You Say Accountant, I Say Controller

You say tomato, I say tomāto. You say accountant, I say controller. Unlike tomato and tomāto, the terms accountant, controller, and chief financial officer (CFO) do have significant differences.

We could go into great detail on what makes them different (oh wait, we did). Instead, here’s a basic breakdown of the difference between the three:

  • An accountant is responsible for entering day-to-day transactions and performing basic accounting functions. These could include entering bills and invoices, running payroll, paying sales tax, etc.
  • A controller is responsible for the accuracy of the financial statements, preparing budgets, calculating financial ratios, etc.
  • A CFO is responsible for a forward looking perspective. They are involved in strategic planning and providing improvement recommendations based on the financial ratios provided by the controller.

Each of these positions relies on the other to get the information they need and to make your accounting and financial processes run more smoothly. Each has a distinct purpose and each is important for the financial health of your business.

Now we know what you’re thinking … there are THREE positions. Yep. But that doesn’t mean they’re three people. Technically, one person could perform all three positions. Often times in small businesses, this is exactly what happens.

The first position you will need is an accountant. Do not take this position lightly. One of the greatest needs of business is the need for good financials. Hire someone who has the knowledge and experience to do a good job, like someone who has experience working with your type of business, or has a strong financial background. If you hire the right person with the right experience, they can also serve as your controller. A CFO is needed when you begin to use your financials as a management tool.

Yet at a certain point, you need to begin to think about expanding your financial department and separating the roles. Knowing when to separate depends on your business. Consider who will be looking at your financials and the purpose for those financials.

So what if you’re just not ready for all three positions? Or, what if you are, but financially you’re not ready to hire all three. After all, recent research shows that a CFO can cost over $125,000.

Look into outsourcing it! A trusted business advisor or accounting firm can help you outsource any number of functions, from the day-to-day functions all the way to the CFO level. Not sure how to find the right advisor to help? Here are six questions you can start with.

By outsourcing these positions, you can free your time to work on your business. Plus, you’ll have a trained professional who can help you understand the importance of your finances and why they matter.

Is Your CFO Ready for the Future?

It’s no secret: the business environment is constantly changing, and will continue to change in the future. These changes can impact everyone in your business, from staff up to the CEO. In our numbers world, we hear a lot about future ready CFOs. Is your CFO (in-house or outsourced) future ready? Here are some considerations to help you measure your CFO’s readiness.

  • Is your CFO proactive? – Rather than sitting back and waiting for the next big change, is your CFO prepared and excited for what is coming? Being proactive is key to being ready for the future. For example, cloud accounting has opened numerous doors of opportunities related to efficiencies, access to information in real time, etc. Has your CFO already taken the initiative to explore these opportunities? Anticipation is another key to being ready for the future. Is your CFO staying current with the trends in your industry or what your competition is up to? Staying ahead of the curve can give you a competitive advantage that can’t be touched.
  • Is your CFO tech savvy? – Being tech savvy is a great skill to have in today’s world. Your CFO should be trying to leverage technology that best suits your business (both financially and operationally). Technology is always changing, and you want to make sure your business stays up-to-date with these changes. Staying up-to-date can help ensure your business runs efficiently and you get the best information you can to make decisions confidently.
  • Does your CFO know his/her stuff? – Does your CFO seek to learn outside of the numbers? It’s important to see the business as a whole. A study by EY and CPA Australia found the top tasks of CFOs in the future will focus around strategic planning, advisory and risk management – not just the numbers. There are many benefits that can come from knowing all the parts of your business, such as a better understanding of how different departments work, or being able to identify higher level problems. After all, your finances work with every part of your business in some form, so knowing what role they play can give you an upper edge.
  • Is your CFO accepting? – Change is hard but it’s also inevitable. Change comes with a mixed bag of emotions, and it’s important that your CFO is willing and able to embrace the change. Your CFO must be able to accept positive, necessary change to grow and build a better future for the business.

There’s no doubt about it: the future is going to change the way businesses operate. Making sure you have a future ready CFO on your side will help you create a competitive advantage that will be hard to beat.

