I learned something new last week: I always thought CEOs understood what a CFO's role was. Well, not all of them do. For example, a couple months ago I contacted the founder of a new company in my area. I have great personal interest in what the company does, and I thought it would be a chance to do something fun. The local newspaper wrote a feature article about them and they were really starting to generate national attention. My first meeting with the founder and sales manager went very well and they expressed interest in my taking on the role of CFO.
I called their attorney to get some background and a copy of their business plan. While the business plan showed where the company wanted to go, it did not explain how they would get there. Financial projections were very elementary, and missing most of the supporting detail. Their time-line for revenue ramp-up was unrealistic, especially considering the many hurtles remaining in product development. While they admitted the plan needed to be re-written, they were totally focused on product development so they had stopped working on it. Call a spade a spade; A business plan generated after the fact, to fit the facts, is a report, not a plan. This reminded me of a meeting I had with China Unicom in Hong Kong in the mid-1990's. They were new to the telecom business and were demanding that suppliers finance the build-out of wireless systems. I asked them if they had a plan. "Yes! We are going to install systems in 88 cities by the end of the year." That is a goal, not a plan.
In subsequent communications, I asked more tough questions about their technology, the target customer and marketing strategy. I had obviously struck a nerve. The response was something along the line of, "We don't need people to question our vision." I was disappointed. I would have expected the response to be "Glad you asked. Let me explain our strategy." Certainly, a knowledgeable investor would ask questions at least this challenging or even more probing. While keeping an eye on product development is important, it's not the only thing. Today, attracting and keeping investors is a key role of the executive team. The CFO must be objective at all times and is compelled to ask senior management the difficult questions, because sooner or later an investor will ask them too. Clearly, this particular CEO didn't get it, and wasn't going to win an investment round.
Attracting investment can be like rabbit hunting. Not much there. After you shoot the rabbit, skin it, and cook it there is not enough meat to feed the family. Times are lean. The investment community today is much different than it was ten years ago. Start-up plans were done during a lunch meeting. Rules were lax. That is no longer the case.
I spoke at length recently with a private venture capital group who has all but abandoned funding start-ups, (odd for a VC) and has instead shifted to emerging technologies, small but with proven track records, and more importantly, credible executive staffs who can potentially get big. They have no interest in risk, no matter what the upside. In their view, if you aren't already making money, at least a little, they're not interested. A business on a solid footing, with real operations, financial controls, the foundations of enterprise, is what they look for. They're no longer interested in creating a company out of thin air, only adding to what is already there.
Stock declines are a sign of the times. Equity markets have been chewed to ribbons by broken lending models, huge deficits, dead credit and sky-high energy prices. Taxpayers are saddled with a clean-up none can afford and the economy, while not totally stopped, is grinding to a screeching halt. The country, every sector of the economy, must reinvent itself. Detroit must re-tool, airlines conserve even more, companies drive toward novel ways of limiting transportation and energy costs. They all need money to do it. In the middle of this situation, how are you going to move your own ball forward? Do you have what it takes? What makes you stand out? Everyone is looking for investment. You will have to scramble for each and every penny. Why makes you so deserving?
So the point is clear.the executive team must keep their eyes on the ball, manage the whole business, in order to successfully grow and reach the next level. This is nothing new. This is where the people at Thomas Financial Services (www.thomasfinancialsvcs.com) can help. They have the experience and knowledge to analyze, create and roll out the roadmap for a stronger and more efficient company through the development of internal processes such as finance, accounting, planning, forecasting, internal controls, project management, and the whole customer experience.
