Most large businesses have a chief financial officer whose job is to monitor how financial decisions may impact the company. Entrepreneurs and small business owners don’t always have this resource, and some of them will admit that financial management is not one of their strengths. However, it is important to consider how every financial decision will affect the net worth of your business. Bad investments and rash decisions may end up having a long-term impact on your company’s net worth, so it is an important component of the decision making process. Even if your company does not have a CFO, you can still learn to think like one.
Make strategic decisions
One of the main drivers for decision making by CFOs involves making strategic decisions with the long term future of the company in mind. A recent blog post on CFO.com describes how Kimberly-Clark CFO Mark Buthman encourages company employees to think like him. “In Buthman’s vision, everything a finance professional does should be aimed at achieving one of three things: building talent, driving results or growing the company’s capabilities.” Small business owners should also keep these principals in mind when making important business decisions, as they all contribute to the company’s overall net worth.
Take calculated risks
Another thing that makes a CFO an important component of any organization is the fact that they take strategic risks. In a recent blog post on FinanceHackers.com titled, “8 Steps to Think Like a CFO,” author and blog founder Paul states, “Look at the biggest and most successful businesses in the world: Google, Apple and companies like them. They got to where they are by challenging what was the accepted logic in the business world. With Google, it was that search engines could be user friendly; with Apple, it was that the smartphone would have mass appeal, and that the tablet would too. They took the risk, challenged current thinking and as a result, they are now two of the biggest companies in the world. Truly successful business people are not afraid to challenge the accepted norm, think what others aren’t and become a true success.”
By taking the company’s overall vision into account before making important decisions, you can increase the profitability of your business. Rather than focusing solely on your product, take the time to develop a vision, and make sure that your risk and strategies align with it.
This article was written by Alaina Brandenburger for Small Business Pulse