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President of Outsourced CFO Firm Offers Financial Advice for Entrepreneurs
CINCINNATI, Ohio, Sept. 15, 2009 - Many entrepreneurs spend too much time on tasks that are not their core competency, like finance. Yet finance is the lifeblood of a business, and if you can't make it financially, you won't stay in business over time, says Steve Lumley president of LGI, an outsourced CFO firm based in downtown Cincinnati.
"If you don't have a CFO in this environment, you are sunk," says Lumley. "Having said that, there are many situations where, if people would have had that skill set, they wouldn't be in the financial trouble they are in today."
LGI and its staff work to free up entrepreneurs and business owners to concentrate on what they do bestâ€” by taking care of their business's financial management in an efficient manner.
The firm's CFOs have more than 100 years experience in providing financial management services for entrepreneurs and closely-held businesses in offices in Cincinnati, Dayton and northern Kentucky.
Lumley, who has 25 years experience as a CFO, once took a $200 million bank and helped it grow to $1 billion over 18 months.
"We noticed a long time ago that many entrepreneurs spend too much time on things that are not their core competency, like finance," says Lumley. "Entrepreneurs should ask themselves a couple of basic questions: What financial issues are you having right now? Can you handle them, or do you need a financial expert to help guide you?
Sometimes we are in a state of denial about our real financial situations."
Lumley offers entrepreneurs seven signs that indicate a business needs a chief financial officer:
- You're unable to obtain financing
- Your company experiences cash flow challenges
- You experience deteriorating margins, and the company is losing money
- No one is playing CFO role, or a non-financial person is playing that role in a company of ten or more employees
- The company is rapidly adding or laying off staff
- Financial statements are behind
- Your bank seems uncomfortable with your financial situation and is unwilling to extend additional credit
"I've seen companies where the president is spending a lot of time managing vendors, cash flow, and looking for financing," says Lumley. "When the president of a company or its top officials spend too much time on financial matters, other core areas of the business suffer."
Other signs you need a CFO are when the president of a company has to interact a lot with vendors because of a lack of payment, or has trouble getting vendors to ship product.
Or, Lumley adds, if you spend a lot of time at the bank filling its needs, you need a CFO.
"If you are robbing Peter to pay Paul, that's a sign, too," he adds.
Entrepreneurs should recognize that money covers a multitude of financial sins in a good economy. "When companies make money and do well, a lot of things don't come to light, and an owner thinks, 'I can do this myself,'" says Lumley. "But when sales or profits drop, then a lot of things are exposed that business owners haven't dealt with. Something will go wrong in your business, and it's almost negligent not to have CFO skill set in your business. A CFO can prevent a lot of problems."