What I learned in the toughest CFO roles and why it matters for your business

Last month marked a year since I decided to move on from my previous CFO role, and 6 months since I actually left that business. As I reflected on all that happened over those 4 years, I decided to write down some of the more significant events which made for some interesting reading.

CFO journey

While there were some challenges, as all companies have, I really enjoyed this role as there was never a dull moment. Throughout all these changes, challenges, and milestones, the finance team continued to serve the business, drive operational improvements, prioritise investor relations, and many other day-to-day tasks.

Now, 6 months into a new venture providing support to finance teams on their journey, I reflect on some key lessons learned in my new and previous roles:

• Growth from Challenges: You learn 10x more in a challenging environment than a smooth one. Experiences in tougher environments throughout my career so far are where I’ve grown and enjoyed the most.

• It’s all about the people: In challenging environments, having great people around you, whether internal hires or external support, is even more crucial.

• CFO Experience: I’m now learning that terms like CFO advisory and Fractional CFO can mean different things and are offered by people with varied backgrounds. If you're considering these services, know what you’re looking for and research the experiences of those offering them. I’m biased, but I believe that actual CFO experience counts for a lot when offering these services.

• Broad Remit of Finance Teams: Finance teams today have a broad remit, but retaining all skills in-house can be challenging. Some skills are not needed all the time, and some are hard to find and retain. Sometimes, it’s more efficient not to hire full-time.

• Healthy mind & body: Now that I’m not regularly working across multiple global time zones, I truly see the value of proper sleep!

Past experiences have shaped the way I approach CFO support and fractional CFO services today. cdFirst was started to support CEO’s, CFO’s and finance teams with a fully integrated finance team support offering to help you grow and scale your business. If that’s something your business needs assistance with, we’d love to chat.

The value of Outsourced CFO services

While large companies may have the resources to maintain an in-house CFO and finance team, many small and medium-sized businesses (SMBs) often lack the capacity or budget to do so. This is where outsourced CFO (often known as a Fractional or Virtual CFO) services come into play. Below, we'll explore the value of outsourced CFO services, the difference between an outsourced CFO and an in-house finance manager or external tax accountant, and why every business, regardless of size, can benefit from financial expertise.

Cost-Effective Solution

Outsourced CFO services offer a cost-effective solution for businesses that may not have the resources to hire a full-time CFO or finance team. Instead of bearing the expenses associated with salaries, benefits, and overhead costs, businesses can access top-tier financial expertise on an as-needed basis, paying only for the services they require. This enables SMBs to access high-quality financial advice and support without breaking the bank.

Strategic Guidance

“I hired a finance manager, and they are great at keeping the train on the tracks, but there is no proactively, no insights, and no strategic guidance”. This is a common complaint, and one that is easily explained – they are two different roles with vastly different skillsets. The final jump to CFO is a large one and you cannot expect your finance manager to perform the role of a CFO before they are ready.  Having access to someone that has been there and done it is huge asset to a Founder, CEO, and Board. It’s also a huge asset for your in-house finance manager who can be guided and developed by an experienced CFO, and hopefully one day step into the role themselves.

Outsourced CFOs bring a wealth of strategic expertise and industry knowledge to the table. They work closely with business owners and executives to develop and execute strategic plans, identify growth opportunities, and optimise financial performance. By providing strategic guidance and insights, outsourced CFOs help businesses make informed decisions that drive value and support long-term success.

Financial Expertise

“I already have a tax accountant, so why would I need an Outsourced CFO”. Tax accountants play a critical role in providing specialist tax planning and compliance services. However, Outsourced CFOs are highly skilled professionals with extensive experience in finance, accounting, and business management. They possess the technical expertise and analytical capabilities to navigate complex financial challenges, such as cash flow management, budgeting, forecasting, financial reporting, debt and equity raising, investor relations, M&A, finance systems and operations. The two, vastly different, roles should work together and complement each other.

