Solving Some Of The Mysteries Of Owning A Business. Part III- Finance/Administration

We have talked before in this space about the “four box diagram” of a business. The four boxes are marketing/sales, operations/production, finance/administration and human resources. We all have various strengths and weaknesses relative to the four boxes. We cannot know and be good at all four. There is a tendency to view the areas we are weak in as “mysteries.” We just want someone to take care of them while we work in the areas in which we are strong. But, as an owner, to regard the other areas as mysteries can be perilous. Every owner needs to know some basics about each area in order to successfully hire outside resources to help or fill that area with the right employees. This week’s “box” is finance/administration.

Like everything else in business, finance and administration can be well designed and supported systems. Finance and accounting are often consumed. Accounting systems are factual, establishing controls and recording what has already happened. Finance is more strategic, helping the business raise capital, deal with banks, assess the potential impact of decisions, and make projections of future revenue and profits. Every business needs both of these disciplines. Most start out with accounting, but sometimes businesses often come up against a barrier to further success. Bringing in an outsourced or full-time Chief Financial Officer can help owners break through this wall. You need good controls, accounting staff and systems to give you clarity on the current status of your business. You also need accounting to support the efforts of the finance person to plan for the future. One last thought on Finance: there is a natural contention system between Finance and Marketing. Rather than trying to eliminate that contention, harness it to cerate clarity on issues so that they can better be resolved and keep it from turning into a series of battles or a war.

For administration of the business, put people who can administrate and mange in key positions. I know this sounds obvious, but not everyone can do those things and others do not want to (but they want the perks that come from being promoted above their competence level.) remember the strategy of building an organization by putting people in the right jobs working to their strengths.