3 Financial Roles Every Business Needs to Maximize Success

As I talk with entrepreneurs to learn about what they do and how they manage their finances, it seems that many are missing an important component of what they need to maximize their success—and this missing component is actually a member of the financial team.  During these conversations, I talk to them about the three financial roles that every business needs to have to maximize success.

Three Financial Roles Every Business Needs

The first role is the bookkeeper, the person who processes transactions, updates the books, and effectively keeps the business running from a financial standpoint. This is the foundational role.

Next up is the accountant role. This is the person who oversees the bookkeeper. They're making sure that the work is correct, that they are reconciling accounts, and they are producing the financial reports. Just in case you're thinking about it and asking yourself, "Well, what about the tax preparer," yes, the tax return basically is a financial report to the government to figure out a tax bill. So, it is a form of a financial report.

Finally, we have the financial strategist. This is the person who looks at the financial reports and helps make decisions about how to best use the money that the company is earning. The typical job title for this role is Chief Financial Officer (CFO).

What Happens When You Are Missing a Financial Role?

Why are these three roles so important? What is the rationale behind me saying that we need to maximize our revenues by filling these three roles?

To explain this, let's look at three different scenarios in which we remove each role and imagine what it is like without them.

Scenario 1: No Bookkeeper

First, imagine that there is no bookkeeper. What would happen then?  The bills won’t be processed, invoices won’t be sent, and the accounting books won’t be updated. How long do you think a business can operate like this? In my mind, it would not last very long. Eventually, things are going to break down, and there are going to be problems with vendors and not collecting money – all these types of things. So we do need to have someone, or multiple people, filling different components of the bookkeeper role.

Scenario 2: No Accountant

Now let's imagine that we don't have an accountant. The bookkeeper's work would not be reviewed for accuracy. Financial reports wouldn’t be prepared, or they would be prepared but might be inaccurate. Now the CFO and the business owner are looking at the financial reports, but they don't have the confidence of knowing that the financial reports are correct, or it is taking a long time for the bookkeeper to get the reports to them, and there is not confidence in the information. Therefore we do need an accountant looking at the bookkeeper's work in preparing the reports.

Scenario 3: No Financial Strategist

Now let's imagine what the business would be like without the top financial role – the financial strategist. The bills would be paid, the invoices sent, the accounting books updated by the bookkeeper and the accountant would make sure that the books are correct, and the reports are issued accurately. But without financial guidance, especially to understand the economic impact of the business’s activities, the business is lacking direction on what activities it should undertake to become stronger and grow.  That is why I say that every business needs each of these roles to maximize success. A business can get along okay with a bookkeeper and an accountant, but it probably will not maximize success if it is not taking this information from the financial reports and making informed decisions about what to do going forward.

How to Fill These Essential Financial Roles

At this stage you might be thinking to yourself, Yes, but I am trying to run a lean business. Now you're telling me I need three people! Well, yes and no. Just because there are three roles doesn't mean that you necessarily need three people or three distinct full-time positions.

When I talk with business owners, the conversation typically goes one of two ways. Either we figure out who within the company is able to take on the different roles, or, more likely the case, we find a part-time accountant and a part-time strategist. This is often the environment that I encounter when working with a new client.  The company has a bookkeeper, and then I come in as a strategist. Sometimes I even take on the role of the accountant and CFO.

What does this mean for your business? I suggest getting started first by making a list of financial tasks and activities that need to be done for your business.  Then it is a matter of allocating them among the three roles, which can be done by asking a series of questions:

  • “What are my bookkeeping tasks and who do I have, or who will I get, to complete them?” then,
  • “Who is going to check the bookkeeper's work and give me reports?" Do you have your tax preparer or a Certified Public Accountant (CPA) looking at these monthly or quarterly? And finally:
  • "Who is going to look at these reports with me, tell me what they mean, and help me understand the financial implications of things that I am thinking about doing?"

By answering these questions and filling the roles, you will have a more robust financial team that will fill the missing gap—the gap of interpreting economic data and advising you, the owner, on how to invest your time and money in more profitable projects.

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