In general, burgeoning entrepreneurs operating in the Los Angeles market have more passion and ingenuity than cash. As such, they don’t have the resources to add a full-time chief financial officer to the payroll. However, the CFO perspective is an invaluable one in launching a new startup. Here are three ways small business owners can use CFO thinking to avoid becoming part of the 90 percent of startups that fail to become viable businesses.
Review Your Financials Regularly
In the early days of a startup, founders often find themselves filling a variety of different roles. In the rush to keep up with logistical, marketing and daily operational responsibilities, it can be easy to lose sight of the big picture. To avoid losing perspective, small business owners should make a point to review their monthly revenues and expenses, and how they compare to the projects found in their business plan.
The US Small Business Administration recommends that owners should review their business performance monthly so they can make operational changes that will ensure their companies’ long-term success.
Pattern-Match To Avoid Critical Startup Missteps
In a recent Forbes article, Greenplum Software CFO Mike Asher shared a piece of advice that all small business owners should know. Asher noted that if a company is selling a quality product in a lucrative market, their greatest chance of failure will come from poor strategy or flawed execution.
As such, founders should make a point of pattern-match their businesses with others of similar size that have operated in the same market. This comparative analysis will produce crucial data that can help an owner avoid potentially devastating mistakes, like launching in a bad location, expanding too aggressive at the wrong time and overstaffing when the demand isn’t there.
Don’t Let Success Get In The Way Of Innovation
In today’s hyper-competitive marketplace, stagnation is death. A once industry-leading company can find itself near insolvency in the space of a few years because they got complacent while their competitors keep innovating. To address this issue, small business owners should develop a plan regarding how they plan to grow their companies beyond the next quarter, year or half decade. To do this, owners should make a concerted effort to find downstream and parallel market opportunities and use qualified market research to drive product innovation.
The foregoing information is provided by City National Bank (CNB). Unless otherwise stated, opinions expressed are those of the respective authors and not necessarily those of CNB. The information is provided without warranty and no recommendation or endorsement by CNB is intended or should be inferred unless specifically stated.
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