Hole 7 of my local miniature golf course is nearly impossible to shoot under par. It’s a straight shot to a red, metal, raised cone that looks like a volcano that blew its top. The hole is nestled at the top of the cone, waiting patiently for the mini-golfer to hit the perfect shot, sinking a colorful golf-ball into its hole, instead of rolling off in a completely different direction.
When your business starts bringing in $1 million in annual revenue, it can feel like you’ve finally graduated from the miniature golf course down the street to the pro-course that only the best golfers in the world get to play. The growth is exciting and worth celebrating, but can also be overwhelming and a bit scary. Whether you play on a mini-golf course or a pro-golf course, the tools you need are the same – a ball, a tee, a golf club, a score card – but the playing field is different enough that you can’t use them without adjustment and expect to see the same results. You can’t use a mini-golf putter to drive the ball from the tee on a 175-yard hole and get a hole in one. (If you try and it turns out I’m wrong, I’ll buy your next mini-golf game!)
The same is true in businesses who grow and find themselves bringing in more money. The financial tools and processes that worked up until this point were fine. Your bookkeeper was able to keep track of everything and you’ve had zero cause for concern. But now that you are making more than $1 million in revenue, if you don’t adjust your strategy – and possibly hire more help – you might find yourself with a lot of triple bogeys when you’re used to birdies.
It’s time to begin using more than just one golf club and I’m here to assist you as your financial golf caddie. I know the differences between a driver, a 7-iron, and a wedge – and the differences between a Bookkeeper, a Controller, and a Chief Financial Officer (CFO). I’ll be able to assess your position on the fairway and pull out the perfect club for your business to maximize success. Contact me today for help to determine what financial tools you should be using.
It’s time to bring in a financial golf caddie who can advise you on the best clubs to use to sink that hole-in-one for your business!
The 1 Million Dollar Difference: Bookkeeper, Controller, & CFO
To someone who has never played golf, a 4-iron, 7-iron, and 9-iron look the same. But they are very different and should be used strategically based on the ball’s distance from the hole. To someone who is not well-versed in million dollar business finances, a Bookkeeper, Controller, and CFO all look the same. In reality, they too are very different and should be used strategically by entrepreneurs to retain financial control over their business.
Think of a bookkeeper as your financial putter. They do the tasks required when you are just a few feet from the hole. This includes:
- Day-to-day bookkeeping
- Entering invoices & printing checks
- Creating/mailing customer invoices
- Recording payments received from customers
- Reconciling bank statements
- Printing reports from the general ledger
This financial role is very important, but often doesn’t require an accounting degree (although it’s great if they have one!) and it doesn’t require a strategic understanding of your business’ entire financial picture. They are there to keep the books in order and make sure nothing falls through the cracks. For start-ups and very small businesses, this is often the only financial position that needs to be filled until the business grows.
Think of a Controller as the financial mid-range iron you need when you are halfway down the fairway. The Controller offers more strategic financial services, which include:
- Overseeing the bookkeeper
- Ensuring the data is correct
- Completing the monthly close process
- Conducting monthly reporting to management
- Monitoring internal controls
- Preparing information for an annual financial audit
- Preparing information for tax returns
Due to the more in-depth accounting knowledge of a Controller, they often have an Accounting Degree and have a better handle on the financial bigger-picture for the company.
A CFO can be thought of as your financial driver, but more so as your financial caddie. They offer a long-range view of your entire financial situation, seeing sand pits and water hazards ahead of time, offering you advice on what clubs to use when and where so that you can proactively avoid difficult field positions. They even pay attention to the weather and which way the wind is blowing! The tasks a CFO is qualified to conduct include:
- Interpreting & providing deeper insight into the reports from the Controller
- Recommending business adjustments based on financial reporting
- Providing analysis of overall company health and guiding the company towards better financial health and growth
- Presenting monthly reports to the Board of Directors
- Budgeting and forecasting
- Recommending changes to internal controls
- Conducting financial analyses on cash flow and revenue, optimizing both
- Determining and overseeing accounting policies
- Optimizing accounting processes and procedures, which will save you back office headcount
- Executing strategies recommended by your Tax Advisor
Another large role of a CFO is risk identification and mitigation, which is often overlooked by other roles who have the financial big picture vision in mind. A CFO is always scanning the fairway for issues that may include:
- Lack of adequate insurance
- Human Resources exposure: company policies, practices, and the employee handbook
- Lack of adequate information infrastructure and vulnerability to cyber attacks
- Potential legal issues
- Internal control weaknesses which make you susceptible to fraud
- Sales tax exposure
- Company reputation
A CFO has a deep and rich understanding of accounting principles, and often is CPA-certified or has an MBA. CFO’s serve as thought partners for CEOs as they make big decisions on the direction of the company.
When To Use A Bookkeeper, Controller, or CFO
Each of these financial roles are important to the health of a growing business, and you have many options to successfully fill them in a way that fits your business situation best.
If you feel you can’t afford to hire all three, even in part-time positions, please hear me say in my most professional financial caddie voice: don’t try to hire a unicorn! One person cannot fulfill all three of these roles. People who are good at bookkeeping can’t provide the strategy you need, and the person who is good at strategy will likely not want to do bookkeeping.
Outsourcing is another great option for hiring a Bookkeeper or Controller, as they often provide several options to find a mix of what you need for your business. In other words, they are great at matching the right duties with the right skillset, and can offer you both on a part time or as needed basis. Hiring a company also boasts perks such as consistency in the work. If someone goes on vacation or decides to change jobs, they have a back-up in place so you don’t miss a beat.
Did you know that you can also outsource your CFO needs? You can gain the higher financial strategy and expertise you need, while also getting help with overseeing and guiding your bookkeeper, as well as supporting your month end close process. All without the expensive, long-term cost of hiring one full-time.
If you’ve been on a mini-golf course and have just recently moved up to a pro-course, chances are you probably haven’t had a CFO before and are missing out on the important skills that will continue your business on a trajectory for success. Did you have an ‘aha’ moment when you read through the list of CFO duties above because you had never thought of it before? As a business owner, you don’t know what you don’t know, which can hinder your company’s growth. As a Fractional CFO, I partner alongside businesses to offer advice on how to use the different financial tools and resources in the appropriate way and at the appropriate time so you can keep swinging for birdies and hopefully shoot a hole-in-one!
Reserve a Tee-Time With Geneve, Your Financial Golf Caddie!
If you’ve read this and still aren’t sure what financial roles are best for your business, or want to discuss having me be your financial golf caddie, I’m happy to open your golf bag, look down the fairway, and provide you with expert advice on what direction to take. Contact me today and let’s take a look at your golf course!
P.S. I’m excellent at being your financial golf caddie, but should clarify that I would not be a good choice for your actual golf caddie!