From time to time I write articles about the tenets of good entrepreneurship qualities and guidelines, and this article definitely fits within that category. In teaching entrepreneurship classes, one thing that often is discussed is the need for professionals to wear many hats. This is especially true with start-ups and very early-stage companies. Typically these firms just do not have the resources to attract and compensate a full compliment of C-level managers. As a CFO, I find that my specialization tends to be the one that usually is last in line in terms of priority. There are many reasons for the CFO spot falling to the back of the line. I feel a big reason is that most founders just don’t understand the value a qualified CFO can bring to the organization. They typically see the CFO role as a traditional accounting role – a “bean counter” role. While the accounting functions are significant and vital to the start-up and early-stage business, both in terms of establishing proper accounting procedures and implementing, tracking, supervising, and reconciling them, a good CFO will contribute in far more significant ways.
A good CFO serves as an active and valued member of the management team, assisting with strategic planning, pricing, sales and marketing, contract negotiations with employees, suppliers, distributors, and contractors, and most importantly, helping the business secure adequate funding. All of these functions fall outside of a traditional accounting-only role, and all require specific financial and accounting expertise that is almost always sorely lacking with the other members of the management team.
What I have personally experienced is that, once the firm gets to a point where they are unable to accomplish a specific goal, such as securing funding, they reluctantly engage me. Still, it is rare that the company voluntarily compensates me at a reasonable level. More often than not, I have to sign-on at some kind of discounted or introductory rate, prove my value, and then renegotiate my compensation (if I can). While this is my personal experience, I am not alone. In fact, almost without exception, when I discuss these issues with other CFOs that focus on companies at the same level of development – start-ups and early-stage companies, I hear similar experiences.
And now the point of this article – wearing multiple hats. What I have found that really can set a good CFO, or for that matter any good C-level manager, apart from the average professional is the ability to bring multiple disciplines or levels of experience and expertise, to the company. As an educator, I see this more and more, regardless of the business setting – companies large and small now expect their employees, and especially C-level managers, to bring a much broader range of skills, knowledge, experience, and abilities to virtually every position. With start-ups and early-stage businesses, there is even more pressure on C-level managers to have these broader skills because these companies simply cannot afford to pay for a full array of managers (or employees for that matter).
I have been a life-long learner and educator, so it is natural for me to continue to expand my knowledge-base and skills. I have had the pleasure of serving as CFO and CMO of a large number of companies over the years, in many different industries. From each engagement I have learned valuable knowledge about the industry and about being better at my profession. For CFOs, bringing additional skills to each engagement will help set you apart from the average, traditional CPA/bean counter, and will help you demonstrate the value you can bring to the business. As we move forward in time, I believe strongly that everyone will be required to possess a broader set of skills backed up by experience and education, to be competitive. To make a comparison that may only resonate with some readers, this is akin to the UFC – in the early days, each UFC fighter had only one martial arts discipline. The interesting thing back when the UFC first started was to watch the match-ups of the different martial arts – Brazilian Jiu-Jitsu against karate, for example. As time passed, fighter realized that to be more competitive, they had to learn multiple martial arts – striking arts and ground fighting arts. Competition grew as the popularity of the sport increased, and as the money involved increased. Today, it would be impossible to compete with skills in only a single martial art, no matter how good the fighter might be in that art. I see the same evolution happening in the corporate arena – C-level managers, like MMA fighters, must be expert at multiple disciplines (effectively wear multiple hats) if they want to be competitive, both today, and even more so as we move into the future.