As CEO, you are responsible for the oversight of your business's operations, resources and financial management. You must understand all of your company's inner-workings in order to develop strategic plans for every aspect of the business from devising viable systems of compensation, analyzing project risks and developing products to considering mergers, acquisitions and even divestitures.
Whether you started your business from the ground up or were hired on as your company's CEO, you need a solid understanding of the unique aspects of both the business and its financial management.
Although a solid financial background can be difficult to pick up along the way, when the position of CEO already puts a major demand on time and energy, it is possible (and essential for success) to become a numbers guru while you handle the rest of the job.
Though required to manage a plethora of diverse responsibilities, CEOs who achieve the most success for themselves and the companies they lead prioritize the following focuses in their roles at the tops of their companies.
If you have no previous financial background, you absolutely must begin by gaining an understanding of the very basics. At the very least, you should be able to:
It is essential that a CEO be optimistic. Without optimism and some expectation of success, who would ever take on the daunting task of running a company? No one. Do not, however, allow your bright optimism completely outshine the, sometimes gloomier, realities of business, the basic principles of economics. Remember:
To prevent future problems and put out current fires, you must always give attention to failures. Do not, however, neglect your successes. Be sure, when something works, you understand why and how to replicate it.
As a CEO, your primary responsibility is anticipating the future. In order to do this well, you need to acquire as much knowledge as you can.
Ignorance is your enemy. Be sure you always know what you do not know because where there are uncertainties, there are also risks. Do what you can to continue learning in order to mitigate as much potential risk as you can.
This is the difference between planning for problems and reacting to problems, being tactical or strategic. A strategic CEO does not waste time putting out fires, but rather sees a pile of fuel near a spark source (for example, a cash flow shortage during the down season), and resolves the situation before it combusts.
It is the CEO's responsibility to imagine worst case scenarios and potential pitfalls to put preventative strategies in place before these types of foreseeable problems have a chance to impact the business.
Just because you have always done something one way does not mean it is the right way or the best way. Your processes might have been the best, most efficient method in the past, but technology has led to nearly constant innovation. While you should be cautious before making large investments in new technology, do not be afraid to consider and establish new policies and practices.
Be sure to partner with technology providers who can add immense value to your company, while also improving operations and saving you valuable time and resources.
Although plenty of CFOs have strategic insight and leadership ability, a CEO will never be the same as a CFO because, ultimately, you are responsible for making the difficult decisions necessary to lead your company. However, you can and should become more like a CFO by learning as much about finance as you can because the most successful CEOs know and understand their business numbers. In your business, you should have a thorough understanding of:
Although, these are all responsibilities of a CFO, as well, it is essential that a business's CEO also have a firm grasp on all of these financial concepts in order to be able to make data-based decisions, rather than gut-feeling reactions, to lead the company to success.
No matter your company's size, you can have a smart back office that takes the sweat out of bolstering leadership decisions with financial intelligence. With a Client Accounting Service provider, such as GrowthForce, your company and leadership skills will benefit from the powers of a streamlined, experienced and smart bookkeeping and accounting department at a fraction of the cost of maintaining an in-house department.
With a solid financial foundation, you will have a built-in fraud controls, accurate processes and management accounting data always at your fingertips. A smart back office will allow you to improve cash flow, increase profits and ultimately achieve success as CEO.