I’ve got a secret to tell you: The bean counters run the world.
From the smallest businesses to the largest governments, those who understand finances are the ones involved in making the final call. I can’t tell you how many executive team meetings I’ve attended where the news from the accounting team usually set the strategy for the company.
As it should be. Your finances can dictate where your company should focus its efforts. However, as a CEO/owner, you can’t rely on your accountant to make the strategy. Their accurate data is invaluable, without a doubt, but let’s not forget who’s the visionary here.
You are the creative thinker. You are the chief strategist. You are the one who needs to set the course for the company and provide the leadership to execute your vision.
Consider the data from your accounting team to be the insight you need to make smarter, break-through strategies. It can also save you from disaster. Here’s an example to prove my point.
Fading Fast – What to Do?
A client was in trouble. His business was on the decline, and he didn’t know which way to go or what to do next.
To me, the next step was obvious. We took a close look at his cash flow and his financial ratios. It’s the first thing my client’s lender would look at, as the banker was strictly focused on making sure he received his loan payment.
One look at this owner’s cash flow and the bank would have pulled the plug on his loan. So what was the CEO to do? Buy a new press? Hire more sales people? Neither would be good ideas, as they’d only make the client’s financial ratios worse. Instead, the following strategies were more attuned to the crises:
Track and reduce the cash flow. The client was spending too much money, and he was in denial that he was over his budget. He needed to not only rein in his spending, but also improve his tracking and accountability, so he could project expenditures for the next 12 months.
Open the lines of communication with the lender. The client’s bank was getting panicky. I’m not sure I blame them. However, they were reasonable, and not interested in seeing their loan go down the drain.
If the owner could show his new cash flow analysis and communicate how he was refocused on his financials, it could help reduce the lender’s anxiety on a short-term basis – providing some much needed breathing room.
Re-focus and re-integrate staff. The solution was not to expand the sales force. Instead, it required refocusing the one they had. The staff would need to target profitable accounts and make smarter use of resources.
They also needed to be in on the new strategy, and commit to the change. Just like lenders, your staff needs to understand the plan so they can clear their minds and focus on the task at hand.
These aren’t particularly innovative strategies, but the client didn’t need a breakthrough idea. He needed to run his business based on the bottom line. His newfound strategies were the first step in the right direction.