rear view mirror

The Rearview Mirror for Looking Ahead: Know Yourself to Grow Yourself

“Why do you accountants always focus on the rearview mirror?”

This question was posed to me during a small business workshop I was conducting. Read on to see how I answered it. But first some context:

I do workshops for small businesses frequently, to share more deeply about my Fractional CFO framework and approach. I share how business changes with growth that generally comes in 1’s and 3’s. (In other words, growth from $100,000 – 300,000, or $1m to $3m, or $10m to 30m.) In this particular workshop, I had been discussing the weekly scorecard and how to improve the accuracy of the company’s numbers using a solid financial close process. I also encouraged tracking many other data points like new customers, new web sign-ups, sales by segment, gross margin, inventory turnover, production and direct labor efficiency, etc. I was rattling on about how these metrics need to be on your dashboard and the importance of not judging your performance on the metrics of other people. I emphasized that their business is not your business. However, your business can always perform better. If you want to jump in 3’s, you first have to know your business well.

That’s about when I received this great, and understandable question. At first glance, CFOs do appear to look at the past a lot. The rearview mirror is important, and we do have to have accurate data; it’s essential to know where you are and where you’ve been. If you don’t it’s hard to get to where you want to go.

I ride my bicycle for my workout four times per week in the summer logging about 100 miles per week.  My bike is equipped with lights so cars can see me and I have a mirror that attaches to the handlebar.  The other day, when I was riding on some incredible roads we have here in Central NY, I was looking in my mirror, which is small and was so dirty that it wasn’t useful.  Using the mirror is safer than turning my head, but the visibility with the mirror was terrible. Trying to focus on the images in the mirror, I almost rode off the road. (I recently bought a radar tool that beeps when there’s a car behind me. Much safer.)

But ironically, a good CFO uses the rearview mirror but doesn’t focus on it. We shouldn’t look in the rearview mirror too often.  We do need to see what’s behind us if it poses danger – like a car for a bicyclist. But we shouldn’t constantly be looking in the mirror to see where we’ve been. We need to keep our eyes focused on the road ahead. 

The job of a CFO is to help a business look ahead. Yes, we focus on getting the monthly financials closed and the reporting package published, but those are tools for our main priority of helping the business deliver on its mission. Reasons come first, results come second. We try to make things better for the future.

To do this well means that a lot of my time is spent trying to help businesses improve processes. Consistent improvements over time often lead to impressive results. Companies that stay stuck in their ways tend to stagnate. Small businesses that are nimble tend to grow and flourish.

In Robert Greenleaf’s book, The Servant Leader, he shares how the servant leads from the back with empathy and compassion. They see the struggle of others and bring clarity and solutions. I’ve seen the suffering of many small businesses over the last 30+ years – and I have been there myself, so I have a desire to help turn that around. Having solid processes and taking a regular, but not obsessive, look in the rearview mirror helps me do that.

The other service that is very helpful to a CFO is to know the valuation of a business. Click here or watch below to learn more about our valuation service.

What is the next thing that you need to do to get ahead? Do you need to shift your perspective from the rearview mirror to the road in front of you? I’d be happy to help. Contact me!

Image by Hebi B. from Pixabay

Scroll to Top