Flexibility and Scalability

Outsourced CFO services offer flexibility and scalability to businesses, allowing them to adapt to changing needs and growth trajectories. Whether businesses require strategic planning, financial analysis, or day-to-day financial management, outsourced CFOs can tailor their services to meet specific requirements. This flexibility enables businesses to scale their financial operations as they grow, without the burden of hiring and managing additional staff.

Outsourced CFO services offer a cost-effective and flexible solution for businesses seeking to access top-tier financial advice and support without the overhead costs associated with hiring a full-time CFO or other finance roles. Terms such as Outsourced CFO, CFO advisory and Fractional CFO can mean different things and are offered by people with varied backgrounds. If you're considering these services, know what you’re looking for and research the experiences of those offering them.

At cdFirst, we support CEOs, CFOs, and finance teams with a fully integrated finance team support offering, so you can focus on growing your business. Whether it's an Outsourced CFO role; outsourcing other roles within the finance function; supporting an in-house CFO with special projects; accounting, FP&A, tax, and treasury services; or investor relations support. Finance teams have a big remit these days, and every business is different – we can tailor the solution to your business’ needs. Quite often what begins as an Outsourced CFO can eventually become CFO support as your business and in-house finance team grows. Whatever the solution, we are dedicated to delivering high-quality financial advice and support tailored to the unique needs of each client.

Strategic Financial Planning: Key steps for success

Strategic financial planning is essential for companies to capitalise on opportunities and achieve their long-term objectives. By aligning financial goals with strategic priorities, companies can optimise resource allocation, mitigate risks, and drive sustainable growth. Yet, from my experience, many companies struggle to harness the potential of effective strategic financial planning. A tick-the-box budget exercise that simply wedges headcount into a predefined cost envelope and models some aspirational sales targets without a plan of how to deliver it, will add limited value.

In this guide, we'll explore the essential steps for success in strategic financial planning and provide actionable insights for businesses to maximise their financial potential, based on our years of CFO and FP&A experience.

Step 1: Set Clear and Measurable Financial Objectives

Begin by defining specific financial goals that align with your company's overarching strategic vision. For instance, if you're a tech startup, your objectives might include achieving a positive cash flow within the first two years, achieving an LTV:CAC ratio of greater than 3, or attaining a target return on investment (ROI) of 20% for your product. Clear objectives provide a roadmap for success and help focus efforts on what truly matters.

Step 2: Conduct a Comprehensive Financial Analysis

Next, delve deep into your company's financial health and the broader market landscape. Analyse your cash flow, profitability, and capital structure to identify strengths, weaknesses, opportunities, and threats. Simultaneously, keep a keen eye on industry trends, competitor movements, and macroeconomic indicators. For example, understanding shifts in consumer behaviour could inform pricing strategies or product development initiatives.

Step 3: Develop a Strategic Financial Plan with Operational Alignment

With your objectives and analysis in hand, craft a detailed financial plan outlining actionable strategies and initiatives. These could range from optimising operational processes to investing in new technologies or exploring untapped markets. Importantly, ensure alignment between your strategic financial plan and operational/tactical plans to aide execution. For instance, if your goal is to expand internationally, your financial plan should account for the necessary investments in infrastructure, talent acquisition, and market research. Simply saying that your plan is the expand to the US because it’s the world’s largest market, with no plan and limited investment, is likely to end in failure….something that many small Australian tech scaleups learn the hard way.

Step 4: Implement, Monitor, and Adapt

Execution is key to realising your financial objectives. Implement your strategic financial plan diligently, monitoring progress against predetermined metrics and benchmarks. Regularly review and reassess your plan, adapting to changing market conditions, emerging opportunities, and unforeseen challenges. Flexibility and agility are key. This shouldn’t be something that is done once and then sits on the shelf.