Tax Accountants, CFOs & Bookeepers … Oh My!

When people hear I’m an accountant and used to be an auditor, I can put money on the next two statements that come out of their mouth. “Oh, so you do taxes?” and “I didn’t know you worked for the IRS!”

I mean, yes, I have done taxes, but that’s a very small portion of my work. In fact, many of my colleagues don’t do any taxes and probably never will. And we’ve said it before, but we will remind you again: just because someone is an auditor does not mean they work for the IRS.

This leads me to my point. Although some accountants do taxes and some go on to work for the IRS, there are many more areas that accountants find themselves working in. In fact, there are so many unique areas that we thought we would break them down for you. Here are some of the different types of accountants:

  • Tax Auditor – These accountants work for the government and help make sure tax returns are filed correctly.
  • Public Accounting Auditor – These accountants are employed by public accounting firms (like us!) and are hired by companies to make sure all accounting records and financial statements are accurate. They work closely with these companies to correct any issues, and make sure the company has good safeguards and controls around their accounting department.
  • Internal Auditor – I promise, this is the last auditor! This type of auditor is generally employed by a specific company and focuses on uncovering and correcting inefficiencies and preventing fraud within the organization. They also check the work of the accounting department to ensure everything looks correct. They do all of this to help your business run better.
  • Tax Accountant – This type of accountant helps companies or individuals with all things related to, you guessed it, tax. This could be personal or business returns, tax planning, estate planning and even succession planning for their business. Tax accountants often focus on a specialized area of tax, such as international tax or state and local tax, to name a few.
  • Forensic Accountant – This type of accountant practices in a very specialized area of accounting focused around detecting and uncovering issues. This could be fraud, embezzlement or even bankruptcies. These accountants may also act as expert witnesses in court.
  • Bookkeeper – Working as a bookkeeper focuses on originating and organizing business transactions and entering this information into the accounting system. Common duties of a bookkeeper include sending customer invoices, processing cash receipts and paying bills, to name a few.
  • Controller – The Controller acts as a manager of the accounting department, and is responsible for all transactions and controls within the department. Often times, this includes the preparation of financial statements and checking to ensure there is accuracy throughout the department.
  • Chief Financial Officer –– This is a high-level accounting position in a business, which can sometimes be overseen by the president or vice president of finance in the organization. Being at such a high level, this position holds a substantial amount of responsibility. Some of the duties of a CFO include overseeing the accounting function, managing taxation of the business and assisting with strategic planning. It is safe to say that a CFO is not just a one trick pony. (To learn more about the cast of financial characters, check out this blog).
  • Consultant – This type of accountant brings a high subject matter expertise to their clients. They often times have many years of experience in many different areas of accounting, and can help a business with many of their needs, rather than focusing on one specific area. This could include strategic planning, implementing accounting systems, making sure the company is running efficiently or even helping a business grow.

Accountants are able to specialize in a certain area within their practice and are therefore able to meet clients’ specific needs. Specialization can also be fun for accountants (yes, we said fun!) because they are able to focus on what they enjoy.

So there you have it. We’re not all tax accountants and most of us have never, and will never, work for the IRS. However, we do come from different backgrounds that have given us vastly different experiences that have helped us decide where we belong in the world of accounting.

(Shameless plug: if any of these people sound like someone your business could use, contact us!)

6 Questions to Ask When Hiring an Outsourced CFO

So, you’ve decided your company needs someone to step in and be in charge of the finance department and provide some guidance. You want someone who will put in good work and get the results your company desires. However, you don’t see a need for this position to be a full time commitment. What do you do?

Welcome to the world of fractional CFOs, a.k.a. an individual who you hire to work part time for your company. In other words, you outsource it.

Why is this important? Well a fractional CFO is able to help your company’s finance department operate smoothly. Have we not told you multiple times how important it is to have the right numbers and sound financial data?

So how do you go about selecting this person? Luckily, we’re here to help. Here are our top six questions to ask when hiring a fractional CFO.

