30 minutes…How Are You Going To Spend It?

You are faced with 30 minutes as an entrepreneur…

Which side of the profit and loss do you focus on today? Revenue and sales? Or costs and expenses?

We just received a marketing email that said:

“As a business owner, you have to master growth. We aren’t just talking about debt here. We’re talking: cash – debt – equity – assets. All forms of growth. So here’s the deal… Not seeking equity… is not seeking growth. Being afraid of debt… is being terrified of growth. Worrying about cash… is literally defying your growth.”

It went on to talk about your perception of money and the image you project if you think it is a scarce resource. It was an interesting email.

Likely your money advise should come from a Finance Leader and not a marketer but there’s some truth to what is being said here.

This particular memo reminded us of one of our favourite topics: growth and revenue and the modern CFO

QUESTIONS TO PONDER:

Where can a Finance Leader assist?

If I hire a CFO/Controller will they torment my team and drive my people crazy and destroy the  culture I’ve worked so hard to build?

Will they interfere with the business with their questions and hassles and cost controls?

Good questions. Valid fears.

Modern CFOs are different.

Modern CFOs are growth focused.

They amplify your team.

They amplify your culture.

They amplify your growth.

How? Read our Modern CFO series to learn more.

Back to our 30 minutes — time is ticking here:

Thirty minutes spent on revenue can have an exponential impact on growth. Or more specifically 30 minutes spent finding $30 of revenue will have a larger impact versus that same 30 minutes spent on costs.

READ THAT AGAIN: 30 minutes spent finding $30 of revenue will have a larger impact versus that same 30 minutes spent on costs.

While reducing costs has merit there’s a pretty obvious hierarchy. If you have a Finance Leader who spends all their time on cost that is a choice and not necessarily a wise one. Similarly if you have a Finance Leader who spends their business partnering and strategy time focused only on cost, you’ve also got an issue.

      • Cost matters and it isn’t back and white. Time needs to be spent on both cost and revenue. Often a modern CFO supports the business’ focus on revenue and coaches the finance team to pay attention to costs. They are pulled in both directions and balancing both.

But if you have to prioritize, the choice is clear and the studies support it: companies that focus on revenue, not cost, grow quicker and stay healthier longer.

If you spend thirty minutes growing revenue you’ve:

  1. secured a new customer
  2. expanded your reach to an existing customer
  3. broadened your market share or other such great things

And guess what?

A new customer and a “stickier” customer becomes a repeat customer so they might spend $30 based on this 30 minute effort but chances are another $30 in revenue is around the corner with minimal or no additional time spent.

A repeat customer and a “stickier” customer is also likely to refer and recommend you, so another $30 could flow your direction as a result of that same 30 minutes.

Meanwhile 30 minutes on cost that saves $30, saves $30.

Pretty clear I’d say.

Contact us to learn more about #financeleaders, #businessadvisors that focus on growth and use the modern CFO methods. We might be a little different than your typical number counter!

I want to Amplify and grow!

More on those 30 Minutes!

So we’ve been thinking about those 30 minutes.

Accountants are smart so why is it they gravitate towards cost despite the studies and the common sense telling them that 30 minutes focused on $30 revenue will have an exponential impact of a repeat client, a referral and other growth? While 30 minutes spent saving $30, saves $30.

We think it’s fear of failure.

It is the probability of success that stops the stereotypical and old-fashioned accountant from prioritizing a focus on revenue over cost. It is staying in their comfort zone and their domain of control vs. getting into the business.

Think about it, an accountant who has 30 minutes to spare and says, “I’m going to use this time to save us $30” likely will do exactly that. If they start out thinking they can do it, the probability of them succeeding is super high! After all it’s often just cutting something, calling a vendor, doing a price comparison or other simple tasks. They can do it within their office, at their desk, or with the support of their finance team.

