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Become a world class leader with a strategic plan

March 27, 2017 by

By Chris Carl
Regional Director at The CFO Centre

A part-time CFO is to an SME what a doctor, a physical trainer, and a world-class coach is to a superstar athlete. The superstar athlete will always be good – but they will only be great if they are healthy (the doctor makes sure of that), they are in great physical shape (the trainer takes care of that) and that they can compete at a world-class level (the world-class coach takes care of that). In a business setting, the CFO Centre refers to these same three levels of conditioning as Business Support (being healthy), Operational Skills (getting in great physical shape), and Strategic Planning (competing at a world class level).

The highly experienced and successful part-time CFOs from The CFO Centre can help make a company flourish in every respect. From increased profitability, to growth through financing or mergers and acquisitions, to increased happiness in the C-suite and all employees, a part-time CFO can literally help perform miracles. But, these results can only be achieved through sound business practices and a great strategic plan. A successful experienced CFO, that costs only a fraction of a full-time CFO, can make all of these happen.

This article (part 4 of 4) discusses developing and implementing a Strategic Plan to make your company able to compete in any market.

Read Part 1 | Part 2 | Part 3

Strategic Planning

In our final comparison to becoming a world-class athlete, regardless of how strong an athlete you may be, you will never compete at a world-champion level without a great coach. That coach helps you develop your plan to get to the top of the podium – from taking stock of where you stand today, to figuring out what actions might hurt you if not attended to, to laying out a timetable to achieve each part of your overall goal. That coach ensures that you have all of the right resources around you that you will need to win that championship, he/she does a lot more than sit on the sidelines and clap when you perform well.

In business terms, to be able to achieve all of your business goals, (and maybe some you thought were beyond your wildest dreams) you need a Strategic Plan. Don’t confuse this with a wish list. A Strategic Plan involves setting very high goals but it also requires taking stock of your current situation, identifying the risks you need to overcome to achieve your goals, a step-by-step path and resources required to get you there, and a definitive timetable for each step to make sure it all happens. Once in place, it also requires execution.

At The CFO Centre, we believe the highest value we can bring to any client is to help them develop, and execute a “Strategic Plan” that takes the company well beyond what the CEO even thought possible. By following the path of the four key elements, a part-time CFO will bring financial abundance to the company. At the CFO Centre, we define these 4 key elements as:

Strategic Planning can sound lofty and somewhat irrelevant to a company that is in the trenches every day just fighting to survive. But it is exactly what the company needs to get them out of the trenches and on to a much better playing field. A Strategic Plan is like a roadmap and without one, the company will wander aimlessly without direction. And when communicated properly, it helps great alignment and purpose within an organization.

For example, one company I worked with as an investor had world-class technology to help other companies optimize cleanliness and environmental compliance in a manufacturing setting. The small management team was very strong and had great breadth between technical, marketing and financial experience and skill. And while they knew they had a world-class technology, they could not generate the marketing and sales dollars sufficient for them to access and educate the larger customers they desired. By selling to smaller customers, their unit sizes were smaller and they had to keep prices (and therefore margins) low just to be able to make the sale. The result: they were losing money or barely breaking even month after month and year after year.

When I met them through a fellow investor, I found a team that was capable, very focused on getting the job done, and who really knew exactly what they wanted in the long term. BUT, they were stuck in a low margin rut and couldn’t find a way out. So I suggested we take a few more hours out of their life for a few weeks and develop a Strategic Plan.

This plan had to be real, but it also had to lay out a path for them to get to point that they could be selling this amazing equipment to the large customers who needed it most. We sat down and recorded all of the possible goals (crazy ones and real ones), and we looked at all the things that could stop us. While there were many small issues we solved, or developed a plan for, in this process, one of the best examples of how a great Strategic Plan could work was in deciding how to increase product awareness and sales to the desired customers.

