“Only in America”, says CEO after going from living off of an Exxon credit card to pulling in $4 million

By Allan Maurer 
 
ClearStar, Inc., a firm providing technology and services to companies that screen potential tenants and employees for their clients, has racked up 106 percent sales growth in the last three years, earning a spot on the Inc. 5000 list each year. Not bad, considering the economy was in the tank and employers were firing far more employees than they were hiring. Yet the small company made about $3.1 million last year and is on track to do $4 million this year.

Bob Vale in the kitchen of the ClearStar offices, a focal point for the family oriented company

That’s not the only unusual thing about ClearStar, either. The company pays 100 percent of its 19 employees’ benefits package, including medical and dental, encourages them to wear shorts if the Atlanta weather is steamy, and boasts a kitchen right smack in the middle of its curved modern offices.

It took a while for ClearStar’s founder and CEO Robert Vale, to grab the success he kept reaching for. “I failed twice,” he says. He’s also been fired from a job. We asked him how the company is funded.

“I funded it with two partners, (CIO Ken Dawson and Inside Director William White) $700,000, four mortgages and credit cards, lots of credit cards.” 

Not an overnight success

“ClearStar did not just pop up overnight,” he tells us. “We have been at this for 15 years, which predates the acceptance of the Internet as a business medium. “We struggled through the .com insanity and 9/11.”

He continued, “We made the transition from a bulletin board system, to software and to the Internet. At one point the company was half a million dollars in debt and we were living off of an Exxon credit card. I think we fed ourselves on Exxon hotdogs for several years. We built this company three times over.”

Was it worth it?

“Hell yes, this is America and it’s the only place you can do that.”

The ClearStar offices: not bad for a renovated warehouse

How to succeed in a down economy

The question we really wanted to ask though, was how the company managed to buck the downward trend in the economy, and do it while performing background checks on employees while companies are laying off millions of workers.

“It’s not really counterintuitive,” Vale says. “Risk and threats have gone up and people are trying to avoid that. There are fewer jobs, but more candidates and a background check becomes part of the decision making. If you have three candidates for one spot who are pretty even, they check all three.”

Also, he says, the company diversified and some of the areas it moved into are growing faster than its core business.

“Early on we looked at what place in the value chain our technology occupied for our customers,” he says. “We then looked at all the points that our technology touched, whether they be human processes or other technologies.”

“By having the blueprint of a value web, versus a value chain, we were able to see where we could make critical processes more cost effective for our clients.  So we really just let our technology organically grow.”

You have capabilities you didn’t know about

He explains that the company looked at its place in the value chain, in this case the screening and background check industry, and found it could become a middle man for criminal records checks as well.

As an analo....

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Structure Your Business For Success - Jun 22, 2010

Posted by: David Kirkup in Articles

You're probably familiar with Maslow's Hierarchy of needs from Business 101.  Humans have a basic need for food, warmth and shelter.  Until they have fulfilled those needs, they cannot think about other things.  Once they have fulfilled these basic needs they can start to move up the scale.  Next come Security needs, and then the need for Love and Affection.  As they fulfill these needs and move up the list, they want to achieve and feel more Self Esteem.  At the top of the pyramid is Self-Actualization.  Maslow describes self-actualization as a person's need to be and do that which the person was "born to do."  

The Hierarchy of Needs is a good metaphor for a business.  The business hierarchy of needs is simpler with just three levels.  In order for any business to progress and really take flight, it is necessary to evolve through each level. The first level of business needs is the Basic Infrastructure: 

Basic Infrastructure

Collections: Is cash coming in on time?  Are collection activities automatic and efficient?  Are you measuring and controlling receivables and being aggressive in taking action?

Payables: Are you managing Payables correctly?  Taking advantage of free vendor credit, and maximizing discounts available for accelerated payments?  Are you using electronic tools to stay on top of purchases?

Payroll and Benefits: Are you in outsourcing payroll and ensuring that taxes are paid in a timely manner?  If handling in-house, have you evaluated the risk you are taking vs. the cost of a service?  Are you providing a competitive benefits package?

Book-Keeping:  Is you accounting system working efficiently?  Is it providing you with the basic information on revenue and profitability?  Can you analyze profitability by product or region?  Is your book-keeper competent and honest?  Who is watching over your accounting system? What is your upgrade path?

Financial Control: Are you confident that opportunity for theft is minimal?  Are parts of transactions split between staff?  Are all books and records reconciled on a regular basis?  Do you have documented procedures?

Sadly, many companies don't have the basic financial infrastructure under control.  This is like building a house on sand.  B2B CFO has heard many tales about companies that "crash and burn" at critical times like growth, acquisition and exit, because of employee theft, inadequate financial information, failure to pay payroll taxes, or collapse of an overloaded accounting system.  For those who have satisfied the basic need of core infrastructure they can move up to Controllership issues...

Controllership

The next level of business needs are what we call controllership functions. 

Cash: Are you planning cash flow?  Do you anticipate cash needs?  Are your lines of credit adequate?  Have you "termed" debt correctly matching short and long term needs with appropriate debt formats? 

Profitability:  Have you benchmarked profitability?  Do you know the profitability of each product/ region/ rep?  Do you understand your direct costs and overhead and the effect on profitability?  Is your pricing model tied in to your quoting and accounting system?

Budgets:  Do you prepare an annual budget?  Do you prepare a rolling forecast? Are you measuring Revenue and costs against budget and taking corrective action?

Productivity:  Do you manage key metrics for your business - both financial and non financial?  Do you set targets for improvement and monitor trends and progress with Dash Boards?

Again, the percentage of companies that take an active role in Controllership is smaller than it should be. Many operate on a very basic level and attempt to wing it when faced with these issues.  Sadly, this is where companies can face fatal issues - when cash runs out, when the company finds out its key products are actually causing the company a loss, when deals are lost because of the lack of forecasting and realistic pricing capabilities.  So far, the company has been looking backwards.  Stopping at this point means the company is not really influencing its destiny, not achieving self-actualization which in the business world means growth, profitability and value. So we come to the highest level of the Business Hierarchy...

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Lonely At The Top - Jun 14, 2010

Posted by: David Kirkup in Articles

The role of business owner can be a lonely one. It's easy to surround yourself with good people,  but you can still feel that there is no one with whom to share your fears and  concerns, or brainstorm new ideas and strategies.

Outside input can help.  Simple questions that illuminate an issue or prompt change. Initiatives from other industries that help spark ideas and generate new business models. For any new and growing company, securing the right external advice and support is fundamental to success.

Too often, senior personnel keep problems close to their chest so as to avoid worrying staff unduly. However, this approach can cause additional stress and make a small problem seem larger than it really is. It is also easy to become so entrenched in a situation where it is not possible to see the wood for the trees and it then becomes difficult to think of solutions or innovative ideas.

So...how can you get the right advice? There are five simple steps that can influence the quality of the advice you receive:

• Find the right accountant – The mere fact that someone is completing your tax returns does not mean you are getting the best out of your accountant. A fast-growing enterprise needs a financial advisor who can plan ahead and proactively suggest ways to make strategies financially possible.
• Select the most appropriate professional for individual tasks – A common mistake is to appoint a lawyer or accountant to handle all legal or financial matters. It is wiser to pick and choose specialists for different functions. For example, payroll differs from corporate finance, while drawing up employee contracts does not require the same skills as protecting intellectual property.
• Assess your banking needs – A conventional retail bank can provide an excellent business service but if your growth plans are more aggressive, then it would be beneficial to enlist the skills of a corporate banking advisor. The key to success is in finding a service that supports the company you want to become, rather than the one you are now.
• Work with people you like – In business, it is often necessary to cooperate with individuals whom you may not like or respect. However, when seeking advice on the future of your firm it needs to come from someone you trust. It is worth spending time to find professionals you ‘click’ with and who complement your company.
• Don’t be too proud to ask for help – Never see it as a failure to ask for guidance. No one is infallible, and having people to support you can make the journey to success so much smoother. Nowadays, there is a proliferation of mentoring schemes, where experienced specialists are on hand to offer guidance and information on a range of topics. It is important to remember though that a mentor is not the same as an advisor; their role is to question and motivate rather than to offer instant solutions. Even if suggestions are never acted upon, their value is in helping to shape an alternative strategy.

B2B CFO® partners are real-world experts in managing working capital for business at the highest levels of America's fastest growing companies. "Cash. We Help You Get It" is not only our slogan; it is what we do with hundreds of clients every day.

Contact David Kirkup, B2B CFO Partner on 404 348 0326 or dkirkup@b2bcfo.com and let's talk.

Gross Profit Maximization - Jun 8, 2010

Posted by: David Kirkup in Articles

One key aspect to building value in a company is that of optimizing gross profit. Gross profit  is what you have left after the direct costs of the sale of a product or service, such as materials and direct labor, are paid for. It is expressed as a ratio of sales and should be as high as possible depending on the industry - certainly above 50% and sometimes as high as 90% in service companies. 

