Exit Planning: How can having the right CFO onboard help you when it’s time to sell your business?
Denver, CO, March 10, 2018: Small business owners are historically underserved, and they’re starving for CFO skills, and oftentimes professional CEO coaching, to help them transform their businesses into “built to sell” companies. They need guidance on the exit planning process, which can be complex and is not inherently intuitive. I like to talk with business owners and teach them that there really are key value drivers that improve the value of your business and prepare it for sale. They begin to realize that they must think about their business in terms of a Buyer’s lens – what’s important for a Buyer may not resonate with a business owner who has spent their life blood building their business. It’s their baby, and they may be looking at their company through a parent’s lens. It’s helpful to remember that a Buyer may be looking at 10 different companies in their industry, and they’re looking at very specific attributes to find the perfect company.
We always say that successful business owners who have built valuable businesses think about selling their business from Day 1. They never know when a potential Buyer may walk through the door and make an offer, and they want to be prepared for that eventuality. From Day 1, they should prepare an exit strategy by creating a winning game plan and hire the right team to help them execute their vision. They recognize that they need CFO skills to unleash the power of their financials in order to drive business performance. And of course, that CFO must possess the skills and experience to edge out the competition and uncover the company’s hidden value that maximizes the potential price Buyers are willing to pay.
The Right Fit: The key qualities to look for in a CFO?
Today’s CFO must possess technical attributes regardless of industry or company size. While the level of complexity increases in larger organizations, accounting, financial reporting, internal controls and more are a de facto requirement in any business regardless of its size.
CFO’s must love the greater whole, curious about the entire business and its operations. They’re like a Chief Detective, talking to people, learning how the business operates, how all of the pieces fit together. They should love to identify bottlenecks, discover opportunities for improvement, and uncover inter-relationships among departments and business functions. Their strategic minds must work together with an out-of-the-box mindset and work creatively with their operational counterparts. And of course, their keen understanding of how operational activities, ultimately mapped to the financial statements and accounts, opens people’s minds and gives them an understanding of how their jobs fit into the greater whole.
The ability to think on their feet and not be afraid to ask questions is a vital skill among savvy CFOs. They need to get out and talk to people and learn more about what they do for the company. People open up when they realize that their opinion matters and their knowledge and experience is needed to make positive changes in the company, especially when they understand that the CFO wants to learn how they can help them do their jobs better AND help the company in turn.
Finally, it goes without question that the CFO’s role has evolved, and that evolution requires an understanding of data. They have to be savvy on the many ways that data is generated, the systems where it resides (online and manually as well), and the right timing of when to generate measurements and metrics (ad hoc, daily, weekly, monthly, etc.).
Successful Hiring: How do you identify these attributes?
I tell people all the time that patience really is a virtue when hiring a CFO. Business owners should take their time during the hiring process to uncover the key attributes that make for a successful CFO hire.
The new CFO should be inquisitive and curious about your company, and they should ask questions that help provide the right questions to gain an understanding of the company’s operations and systems.
You should immediately feel that they’re humble by nature, because anyone who believes they’re coming in as the “big kid on the block” or “the shooter” will not effectively gel with all levels within the company. It’s a people-business, and no one likes a know-it-all, so be careful if you find someone that doesn’t fit the bill, asking a variety of questions that help to uncover their humble nature.
Spend time talking through their career progression and the roles they’ve served. You should see a trend where the person has served in a variety of capacities or led corporate operational projects designed to improve business performance. You can usually tell based on the ease of the conversation and the use of key words versus memorized for the interview.
Finally, I’d broaden the interviewer pool to include people in different roles throughout the company. You have to balance the interview lifecycle from inception to hire with the real war for talent but deciding not to hire in favor of finding the right person saves you time, headaches and money if the candidate does not work out.
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