Everyone at the company felt that they needed to bring on a couple of top-notch sales people who could cover the continent. The problem was that, just like a full time CFO, highly qualified experienced sales people are expensive to employ full-time and for this company the selling process could take up to a year. That was an added overhead the company just could not afford. So instead we looked to how we could leverage the skills of others and decided that if we could possibly find distributors who already sell products to our desired large customers, maybe they could be our conduits to sales.

So we laid out a plan, and a timetable (the most critical element is that you MUST have a timetable). We decided that we wanted a distributor in 50 States and 12 provinces. I suggested to the team that we set a goal of 1 year to achieve this and I was almost laughed out of the room. “Impossible” they said. But, not wanting to leave and still wanting to become an investor, I asked them not to think about it as 50 new distributors in the US and 12 in Canada a year, but rather 4 distributors in the US and 1 in Canada each month. I suggested that by breaking this seemingly insurmountable plan down into bite sized pieces that not only might we get there, we might just get there faster than we think.

After much debate, not only did we agree to give this a try, but with everyone being so busy we asked everyone on the team to contribute just a little bit. That meant sharing our plan with other customers and contacts, getting on line to research who might be out there, and start making calls. The admin assistant of the company drove the process by recording and organizing everyone’s efforts and new contacts daily, and by doing lots of outreach on her own as well. The team developed financial terms that were good for the distributor that would also be great for the company, and the sales manager found a draft Distributor Agreement that was only 2 pages and had the lawyer sign off.

In month one we signed off on 2 of the 5 that was our goal, and in month 2 we got 4 of 5. The numbers increased every month and by the end of month 10 we had a distributor in all 50 States and 12 provinces in Canada. We achieved this “unachievable goal” in 10 months instead of the year – even when the team thought getting it done in a year was impossible.

The result of setting the strategic goal to eastablish a network of Distributors was the company increased the value of the average sale from $20,000 per sale to $125,000, margins increased from 20% per sale to almost 50%, and the customer profile went from a privately owned business with under $5 million in sales to 80% of customers now being listed on the Fortune 500 – and three of them on the Dow 30.

To be fair, there were lots of fits and starts to get to this point, and there were times that it all seemed like it would come crashing down. But, by having that strategic plan to keep going back to and to measure themselves by, and by having a month to month plan of something achievable rather than a one year plan that seemed impossible, the Company did achieve what seemed like impossible goals. And today the same team is still working their butts off to continue growing the company – but they smile a lot more than they used to – and they know their now larger paychecks can be cashed.

There are dozens of stories like this from our CFOs at the CFO Centre. Strategic Planning may seem like fluff when you can barely make payroll next Friday. But in reality, a strategic plan is exactly the tool that a company with great products or services needs. Whether you are barely breaking even, or making millions in profit, EVERY company will grow and improve with a well developed, and well executed, Strategic Plan. The part-time CFO is the perfect resource to help an already busy team make this happen.

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Chris Carl has a 30-year career growing manufacturing based companies with novel technologies both as start-ups and within Fortune 500 companies. Having held both CFO and CEO roles, he has raised a combined $500 million in debt, mezzanine and equity financing in private and public companies listed in Canada, the US and Europe.

The CFO Centre provides highly experienced, part-time CFOs to small and mid-market organizations at a fraction of the cost of a full-time CFO. We are committed to helping companies work through complex financial issues, in order to maximize profit and provide senior financial leadership.

Our global team has over 400 CFOs across 13 countries; our services include business and strategic plan development, financial reporting, cash flow management, internal control, risk assessment and mitigation, training and development, and negotiations.

www.thecfocentre.ca
1-800-918-1906 or email: [email protected]

A Part-Time CFO Adds “Bottom Line” Value to a SME

March 21, 2017 by

By Chris Carl
Regional Director at The CFO Centre

The highly experienced and successful part-time CFOs from the CFO Centre can help make a company flourish in every respect. From increased profitability, to growth through financing or mergers and acquisitions, to increased happiness in the C-suite and all employees, a part-time CFO can literally help perform miracles. But, these results can only be achieved through sound business practices and a great strategic plan. A successful experienced CFO, that costs only a fraction of a full-time CFO, can make all of these happen.

