Is This Essential Element Missing From Your Business Plan?

In building your business, do you ever:

Feel out of control – you’re getting by, dealing with one crisis after another, but just barely hanging on?
Find that your longstanding products and services just aren’t selling like they used to, but you can’t find time to develop new offerings?
Think about retiring after selling out to a group of your employees, but you know that they (and you) are nowhere near to making that possible? (see our post on exiting your business for more on that)

A big step towards resolving these issues, and many others, is to have a business plan – an effective business plan.

Many businesses get by without one. “It’s in my head,” you might say. Or, it could be a document you put together years ago, maybe because your bank required it to extend financing, and you haven’t looked at it since.

According to a survey by business and finance software provider Exact, companies that have a business plan in place were more than twice as successful at achieving their goals than those that did not (a 69% success rate versus 31%).

What’s wrong with many business plans?

If having a business plan is so important, how can your company get the best possible benefit out of the work that goes into preparing one?

Our work here at the CFO Centre has found that while having a business plan helps, there are some important elements to success (many of these are presented in more detail in the e-book).

One is that the plan must be a living document – it needs to be something that you review frequently, updating it as circumstances change, and using it to provide guidance on what your daily, monthly and yearly priorities should be.

Another aspect of success, believe it or not, involves packaging. You may be aware that a business plan that is used as a finance-obtaining tool will succeed more if it features attractive layout and design. But having a document that’s pleasant to look at – not just text on a page – will work better even if it’s just used internally. That’s because the people who read it, including you, will have a greater sense of confidence that the ideas in it can be made to happen.

How a timeline helps make it all happen

But the one important aspect, that many business plans miss, is the element of time. Without a clear picture of what is to happen by what time, a business plan is just a wish-list.

The best way to help make sure that the business plan stays alive – and more importantly so that what’s in it comes to pass – is through including a timeline.

A timeline (or timetable, if you prefer) sets out the milestones of your business plan – the number of employees, number of locations, sales targets, net revenue expected and other targets – and indicates what date they are expected to be reached.

For example, let’s say you have a winning retail concept that you want to turn into a franchise. Maybe even a national franchise.

To do that, you need to determine what processes need to be implemented in order to manage a store like yours effectively. That, in turn, leads to a set of written procedures – such as the steps to be taken upon opening the store or on closing, how to make each of the products that are sold, and other aspects of success. Maybe then you need to establish a time by which you expect to have that first satellite operation running, maybe as a corporate-owned location, just to see what happens when you’re not on site to trouble-shoot all the time.

It could be that this sounds so complicated and intimidating that you never actually get your franchising idea off the ground.

Here’s how a timeline helps make your business plan happen:

It breaks down big, scary projects into smaller, bite-sized chunks you can actually do
It reassures you by pointing out that you don’t need to do everything right now
It moves you along because you see a deadline for one of those “chunks” coming up, so you can get working on it

Start with the end in mind, then work backward

This involves a 5 step process.

Get a firm image of your goal. Established business wisdom says to consider first where you want to be (say, 20 franchise outlets across the country, ten years from now) and then spell out in detail what that will look like. Going into detail gives you a more clear idea of what needs to be in place for that to happen. Set a date for that to happen.

Determine the big milestones along the way. This might include writing out the elements of success in your current business, creating written procedures, testing those procedures to see if they cover all reasonable contingencies, opening a second outlet to further test those procedures, selling your first franchise to someone you know already, and onwards.

Think of the resources you’ll need. For example, at some point, you’ll need to engage a franchise lawyer to consult and help in the preparation of a franchise agreement. Think of the finance you’ll need to have in place, maybe from a bank or friend-or-family source, to make the rest happen (to learn more about how to avoid cash-flow problems that might drag you down, see our post here).

Write out your timeline. It might be on paper, on a computerized document, on a calendar program that will remind you about deadlines, or whatever works for you. Maybe multiple formats will be a good way to keep you on track.

Implement. The rest is up to you and your team. Delegate tasks, outsource, do it yourself – but be sure to stay with your timeline.

Hiring Best Practices: What to Look for When Hiring a Part-Time CFO

Are you looking to hire a CFO that will oversee the financial side of your business?

As you start to consider what to look for in a CFO and who would be the best fit for your business, your first instinct might be to interview full-time candidates only. However, you’ll be missing out on the many benefits that qualified, part-time CFOs bring to the table.

The Benefits of Hiring a Part-Time CFO

Immediacy for Urgency

When the needs of a business are urgent, it is usually easier and quicker to hire a part-time employee to help out, instead of instigating a full-time position. Given the nature of their role, part-time CFOs can act quickly on fulfilling specific needs, whether it is identifying business pain points or ways to make the business more profitable. Although you may only request your part-time CFO to work once a week, they will be ready to help whenever you need them, and they are always just a call or email away.

