The CFO Connection was featured in this article written by Dr. William Osgood at Buzgate.org
Is your business growing? Are your sales increasing? Are you making less on the bottom line both as a percentage of your sales and in an absolute sense? What happened to your profits?
Working hard, nose to the grindstone, all that stuff – the old Puritan ethic at work with the expectation that you will make more money as you work harder and your business grows. The problem with “nose to the grindstone” is that it is difficult to see anything except the grindstone. A business with rapidly growing sales can (and usually does) also have rapidly growing expenses. Expenses have a great way of taking on a life of their own. When your business is experiencing rapid sales growth, it is normal to expect that expenses will increase as well. Unfortunately, because of this perspective, it is easy to justify these expense increases without questioning the need.
When times are tight, expenses are carefully scrutinized. After all, a dollar not spent is a dollar you can keep â€“ and when the sales dollars are drying up, the only way you can maintain profits is through a strong and careful control of expenses.
But where is the balance? When your sales do start to increase, how do you know how much increase in spending is justified? When spending is justified, how will you be sure that cash flow will be there to support it?
Being All Things To All People
One of the most common challenges for any small business owner is remaining objective in the midst of running the day-to-day business operation. While it’s basically impossible to be all things to all people, many small business owners try. As a result, many costly mistakes are often made that can be otherwise avoided.
The fact is that as a small business owner today, you have many choices when it comes to more effectively managing and growing your business. Consider these three options;
- Leveraging Time | One of the best ways to use your time more wisely to have a Strategic Plan. Unlike the traditional business plan, which is designed to provide a 3 to 5 year strategy, a Strategic Plan serves to guide business growth in 6 month to 1–year time frames. Well written, this is a powerful tool that conveys where the business is at, where it is going and how it will get there.
- Leveraging Technology | One of the most common reasons for business failure is running out of cash. The old adage that you have to spend money to make money is true. The challenge is where does the money come from and what is it going toward? Spending control and cash flow management go hand in hand. Expense Management is critical in terms of aligning revenues, costs and cash flow and there are robust cloud-based options to help with this process. ExpenseWatch.com, for example, offers scalable applications for automatingexpense reporting, purchasing and accounts payable invoices.
- Leveraging Talent On-Call | Unlike 50 or so years ago, there is no reason to go it alone when managing and growing a small business today. There are thousands of no–cost government and non-profit small business assistance programs available by state, as well as sophisticated financial management expertise available on–call. For example, you can cost-share Chief Financial Officer-level talent through organizations like The CFO Connection. A part–time CFO can not only help you to maintain an objective perspective about business performance, but they will work with you to develop and refine your Strategic Plan over time, as well as maintain an expense control strategy that aligns well with growth objectives.
Small business success is more obtainable today than ever before simply by being smart, leveraging resources and focusing on the bottom line!