This article (part 3 of 4) discusses how to improve your financial fitness through improving your Operational Skills.

Operational Skills

To continue with the analogy of a becoming a world-class athlete, one needs to be healthy to be able to perform, but to operate at a high competitive level you also need to be continually improving your level of top physical fitness.

In business terms, you need to ensure that your business is healthy by making sure critical business tasks are done correctly and not falling through the cracks. You also need to know that your current operations are running smoothly and at peak financial performance. The best news is that this does not require added cost. Instead, and without fail, improving your Operational Skills will always add tremendous value to your profitability.

At the CFO Centre, we reference operating at peak day-to-day financial performance as “Operating Skills.” If the four key Operating Skills are at peak performance, that means your company is operating at peak performance and you are therefore ready to handle any growth, or new projects, that you may desire for your business. These Operating Skills include (click on the links below for more information):

By assuming leadership for the Finance function and by implementing these key Operational Skills, a part-time CFO provides the business owner with TIME to focus on the business and CASH through a focus on operational efficiencies, by providing timely analysis and insights on the business to drive profitability and better cash and working capital management. Having more TIME and CASH, two much needed resources for any SME, eliminates some of the stress of operating your business and allows the business to be physically fit and healthy for the next level of growth.

As any owner or senior executive of a small to medium sized business knows, “cash is king.” That doesn’t mean sitting in the safe counting your money, but rather being constantly aware of your day-to-day cash flow. If something unexpected occurs, or you suddenly have a new opportunity that you must decide on quickly, you must be able to access, and to trust, the cash flow information of your company quickly.

In my experience working with SMEs, with clients or that I have run myself, it is an inability to access internal cost information quickly, and to be able to believe in the information you are getting, that can really slow a CEO down.

As an example, if you are running a business averaging $1 million per month in sales, and you get a call to take on $100,000 per month of new business at a 25% gross margin can your company handle this? Do you have an internal cost reporting system that allows you to accurately determine if this will be profitable for you? At the surface, the answer seems obvious: who wouldn’t want $25,000 more margin each month? But there are many things you need to know before you can say yes, such as:

How does the new business affect expediting of current sales?
How many more people do I need to fulfill this business?
Do I have enough working capital to manage the new receivable?
How many months of setup is required and at what cost before I start to see incoming cash?
Could taking on this business reduce the quality of the products or services I am already selling?
What is the credit risk of this new receivable?

The list of questions you want to be comfortable with is extensive but the point is made: without having Operating Skills that are in top financial fitness, you may spend hours trying to figure all these things out, and even then, you might make the wrong decision. But, the opposite is also true. If you have great Operating Skills and you trust them completely, not to mention having a part-time CFO who is a phone call away to share ideas with, you can make this decision in good conscience and feel great about the decision you just made. Does your finance function have the leadership and skillset to help drive your business forward? See how your finance functions rates (take the F Score).

While this is but one example of thousands to choose from, the point is clear. If your Operating Skills are in great shape, you will be able to make new decisions quickly and accurately. Just as importantly, while you are getting these systems in top shape, your part-time CFO will find areas where cash flow can be improved, and profitability will be be increased. This is just one of the ways that a part-time CFO will pay for themselves, or more likely, generate new profitability and cash flow far in excess of the cost of he or she being there.

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www.thecfocentre.ca

1-800-918-1906 or email: [email protected]

How a Part-Time CFO Keeps a SME in Top Health

March 14, 2017 by annbeldia

How a Part-Time CFO Keeps a SME in Top Health

^*Small and Medium Enterprise

By Chris Carl

Regional Director at The CFO Centre

The highly experienced and successful part-time CFO’s from the CFO Centre can help make a company flourish in every respect. From increased profitability, to growth through financing or mergers and acquisitions, to increased happiness in the C-suite and all employees, a part-time CFO can literally help perform miracles. But, these results can only be achieved through sound business practices and a great strategic plan. A successful experienced CFO, that costs only a fraction of a full-time CFO, can make all of these happen.

