Reading: Driving growth while keeping the books in check – a CFO’s memo5 min
Driving growth while keeping the books in check – a CFO’s memo
What do fast-scaling companies and unicorns Dice, Klarna and Grab have in common? CFO Linda Höglund. Learn her growth lessons that apply to all high-growth environments.
“I make sure the company continues to grow, and see myself and the finance organization as enablers of growth.”
Expect to learn:
- How to be both the innovative growth enabler and the guardian of the company budget?
- How does Linda Höglund spot the difference between just fine and actually great CFOs?
- What are the things you can never let drop when scaling goes through the roof?
The CFO is the one to keep the boat afloat through the rougher tides.
Linda Höglund has previously navigated three fast-scaling companies through the period of intense growth: Klarna, Grab and Dice. Currently, she serves as General Partner at Luminar Ventures, one of the leading seed funds in the Nordics. At Luminar, Linda manages a number of her own investments, but also looks over the fund finances and supports the portfolio companies in finance and scaling.
And how does Linda perceive herself as a CFO?
Hands-on, growth-oriented and always where the business operations happen. Simple as that. “I make sure the company continues to grow and see myself and the finance organization as enablers of growth. This requires staying close to the business, as well as balancing growth and control in the right way,” she summarizes. She reminds us that growth and control are not polar opposites. “I believe it is possible to have both, and that they sometimes even reinforce each other,” she explains.
Linda’s areas of focus change depending on the phase of the company. At Dice, Linda worked both as CFO and a deputy CEO, and was integral in promoting the Battlefield game series into a huge franchise. Forecasting, accounting, compliance, investor relations, board communications, business analysis and modeling, several operational projects – all hers.
Klarna and Grab were also scaling fast, making her role equally broad. She took care of the more traditional CFO areas such as forecasting and accounting, but was also responsible for business finance, pricing analytics, purchasing, business intelligence and data teams.
At Luminar, Linda manages a number of own investments, but also looks over the fund finances and supports the portfolio companies as CFO.
Good CFOs can indeed be a transferable asset between industries. “High-growth environments are more similar than different. When your growth chart is steep, and you need to get from point A to point B, many aspects of balancing growth and control in building the finance function are similar,” Linda says.
How does she handle the balancing act of supporting innovation and keeping things within reasonable financial boundaries?
“I believe it is fundamentally about staying close to the business, really understanding the company’s DNA – the market, the strategy, the company’s core internal assets, strengths and weaknesses,” Linda summarizes. Ensuring that you’re on top of these things gives you a head start when the going gets tough.
Budgeting. One doesn’t have to be the office killjoy to keep things rational. “Budgeting and forecasting can be used as frameworks for both control and freedom. If you have a budget approved, you are free to act within its boundaries. Correspondingly, if you want to add or change something, there has to be a dialogue. In this way, budgets create positive freedom and security and are not only controlling in a negative way.”
The budget is not something you set once a year. It is an agreement of what is approved and what is not, and can be updated in the next cadence,” Linda summarizes. Keeping the budget as agile as possible starts with keeping forecasting processes as fast and efficient as they can be.
“Another focus needs to be to be open and listen to the organization and the employees, as a lot of knowledge of what should be done is there. If you get a proposal for change, be curious and ask questions to understand more,” Linda advises.
All in all, Linda enjoys the growth phase, being close to the business and not only analyzing, but actively driving the company forward.
So, you’ve got yourself a company…
When should the full-time CFO come knocking?
Around hitting Series A.
Early on, what the founding team lacks in financial expertise can easily be outsourced. As long as someone is covering the bare minimum that need to get done in order to keep things moving, using external resources enough.
“When you reach the seed financing stage, you need additional financial competency. A part-time financial consultant could come to question, or you could share a CFO between two-three companies.” But when Series A comes around, a full-time CFO is an asset you should really consider adding to your crew.
How to know you’re hiring the creme de la creme, then?
“The difference between good and great is often visible in diligence, commitment and understanding. It’s about getting familiar with the nuances of a given company and its business and then using that to set targets and drive the company forward together with the wider team,” Linda summarizes.
Finance Map – questions every truly great CFO knows how to answer
Linda introduces the concept of a ‘Finance Map’ – what every great CFO and finance team needs to be able to explain to themselves and others at every moment in time.
- Where are we as a company – what is our outlook, financially and in terms of KPIs?
- Where are we trending right now – are we tracking in the right direction?
- Our goal and target state as a company – broken down into KPIs and incremental goals
- Driving the way forward and towards the target – how to get there? How do we keep moving forward and towards our targets? Where should our focus be?
Quickfire Q&A with Linda
How to keep things clean and financially sound when growing fast?
Define the areas that you need to control and manage these in a clear way. There are fundamental areas you can’t drop: having proper finances, processes and numbers delivered with high quality and always on time, cash flow management and compliance. Knowing what can’t be compromised frees up time for creativity. Then you can maximize agility in other areas.
Set up the fundamental finance processes early. Build a structure for necessary things early on. It doesn’t have to be a complicated structure, as long as there is a clear process for the organization to follow.