The various financial roles of a company can be confusing to some and overwhelming to others, especially for those just starting out in business. You may be asking yourself—What exactly is the difference between an accountant and a CFO? Aren’t they the same thing because both deal with money? And the answer is a resounding … No.
While the positions needed will vary greatly depending on the size and structure of a company, it’s important to understand how they build upon each other, particularly as the company prepares for growth. To that end, I thought it was time for a quick review.
Bookkeepers
Net Result: Transactional data entry
A bookkeeper represents the foundational building block of any business. If we were using construction terms, the bookkeeper is the concrete that needs to remain sturdy and level in order for the rest of the building to stand. Bookkeepers are responsible for recording financial transactions (sales, receipts, bill paying, financial coding) that occur on a day-to-day basis. This is the person who enters data and keeps records correct and up to date. A bookkeeper balances ledgers and ensures invoices are paid on time and the exchange of money is logged correctly. This attention to detail is vital for the successful growth of a company at every stage of development.
Accountants
Net Result: Manages accounts, invoices, and financial statements
Similar to a bookkeeper, an accountant also deals with financial data and numbers. The difference, however, is often found in the level of trained experience. An accountant, as the title suggests, will have a degree in accounting. While the bookkeeper logs transactions, the accountant is in charge of balancing each company account. In smaller companies and startups, it is possible for the accountant to also be the bookkeeper, but as the company grows and evolves, it is important to separate these roles.
To continue with the construction analogy, the accountant would be the outer support structure of the building. An accountant looks closely at financial statements to make sure they stay accurate and up to date each month. They review data presented by the bookkeeper and analyze profits and losses within the company. They also may do taxes.
You may be wondering then if an accountant is the same as a CPA (Certified Public Accountant). While both deal with financial data, a CPA is an accountant who has met certain state licensing requirements. Think of it this way—while all CPAs are accountants, not all accountants are CPAs.
Controllers
Net Result: Controls cash flow
We have the bottom support and the strong outer walls, so what’s next? Now comes the controller, who “controls” and oversees all financial accounting within a company. Think of the controller as the manager or direct supervisor of the bookkeeping and accounting departments. The controller can be thought of as the internal walls of the building that make sure the ground floor and outer walls maintain their connection and are able to keep standing and communicating efficiently. A controller generally oversees payroll, ledgers, cash flow, and financial statements.
You may be questioning why you would need to have a bookkeeper, an accountant, and a controller all within the same company. And, in some respects, you would be right. Smaller companies do not need each of these roles in place. However, as the company grows, it’s important to have a clear separation of duties and of financial checks and balances within an organization. The controller is there to double check the work of both the bookkeeper and the accountant and to provide a report of past and future spending to the CFO or owners of the company.
CFO
Net Result: Future strategic growth
Our construction is nearly complete. Next comes the CFO (Chief Financial Officer) or “roof” of the finance department. The CFO is part of the executive board of a company and has direct interaction with the controller. One of the primary differences between the CFO and other financial roles is that a CFO has business leadership acumen. With a strategic mindset, the CFO has the ability to extrapolate data to formulate a financial roadmap for the future of the business, including projections of company growth, opportunities, and risks.
The CFO understands the company’s strengths and weaknesses and knows how to use that information for these projections. For some companies, the CFO may be the owner (or one of the owners). For others, the CFO is a third party specifically hired to help an existing company navigate its financial future.
As a company grows from concept to seed to established, so does its financial needs. Make sure you start with a strong foundation, then build your walls to help support the roof. It’s important to remember that separating financial responsibilities helps provide a system of checks and balances. Then, the CFO can help ensure that the future of the company remains on solid ground.
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.
It’s no surprise that a company will only ever be as strong as the people in it. Strong teams that collaborate, communicate and possess a strong drive and passion can help propel the company to new levels of growth and success. However, an underperforming team can have quite the opposite effect, not only decreasing productivity and profitability, but also the overall morale and company culture. And while leaders know this, it’s not as if they can just go clean house, especially today, when competition for talent in the market is fierce. So, what can they do? They can do what highly effective leaders always do—face the challenge head-on and learn how to manage it.