  1. Do you like numbers? Our first question may seem a little goofy, but it is a really important step in getting the right person for the job. Yes, it sounds cliché to ask a numbers person if they like numbers. But, if you end up hiring a CFO who really can’t stand working with numbers and is just in this position because he or she graduated with a finance degree, the chances of getting quality work that’s beneficial to your company from this individual will be very low.
  2. What is the key to a successful budget? This question is beneficial because it gives the candidate an opportunity to really showcase his or her knowledge of the industry, as well as showcase his or her way of thinking. This can also help uncover creativity and skills that the candidate may possess.
  3. Where do you get your financial news and knowledge? Find out where the candidate gets his or her financial news. This question might seem a bit personal and way out in left field, but it can actually lead to some very good insight into the candidate’s interest and seriousness about finance. You want to hear answers such as Wall Street Journal and MarketWatch. Hearing just a general news source or website may indicate that they aren’t as in depth in the finance world as a CFO should be.
  4. What areas of financial and/or operation management are you most and least comfortable with? This simple question allows for you to compare your candidate’s strengths and weaknesses in the financial area with your company’s goals.
  5. What challenges and issues will you look for? How will you solve those issues? Get your interviewee to really think, and ask them what challenges they are looking for and expect in the fractional CFO position. This question will provide you with insight in to what your candidate enjoys putting his or her mind to, and how much time, effort, and dedication they are willing to give in order to meet and exceed the needs of the challenge.
  6. What five words would you use to describe yourself? It’s an oldie, but a goodie. This question will teach you a lot about your candidate. It helps show which characteristics they value most, and can help you determine if those traits fit well with the culture of your company.

Others you may want to ask include:

  • What do you consider to be your top accomplishments?
  • How do you use communication skills to work with multiple parties?
  • What motivates you?
  • What do you feel sets you apart from the competition?

These six questions, along with a few other topics, will be a great starting point to help the interview go smoothly, and ultimately, for you to find a great fit for your company.

 

 

 

 

 

Meet the Team: Dan Macintosh (@dsmacintosh)

DanWhat is my role?

My role in the Possibilities Center is to lead our Business Process Outsourcing (BPO) services. These services are designed to help you in all aspects of your business. We handle the back office accounting, Controller or CFO on call, tax consultation and preparation, even HR or IT. With a team of professionals with experience in all of these areas, we are able to fill the roles of many of these people, freeing up your time and financial resources to focus on your goals.

Why are good numbers important for business?

The biggest issue I see facing small and growing businesses is the ability to get timely and accurate financial information. The ability to get this information is vital to the decision making process, and can be the difference between accomplishing your goals and getting stuck. With a little work and our professionals, we can help you get the information you need to make sound business decisions.

Why do I want you to succeed?

I want you to succeed because it’s why you went into business in the first place. Not everyone loves accounting as much as our numbers nerds do. That’s why we’re devoting our time and talent to taking away a lot of the headaches, allowing you to focus on what you do best.

#ILoveFargo

As the newest member of the Possibilities Center (I’ve only been in Fargo for a month!), I’m still in the honeymoon phase! However, I can tell you that my wife and I were ecstatic to move back to North Dakota after several years away. One of the biggest things I heard of Fargo while we were exploring a new landing spot was how vibrant the business environment was here. From drone technology to manufacturing to the entrepreneurial startup community to the rapidly growing more established business, Fargo has done a wonderful job of creating a true business ecosystem!

 

 

No Man’s Land: Market Misalignment

Do you ever feel like you’re losing touch with your customers? Maybe you feel like you’re not meeting their needs anymore, or you’re not sure what you should offer them to keep them satisfied. Early on, a company will grow on the strength of a simple exchange between the customer and the entrepreneur. However, once the company grows, the demands of the entrepreneur intensify and he or she is physically unable to adapt the company to meet the ever changing needs of the customer. This can result in the company losing its competitive edge, and ultimately, losing sales.

This stage of growing out of touch with customer needs is known as “market misalignment,” and it is the most fundamental peril companies face in “No Man’s Land.”