Gross Profit is a key metric for every business to manage, as it impacts both how fast your company breaks even and the amount of profit that can be earned once that happens. Every business has overhead costs such as rent, office, payroll that are relatively fixed and these have to covered before you can become profitable.  In other words, gross profit directly impacts risk and return. The levels of gross profit margin can vary drastically from one industry to another depending on the business. For example, software companies - which are selling services - will generally have a much higher gross profit margin than manufacturing companies - which may have significant labor, inventory and overhead costs built in to the cost of their product.

To illustrate how gross profit margin affects break even and profit, consider a company with $300,000 in fixed overhead expenses. If the firm's gross profit margin is 50%, it would need to generate sales of $600,000 to cover overhead. If we were able to increase gross profit margin by 2 points to 52% instead, break even would decrease by $23,000 or approximately 4%. The company would then start earning a higher profit of $0.52 on each dollar in sales after revenues reach $577,000, rather than just $0.50 on the dollar after $600,000.

Inadequate gross profit indicates problems with prices that are too low and/ or direct costs that are too high, and therefore problems with break even and profit. When a company is generating adequate sales but gross profit margins are low, it signals an issue in one or both of these areas. This lack of understanding often leads to decisions that only worsen the company's position, such as attempting to increase sales via lower prices, leading to even smaller gross profit margins - so-called "making it up on the volume"

Gross profit optimization often does not get the attention it deserves. Companies should be aware of the factors that will impact gross profit margins and pay close attention to them.

A B2B CFO advisor can help companies find a benchmark for gross profit margin using competitor data and industry averages to provide a targeted goal. They can also help measure and manage the factors impacting gross profit margins as they change over time. A B2B CFO can help analyze gross profit by product or service, and highlight low margin products, or help restructure service delivery to optimize gross profit.

Call David Kirkup, Partner at B2B CFO, for a complimentary "Executive Company Physical" and a plan for how to get where you need to be at 404 348 0326 or dkirkup@b2bcfo.com.

Financial Management And Visibility - Jun 3, 2010

Posted by: David Kirkup in Articles

Well managed companies employ many tools to optimize financial performance, some of which can be very sophisticated.  However, most of these techniques these fall within three key areas: accurate financials, adequate internal control and proactive management.

Invariably, companies that under perform their peers or experience fraud or some other catastrophe will have failed in at least 2 of these categories.   And the price of failure can be harsh.  Many companies that experience a negative event - such as a fraud perpetrated by an employee or a significant misstatement of their financial statements - may be forced into bankruptcy or may be forced to merge or restructure against their wishes.

So it is wise to review your business operations and determine if you are lacking in these areas.  If so, you should take quick, calculated action to supplement the areas of internal control, financial reporting and financial monitoring.  

Accurate, detailed financial statements produced in a timely fashion

• Management should ensure that financial statements and management reports are produced in a relatively timely fashion.  If your accounting staff cannot produce meaningful reports in a timely fashion or if the information is inconsistent or contains many errors, you could have a serious problem.  If erroneous data is being sent to bankers, auditors or joint venture partners, you may lose credibility or may incur financial losses directly attributable to the loss of confidence of your stakeholders – such as the closure of a debt facility.  You should ask yourself these questions:
• Is the financial data contained with reports consistent?  Does it dovetail with what you know is happening with the business?  Does it allow you to exploit new opportunities and control exposures?
• Are you able to answer relatively simple questions such as what has led to an improvement or deterioration  in your business over time or what is the biggest contributor to operating profit?

Adequate internal controls including adequate segregation of duties

• Most business fraud is quite simple in nature.  Making checks to fictitious vendors or altering such checks are very common.  Most fraud results from opportunity and lax supervision.

• Does your business have adequate controls and procedures in place to prevent errors and irregularities?

• Do the proper checks and balances exist so that one employee does not have an undue level of access or control ?  What controls and procedures are in place to prevent an employee from making an unauthorized disbursement by check or wire transfer?  What prevents an employee from setting up a phony vendor or phony employee in your computer system?

Proactive, well informed, inquisitive management

• The most valuable asset to a small business is astute management that asks the right questions, has a strong vision and is able to capitalize on opportunities quickly and efficiently.   This type of management will use the solid financial data at their disposal to determine where their business is headed, to change course and/or speed and use all their resources to get to their destination.
• Management will need to be able to “mine” data to determine how the business is doing and why?  Which clients are profitable and which are less so?  Which products generate the highest gross margin and which contribute little?  How are the trends in your business versus competitors of a similar size and make up?  How do you position your business for a trade sale and how do you modify your business to give rise to a higher purchase price from an acquirer?

• Management will need timely, reliable financial data produced in a strong control environment to be really successful.  Otherwise, you will be making decision and determining a course that might not be the best one.

If your management is not able to be really proactive, to gain the knowledge that they require from management data and to be truly inquisitive, you may be incurring serious exposure due to poor performance in financial management.

The inclusion of a B2B CFO® partner onto your senior team can give you the financial expertise and strategic insight that you need to maximize the performance of your operation. &....

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Managing Cash Flow The Simple Way - Jun 1, 2010

Posted by: David Kirkup in Articles

"Cash... we help you get it."  It's the B2B CFO slogan and we like to think it's a "twofer" slogan.  We help you understand cash flow and why it's important, and by improving every aspect of your company's financial performance we make you a better candidate for investment and loan financing.

So how do you understand cash flow? Let's take a look at seven main drivers of cash flow:

1. Accounts Payable and Cash Flow. Every business relies on suppliers and trading partners to provide goods and services, without which we could not serve our customers. When we purchase goods and services we typically buy on credit with a pre-determined set of payment terms. When payment is due, we use cash to settle our debts. The faster we can receive and transform purchases into our own products, the faster we will have finished product to sell to our customers, which ultimately means cash in our door. We need to focus on : 1) reducing supplier order-to-consumption lead time, 2) reducing work-in-process inventories and 3) optimizing use of credit terms with suppliers.
2. Accounts Receivable and Cash Flow. Accounts receivable is a significant driver of cash flow. In fact, your outstanding day’s receivables can often be the differentiating factor of the company’s fiscal viability. Remember, cash is the life force of your business. In fact, it is wise to make all salespeople responsible for collections in addition to selling products - or at least commissioned on collected sales.  Our ultimate goal is to receive payment as quickly as possible after we make a sale. Key to this outcome is delivering the perfect order. The perfect order will provide the customer with the right product at the right place at the right time and in the right quantity and condition, thereby encouraging the customer’s prompt payment. Areas of focus should be: 1) deliver the perfect order every time and 2) reduce days sales outstanding by aggressive management and follow up.
3. Revenue Growth and Cash Flow. Many management gurus have argued that the only purpose of a business is to develop a customer. The logic here is that without a customer there is no business proposition. However, some customers are better than others. Therefore, it is important to understand that cash is generated from good customers. Increased revenue from good customers will result in increased cash flow. Try to: 1) identify “good” and “bad” customers based on the profitability of individual accounts, 2) retain current customers and develop new, profitable customers to generate increased cash flow, 3) reduce inventories to become more cost competitive and 4) credit qualify new customers and existing customers periodically.  And growth can sometimes be bad.  Unless you know your sustainable growth rate, you run the risk of out-running yoiur cash capacity.
4. Gross Margin and Cash Flow. Gross margin is generally defined as net revenues less cost of goods sold. Gross margin is the first line of profit contribution that the firm will see from operations. The larger the gross margin, the more gross income we will have to contribute to corporate overhead and profitability. This will result in cash generation (after dealing with collection). To increase gross margins, we need to ensure that our variable cost curves do not grow proportionately with our revenue curves. That is, we need to be able to generate increased revenues without a one-to-one increase in cost of goods sold i.e. doing more with less. To reach this goal, we need to focus on the activity drivers of cost of goods sold. Action items would be to: 1) reduce overall supply chain and manufacturing lead times and 2) reduce work-in-process and raw material inventories in order to reduce inventory carrying costs and therefore reduce overall cost of goods sold, 3)Analyze profit contribution by product, territory or other classification to eliminate areas that do not contribute fully.
5. Selling and Administrative (SG&A) Expense. Although not all companies call it the same thing, Selling, General and Administrative (SG&A) expense is the most common term used for corporate overheads. Reducing the corporate overhead burden will result in increased cash to the bottom line. Substantial operations activities and costs are often rolled into SG&A. Unfortunately, many of these activities and their costs are regarded as necessary evils—merely costs of doing business. In today’s business climate, where 1 percent of sales can mean the difference between viability and bankruptcy, these supply chain operations represent a key area of concentration and, perhaps, means of competitive differentiation. To achieve advantage, the company must: 1) improve internal processes and reduce SG&A expenses ultimately to....

