If you are an entre­pre­neur, have you ever found your­self just “Stay­ing Afloat”?  It isn’t  fun wor­ry­ing about how to pay your bills week to week.  These are the days of a lot of hope and hard work, with less mon­ey to show for it than you would make sling­ing burg­ers at McDonalds.

For those that per­se­vere, there is a new stage, “Com­fort­able”.  You are sleep­ing bet­ter at night, you’ve got a good team help­ing you and a steady stream of busi­ness. Cash flow is bet­ter and you are begin­ning to make some decent mon­ey.  But you are one blink away from going back to “Stay­ing Afloat”.  One sig­nif­i­cant cus­tomer, one key employ­ee or one key ven­dor can knock a hole in your ship that cre­ates an all hands on deck emergency.

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Many busi­ness own­ers find being “Com­fort­able” works for them and choose to make their busi­ness work at this level.

For a vari­ety of rea­sons, some of us, in order to feel pros­per­ous, want to “Break Out” and reach the “High Poten­tial, High Per­former” busi­ness stage.  Pas­sion, ambi­tion or wealth may be your dri­ver, but regard­less of why, mak­ing this leap is a big challenge.

The lev­el of com­plex­i­ty, and skill need­ed in man­age­ment, finance, mar­ket­ing and more must accel­er­ate dra­mat­i­cal­ly to sup­port our upward movement.

One of the most over­looked areas that has to grow is finance and account­ing.  Often seen as an over­head item, busi­ness own­ers often focus on min­i­miz­ing the expense of finance and account­ing rather than mak­ing it a way to add val­ue to the busi­ness.  Entre­pre­neurs often lack of an under­stand­ing of the need nor the know-how to acquire the tal­ent to imple­ment the kind of sophis­ti­cat­ed sys­tems required for a busi­ness to reach its high potential.

In any For­tune 500 com­pa­ny there are lay­ers of finan­cial tal­ent. Book­keep­ers, bud­get ana­lysts, finan­cial ana­lysts, con­trollers, account­ing man­agers, cash flow experts, per­for­mance mea­sure­ment spe­cial­ists, and more, direct­ed and man­aged by the CFO to inter­face with all the areas and func­tions of the com­pa­ny in accor­dance with the com­pa­ny’s strate­gic and finan­cial plan.

Just as a Con­duc­tor directs and man­ages a sym­pho­ny orches­tra to play beau­ti­ful music, we need CFO-lev­el tal­ent to direct and man­age the com­plex set of finan­cial skills need­ed for all facets of our busi­ness to play the same tune.  With­out this exper­tise, it is like try­ing to play Bach with the High School pep band.  You are going to get some­thing, but it will be more like noise than music.

So what does a pro­fes­sion­al sym­pho­ny orches­tra lev­el finance depart­ment look like for a small to mid-size com­pa­ny and how can they afford it?

Let’s con­sid­er first what it must include. Instead of one sys­tem, as we tend to think of it, an account­ing depart­ment. The sys­tem to get you to “High Per­for­mance High Poten­tial” is actu­al­ly THREE inte­grat­ed systems:

  1. An expand­ed and more met­ric-cen­tric account­ing system
  2. An account­abil­i­ty system
  3. A busi­ness struc­ture system

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Let’s look at all three components.

The account­ing sys­tem need­ed to pros­per at the “High Poten­tial, High Per­former” lev­el includes:

  1. A Mea­sure­ment Sys­tem (tra­di­tion­al­ly called report­ing or account­ing systems) 
    • Ful­ly inte­grat­ed book­keep­ing to man­age all the day to day activities
    • Con­troller­ship tal­ent to man­age a con­sis­tent and time­ly month end close process
    • Month end finan­cial statements
    • Trend­ing com­pa­ny-wide Key Finan­cial Indicators
    • Depart­men­tal and indi­vid­ual Key Finan­cial Indicators
    • Bud­get reporting
    • Cur­rent Forecast
    • The capac­i­ty to do deep dive analy­sis as needed
  1. An Account­abil­i­ty System 
    • Vision, mis­sion and the own­er’s inten­tion for the business
    • Com­mu­ni­ca­tion sys­tems to get feed­back on goal devel­op­ment & to com­mu­ni­cate results appropriately
    • Own­er com­mit­ment and account­abil­i­ty to the cho­sen inten­tion and goals
    • Cas­cad­ing Metrics ™
    • Com­pa­ny, depart­ment and indi­vid­ual Key Per­for­mance Indicators
    • Report­ing rhythms and transparency
  1. A Busi­ness Struc­ture System 
    • An under­stand­ing and peri­od­ic revis­it of the company’s val­ue proposition
    • An under­stand­ing, mon­i­tor­ing and peri­od­ic revis­it of key lever­age points
    • A busi­ness finan­cial plan ground­ed in the val­ue propo­si­tion and lever­age points

How do you afford it? 

Rather than build your own tal­ent team, which is pricey and not the core com­pe­ten­cy of your busi­ness, you build an inter­nal team that han­dles your day to day account­ing and sup­ple­ment that team with out­sourced talent.

The trick­i­est ques­tion of all is…. how do you know when you have found it?  Many CPA firms say they are Busi­ness Advi­sors and there are out­sourced CFO’s as well.  But many of these resources solve or trou­bleshoot prob­lems rather than devel­op­ing sys­tems that help you make bet­ter decisions.

To find that rare provider who has the tal­ent to build the sys­tems you need to reach “High Per­form­ing High Poten­tial”, ask poten­tial ven­dors these four questions:

  1. What is your process for help­ing us pre­dict the future?
  2. How does your work bring account­abil­i­ty for busi­ness goals and objec­tives into each depart­ment and indi­vid­ual in the company?
  3. What is your process for help­ing us clar­i­fy our busi­ness inten­tion and how is that inten­tion used to influ­ence the goals and deci­sions we make?
  4. How does your process help us, as own­ers, work less by work­ing smarter while at the same time increas­ing our bot­tom line?

While there are oth­er ques­tions you will want to address, fail­ure to answer these four tells you the ven­dor you are con­sid­er­ing does­n’t real­ly have a sys­tem to help you build the account­ing and finance depart­ment you need to sup­port your growth.

Last­ly, at the end of the day, it is your busi­ness and it holds the key to your per­son­al pros­per­i­ty.  Change is a choice.  You can choose to stay com­fort­able and at some point you will your qual­i­ty of life and amount of income will max out. There is noth­ing wrong with that choice!  The sim­ple act of being clear on your choice can bring you peace and joy.

The alter­na­tive path is to break out and reach your “High Poten­tial, High Per­for­mance” Pros­per­i­ty lev­el.  The growth of your qual­i­ty of life and income will be greater, but so will your risk.  This is a great choice too. The sim­ple act of choos­ing and mak­ing a com­mit­ment to hold your­self account­able to that choice is your first step in reach­ing your “High Poten­tial, High Per­for­mance” goals.

This is your one life.  What do you choose?

If you choose to leap to “High Poten­tial, High Per­for­mance” and need a finance and account­ing team to sup­port you in that jour­ney, we at Mack­ey Advi­sors wel­come the oppor­tu­ni­ty to answer the four ques­tions above and any oth­ers you have.  We are The Pros­per­i­ty Peo­ple and our pas­sion is to expand your prosperity.

In joy,