As a CFO, I have worked in a variety of small to mid-size companies. Listed below are some best practices to consider implementing as you grow your profitable business.

1. Start-Up Phase:

• How I will manage my business? – Best Practice: Simple accounting system (i.e. QuickBooks or Xero)

This is a great way to setup chart of accounts, balance sheet, income statement, cash flow, & budgets. This way you can provide access to your accountants to review your financial information for you. Plus, you can log in with any computer via web and see your centralized financial information. This may provide you with more timely and accurate financial information.

• What type of funding will I need for my start-up business?- Best Practice:


Friends, family, or personal savings – This is the cheapest way to fund your business, have a conversation and share the vision.

Small Business Administration loan (SBA) – Interest rates are low and you can borrow from $25k to $250k. Terms – 25 year term for real estate, 10 year term for equipment, 7 year term for working capital. You will need to provide them with a business plan (business vision, marketing, demographics, finance, 3-5 year projections, etc.)

Investors – You may be able to raise more money this way. You need to understand if they will be hands off or on. Do they want an equity position, some control of management? You will want to review your financial progress with the investors monthly.

2. Growth Phase:

• Develop a roadmap for success! – Best Practice: Six areas to focus on the business

Vision- CEO should share the story and vision with the team and get alignment.

People- Ensure you have the right people in the right positions to lead.

Data- As you grow you will want a centralized system that will allow your company to scale up.

Issues – Every business has challenges and you should set short and long term goals. Pick your top 5 priorities and focus on them. Hold teams accountable and have weekly meetings. A SWOT analysis is a good place to start and establish SMART goals.

Processes- Document your process for each department and make them simple for training purposes.

Execution- Understand how your company makes money and streamline your model. Is it reoccurring revenue or project type revenue?

• How do you want your business to grow? – Best Practice: Organic growth or Acquisition growth?

Consider the options to growth and decide if you want a lifestyle business or do you want to grow it to potentially sell the business one day?

• What are some company value detractors? Buyers buy a documented, believable future!

If you have these problems, you should to fix them.

1. Sustainability of the business is questionable without you, or you are extremely difficult to replace because of your personal relationships. This will result in a big discount.

2. Poor management team

3. Poor systems

4. Poor documentation

5. Poor accounting records

6. Legal problems

7. High employee turnover

8. Risk of losing key personnel

9. Lower gross margins and net income than industry standards

10. Obsolete assets

11. History of declining sales

12. More than 10% of sales are concentrated in 1 customer (i.e. if you have a 30%+ in 1 customer, expect a discount of at-least 25%)

13. Plan for the future is weak

14. Industry is in a downturn

3. Mature Phase:

• What type of legacy will I leave? – Best Practice:

Succession planning- Now that you have a mature profitable business, what do I need to do to ensure the business will continue when I’m gone.

Steps 1 – Plan 10 years ahead and identify the person to run company. (Is this person internal or external?)

Step 2 – Train the person. Delegate responsibilities and monitor progress so they can be successful. Create a timeline of milestones.

Step 3 – Create an environment for the person to lead the organization. Every person will have a different style and this person will need time to understand all the different areas of the business to ensure success. Introduce the person to clients, stakeholders, and other leaders to ensure success.

• Exit strategy? – How will I sell my business – Will I sell it to the management team? Will each person finance their portion with a bank or owner financing. Will I sell/merge with another company? Find a business partner with similar culture to continue your company’s growth. Always speak with your outside professionals to assist you with this important decision so you can enjoy everything that you worked so hard for all these years!

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