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They Will Know You by the Company You Keep
By Generational Group
05/29/2023
Proverbs 13:20 says –
Whoever walks with the wise becomes wise,
But the companion of fools suffers harm…..
I was reminded of this verse recently with a white paper released by Oracle entitled, “5 Habits of Top CFOs”.
It caught my attention because as your company grows from one million in revenue to ten, twenty, thirty and beyond it is vital in order to build a thriving, buyer ready business, that you surround yourself with experienced, talented people on your executive
team.
Although all team leaders are key, and we don’t want to minimize the impact that your V.P.s of HR, Marketing, Production have, one key role to focus on as you build a business that will attract buyers is the CFO role.
Having a CFO (or whatever title you prefer) on your team will greatly enhance the saleability of your business.
Why?
Because buyers abhor risk.
Risk can show up in many forms and from many areas of your business, but when in due diligence, if your team can’t answer key financial questions, it matters not how fantastic your product is, how strong your sales team may be, and the accolades
you receive from your clients….
If your team is not tracking key financial metrics and buyers find this out (and they will), not only may it impact your deal terms, but it could also impact the entire sale of your business and your financial legacy.
I once attended a closing dinner for one of our clients that I was doing a post transaction interview with. At the dinner, which was attended by our deal team and his executive staff, the owner laughingly said to us, “I still don’t know what
EBITDA means!” At which time his CFO (who turned out to be a key reason the deal closed) leaned over to me and said, “Yes but I do…”
A very telling moment indeed!
Therefore, I say this to you: If you want your company to reach its full potential, admit that you are not a genius in all facets of business. Likely you are amazing in explaining how your product works and why a client should buy it, but logically you
likely are not an expert in HR, Marketing, Sales, Social Media, Blogging, Internet Marketing AND Financials.
Admitting so is not a weakness. Rather it is a wise move (and remember what happens when one walks with the wise….)
Hiring a talented CFO with experience will take you to the next level AND make buyers very, very comfortable that you have a real business for them to invest in.
I would recommend that you download and read Oracle’s fantastic white paper and review it when you consider your growth and the team you want to surround yourself with:
The legacy you are trying to build is limited by only one thing (besides capital): Finding great people to support, nurture and challenge you along the path. As Proverbs 13:20 says –
Whoever walks with the wise becomes wise,
But the companion of fools suffers harm.
So hire wise people on your executive team, give them the freedom to do their jobs, reward them, listen to (and follow) their wise counsel and in the long term, avoid the harm of trying to do all things unto yourself.
As we have discussed in past articles, one of the toughest skills for an entrepreneur to develop is the ability to delegate. However, if you are desiring to build a buyer ready business, hiring great folks and then letting them do their jobs (without
meddling by you) can be the greatest lesson you can ever learn.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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