WNA Blog

Mon 17 Jun 2019

How To Be Your Own CFO (Till You Can Afford To Hire One)

Finance & Insurance
As business owners, we are not only the Director and Founder in our business, but until we hire professionals and staff for support, we are in charge of operations, human resources, product development, marketing and finance.

There are many hats to wear, and at times that can be daunting. Financial decisions impact every single one of these areas in business.

As a business owner, when we act upon our knowledge and values, we’ve made a choice. When we do nothing, we’ve also made a choice, by choosing the default option or accepting the status quo. Either way we are choosing, so let’s set ourselves up to make a good choice. This is the reason we need to consciously be our own CFO (Chief Financial Officer), the head of the finance and financial decision-making in our business (until we choose to hire one).

Being a great CFO doesn’t mean we need to be a math genius or numbers nerd; instead the core skill required is to work on making confident financial decisions.


Know where you are heading

Aligned goals link meaningful work and purpose to one direction. They are like the ‘X’ on map. The destination.

Your business goal is not always a monetary motivator, it is most likely centred around your life and the lives of others. By articulating this clearly, you then know whether your financial decisions are moving you a step closer to this goal, or further away.

Get clear on what is making money and what is not

Looking at sales and financial data is an annual event for some business owners: tax time. But this shouldn’t be the case.

Tracking and reviewing your business numbers monthly serves two purposes: first it makes tax time easier, faster and potentially cheaper. Secondly, it shows the financial story of your business’ health. Consider it the blood test in a health check-up for your business. From these results, you can decide what needs to happen going forward to reach your goals.

Devise a strategy for the future

Now you know where you’re heading and what is working so far. It’s time to decide how you’re going to reach those goals. The vehicle to get there is your business model. If your business is already making sales, then you already have one. This is the structure in which you make, deliver, sell and distribute what your business does.

When considering your business model, there are a few financial components, comprising of your income streams, pricing strategy, financial systems, financial policies and reporting.

Each of these should be linked to your goal, and as CFO you need to ensure they are all heading in the same direction. For example, if you wish to make $200,000 this financial year, your pricing strategy and income streams need to be designed to reach this level. Your financial systems need to be set up to handle the transactions with ease, and your policies need to provide security around receiving and distributing the funds of the business.

Use your values and intuition as your compass

Brand values are becoming increasingly more visible in the marketplace. Your values show in all your business choices, and your financial choices are no different. From the quality of your inputs to the way you treat your staff, this reflects the type of company and CFO that you are.

  • Paying above standard pay rates displays your respect and value of your staff.
  • Using only environmentally friendly products engages a particular type of consumer.
  • Incorporating high quality materials, where inferior products flood the market.
  • Offering immense value, but not at the cheapest price.

These examples all tell a story about your business and all have financial impacts, large or small. There is no guarantee when making these decisions that there will be a positive financial impact. Your intuition or gut instinct is your compass when making these decisions.

Being a great CFO and custodian of your business finances is not about ‘making a profit at any cost’. It is also not about growing revenue every year without fail. Being a great CFO for your business is about making confident financial decisions that ensure the financial viability of your business. It means seeking help from professionals where need be, displaying the value of what your business offers at the price point you have chosen, all while upholding your business values at the same time.

It’s a balancing act. One we are all capable of. We all have the potential to be great CFOs of our own businesses…till we are ready to hire one.

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