Ever wondered what a CFO does beyond just managing the finances and the finance team?

As many of you are either Founders or aspiring or new CFOs, it's time we unravel the broader role of a CFO in the fast-paced world of startups.

Navigating the Topography of Business

A great way to capture the essence of the CFO role comes from a Forbes article: "The CFO is much more than someone who reads the instruments. The CFO is more like the navigator who rides alongside while the CEO steers the business through a road-rally race. While the driver keeps eyes on the road, the CFO-navigator reads a topographical map, keeping track of time and landmarks and saying things like “500 yards ahead, there’s a steep slope and a hard left.” Driver and navigator need trust and teamwork to keep from crashing."

I couldn't have said it better myself! Essentially, CFO responsibilities extend well beyond the spreadsheet.

Just as a navigator in a rally race, the CFO's role is to keep track of the business landscape, anticipate turns, and make sure the company is well-positioned to handle the road ahead.

What Does a CFO Do, Really?

On the surface, it's about the numbers - budgets, cash flow, profitability. But beneath the surface, there's a whole world of strategic planning, risk management, and business forecasting.

The CFO's role extends to understanding and scrutinising all aspects of the business, from operations and products to pricing strategies and customer demographics.

Strategic Planning: As a CFO, you are the owner of financial foresight. You create financial strategies that align with the company's goals, ensuring resources are used most effectively. You're not just planning for finance; you're involved in setting strategies for all areas of the business.

For example, if the company plans to launch a new product, you're involved in pricing strategies, assessing the cost of production, and estimating the revenue it could generate.

Operations Oversight: You'll also have a keen eye on the operations. You're tasked with ensuring the company's operations are efficient and cost-effective. This could involve everything from improving supply chain efficiency to reducing operational waste. It's about making sure that every process in the company delivers maximum value.

Risk Management: You're also the first line of defense against potential risks that might affect the business. This isn't limited to financial risks; it also includes operational risks, reputational risks, and even strategic risks. You identify, assess, and create action plans to mitigate these risks.

For example, if a key supplier is experiencing financial trouble, you'll need to anticipate how it could affect your business and devise strategies to minimise impact.

Product and Pricing Analysis: As a CFO, you need to understand the profitability of each product or service your company offers. This means looking at the costs involved in production or delivery, the pricing strategy, and how each product contributes to overall revenue. You might identify underperforming products that need to be discontinued or spot opportunities for increasing profit margins.

Business Forecasting: Using your understanding of the business’s financial health and its operations, you predict future performance. This helps in making informed decisions about investments, growth, and potential challenges. You're essentially guiding the company towards a sustainable and profitable future.

Investor Relations: Another important aspect of a CFO's role is maintaining investor relations. You communicate the company's financial status, strategy, and growth potential to investors and shareholders. Your ability to present a clear and confident financial picture can significantly impact the company's ability to attract investment and support.

So, as a CFO, you're not only managing the finances and the finance team, you're also a key decision-maker in almost every aspect of the business. It's a demanding role, but also one that is rich in opportunities to shape the future of your company.

What Do CEOs Want from Their CFOs?

Above all, they want a strategic partner who understands the business landscape, provides insights into potential opportunities and threats, and helps them steer the company towards its objectives. They want someone who can balance the books while also looking ahead, identifying the next "steep slope and hard left" before it arrives.

So, there you have it. The role of the CFO is a multifaceted one, requiring you to wear many hats - from finance guru to risk assessor, business forecaster, and strategic advisor. The ability to toggle between these roles, all while maintaining a firm grasp on the company's financial health, is what makes a truly great CFO.

Remember, in the world of startups, the road ahead is full of twists and turns. It's up to you, as the CFO, to help navigate these challenges and steer your company towards success. It's an exciting journey, and I'm here to help you every step of the way. 

Links:

1. Get your FREE Guide: Stepping into the role of Finance Director or CFO
2. Register for the mini-course, Upgrade your Management Accounts and get noticed by the business 
3. Work with me in the Financial Leadership Foundations course  that includes monthly Q&A sessions where we can discuss all of your questions and how to apply your learnings to your current role. 
4. Work with me as a Founder needing guidance and support from experienced Finance leaders.