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   Building Financial Insight - May 28, 2010

   Posted by: David Kirkup in Articles

   Many small and mid-sized companies have basic accounting systems. They have a book-keeper, maybe a Controller. They have an accounting system - probably QuickBooks, or possibly a more advanced product. What they usually don’t have  - and what for many is a major weakness - is a coordinated Financial Process.  Jim Collins, entrepreneurial author and guru, says there are plenty of great mousetraps but not very many great processes and that's where entrepreneurs should focus. The better process will enable others to build better mousetraps.

   A B2B CFO can help you build such a process for financial excellence.  Here are the ten key steps to taking financial control of your company.

   • Key Metrics - Select some key performance indicators and report daily, weekly and monthly
   • Cash Flow Forecast - A weekly forecast of cash will create a strong control discipline and enable you to look forward at least a month.
   •  Timely Financial Statements - Accurate and timely financial statements are essential for managing results
   •  Financial Analysis - Carry out a monthly comparative review of financial and other indicators
   •  Commentary - Prepare a monthly operations overview with suggestion for improvement and strategic development
   •  Monthly Ops Meeting - Chair a monthly meeting on the financial performance, impact on strategy and implications for change
   •  Financial Planning - Develop budgets, plans and rolling forecast to manage desired activities
   •  Cash Management - Build relationships with banks and investors to ensure company cash flow plan materializes Financial Control - Implement process and procedures to deter fraud, improve efficiency and maintain confidence in results
   • Financial Systems - Implement and tune best current systems and staff to improve and maintain information flow

   To get started on Financial Insight, call David Kirkup, Partner at B2B CFO on 404 348 0326 or dkirkup@b2bcfo.com.

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   Creative Ways To Get Cash Now - May 27, 2010

   Posted by: David Kirkup in Articles

   Right now, many business owners are concerned about cash flow and where to turn to if the bank won't help. It's now time to get creative. The breakdown in the credit markets has had lasting effects and many businesses, particularly owners with bad credit, unproven ventures, new start-ups or companies tied to troubled industries, are having difficulty.

   As a result, there is much interest in alternative sources of financing, which can range from receivables factoring to bartering and social network loans.

   Factoring , although it has a reputation for high cost, has been around for centuries and in the right situation it can be valuable. First of all, you can receive cash in about five to 10 days - or even sooner, from your invoicing date. This can be critical when your company is in a crunch. Additionally, there is no requirement for your company to have a credit check. That's because factors normally only want to evaluate the ability of your customers to pay.  The key is the credit quality of your customer.  Another similar source is PO Financing which raises money based on approved purchase orders - although it's generally only available for product based orders - not services.

   Another approach is to use an online marketplace, such as The Receivables Exchange, where you can post your receivables on a private Web site and have financial institutions bid on them. Somewhat similar is FTrans which provides funding as part of an accounts receivable management process.

   It's not always easy for small companies to get traditional bank loans these days. Major financial institutions have written down over $400 billion in bad investments over the past couple of years and banks are scrambling to raise depleted coffers. That usually hurts small companies more than their larger counterparts.

   Asset-backed loans are commercial loans backed by company assets-anything from a company's inventories to its accounts receivable. These loans differ from traditional commercial bank loans because they cost more, require lenders to scrutinize assets more thoroughly, and sometimes require physical inspections that most banks wouldn't conduct. Nevertheless, they may be a match for a company whose bank won't take their call.

   Bartering has gained currency as a relatively easy path for small companies to get goods and services without having to dig into cash flow. According to the most recent numbers compiled by the National Association of Trade Exchanges (NATE) in Mentor, Ohio, some 400 barter exchanges in the U.S. and Canada generate transactions worth $4 billion a year. For small businesses, ramping up their own use of barter is a strategy that allows them to reserve cash and still expand operations at a time when credit lines have yet to thaw. Larger customers may finance working capital to ensure an ininterupted supply of niche manufactures - especially when te product is complicated and difficult to quickly resource.

   Social lending is another similar, but more organized option that is based on social networking concepts through the web. Prosper is an auction-style site that connects borrowers with lenders and promises both sides more favorable interest rates than banks by cutting overhead costs. Loans up to $25,000 are possible with "lenders" bidding on interest rates based on the credit quality and "Story" of the applicant. This is worth watching as it matures.

   Credit Unions, As nonprofit organizations, credit unions don't aim to make money from their customers, so their loans typically carry lower interest rates than bank loans do.

   Using a 401K to invest in a business is a little known option. Sure, you can liquidate your retirement fund and get killed on taxes, or take a loan which is limited to about $50K, but you can also use a self directed fund to invest in a business.
   
   VC funding is highly over-rated and a little like buying a lot....

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   Small Business Captive Insurance Companies - May 26, 2010

   Posted by: David Kirkup in Articles

   Captive insurance companies were initially established by Fortune 500 companies to manage self -insured risk, for tax minimization and to build investment funds for corporate purposes. New companies e....

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   Why A Full Time CFO May Not Make Sense - May 24, 2010

   Posted by: David Kirkup in Articles

   In these challenging economic times, I think it's worth evaluating where you spend your accounting dollar and how effectively you are using resources.

   Every company in a recession does a lot of soul searching about cost-cutting, and as payroll is generally the elephant in the room we eventually have to get to the tough decisions on employment.  Generally, it's your CFO making those decisions and they don't usually recommend themselves for the chop.  So in the interest of fairness - and my own business development - I would like to review some of your options.

   A seasoned CFO costs between $150,000 and $200,000 or more.  If your "CFO" is earning less than, say, $120,000, then they are not really a qualified CFO - most likely a Controller.  A good source on this is Salary.com.  Benefits and taxes would add about $30,000 to this number.  You may pay a 20% annual bonus, so add another $30,000.  It's probably unlikely they have a car or other big corporate benefits, so we will not add anything here.  Figure another $20,000 for office space and other connected overhead and we're looking at $230,000 to $280,000 a year.  That's a lot of green! 

   Now, in a company with $10 million to $30 million in sales, it is extremely unlikely that a CFO is actively busy in a CFO role for 40+ hours a week.  At B2B CFO®, we typically direct the high level financial activities of this type of company within one day a week - more if we are in clean up mode,  less once systems, procedures and well trained accounting staff are in place.  Thus, it may be that you are paying premium pricing to have your "CFO" perform many mundane tasks as they fill their weekly schedule.  At B2B CFO® we firmly believe in delegating tasks to the most cost effective level.  Not only is this efficient, it also ensures you have a more balanced financial organization with qualified and well trained staff ready to step into a higher role if someone leaves.

   A highly seasoned and experienced B2B CFO® would cost less than 10% - 20% of the full time CFO.  Finally, does your full time CFO belong to an active network of over 100 highly qualified CFOs - many with experience with well known top-drawer companies, or former partners with Big 15 CPA firms, bringing a vast store of industry specific knowledge to bear on your business problems?

   If you are not happy with your current CFO, or feel that you are not getting timely and acurate financial information, or would like an independent discussion about your business then it's time to talk with B2B CFO®.

   For a conversation about the best way to re-organize your accounting department, and to start improving profitability and company value, call David Kirkup, your B2B CFO® on 770 845 6897 today.

    

    

    

    

    

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   Make It Fit One Pagebusiness Metrics - May 14, 2010

   Posted by: David Kirkup in Success Stories

   You may be familiar with DashBoards and KPIs or Key Performance Indicators - a term beloved of big consultants.  You may even have seen those expensive software packages that purport to gather key criteria and display them as pretty speedo dials and traffic signals.   A speedometer dial works fine in your car - it tells you how fast you are going. It can't, however, tell you how fast you have been, or will be going, or your relative speed to other competing cars.  It can't relate your speed to other aspects of your car's perfomance.  When you translate it to a business report, it's just a fancy way of showing ONE data point of information.  ONE data point.

   I believe dashboards are a superb tool for smaller companies to monitor the workings of the business.  But I like to use small graphs that can depict a rolling 13 months history against a target.  Using this technique I can pack as many as 20 graphs on a page depicting over 500 data points in an easy to use format.

   Some of the many benefits of my Dashboards are:

   • They can quickly highlight underling trends and connections between data that you might not find with hours of studying traditional reports.

   • They reduce the piles of paper reports that take time to produce and rarely get read by the people who need the information.

   • They quickly communicate activity across the organization and can be used to monitor cash, financials, sales, purchases or non financial metrics such as environmental variables or customer service measures.

   Let's take a look at some examples.  The first one is a weekly Cash Dashboard.  I use this chart to display 14 different KPIs including Sales Trends, AR and AP management, Incoming and Outgoing cash, Line of Credit availability and much more.  In total it shows about 400 data points on one page.  I can use it for projections as well to quickly see what my client's cash needs will look like in a month or two.

   Another example is a Sales Dashboard.  This graphically provides information on a company's top customers, showing monthly and YTD figures, as well as growth.  It also shows the sales trends over 13 months against a budget or the prior year for all customers.   I customize this directly to my clients' needs, and it can be supplemented by other sales target information to support the sales management activity.

