6 Ways Top Entrepreneurs Leverage Expert CFOs to Build Successful Businesses

Successful Entrepreneurs leverage Expert CFOs to Generate Consistent, Positive Cash Flow, Increase Profits, Provide Expert Financial Analysis, Increase Business Value, Build Accurate Financial Models

Sep 26, 2024

The struggles of entrepreneurship are immense, the chances of success are slim, and the cost of failure is daunting. But many startup and small business owners don’t understand how to leverage expert CFOs (Chief Financial Officers) to help them build a successful business and achieve their goals. This article will provide an understanding of 6 benefits a CFO should bring to your business and how you can use their skills to succeed in your business.

Most Business Owners I interact with:

Feel stuck in their business
Don’t have enough money
Don’t know what is working and what isn’t in their business
Don’t have clear goals or a path to a successful, profitable business
Don’t make meaningful progress year-over-year
Are stressed, frustrated, confused, and isolated

These feelings are almost universal, but most business owners feel very alone in their struggles at the top of their growing company. Many don’t understand how a CFO is best suited to walk with them as a trusted advisor and help them solve these problems.

Those business owners who know a CFO can help them often don’t know how to evaluate or leverage their skill sets to make them successful.

Questions Business Owners Have About Hiring a CFO:

Why do I need a CFO?
When do I need to hire a CFO?
What does a CFO do?
What should I expect from a good CFO?
Who should I hire as my CFO?
How can I get the most out of my CFO?

An Expert CFO provides an Entrepreneur with specific, concrete, insightful guidance on how to build and manage a successful business and make sound, timely business decisions.

Whether you’re curious about hiring a CFO for your business someday, wanting to challenge your CFO to deliver more for your business, or looking to replace your CFO, the remainder of this article presents a clear vision for this role and how a CFO should be best leveraged to make your business successful.

Successful Entrepreneurs Leverage Expert CFOs to:

Generate Consistent, Positive Cash Flow
Increase Profits
Provide Expert Financial Analysis
Increase Business Value
Build Accurate Financial Models and Forecasts
Develop Better Business Models

Let’s jump into each of these areas in detail:

1. Generate Consistent, Positive Cash Flow

No business ever failed with consistent, positive cash flow. This is the first priority for every good CFO. An Expert CFO manages Consistent, Positive Cash Flow through:

Analyzing and Managing Your Margins (Gross Margin, Net Margin, Contribution Margin, Costs as % of Sales, etc)
Improving and Maintaining the Cash Conversion Cycle (Payables, Receivables, Inventory)
Obtaining and Managing Financing (Additions or Repayments of Debt & Equity, Financing and Investor Relationships)

2. Increase Profits

After Cash Flow, the next most important driver of success is improving the profitability of the business. CFOs specialize in:

Strengthening Revenue through improving Pricing, Volume, and building Recurring Revenue
Improving Gross Profit and Cost of Sales by Product and Service Margin Analysis, Cost Controls, and Negotiations
Increasing Net Profit by Managing and Reducing Operating Expenses, Overhead, and Taxes

3. Provide Expert Financial Analysis

A CFO can not only expertly dissect and analyze the financials but can also translate those numbers into tangible goals and accountability for each key stakeholder in the business. A CFO should be able to:

Explain the “story” of the business from the financial reports (Balance Sheet, Profit & Loss, Cash Flow Statement, etc.) in terms that everyone in the business can understand
Track Revenue, Profit, Cash Flow, and Financial Health and communicate in clear scoreboards and metrics to relevant stakeholders
Analyze the business’ financial strengths and weaknesses and know what to do to change, when, and how.

4. Accurate Financial Models and Forecasts

A good CFO looks to the future and makes goals a reality through robust financial models and forecasts. Find a CFO for your business who can:

Build an Accurate Financial Model for your business to see the consequences of business decisions years in advance
Set Accurate Financial Targets with Clear & Relevant Operational Objectives, Key Results, and Key Performance Indicators
Provide you as the Business Owner with accurate information for confident decision-making so you know you are going in the right direction and what the results of your decisions will be

5. Develop Better Business Models

Sometimes Entrepreneurs are simply building the wrong business to get where they want to go. A CFO should be able to help you understand your business model and determine whether it has what it takes to go the distance for you. Make sure your CFO helps you:

Understand what is and isn’t working in your business and provide clarity on corrective actions
Help Reinvent, Adapt, and Optimize your Business Model
Provide clear feedback and direction on how the business model is performing and how to improve

6. Increase Business Value

Your business is likely one of your most valuable assets. A CFO should help you increase the value of your business exponentially by:

Reducing Dependence on the Entrepreneur in day-to-day operations
Building Sustainable, Recurring Revenue from a Diversified Customer Base
Proving your Growth Strategy and Demonstrating Scalability
Maintaining Good and Improving Cash Flow
Establishing Financial Foresight and Controls

Are You Reaching Your Goals?

What I hope I have shown you in this article is that you need to leverage an expert CFO to help you reach your full potential for financial transformation and success in your business, however you define success for you.

So what does success look like to you?

Building Work-Life Balance?
Reaching your Retirement Goals?
Securing Your Family’s Future and Legacy?
Transferring your Business to a Family Member?
Giving back to your Community, Charities, and Employees?
Building your Next Business?

Don’t keep spinning your wheels. If you aren’t making the kind of progress you’re looking for in your business, leverage the expertise of an Expert CFO to get you moving toward your goals.

If you’d like to discuss what CFO services could look like for your business, please reach out to me for a consultation and financial analysis to see how CFO services can help you be successful in your business.

If this was helpful for you, please consider sharing this article with others!