Growing Wealth … It’s Not Just for Companies What We Can Take from the Office
When you’ve been acting in some type of CFO capacity for as long as I have, you can’t help it—growth strategies, numbers, maximizing revenue, minimizing expenses, and leadership are a part of your DNA. And that DNA stays with you whether you are in the office, on a Zoom call, or taking care of your personal finances.
I started thinking about the correlation between what we do in our “official” CFO role and what we do in our personal lives. I asked myself what we can learn about what we do in the office to take it home and help us build our own wealth. And the more I thought about it, the more I thought that many of the same principles apply whether we are strategizing for our companies or for our families.
Unless you’re independently wealthy or have been left a huge inheritance, you have to build your own wealth, just like a company has to build its revenue. While inflation and growing debt may make it seem like this is futile, with the right principles, strategies, and habits in place, your financial growth will strengthen. So, I’ve compiled the top five habits to help you grow your wealth … from a CFO perspective.
1. Don’t spend more than you earn
This may seem intuitive, but for many individuals, it’s anything but. It’s critical to be aware of our spending habits and have discipline to live within our means. This does not mean depriving ourselves of full lives, as some may think. Rather, it comes down to making choices.
A few tips to help along the way:
Take advantage of automated savings (i.e., pay yourself first).
Eliminate frivolous spending.
Create a budget and stick with it.
Stop comparing your spending with others (especially from social media posts).
2. It’s never to early (or late) to invest and save
Far too many younger individuals just entering the workforce think they don’t have to worry about saving for retirement or investing. They figure they have years to think about all of that. But I would argue there is no time like the present. Investing is a great tool to help build wealth, but to truly do so takes years. So, the sooner we start, the better.
Additionally, when we start younger and don’t yet have a family or other major expenses to account for, we can invest more and solidify some strong financial habits before incurring additional, often larger expenses. On the opposite side, others think it’s too late, so why bother. It is never too late. You may not have exactly what you had hoped for as you approach retirement, but at least you will have something.
Financial planning should always include both short-term and long-term goals. This includes having an emergency fund, so when those inevitable life experiences come up, our savings accounts do not get exhausted. It also includes taking advantage of matching retirement plans, such as 401(k)s.
3.Use debt strategically
Many financial experts will say to avoid debt at all costs (pun intended). However, I urge my clients to first consider the type of debt they have and also the importance of having some debt. To start, in order to build credit, it must first be established by incurring debt. This does not mean you should max out credit cards and pay insanely high-interest rates (actually an example of the bad debt we want to avoid). But if you are responsible with the debt you have, and make payments in full on time, you will build credit. With regard to the type of debt, consider lower rates on mortgages, home equity loans, and federal student loans. This can help establish credit and free up cash to invest.
4.Diversify income
Just like a company needs more than one product or service to offer, we need more than one source of revenue to truly build wealth. Now, you may be thinking that you already work a full-time job or have a business to run, with no time for anything else. However, there are many passive income opportunities that can help generate additional revenue with little time and effort.
When we diversify our income sources, we minimize the risks associated with losing our jobs or closing our businesses. Other benefits to having additional sources include:
saving more and investing,
paying off bad debt, or
taking a long overdue vacation.
5. Remember knowledge is power
This is a leadership principle that pertains to any industry and organization, and it applies equally here. We must always make a commitment to continuous learning. While expanding financial knowledge can be overwhelming to some, continuously educating yourself is the key to becoming more financially stable—from new tax laws to interest rates to investment opportunities.
Resources can be found almost anywhere—blogs, videos, podcasts, webinars, mentors, and coaches. How you do it is up to you. The important piece is to be prepared, ask questions, and learn something that will help you navigate the path to reaching your financial goals.
Barker Associates provides strategic guidance and outsourced CFO services to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Beyond the Numbers – More Than Ever, CFOs Need a Strategic Mindset
I don’t think anyone would doubt the importance of the CFO role (or at least I hope they wouldn’t!). But what many don’t understand is the magnitude of this role’s transformation over the past several years. It’s not just about financials. And it’s much more than tracking and compliance, as some may have thought. At the base of this transformation is an increased emphasis on having a strategic mindset.
Organizations are facing unprecedented challenges in supply chains, labor supplies, and overall skills gaps that must be rectified, or at least minimized, at every level and in every department. CFOs are plagued with the continued uncertainty these challenges bring, as they attempt to align the organization’s current and projected finances with the organization’s growth goals and strategies.
So, how can CFOs exceed expectations and sustain organizational growth? What separates the good ones from the great ones, especially in light of today’s challenges? What are the successful CFOs doing differently? Simply, they have the required financial acumen and leadership skills of most, but also a strong, developed strategic mindset.
Strategic Mindsets Lead to Success
CFOs look at the drivers of business growth to deliver both short-term financial gains and sustain long-term organizational growth. But to be successful at both requires a strategic mindset. In a recent Forbes article, a strategic mindset is listed as one of the top attributes of successful CFOs. “A strategic CFO understands that success tomorrow depends on creating the right financial structure today. The right person will work alongside the CEO to create a viable financial plan that will carry the business through future growth stages. This includes thinking several steps ahead to minimize risk.”
