Ep. 271 - From Bean Counter to Value Guide [Business 300]

Hello and welcome to Business 300. My name is Philip Kulachoff, and this is 300 seconds

about business. We're all a busy people, so I'm 5 minutes or less to get my point across.

I'm counting seconds here. Some people think business finance exists to count money,

like expenses, reconcile accounts, and make sure the tax filings are accurate. But if you limit

your expectations for the finance function to just that, you're limiting your business. Finance

isn't just about recording what happened. It's about illuminating whether your business

is actually creating value and guiding decisions to create more of it. As your business grows

and in order for your business to grow, the finance function must mature to align more

with its purpose. The purpose of business finance is to illuminate the value of business

providing. Finance's role is to illuminate to shine light on whether value is truly being

delivered as promised to the business stakeholders, and with its light to guide the improvement

of value. As the function matures, it must move from simply being a bean counter towards

a value guide. So I have for you four levels of business finance maturity that your business

must develop if it is to move towards greater value delivery. Business finance starts at

level one, bean counter. Someone, maybe you, maybe a part-time bookkeeper, records transactions,

reconciled bank statements, prepares compliance documents. The focus is historical and administrative.

This is basic and necessary, but it's not strategic. It's shining some dim light on what happened,

but that light is not very bright, and there isn't any light pointed towards where you should be

going. It's not helping you understand whether your business is actually delivering value to

customers, employees, investors. It's just tracking numbers after the fact. So as the business

grows, you want finance to move to level two, reporter. This is dashboards, monthly reports,

maybe even some KPIs. Revenue by product line, margin by customer, cash flow projections.

The finance function is producing information. The light is brighter, but it's still passive.

It elaborates more on what happened, but there isn't much insight. Level three is where

finance starts adding actual value to your decision making. Level three is analyst. This is

where finance goes from showing numbers to explaining them. Why did margin drop last quarter?

Was driving the increase in customer acquisition costs? Which product lines are actually

profitable and which ones are bleeding cash? At this level, finance is identifying trends,

surfacing drivers, connecting dots that aren't obvious from the reports alone. It's moving from

here's what happened to here's why it happened and here's what it means. This is valuable,

but it's still backward looking. It's explaining results after they've already occurred. So level four

is forward looking value-iding finance. The value guide. At this level, finance isn't just explaining

the past. It's influencing the future. It's challenging assumptions before decisions are made.

It's asking whether that new product launch will actually be profitable, whether that pricing

strategy makes sense, whether that investment will generate returns worth the cost.

Finance as value guide illuminates whether value is truly being delivered as promised to stakeholders,

and it guides future improvement. It doesn't just report that margins are thin, it helps identify

where efficiency can be gained. It doesn't just show that customer acquisition is expensive,

it helps determine which channel to deliver the best lifetime value. This is finance operating

the highest level, not simply recording history, producing reports, or even explaining results.

At level four, finance is actively guiding the business toward greater value creation.

Moving from being counter to value guide requires competence, access, and authority.

Competence means the finance function is led by someone understands not just accounting,

but the business model. They know how value is created, where margin comes from, what drives customer

behavior. They can think strategically, not just technically. Access means finance owns the data

that drives the business. The operational metrics, customer data, sales pipeline, they have visibility

into what's actually happening in the business, not just the financial residue of it.

An authority means finance as a seat at the table when decisions are being made. They're not

just handed plans to cost out after the fact. They're in the room challenging assumptions,

testing viability, ensuring decisions aligned with value creation.

Finance done right is strategic. It's how you know whether your business is working,

whether you're actually delivering value or just generating activity.

The purpose of finance is illumination. It's shining light on whether value is being created

and guiding the business toward more of it. You want finance to move from being counter

to value guide.