From Practical Business Growth Strategies to Hiring a Virtual Chief Financial Officer, Everything You Need to Know About How to Grow Your Business Faster Is Linked Here
Introduction to Business Growth Acceleration
Once your business has been around a while, you stop worrying about survival – and you start seeking strategies to scale your business.
For the growth-focused women business owners who make up the majority of our clients, this shift takes on new urgency once they have already built a 7- or 8-figure business. To get to this level, you’ve already typically accomplished several key items to growing a successful business, including:
But once you hit this point of building a 7- or 8-figure business, you start to think about:
Scaling your business is an important step in the evolution of your business. Scaling is what allows you to:
- Make your mark on the world
- Have a bigger impact in the lives of your customers
- Increase your profit margin
- Create more time freedom for yourself
- Maximize the value of your business – and the price you get paid when you sell it
Scaling your business takes an investment of time – and typically of money. You need to invest in:
- Analyzing how your business operates
- Identifying and addressing inefficiencies
- Systematizing operations
- Adding new products and services
- Growing your team
- Expanding your marketing and sales
Many business owners stall out at this point in their business growth. They know they want more from their business. But they don’t know how to break through to the next level of success, how to fund their company’s expansion, or whether a virtual CFO can help them.
Stages of Growth Acceleration
Businesses go through an evolution as they mature, just as infants grow into toddlers, who grow into children, who mature into teens, who eventually turn into young adults, middle-aged adults, and seniors. The difference between businesses and humans, of course, is that businesses mature much more quickly – and at their own pace.
The stage your business is in will determine which strategies are needed to help you reach the next phase of evolution – or whether a virtual CFO can help.
- Adjusting your product mix. Some products naturally produce higher profit margins, while others have slim margins. To maximize value, you’d focus on selling high-margin items. A CFO can crunch the numbers to help you figure out which products to focus on.
- Expanding your team. As your company grows – and grows more complex, you’ll not only need more people to do the work, but you’ll also need employees and vendors with specialized skill sets.
- Update your infrastructure. Depending on the type of business you have, you may need new office space, a more robust computer network and/or website, different software, a better inventory system, the right staffing, proper internal systems and procedures – the list goes on and on. To rapidly build your company’s value, focus on the investments that will produce the biggest, fastest and most necessary returns. A CFO will help you identify the right infrastructure needed to achieve your goals – and the components it should contain.
Partnering with a virtual CFO at this stage is smart, because this specialist can help you:
- Identify the correct business value for companies like yours
- Spot problems or pitfalls that may prevent you from getting paid top dollar
- Recommend practical solutions to potential problems
- Pick the right business growth strategies to fatten up your business value
- Identify and negotiate with potential transaction partners
Why Businesses Struggle with Growth Acceleration
Growing your business is a universal desire for entrepreneurs. Yet, most business owners struggle at one point or another with achieving the next level of business success. Virtual CFOs play a key role in helping to identify the right business growth strategies to use at each phase of your business.
Some business owners never get past the first phase. They work hard, yet never make the leap from self-employment (where you’ve simply created a job for yourself) to actually owning a “real” business, where revenue is predictable and a team is available to handle the work.
Other businesses stall out a few phases up the ladder. They’re able to create a certain level of success, but then simply cannot break through to the next level.
In all cases, the struggle to achieve steady business growth tends to be traced back to one or more of the following issues. Which of these statements ring true for you?
- You treat your business financials casually. As long as there is money in the bank account and some cash coming in, you don’t spend much time thinking about your business finances or how you’ll grow your business. You do what it takes to take care of clients, and you’re simply too busy to slow down and look at your numbers strategically.
- Speaking of numbers, you don’t know what your key business numbers are – or how to identify them. Other than your bank account balance and revenue, what else are you supposed to know? (In fact, there are 10 critical numbers every CEO should know at all times.)
- You struggle with cash flow. Some months are great, so you relax, stop worrying, and even spend a little extra. But then all of a sudden, you don’t have enough cash on hand to cover your business, much less invest in business growth. Maybe a big client pays late or you lose a contract. Or maybe revenue is steady, but your expenses skyrocket because you have to buy a bunch of inventory or your key suppliers start charging more. All you know is that it’s feast or famine – and you’re tired of being on the roller coaster.