Strategic financial planning is essential for companies to navigate uncertainties, capitalise on opportunities, and achieve sustainable growth. By setting clear objectives, conducting thorough analysis, aligning with operations, and continuously adapting, companies can navigate uncertainties and seize opportunities with confidence. Remember, strategic financial planning is not a one-time exercise but an ongoing process that evolves alongside your business.

Navigating Financial Growth: Strategies for emerging businesses

As emerging businesses strive to scale and expand their operations, one of the critical areas they must focus on is managing their finances effectively. The journey from a startup to a successful enterprise is fraught with challenges, particularly in the realm of finance. In this post, we'll explore some of the hurdles that emerging businesses encounter in scaling their financial operations and provide practical tips and strategies for overcoming them.

Challenges in Scaling Financial Operations

Emerging businesses often face several challenges when it comes to managing their finances as they grow:

1.      Limited Resources: Unlike established companies, emerging businesses typically have limited financial resources, making it challenging to invest in sophisticated financial systems and personnel.

2.      Cash Flow Management: Maintaining healthy cash flow is crucial for sustaining operations and fuelling growth. However, many emerging businesses struggle with cash flow management, leading to liquidity issues and potential disruptions in operations.

3.      Lack of Financial Expertise: Small teams in emerging businesses may lack the expertise required to navigate complex financial matters effectively.

4.      Regulatory Compliance: As businesses grow, they become subject to more stringent regulatory requirements, which can pose compliance challenges, particularly for those unfamiliar with the legal and regulatory landscape.

Strategies for Establishing Robust Finance Functions

Despite these challenges, emerging businesses can implement several strategies to establish robust finance functions that support growth:

1.      Implement Scalable Systems: Choose scalable financial systems and tools that can grow with your business. Cloud-based accounting software, data warehouses and analytics tools, for example, offer flexibility and scalability, allowing businesses to adapt to changing needs without significant investment.

2.      Build a Strong Finance Team: Hire or outsource to finance professionals with expertise in areas such as financial analysis, planning and reporting, cash flow management, investor relations, accounting, and tax. A competent finance team can provide valuable insights and support strategic decision-making.

3.      Focus on Cash Flow Forecasting: Develop robust cash flow forecasting models to anticipate future cash needs and identify potential shortfalls. This proactive approach enables businesses to take pre-emptive measures to maintain adequate liquidity.

4.      Promote Cross-Functional Collaboration: Encourage collaboration between finance and other departments within the organisation. By fostering open communication and sharing financial insights across teams, businesses can gain a holistic understanding of their financial performance and identify opportunities for improvement. For instance, involving sales and marketing teams in financial planning discussions can provide valuable input on revenue projections and customer acquisition costs. Similarly, collaboration between finance and R&D teams within a technology business can optimise capital allocation between competing product initiatives and reduce costs. This cross-functional approach fosters a culture of accountability.

Best Practices for Streamlining Financial Processes

In addition to establishing a solid finance function, emerging businesses can streamline their financial processes to improve operational efficiency:

1.      Automate Routine Tasks: Leverage automation tools to streamline repetitive financial tasks such as invoicing, expense tracking, and payroll processing. Automation reduces manual errors and frees up time for staff to focus on value-added activities.

2.      Implement Clear Policies and Procedures: Establish clear financial policies and procedures to standardise processes and promote consistency across the organisation.

3.      Monitor Key Performance Indicators (KPIs): Define and track relevant financial KPIs to measure performance and identify areas for improvement. Common KPIs can include profitability margins, liquidity ratio’s, customer acquisition costs, and many more. Get familiar with those that are most relevant to your business and sector.

4.      Regularly Review and Adjust Strategies: Continuously review and adjust financial strategies based on changing business conditions and market dynamics. Flexibility and adaptability are key.

By addressing these challenges and implementing these strategies, emerging businesses can establish a solid foundation for sustainable financial growth.