Leading an underperforming team can be complicated, to say the least. Whether it’s a team you’ve been working with for a while or you’ve just been brought on as a new lead, the threat of failure lurks just beyond every individual mistake, instance of poor communication, or strained relationship. But don’t throw in the towel just yet (would we really ever do that?). Here are a few tips to help turn your lackluster team into something that shines. Take a deep breath, walk in with a positive attitude, and commit to making clear-headed decisions, not reactive ones.
1. Start Small
The desire to get in there and make big changes will likely be compelling. However, rushing to judgment like this will only push team members further away—from you, from each other, and from the company. The more effective approach is to start small by listening, observing, and collecting as much information about what is going on with the team as possible. Get a better understanding of where the problems are, so that you can address them one at a time.
2. Provide a Safe Place
With all that we’ve been through, people are still struggling. And often, they are doing so silently. In fact, they may not even realize how much it is affecting their work. Provide your team members with a safe space to give feedback and voice their professional grievances or even personal issues (we all know they don’t stay outside the office door). Try to pick up patterns and pinpoint weaknesses, so that you can help redirect them on a more productive path. You can also promote a greater sense of unity and collective purpose by co-creating goals with your team that everyone can work toward together.
3. Don’t Forget Other Leaders
While weaknesses may be obvious among your entry- or mid-level team members, are they as clear with regard to your managers? Unfortunately, the answer is usually no. Take some time to explore how your management could be improved upon. If there was any criticism in your team’s feedback, take it seriously. Getting defensive does nothing but hurt the entire team. Think about what adjusting to their criticism would look like and what you are able to implement with your current management. You may also want to look into leadership training or coaching to help your managers understand their role more thoroughly and work better with the team.
4. Know When to Make Tough Decisions
A team could be underperforming for a wide variety of reasons. However, if performance does not improve after some time and effort, it may be time to consider going your separate ways. Sometimes, despite your best efforts, it just isn’t the right fit. And prolonging a bad relationship will only make it worse in the end. Be aware that terminating a team member can be a heavy blow to team morale in the here and now, but the long-term benefits will more than make up for it.
There’s no doubt that an underperforming team can be frustrating, creating its own unique set of challenges. With these tips and remembering that you can handle this responsibility, your team will rise to the challenge with you.
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.
When looking to secure funding for your business, there is no greater asset than a winning pitch deck (and maybe a winning smile!). Pitch decks are your one chance to make a great first impression on potential investors and to position your business favorably at the same time. With funding on the line, entrepreneurs typically spend hours upon hours preparing and planning their pitch decks before that ever-important meeting. However, even a knockout pitch deck can be held back by a few commonly made mistakes.
We’ve talked a lot about what you should be doing before, during, and after a pitch, but it’s equally important to know what not to do. To that end, we’ve compiled the top five most common mistakes to avoid when preparing your pitch deck –
1. Too Long/Too Many Details
It can be exciting to finally be making the case for your business, however, it’s extremely important to respect the time of the investors and not oversaturate them with information. For many entrepreneurs, this business is their baby. And like a proud mom or dad, they may want to overshare every detail of its existence. But investors have both limited time and bandwidth. So, if it isn’t pertinent to the primary message you’re delivering, you’d be well advised to omit it. A great pitch deck will have investors excited and wanting to learn more by the end, not overwhelmed by extraneous information.
2. Lack of Clarity
The message you are communicating with investors should ring loud and clear. Remember that the investor may know nothing about your business and/or industry, so your pitch deck needs to have clear and concise points regarding their merits. Entrepreneurs should avoid using too many buzzwords or jargon, which only tend to muddle the overall message of the pitch.
3. Ignoring Weaknesses
The very foundation of investing is about evaluating risk and reward. A pitch deck that does not acknowledge the weaknesses of the plan robs the investor of the opportunity to make a proper evaluation. Your pitch should help assess the risk for them and make the case for your business despite any weaknesses. Ignoring them will only make the investor think you haven’t fully analyzed your position or have something to hide.
