90-180 day assignment.
Requires REIT Experience and strong GAAP/IFRS CPA.
See contact page if interested.
90-180 day assignment.
Requires REIT Experience and strong GAAP/IFRS CPA.
See contact page if interested.
I met with a middle market company last week. It was owned by two charming brothers who had grown it over 20 years into a successful $30 million manufacturing business. We were discussing preparing the company for outside investment. If you ever listen to the NPR radio show Car Talk hosted by the venerable, Peabody-Award winning Tappit Brothers, Click and Clack, you have an idea of the type of guys who owned this business and how much fun I had talking to them.
While touring the facilities, one of the owners was talking about their differing management styles and said his brother practiced what he called ‘Management By Dumpster Diving’. Each morning, he would tour the facilities and each time he passed a dumpster or waste can, he would poke his head in to see what was there. It was a 24-7 operation, so this was his primary way of determining the waste and efficiency of the operation the night before. The dumpster diving brother claimed he learned a lot of interesting information about his company and employees over the years. The other brother claimed he was preparing for a future life on the streets!
This highlights what I love about entrepreneurs and why they need to make changes when they bring in outside investors. Entrepreneurs are there everyday, doing whatever they need to do to grow the business, taking risks, getting dirty if necessary, inventing their own methods and solutions that fit their unique business and personal management style. Private equity groups are not going to go dumpster diving to determine the previous day’s waste. Larger companies with offsite ownership need systems and policies in place to measure and report KPI’s such as raw material usage analysis and production efficiency. It’s not necessarily better or worse than the dumpster diving approach. It’s just a good example of how a management process that works for a company at a particular stage of it’s development will not work as effectively as it grows and the ownership structure changes.
As an interim CFO for companies like this, I can help identify the necessary changes and implement them, before or after the change in ownership. Please contact me directly if I can help your company or private equity group in this capacity. For 7 tips on being successful as an interim CFO at private equity portfolio companies, click here. And feel free to share any interesting management techniques you’ve come across and post them in the comments below or tweet them to me @middlemarketCFO with hashtag #ManagementByDumpsterDiving.
I attended an IMA meeting this evening and the guest speaker was Jeff Lenning, President of Click Consulting and author of “Excel University: Microsoft Excel Training for CPA’s and Accounting Professionals”.
The theme of the presentation was basically “eliminating inefficiencies in recurring use spreadsheets”. I build a lot of large spreadsheets with vlookups, pivot tables, charts, if statements, conditional formatting and other relatively advanced functions. To be honest, I did not expect to learn much, but as is often the case, the more you know, the more you realize how much you don’t know. I quickly learned several relatively simple tricks that I can apply more consistently throughout my recurring use spreadsheets to save a lot of time for myself and my clients. I’ll summarize some of these below:
I have used many of the tips above, but the key is to use them more consistently. If you have any additional Excel tips or tricks you like, please share them in the comment section below.
Like a basketball player who keeps one foot planted while spinning on it to explore different directions, companies pivot by staying grounded in what they’ve learned while shifting directions to explore a new customer base or providing different products or services to your existing customer base. The pivot is a term coined by Eric Reis in his book The Lean Startup and it has gotten a lot of buzz in the startup and growth communities of late. Nearly every successful company has pivoted on some level and there are many classic examples. Nintendo started selling playing cards before switching to electronic games. Tote was an online clothing catalog before it pivoted and became Pinterest. So, how do you do it? For starters, make it a topic of discussion in management meetings on a regular basis.
Being able to pivot is critical for middle market companies. The good news is, it is easier to do at this stage while everyone is accustomed to constant change. This makes it easier to pivot without leaving a divot!
Have you pivoted in your company? Share your story in the comments below.
Photo courtesy of streetballblog.
Most middle market businesses have either been or will be the target of attempted payment fraud. The good news is when you are following best practices to prevent payment fraud, it is fairly easy to detect and prevent the attempted fraud from being successful. Best practices include the following:
1) Implement Positive Pay: This is an early warning fraud detection system that helps you prevent fraud before it occurs. It involves sending your bank an electronic file of payments made as you make them, which they can cross reference as checks are cashed. The service is inexpensive and can be provided by your bank or your ERP system provider.
2) Daily bank reconciliations: Some people think daily bank rec’s are overkill, but the truth is they prevent fraud, give you a clearer picture of your short term cash flow and they often actually save time. Minor discrepancies can be difficult to identify when you are working with a whole week or month of data. Reconciling daily makes it a simple task that can be easily performed by lower level accountants.
3) Use fewer paper checks and keep your check stock secured: Most of the attempted payment fraud is the result of fraudsters getting their hands on your paper checks and either duplicating them or using the information to make unauthorized ACH debits. Converting regular payees to electronic ACH payments reduces the risk of fraud.
Following these 3 simple practices will greatly reduce the risk of fraud and give you some additional peace of mind.
Unused Line Fees or Commitment Fees
Everyone understands loans have an interest rate applied to the balance or the amount borrowed. Not everyone understands business lines of credit generally come with ‘Commitment Fees’ or ‘Unused Line Fees’ applied on the amount of the line of credit not borrowed. It is generally a relatively low rate compared to the interest rate, and it is basically the fee the bank charges to have the amount of the line of credit available for you to borrow if and when you need it, even though you are not currently using it. Middle market CFO’s should understand the following 3 points:
(1) They may be negotiable.
(2) When comparing 2 or more loan offers, include the unused line fees in the analysis. The difference may be substantial enough to tip the scales to one loan versus another. If so, remember point #1.
