Saturday, January 21, 2023

Virtual CFO Services

For clients, REPCFO's main focus is to provide value. For any service provider, every dollar invested in services should yield some form of return on investment (ROI). Yes, REPCFO services may show up as an expense on your P&L statement under "professional services," but in all of my engagements, the expectation is the Net Profit growth of your organization will far exceed your investment in the services provided.
When engaging with a Virtual CFO, you should expect:

Financial Planning & Analysis

Any engagement begins with a baseline analysis of the current state of operations. As a rule, REPCFO provides an analysis of the current state of operations and works with the ownership team of the organization to identify key areas where improvement will yield measurable improvement in overall organization improvement. 

Short Term Strategic Planning

Most early stage organizations that do not have the resources to hire a full time CFO could benefit from a voice that can help the organization with understanding the key performance and strategic priorities that will yield improvement in customer satisfaction, market growth opportunities, operational productivity, and pricing strategies.  REPCFO works with clients to help them visualize the potential results of various strategy enhancements and establish measurable expectations of success through financial forecasting.

Loan Packaging Assistance and Financial Due Diligence

With years of experience of raising both equity and debt capital, REPCFO can produce loan packages or financial due diligence so investors that the information necessary to make quicker approval decisions. REPCFO is aware of many points of capital access in the Pacific Northwest and can provide guidance regarding financing opportunities.  REPCFO does not serve as a financial broker for any financing group and does not accept commissions on financing deals, so all advice is geared towards what is best for our clients.

Accounting System Cleanup - Set-Up

REPCFO can quickly recognize if financial statements are not serving their intended purpose to guide the measurement of business performance in real time.  Our team can help you set up or clean up you procedures for tracking financial performance so you have weekly dashboards to clearly measure business performance. Since each business is unique, our engagements begin with truly understanding your business model and providing a level of customization that few other financial services consultants offer. 

HR and Staff Training

REPCFO recognizes that many business owners are new to managing teams. With expertise providing HR and Staff training to organization of over 100 employees, our team can support your development of your team, establish employee training materials, as well as basic advice on compliance with Federal/State labor laws.

Saturday, March 21, 2020

Survival and Resilience

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” Charles Darwin

There is no denying that many businesses are in uncharted territory with the recent Covid outbreak and recent marketplace changes. This particular pandemic may be new and the impact more severe than previous challenges.  Still, our region has dealt with recessions, pandemics, disasters and other challenges to that impact the survival of small businesses.  I’ve personally owned or managed businesses that have been damaged by windstorms, earthquakes, lightning strikes, cars driving into our storefront, H1N1, SARS outbreak and the terrorist attacks of 2001. I wish I could say that I handled all of these challenges with grace and wisdom. I didn’t.  There was anger, anxiety and overreaction.  Fortunately, in all cases, my businesses survived in spite of some poor decisions on my part.  In hindsight, it took a combination of luck, support from others and significant adaptation in our operations to get through those challenging times.  I learned quite a few lessons along the way about being resilient during times of crisis.  Here are a few:

1. Revisit your budget process.  If you don’t have a budget process, you need to create one, ASAP.  Businesses run on resources.  You need to know what resources are necessary to keep your business afloat.  Your greatest adaptation you can make is to look at what resources you need to keep your business afloat during the challenging times.  It’s critical to chart differences in operational issues (where sales/expenses will change) and cash flow issues (receivables/payables/inventory). Looking at what payments are critical and what can be deferred is a proactive exercise and best done with at least one external mentor for support (friend, family member, accountant, bookkeeper, trusted consultant). Often someone slightly outside of day to day operations can help you prioritize necessity of expenses with some level of emotional detachment that the business operator will never have.  

2. Focus on customer maintenance and new customer development.  In any economic challenge, it is important to remember that no disaster in US history has completely stopped business activity.  Think of Maslow’s Hierarchy of Needs.  Now is a good time to think about the base of the pyramid.

People need food, shelter, healthcare and safety. The transfer of funds for these things has not stopped completely and there may be remote opportunities for your business.  Yes, things have changed, but so will our ability to adapt and keep our businesses relevant.  Even if there are no immediate opportunities for your business model, preparing sales strategies for resumption of operations can make recovery quicker.  If you can’t take care of your customers immediately, you want to have a plan in place to get them back once operations resume.

3. Look for financial resources.  I like the saying, “this too shall pass.”  I wish I could project forward how long it will take until there is a sense of normalcy in the marketplace, but I can’t.  Experience has shown that those who have access to financial resources are better positioned to weather challenges until the marketplace stabilizes.  Probably the biggest lesson I learned is that financial resources should be sought early.  If possible, you want low interest, long term financing to help spread this short term hurt over a longer period.  Of course, there is risk involved in any new investment of resources, so there needs to be some level of confidence that your business is positioned to recover before making a decision.  There are plenty of financing sources out there, but use diligence in assessing options and think outside the box.  The term "angel" is often misunderstood.  An "angel" is anyone that can support you with financing.  With this type of financing, terms can be negotiable and much more flexible. The are some great win/win options with private financing for small business owners and those with resources who wish to invest locally. No matter which financing you may choose, use caution to assess the cost of short-term financing before entering into any agreements.  I’ve unfortunately watched clients get into onerous terms for the benefit of quick cash.  I especially caution businesses to steer clear of merchant service loans.  They often have high associated fees and relatively short payback schedules that can hinder recovery efforts.

Ultimately, survival requires being nimble and thoughtful with the prioritization of resources to get through these difficult times. Be prepared to do things a bit differently, but also use caution with your choices. A calm and adaptive approach to the next few months is your best chance of weathering this pandemic.

Wednesday, February 5, 2020

Business vs. Busyness

Being successful in business is based on a very simple premise.  You need to have more income than expenses.

While the concept is simple, that does not mean that the execution of starting and operating a successful business is an easy undertaking.  Each day brings multiple possibilities of challenges.  How can your business increase sales?  Is your business experiencing an ongoing creep of new expenses?  Are new competitors entering an already saturated marketplace?

Running a business requires the owner to fill a variety of management roles, usually requiring multitasking on a daily basis.  Often, our clients tell us that there isn't enough time in a day to do the things that need to be done to be successful.  Still, there is a difference between running a business and just being busy.   

Being self-employed requires a certain amount of leadership and discipline.  Measuring how many hours you work at your own business is not nearly as important as tracking the productivity and operating results.  Answering the question, "Is this the best use of my time?" during a busy day can often help guide a better prioritization of your actions. 

On a daily basis, you should be aware of the productivity of your efforts, and if applicable, your employees.  Each business transaction brings an opportunity for analysis and the more successful business owners possess an awareness of what I like to refer to as the "profitability of the moment." They maintain an active thought process of evaluating transactions and manage towards better performance.   

Effective business managers have the ability to focus their attention on the areas where they can influence more profitable performance.  They delegate "busy" tasks whenever possible so they can focus on business development activities.  They are quicker to adapt to changes in the marketplace, make process improvements and bring new innovations to their product/service lines based on observations of consumer behavior.

As Stephen Covey noted, "The key is not to prioritize what's on your schedule but to schedule to your priorities."

Be mindful of what you can do in the moment to improve your business rather than getting tied up in the "busyness" of the day.