4. Not Revising Enough
Never present your first draft to investors. Actually, never present your second or third draft either. Your pitch deck can only be perfected over time with thorough revisions to pick it apart and put it back together again. Revision is a crucial part of creating a winning pitch deck formula and eliminating mistakes.
5. Generic/Outdated Formatting
Many entrepreneurs make the mistake of focusing too heavily on what they want to say in their pitch deck rather than how they should say it. Make no mistake, the “what” is incredibly important, but the overall appearance and formatting will be one of the first visual components investors see—making it the “first impression” to your first impression.
An outdated or generic format or appearance will automatically make your pitch deck seem outdated too. Ensure that the formatting aligns with your product, the industry you’re in, and the consumer you’re serving. If you’re edgy, then the formatting should be edgy. If you’re conservative, then it should be more conservative. You want to create cohesion between the formatting and the content of the deck overall. In this particular respect, no detail is too small.
There’s no denying just how important it is to make a great first impression to potential investors. And avoiding these mistakes will help you do just that. In such a competitive and high-risk financial world, don’t you want to give yourself the best chance to walk out with funds?
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.
Recessions are a normal part of the economy. In fact, according to the National Bureau of Economic Research, they occur more than most people want to believe, averaging once every six years. And many are thinking that we are heading for one soon.
As business owners and executives, there’s nothing we can do to stop it. But that doesn’t mean we should sit idly by and do nothing. Instead, we should be working diligently to recession proof our businesses—not after the stock market tanks, but when times are good. Recession proofing is about proactively preparing for the next economic downturn … whenever it heads our way, rather than waiting for it to hit and then gathering the troops to figure out what to do next. By then, it may be too late. This requires advanced planning, specifically with regard to revenue preservation and increased technology needs.
As the C-Suite or Board of Directors begins to strategize with increased meetings (starting now), preplanning with respect to the following will assist in recession proofing your business:
1. Operate within the Budget
While this may seem like a given, not enough businesses actually take the steps necessary to do so. Make no mistake, this is a best practice regardless of the economic climate. Not only will it help when times are good, it may be the biggest factor in survival when they’re not. Operating within your means will put you in the strongest position possible when the economy starts to change.
2. Reskill and Cross Train Employees
There’s no doubt that you may lose resources during a recession, and clearly, not because you want to. As such, you need your team to be as flexible and resilient as possible, so that they can pivot when you need them to. However, too many employees only know one department or area, one set of tasks or activities because that’s what they’ve been trained for. Cross-training and reskilling so that they have the ability to work in various areas if needed are essential to preparing your business for the next recession.
3. Track KPIs Continuously
Whether it’s a marketing or sales or operational activity, if it is not achieving goals, it should not continue. This is about becoming the most efficient with time, resources, and funding, and that means eliminating waste wherever possible.
4. Create an Emergency Fund
Just as with personal finances, an emergency fund provides a cushion when times turn. This is especially important for small businesses that may not have access to extensive lines of credit or other financing options. By cutting unnecessary costs and relentlessly collecting all receivables, you can begin to create three to six months of a cash reserve to cover essential expenses like payroll and utilities if revenue drops.
5. Assess Risk Tolerance
Consider how much risk your business can withstand. This should be an honest assessment across the board—from leaders to staff to technology to systems. Ultimately, you want to know if they are adaptable enough to handle the stress of a recession. Can they withstand the pressure? And, if so, how much before they start to crack? Then, the biggest consideration—What can you do to strengthen them now?
6. Diversify Revenue Streams
Similar to operating within the budget, this is always a best practice. Consider how can you tap into a new market or revenue stream within your current parameters. This may be extending your geographical boundaries or offering more virtual options. It may also include assessing your current equipment to determine if it could be used for any other purpose. Simply, the more revenue streams you have, the less likely your business will be overwhelmed by the recession’s impacts.
7. Cultivate Client Relationships
This is yet another best practice, regardless of the economy, but crucial before a recession. When your clients and customers have to make tough decisions, just like you, regarding where they spend their dollars when they have less of them, they will choose the people and companies with whom they have the best relationships.
Recession proofing is not about being negative or having a “the sky is falling” attitude. Instead, it’s about being proactive by planning for the worst, so that even through tough times, you can experience the best.
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.
