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Quotes Every Financial Leader Needs to Read

A few weeks ago, I started another series of our Financial Leadership Workshop, and in Day 1, we discuss that paradigm shift that needs to take place to go from accounting to financial leadershipSo, I compiled all the quotes from all of my curriculum that make me think… How can I lead my company differently? What can I do to better serve my clients? Take a look at following quotes every financial leader needs to read. Leave a comment below to suggest any other quotes and/or your take on the quotes I listed.

Quotes Every Financial Leader Needs to Read

While each of the following quotes is focused on a specific need or issue, I believe that every CFO, CEO, and financial leader needs to explore what each of these quotes mean.

Having a Plan

So often, entrepreneurs do not have a plan. We hear horror stories of executives telling their teams that there is no plan. Having no plan is a plan and it usually ends in disaster. Or maybe you have a plan but it is in your head and not documented.  You must get your plan down in writing.  Do you remember Captain Sullenberger landing the plane in the Hudson River on that chilly winter day? Here’s his take on having a plan.

“During every minute of the flight, I was confident I can solve the next problem. My first officer, Jeff Skiles, and I did what airline pilots do: we followed our training, and our philosophy of life. We never gave up.  Having a plan enabled us to keep our hope alive. There’s always a way out of even the toughest spot. You can survive.” – Capt. Chesley B. Sullenberger III

Role of a Leader

Do you know the role of a leader? Condoleezza Rice, former Secretary of State, said the following about a leader’s role.

“The role of a leader is to inspire people to a common goal and enable them to get there.”– Condoleezza Rice


Are you financially leading your company (or trying to)? We are starting a new series of our Financial Leadership Workshop this March 2019. Click the button below to learn more about what this coaching workshop is all about.

Learn More About the Financial Leadership Workshop


Leadership Habits

“The 8th Habit is to find your voice and inspire others to find theirs.” – Stephen R. Covey

Attraction

“The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor”– Charles Mundger

The Rest is Just Details

Our very own founder, Jim Wilkinson, had this saying that business is pretty simple… It’s all about sales! When a financial leader is able to shift their mindset from accounting to supporting sales and enabling sales to grow, then you become a whole lot more effective. Read more about this phrase here.

“It’s all about sales; the rest is just details!” – Jim Wilkinson, founder of The Strategic CFO

Budgeting

There are several budgeting quotes every financial leader needs to read.

“A well-constructed numerical estimate is worth a thousand words.”  – Charles Schultze, former Director of the US Bureau of Budget

Budgeting is the bane of corporate America.”  – Jack Welch, former CEO of GE

“Without a yardstick, there is no measurement And without measurement, there is no control.”  – Pravin Shah

The Hedgehog concept – created by Jim Collins – is when companies identify what they do best and focus on that. For example, a hedgehog knows how to defend itself. That’s what it does best! It does not try to expend time or energy hiding or fighting.

“The purpose of budgeting in a good-to-great company is not to decide how much each activity gets, but to decide which areas fit the hedgehog concept and should be full funded and which should not be funded at all.” – Jim Collins

“The only things that saves us from the bureaucracy is its inefficiency.” – Eugene McCarthy, US Senator

Problem Solving

Equip yourself with multiple tools, and more specifically, the right tool.

“If the only tool you have is a hammer, then every problem looks like a nail!” – Abraham Maslow

My Own Quotes

Here are two of my own quotes I use with entrepreneurs and coaching participants over the years:

“I do not believe in sacred cows.”

Working capital is like your diet; if you do not manage it, then it can kill you.”

What other quotes have changed the way you lead your company? Leave them in the comments below. Also, click to access our 7 Habits of Highly Effective CFOs – this is everything CEOs have told us what they want from their CFO.

quotes every financial leader needs to read

Quotes Every Financial Leader Needs to Read

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The Importance of Using GAAP Financial Statements

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial StatementsI have written about this in the past, yet it is an ongoing subject that we deal with business owners day after day… A client recently asked me why we (The Strategic CFO) were insisting on generating the clients financial statements on an accrual basis and per GAAP.