   A final example shows a company's Financials Dashboard.  In this chart I have extracted key figures from a manufacturers income statement, balance sheet and cash flow and show the information in table and graphical form.  A perfect way to quickly summarize recent trends, make connections between key figures and provide early warning signs of declining performance. 

   In three pieces of paper I have presented about 1,400 data points, with a very easy way for a business owner to stay on top of key indicators of progress.  I use this same technique to monitor purchases, loan covenants, production factors, employee utilizations in professional firms and many other situations. 

   So there are the facts - almost 1,400 of them.  The next time your company needs usable intelligence fast call for the expert on Dashboarding.  David Kirkup, Partner with B2B CFO , will quickly get you up to date.  Call him on 404 348 0326 or dkirkup@b2bcfo.com.

    

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   Don't Ask The Barber If You Need A Haircut Buffett - Mar 3, 2010

   Posted by: David Kirkup in Articles

   A KPMG study conducted in 2000 determined that only 17% of Mergers and Acquisitions examined created a substantial return and, even more discouraging, 53% destroyed value. Validating these findings, a six year study by Business Week showed that 61% destroyed value that existed prior to the acquisition.
   
   Which is why Warren Buffett, in a recent shareholder letter said, “Don’t ask the barber if you need a haircut”.   It was his thinly veiled dig at Wall Street bankers and the perverse incentive system for corporate “advice” on mergers and acquisitions — namely that bankers are paid only if a deal is completed. Given how the incentives work…you will get a haircut.  Buffett, of course, is no stranger to deals and he’s got an idea for companies that think they need counsel: reward one advising bank if the deal goes through, and another if it doesn’t. 
   
   So…what are the implications for smaller companies?
   
   For most business owners the most significant M&A deal they do will be the sale of their company.  There are 20 million companies with employees under 1,000, and about 70% are expected to change hands in the next 10 to 15 years.  But only about 20% of companies will actually complete a successful sale.  Many owners begin their Exit Plan by speaking with a Business Broker or M&A advisor – transactional advisors who only get paid for a sale.  So, it’s no surprise that they are advised to get the haircut.
   
   A better way to begin an Exit Strategy plan is to discover your own goals, personal circumstances, and needs which can depend on how you treat your business – as an investment or as a lifestyle, whether you have developed independent retirement funds, what your family and estate tax situation is.  After a review of these factors, you can then evaluate some Exit options – which might include Private Equity, Management buy-outs, ESOPs, and even strategic gifting – as well as a Sale.
   
   Once this review is complete, you can now pick an advisory team.  If a sale is indicated then it will be time to employ a value enhancement process to maximize sale proceeds, and to engage with a reputable M&A company.  Other advisors will include experts in legal, estate, and tax matters.  For a full discussion of Exit Strategy Planning, contact a B2B CFO® partner.  David Kirkup – 404 348 0326 and dkirkup@b2bcfo.com

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   Peace Of Mind with Effective Cash Flow Management - Feb 26, 2010

   Posted by: David Kirkup in Articles

   Recently I have met a number of business owners who have made a decision to run their books on a cash basis.  Surprisingly, these are not “mom and pop” companies, but have revenues exceeding several $million. They explained that things had been very bad over the last few years and that this was the only way they felt comfortable managing the business. 
   As a CFO I don’t agree with this approach – it’s a little too much like the old jam jar accounting process where you set aside cash amounts for expense categories, and when the jar is empty – you are done, at least until the next pay check.  Let’s just make sure we understand what is happening.
   
   Cash Basis
   
   If you use the cash method of accounting, you record income only when you receive cash from your customers. You record an expense only when you write the check to the vendor. Most individuals and many new companies use the cash method for their personal finances because it's simpler and less time-consuming. However, this method can distort your income and expenses, especially if you extend credit to your customers, if you buy on credit from your suppliers, or you keep an inventory of the products you sell.
   
   Accrual Method With the accrual method, you record income when the sale occurs, whether it be the delivery of a product or the rendering of a service on your part, regardless of when you get paid. You record an expense when you receive goods or services, even though you may not pay for them until later.
   Accrual accounting is required by GAAP standards  - the "Matching principle" requires expenses to be matched with revenues as long as it is reasonable to do so.  This principle allows greater evaluation of actual profitability and performance (shows how much was spent to earn revenue).
   The accrual method gives you a much more accurate picture of your financial situation than the cash method. This is because income earned in one period is accurately matched against the expenses that correspond to that period, so you get a better picture of your net profits for each period.
   
   Pros and Cons.
   The cash method is maybe easier to maintain because you don't record income until you receive the cash, and you don't record an expense until the cash is paid out. But Cash basis accounting does not conform to Generally Accepted Accounting Principles (GAAP) rules – since revenue and expenses are not matched, and there are specific IRS rules that specify that companies of a certain size cannot use the Cash Basis for tax purposes. If you maintain an inventory, you will have to use the accrual method, at least for sales and purchases of inventory for resale.
   
   The accrual method gives you a more accurate picture of your financial situation than the cash method.   For a larger company using cash basis accounting and requiring audit, there will be additional audit costs associated with converting the company to an accrual basis.
   
   The core problem with Cash basis accounting is that you lose the ability to manage the business pro-actively.  It’s like checking the bank account every week and making spending decisions based on the bank balance.  Without an accurate picture of true revenue and expenses, how can you understand profitability – of products and people?  How can you identify collection problems, and weaker customers.  How do you take advantage of vendor credit? How do you explain your business to the bank, and give them a comfort factor that you have control?  How do you forecast cash flows six months out?  In short, how do you get peace of mind?
   
   So how can we address the genuine concern about managing cash flows that has caused some companies to adopt a cash basis approach?  The solution is financial visibility.  There is no reason why a company cannot manage cash flows very tightly, while having the advantages of Accrual accounting.  Weekly and monthly cash flow forecasts are essential, financial dashboards will help to visualize and track key metrics.  Detailed long term budgets and plans will help the business predict the future, and determine what contingency plans are needed.  Planning cash flow is the most effective way to ensure that additional funding is available when needed.
   
   A B2B CFO is an affordable way to develop more financial visibility.  Call David Kirkup, Partner with B2B CFO on 404 348 0326 or dkirkup@b2bcfo.com.

    

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   Consumate Professional - Jan 30, 2010

   Posted by: David Kirkup in Testimonials

   David has the uncanny ability as a financial officer to think outside the box to help his clients be more successful. He is very quick to pick up on potential new methods that translate into bottom line advantages. He is the consumate professional, bright, and an asset to any company in need of either strategic or tactical financial help.
   
   Norman Meullen CEBS Fellow, President, Benefits Retain People, LLC

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   Clear Understanding Of Product Line Profitability - Jan 30, 2010

   Posted by: David Kirkup in Testimonials

   As owner of a small service company, I have had to analysis and stay on top of my numbers in this harsh economic climate. David met with me several times and offered great advice that I now use in my company daily to have a clear understanding of profit by product line, cash flow analysis and integrating my softwares to allow me to be able to efficiently stay on top of these money issues. I would highly recommend David services. David Neel Mobile Glass USA President
   Top qualities: Great Results, Personable, Expert

   David Neel

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   Top Notch CFO - Jan 30, 2010

   Posted by: David Kirkup in Testimonials

   David is an asset to any company looking to outsource their CFO responsibilities. He is hard working and focused on providing the best direction for your company to excel - helping you make the right decisions based on your financial strength of your company. I have seen him at work and was very impressed. He is always professional and a Top Notch CFO.

   Michael Dahlhauser, Owner, Astila Corporation

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   Cost Control And Increased Market Reach - Jan 30, 2010

   Posted by: David Kirkup in Testimonials

   Dave was instrumental in helping us with ideas on how to control costs and increase market reach without increasing investment. His insight into the financials was extremely helpful in identifying spending gaps, ROI, and future investment optimization. Moreover, his grasp of the business, his demeanor and his candor made him even more of an asset to our division. It was truly a pleasure working with him. With Dave’s help, we were able to easily identify non-strategic spending and reallocate those dollars to higher revenue generating programs. I would highly recommend Dave to anyone looking to improve their bottom line
   
   Mark Johnston, Director, Software Channels, Hewlett-Packard

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   Talented Executive - Jan 30, 2010

   Posted by: David Kirkup in Testimonials

   “David is a talented executive that I greatly enjoyed working with. David exhibits the rare strength of pragmatism and analytical rigor. I strongly endorse David.”

   Robert Covington, CEO, Firstdoor CEO
   Principal at The Stephens Group

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   Meets Client Needs With Proactive Solutions - Jan 30, 2010

   Posted by: David Kirkup in Testimonials

   It was a pleasure to work with David; he is a very knowledgeable, innovative professional. I worked with David in different roles at Willis and he always does his homework and is prepared to meet clients' needs by delivering a proactive solution.”