At cdFirst, we have years of CFO experience in emerging companies. We’ve been the first in-house company CFO appointment several times and have built scalable finance and operations teams from the ground-up that can support a business through rapid growth. By establishing an uplifted finance function equipped with appropriate systems, reporting, and analytics capabilities, the organisation can unlock significant value, drive informed decision-making, enhance stakeholder confidence, optimise resource allocation, and pave the way for future growth and success. On the flipside, ignoring investments in these areas entirely can often lead to a business flying blind with a complete lack of reliable information to drive decision making, adding additional stress to the CEO, and a lack of board and investor confidence. Also, the perceived savings in delaying these investments can often be more than eroded if the remediation activities start too late.

Don’t leave it until it’s too late!

The evolving role of the CFO: From bean counter to strategic partner

In the traditional corporate landscape, the Chief Financial Officer (CFO) was often seen as the bean counter, responsible primarily for financial reporting and compliance. However, as businesses evolve and face increasing complexity, the role of the CFO has undergone a significant transformation. Today, CFOs are strategic partners who play a crucial role in driving growth, innovation, and long-term success. In this post, we'll explore how the role of the CFO has evolved and the key characteristics of a modern CFO as a strategic partner.

strategic leadership

Modern CFOs are strategic leaders who actively contribute to shaping the overall direction and vision of the company. They work closely with the CEO and other executives to develop and execute strategic plans, identify growth opportunities, and drive business performance. By providing financial insights and analysis, CFOs help guide decision-making and ensure that financial goals align with broader organisational objectives.

Financial stewardship

While financial stewardship remains a core responsibility of the CFO, it goes beyond simply managing the company's finances. Today's CFOs are tasked with optimising capital allocation, managing risk, and enhancing shareholder value. They take a proactive approach to financial management, leveraging data and analytics to identify inefficiencies, mitigate risks, and drive operational excellence. Stakeholder management is also a critical skill for CFOs, as they must effectively communicate with investors, board members, and other key stakeholders. CFOs must build trust and transparency with all stakeholders and take an increasingly key role in leading a company’s investor relations program.

Technology & innovation

The rise of digital transformation has elevated the importance of technology and innovation in the CFO role. Today’s CFOs embrace technology solutions to streamline processes, improve efficiency, and provide real-time insights into financial performance. They leverage advanced analytics, artificial intelligence, and automation to drive innovation and enhance decision-making across the organisation.

strategic partnerships

Modern CFOs are strategic partners who collaborate closely with other functional areas of the business. They work cross-functionally with marketing, sales, product, operations, and HR to align financial strategies with broader business objectives.

Strategic CFOs are able to anticipate market trends, identify growth opportunities, and align financial strategies with the company's overall objectives. CFOs are no longer confined to the finance department but are integral members of the executive team, driving growth, innovation, and value creation across the organisation.

As finance and accounting professionals climb the ladder their technical skills will often get them ahead – whether they are great with systems and reporting, financial modelling, technical accounting matters, tax, etc. But the final jump is a big one and the skillset required to perform as a CFO will test their leadership ability, commercial nous, and ability to get out of the finance box and take a business wide approach. In my experience, a brilliant financial controller or commercial finance leader, won’t necessarily succeed as a CFO. And a brilliant CFO doesn’t need to be able to recite accounting standards – they need the broad knowledge base and experience to spot issues before others can, and the people skills to embed themselves in the broader business and become a sounding board for the CEO and board.

I’ve seen many business owners that have not hired a CFO, confused why their financial controllers cannot take a proactive big picture approach, deliver the ‘so-what’ along with the numbers, and bring solutions to the problems they find. It quickly becomes clear that they want the skills of a CFO but have hired something else.

At cdFirst, we understand the evolving role of the CFO and the importance of strategic financial leadership in driving business growth. Having spent many years in the CFOs shoes, we are well placed to provide tailored solutions to help CFOs excel in their strategic role, from financial planning and analysis, capital management, investor relations, technology integration, and more.

And if your business wants the CFO skillset but isn’t ready for the permanent CFO headcount yet, we can also provide a tailored Fractional CFO solution.