He insisted that cash basis was fine and that we were just creating a lot of busy work.

He also stated that he did not care or need the balance sheet, just the income statement.

Today, we’re talking about the importance of using GAAP financial statements.

GAAP Financial Statements

Our firm did not invent GAAP financial statements.

GAAP means Generally Accepted Accounting Principles.

These principles have evolved over time as we get smarter and more advanced.

The main principle behind GAAP financials is to generate a set of financial statements that represent the most accurate picture about your company. They should be comparable, not misleading and clear so a third party can understand.

So the uniform application of GAAP to business transactions would most clearly represent a true picture of your business.

The Importance of Using GAAP Financial Statements

There are several reasons companies should be using GAAP financial statements.

First, public companies and certain loan documents require GAAP financial statements. We recommend that all private businesses also use GAAP financials as a best practice so you can have the best information to run your business.

Second, by not having your financial statements per GAAP (which uses accrual based accounting), you are basically 60-90 days behind your business.

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial Statements

Running Behind Your Business without GAAP

Let’s look at an example of a manufacturing facility.

Someone in the manufacturing facility orders $50,000 worth of raw material, but you have not yet received an invoice from the vendor.

The vendor takes 30 days to generate an invoice because they have an inefficient accounting department.

The invoice gets mailed, taking 1 week to get to you.

Your staff person got the mail and did not enter the invoice in the system for a week.

Then because you did not review your aged payables until the end of the month, you are likely to be 60 days behind your business. You will not have the liability section reflecting the payable for this example until much later.

That means your balance sheet is not accurate.

Plus, you may not have that payable in your cash forecast for payment.

This example is one transaction, but it adds up when you consider all the transactions in your business.

You will be 60 to 90 days behind your business by not keeping your books on accrual basis.


Don’t let something as simple as not having your financial statements per GAAP take value from you! Learn about 10 other destroyers that could be taking value away from your company.

Download the Top 10 Destroyers of Value


Accurate Reports on Your Business

As a business leader, you want the most accurate reports on your business on a timely basis so you can make business decisions.

Your income statement, balance sheet, and statement of cash flow paints the picture of the recent historical performance of your business.

You need to monitor the trends so that you can make business decisions timely.

Critical for Growth

We see it over and over again… A good business is mismanaged because the CEO or entrepreneur does not want to spend the money or take the time to understand his financials or keep them per GAAP. Eventually, they are upside down on working capital and run out of cash. This is especially true in a high growth environment.

Reasons for Using GAAP Financial Statements

If you have a small business of 3 employees with one legal entity and have sales of $800,000 per year with no plans for growth, no debt, no outside investors, then you can certainly keep your books on cash basis and ignore GAAP.

But if you grew beyond that and have a substantial business that you want to grow, or you have debt, our outside investors, then you seriously need to consider keeping your books and records on an accrual basis and per GAAP.

In short, why should you keep your books and records on an accrual basis and per GAAP?

  • Working Capital – Not having them per GAAP can lead to operational disaster
  • Outside Investors and Lenders will require them
  • Growth – If you are beyond a mom and pop shop, then these financials will be your key tool for growth
  • Value – From a valuation standpoint, GAAP financials add value

Why Use GAAP Financials

So to answer the question we started this blog with why use GAAP financials?

First, using these principles allow your business to be presented correctly to third parties.

Then, you need accrual based financials to properly run your business. Otherwise, you are 60-90 days behind running your business. It may be required by your lender.

Having your books kept per GAAP actually adds value to your business from a valuation perspective. While you are working on adding value, make sure there aren’t “destroyers” taking value from you. Download our Top 10 Destroyers of Value whitepaper and protect your company’s value.

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial Statements

Use GAAP Financials, Using GAAP Financial Statements, GAAP Financial Statements

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Why You Need to Have a 13-Week Cash Flow Report

Why You Need to Have a 13-Week Cash Flow ReportHave you ever been in a cash flow crisis?

