Controller / CFO

It is often uncomfortable to talk about business failure. However, business failure is only half of a picture. The other half is business success. They are the “Yin and Yang” of doing business. Pro football teams review their prior week games to determine what worked and what didn’t. Plays that worked are repeated or enhanced, and plays that didn’t work are discarded or tweaked. The Bureau of Labor and Statistics tracks the number of business starts and the number of businesses that are still in existence by year – in essence, the “success rate.” Between the 1st and 2nd year approximately 20% of businesses disappear. Around year five approximately 50% of businesses have disappeared. Our focus should be on all tools and methods that help increase the success (and reduce the disappearance “failure rate.”) Note - not all businesses disappear for failure: some are sold, some are successfully closed down, etc. In this article, success and failure are captured in the phrase “Business Longevity.”

This can be illustrated with three types of people: the first is a planned, deliberate individual that is extraordinarily health-conscious and measures many aspects of their life. A second individual is a happy-go-lucky person who lets life evolve. Their motto is “Que sera, sera” (whatever will be, will be.) The third person overindulges in many aspects of their life. They do not control their eating habits or their drinking habits, and as a consequence, they are overweight, out of shape and in generally poor health. If we evaluate these three on their lifespan, which person has the highest chance of dying first? Some people have even begun to use health longevity specialists. These are physicians who focus on helping people extend the quantity and quality of their life.

This analogy can be compared to the business world. There are three types of businesses that fit the same profile. The first is a planful organization. They create plans, they execute the plans, and they measure the resulting success (or failure) of the plan. The second type of business goes from activity to activity depending on where the opportunity is most significant. They may also believe that generating sales will solve all the problems of the organization. The third type of organization is not planful and does not follow any discipline in regards to finances, employees, etc. Which of these three businesses is most likely to experience financial difficulties and potentially a shortened business existence?

This leads us to the concept of business longevity. Business longevity is the practice of assessing where an organization is, determining where the organization would like to be, and then creating the action steps for the business to arrive at its the chosen destination. This may sound similar to business planning, and yet it is much more expansive. The assessment that an organization should go through would encompass areas such as evaluation of historical financial trends, industry analysis, competitor analysis, environmental scanning using tools such as PESTLE and planning tools such as strengths, weaknesses, opportunities, and threats. It should also include a robust evaluation of future innovations and changes in society as a component of the SWOT analysis.

One of my favorite tools is the Altman Z-score. Traditionally this is a tool used to depict the likelihood of bankruptcy, however, the author uses this as an overall measure of the health of an organization similar to the way that a doctor uses a blood pressure analysis. Also, consider expanding the length of time financial information is reviewed. Current financial practices of comparing this year's results with prior years are too shortsighted. If you looked at any two successive years for Sears, the story of their failure does not “pop out.” If you review ten years of their financial information, it is plain to see how the company was declining. At a minimum, a company should understand their key financial metrics including the z-score and selected ratios (such as the current ratio) for a minimum of 10 years or the length the business has been in existence.


Who is Jim Lindell

Jim Lindell is President of Thorsten Consulting Group, providing strategic and financial consulting, professional speaking, training and executive coaching. He is a Vistage Chair and responsible for two CEO groups in the Milwaukee area. He is an Award-winning Speaker and Best-Selling Author. Contact him at 262-392-3166 or [email protected].

Email: [email protected]
LinkedIn: https://www.linkedin.com/in/jimlindell/
Twitter: https://twitter.com/thorlessons

When your organization is stuck and is unable to get to the next level or encounters an insurmountable business problem, consider the following: if you had to redesign your business today with no constraints, how would you do that?

Many of our business problems result from all the processes, procedures, and paradigms that we've put in place. Once they are in place, they become part of the organization's business culture and, unfortunately, seem unchangeable. And yet, we forget that we created these roadblocks and are hesitant to remove them.

One business owner was confronted with such an issue. He realized that his business was going to fail, and he would lose everything. He brought this issue to his Vistage Group and asked his peers for their counsel and advice. He wasn't expecting that they would save his business, but that's what they did by asking a simple question. The members asked this individual, "If you had to start over again, how would you redesign your business?" And the member responded by stating the number of people he would employ, the positions that would be filled, the facilities that he would use, and the processes that would be changed. At that moment, he recognized that there was an answer, but also, would he have the fortitude to make the necessary changes. It is easy for us to trick ourselves into believing we cannot change the components of a business. Yet, many areas can be modified respective to our level within the organization. The challenge is to have the courage to make the changes. When this question is answered, it leaves the decision-maker with a simple gap analysis.

The gap analysis is one of the most simplistic forms of a business or strategic plan, which can be summed up as follows: "Where am I, where do I want to be, how do I get there?"