Financial Leadership

Other than solving immediate challenges, a part-time CFO can also act as a strategic business partner and help grow your business in a sustainable way. For example, they can prepare financial forecasts, develop annual plans for revenues and expenses, and assess the competitive landscape and long-term cash flows. As a result, this would help free up any business owner’s time, so they can focus on other aspects of the business.

Affordability

Aside from solving a company’s short and long term goals, one of the biggest benefits of hiring a part-time CFO is that you can have access to an experienced CFO at a fraction of the cost of a full-time CFO. A full-time CFO delivers all the benefits of a part-time CFO but at an increased cost and financial commitment, and most SMEs do not require that skillset or experience every day of the week. Instead of investing in extra recruitment and hiring costs to find a full-time candidate, your business can reap the benefits of a part-time CFO who has practical, financial, and strategic skills to offer.

Flexible & Customizable Work

Flexibility is becoming more acceptable in today’s business landscape, allowing for part-time CFOs to fit right in with their varying schedules. Once you hire a part-time CFO, they will take on a variety of different tasks, based on what and when you need them for. Depending on the part-time CFO’s experience, they can also cater to different business markets and fulfill various needs. Overall, this results in an efficient solution for both parties, where clear roles and responsibilities are established and no time is wasted.

Open & Honest Dialogue

An advantageous quality that most part-time CFOs (and part-time employees in general) have is their ability to be candid with their employers. You can expect a qualified, part-time CFO to challenge you in ways that a full-time employee might feel uncomfortable doing. An employee’s honesty and transparency tend to lead to meaningful discussions that push businesses towards their goals and bring clarity in times of confusion. Since part-time CFOs are independent workers, you can also confide in them about any departmental issues you may be facing.

Expertise in Local and International Markets

Depending on your business needs, you may require a part time-CFO who is familiar with the local and international markets – companies such as the CFO Centre provide access to a network of local, national and international teams to support a diverse variety of needs that an individual CFO cannot offer. There are also over 60 experienced part-time CFO’s to choose from who have expertise in various sectors.

Finding A Suitable Candidate

There are many qualities to look for in a CFO, however, we have outlined some of the most important below:

Big Picture Thinking

A CFO who can see beyond the numbers would be a valuable asset to your company. This individual would be able to interpret data in a meaningful way and provide analysis that encourages positive growth for the company.

Communicative Team Player

Considering that a part-time CFO will not operate within a consistent schedule, they should be able to communicate often with others and provide extensive detail whenever necessary. It is also important that they are a team player who gets along with other employees, otherwise, they will not be able to work efficiently and successfully with your team.

Multi-Faceted Experience

To make the most of your part-time CFO’s skill set, you should consider how much experience they have with different companies and within various industries. Individuals with an impressive range of previous experience can provide valuable perspectives on different problems, strategies, and goals that other employees may fail to see.

Life-Long Learner

Ideally, your part-time CFO should be excited about building upon their skills and developing their career, to ensure that they stay up-to-date in their respective fields. Without this attitude, your business will not be able to grow and progress from a financial standpoint.

Interested in hiring a part-time CFO of your own? Browse our selection of Canada’s most qualified, part-time CFOs.

Heading for the big exit: How a part-time CFO can help maximize value when you sell your business

The CFO Centre will provide you with a highly experienced senior CFO with ‘real-world experience’ for a fraction of the cost of a full-time CFO. This means you will have on your team:

One of Canada’s leading CFOs, working with you on a part-time basis
A local support team of the highest calibre CFOs
A national and international collaborative team of the top CFOs sharing best practices (the power of hundreds)
Access to our national and international network of clients and partners.

With all that support and expertise at your fingertips, you will achieve better results, faster. It means you’ll have more confidence and clarity when it comes to decision-making. After all, you’ll have access to expert help and advice whenever you need it.

