Successful Small Businesses Develop a Chief Financial Officer Mindset to Succeedby GDN Shared Post January 17, 2018
Successful small businesses stay on track while others run off the rails. Often the fate of the business hinges on the main person running it – the owner – especially in the small business arena.
Successful small businesses have a slimmer margin for error, giving the owner a wide area of responsibilities. But sometimes the owner doesn’t embrace all of those, and that failure to grasp other roles – and one in particular – can lead to a company’s demise.
According to the Small Business Administration, only about half of all start-ups survive at least five years, and only 30 percent last 10 years. Experts attribute many failures to poor management in areas such as finance, purchasing, production and hiring. Paying heed to these departments as the de facto CFO can pay off for the small business owner in the long run.
“Many people have businesses that run them,” says Al Zdenek (www.AlZdenek.com), the author of the book Master Your Cash Flow: The Key To Grow And Retain Wealth and of the upcoming book Master Your Cash Flow: The Key To Grow A Valuable Business. “They work for the business and not on the business and lack basic finance literacy and comprehension. In other words, they are basically an employee with their name on the door. But you must approach your business with the mindset of a Chief Financial Officer. A small business may not be able to afford a CFO, but someone has to take on that role and use those skills that many owners do not possess.”
Zdenek gives four reasons why an owner with a true CFO mindset can succeed:
- Finding more money. This doesn’t happen by looking under a mattress, but in a variety of ways through a smarter operation of the business. Reducing expenses, being creative, and landing more favorable deals can make a big difference in your daily cash flow. “You need to find cash flow from the every-day decisions you make,” Zdenek says. “Some examples include negotiating better deals with vendors, or even switching vendors, weighing the plusses of renting or buying office space, negotiating a lower rent, incorporating new products into your business, and raising the prices of your goods or services.”
- Setting clear targets on profitability. A successful business requires that clear, specific goals are in place. Additionally, goal-setting means having a series of steps to make those goals a reality. “It’s especially important to include expense control goals as well as revenue goals; when you’re trying to increase revenue from the previous year, your expenses might go up,” Zdenek says.
- Keeping business systems in sync. Reaching profitability goals requires a regular monitoring of each part of your business. “As you hire people, update your marketing and sales approaches, track inventory, it’s all tied back to you and keeping on top of every aspect of your company,” Zdenek says. “From there, you should build a championship team of experts inside your organization and also work with a championship team on the outside. But it starts with you as CFO.”
- Tracking your results. Keeping track of your business’ progress or regression is crucial in terms of organizing and managing your business. “It gives you accuracy and clarity, allowing you to know when and how to adjust your practices and goals, where you need improvement,” Zdenek says. Effective ways of tracking include a visual, such as a calendar or wall chart. Surveying customers for their input is important.
“Most business owners are running their business with a mentality that if there is enough money in the bank, the business will stay afloat,” Zdenek says. “But there’s so much more to it if you want to be around at the end of five or 10 years.”
About Al Zdenek
Al Zdenek (www.AlZdenek.com) is the president, CEO and founder (1982) of Traust Sollus Wealth Management, a boutique wealth management firm dedicated to empowering people to transform their lives and live the life they wish now and in the future. This is done by consistently making the best financial decisions. His book, Master Your Cash Flow: The Key To Grow And Retain Wealth, and his upcoming book, Master Your Cash Flow: The Key To Grow A Valuable Business, shows readers how to achieve the wealth they need and then find additional cash flow and, if saved, build wealth sooner, work less years or have more wealth to live the lifestyle they desire now and forever.