A small-business owner with the mindset of a chief financial officer can succeed

FALLBROOK – Some businesses stay on track while others run off the rails. Often the fate of the business hinges on the main person running it – the owner – especially in the small business arena.

A small business typically has a slimmer margin for error, giving the owner a wide area of responsibilities. But sometimes the owner doesn’t embrace all of those responsibilities, and that failure to grasp other roles – and one in particular – can lead to a company’s demise.

Many people have businesses that run them. They work for the business rather than work not on the business; they lack basic finance literacy and comprehension. In other words, they are basically an employee with their name on the door, but small-business owners must approach their business with the mindset of a chief financial officer. A small business may not be able to afford a CFO, but someone has to take on that role and use those skills that many owners do not possess.

According to the Small Business Administration, only about half of all startups survive at least five years, and only 30 percent last 10 years. Experts attribute many failures to poor management in areas such as finance, purchasing, production and hiring. Paying heed to these departments as the de facto CFO can pay off for the small-business owner in the long run.

An owner with a true CFO mindset can succeed, if they acquire four habits.

First, they are good at finding more money. This acquisition doesn’t happen by looking under a mattress, but in a variety of ways through a smarter operation of the business. Reducing expenses, being creative and landing more favorable deals can make a big difference in the daily cash flow. small-business owners need to find cash flow from the everyday decisions they make. Some examples include negotiating better deals with vendors, or even switching vendors, weighing the plusses of renting or buying office space, negotiating a lower rent, incorporating new products into the business and raising the prices of goods or services.

The mind of a CFO sets clear targets on profitability. A successful business requires that clear, specific goals are in place. Additionally, goal-setting means having a series of steps to make those goals a reality. It’s especially important to include expense control goals as well as revenue goals; when a small-business owner is trying to increase revenue from the previous year, their expenses might go up.

Keep business systems in sync. Reaching profitability goals requires a regular monitoring of each part of the business. As people are hired, the marketing and sales approaches are updated, inventory is tracked, it should be all tied back to the owner, and they should keep on top of every aspect of their company. From there, they should build a championship team of experts inside the organization and also work with a championship team on the outside. But it starts with the owner as CFO.

Lastly, track results. Keeping track of the business’ progress or regression is crucial in terms of organizing and managing the business. It gives the owner better accuracy and clarity, allowing them to know when and how to adjust their practices and goals, where they need improvement. Effective ways of tracking include a visual, such as a calendar or wall chart. Surveying customers for their input is important.

Most business owners are running their business with a mentality that if there is enough money in the bank, the business will stay afloat, but there’s so much more to it if they want to be around at the end of five or 10 years.

Al Zdenek is the president, CEO and founder of Traust Sollus Wealth Management, a boutique wealth management firm dedicated to empowering people to transform their lives and live the life they wish now and in the future. He is also the author of the book “Master Your Cash Flow: The Key to Grow and Retain Wealth” and of the upcoming book “Master Your Cash Flow: The Key to Grow a Valuable Business.” For more information, visit http://www.AlZdenek.com.