Expert Advice for Medium and Midsize Businesses

7 Steps to a Great Finance Function for Your SMB

Ken Judd
Chief Financial Officer
Do you ever get tired of being the grown-up in the room?

That’s one of the CFO’s most important personas at a fast-growing company. The CEO will come at you with all kinds of ambitious plans about international expansion or acquiring your fiercest competitor. The marketing team will want to launch innovative new promotional campaigns. The development team will want to launch new products. And they’re all competing for a finite amount of money to do it.

Your job is to encourage and guide them to success. But sometimes, you need to rein them in.

Aside from all of your financial acumen and accounting skills, a great CFO needs to be adept at managing people—especially other executives. You will hear lots of enthusiastic visions about how fast the company can grow. The CFO must be the grown-up in the room and have a clear eye into how much the company can realistically achieve with the resources it has.

And occasionally, you’ll be asked to go out and find more resources—in other words, bring in more money. Garnering commitments from investors or bankers requires a solid business plan and transparent finances. Nobody will want to invest in your SMB if they don’t trust and believe your financial information.

Unfortunately, many SMBs have trouble getting the metrics they need. Most startups launched their companies using only QuickBooks and spreadsheets. One of the biggest challenges I see with finance teams is their inability to provide key metrics in a timely manner: revenues across multiple dimensions, sales pipeline, or manufacturing forecasts for the next 30 to 90 days.

On top of that, planning and budgeting is usually done with spreadsheets—an unreliable approach that can lead to disastrous mistakes. Spreadsheets used to only live on desktops and laptops distributed throughout the company. Now they’ve spread outside the company via smart phones and tablets. Which version is the right one? And they contain formulas that break. Finance teams often spend days consolidating all these spreadsheets from different departments into a cohesive financial plan.

These challenges can lead to burnout among finance staff, which leads to high turnover. There’s a tremendous, on-going labor war for finance talent. Teams are understaffed, finance people regularly work crazy-long days and weeks, and they end up leaving for another company just so they can stay sane. The problem is even worse among SMBs that have gone public because of the additional regulatory and compliance requirements that those finance teams must deal with.

If you want to stay ahead of the growth curve while maintaining your sanity, here’s some advice for SMB finance leaders:

  1. Master your people skills. Learn how to work with and manage people beyond the finance function. You’ll need to work with and respond to them. But you must also be prepared to challenge them when they get overly ambitious.
  2. Get comfortable with cross-functional leadership. Make sure you’re knowledgeable about corporate sales, major marketing campaigns, and operational strategies. You don’t need to master all these areas, but you will need to be comfortable engaging with them.
  3. Don’t stay stuck in the back office. Get out in the field, go on sales calls, go see customers and see what their challenges are. CFOs are almost always welcomed by customers because they have stature within the company; it makes the client feel valued.  
  4. Get your direct reports more involved in operations. This will help your team open up more lines of communication at the mid-management level, which builds trust and confidence between finance and operations. It also takes some of the burden off the CFO.
  5. Make your people learn the business. If possible, rotate your team members from one function to another. This will develop their skills and help avoid burnout.
  6. Automate as much as possible. Replace spreadsheet and manual processing with cloud-based finance systems and tools. Things will only get busier as you grow and expand, and you must be able to scale to keep up. Putting finance in the cloud will automate much of the manual work that’s causing your team to burn out—leaving them more time to focus on value-added analysis and strategy, instead of low-value data gathering and number crunching.
  7. Find a reliable partner. When you make the move to cloud, look for a provider that offers world-class security, keeps abreast of ever-changing finance requirements and regulations, offers a complete breadth of finance functionality (core financials, planning and budgeting, FP&A, risk management, etc.) and can scale with you as you grow.

Every SMB has growth as its goal. It’s the CFO’s job to ensure that the company grows responsibly, remaining fiscally strong while it takes on new customers and expands into new markets. With the right team and technology in place, CFOs can help attract the investment capital that SMBs need to succeed, develop top talent, and turn their small company into the next breakout star.

Discover 5 ways to improve finance function effectiveness and help your SMB "GO and Grow." 

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