You aren’t able to make payroll.

You can’t pay your vendors.

There is simply not enough cash.

BUT sales are rocketing.

So in theory, there should be enough cash… Wrong.

I say this during every Office Hours I host for our SCFO Lab members… “You need to have a 13-Week Cash Flow Report. If you don’t have one, get one.” As we are quickly coming into the holidays and the new year, let’s look at why you need to have a 13-Week Cash Flow Report.

Or, do you live in a company that is cash rich, and you simply do not see the need to forecast cash because you know you have plenty in the bank?  Well, you still need a cash flow forecast.

Handling a Cash Flow Crisis?

Handling a cash flow crisis is never easy because it puts financial leaders in a difficult place. It may look like asking vendors to extend their payment terms, selling off assets, or laying off employees.

Whether your cash flow crisis resulted from the fluctuating market or mismanagement, there are a couple of tips in handling a cash flow crisis.

(NOTE: Regardless of whether cash is tight or flush, every company should have a 13-Week Cash Flow Report. In the SCFO Lab, members have access to our 13-Week Cash Flow Report template that we use with all our clients. Click here to view.)


Every company needs cash. That’s why you need to have a 13-Week Cash Flow Report! Learn 25 different ways to improve your cash flow with our free whitepaper. 

Click here to Download the 25 Ways to Improve Cash Flow


Update Financials & Reports

Look at your financial statements regularly, and make sure they are updated – especially your…

You cannot make smart and strategic decisions without the most up-to-date facts.  Having an updated cash flow forecast for your business that is updated weekly allows you to have a true pulse on the business. Your accounting records should be based on accrual based accounting. But your cash flow forecast ties in nicely as a great tool.

Communicate Effectively

Communication is key to handling a cash flow crisis. This could look like…

Why You Need to Have a 13-Week Cash Flow Report

The #1 reason why you need to have a 13-Week Cash Flow Report is because it’s active cash management. This report is a big picture tool that tells companies how much cash is required on a forward rolling basis. More specifically, it gives you the freedom to make big decisions.

Cash Rich or Cash Poor – You Need a Cash Flow Forecast

So, we briefly discussed that in a cash flow crisis the cash flow forecast allows you to manage cash and adjust payments to vendors while making payroll and keeping the lights on. What about in a cash rich company?

I recently started on a client, and the company is a cash rich company. The CFO was surprised when I mentioned to him that he should have a cash flow forecast.

Here are a few reasons why a cash rich company would want to know exactly how rich they are:

  1. If you are cash rich, then you may be looking at acquisitions. It would be nice to know who much you pay as cash and how much you finance.
  2. CAPEX acquisitions – you want to know how much actual cash you have to acquire CAPEX.
  3. Distributions/Bonuses, etc. – how much can you pay out?
  4. Plan for the worst –  I do not care what industry what you are in; they all eventually have downturns. Plan ahead and save up for those rainy days.
  5. If you are cash rich, then that means you made a large profit. That also means you have to probably pay taxes, or distribute cash to pay taxes. How much cash for taxes do you need?

How to Create a 13-Week Cash Flow Report

Now, let’s look at how to create a 13-Week Cash Flow Report.

There are several pieces of information that you need to gather as you build this report, including the following:

Why You Need to Have a 13-Week Cash Flow ReportTips on Making Your Cash Flow Report Successful

Here are a couple of tips on making your cash flow report successful.

Get C-Level Support

If your C-level is not supportive of creating the 13-Week Cash Flow Report or using it as they run the business, then it’s just going to be another report that never gets used.

Don’t let it become that!

This tool is so valuable AND every company should be using one.

Not using a 13-Week Cash Flow Forecast is like deciding not to drink water for an extended time. You know you need to water/cash, but you do nothing about it. Eventually, you become so illiquid that you are financially distressed, if not bankrupt.

