By Maurie Cashman
Acquiring financial skills is at the top of responses to a Grant Thornton August CFO Survey. And no one appears to have a handle on how to accomplish this critical task. Last week we suggested Five Ways to Improve Your Financial Function. The number one issue is finding and retaining the right talent, which we will talk about in this article.
According to the Grant Thornton survey: Executives donâ€™t agree on which skills their finance team needs most to achieve their desired business growth. On average, core financial analysis skills are ranked the most important, followed closely by broad business skills second, value-added, strategic skills third and technical skills fourth.
Most business owners I talk to do not understand how much information is in their systems, how to access it or how to utilize financial skills as a strategic weapon. Many have grown up around a bookkeeper that has always â€œkept the booksâ€ and have never upgraded these skills to keep up with the growth of the business. They simply do not recognize how powerful the financial function can be. Oftentimes their advisors may have little incentive to want them to upgrade.
The businesses with the most opportunities that I work with are often those with little to no debt and lots of cash. They have taken their foot off the gas and donâ€™t realize that they could have a huge impact on performance, make more money to utilize in whatever way they wish, recognize opportunities and seize upon those to grow both their business and their employees.
Identify the Financial Skills You Need
Every organization is going to require a different set of financial skills. Some businesses are on aggressive growth tracks. In that case you need someone with the skills to analyze acquisitions and conduct due diligence. In other cases, you may need to improve financial systems and controls. Some would benefit from improved budgeting and financial planning and analysis. Perhaps you are considering an ownership change and need to beef up your financial skills to both make your company more attractive and valuable and to prepare for the due diligence that is coming your way.
How Will You Acquire These Financial Skills?
OK, so you have recognized the importance of information and identified the financial skills you need and do not have. What are you going to do about it?
Here are some ideas to consider:
Itâ€™s an Investment
You may have to spend money to make money. In this case that means you may have to go out and find the talent that you lack and spend the money needed to acquire them. This must be looked at as an investment rather than an expense. If you consider it an expense you will not make the hire. If you analyze it as you would a capital investment however, with an expected return on that investment, I am confident that many would quickly recognize value.
Long Term vs Short Term Investment
If you are considering an ownership change you may prefer to bring in short-term horsepower to shore up your financial skills. A high-quality financial experts who can come in on a part-time contract basis to get you from one point to another may be just what you need. Your acquirer may already have a strong finance function and you may not want to hire on a permanent basis.
Right Size and Plan Ahead
Not every business can afford a full-time financial expert. So again, you may be better off paying for high-quality help for a few hours per month to provide analysis to you as a leader in your company. Letâ€™s face it, it is lonely to be the leader of a small but growing company. Someone to bounce things around with who understand you and your company may be very valuable. They can also help you to grow into a relationship when you have grown the business to the scale that can support them on a full-time basis.
So donâ€™t short-change your financial skills. You should know what your financial statements mean and what they can tell you about your business.