paper to prediction, there are many different silos of data within your company. The right BI solution can help you better organize this information in order to make it work for you. This results in a faster time-to-insight which is the time it takes to analyze your data and come to a conclusion about what your next steps should be.

3. Business Intelligence is more than an internal solution.

While many focus on BI as a way to improve information and analytics, it can and should also be utilized to enhance your customer service capabilities. BI can provide your customer/end-user with self service functionality through interactive and responsive controls helping your organization become more ‘customer-centric’.

4. BI provides access to information when you need it.

The authenticity of information enables the efficient use of data to improve your BIQ. Further, the ability to inter-operate with other software solutions will provide for a well-rounded 360- degree view of your organization. The greatest value of your BI solution is the consistency, currency, and protection of all of your data, maintained in a secure, reliable and always available format.

5. Business Intelligence is not just a solution, but also a strategy.

Your BI should always be evolving in order to ensure that the changing needs of your organization and your customer are being met. It therefore extends beyond just an intelligence solution, but becomes a strategic decision-making tool. It is crucial that you implement a BI solution that not only meets the current needs of your company, but will also do so in the future. This will insure the best value that continues to provide the appropriate levels of efficiency going forward.

Ultimately Business Intelligence should be used not only to analyze your data, but to improve your decision making process, thus providing a strategic value to both your organization as well as your customer. The future of BI will be driven by customer-centric imperatives that provide right-time information, enhanced self service, adaptability, security and compliance. Practicing the principles outlined in this article will help you continue to raise your Business Intelligence Quotient, improving your decision-making and customer service capabilities across the board.

PAYG Consulting can help improve your Business Intelligence Quotient.