For example, we once put together a 13-Week Cash Flow Forecast for a company that was making a small percentage of what they used to make when the market was better. We predicted that if they did not take any action, then they would be out of cash within 9 months. Unfortunately, the CEO and senior leadership did not make any changes and had to shut their doors. Our long term cash flow forecast was accurate and we warned the CEO.

Use The Report As A Playbook

The report is useless unless you actually use it as a playbook and use it to make strategic decisions. When you use the report as a playbook, you go from being an accounting/finance professional that knows how to build reports to a financial leader that strategically directs the firm.

How to Use a 13-Week Cash Flow Report

Once you have created the 13-Week Cash Flow Forecast, it’s important to maintain it. We suggest to maintain and update it at least weekly. We also suggest that you use this report in conjunction with the Daily Cash Report.

If you want to increase cash flow, then click here to access our 25 Ways to Improve Cash Flow whitepaper.

Why You Need to Have a 13-Week Cash Flow Report

Strategic CFO Lab Member Extra

Access your Cash Flow Tuneup Execution Plan in SCFO Lab. This tool enables you to quantify the cash unlocked in your company.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Why You Need to Have a 13-Week Cash Flow Report

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Hire For Traits, Not For Talent

Hire For Traits, Not For TalentYou have probably heard the term, hire for traits, not for talent.

I can tell you ever since I first heard of this term, I have gone back in time and the different experiences I have had, that related to this term over the last 28 years of my career.  I am convinced more than ever that we should all apply this to ever hire we make.

Hire for traits, not for talent.

Hire For Traits, Not For Talent

You would be surprised, or maybe not, how many times I have worked with accounting, finance, or operational professionals that really knew their stuff.

Technically, they were all there and then some.

But when it came with dealing with these individuals on a personal level, they were very difficult to deal with or even impossible to deal with.


Are you building your team? If so, it’s time to stop hiring duds. Learn how to recruit that star-quality team you need to get to the next level.

Access Our 5 Guiding Principles for Recruiting a Star-Quality Team


Case Studies

In my 28+ years of experience, I have had numerous good and bad experiences hiring. Let’s look at a few of them!

“Super Star” Divisional Controller That Knew It All

I worked for a large publicly traded company, and the operating world was divided into regions for the entire world. So, there were several divisional controllers.

Well… There was this “super star” divisional controller that knew it all. He was technically the smartest guy in the room when it came to the latest accounting pronouncements. But when it came to dealing with people, this mad man was impossible to deal with. He was rude, had temper tantrums, and was just a jerk. He got the job because on paper he was a super star. But when it came to working with others, it was impossible.

As a result, he had a short career at the company.

Cancer In the Organization

I also dealt with an operating guy recently who was hired for his technical expertise in a specific operation. He was very talented when it came to the operation of the business. But once again, he was insubordinate, treated others like dirt, and just a cancer in the organization.

Sponge in Learning

On the contrary, I recently hired a young man with very little work experience, smart, and was a sponge in learning about the business or how we did things. This young man has turned out to be a real super star. I did not hire him for his talents, but his traits and ability to work well with others.

Conclusion: Hiring for Traits

The stories above are real and I have another dozen like these.  All of these individuals had “talent” in there area of expertise, but their personal traits varied. Those that failed had horrible personal traits. Those individuals that I have worked with that had excellent personal traits turned out to be excellent employees. An individual with exceptional personal traits can learn anything.

Personally, I would want to always hire that person that has exceptional personal traits, and maybe average on talent.

Why?

Because I know I can train this person and make him or her a super star.

Think about those individuals that you have worked with in your career. Think of their traits versus talent. Someone can have exceptional talent, but if they can not get along with others, work in a team environment or have other horrible traits, then that person will always fail.

Don’t make the same mistakes when hiring your next employee. Learn about our 5 Guiding Principles for Recruiting a Star-Quality Team and how hiring for traits is the way to go!

