The CFO and the SMB

You're a Small to Mid-sized Business (SMB), and you're the owner.

You may be very profitable, you may be barely profitable. But you are in business, and your business has finance and cash flow issues.

You may be comfortable with the money your able to pull from the business and the fact that the business is growing, meaning that you'll be able to live better (as well as your employees). But are you maximizing your finance, accounting and administrative resources to its best ability?

In other words, can you be making more money by wisely managing your non-sale business relationships and your cash?

I just saw a $50M company that was extremely successful. They employed several dozen employees, and had an entire floor in a high-demand area of town. In fact, they were stressing the square footage as they have been growing steadily for years.

They had some problems and we were discussing these issues when several topics came up that immediately piqued my "there's a trouble a-brewing" antenna.

Chief among these topics is that they had no real banking relationship, and the bank they were with, for their industry, was the wrong bank.

Secondarily to that issue is they had no credit line. None, zero, not even over-draft.

When I brought up the subject they pooh-poohed it, since they didn't like nor want debt. Too bad, because of an oversight, they had a large amount of money tied-up awaiting certain paperwork to be finished. While this paperwork and cash was in limbo, their once cash-positive company became cash-negative.

So much so, that the owner had to loan the company money. 

Do you see where the picture is going?  

Every tenant of finance was being broken because the company was still being run by a mentality of the "mom and pop" corner store.

What could and should have happened, if he had invested in a Chief Financial Officer (even a part-time or interim CFO) would have been multi-fold.

1.  A banking relationship would have been established.

2.  A line of credit would have been established.

3.  Reviewed and/or audited financial statements would have been prepared (and in their case going back a year or two).

4,  The paper snafu would have never occurred.

5.  The convoluted accounting/administrative systems would have been streamlined (probably saving him five (5) bookkeeping salaries.

6. The inadequate accounting system (for their business model) would be replaced.

Along with a host of other strategic and tactical changes.

Does this scenario only occur in mid-sized companies? Absolutely not. Start-ups, small and large size companies all have the same issues.

Every company should receive and utilize competent CFO services. Not all CPA or CPA firms have the experience to provide all the services that a competent CFO can.  

CPA firms have to be careful about crossing an ethical and legal threshold, if they want to be able to perform audits and reviews. In addition, providing CFO services are not in the business model of most CPA firms.

So a small or start-up company can still use a competent and complimentry CFO along with their CPA. But what do you do if you can't afford a CFO or truly don't need a full-time CFO?

There is a large market of Part-time or interim CFO's in the marketplace. These consultants will work on an hourly, daily or some other time period basis for as long or as short as you require.

Search them out, talk with them, increase your bottom line by taking your accounting and administrative functions out of the cost center modality into the profit center mode!