By Fuad Ahmad
We all learned in 2020 that the world can change in an instant. Shifts happen faster. Effects last longer. And impact reaches wider. Markets no longer transform in years. Instead, they shift in weeks or months.
Adaptability is a necessity, and it forces a growth mindset that involves moving fast and experimenting more. The payoff: adaptive businesses grow three times faster than the Fortune 500. To ensure sustained growth, adaptive businesses tweak in real-time any of the four critical parameters: product, pricing, go-to-market strategy and revenue models. They don’t get slowed down by siloed operations and they leverage capabilities across all business units, including: sales, marketing, customer success, product, finance, and operations. But more than that, I believe that they also need to evolve their organizations including the roles, relationships and scope of engagement of their key hires.
The CFO as de facto Chief “Growth” Officer
The shift to more agile and adaptive business processes has changed the role of the CFO. In the past, CFOs were focused on implementing controls, financial policy and numbers: cost-efficiency, metrics, risk management and compliance. Today, companies need to plan and execute beyond one or two quarters with greater foresight and precision. This has shifted the CFO’s role to both keeping the lights on and enabling growth. CFOs still need to preserve the assets of the organization by minimizing risk and getting the books right—and they have to run a tight finance operation that is skilled, accurate and effective. But now they increasingly must give direction to shape overall growth strategies while simultaneously instilling a financial mindset and disciplined approach to decision making throughout the organization to help all parts of the business perform better. They must actively work to identify, evaluate and execute new business strategies while serving as a valuable business partner to key decision-makers within the executive team and the board as well as to those within a wide range of business units. The CFO has become the de facto chief growth officer of the company.
The CFO’s focus on growth is a major benefit for marketing leadership. CFOs are not just budget managers; they are investment supporters for mar tech/marketing infrastructure, “test-and-learn” programmatic experimentation, channel expansion, and other growth-focused initiatives. CMOs and CFOs now have synergistic goals and priorities, and are of similar minds when it comes to the importance of serving customers, creating brand awareness, hiring the right talent, and driving insights from data. And while a laser-focused on growth has always rung true in the startup stage of most businesses, it is rapidly becoming the norm for even larger companies as they embrace a digital-first approach to business. These expanded directions for the CFO’s job facilitating growth have made the role more complex and demanding – but also, I believe, much more engaged, participative and interesting.
Managing Growth in Uncertain Times
In a recent conversation with Joyce Mackenzie Liu, founder of Pegafund at my client Chargebee’s Champion of Change Summit in 2021, I learned a lot about how to manage growth in uncertain times and how CFOs can help drive positive change within a SaaS business like Chargebee’s. For Liu, building and scaling a business is like building a house. The basement for the house is solid accounting with strong data quality and integrity. The next phase is to build up the walls and the visibility on the revenue side. Then, companies need to build a roof by continually iterating and aligning with the business strategy and the company’s position in the market.
In SaaS businesses, according to Liu, a lot depends on where the business is in terms of scale and growth.
Smaller SaaS Businesses: $30 million in ARR or Less
Liu notes that SaaS startups with less than $30 million in annual recurring revenue often do not have the benefit of a strong balance sheet or hundreds of millions of dollars in funding. They need to focus on profitable growth and predictable unit economics, as well as cash management. These companies need to be able to measure the experiments that will contribute to future growth and determine which channels will be most predictable. This requires robust solutions for billing, expense management, and revenue visibility to measure and track the right data, and then use that data to derive marketing and sales insights and make better, faster decisions—ultimately creating more options for growth.
Midsize SaaS Businesses: $30 to 80 million ARR
At this stage, SaaS companies need to be analyzing which channels are the most efficient, and which can be scaled predictably across different segments and geographies. Now, it becomes even more critical to have billing, expense management, and revenue visibility solutions. And as a SaaS company continues move up-market, its finance tools will continue to change in order to accommodate different needs and the evolving business’s size.
Larger SaaS Businesses: $80 million-plus and Beyond
At the pre-IPO, late-growth stage, the focus within SaaS companies needs to shift to making the organization as productive as possible. These organizations are still looking for growth, but only very efficient growth and they must also work to build a strong balance sheet.
CFOs Need the Right Toolkit
My advice if you are a CFO, don’t postpone the selection and adoption of the right tools. If you do, this could come at the cost of growth and competitive advantage for your business. Ensure a single source of “truth” for each area of business and financial performance.
And make sure your final recommendations for solutions here integrate easily. Your CRM solution, for example, should be seamlessly integrated with customer support, billing, invoicing, expense management so that product and business unit performance can be viewed at both the micro and macro level across the enterprise. Integration is essential to obtain a single source of truth for data across the entire organization. Only this way can organizations avoid missteps and miscommunications, make the right business decisions and achieve the best business outcomes when it comes to growth.