- You have too much debt … you suspect. (You don’t really know, because you don’t know what “too much” means.) You have no problem investing in strategies that will grow your business, because you know they’ll pay off. But you’ve reached a point where you only seem to be able to cover minimum monthly payments on your debt. You begin to doubt if you’ll ever get your debt paid off completely, and you start to worry about being able to pay your minimums in the months when cashflow is tight.
- You simply don’t know if you’ve priced your products and services correctly. Some clients have no problem paying what you ask, while others balk. You seem to be working all the time, yet you never seem to have enough money. Truth be told, you’ve guessed when setting prices, and you don’t know with 100 percent confidence that you’re charging enough for the value you deliver.
The Role of Strategic Financial Planning in Growth Acceleration
When you’re seeking ways to grow your business, it’s easy and tempting to jump straight into asking, “How can I get my company to the next level?”
But jumping straight into action consumes time, energy and resources. It can even backfire if you choose the wrong strategies for your current phase of business evolution, the challenges you’re facing, and/or the goals you want to achieve.
This is where strategic financial planning comes in.
Wow, did you just yawn? 😉
Yes, the words “strategic planning” make some people want to take a nap. But to a CFO – a highly trained professional who is uniquely equipped to help you look forward and steer your company confidentially toward its goals – the process of strategic financial planning is intoxicating.
As the saying goes, “If you’re failing to plan, you’re planning to fail.” Business growth acceleration involves an often-sizeable investment of your time, money and energy. You want to make those investments in places – and in ways – where you’re confident you’ll see a positive, measurable, and predictable return on investment.
Strategic financial planning is a complex, data-driven process that encompasses the following steps:
- Taking stock of where you are. Your virtual CFO will dig deep into your financials, identifying the true costs of doing business, profitability for every product and service you sell, how much debt you’re carrying, your cash flow projections, and so much more. By the end of this phase, you’ll be able to take a cold, hard, objective look at how healthy your business is – and how it compares with the rest of your industry. You must do this before picking the strategies you want to use.
- Set your goals. The process of growth acceleration should be like taking a direct flight from New York to Los Angeles – a straight shot in as little time as possible. It should not be like setting off on a backroad Sunday drive, meandering around and enjoying the journey to nowhere. To know which strategies to employ, your CFO needs to know first where you want to end up.
- Create the plan. Have you ever been in a meeting where decisions are made, but no one takes responsibility for getting the work done? What happens with those key decisions? They go nowhere, right? Business growth doesn’t happen simply by setting a vision, although goal-setting is a key part of the process. The magic happens when you identify exactly what needs to happen to execute your plan, who is responsible for executing each step, and when those actions will be completed. This article reveals 5 questions to ask.
- Monitor progress. You’ve heard the saying that “Things that get measured get managed,” right? The same goes when executing your growth acceleration plan. Someone needs to take the lead on making sure that the plan is being acted upon. Someone also needs to be monitoring the effectiveness of the strategies you selected to ensure that they’re delivering the results you expected.
If you’re serious about accelerating the growth of your business, a virtual chief financial officer is a highly recommended person to add to your team. Put this gifted professional in charge of the strategic financial planning process. Not only will you know that you’re operating from a plan that’s based on accurate, real-time data and that’s carefully crafted to help you achieve your goals as efficiently and quickly as possible, but you’ll also enjoy greater confidence and peace of mind from knowing a professional is in charge.
How a Virtual CFO Can Help Identify Your Organization’s Business Growth Strategies
When you’re committed to accelerating the growth of your business, you can do it yourself. Or you make life easier (and boost your confidence and peace of mind that you’re selecting the right strategies) by working with a virtual CFO.
This highly trained financial professional is focused on the future, long-term focus of your business – and is uniquely qualified to help you achieve your goals.
A CFO can handle a variety of mission-critical financial responsibilities and tasks for your business, such as:
- Assessing the financial health of your business.
