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Effective Financial Strategy

Posted on: April 12th, 2022

Businesses with fewer than 500 employees play a major role in the U.S. economy, generating about 50% of the gross domestic product. But they also have a very high failure rate.  Creating an effective financial strategy can make the difference between success and failure.

MLA helps small to mid-sized businesses with finance, strategy, and solutions.  We can help you create an effective financial strategy, and develop the tools and resources to execute on it.

Rates of Business Failures

On average, 20% of new businesses in the United States fail within their first year of existence; about half will fail by the end of the fifth year, and by the end of a decade only 30% of new businesses will still exist.  But an effective financial strategy can make the difference between failure and survival.

“In many cases,” says MLA Companies co-founder and CEO Seth Morgan, “startup companies fail not because the founder lacked vision or misunderstood the market, but because the company lacked a growth- and survival-oriented financial strategy.”

An effective financial strategy is both a roadmap for normal times and a gauge against which to assess new opportunities.  “A business owner shouldn’t have to guess at how certain decisions will play out,” Morgan says.  “Your financial strategy should give you a set of variables to play with that help you envision the future state of your company.  And even more, that financial strategy has to line up with, support, and enhance the overall business strategy.”

Effective Financial Strategy

A fractional, or outsource CFO allows a business owner to pay for that ability without the burden of hiring that person full-time.  They might only need to meet with a CFO on a weekly, monthly, or quarterly basis, and a fractional model makes that possible.

But Morgan offers a word of caution about hiring a CFO with only big company experience as a fractional CFO.  “It requires a different mindset to work as a fractional CFO,” he comments.  “Being a fractional member of the team means you need to be able to get up to speed quickly and find places to make your influence felt.  It means learning to advise and execute, often simultaneously. Not everyone coming from a full-time CFO background can do that.”

Are you looking for financial expertise to develop an effective financial strategy for your business?  MLA can help. Contact us to learn more.