I hear a lot from both other professionals and those following my pages – “Caitlynn you are a CFO why do you spend so much time chatting about bookkeeping? Shouldn’t you be providing strategies?”

And I would LOVE to focus solely on strategic growth and decisions- but our business has a hierarchy of needs- not unlike how we as human’s have one. 

At some point in school most of us learned about Maslow’s Hierarchy of needs. He explained how we cannot get to actualization if some of our most basic needs are unmet (ones like hunger, safety, love). Self Actualization is where we really dive into the deepest parts of society and humanity. Where we determine who we are, what we are called here to do, how to fix the problems in front of us. However, we can never reach that point when we are hungry, without shelter, unsafe, isolated. Our survival instincts will always kick in and force us to solve the basic needs before we can go back up the pyramid to self-actualization.

Your business works the same way. Here’s how the financial side works: 

As you can see- the basis for our business financials is bookkeeping. We cannot effectively or accurately climb the pyramid without starting with bookkeeping. It’s why, as a CFO, I talk about it so often. The bookkeeping is the basic need. The equivalent of food, shelter, water- for your business.

As we climb the pyramid we now get to tax compliance. This is a necessity to operate in our US society. It’s a legal obligation and uses bookkeeping to complete it accurately and timely. Compliance is simply filing your legal requirements- no planning or extra thought to it. So it is followed by tax planning.

Tax planning is a bit more strategic and complex in nature than compliance. And it takes the bottom two levels being complete in order to implement planning. We need to know what the business makes, how money is spent, what the current tax obligations are and where we can adjust those to plan for a lower tax bill. 

I debated about where tax planning and budgets/forecasts/cash flows should fall. I think these two could be interchanged depending on your business. They both so closely relate to being able to complete each other. Tax plans affect cash flows and budgets. Forecasts affect tax plans – and round and round we go. 

That aside. Budgeting, forecasting and measuring cash flows will be essential to moving to the strategic growth decision, or the self actualization, of your business. These are what will help you decide what is next for the business. Where expenses need to be cut, where growth can happen, and what your priorities are. 

Each level here is so important and needs to be done regularly so that we can move and stay in the strategic growth phase. At this phase we are making decisions from the highest possible version of our business. We have accurate, timely, effective data. We have short term and long term goals. We are watching the world outside our business, our competitors, our supply chains. This is where we want to consistently run our business from. 

Economies contract, pandemics occur, and by having the right team in place we are able to stay in Strategic Growth during those times. The big – Fortune 200 type- businesses that last are able to have systems and professionals consistently completing all levels so that the business never leaves strategic growth decisions. And that’s what you need for your business.

So before you ask about a strategic growth plan- take a look at all levels of the pyramid. Make sure you are regularly completing the work at those levels or have hired someone who is. 

And if you are looking for an all in one solution- set up a discovery call- we would love to be your outsourced accounting and CFO department!