Want a challenging job? Try becoming the Chief Financial Officer (CFO) of a start-up.
Marc describes his position like this: “You are in a start-up company full of brilliant ideas, endless optimism, and visions of exponential growth. You are the CFO, the last stop of reason on the flight of fancy and rose-colored horizons. You must walk the razor’s edge of keeping ideas flowing and growing while preventing the most common death of all start-ups, financially bleeding to death.”
As the CFO of a start-up, Marc has dubbed himself “the killer of ideas, because I am often the last step to get any substantial new process, idea, development, or marketing strategy approved.” However, he also recognizes that if he stifles the company’s creative spirit, then he “won´t see the revenue growth needed to hit profitability and fund those wonderful profit sharing plans and stock prices that we all hope for.”
To balance creative energy with financial caution, Marc recommends that CFOs for start-ups use these guidelines:
1. “Give all ideas a second hearing.
Accounting and Creativity do not mix well. Accounting and finance are based on detailed rules and routines which forces mental thought down a narrow path to do it right.” As a result, he says, “start-up CFOs frequently see the stress of funding large outflows from the company´s financial reserves without frequently seeing the positive effect of large incoming revenues.” When CFO are focused only on numbers, they “are not in the right mood to give a fair hearing to new ideas and are too pessimistic to separate the gems from the chaff.”
2. “Ask to prioritize.
There will always be more ideas than budget and money.” Marc believes that it is not the CFO who will be best able to determine which ideas are the real winners. ” Whenever possible have the salesmen, engineers, designers, and marketers give you their views” on which projects have the highest potential. That way, “while you still need to make the final decision, you will always have the benefit of their expertise.”
3. “Walk in someone else´s shoes.
While the CFOs in large companies can spend all their time on finance, you probably have other hats to wear. Be thankful for this. Your company´s survival depends on dodging the problems they encounter and as the ultimate check on all actions, you must be both connected to your company and aware of its basic needs and goals.” To manage this, Marc recommends seeking ways to connect to all areas of the company. By doing so, you will acquire the ability to “separate honesty from bullshit coated in trade lingo and jargon.”
4. “Use the shotgun followed by the rifle.”
Translation: for many start-ups, the question is not how to produce the product but how to prmote it. CFOs often dislike marketing because it is so difficult to “measure the return of a marketing program, especially an early marketing program. While most marketers will proclaim that consistency is needed to promote a brand name, in the early stages of promotion you cannot afford to commit a lot of money to any medium until you have an idea of which connect to customers and which are rat holes.” To overcome this potential problem, experiment with “limited amounts on a broad spectrum of media to identify which generates any sales response. Later, you can keep the budget the same but target the channels that have actually given you a positive response to see if your promotion is actually hitting the mark.”