Hire For Traits, Not For Talent

Strategic CFO Lab Member Extra

Access your Recruiting Manual Execution Plan in SCFO Lab. The step-by-step plan recruit the best talent as well as avoid hiring duds.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Hire For Traits, Not For Talent

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2

The Importance of Knowing Your Leadership Competencies

Knowing Your Leadership Competencies, unique ability

Two weeks ago, our team celebrated 1 year since the acquisition of The Strategic CFO. In the past 12 months, we’ve grown significantly in the number of team members and clients. In our meeting, I put the quote up on the screen…
“Life is simple… People complicate it.”
Everyone laughed because it is so true.
As we shared stories, challenges, successes, etc. in my team meeting, I asked them if they knew what they were competent and incompetent at.
Everyone is incompetent at something.
Financial leaders need to understand the importance of knowing your leadership competencies.
Truly successful people spend 80-90% of their time utilizing their excellent and unique abilities and delegate the rest.

The Importance of Knowing Your Leadership Competencies

Before we begin, I want to define leadership. It’s the ability to guide, direct, and influence people. There are four types of ability that a leader must know about themselves. Those include the following:

  1. Incompetent
  2. Competent
  3. Excellent
  4. Unique Ability
Become a better financial leader by learning exactly what CEOs want from their CFOs. You can find these habits or traits7 Habits of Highly Effective CFOs whitepaper in our .

Know What Your Incompetencies Are

First, you need to know what your incompetencies are. Incompetent indicates the activities that you are not good at and the things that you don’t do well. Everyone is incompetent at something. Some incompetencies could be translating the numbers to something the CEO could use to make decisions, knowing the ins and outs of your accounting system, or working with technology. Before you can start to figure out what you are competent at, you need to know what you are not good at.

Write those incompetencies down. If you are asked to do work in those areas, either defer or delegate. It is not worth your time to invest in those areas when they are not profitable.

Know What Your Competencies Are

Then identify your competencies; these are activities that you are okay at, but the majority of others are better. In other words, the general population is good at that thing. For example, all accountants will know where assets, liabilities, and equity go on the balance sheet.

What Are You Excellent At?

After you have identified your incompetencies and competencies, then ask yourself… “What are you excellent at?” This refers to the activities that you excel at, but so do a few others. If you have a knack for knowing where to unlock cash after just looking at the financial statements, then it may be time to focus more of your energy there. Not everyone will have this skill though.

Know Your Unique Ability

Finally, know your unique ability. Your unique ability are the abilities only you possess. These are activities that drive value for yourself and others. In addition, your unique ability must be valued by society.

Strategic Coach outlines the four areas that you need to look at when identifying your unique ability:

  • Passion
  • Superior Skill
  • Energy
  • Never-Ending Improvement
So, how do you tell the difference between your unique abilities and your incompetence activities? Your unique ability gives you energy and your incompetence zaps your energy!

Inventory of Role

If you want to be really effective as a CFO and a financial leader, then you need to know what you are already doing and what your CEO wants more of. In our Financial Leadership Workshop, we walk our participants through an extensive inventory of role. Some of the areas that CEOs wants more from there financial leaders include:

If you want to go through this exercise AND 32 hours of coaching from me, then click here to learn about our Financial Leadership Workshop. Registration for our series starting December 2018 is now open. Contact us for more information and to register.

The Role of the CFO

While the CEO must balance the vision, growth, implementation, cash, and profitability of the company, the role of the CFO is to compliment the skills and unique abilities of the entrepreneur. You would not find Steve Jobs or Jeff Bezos in the accounting department, but they sure need(ed) support from their financial leader to make innovation happen.

To learn other ways to be more effective in your role as the financial leader, click here to access our most popular whitepaper – the 7 Habits of Highly Effective CFOs.

Knowing Your Leadership Competencies, unique ability

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to manage your company before your financial statements are prepared.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Knowing Your Leadership Competencies, unique ability

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Does Your Management Team Understand the Financials?

