Your Financial Dream Team

Your Finance Team

Every company has a different-looking team running their finances.

Here's a quick rundown of the three most common players and what they are (usually) responsible for:

1. Bookkeeper (Accountant): They handle the day-to-day transaction recording, invoicing, bill pay, etc. These are your data entry specialists, making sure everything is categorized correctly. Remember: this is your foundation... without good numbers, there is no way to use them!
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2. Controller: This person oversees bookkeeping and accounting tasks while making sure the numbers are reliable and financial reports are generated. They also create accounting policies, manage financial processes, and do some light financial analysis to identify trends or issues.
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3. CFO: This is your strategic financial advisor, using and reading the financial information to make big-picture decisions. This person should be focused on the future, always looking ahead. Aside from telling you what the numbers mean, they tackle funding, financing, and financial strategies for growth or profit improvement. The CFO relies on the data/analysis provided by the controller and bookkeeper.

Think of it this way... Bookkeeper = recording the numbers. CFO = tells you what the numbers mean.

Do you need all three? In short, it depends.

Most businesses could get away with #1 & #3 (in a combination of part-time or outsourced roles) while a business in the $5-10m revenue range could benefit from all three roles (again, in a combination of part/full time roles).

And while it may seem counterintuitive, smaller businesses ($1m revenue or less) could seriously benefit from a CFO-level investment.

Think about it, typical small business profit margins are 5-10% (or worse). A good CFO (even a fractional or part-time one) can help 2x those margins... meaning six months at $3-4k ($18-24k in total) could add $50-100k of sustainable profit to a $1m business. Here's a quick framework to work from:

• Small Business Starting Out: You might be fine with a part-time bookkeeper to handle the basics. As your business grows, consider outsourcing some bookkeeping tasks until you need a full or part-timer on staff. Consider a fractional CFO to shorten the timeline to your desired profit target.
• Growing Business: When the numbers become more complex, a controller could be the missing link. Managing cash flow becomes increasingly important and you might notice funding and financing climbing up the list.
• Established Business: By now you should have a solid bookkeeping team in place and if you're at or above the $5-10m revenue mark you might have a controller too. At this point, a CFO becomes mission critical for sustaining and growing profits while staying on the lookout for potential issues.

This isn't one size fits all. There are nuances to every company's situation.

There's also some overlap here (especially in smaller businesses), your bookkeeper might be doing some reporting or analysis, a controller could be handling some bookkeeping tasks, etc.. It's all about finding the right fit for your company's size, needs, and future plans.

Homework

This week's assignment – Size up your team. Take a look at your internal and external resources over the past year and ask yourself what's working and what isn't. Maybe it's time to up the investment or make a change.

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