Little companies can succeed. Big companies fail every day. Failure to anticipate and plan kills your future. Recent blowups like Lehman and AIG drive home the point that when even the big boys take their eye off the ball, they strike out too. Chief Financial Officers turn organizational discipline into credibility with investors. Make sure your executive team is truly a team. Stay on top of your game. Plan your work, work your plan. - 15266
I called their attorney to get some background and a copy of their business plan. While the business plan showed where the company wanted to go, it did not explain how they would get there. Financial projections were very elementary, and missing most of the supporting detail. Their time-line for revenue ramp-up was unrealistic, especially considering the many hurtles remaining in product development. While they admitted the plan needed to be re-written, they were totally focused on product development so they had stopped working on it. Call a spade a spade; A business plan generated after the fact, to fit the facts, is a report, not a plan. This reminded me of a meeting I had with China Unicom in Hong Kong in the mid-1990's. They were new to the telecom business and were demanding that suppliers finance the build-out of wireless systems. I asked them if they had a plan. "Yes! We are going to install systems in 88 cities by the end of the year." That is a goal, not a plan.
In subsequent communications, I asked more tough questions about their technology, the target customer and marketing strategy. I had obviously struck a nerve. The response was something along the line of, "We don't need people to question our vision." I was disappointed. I would have expected the response to be "Glad you asked. Let me explain our strategy." Certainly, a knowledgeable investor would ask questions at least this challenging or even more probing. While keeping an eye on product development is important, it's not the only thing. Today, attracting and keeping investors is a key role of the executive team. The CFO must be objective at all times and is compelled to ask senior management the difficult questions, because sooner or later an investor will ask them too. Clearly, this particular CEO didn't get it, and wasn't going to win an investment round.
Attracting investment can be like rabbit hunting. Not much there. After you shoot the rabbit, skin it, and cook it there is not enough meat to feed the family. Times are lean. The investment community today is much different than it was ten years ago. Start-up plans were done during a lunch meeting. Rules were lax. That is no longer the case.
I spoke at length recently with a private venture capital group who has all but abandoned funding start-ups, (odd for a VC) and has instead shifted to emerging technologies, small but with proven track records, and more importantly, credible executive staffs who can potentially get big. They have no interest in risk, no matter what the upside. In their view, if you aren't already making money, at least a little, they're not interested. A business on a solid footing, with real operations, financial controls, the foundations of enterprise, is what they look for. They're no longer interested in creating a company out of thin air, only adding to what is already there.
Stock declines are a sign of the times. Equity markets have been chewed to ribbons by broken lending models, huge deficits, dead credit and sky-high energy prices. Taxpayers are saddled with a clean-up none can afford and the economy, while not totally stopped, is grinding to a screeching halt. The country, every sector of the economy, must reinvent itself. Detroit must re-tool, airlines conserve even more, companies drive toward novel ways of limiting transportation and energy costs. They all need money to do it. In the middle of this situation, how are you going to move your own ball forward? Do you have what it takes? What makes you stand out? Everyone is looking for investment. You will have to scramble for each and every penny. Why makes you so deserving?
So the point is clear.the executive team must keep their eyes on the ball, manage the whole business, in order to successfully grow and reach the next level. This is nothing new. This is where the people at Thomas Financial Services (www.thomasfinancialsvcs.com) can help. They have the experience and knowledge to analyze, create and roll out the roadmap for a stronger and more efficient company through the development of internal processes such as finance, accounting, planning, forecasting, internal controls, project management, and the whole customer experience.
Little companies can succeed. Big companies fail every day. Failure to anticipate and plan kills your future. Recent blowups like Lehman and AIG drive home the point that when even the big boys take their eye off the ball, they strike out too. Chief Financial Officers turn organizational discipline into credibility with investors. Make sure your executive team is truly a team. Stay on top of your game. Plan your work, work your plan. - 15266
About the Author:
A credible start-up looking for funding and investors looking for great opportunities often find it difficult to connect Small Business Consulting through Thomas Financial Services LLC helps tune your company up, make the connection. CEO Thomas Mezger, tmezger@thomasfinancialsvcs.com and SVP John Sawinski, jsawinski@thomasfinancialsvcs.com have over sixty combined years getting companies to the next level. Get in touch with us today