(3) When determining the amount of the line of credit, include the unused line fees in the analysis. While it may be best to have more credit available than you think you will need, understand the cost and factor it into your decision.
Although the reason the banks charge unused line fees is understandable and the cost is relatively small (especially compared to the amount of interest you might be paying on the portion of a term loan you don’t need), unused line fees are often a source of annoyance to many business owners and CFO’s who simply can not get used to the idea of paying the bank a fee on money they are not borrowing. What types of fees and business expenses are the most annoying to you?
Sven has over 5300 LinkedIn connections. That is a lofty goal, but 500 is more realistic. Once you get there, your profile shows that you have “500+” connections and people will see you as a super connector. At the time of this writing, I have 259 so I have a way to go.
The first step is completing or improving your profile. Think of your entire profile as a key part of your personal brand. It is more than a resume, but done properly, it can essentially replace your resume.
The next step is searching for new connections. Using the Advanced Search options, you can find potential connections from your groups, schools, fields, companies, geographic areas or any combination of those options or more. When sending invitations to connect, you should personalize each message rather than using the default message LinkedIn provides. While strong connections are best, a weak connection is better than no connection so if you find yourself wondering whether you know someone well enough to send them a invitation to connect, the answer is probably yes you do.
Lastly, review your connections regularly and stay in touch. You can use tags to remind you who you need to schedule a lunch with or who you need to reach out to with a business opportunity.
You can see my LinkedIn profile using the button below (which you can create in LinkedIn). If we are not already connected, send me an invitation to connect. If you are moved to endorse my skills or write me a recommendation, even better! If you have any additional tips to get more out of LinkedIn, leave a comment below. I look forward to connecting with you!
BIG DATA is a big trend. With a multitude of brilliant minds pursuing the field, new innovations emerge daily, but the biggest applications of big data are probably yet to be pondered. Retailers are already using this data to know who you are, or at least what you look like, where you live, what you eat, what you wear, where you go on vacation, how much you spend and get paid a month, who your friends and family are and what you are saying about their products. Plans are underway to use big data to crunch consumer credit worthiness, predict the likelihood of mergers and acquisitions, prevent the spread of disease, combat crime, alleviate traffic congestion and who knows what else.
CROWDFUNDING – In 2012, 308 crowdfunding platforms across the world raised $2.7 billion, an 81 percent increase over the amount raised in 2011, according to the annual report released today from the Los Angeles based research firm, Massolution. The growth in 2012 represents an acceleration, up from 64 percent growth in 2011. Looking ahead, growth is expected to reach $5.1 billion raised in 2013, representing an expected 89 percent increase in the dollars raised, the report predicts. A trend is obviously developing.
As it exists, the majority of money raised with crowdfunding is still on donation or reward-based platforms, where an entrepreneur or artist raises small sums from a large group of people in exchange for a product sample or experience. Of the $2.7 billion raised in 2012, $1.4 billion was on these platforms, made popular by brands such as Kickstarter or Indiegogo. Lending-based crowdfunding, where campaign leaders have to repay their investors, equaled $1.2 billion.
Equity-based crowdfunding, where investors receive a share of the company in exchange for funds, was the smallest sector the market in 2012, totaling only $116 million. Until the SEC issues the regulations to allow the JOBS Act to take effect, private companies in the U.S. are only able to crowdfund from accredited investors. In a handful of other countries, equity-based crowdfunding is already legal. When the JOBS Act takes effect, the distribution of funds raised from equity-based crowdfunding is likely to increase dramatically. This will open early stage companies up to a new, much larger, group of potential investors and it will give unaccredited investors access to a new pool of investments.
3D PRINTING is not a new concept. The platform for it began with a 30-year-old technology called rapid prototyping. Although there were cost-savings benefits to rapid prototyping, the equipment was very large and expensive and had very limited capabilities. Fast-forward to 2013. Hardware and software advancements have modernized rapid prototyping, allowing 3D printing companies to enter the market. Today’s 3D printers provide more accuracy and precision than rapid prototyping because the design of the object is created separately in 3D software. High-end 3D printers now allow multiple materials to be fused together in one print.While the platform for 3D printing is more than 30 years old, today is the first time that 3D printers have become inexpensive enough to be used by enthusiasts and small businesses to create physical objects. It is similar in that sense to the emergence of the personal computer, and we know the sort of impact that had on business productivity and nearly every other aspect of our lives.
The real opportunity of 3D printing is that it is giving companies the ability to produce a wide range of objects on demand, with little or no inventory costs. Imagine a ‘virtual’ parts catalog, made up of sets of 3D files that can be printed on demand. Because the inventory is virtual, it would cost very little to offer customers an ever-expanding catalog of products and replacement parts. For a small premium, customers would have the option of creating whatever they want. With the rapid advancement of 3D printing, we are entering an era in which it is possible and economical to produce products at a low volume and with mass customization. 3D printing has the capacity to change the definition of obsolescence, as well as the level of control that customers have over their products.
MADE IN AMERICA – This has been a trend in reverse for the past several decades, but it is already starting to change. The labor costs have inevitably crept up in places like China, making U.S. manufacturing more competitive. If you think this trend will be small compared to the others, consider that the other trends listed above, particularly crowdfunding and 3D printing will contribute greatly to the Made in America movement.
“Regardless of which sources of growth their companies pursue, the results indicate that, in the coming years, CFOs will need to up their game in a wide range of growth-related activities.” Click here for full article.