   Anjanette Simone, Senior Vice President, Employee Benefits, Willis

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   Testimonial - Clear Choice Telephones - Jan 28, 2010

   Posted by: David Kirkup in Testimonials

   I would highly recommend David to any company looking for guidance in the financial area of their business. He did some consulting for our company and in a few short hours gave us a procedure to more accurately bill for our services, directly resulting in increased revenues. David and I have also worked with mutual clients and I have had the opportunity to observe his professionalism and industry expertise in a real world environment.
   
   Paul Mancini, SVP, Clear Choice Telephones

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   Testimonial - Enwisen - Jan 28, 2010

   Posted by: David Kirkup in Testimonials

   David was instrumental is helping build a company that Enwisen acquired. David continued to help drive the combined company to success in a difficult economy and competitive marketplace. I would highly recommend David for his knowledge in the accounting area, but also as a strategic thinker in all facets of business
   
   Wally Smith, CEO, Enwisen, Inc.

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   Company Has Grown Stronger - Jan 28, 2010

   Posted by: David Kirkup in Testimonials

   David works as a contract CFO at a client for which we offer audit services. David has provided great benefits by assisting the company and training them to focus on cash flow and other operating dynamics essential to the Company's business. He has enabled them to implement policies and scorecards that help them focus on crucial factors for moving the business forward. As a result the company has grown stronger even in today's poor economic environment. He is truly an asset to the 
   
   Glenda Leduc  - Leduc & Phillips LLc CPA Firm

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   The Rot Spreads Business Fraud - Jan 27, 2010

   Posted by: David Kirkup in Articles

   Desperate times lead to illegal measures

   A former bookkeeper for a small insurance broker in Georgia was recently charged with stealing more than $1 million to pay for trips and shopping sprees.  Credit card bills showed she traveled to Disney World, New York, Washington, Honolulu, New Orleans, San Francisco, Lake Tahoe, and (of course) Las Vegas.  She apparently under-booked revenue invoices to create a secret fund of excess cash, and then forged checks  to siphon off the funds over a period of five years. 

   There were more red flags here than the watch-listed "Christmas Terrorist’s" cash-only, one-way, no luggage, near disastrous plane trip from Nigeria to Detroit.  But you have to ask…what were the owner’s thinking?  Probably that she was a gem, and she has “never taken a sick day – ever”.  How can $1 million disappear in a business that probably bills no more than $ 3 - 5 million a year?

   
   PriceWaterhouse Cooper has conducted an annual study on economic crime for the past ten years.  A third of the participants reported suffering an economic crime in the last year – theft and accounting fraud being the most common and seeing the sharpest rise.  The rise in fraud stems from a mixture of increased opportunities and growing incentives.  Companies have reduced the number of employees who monitor workers at a time when employees are more tempted to break the rules because their living standards are eroding and their jobs are looking shaky.  Economic crime has dismal consequences for everything from company morale to financial performance: a quarter of companies that reported accounting fraud believed it had cost more than $1 million.  What can be done to stamp out the problem?  PWC believes that senior managers should play a more active role in combating the problems.  Owners and senior executives are apparently much less likely to notice economic crime than lower level employees.  More realistically most companies should consider hiring a part-time CFO.  In many cases, for less than the cost of the monthly phone bill, a B2B CFO® can help deter and prevent economic crime from taking place.  So, what should the small insurance broker have done to prevent this $1 million calamity – which calls into question the integrity, business savvy, professionalism and continuity of the firm?
   
   A multi-stage approach would focus on internal control, on regular review of banking records and reconciliations, on regular dashboards for key metrics, on questioning revenue levels and low profit margins and benchmarking against industry standards.  The simple presence of an outside CFO can often be enough to deter opportunistic attempts to steal company cash.
   
   To discuss your business and dvelop a fraud prevention plan, call David Kirkup – Partner at B2B CFO® on 404 348 0326 or dkirkup@b2bcfo.com.

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   Do You Budget - Jan 18, 2010

   Posted by: David Kirkup in Articles

   I get annoyed when politicians shut down public policy discussions about health care by grinding on about"Socialized Medicine", totally oblivious that they have been enjoying premium benefits at the public trough for many years. If you want to know what a politician really thinks about health care - follow their deductible.

   Employee benefits are perenially cited as an employer's worst nightmare - can't live with 'em, can't live without 'em.   Costs are uncontrollable, employees are never happy, each year brings a round of plan surgery as the employer nibbles around the edges of the deductibles and co-pays, trying to keep benefit costs lower than their entire cost of goods sold.  But why is this such an intractable problem?  Are we faced with a continual escalation of costs that forces more and more employers to cry uncle and cease offering benefits? As a self-employed individual with an expensive policy, I know that employees typically place low value on their benefits, and frankly, don’t realize how lucky they are.   As a B2B CFO^®, I know that clients hate dealing with EB and are caught in the middle.

    I have a great deal of experience in the insurance/ PEO/ benefits field, so I follow the health care debate fairly closely.  The basic problem with employee benefits insurance as it is usually done is this: “Today’s paradigm – where one entity pays the cost and another derives the benefit – has fostered inflation, inefficiency, and dissatisfaction for both employers and employees.”  Here are some of the positive trends in small employer benefits that are starting to happen:

   1. Defined Contribution: The employer sets a contribution based on affordability and competitive need.  It makes it easy to budget, it begins to remove the employer from the EB maze, and focuses on a simple annual financial decision.  It’s as different from traditional plans as the 401K is from the old IBM pension.  Defined Contribution vs Defined Benefit!
      
   2. Large Group Underwriting: I don’t think this part of the model is perfected – partly due to insurance regulations – but employers need to become part of a much larger pool  at least in terms of group purchasing power.  This is the buying power that will ultimately reduce premiums significantly.  In a larger sense this is a philosophy that insurance has to be based on large numbers.  So I think this will continue to develop to the benefit of small employer....

      Read more...

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      One. Billion. Dollars Yeah Baby - Apr 27, 2009

      Posted by: David Kirkup in Articles

      In a witty scene from one of the Austin Power's movies, the evil Dr. Evil goes back to the 1960s to hold the US government hostage to his death ray.   Dr. Evil demands as his ransom...One...billion....

      Read more...

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      From Russia. With Love - Apr 20, 2009

      Posted by: David Kirkup in Articles

      You may recall the story about Alexander Litvinenko, the Russian émigré and former KGB man who was poisoned in London.  In November 2006 Litvinenko suddenly fell ill and was hospitalised in what was established as a case of poisoning by radioactive polonium-210 and resulted in his death within days.  

      The British investigation into his death and subsequent Russian stone-walling, contributed to the further cooling of Russia–United Kingdom relations.   You think, so what – an obvious case of the Russian hierarchy sending an unmistakable message to its émigré citizens.  But on deeper investigation: why would the Russians – obvious experts at assassinations (Source: Austin Powers, James Bond et al) have used such an unusual and highly visible method.  After all, Polonium is only manufactured in one secret Russian city, and virtually the entire supply is exported to the USA.  The Polonium left a trail of radio-activity from the London restaurant to hotels, airplanes and virtually to the Kremlin's front door.  Who would be most interested in damaging UK and European relations with Russia?  And why? Anti-Russian government provocateurs? The CIA?  The Iranians or Al Qaida?  Clearly, all is not as it seems…

      Which is exactly the point that B2B CFO Founder, Jerry Mills, makes in his book - The Danger Zone .  Many business owners create companies that take off rapidly.  In the early stages a business has cash, sales are rising, employees and customers are happy.  But then things start to go wrong...and all is not as it seems.  The business owner starts to:

      • Misjudge how well or how p....

        Read more...

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        You're An Idiot.Charlie Brown - Mar 26, 2009

        Posted by: David Kirkup in Articles

         

        The President of Peanut Corporation of America recently appeared before a bankruptcy court in Vicksburg, VA to answer questions about his company's bankruptcy due to troubling safety and hygiene practices, and the resultant salmonella outbreak nationwide. His trusted advisor was also present - who happened to be his daughter, the company's book-keeper!  Asked at one point whether the company that had nearly $20 million in sales last year paid any dividends to its shareholders - namely, the President and his partners - she replied, "What's a dividend?"

        So how much is not having a CFO costing you?

        In a excellent recent article on the Chief Executive Blog, Terry Weaver explores how not recognizing the need for and value of a CFO can kill your company.  If you don't have timely financials you trust - how can you begin to manage your business?  It's not just that your financials may not tell you much.  Often they are telling you the wrong things.  "Not having rock-solid, timely financials is like flying with no altimeter, no compass and no artificial horizon. The FAA won't allow that, and for good reason. Those pilots crash."  Terry reminds us that "failure to fully understand the company's financials is one of the top 3 causes of small business failure."

        And you should not think that this is your CPA's job.   As Terry says, "That's an unrealistic expectation for at least two reasons. First, although there are a lot of exceptions, most CPAs do not have CFO experience. They report the news, they don't forecast or shape the news. Secondly, it's generally not their job, as they perceive it. If you hire them to prepare monthly statements and do your taxes, they actually believe you're going to read (and understand) the monthly statements and that the data you gave them to prepare them was accurate. It's like wondering why the scorekeeper at a football game didn't call better plays."