- Helping you understand the 10 key numbers that every business owner should know
- Creating a realistic budget – and monitoring it
- Determining what your costs should be – and trimming them when needed
- Stabilizing cash flow
- Building an adequate cash reserve
- Strategizing for the growth of your business
- Identifying your best, most profitable clients and customers
- Pricing your products and services for maximum profit
- Analyzing and adjusting your product mix
- Positioning your business to secure financing
- Maintaining shareholder relationships
- Increasing the value of your company
- Finding potential buyers for your business
- Negotiating the sale of your business
- And much more
Although they are invaluable at creating a strategic financial plan, a CFO is not the only type of financial professional you might have in your business. Let’s take a look at how CFOs differ from the other, more common types of financial professionals:
- A bookkeeper is responsible for the recording of your financial transactions in your company’s general ledger. They record all transactions and post debits/costs and credits/income. A bookkeeper also can product financial statements and other reports.
- An accountant prepares an analyzes a company’s financial records. This can include data management, creating financial statements, ensuring regulatory compliance in the company’s accounting practices, and preparing taxes. A Certified Public Accountant is a specialized and more highly trained accountant who is extremely focused on taxes. Accountants follow procedures needed to create detailed and accurate financial information based on activities that have already occurred.
- A virtual CFO stands out by being forward-focused and committed to your long-term financial strategy. Bookkeepers and accountants look at what happened in the past. CFOs look at where your company is headed and what your financials reveal about how to get you there.
You’re ready to work with a CFO when you want strategic advice and financial planning that helps you hit your goals. Learn more here.
How to Choose a CFO to Help with Business Growth Acceleration
You know you’re ready to create a strategic financial plan that will take your company to the next level. You also know that it’s time to work with a CFO, because you want the expertise and guidance that comes from a financial strategist who understands your business.
Choose your virtual CFO carefully. Not all are the same. Because you’ll be working closely with this person and relying on their advice to facilitate your business growth acceleration, you want to choose the right CFO for you.
Here are some questions you can ask when choosing a CFO who will identify and oversee your strategic financial plan:
- In what industries have you worked? Although there is benefit to having experience in your industry, there is just as much – if not more – benefit to hiring a CFO with experience outside of your industry. The more diverse your CFOs experience, the more likely you are to enjoy innovative approaches and a cross-pollination of ideas. While everyone in your industry is zigging, you can zag!
- What level of service will you provide? Review the stages of business evolution listed above, and identify where your business is. Make sure that the CFO you’re considering also takes the time to identify where your business is and agrees with you on the steps needed to move forward. Then ask about their experience in helping clients make similar transitions. Ask what growth strategies they used – and how they would go about determining which strategies they would recommend for you.
- How often will we meet? Accelerating the growth of a business requires careful planning and coordination. The process needs frequent monitoring of key numbers and KPIs. Ideally, your CFO will want to meet weekly and be available via phone and/or email between regularly scheduled calls. They may be virtual, and they may be part-time. But your CFO is a key part of your team and needs to be embedded within your company’s operations.
- What type of reports will you give me? To monitor the success of your growth acceleration plan, your CFO should be providing and analyzing regular reports such as:
- Balance sheet, which reveals your assets and liabilities
- Profit & loss statement, which shows your profitability over a set period of time
- Cash flow statement, which looks at money coming in and going out of the business over a set period of time
- Accounts receivable aging report, which helps identify slow-paying customers and delinquent accounts
- AR days vs. AP days report, which shows how long it takes your business to get paid and how long it takes you to pay your vendors and suppliers
- Net profit margin over time report, which helps track trends in profitability and manage pricing, expenses and sales
- Budget vs. actual report, which reveals where you’re overspending and where budgeting can be improved
- Who will I be working with at your company? No matter what firm you choose, you should have a designated CFO who is “yours.” This person may have an assistant who will handle some pieces of your financials. This is perfectly normal and a cost-effective sharing of responsibilities to ensure that your CFO is focused on high-level tasks that only she can perform, such as picking your business growth strategies. Just make sure that you’ll have regular access to your designated CFO.
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Growth Acceleration Resources
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