Determining what change is necessary and how to implement is difficult because of the following:
• Unwillingness to change
• Political or family restrictions that may overrule the change
• Inability to see the change that is required

If you google ”small business failure,” you will find many different examples where companies went in the wrong direction. Consider the following instances that have resulted in business failure:
• Failure to establish and communicate company goals
• Lack of vision and purpose by principals
• Poor market segmentation and strategy
• Competition or lack of market knowledge
• Over-dependence on specific customers or individuals in the business
• Lack of management systems
• Absence of a standardized quality system
• Lack of financial planning and review
• Inadequate capitalization
• Owners or leaders concentrating on the technical rather than the strategic work at hand

It is easy to confuse cause and effect with lists such as these. Keep in mind that the items above are symptoms. For almost all business failure cases, regardless of company size, the main culprit or cause is ineffective, dysfunctional, or incompetent management teams. It is easy for a management team to be blindsided by a competitor, technology, or dysfunction. Overlooking any of these areas is one of the most fundamental reasons companies should have some form of outside board that is credible and persuasive to help management recognize potential problems and opportunities for the organization. It is also a group like this that can help your organization redesign itself and identify areas holding the organization back or opportunities that should be pursued. Consider how we witness this all the time with the national football league. General management attempts to secure impact players for the current season and impact players for the future. Roster changes are made where fans complain, critique and wring their hands over the future success or failure of the next football season.
The lesson for us is simple. Do not let the failures or successes of the past obstruct your future success. Critique your business as if you had to start again and see what changes you would make. Once the changes are identified, do you have the courage to make it happen?


Who is Jim Lindell

Jim Lindell is President of Thorsten Consulting Group, providing strategic and financial consulting, professional speaking, training and executive coaching. He is a Vistage Chair and responsible for two CEO groups in the Milwaukee area. He is an Award-winning Speaker and Best-Selling Author. Contact him at 262-392-3166 or [email protected].

Email: [email protected]
LinkedIn: https://www.linkedin.com/in/jimlindell/
Twitter: https://twitter.com/thorlessons

If you want to increase your sales, focus on customer pain. Benefits of your products and needs of the customer are important. However buy decisions will first focus on customer pain. The customer may not even recognize the underlying reason that select your product or service. #sales #salestechniques #CPA #CEO #vpsales #coaching #salescoaching

PART 2 - 4 Essential Considerations Before Going into Business! Part 1 – Why be your own boss? Part 2 – Ideas and dreams. Part 3 – Risk. Part 4 – Your significant Other. These items precede your business plan, entity creation, and business structure. This video is the 2nd consideration #entrepreneur #startup #startupadvice #coaching #boss #CFO #cpa #franchisee

Registration is Open! Please join me on December 28 for your Year-end CPE. Please visit https://thorstenconsulting.com/webcasts to Register. Year-end CPE for CPAs, Controllers, CFOs, Accountants, Accounting Professionals "Controller/CFO Strategic Outlook-2023," or "Data and Predictive Analytics / Business Intelligence." You can also register for both at the same time.

Alrighty then! SVB, Signature, Credit Suisse, East Palestine OH , etc. Companies must include contingency planning, risk analysis, scenario planning into the overall planning process. Anything less is incompetence on the part of management. This also holds true for us as individuals and our careers. What will you do, if your company closes, you lose your job, you have to change locations due to spousal move, etc. It is time for serious "Plan B" analysis. #careers #change #planning #management #job #svb #signature #creditsuisse #contingencyplanning

Have you taken the time to create a Plan B for your Business and your Career? If not, you are inviting a breakdown when difficult times or Black Swan events occur. Preparing a Plan B will help in business and career continuity. The embedded video outlines the general concepts of Plan B.

(c) 2023 & 2022 - Thorsten Consulting Group, Inc.

Today's Controller or CFO must Focus on the evolving nature of their role. This evolving role has four major points of emphasis. They are:

1. Gold prospector.

2. Casting agent.

3. Team player.

4. Meteorologist.

The Controller or CFO as a gold prospector must find ways to be strategic. They must identify the value to the organization beyond traditional accounting functions, accounting process improvement or efficiencies. This individual must also be a casting agent. Every company will acknowledge that their most valuable asset is their people. Therefore the Controller or CFO must be excellent in recruiting, developing and retaining staff. It is imperative that the Controller or CFO as a team player practice servant leadership. When any support service department such as accounting, human resources, or information technology, desires to participate in the Strategic Planning process of the organization, they must practice servant leadership. When support departments complain about not having a voice in the direction of the company it is usually a result of not understanding their role in the organization as well as their inability to be a servant of operations. Finally, a Controller or CFO must be a meteorologist. They must be able to tell what happened to the organization regarding traditional Financial results. They must also be able to predict or forecast what is going to happen to the organization in the future. This not only includes tracking and forecasting the organization results but also includes interpreting the business environment in which the company operates. A Controller or CFO that understands how economic trends impact the organization will always be valued. ©2017 Thorsten Consulting Group, Inc.

Watch the opening remarks of Jim's Keynote on "The Evolving Role of the Controller / CFO."

Jim Lindell - Evolving Role of the Controller / CFO