Market alignment is obtained when a business consistently delivers the value its customers desire. Sounds simple, right? Not exactly. It’s one thing to be aligned, but to stay aligned is a whole new world. According to Doug Tatum in his book No Man’s Land, “The key to market alignment is through innovation.”

But how does innovation happen? It comes when customers ask for a new product or service that requires a substantial change to your business model. Businesses become living laboratories, given over to a process to discover what is the right product, service and target customer. If a company is not innovative and meeting customer needs, they may face market misalignment.

Another reason your company may be facing market misalignment revolves around the fact that the company has made promises it cannot keep, or neglected to make promises that should have been made. The key is for the company to make the right decisions, ones that lead to growth and profits. Deciding which promises to make is part of strategic planning, and these promises can shape the company’s future of market alignment.

Still not sure if your company is aligned? Here are some signs you might not be:

  • Sales growth has stalled
  • Losing competitive edge
  • Tensions have arisen between promises made and delivery
  • Quality problems are arising
  • Increase in customer complaints
  • No direct contact with customers
  • Unable to distinguish customers who will bring growth and those who won’t

Any of these sound familiar? If they do, you’re probably wondering how you can beat market alignment. There is only one sure fire way:

Companies need to surpass the entrepreneur’s physically limitations by institutionally capturing the value proposition that has been developed through the entrepreneur’s unique insights”-Doug Tatum

To put this in simple form, the company must recreate synthesis between marketing and operations, and make use of employees and processes rather than one person’s effort. To get the business to be good at what the entrepreneur did well with customers involves three steps:

  1. Entrepreneurs should identify what exactly they are good at.
  2. Systemize delivery of the value proposition by creating a system where everybody behaves rationally and plays a specific position. Although not always simple, developing processes to capitalize on the entrepreneur’s talents becomes a huge part of the company’s competitive advantage. Concentrating on the value proposition is the most important thing a company can do as it grows.
  3. Develop ways to measure the results of the process.

An entrepreneur can find the skills to lead his or her company through No Man’s Land if a value proposition is institutionalized within the business, as well as identified. Creating a process to ensure that the entrepreneur’s core vision and talents are upheld also helps a business get out of the maze of No Man’s Land by creating competitive advantage that allows for the company to be successful and profitable.

Our next blog on No Man’s Land will focus around management and the dangers to your business of outgrowing it.Missed the first two? Check them out here and here.

 

 

 

No Man’s Land: An Introduction

If starting a company is difficult, leading a company once the business has caught fire is infinitely more so. Thousands of companies each year approach the dangerous transition known as “No Man’s Land.”

No Man’s Land : “a transition that a company goes through when it is too big to be small and too small to be big. It’s something every company has to go through in order to grow to scale. It’s a highly fatal transition and many companies don’t make it.” – Doug Tatum

Rapid growth may be your dream, however we’re here to break the news to you that it doesn’t come easily and is usually rife with dilemmas. During your time in No Man’s Land, growth often sparks periods of self-discovery, allows you to build discipline and ready yourself for the inevitable transitions that businesses will face throughout their life cycle.

Unfortunately, it also comes with an agonizing battle between the natural tendencies of a lonely entrepreneur and certain immutable laws of growth. The result is confusion, frustration, stagnation, loss of employee morale and even financial failure.

Some common trigger points to signal your emergence into No Man’s Land include:

  • Revenue stops growing
  • The people you started with don’t seem to be the people you can grow with
  • You need more capital and investment

Yes, we know it sounds pretty bleak. The good news is that it doesn’t have to be. Rather, it’s important to not only know about the ride ahead, but be prepared for its twists and turns.

Plus, we’re here to help you along the way. Over the next few weeks, we’ll be talking about how to navigate “No Man’s Land” and come out on the other side. Here’s a sneak peek:

  • Align your growing company with its market
  • Execute the necessary changes in your management
  • Confirm that your financial model is scalable
  • Attract money and make smart decisions about financing your business

Stay tuned for “Too Big to Be Small, Too Small to Be Big!”

P.S. All of these blogs will be based around the concepts in “No Man’s Land” by Doug Tatum