Last week after a network group meeting that I had been the chosen professional for our “5-minute spotlight” I was approached by a CEO after my Finders, Minders & Grinders℠ snippet who literally began “Business is good, I have a Controller, why do I need you?” before Mr. Smith (not his real name) even mentioned his name. Clearly he was successful, no-nonsense, a cut straight to the chase individual. After spending a few minutes, very few actually, warming up, I was able to learn:
- Business was indeed good … but they’d just lost a client of some import to the business.
- Business was growing steadily … but cash is very tight.
- That my Finders, Minders & Grinders℠ discussion (happy to share that with you if you’d like) had resonated with Smith — he had found himself sucked into — a technical term — a lot of blocking and tackling — minding and grinding tasks — and no one was paying much attention to customer relations … or Finding new customers. Much of their success had fallen into their lap. As Founder he was experiencing some of the not uncommon challenges inherent in scaling continued growth of the company, including: maintaining sufficient working capital to fund growth and implementing best practices to operate at maximum efficiency, and the like.
- Smith felt he was no longer in control of his business. I can say that with conviction — that’s darn close to his quote.
He was beginning to warm up and asked if I had time for a cup of coffee to explain more of what a CFO could do for him — so we headed to the diner literally across the street (I’ve lived much of my life in NJ, I couldn’t tell you where all the Gardens are but Diners are rarely more than a stones throw away). Here’s what we talked about – a short primer on good financial management – largely none of which was in place:
- Cash Flow Forecasting – rolling forecasts at least 6 weeks out but better 3 months.
- Cash Management – Building relationships with his existing banks and managing investor expectations.
- Key Metrics – Smith named two (cash and current months sales – but didn’t know what the numbers were) … there are likely another 4 or 5 more key metrics.
- Financial Statements – Must have and must be timely and accurate.
- Budgets – Another must have including actual vs. budget analysis.
- Monthly Meetings – To review “what’s working, what’s not”, identify necessary corrective actions.
- Financial Controls – Another must have to improve inefficiencies have confidence in reported results and deter theft and fraud … no one likes to think the later could happen to them … but it’s more common than you might think … particularly in SMBs.
I’ll be meeting with Mr. Smith for a more comprehensive discussion later in the week.
For the rest of you, below is a chart of a number of fundamental differences between a CFO and a Controller — if your CFO isn’t handling all (or darn close) the responsibilities under CFO, what you likely have is a Controller masquerading otherwise.
|Enhances Corporate Culture||√|
|Plans & Implements Growth Strategy||√|
|Develops & Implements Profitability Improvements||√|
|Plans & Integrates Acquisitions and Divestitures||√|
|Quarterbacks your Exit Planning Strategy||√|
|Provides Meaningfully Financial Analysis & Strategic Solutions||√|
|Oversees Tax Strategy||√|
|Manages Risk Management||√|
|Accounting & Reporting|
|Develops Business Plans, Financial Plan & Budgets||√|
|Maintains Budget Variance Reporting||√|
|Develops Key Metric, Dashboard Management Reports||√|
|Prepares Key Metric Management Reports||√|
|Develops Financial Systems & Reporting||√|
|Prepares Financial Statements||√|
|Develops Internal Controls, Policies & Procedures||√|
|Maintains Internal Controls, Policies & Procedures||√|
|Coordinates all facets of Annual Audit / Review||√|