Running a business is hard work, and business leaders constantly face new trials, even when their business is extremely successful. In order to continue with growth and success, business leaders must be prepared to overcome challenges. Given that financial leaders control millions of dollars, they have a unique vantage point into how to run a business and maintain its viability.
Four Financial Leadership Lessons for Business Owners
Whether you are just starting out as a new business owner, or you have been running a corporation for many years, you can’t go wrong with these four financial leadership lessons for business owner
1. Make sure you know and understand your numbers
As a business owner, you absolutely must understand which numbers drive your business. It’s crucial that you stay informed about these metrics as they change from day to day and month to month. This data ranges from cash balance in the bank to complicated calculations and forecasts. You can keep ahead of the financial game by maintaining a weekly and monthly data chart to track metrics.
Don’t worry if you lack the financial background to determine which metrics you need to follow or how to track them. Get someone from your team to do this for you. If you don’t have anyone on your team who can do this, then it’s time to recruit a new member for the decisions.
Kroger Chief Financial Officer, J. Michael Schlotman has been with the company for more than 30 years and has been CFO since 2000. Prior to joining the Kroger team, Schlotman worked with the accounting group Coopers & Lybrand. Since he came on board at Kroger, Schlotman has been recognized for multiple achievements within the company including doubling Kroger’s digital investments and acquiring stakes in overseas companies. His advice to business leaders is to be as comfortable with the people as you are with the numbers behind the business.
2. Be as transparent as possible
Once you are fully up-to-date with your company’s figures, it’s essential that you share that data with your internal stakeholders. So, in addition to providing items related to your income statement, give them information related to your inventory, how much money you have tied up in receivables, and your current debt load.
These figures should not be viewed in isolation but should be shown in contrast to prior periods to highlight trends. Sharing metrics that help drive company growth and profit will encourage your stakeholder’s ability to invest in improving company performance. When your company is financially successful, you can invest more money in its employees through expanded benefits, office amenities, bonuses, and personal development opportunities.
Ned Segal joined Twitter as their CFO in 2017. Before joining the team, Segal was a Goldman Sachs banker for many years and more recently held the position of Senior Vice President of Finance at Silicon Valley’s Intuit. His advice for financial leaders is to find the truth in the figures.
Elizabeth Elliott, VP of Equity Research, has been with the company for a year. Her role is to perform financial modeling to share with company leaders and shareholders. Her advice to business leaders is that in order to maintain financial success in business, you must be honest and prepared to admit your mistakes.
3. Examine what your customer base values and invest in that
Too often, business leaders become distracted in attempting to please too many different people by offering too broad a range of services and features. Consequently, they end up spreading themselves too thinly and losing money. It’s important to reduce your costs by avoiding the selling of goods and services that are not essential to your customer base.
The key factor to remember here is that your primary goals are to improve your product and your customer service to increase sales growth, without attempting to incorporate too many different aspects to your service. Otherwise, you will tend to lose sight of the things your customers truly value. To do this effectively, you must understand what actually generates profit and invest in those areas.
CFO of Home Depot Carol B. Tomé has been in her position since 2001. She was named the executive vice president of corporate services in 2007. As well as financial leadership, her areas of leadership expertise include real estate and strategic business development. Tomé’s advice to be great leaders is to understand that you need to become a master of connecting with your audience.
4. Motivate employees in order to boost your business
Having a growing business gives employees opportunities to make an impact and leave their mark in it. Employees want to have a role, clear and achievable goals, and purpose. Therefore, the ethos behind your company and its strategic goals and objectives should be made clear. The key to success in this instance is maintaining clear and consistent communication. Good communication helps keep employees engaged, productive, and loyal to your company’s vision. Remember to talk with rather than to your team.
Another critical element to motivating your employees is maintaining an air of professionalism. Professionalism and proper interpersonal behavior nurture pride as well as team loyalty. While you are demonstrating your level of professionalism, encourage employees to achieve their own level of skills.
The CEO of Morgan Stanley, Clare Woodman, joined the team in 2002 as a lawyer in Global Capital Markets. She advises business leaders to remember that preparation is more powerful than perfection and that striving to be prepared means more success in the workplace.
Now that you have gained a bit of business wisdom from some of the top industry experts, it’s time to put their practical knowledge to work in your own business. Bear in mind that although it’s relatively easy to start up a business of your own, only a few company owners achieve success in the long term. Always strive to keep learning from other business leaders, this will help you grow and keep you in the right frame of mind to make your business succeed.