cfo Archives - The CFO Centre Canada

Why a timeline or timetable is essential for implementing your business plan

Published: September 19, 2018 by

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.

But as the CFO Centre’s e-book “Business planning and strategy implementation” points out, 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.

Is your business idea disruptive enough?

Published: July 31, 2018 by

Maybe you see ride-hailing services like Uber and Lyft as arrogant bullies. Or, to you, they’re a breath of fresh air in a world held victim by over-regulated dinosaurs.

But whatever your view, you can’t deny that ride-hailing upended an entire industry. Some taxi companies have tried to compete with the upstarts through rideshare-like mobile apps allowing customers to choose vehicle options, pre-book rides, and pay by smartphone.

Why have ride-sharing services succeeded against well-entrenched opposition? They’re a new idea – but more importantly, they offer real benefits over the traditional taxicab. In short, they’re disruptive.

As we’ll see later, just being disruptive isn’t enough on its own, but it’s an essential part of success.

Disrupt your way to a better customer experience

To see how being “disruptive” works, consider one of the world’s oldest skills – what some parts of the world call “joinery” and others “cabinetry.” It’s about making furniture, cabinets for kitchens and bathrooms, and other fine woodwork. It’s a slow, meticulous process in which skilled people use tools that have changed little in centuries.

That is until someone crashed into this tradition-bound environment with a radical new approach to the business. As entrepreneur Alex Craster recounts in The CFO Centre’s book “Scale Up”, he’d already helped disrupt one industry – travel agencies, with the then-new idea of people booking their own travel online.

Craster talks of how he’d been pulled into managing his father’s failing joinery business. But he came to see opportunities for the firm to provide better services and meet new needs. He started using suppliers in Eastern Europe who were able to do highly skilled work at a fraction of the cost of UK suppliers. He also switched the focus of the firm, from making products into providing solutions to customer problems.

The result has been spectacular growth and even an invitation to supply services to Buckingham Palace.

Why is disruption like this such an important part of business success today? It has to do with two concepts – something that’s new, and something that’s better.

Grab the attention of people you want to attract

Let’s start with “new.”

One well-made kitchen cabinet is pretty much like any other well-made kitchen cabinet. In some ways, cabinetry is a commodity – it’s hard for a customer to tell one company’s offering from another’s. So it becomes a race to the bottom regarding prices.

To catch the attention of potential customers, Alex Craster’s company had to offer something that was new to the market – providing a service in which company representatives sat down with potential customers to get an idea of their problems. That might involve a hotel that wanted to attract a higher level of clientele. This approach made the company newsworthy, so it gained more word-of-mouth publicity.

The company’s approach made it more attractive to the traditional media. But it also had the potential to attract what is becoming a more important kind of attention, from social media including bloggers and Instagrammers.

This meant that just having a new approach put the company’s name in front of potential customers.

Holding the attention of prospective customers

Once you have the attention of the people you want to attract, how do you hold them? By offering something they will value – something that’s not just new, but demonstrably better than what they have now.

Alex Craster’s approach, which included a consultation and understanding customers’ business objectives, was a big step towards helping a hotel meet its goals. Those may have included being able to charge a higher room rate and improving the hotel’s all-important RevPAR (Revenue Per Available Room) metric.

So too, you need to be sure that your business idea offers real benefit to the people you want to serve.

Start by understanding their situation – some of the most pressing problems they are facing. That matters, because unless you can present them with a solution to one of their most pressing problems, or a step towards a solution, they’re not going to pay attention.

Then, instead of choosing a service or product to offer, you choose a problem to work on – such as increasing a hotel’s RevPAR.

Your approach must then revolve around solving that problem, with your product or service being part of that solution. If you’re offering something that is distinctly better than the solutions your prospective customers have on hand, you’ll have a much greater chance of success.

Planning is essential

All of this – finding something new and better – doesn’t just happen. You need to think it through. It takes time to match the assets you have – your skills, the skills of the people you work with, experience, and other factors – to the needs of potential customers.

A big part of that is the financial resources you have access to. With a good understanding of your financial picture, you can understand your financial strengths and limitations, so you know how much you can spend and still pay your rent and your staff.

Many growing companies find that the best way to make sure they have the financial resources they need is through a skilled finance professional – a Chief Financial Officer – who can help them understand their financial picture, and if necessary, get access to other financing that can help to seize on the opportunities to grow in a “disruptive” way.

For many companies, their best option is to have an experienced CFO available to them, on a long-term basis, but without the need to pay the compensation that a full-time professional would expect. By utilizing a part-time CFO, they have the skill set they need available to them, but in a much more cost-effective manner.

To make sure you’re being disruptive within your market, planning is key. Failing to plan is like planning to fail. To learn more about how you can take your business to the next level, please download our e-book, “Business planning & strategy implementation,” which will walk you through the steps involved in business planning.

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

Published: March 21, 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 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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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]

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

Published: 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]