        B2B CFO^® offers seasoned, highly experienced part-time CFOs, so there's no excuse to run your company with blinders on.  In a sea of economic red ink, many of B2B CFO^®'s clients continue to add employees and grow sales, while having access to lines of credit, and developing company value.

        Call David Kirkup, your B2B CFO^®,  for more information and a free 2 hour company evaluation on 770 845 6897.

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        Retirement Saving For Mega Millionaires - Mar 23, 2009

        Posted by: David Kirkup in Articles

        I have a solid retirement plan...

        Every time the Mega - Million Lottery prize exceeds $150 million, I buy a ticket.  Cynics may scoff at the odds and try and tell me that I am wasting my money.  But the vicarious thrill of imagining how I will spend my $235 million lasts the whole weekend, even with the inevitable Tuesday disappointment that yet another garbage worker in New Jersey has picked the winning ticket. 

        Of course, I also have a Plan B.  I invest for retirement in whole life insurance that comes with a guaranteed minimum return and long term average rate of 7%, tax free distributions at retirement and no-hassle loan capabilities at any time, together with a substantial tax free estate at the end game.  Cynics again may scoff: "You should buy term, and invest the rest", but I say my nest egg is still growing.  And I'm not alone: 68% of the Fortune 1000 utilize company owned life insurance in their long term investments, and 99% of banks own large amounts of  life insurance. 

        And yet conventional wisdom is 401K and Roth IRA - as the only game in town?  Well, the 401K contribution will max out at about $16,000 a year - which is too low for many successful business owners.  Other qualified plans - i.e. those following arcane tax rules to ensure tax deductibility of contributions - are not much better. Sure you can save tax free, but you have to take the money out at 70, and what do you think will happen to tax rates by then?

        So..what can a successful, high income business owner do to invest for retirement and minimize taxes?   One promising option is the Executive Retirement Supplement Alternative.  This type of plan adopts many of the benefits of whole life insurance such as guarantees, solid returns, tax free distributions and an estate legacy, while providing  company tax deduction for contributions.  There are no practical limits on funding your plan and no requirements that you spread the wealth across all employees.  But it can also be used to reward valuable, highly compensated executives who you would like to engage with "golden handcuffs". 

        Another promising area for larger companies is the captive insurance arrangement which allows a company to set up tax deferred insurance plans to dedicate funds for purchase of competitors, employee buyouts or family transitions.  More in a future blog.

        For insight on ways to maximize the value of your exit plan, while reducing lack of control and volatility, call David Kirkup - your B2B CFO^®  - on 770 845 6897.

         

         

         

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        Fat Cats And Lame Brains - Mar 20, 2009

        Posted by: David Kirkup in Articles

        (Full Disclosure - this article from last year mentions AIG, so this is a shameless attempt to get even more exposure from the current Bonus Crisis. )

         Alright I admit it - the Financial Meltdown is all my fault. I could have prevented it, but I sat back and let it happen.

        Let me explain.. In my life's journey from English childhood in Manchester, England to my present life as a B2B CFO partner in Atlanta I spent a number of years in Lower Manhattan.

        While there, I became a member of the "Englishmen in New York" club - a very exclusive society that only met once a year to celebrate Christmas - typically in very boozy fashion. Most of the members were, of course, Brits, and in insurance, and many of them were from... AIG .

        Perhaps if I had had more insight into the future, I could have nudged one or two of them in a different direction (under a car/ into academia?) - a la the Butterfly's Wing - and twenty five years later saved the world from Credit Default Swaps (or is it Credit Swap Defaults? - guess it doesn't really make a difference anymore).

        So with hindsight what can we learn from the meltdown that seems upon us. An article on the Harvard Business Online site made for thoughtful reading, and I think has some pointers for companies at the lower end of the scale.

        1. It doesn't work to let dealmakers make all their money up front. Whether it's lenders hawking mortgages, bankers pushing bonds, or salespeople closing contracts before the end of the quarter, dealmakers have to have responsibility for the health of those decisions years down the road. Where possible, the individuals who make the deals should also have their compensation depend on the long-term performance of those deals. And sales commissions should be based on collected cash not receivables.

        2. Risks may correlate more than you think. In other words, a single problem can take you down if it's severe enough. In even other words, don't put all your eggs in one basket - and don't let one customer provide 80% of your revenue.
        
        3. In a crisis, liquidity can disappear overnight. So make sure someone competent projects out cash flow, and maintain solid relationships with several banks.

        4. It's incredibly dangerous to buy a business unless you understand it in excruciating detail. And just as dangerous to operate without adequate and timely financial information.

        5. Whenever anyone says they've managed to do away with risk, head for the hills. Can never be said too much, along with free lunches, if it sounds too good to be true...

        6. Perhaps the greatest lesson of all is that bad strategies can happen to great companies and smart people. Which means you have to plan for the worst, and find a sounding board to constantly reality-check your strategies.

        The next generation of great leaders will be the ones who absorb these lessons. Everyone else is doomed to repeat the same mistakes. In other words...it will be deja-vu all over again.

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        Enter The Dragons Pitch Perfect - Mar 16, 2009

        Posted by: David Kirkup in Articles

         

        I like to watch BBC America, and one show you must see is Dragon's Den.  I can explain its premise succinctly in one phrase.  It's "Simon Cowell meets the Elevator Pitch".

        Set in a trendy warehouse, a team of Millionaire "Dragons" are empanelled to pass instant judgement on a parade of aspiring enrepreneurs, and make instant investments to the winning pitches.  True to the Simon Cowell formula, the "contestants" include eccentric dreamers, annoying young men, incompetent accountants and naïve housewives.  The panel swiftly dismisses them, as they elicit such mistakes as a lack of planning, poorly thought out revenue projections, stumbling over figures, over-leveraging and ridiculous optimism.  Hard faced Dragons tell the dreamers - who have typically invested their life savings in such sure-fire ideas as a 3 minute egg boiler - that they should keep their day jobs and that their ideas are crazy... but that they might be willing to give them $50,000 for 80% of their company.  To underline the point the Dragons have piles of cash sitting on the table.   

        But, again true to the reality formula, there is always one business owner who clearly has a winning business model with all the right answers, and then the tables are turned as the Dragons start to outbid each other for a piece of the action.  The audience cheers.  Compulsive TV watching if you have any interest in business. 

        I find myself evaluating the entrepreneurs, who despite the wealth of web site information seem to stumble at the first fence, as they begin their Elevator Pitch.  So what are the Dragons really looking for?

        The Pitch

        The very first thing any successful pitch for anything in life needs to do is grab your attention. Sadly, this is where many great ideas fail. Investors don't have time or the patience to pick through the business and uncover a really good opportunity. So make sure you get peoples attention with your opening statement.

        1. What is your product or service?
           Briefly describe what it is you sell.  Do not go into excruciating detail.  
            
        2. Who is your market?
           Briefly discuss who you are selling the product or service to.  What industry is it?  How large of a market do they represent?
            
        3. What is your revenue model?
           More simply, how do you expect to make money?  Do not say, "It's a $6 billion market, so if we can just get 1%...."  Investors hate that.

        Now that you have their attenion, it is critical that you think about how you can demonstrate credibility so that desire is underlined by credibility.  Another way to think about this is how is the risk minimized?

        1. Who is behind the company?
           "Bet on the jockey, not the horse" is a familiar saying among Investors. Tell them a little about you and your team's background and achievements. If you have a strong advisory board, tell them who they are and what they have accomplished.
            
        2. Who is your competition?
           Don't have any?  Think again.  Briefly discuss who they are and what they have accomplished.  Successful competition is an advantage - they are proof your business model and/or concept works.
            
        3. What is your competitive advantage?
           Simply being in an industry with successful competitors is not enough. You need to effectively communicate how your company is different and why you have an advantage over the competition.  A better distribution channel?  Key partners?  Proprietary technology? 

        Finally, there should be a call to action. It constantly amazes me how many great pitches just end with, well, nothing! When you get to the end of the pitch make sure you have spelt out what you want the person to do next. It could be to buy your product. It could simply be where to contact you for further information etc.

        One more Dragons Den Pitch - a chip making machine.  Is this for real?

         

         

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        Raising Money The EBay Way - Mar 9, 2009

        Posted by: David Kirkup in Articles

         

        I have bought three used cars on Ebay...Infiniti - good; Lexus - good; Jaguar - not so much.  Made the bid, paid the check and took a plane to Brooklyn, NY and a cross country return trip to Atlanta.  Probably, I rank in the top 1% of car buyers nationwide who have done this.  Maybe even in the world.  Why? 

