As I sat through a full-day board meeting of a software company it became clearer and clearer that what the directors yearn for is visibility.
Visibility into their:
- Cash position – How many months of liquidity does the company have at the beginning of each month? In other words, what is the runway available to the company given its net burn rate?
- Sales funnel – With what level of certainty can the company know how many products it well sell or how many contracts it will win at any point during the quarter?
- Changing HR policies – How can the company’s onboarding process, vacation policy, and legal documentation of staff be consistently adjusted and updated to accommodate rapid scaling and international expansion?
- Legal status overseas – What level of comfort does the board have that all legal details are in order?
They are backward looking and the challenge for the CFO of the company is to provide answers to the questions listed above using the processes in place inside the company.
These processes reveal the data that develop a coherent and concise Key Performance Indicator table.
If the data is not available then systems and processes must be upgraded or completely created from scratch.
This is not a simple task and can be very disruptive and time consuming to all involved. That’s why I make sure that I have total buy-in from the CEO, who must work alongside me to implement the changes with the respective heads of each department – accounting, sales, marketing, HR, and legal.
Everyone inside the company feels these “growing pains” and so both the CEO and CFO must excel at leadership to ensure team performance continues to be maximized.
As we continue down the road of startup finance and how to create a strong foundation upon which to scale and replicate I will take each of these topics individually and take a deep dive into what I do to find the answers.
Before I sign off I would like to ask you to spend some time think through the following questions:
What’s your visibility into your company’s cash liquidity, sales funnel, HR policies and legal compliance?
What does your monthly or quarterly management report look like that provides the key performance indicators with which you can make the highest quality decisions?
And which leadership strategies do you implement to drive maximum team performance during periods of high growth and rapid change?
Remember, all great leaders and successful entrepreneurs take time out of their day to think.
Today, we’ve barely scratched the surface
Whatever stage you’re at in business, you need to be all over the numbers. In posts like this, we aim to offer bite-size food for thought – but in a few hundred words, we can only do so much.
If you’re ready to build your financial muscle, how about a FREE copy of James Vanreusel’s (highly-acclaimed) book for CEOs?
The #1 Key to Creating a Thriving Business takes you through the challenges of growing and scaling your company, from first to last. And you can request your copy here – no hidden fees, no strings.