In particular, your part-time CFO will help you to ensure that your business has planned and prepared for an exit. They will ensure that your sales process is managed in an efficient way to minimize challenges on price and prevent advisors’ fees from eating up too much of the sale price. He or she will, for example:

Help you to implement your strategy for growth and exit
Identify where value can be maximized and eliminate unprofitable or low profit activities
Ensure that shareholders’ interests are protected and consistent with the shareholders’ agreement
Explain and introduce incentive arrangements available for key management. These could include bonus plans aligned to the business objectives or option plans
Ensure that property is held in the most appropriate manner for the business and any potential acquirer i.e. freehold or leasehold and length of tenancy
Review pension arrangements to identify any funding or future liability issues
Protect intellectual property and ensure that SR&ED tax credit claims are made to help fund new intellectual property
Review contracts and trading terms to ensure they are in place, up to date, compliant and enforced
Identify risks to the business from suppliers and customers on whom the business may have become reliant and plan to mitigate the risk
Improve the accuracy and timeliness of management information
Introduce systems and controls to increase confidence in the integrity of the accounting information
Improve and/or introduce forecasting processes and procedures so that budgets and forecasts can be used as dynamic planning tools
Identify means of improving margins and reducing overheads to improve profitability
Ensure compliance with GST/PST/HST, Employee Source Deductions, Income Tax and Corporation Tax legislation while seeking ways to reduce the overall tax burden to you and your business
Introduce you to corporate finance, legal and other advisers to help with all aspects of the exit preparation and process
Project manage the exit process internally so that it minimizes disruption to other staff and their continuing responsibilities
Create confidence in the acquirer and their advisers so that they have limited opportunity to attempt to negotiate the price down or increase warranties from you
Help you achieve the freedom you want after the efforts that you have invested in growing the business.

A successful exit can be very rewarding, but planning is critical to maximizing overall value. By planning ahead, you will be able to sell faster, for more money and ensure that you can plan your tax position to reduce the tax cost to shareholders. You keep a greater proportion of the sale price.

By demonstrating that you and your team have reliable information that allows you to report and forecast accurately, you will be able to instill confidence in an acquirer and their advisors. You will also minimize possible price reductions.

A part-time CFO from The CFO Centre works with you to make your plans a reality by shouldering some of the burden. We give you the opportunities to grow your business further, from a position of strength, in the

knowledge that you will be able to market your business, or take advantage of an offer to acquire it.

Book your free one-to-one call with one of our part-time CFOs now.

tel: 1-800-918-1906

Heading for a big exit : Due Diligence

Due diligence

Due diligence is the process the potential acquirer goes through, usually with a raft of analysts, accountants, lawyers, and the occasional industry specialist advising.

It is normally an extremely extensive check of all aspects of the business, can be time-consuming and stressful, and happens while you still have a business to run.

Advance preparation is essential as it will reduce the workload, give confidence to the acquirer, reduce professional fees and make attempts to reduce the offer price less likely to succeed.

The acquirer needs to know whether what they have been shown is supported by fact. They’ll look at any papered- over omissions and whether the hopes and expectations for future profits are realistic. While appearing to be similar to an audit it can be far more comprehensive and onerous.

The starting point for due diligence is the data room. The data room is a collection of everything that is relevant to the past, present and future running of the company. It will normally include at least:

Corporate articles and minute book
Property deeds and leases, fire certificates, environmental reports
IP registrations – patents and trademarks Product specifications
Fixed asset registers
Insurance – property, employer’s liability, product liability, vehicles, business continuity, etc.
Customer and supplier contracts
Debtors and creditors loan agreement and liens search
Employee contracts and details including pension and severance obligations
Statutory and management reports for the last three years, budgets and forecasts
Audit letters and recommendations
Detailed accounting policies and procedures Employee Deductions, GST/PST/HST and corporation tax returns and any compliance visits or CRA audits
Bank accounts, loans, mortgages, foreign currency (or hedging) and interest rate exposure
Commitments and contingent liabilities

Depending on the nature of the business there could be much more.

Do not underestimate the pressure that will be placed on you and the senior team, especially finance, during a sale.

It takes a thorough understanding of the business to know what belongs in a secure data room and significant time scanning documents or copying files to set one up. It should, therefore, be part of the exit planning process to create, over a period of time, a repository for all these documents (in soft copy as the data room will ultimately be a virtual, online room).

In addition to being prepared for the due diligence process, the act of putting a data room together will identify what records do not exist or where copies are missing. It also highlights areas where attention is needed – perhaps a lease needs to be reviewed or IP registered.

The actual sale process can be disruptive for staff and anything out the ordinary can create concern and rumors. A low profile gathering of data will become accepted practice whereas a flurry of activity looking for missing paperwork is likely to disturb the office workforce in particular.

Finally, do not underestimate the pressure and resources required from you and your senior team, especially in finance. Anyone who has been through the process will tell you that they never expected it to be so onerous.

There is a real danger that focuses on the sale process will take the effort away from running the business. It might be advisable to bring in professional assistance to project manage the transaction internally to minimize the impact on the senior team.

Not all offers for businesses go all the way to completion. The worst scenario for a distracted team is to have the business slip and then suffer the emotional backlash of a failed sale; particularly having adjusted to a probable change in ownership and management.

Category: Ask CFO Centre