If you’re like a friend of mine who started what today is a $40 million company in the travel industry, the answer is No. She’s managed extremely well over nearly 30 years to grow the firm from nothing to highly successful without ever having a CFO – full time or part time – on board.
As director of business development for Nperspective in South Florida, I’m always looking for potential clients. Because we’re friends, I didn’t want to ask her directly if she could use some help with strategic financial management. Instead, I asked a longtime employee if the company had ever had a CFO.
That got a laugh. “No,” was the answer. “Our CEO is her own CFO. She’s terrific at handling financial issues.”
Some CEOs are indeed financially savvy. But others – I’m guessing the majority – are the way I was. Years before joining Nperspective, I left an excellent corporate position to become an entrepreneur. Without any family history in private business, without ever having taken a business course, and as an English major with prior careers in college teaching and TV journalism, I knew only that I wanted to be my own boss.
Being in the Right Place at the Right Time
I was fortunate to be at the cusp of major political and economic changes in Eastern Europe at the beginning of the 1990s. From ABC News bureau chief in Warsaw, I became President of Alcat Communications Warsaw Ltd, a public relations and marketing company in the Polish capital.
Acquiring clients was no problem – Poland had been out of bounds for most major corporations until the end of communism and the beginning of a market economy in 1990 – and many significant firms were ready to try their luck.
As an American, speaking Polish, with major news media experience and knowing the former government and the new one, for a few years I was flavor of the month for American companies looking for PR assistance. Our first client was American Express; the second Levi Straus; the third Citibank; followed by AIG, Cargill, Compaq, Dell, General Motors, Gerber, Sheraton, Texaco, Westinghouse, and others of similar stature.
I added staff, mostly fresh graduates of Warsaw universities, trained them, and moved on. As rainmaker and guarantor of quality in deliverables, I worked 80-100 hours a week and loved it.
The number of employees at Alcat Communications increased to 30 at times, seldom dropped below 20. Financial management for me meant making sure we had enough income to pay rent and salaries. Often, I too could draw a salary, and whatever income remained stayed in the bank account.
The Things a CEO Needs to Know
Today as I talk to clients about CFOs, I think about how I could have grown the company if there had been a financial advisor to question some of my decisions and point the way toward becoming a bigger and more influential operation. When I decided to sell the firm in 2003, it was without any preparation to attract the right kind of investor. The sale sufficed to exit Poland with no debts and no profits.
My story is specific in terms of being at a historical moment when suddenly what had been impossible became possible. I am grateful for the experience of having been in Poland and Eastern Europe at that time. But I think that the way I started my company and how I managed it remains typical of how many entrepreneurs operate.
As a creative person, enjoying marketing and the challenges of working in a dynamic environment, I cared only about acquiring clients and making sure they appreciated the work we did for them. Financials – as long as I earned more than I spent – were of little interest.
My friend with the $40 million dollar company would have been shocked. I wish I had known her at that time because she could have told me some important truths about running a business. However, I have seen during six years in South Florida and two years with Nperspective that more entrepreneurs seem to be the way I was, insufficiently concerned with making strategic financial decisions.
If a CEO entrepreneur makes all the financial decisions himself or herself without benefit of a CFO who can spot problems and suggest better ways of conserving funds and using them efficiently, the growth of the company is likely to be slow.
It’s also impossible to make significant leaps in business without taking some calculated risks at key times. Entrepreneurs who don’t have the benefit of expert advice often end up falling behind as markets change and local and national economies bump up and down.