As companies grow, more and more people get involved with the operations of the business. Whether you have a manufacturing business or service business, this eventually grows beyond a one-man show. Sales people, engineers, and technical people often become the leaders responsible for driving your business and adding to the top line. Everyone understands what a new client means and what revenue is. So, does your management team understand the financials?

Management Team Understand the FinancialsDoes Your Management Team Understand the Financials?

The challenge is when a business grows, companies add people to operations, the management level, vice president positions, etc., but they do not have a solid understanding of the financial statements. We often see this in high growth businesses, where the focus is on sales as it should be, but only the CEO, Controller, or CFO understand the other parts of the financial statements.

Why Your Operations People Should Understand All The Financial Statements

I recently witnessed a business that had a steady run rate of sales and EBITDA at a very attractive rate.

Then, the operation was handed over to an “expert” in the industry. This industry expert does know a lot about how to technically process something, but he has no clue about how a business really operates.

In one month, he changed the focus of the production to one project. While, this one project was completed in record time, all other projects came to a standstill.

Now, the business ran out of work in process and finished goods, and sales suffered the following month.

If the industry expert understood the balance sheet, inventory, A/R and A/P (in addition to sales, cost of sales, and cash flow), then the company would have avoided this poor performance in the following month. Anyone in charge of an operation or in a management position must understand how their activity affects the balance sheet, income statement, and cash flow. They are all tied together and all get affected with operational activities.

It All Turns Into Cash or Lack of Cash Eventually

My prediction is that in the following 4-6 weeks, that business mentioned above will find itself in a cash tight position. Remember, CASH IS KING!  Everything you do will have an effect on cash one way or another. The lack of planning in a production environment causes work in process inventory to run out, sales to suffer in the following month, and ultimately, cash to get tight.

Cash is king. That’s why we created the 25 Ways to Improve Cash Flow. This valuable resource has helped many of our clients get out a cash tight situation and become flush with cash.

Educate Beyond the CEO, CFO, and Controller

I am a big believer that it is the company’s responsibility to educate the management team that has “P&L Responsibility”. I do not mean  just the P&L.

Everyone with responsibility for the bottom line, profit, and cash should have a general understanding of the impact to all three financial statements.

Not everyone is an accountant, and they should not be.

But it is our responsibility to educate those that have operations responsibility that affect the bottom line. I am a big proponent of workshops and educational courses for operations people. In a few days, you can give them enough knowledge to at least have them ask the right questions. But as CFOs, Controllers, and CEOs, we need to provide that education so that the people making operational decisions have a positive impact on the bottom line and cash.

From Operations to P&L Leader

We have specifically designed a 4-day workshop for this exact purpose. It is called “From Operations to P&L Leader”. We are not out to have operations people become accountants; however, our goal is to simply provide enough data and understanding of how operations and the financial statements are tied together. Furthermore, we show participants how their decisions in operations affect all three financial statements – the Income Statement, the Balance Sheet, and the Cash Flow Statement.

Educate, hold accountable, and have deliverables. This will lead to a successful organization!


If you want to increase cash flow, then click here to access our 25 Ways to Improve Cash Flow whitepaper.

Management Team Understand the Financials

Strategic CFO Lab Member Extra

Access your Cash Flow Tuneup Execution Plan in SCFO Lab. This tool enables you to quantify the cash unlocked in your company.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

Management Team Understand the Financials

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How to Make Dramatic Changes in Business

How to Make Dramatic Changes in Business

Recently, we had a coaching participant mention to us how her company was wanting to make a huge change in their business that would ultimately destroy the current business.

This happens more often that you would think…

The owner or founder of the company wants to make a shift, a change, but the leadership did not full think through what that would actually look like.

In our coaching participant’s case, her company had been around for a long time. They were known widely for their innovation. They were also a non-profit. The founder wanted to convert the company into a for-profit entity.

That change would change EVERYTHING.

In fact, it would be an entirely different company.

In this week’s blog, we look at how to make dramatic changes in business while avoiding catastrophe and how to reinvent your company.

