How To Enhance Financial Growth In Business: CFO Tells In New Book

Where’s the Moolah? will help you grow your profits and manage your cash flow better. It tells you how to pivot for high financial performance, and how the different functions of a business can contribute to overall financial growth.

You will find takeaways in the form of tools to capitalize on various aspects of the business for enhancing financial growth, maximizing efficiencies, dos and don’ts, and scorecards. 

Here's an excerpt from Sangeeta Shankaran Sumesh's Where’s the Moolah

Finance is the backbone of any industry, however big or small. One of the common reason many businesses fail is due to the lack of proper financial management. By focusing on the financial aspect of your business you stand to improve your business profits. 

What are the main financial aspects that you should focus on? Like the 5 elements of nature (space, fire, air, earth & water) these are the 5 elements of finance that can help your business to perform well financially. 

1. Space ️- Like how there is no end to space, your business revenue can be so vast, having no limits to the growth of your business top line. So the space element of finance is revenue. Reflect on the various ways to grow your top line.

2. Fire - If your business does not meet sufficient margins, then you feel like your business is on fire! Therefore, simply stated business margins are the fire element. Think about the ways you achieve better margins.

3. Air - We cannot live even for a moment without air! So the air equivalent of your business is indeed cash as you cannot do business without money. Cash is oxygen for your business. Ensure there are no cash shortages in your business.

4. Earth - The fourth element is earth and what I would like to equate it to are the resources of your business. Without the requisite resources like capital, assets, technology, customers etc. your business may not succeed as well. You need to nurture and nourish them for better growth. 

5. Water - The essential one! I relate this element with people - your team as they are the ones who can deliver operational efficiency in your business. They are the key, as they are the ones who make the business. Even if you are a solopreneur, you are the most essential element of the business.

Beware of these 7 deadly sins of financial management 

1.    Poor cash management & no financial review
2.    Not plugging revenue leakages
3.    Spending without measuring the benefit
4.    Not building sufficient cash reserves
5.    People dependent and not process dependent
6.    Taking loans that do not build wealth or increase income in the long term 
7.    Not getting sufficient Returns on investment 

Watch out for these common mistakes 

•    Not reviewing the financial performance of the business on a regular and periodic basis.
•    Thinking that finance is the responsibility of only the finance department.
•    Not getting into the details and reasons of the variance analysis.
•    Neglecting to prepare the forecasts and projections.
•    Not strategizing enough about the corrective measures to be taken to improve the financial performance. 

Fake Stake Syndrome 

This is something you should be watchful of so that you do not fall into this trap. In my own mission to help entrepreneurs achieve financial wellness, a successful tech entrepreneur wanted to know if I knew suitable investors for the business. Having spoken to and helped many entrepreneurs, I sensed that there was something more than this the entrepreneur was seeking. The eyes showed a sense of pain and the voice had despair. Being a coach, I started probing deeper.

As the conversation progressed, the entrepreneur revealed the truth—he sought an investor because of persistent cash flow issues. The entrepreneur admitted that despite running a successful business for the past decade, cash flow was an issue month after month, and the entrepreneur wondered how to pay salaries on time.

It was disturbing emotionally as well, as this issue could not be discussed with the spouse, children, employees, or friends. Finally, the entrepreneur poured out the issues to his heart’s content and felt much lighter. Being a techie, the entrepreneur admitted that there was no attention to business finance.

I realised the entrepreneur was falling prey to what I call the “fake stake syndrome”, wherein the entrepreneur is filled with hope that the cash flow issues will vanish, without addressing the root cause of the issue. I wanted the entrepreneur to become aware of this. 

As our coaching conversation progressed, many ideas were uncovered. The discussions made the entrepreneur realise —
    That a new investor would only solve the cash flow issue temporarily.
    What needed to be fixed was a better system of working capital management.
    The revenue model was not right.

So watch out if you are by any chance caught in any such fake syndrome unknowingly.

The common mistakes that businesses commit regarding funding:-

•    Not assessing properly, the funding requirements and the plans for its usage.
•    Seeking funding for managing the working capital without plugging the root cause issues of cash flow issues.
•    Failing to highlight / state explicitly to potential investors “what’s in it for them?” or how their investment will multiply.
•    Thinking that funding is a one-stop shop for all the cash problems.
•    Over-stating the net worth of the business for valuation purposes.

Extracted with permission from ‘Where’s The Moolah?’ – Financial Growth Hacking for Business Profitability by Sangeeta Shankaran Sumesh, published by Westland Business

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