CFO Services and Mentoring

उत्तिष्ठत जाग्रत प्राप्य वरान्निबोधत। क्षुरस्य धारा निशिता दुरत्यया दुर्गं पथस्तत्कवयो वदन्ति ॥


Arise, awake, find out the great ones and learn of them; for sharp as a razor's edge, hard to traverse, difficult of going is that path, say the sages.

Entrepreneur without mentor is like a ship without compass. Entrepreneur without CFO is like a business without profit.

Considering that 5-10% of startup succeeds, the path of them is really difficult. With a success rate of 30% in first generation businesses to succeed to second generation , path of existing businesses is equally difficult. The above fact survives only because entrepreneurs do not follow the above advice and tries to solve their own puzzles. Without any insight from experienced professionals who have witnessed several falls and rises, an entrepreneur puts his whole business at stake. On one side entrepreneur makes many costly mistakes that can be easily avoided and on other side also misses possible growth and acceleration opportunities.  CFO service can significantly help to en-cash untapped opportunities on one side and help to mitigate damage from poor quality of decisions.

There are many reports why the success rate is so low but it only highlights areas not the solution and here comes the role of Mentoring and CFO Services.

Why are the mentors needed?

  1. Entrepreneurs gradually become busy handling many aspects of business and  starts loosing focus on the business model
  2. Entrepreneurs gradually become busy because of delay in scaling up the business and getting the right team on board. The team around entrepreneurs has limited capacity in their skill, qualification, exposure and experience.
  3. There is either performance problem for a given revenue or there is scale up problem for the business
  4. The business is growing and so are the complexities of team building, process building, profit margin, working capital, debt servicing, disruptive competitive trends etc etc
  5. The promoter is identifying growth potential but is not able to upgrade business model that can tap the growth/ opportunities.
  6. The business is on decline and promoter wants to exit.
  7. Promoter wants to have objective view about the business to explore funding, scale up, joint venture opportunities etc..

 

Why do business need CFO Services?

  1. When businesses do not have CFO: It needs CFO services to plan and then execute the plan within financial constraints and within specific time.
  2. When businesses have CFO: It still need CFO services for  
    • the sustainability of business model
    • maturity of the decision support systems,BI readiness
    • strengthening of people- process mapping and compliances
    • evaluating prospective acquisition or exit proposals
    • execution of the strategic initiatives across all functions of business
    • support to Project management Office
    • planning for an entry in India by Foreign Companies
    • identifying / evaluating business opportunities to create advantages of synergy
    • exploring scaling up with franchise model
    • as support to CFO office e.g. evaluating/ implementing/ data migrating ERP solutions,  Designing Data Warehouses/ Business Intelligence, designing and implementing knowledge management portals, preparing for data rooms, conducting SBU reviews etc. etc.

The entrepreneur should first feel the need of the mentor as mentioned in the starting sentence.  If the business is facing any issues mentioned above, then it is time to seek mentor. If you find a CFO with profile capable to handle mentoring & CFO Services then go for it.  Another misconception is that having a qualified accountant or having an auditor means no need of CFO services, they will continue to be needed to focus on your ongoing needs.

CFO can be a good mentor if he/she has exposure of several stages of business like greenfield venture, scaling up organically, scaling up with M & A, successful exits at various roles and has handled businesses of larger volumes as well as small volumes.

Disruption is coming not always from external factors it is also due to internal inactivity (status quo) and when it is from both, then it can even challenge your business model, forget about any month's or year's performance. While evaluating mentoring always remember you have much more at stake, the more you delay the more will it be difficult to find solutions in dynamically changing situation in the business and outside the business.

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