This article (part 2 of 4) discusses how to ensure your company is in top health through Business Support.

Business Support

To become a top performer in any field, you have to be healthy to compete. As an athlete, that means not being sick and also being in great health in every measurable way. As a corporation, it means you must have all of the fundamental requirements of running a business under good control.

One of the many ways a CFO can bring value is to run a health checkup of your business to ensure it is strong enough to grow and to compete. For all companies, “financial health” can generally be thought of in four categories:

Compliance reporting to owners, government agencies and financial partners
Tax and legal planning
Outsourcing of professional assistance and support services where required
Banking and Investor Relationships

Chances are that most of these areas of your business are already pretty strong, but like a chain and many other things in life, the business is only as strong as its weakest link. At the CFO Centre, we call these activities “Business Support.” Enhancing these areas of your business may not seem like they can increase sales or customer satisfaction, but in fact, it is critical for these parts of your business to be in great health to allow you the freedom to have the resources available to support your customers.

While a part-time CFO will have a mandate that is much broader than these financial health-check issues, a great CFO will naturally take a look at these areas of the business to make sure everything is functioning well.

Most businesses require access to some sort of funding assistance to foster growth and innovation. This funding can take the form of a conventional bank loan or line of credit, convertible debentures from private investors, government assistance programs, or common or preferred equity being issued to existing or new shareholders. Though there are many variations of financing available, to be successful in obtaining access to such funding quickly and at the lowest possible cost, the business must be seen as financially healthy.

Making sure that the balance sheet is healthy is a great place to start. Are assets greater than liabilities? Are current assets greater than current liabilities? Once these are in good shape, are the four categories listed above all performing well?

As I have shared with partners, employees and clients over the years, when accessing new funding, it is not enough to have a good idea and be in relatively healthy financial condition to ensure you successfully attract new funding. Rather you need to be “better” than the other 5 or 10 companies your funding source may be looking at.

As an example, if you are talking to a great investor who likes your business idea, you need to remember that investor is likely looking at several other opportunities as well. That means you are competing with others who you can’t see. A great CFO will help you make sure that by being in great financial health, and by having top-notch reporting systems, that you will score very highly in the investor’s eyes against that unseen competition. Why? Because a company that operates smoothly, reports accurately and on time, and has all of the “financial health” issues well covered, is a company that is ready for the challenges that the new opportunity brings.

And of course, the opposite is also true. If your company is good at these things, but not great, you will always have trouble crossing the finish line with these investors because there will always be a company that does have these things under top control that will be viewed as better than you – even if your idea might be better than theirs.

Maybe it is time to ask yourself, “Is my company in as strong a financial health as it should be?”

Your part-time CFO will take on the oversight of the day-to-day tasks for these parts of your business and they will help your current accounting group (whether one individual or a whole team) modify their current processes to make sure they are performing at a top level that is competitive. Usually, this does not involve doing more work, but instead making sure the work is prioritized and is being done right the first time around. This may include automation or outsourcing that strengthens processes, increases expertise and improves profitability.

Do you want to be a world-class competitor and grow your business to its full potential? One of the easiest and most sound ways to get there is to make sure your company is in great health. And there is no one who is better suited to make sure that happens than a CFO.

And, while the CFO will have many more responsibilities than just examining the financial health of the company, an experienced CFO can make this work, and everything else that is required, on a part-time basis. I believe your company can derive its highest possible value by hiring an experienced, world-class CFO who can manage these things at a fraction of the cost of a full time employee.

Is it time for you to find a Part-Time CFO?

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Chris Carl has a 30-year career growing manufacturing based companies with novel technologies both as start-ups and within Fortune 500 companies. Having held both CFO and CEO roles, he raised a combined $500 million in debt, mezzanine and equity financing in private and public companies listed in Canada, the US and Europe.

www.thecfocentre.ca

1-800-918-1906 or email: [email protected]