Dear entrepreneurs,

It's a good day to start with some business talks! I hope you enjoy these Wednesday conversations about leadership, business exits, and valuation. 

Today, we're diving into another crucial topic: developing a CFO mindset as a founder.

Have you ever seen your financial statements and felt like they were written in another language? 

If so, believe me, you're not alone. 

After nearly three decades of steering companies through several financial stages (and occasional storms), being a CFO and founder is less about crunching numbers and more about strategic thinking.

Why Does Your Business Need a CFO

Here's the truth: investors will only put money into your business if they see strong financial leadership. No matter how compelling your story, they need the confidence that comes from solid financial management.

If you can't recruit a CFO, my advice is to start with external consulting to build that crucial bridge for the investors. 

But more importantly, understand these key areas that CFOs typically manage:

1/ Strategic Pricing
When you decide what price your customers will pay, you need to know what lifetime value you are creating for them.
This isn't just about transactions. Let me share an example:
Imagine an engineering business creating a process that costs £20,000 to build but saves millions for an oil and gas business or a nuclear business. That's not a £40,000 pricing opportunity.
It's a value-based pricing strategy where the perceived value could dramatically increase your business valuation.

And that's where a CFO comes in to ensure that you create systems and pricing that will allow the business to have a high valuation.

The key is understanding that your price should reflect the value you create, not just your costs plus a margin.

2/ Balancing Passion with Discipline

Think of it this way: Founders bring creative vision and dreams, and CFOs bring discipline, systems, and policies.

You need both to succeed. 

Without systems supporting your passion, your business won't scale effectively. This means implementing processes that turn your creative ideas into repeatable, profitable operations.

3/ Risk Management
A business inherently starts with risk. It begins when somebody risks their money to create jobs and valuable products.

The key isn't avoiding risk; it's making sure potential losses are small enough to be lessons rather than disasters.

You take a risk, calculate it, manage it, and don't lose too much that's what a CFO does.

But those finance-first traits and skills come with experience and if you’re the founder and also the CFO of your business, here are some mindset shifts you need to adopt:

Founder to CFO: Mindset shifts to think like a CFO

These mindset shifts aren't just theoretical concepts, they're practical approaches that can transform your business:

1. From Annual to Five-Year Vision

Vision isn't just about making longer forecasts. It's about developing a strategic mindset to plan and budget with different scenarios. 

You need to be aware of the external world. Here are some action steps to remember: 

- Create detailed financial models for each scenario
- Review and adjust financials quarterly
- Build flexibility into your strategies
- Develop contingency plans

 A long-term vision will help you make strategic decisions and healthy profit margins. 

2. From Reactive to Proactive Risk Management

Risk management is never about avoiding risks but about making them manageable.

In the absence of a CFO, several metrics must be tracked, starting with monitoring customer concentration risk, maintaining a 3-6 month cash reserve, and focusing on diversifying revenue streams.

3. From Cost-Plus to Value-Based Thinking
This is the most crucial mindset shift for growing your business valuation.

Most entrepreneurs I meet are stuck in the "revenue chase" mindset. Here's what a CFO perspective looks like instead:

To implement these mindset shifts effectively, you can structure your financial leadership time as follows:

Additionally, consider the customer's economic benefit, the long-term impact of your business solutions, and the strategic advantages you create.

Reading about mindset shifts is great, but real change happens through action. 

Turning Insights Into Action

Let me break down exactly what you should do to start implementing these principles:

These initial steps will give you the foundation to build more robust financial systems. Now, let's look at what you need to accomplish in the next 30 days: 

With these systems in place, you're ready to tackle larger strategic initiatives. 

The next quarter will focus on transformative changes that will significantly impact your business valuation: 

Remember, you don't need to tackle everything at once.

Each step builds upon the previous ones, creating a solid foundation for sustainable growth.

Start with what feels most urgent for your business, but make sure you're making progress across all areas over time.

The journey from founder to financial strategist isn't about losing your entrepreneurial spirit; it's about giving it the structure it needs to soar.

I’ll see you next week when we discuss IP Monetization and how you can implement it in your business. It’s my favorite topic, and you won't want to miss it!

Matteo Turi, 
Your Personal CFO

P.S. Hit reply and let me know: What's your biggest challenge in implementing these CFO mindset shifts? I read every response!