Change requires a strong leader. Learn how to be a more effective leader here.

How to Make Dramatic Changes in Business

When a company makes dramatic changes in their organization, it’s important to ensure the change will be sustainable and has the benefits outweigh the risks. This starts with questions like…

How can we better develop our product/service to provide more value to our customer?

What organizational changes can we make to reduce overhead and increase productivity?

Is our current company structure the best structure for accomplishing our mission?

Do we need to totally reinvent ourselves just to survive?

In our first example, changing the organization from a non-profit to a for-profit would only stuff the founder’s pockets; however, upon further conversations with their Finance Director, we came to the conclusion that that organizational structure change would change everythingmarketing, branding, funding, employees, legal aspects, and accounting. It would cost more to make that dramatic change than to stay the same. They would most likely loose their funding, their employees, and their entire culture.  They apparently were making a change for the wrong reasons.

Driving Radical Change • McKinsey

In a McKinsey article called Driving Radical Change, they outline how to make dramatic changes in business. It first starts with the aspiration – the goal for the change. Then, the leadership for the change needs to be addressed. Who is doing what? What are the priorities? The next two steps include articulating actionable steps for employees to act on and the direct impact they have on the change. This stage is what really fuels the change. Leadership needs to engage and energize their employees during change (change is scary for most people). Read more about making radical change here.

How to Make Dramatic Changes in Business

Why Make Dramatic Changes in Business

So, why make dramatic changes in business? Sometimes, it just needs to happen. Businesses can get stuck in a “rut” where they continue to practice the way that they have always done without evaluating the changing environment or their team. If your company has not made a change (or at least evaluated current practices) in a decade, then it’s time to look at whether radical change is necessary.

Reasons to change include but are not limited to the following:

  • It’s just not working
  • Competition is growing and taking business away
  • There are legal restrictions
  • The market is shifting
  • Technology shift (this is probably the most common in the last decade)
  • New opportunities identified
  • Customers demand something else

Changes could include the following:

Sustaining Business After Big Changes

So many businesses have made changes due to technology advancements, competition, etc. Barnes & Noble has been through numerous CEOs because they did not continue to press on with their Nook and e-commerce platform. Netflix went through a period of declined stock prices as they pressed on to be a primarily online-streaming platform. Sustaining business after big changes can be difficult, but it all comes down to the leadership. Forbes contributor, Erika Anderson, says, “When CEOs and their teams fail to fully commit to change, change fails.” The entire company needs to commit to making this change successful. If one link in the chain is weak, then the whole project will fall.

Here are a few more notables:

  • Amazon started as an online book sales company; it is now a large distribution and logistics company
  • Western Union started as a telegraph company, then it grew to one of the largest money transfer companies in the world
  • Nokia started selling rubber boots; it is now is a major cell phone manufacturer
  • Shell (the major oil company) started in a small store in England importing and selling shells

There is a great quote that I saw in an article from MONEY… “A successful company is like a giant great white shark. In its prime, it chews up the competition, but if it dares to sit still for too long, it dies.”

Your CEO needs a strong leader – especially a strong financial leader. Learn our 7 Habits of Highly Effective CFOs and become the strong leader your CEO needs.

Supporting Change as the Financial Leader

Change is uncomfortable for everyone because there is uncertainty about the results.

Accounting type people are often prone to being the no-sayers during change… It’s too expensive, too risky, and too advantageous.

When making dramatic changes in your business, it’s important for the financial leader to support the change.

If a certain change will dramatically impact cash flow and profitability, then work with your CEO to figure out what you can do.

Do not just say “no”.

The CEO needs a trusted advisor, a confidant, someone who they can rely on for a more financially sound way of doing something.  In my experience, change has usually been good and for the right reason. To learn other ways to be more effective in your role as the financial leader (and to become a trusted advisor), click here to access our most popular whitepaper – the 7 Habits of Highly Effective CFOs.

Dramatic Changes in Business

Dramatic Changes in Business

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