Owning a business can be stressful. Your clients rely on you to deliver quality projects on time and on budget. Your team is relying on you to keep the projects flowing so they can work to support their families. And in most cases, a business owner is the primary breadwinner, so your family is relying on you to keep everything on track. No pressure!
Mick Renton of Xact Accounting says that running a business in the construction industry is one of the toughest jobs in town.
Not only is everyone relying on you to get it right, but as the business owner, you’re often isolated, making critical decisions on your own. This can quickly lead to feeling out of your depth, especially when it comes to the financial side of running a business, he explains.
Owners don’t have to be in crisis mode to feel a high degree of daily anxiety.
We have people come to us with decent-sized businesses making okay profits, but their stress levels are still through the roof, Mick explains. They’ve managed mostly through trial and error but are now dealing with numbers that are starting to get pretty serious and they’re still not sure how to make things stack in an orderly way.
Mick notes that while this DIY approach to running a business can work to a certain extent, at some stage, business owners reach a crossroads where they either get serious about levelling up their commercial acumen, scale back operations to a more manageable level, or face the third, less attractive option—continuing to grow without the right foundations, risking everything spinning out of control.
This is where Xact’s CFO Advisory service comes into play. Delivered by commercial accountants with years of experience managing the finance side of large businesses. They have a deliberate process for getting businesses onto a sustainable profit pathway. And because they’re not an employee they’ll say exactly what needs to be said.
Our CFOs rightly view their clients as the CEO and Founder, the final decision maker, Mick says. But like a good CFO in the business world, we act as the trusted right-hand on commercial matters, providing expertise that the CEO might not naturally possess and serving as a valuable sounding board to unpack challenges and opportunities as the business scales.
Once the commercial foundations are rebuilt, Mick says businesses are now in a position to make iterative changes to how they operate.
Now that you have clarity on your numbers, you can start to get some really powerful insights.
A core component of Xact’s CFO Advisory Service is the delivery of a monthly reporting pack and an in-depth one-on-one meeting with your dedicated CFO. Dan Wilkinson, Head of Xact’s CFO Advisory division, says these reports and the monthly meeting are vital.
It’s really important that we step back and look at the business away from the noise of daily operations. We look at the results across the business and for every job, compare them to our expectations, and then drill down when there’s a variance. This allows us to zoom in on potential fail points early in a job, with plenty of time to claw back margin if needed.
Another benefit of these monthly meetings is that, over time, business owners build their commercial knowledge —what the key metrics are, how these can be measured, and most importantly, what the big financial levers are to generate healthier profits.
It’s so rewarding for us to see this play out, says Dan. When we start off, the client often struggles to understand the financial side of the business. Gradually, through measuring the same core fundamentals month in and month out, they build their muscle memory with the numbers and become adept at identifying key financial patterns and making informed decisions.
By now we’re also starting to see some significant turnaround in profits and the degree of stress starting to get back to more manageable levels.
Because Xact’s CFOs have worked on the operational side of larger businesses, they can help business owners navigate a range of other commercial aspects of their business. Depending on where the needs are, this could include fine-tuning team structure, building sales and marketing systems, and issues relating to contracts and disputes with clients. Additionally, Xact clients have the privilege of accessing a network of specialist advisors for specific advice on matters like industrial relations, construction law and financial planners.
As the relationship with Xact’s clients matures, the knowledge of their business and the specific dynamics in their world continues to grow. It’s like compound interest in financial products—over time, Xact’s understanding of their clients’ business becomes more and more valuable, allowing them to move the needle even further. Clients know their numbers better than ever, and together they can drive at some really exciting opportunities.
At this point, we like to say that our clients are in full control of their financial destiny, Dan explains. If they’re a builder, they may choose to start diversifying into doing their own developments, or they might start building a management structure to allow them to spend more time with their family. Whatever their personal goals are, once they’re in a position of full control, they are now in the driver’s seat rather than being caught in the whirlwind.
Xact’s CFO Advisory service begins with a Deep Dive – a thorough review of the business’s past performance and current operations, highlighting specific areas that need to be addressed. This initial analysis establishes the foundation for the projects that follow and is the precursor to our ongoing service. Clients are not obligated to continue after the Deep Dive; they may simply want an expert set of eyes to review their business.
To find out more about CFO Advisory and the impact it can have on your business, get in touch today for a free consultation.
