5 Tips on How To Build a Successful Business from a CFO’s Perspective

At Profitwyse, we focus on helping our clients build a successful business.  If you are now wondering how we define a successful business, we use the following six characteristics:

  1. Sufficient operating cash flow to pay the owner a better than market wage and support debt requirements through the year;
  2. Has an established infrastructure such that the owner can take, at a minimum, two-week vacation at some point during the year without the business collapsing or sales taking a nose dive;
  3. Is using a strategic plan or road map to track progress toward key objectives and make sound business decisions relative to various trade offs requiring resource consumption;
  4. Nurtures an engaged team that acts in accordance with the owner’s key business objectives;
  5. Has built a culture of continuous process improvement that rewards employees for taking action to improve cost efficiency and quality (however quality is defined); and
  6. Most importantly, the business can be monetized or sold, when the time comes, to fund, at minimum, the same lifestyle the business owner had while operating the business, preferable better.

To achieve this goal, business owners need to establish a business management infrastructure, specific to their industry and business size, with an eye toward continuous improvement.  Why is an eye toward continuous improvement is needed?  Well that is because a business process that sufficed when generating $500K in revenue becomes a barrier to continued growth when generating $2,000K in revenue.  All business owners encounter barriers to sustained growth.  Quickly overcoming those barriers is key to wealth creation.  Here are 5 tips on how to build a successful business from a CFO’s perspective:


Accounting systems, set up and processes

  • Accounting technology – Intuit has 75%+ of the small to midsize business market for accounting technology.  There are two basic products: 1) QuickBooks (Pro, Premier and Enterprise) and QuickBooks Online (QBO).  The first question you should as yourself is what industry am I in.  The next is how many employees will need access to the accounting system.  A professional services firm can easily get by with QBO or QB Pro.  One advantage to QB Professional is cost.  With QBO, you will pay a monthly user fee for as long as you are using the service.  With QB Pro, you can purchase a single-user license, including payroll functionality for less than $300 that will be supported by Intuit for 3 years, which works out to less than $9/month ($300/36 months) for as many entities as needed.  QBO requires monthly service fees for each entity into perpetuity.  Businesses that have more complex accounting needs, such as distributors, will want to look at QB Premier.  If more than 5 users are required to concurrently access the accounting system, then you need to look at QB Enterprise.
  • Smart considerations when setting up an accounting system – Configuring accounting systems required forethought to ensure information is tracked correctly.
  • Six reasons for effectively closing your books – Effective accounting processes are a significant success factor for all midsize businesses.  Closing the books on a regular basis and reviewing results are key.
  • Need to know how to get a business loan?  Here’s what you need to know.


Use Financial Reporting to Build a Successful Business


Financial Planning & Analysis

  • Why financial planning matters
  • Weak financial plans are common among our midsize business client base.  Addressing the short comings in a financial plan brings greater clarity to how important milestones will be achieved.  What your financial plan may be missing.
  • One of the most critical metrics to properly plan, report and analyze is gross margin.  We have a step-by-step gross margin analysis tutorial that is very popular on SlideShare.  Contact us if you would like a copy of the accompanying workbook.
  • Once you have gone through the trouble to create a reasonably detailed financial plan, a significant hurdle that many businesses struggle to overcome is the ability to merge monthly financial results with a financial plan that results in meaningful variance analysis.  Typically, a financial plan will be stored in an Excel workbook and the accounting results will reside in an accounting system, which complicates the merging of the two.  To merge the two, we utilize Planguru which is a modestly priced financial planning tool for midsize businesses.  For more information regarding
  • The key is understanding how to value a business so that a financial plan can be modified to focus on the levers that will increase business valuation.


Business Performance Measurement