        Well...I see Ebay as the economist's fabled "perfect market".  I can get up to the minute pricing on hundreds of identical models, I can review at my leisure 50+ detailed pictures of the car, and I can get hundreds of testimonials from previous customers of a particular dealer.  Line up competitive financing, delivery, warranty etc.  I buy close to dealer price, so I know I can sell at anytime without being underwater.  In another example of Ebay's power, I know twenty-somethings who buy and sell fashionable clothing like yesterday's mutual fund, while saving themselves a fortune in "New Dealer" premium.

        As a B2B CFO^® I find the process of raising funds for my clients can be quite tedious.  It is, in effect, a distinctly old-fashioned experience.  Just to get a simple line of credit can take weeks or months.  Little price visibility until you are on the "dealer's" floor, very hard to get multiple competitive bids, impossible to get customer testimonials, mountains of legwork and paperwork.  Hey, what if we could combine Ebay with business financing?

        Well. last week I came across a web site called The Receivables Exchange.  As the name might suggest this is a site that allows a company to sell their receivables to a global network of institutional investors.  Within days, or even hours, it is possible to obtain receivable financing from multiple bidders, and select the best offer.  When you consider that typical remittance term can be 48 days, or as much as 180 days, this is a welcome financial tool for small and mid-sized businesses.

        As a young accountant in the 1980s, I worked at Reuters in London putting together a new service called Money Dealing.  The service was to replace a fusty old phone network of currency dealers with an online exchange.  They said it couldn't be done, but once it opened the old way vanished and the market rapidly developed into a global, multi-billion dollar system.

        The Receivables Exchange is another perfect example of a game-changing product, plugging small and medium local companies requiring working capital into the global financial system and pairing them with cash rich but investment-shy hedge funds, investment firms, insurance companies around the world.

        For insight into your working capital needs and innovative ways to get cash, call David Kirkup - your B2B CFO^®  - on 770 845 6897.

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        Show Me The Dosh - Feb 16, 2009

        Posted by: David Kirkup in Articles

        An English accent adds at least 30 points to a person’s IQ, and makes the opposite sex swoon. This is a scientific fact (source: Dilbert). It also provides the possibility of work in Hollywood – usually as a villain. Notice in the movie Valkyrie, all the German generals and conspirators are played by second rate British actors - except for Tom Cruise - who is American.

        For those not so endowed, there are several routes to self improvement. One can attempt to imitate the English – a route taken by many an Anglophile. This not recommended, as there are so many “tells” waiting to trip up the counterfeit – use of cutlery, where your father went to school, how you pronounce garage etc. Another possibility is to study a Brit Speak directory and become familiar with English terminology – Dosh = Noun, Money.

        {Editor: Is there a business point to this story? DK: Yes, it’s a rather clever analogy about communications. Ed: Well, could you get on with it! DK: Absolutely!}

        Sometimes, effective communication is as simple as speaking the same language. When you need money, then you have to visit the bank. But a failure to communicate will undoubtedly leave you empty handed. So how can you improve your chances of communicating with your banker like a native? Bankers speak the language of finance… as revealed in your financial statements. If you enter the temple of finance bearing weak, incomplete and hazy financial statements – then don’t be surprised if you leave empty handed. Here are ten tips to speak “bank”.

        1. Learn the language – do you understand your balance sheet, know your ratios and growth rates, can you talk about gross and net profit and understand the contribution of your various products to profitability? Or do you at least have a senior advisor who can assist you?

        2. Have a presentation prepared. Banks want to see if you are a credit risk. Although it is unfair, they may judge you negatively if you come across as unprepared and without evidence of clear thinking.

        3. Make it clear you have costed out what you are spending the money on. Showing quotes and projections can really help – unless it’s $11,000 for a shower curtain.

        4. Show them the money. Have you and other investors already opened your wallet? It is fair enough for the bank to say “why should I risk my money - when you are not prepared to risk yours?”

        5. Have complete mastery over the numbers. You really must. You must be prepared to justify every single assumption.

        6. Present a range of scenarios. You need to demonstrate that even in the worst case; the bank will get its money back.

        7. Have a clear vision for the business which extends beyond the life of the loan or overdraft. Banks are more likely to lend to you if you can demonstrate you can have a good commercial relationship with them over a long period of time.

        8. Make sure you are not asking them for equity funding. It must be debt funding. You must be able to provide them with a high level of comfort that they are not taking a risk.

        9. If possible have an accountant or a competent finance person with you. I realize it is not always possible, but it really will make the bank feel comfortable. A part-time B2B CFO^® has over twenty five years experience and is someone who already speaks “Bank” fluently. They can help you plan and prepare for funding and make sure your financial house is in order.

        Call David Kirkup, Partner with B2B CFO^®  on 770 845 6897.

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        The Sopranos Management Lessons To Die For - Jan 20, 2009

        Posted by: David Kirkup in Articles

        (This was originally a presentation I gave to a group of company owners. It was an offer they could not refuse.  This article was first published in 2008 and is back because I'm a believer in re-cycling.)

        My wife and I were watching the Sopranos final season on CD and I started thinking about why we like the show. Of course there's the underlying dark comedic theme, and the realistic inside dealings of the family, as well as many New Jersey scenes familiar to me from my time there. My wife, who is in the psychology profession, pays professional attention when Tony Soprano visits his therapist. But as I watched the final episode I also realized that one thing that frustrates me about Tony.... His organization suffers from a lack of financial discipline, effective controls, crisp procedures and timely financials. He really needs a part-time CFO!

        In Season Six - the final episode, the New York mob is making an aggressive takeover bid for the New Jersey family - which involves the forcible and permanent retirement of Tony Soprano, his consiliare - Silvio Dante, and heir apparent - Bobbie Baccala. As the senior executive team makes a break for the off-site location, it becomes increasingly clear that the financial side of the organization is terribly weak. Consider:

        • Shortly before being shot by NY wiseguys, Sil is seen stuffing the Bada Bing payroll into his bag. So.. who will be making sure the staff get paid? And how does Tony ensure that this enterprise continues, and that he does not lose key staff. Are there effective procedures to cope with this kind of risk?
        • While Tony's main W2 occupation is as a "waste management consultant", the family enterprise is a mostly cash business. Revenue in the form of thick envelopes arrives regularly, but I don't believe they are using QuickBooks or another reputable financial system.
        • When earners deliver the monthly revenue, envelopes are described as "heavier or lighter than usual", but no serious effort at budgeting and variance tracking is evident.
        • The family's business interests are widespread with many divisions, products and revenue streams. Competent analysis of profit margins is essential to maintain focus on the most profitable earners.  Often considerable resources can be wasted on losing ventures such as the declining "security and protection" business.
        • There is little evidence of tax planning, and retirement investment mostly seems to consist of football spreads and the ponys. While Tony may disdain tax returns, it's a fact that the IRS has put more mob members away than the FBI.
        • As a mob boss, Tony's role is that of a Finder . He guides and develops the business. But because of the lack of a strong supporting CFO he constantly finds himself immersed in detail, and has to act as a Minder. Inevitably this leads to longer hours, more stress and less time with the (real) family.

        By any measure, Tony is a born leader. He has confidence and charisma, brains and empathy, inspires loyalty and reverence, and his power is rarely questioned. Tony's not afraid of confrontation... "I got some news you're not gonna like." And in the end, like most Business Owners, he's also something of a philosopher:

        "All due respect, you got no idea what it's like to be Number One. Every decision you make affects every facet of every other thing. It's too much to deal with almost. And in the end you're completely alone with it all. "

        So I thought it would be interesting to talk about what Tony Soprano, like any business owner with revenue up to about $50 million, should look for in a part-time CFO .

        Your CFO should be a:

        Technician: A professional accounting designation (ACMA, CPA or MBA),  and/ or many years of experience is the foundation. Your CFO has to have the accounting, process and tax knowledge needed to steer a company's finances. The ability to match wits with the government can also be helpful.

        Financier: A good CFO not only runs the process for fundraising, but should also bring financing into the company. He will have a track record of originating and closing deals and should have a list of potential financing sources that are eager to take a call. As the Soprano enterprise grows it will become increasingly important to fund growth with legitimate backing.

        Closer: Your CFO can be a key member of your sales team, available to help negotiate and close sales. The CFO can be actively involved in managing and optimizing your sales pipeline and should be capable of being deeply engaged in sales. This might involve convincing larger customers that you are indeed a serious and viable business.

        Operator: The CFO should take a leading role in bringing operational quality into your company. This doesn....

        Read more...

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        Rhino Surgery At Rockefeller - Dec 15, 2008

        Posted by: David Kirkup in Articles

        So...it's Christmas Eve at Rockefeller Center, NY. Ice skating with my 7 year old and her friends as the snow flakes fall around us. We skated around the world famous rink.  Suddenly...she slipped and fell... I grabbed for her and lost my balance... and then I...fell... on top of her!! As I reached out to stop my fall... I heard the heart-breaking crunch of her nose hitting the ice...