With a strategic mindset, CFOs often consider these types of questions:
How much cash do we need on hand at any given time?
How much should we have in reserves?
Where can we reduce costs?
What actions should we take to increase revenue? Short-term? Long-term?
Are our financial processes ready to scale? If not, what do we need to do so they are?
At what point will we be able to position ourselves for a merger or acquisition?
Seeing beyond the numbers to both the opportunities and risks that can only be found “in between the lines,” a successful CFO becomes a trusted strategic business advisor to the CEO. And a strong relationship between the two helps the financial and operational strategies stay aligned. “Strategic leadership from the CFO’s office in these scenarios can keep the company moving forward. When the chemistry between the CEO and CFO is right, their unique leadership traits will sharpen each other and work in tandem to get the best possible results for the company.”
As with much else in life, this comes down to strong relationships. Without the ability to communicate and collaborate effectively with others, a strategic mindset alone will never move the needle. We are at a time where everything in business is seemingly connected. Leaders can no longer operate in silos—there is simply too much at stake.
For example, the CFO should take that same strategic mindset to collaborate with the Chief Information Officer with respect to technological advances and data, with the Human Resources Director to manage the organization’s culture and employee experience, and the COO to decide where the most effective operational investments can be found. In this way, CFOs are about entirely more than the financials. In fact, they are the drivers of organizational transformation.
Barker Associates provides strategic guidance and outsourced CFO services to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Knowing Your Worth The Value of Executive Coaching
Last week, we spoke about mentorship and the important role mentors can play in someone’s personal and professional development. It seemed appropriate that this week, we dive into another crucially important role – an executive coach.
The world of executive coaching has undergone a staggering increase in popularity over the past few years. Factors such as the COVID-19 pandemic and The Great Resignation have greatly altered the employee-employer relationship and, in many instances, widened the skills gap in the workplace. These circumstances have left employees feeling as if they are out in the cold – many debating if they should stick it out or try to find something more fulfilling elsewhere. But there is another option for the millions of Americans in this situation, and it lies in coaching.
Making an Investment in You
Executive coaching is one of the most valuable investments you can make in yourself. It helps you understand the significance of what you bring to your organization, and also helps develop the skills that will allow you to meet your goals and advance your career further. But it’s even more than that. Coaching combines skill building with getting at the heart of what’s holding you back in setting up strategies to get “unstuck.”
Simply, executive coaches help you create outside change from the inside. They work with you to reexamine your professional narrative by taking the time to learn who you are, including your strengths and your weaknesses. Once they have a complete picture, they can provide the most individualized strategy to help you move forward by identifying what is keeping you from your full potential.
Know Your Worth
As an executive coach, I have the extraordinary ability to witness firsthand the benefits coaching has on an individual. Last year, a CFO reached out to me and asked to begin a coaching arrangement. She had seen a colleague use executive coaching to achieve major advancement in their professional development and she wanted to see if she could obtain similar results. She was ready to quit a job she loved because she didn’t feel valued or that she was getting paid what she was worth. She was in need of validation, direction, correction, encouragement, and the knowledge that dysfunctional experiences are not failures.
We began weekly coaching sessions, starting with examining what was important to her and her goals. The timeline for the goals was approximately six months (tip – goals must always be attached to dates). Her goals were:
Establish her value,
Earn respect, and
Negotiate a raise.
Each week, we discussed her stories, her disappointments, and her vulnerabilities. I worked with her to transform her perspective to view these instances as normal – just like everyone else goes through, and to feel capable and empowered. There were some weeks where we struggled a great deal, but struggle is always a part of the process. Learning to handle tough times and emotions is essential for life, both in and out of the workplace. It’s all about shifting that perspective and learning to create better boundaries. On weeks when we’d make strong progress, we emphasized keeping that momentum to work toward something new.
After six months of coaching, my client was able to achieve all of the goals she set at the beginning of our time together. She let her company know that she loved her job, but that she would need to be paid fairly or would be forced to move on. She even provided a specific number because she had the confidence to know she was worth it. Her company agreed to her raise, and she is now getting paid what she deserves as CFO. She also feels that she is more respected as a leader, collaborator, and strategist, and is better at handling her responsibilities.
I am honored that I was able to help her not only stay in a role that she loved, but also help her get to a place of peace and happiness – those results extend far beyond the office. We have now set new goals focused on company growth and corporate standards. It has been a pleasure to watch her grow both personally and professionally and I am thrilled to see what she will do in the future.
Keep in mind that there is never a one-size-fits-all solution to reaching professional goals. Everyone has different strengths, that must be amplified, and weaknesses, that must be improved. Coaching can be hard work, but don’t we have to work for anything of true value? And what is more valuable than shifting your perspective when you need to, developing your skills, and finding the peace, happiness, and value you truly deserve?
Barker Associates provides executive coaching to CFOs and other C-Suite executives. We provide the guidance you need to navigate your professional development. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.