And, as we’ve said, this isn’t a binary choice. Saving costs and reducing your spend has merit. Having a finance team successfully support the business by managing costs is very valuable. It also lets them feel like they are making a difference and contributing. A modern CFO supports and coaches their team in these efforts. Cost matters. It’s not a waste of time to focus on it.

But, there’s a hierarchy and the priority should be growth and revenue. So why do so many accountants gravitate so strongly towards a cost focus?

The more we think about it the clearer it gets: it is the probability and fear of failure. Spending 30 minutes on revenue to earn $30 isn’t quite as easy. In fact, the probability of even the best CFO accomplishing this single-handed is very low, maybe even nil. They are back-office after all and not the linchpins or moneymakers. So those revenue-focused 30 minutes is going to require they get out from behind the desk. They’ll have to venture into the business and they’ll have to business partner and strategize as an executive. They can’t succeed on their own or in their own domain.

If your Finance Leader doesn’t prioritize business partnering with operations and working on strategy as an executive you’ve got additional problems. But that’s arguably a different topic.

But back to the 30 minutes.

So now that the CFO is out in the business focusing on revenue they really have only 15 minutes because in most cases they need someone to coach and work with (15 minutes per person for that same 30 minutes spent by the organization). And let’s face it, two heads might be better than one, but there’s no guarantee that we are going to achieve that original goal “30 minutes to earn an additional $30”. The probability, even with us working together is still not extraordinarily high.

But if the goal is reasonable, it’s still probable enough. And the $30 we earn will exponentially impact our business so the math still works. The exponential impact grows if you’ve lit a fire with operations to stretch their revenue and be creative and focus on growth.

It’s still clear that we need to spend time on revenue and growth but now more obvious why it’s infrequent.

Contact us to learn more about #financeleaders, #businessadvisors that focus on growth and use the modern CFO methods. We might be a little different than your typical number counter!

Give us 30 minutes…

Still Not Convinced? 

Okay if you are still not convinced that spending 30 minutes on growth and revenue is better for your business than 30 minutes spent on cost we’ve got one more consideration to bring up.

So, if you are an accountant saying,

“that’s great that 30 minutes focused on $30 revenue will have an exponential impact of a repeat client, a referral and other growth. While 30 minutes spent saving $30, saves $30 but I still am uncomfortable with the probability of success. I don’t want to waste those 30 minutes focused on revenue and not succeed when I am pretty sure I will be able to save $30. I don’t want to get out of this chair and rely on others to help with the revenue focus when I can save the money with my own efforts or delegate to my great finance team and get it done.”

Then consider this…

Sometimes saving costs actually reduces revenue in the long-run. So many examples of this right?

  • A lower quality input can drive a premium price for your product down as the quality lowers and the willingness to pay does too.
  • An employee burdened by cost reduction and forced to drink crappy office coffee during performance meetings when they used to treat their subordinate to a Starbucks might result in two employees a little less satisfied and a little less engaged.
  • A restaurant running with one less server might take just a little too long to get the customer their bill resulting in less likelihood of a repeat visit or referral.
  • A policy to not pay for parking might mean employees have an increased commute and spend less time in the office on the business.

Cost savings isn’t always straightforward and quick. It too is strategic and requires business partnering and executive consideration.

Again, if your Finance Leader doesn’t prioritize business partnering with operations and working on strategy as an executive you’ve got additional problems.

So our last point on this topic is 30 minutes growing the revenue by $30 versus 30 minutes saving the organization $30 is ridiculous and not realistic. Nothing is ever quite that simple, is it?

But what is simple is the need to focus on growth. The need to make room for growth. The need to understand that growth comes from revenue.

Your Finance Leader should be seeking growth.

They can’t be scared of growth.

They can’t be focused on costs to the degree they are defying your growth.

MIKE DROP

Contact us to learn more about #financeleaders, #businessadvisors that focus on growth and use the modern CFO methods.

Find out how we are different!
By |2021-08-30T14:18:08-06:00January 26th, 2019|FINANCE LEADER SERVICES (CFO SERVICES)|0 Comments

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