Financial Advisory Blog

Armanino’s Financial Advisory blog is your source for thought leadership around cloud ERP and accounting solutions and integrations. Supported by the Cloud Accounting Institute and numerous experts in cloud, finance, reporting, integration, compliance, and technology, Armanino’s Financial Advisory blog features must-read content on what’s happening in the finance industry, case studies, white papers, and much more.

January 29, 2020

Finding the Right Leaders for Your Middle-Market Company

Posted by Jenn McCabe

Middle-Market

People usually fill multiple roles in a startup’s early days. But at some point, having the COO help pack orders or the controller buy office supplies becomes unsustainable. As your company reaches the middle-market and attracts larger customers and, potentially, outside investors, management roles become more specialized and require skills that are different than the ones that got you this far.

For example, a CFO helping a company move from its first shipment to starting to produce consistent, repeatable execution has a different skillset than a CFO who is scaling a business for international growth.

In a mid-market company, it’s harder for a leader to see as much of the organization as they can in a startup. This narrower view means you need executives to oversee smaller, but more specialized, segments of the business. And as new opportunities emerge, so do new challenges.

Say you land a huge order. As soon as the high-fives are swapped, the euphoria is often replaced by the realization that you’re going to have to fill that order – and you’ll have to produce, pack and ship more products than you have before, to a new customer who expects consistent, timely delivery.

Similarly, the nature of a company’s challenges evolve as it grows. For a startup, a common situation is not having enough resources – people, equipment, capital or others – to operate efficiently. For a middle-market firm, the challenge often shifts to being able to use the company’s resources as effectively as possible. This requires a different mindset, and typically creates a need for different managers and skillsets.

For instance, a generalist COO who’s comfortable in a $2 million company may lack important experience as the company grows to $20 million and issues such as serving international customers and meeting stricter compliance requirements come into play.

Or consider a startup executive with a CFO title whose duties align more closely with what a controller does. That can be fine when your accounting needs only include a profit and loss statement. But once you start negotiating with outside lenders and potential investors, that basic information won’t be enough. You’ll need a finance leader who can understand the company’s performance in more detail and communicate effectively with the rest of the management team and outside stakeholders.

Recognizing Your Needs

How do you know when it’s time for new leaders with different skills?  It starts with management’s ability to recognize that something’s not working, or when existing leaders are able to see that they’re no longer the best choice for a given function.

This can mean someone feeling overwhelmed, tasks not being done on time, or an executive realizing it would be more cost-effective to bring in someone to take care of basic tasks that are below their pay grade. (Just because you can do something, that doesn’t mean you should.)

In some cases, it’s more cost-effective to bring in outside help with specialized expertise instead of stressing your team. There are numerous ways you can do so. For ongoing operations, you can outsource many finance-related tasks to a service provider. Or, you can hire a fractional CFO or controller who works with your company (and others) on a part-time basis.

To meet a specific need, such as negotiating a credit line or another financing round, you can retain an interim CFO experienced in similar transactions. This hired gun can join the management team while your company pursues a given milestone, or can fill a leadership role while you look for a full-time finance pro.

In each case, you’re paying just for the expertise you need, when you need it.

Interested in a fractional or interim CFO or controller for your middle-market firm? Learn more about our services here.  

Co Authors :

« | »