        ...Four hours later I faced the music, and my wife gazed upon her 7 year old daughter's squashed face in horror. What..to.. do?... at 6 pm... on Christmas Eve??

        Fortunately we had many medical friends in our small community, so I meekly suggested we consult with them. My wife agreed.  John, the English Psychiatrist told us to "retain the best Cosmetic Surgeon and immediately get her into surgery".... Ernst , the German Cardioligist, said "don't worry it will fix itself - and if not.. not to worry." Lewis, the Urologist recommended we take a "wait and see approach".

        So we waited ...

        Lessons?.... Surround yourself with experts!

        First, you need a good attorney. Most people don't hire an attorney till they have some type of trouble. That's not wise! Look for a good business attorney who can advise you properly on a wide range of business subjects: contracts, employee relations and any other legal issues before they become a problem. The attorney's job is to advise you so you can make the right decisions to prevent you from having legal problems with your business.

        Second, you need a CPA - certified public accountant. Not just someone who is going to do your tax returns but someone who is going to use the tax law to ensure you legally take every deduction available, and who can advise you in areas of tax planning, so you can pay the least amount of income tax possible.

        Third, another member of your team should be the insurance agent. A good insurance professional will guide you in buying the right insurance for your business with the right coverage. They will periodically review your coverage and make sure you have the best combination of rates and limits.

        Fourth, know your banker.  Build a strong relationship with them so when you need a business loan you already have credibility. Provide financial updates, show the bank you do cash flow projections, have timely and accurate financials and that you are a good risk.

        And finally, perhaps the most important person to consider is your CFO. Someone who is highly experienced and used to maximising profitability and the value of your business - and who can help run your team of experts. Every business needs a Chief Financial Officer - without one you are at a significant competitive disadvantage. Cost has always been a prohibitive issue in the past. Fortunately, you can now hire a B2B CFO^® who can bring a wide range of experience and knowledge to advise you in and help build your company.

         

        BTW: Last year my 23 year old was chosen as one of "Atlanta's 50 Most Beautiful Young People." Who knew?
        

         

         

         

         

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        130 In My Mercedes International Expansion - Nov 25, 2008

        Posted by: David Kirkup in Articles

        So... I'm doing 130 in my Mercedes heading for the German border.

        I started that day in Ostend, Belgium and hoped to get to my destination before mid day. I've lived in the USA for nearly 25 years, so it's a real pleasure to have some free time in Europe. I was on a mission to visit my Uncle - my father's younger brother - near a picturesque little town called Rheinberg just over the Rhine from Holland. The "Interstate" remained pretty much the same as I moved through Belgium, then Holland and on to Germany.

        Around noon I found the place, nestled in the trees on a lonely stretch of single lane highway. I double checked the address - Section B, Row 12, Plot 4. It's a Commonwealth War Grave Site dedicated to RAF pilots and crew who died in action in WWII. Walking through a well tended and very peaceful space with over 3,000 identical white gravestones, I found what I had come to see. Flying Officer Jack Kirkup , aged 21, killed in action on October 22, 1943. I am pretty sure I was the first visitor in nearly 65 years. For me, a very emotional day...

        Driving across Europe, after being away so long, underlines how the world has changed and that it gets much smaller all the time. As a B2B CFO^® I have a number of high growth clients, and my trip to Belgium with XL Video , was to discuss some of the issues related to having a company expand internationally. Globalization is a fact - and seeking out international growth is a must for many companies.

        Entrepreneurial growth companies are becoming increasingly international in scope, with operations, customers, and partners situated around the world. According to a survey done last year by The Economist Intelligence Unit, nearly one-third of midsize American companies seeking growth expect to do so by expanding geographically. Of these companies, more than half plan to expand beyond the U.S. borders to Asia, Europe, and Latin America.

        Yet, while global markets offer attractive opportunities, entrepreneurs must develop an effective strategy before they tackle new geographies, either organically or by acquisition. Private equity firm, Summit Partners in an Inc. Online article looks at success factors for international expansion. Some of those factors are:

        #1: Decide if you are ready...and if the time is right
        Expansion can be a distraction for your management team, as it often siphons resources that are needed elsewhere. How do you know when your company is ready? Your company should be an established business in one geographic market, and should be profitable enough to finance expansion. Beyond that, the right time really depends on the company. Businesses with limited home markets will look to expand before those with robust domestic markets. Sometimes companies, like XL Video , will be drawn to new countries due to international opportunities with customers. Other companies, like my client Metcam , will find opportunities though incoming web based marketing that can have surprising results.

        #2: Develop your top priorities...and stay focused on them
        Begin by looking at global demand for your product or service: Where have sales been strong? Where are most of the buyers? Which markets are most competitive? Which ones offer the best terms? You also may need to consider factors that are unique to your company: Do you have a relationship with a key client or vendor in another market?

        #3: Send your best people...and find locally based talent
        Your people bring invaluable experience and in-depth understanding of your company, its culture, and its products and services. Locally based hires, by contrast, know the language, understand specific market conditions, and have contacts on the ground. The trick is to balance your local team with these two types of employees. In many cases you an hire or outsource experienced talent before making a full time commitment.

        #4: Seek out accounting advice...and legal expertise
        Local accounting and legal professionals can help you navigate regulations and requirements. These experts also can help you set up your company, register with appropriate authorities, and comply with local regulations.

        #5: Execute a global web-based strategy...but use local markets for sourcing
        While the Internet makes it easier to reach customers in multiple countries, executing a global web-based strategy may be more complicated than you think.....

        Read more...

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        How Much Is Business Worth - Nov 20, 2008

        Posted by: David Kirkup in Articles

        Trying to sell a house can be easy or hard. The hard way is avoid routine maintenance, fail to make improvements, not be aware of the market, not decluter and otherwise stage the home for sale and not to be willing to negotiate. The easy way is...well, I'm not in the realtor business, so the truth is there really is no easy way to sell a house. But selling a house or a business is a process and can be planned. That's why B2B CFO has a system called Finding the Exit to help business owners get ready for a sale. It's also good to get a an idea of what price you can expect.

        The best way to know what your business is really worth is to cast a wide net to potential buyers when marketing your company. Creating a competitive bidding process - while maintaining confidentiality - is ultimately what drives price.
        
        However, there are benchmark valuation ranges that are typically used in the middle market segment of the merger and acquisition industry. For the most part, buyers express their bids for operating companies as a multiple of "Adjusted EBITDA" or "Adjusted Operating Profits." Adjusted EBITDA is: Earnings before Interest, Taxes, Depreciation and Amortization. The adjustments factored in include normalized management compensation, fair market rent for real estate, one-time or extraordinary expense events, significant G&A expenses for growth where the benefit has not yet materialized, and normalized fixed asset investments required to maintain the integrity of the business.

        
        Think about it...if you were purchasing a business, you would want to know how much of the company's cash flow would "stick in my pocket." The important thing to remember is that the larger the adjusted EBITDA, the larger the multiple. There are fewer larger companies than smaller companies, so the larger ones are more in demand, and buyers will pay more. In addition, larger companies are less vulnerable to changing business conditions than smaller companies. Notice we're focusing on profits here, not revenue.

        For businesses generating between $1 million- $5 million of adjusted EBITDA, the multiples we see at closing range from 3x - 7x adjusted EBITDA. For businesses generating between $5 million-$10 million of adjusted EBITDA, the multiples range from 4x - 8x. There could be more value based on contingent payments regarding future performance, however when we quote multiples we stick with what the owner(s) are likely to see at closing. There could be small amounts in notes, but 70% - 100% of the value, based on these multiples is obtained in cash.

        Remember: You may receive an unsolicited offer for your company in the above value ranges, however without running a competitive process; you will not be able to compare offers to understand how much of the value will be cash at closing.

        Factors impacting the multiple include the type of business, historical and potential growth, competitive position or uniqueness of the company, composition and diversity of customer and supplier bases, management infrastructure and capacity.

        Finally, once you've decided to sell, act like you're not! Focus on the business as if you're going to hold onto it for another several years. Keep up the sense of urgency. Continue to pursue new opportunities and make prudent investments - don't cut any cash outlays that will impact long-term performance because seasoned buyers will pick this up in due diligence. The picture you want to paint is that of a viable growing business that doesn't need to sell.

         

        ( B2B CFO ^{and The Woodbridge Group Inc. have formed a strategic alliance. The Woodbridge Group is an international Mergers and Acquisitions advisory company specializing in the sale of businesses with revenues of $5-100MM. This is how they would go about placing a value on your company. Of course, a company with a B2B CFO is likely to start the process with a much higher EBITDA...)}

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        Six Lessons We Should Have Learned Already - Nov 11, 2008

        Posted by: David Kirkup in Articles

         

        Alright I admit it - the Financial Meltdown is all my fault. I could have prevented it, but I sat back and let it happen.

        Let me explain.. In my life's journey from English childhood in Manchester, England to my present life as a B2B CFO partner in Atlanta I spent a number of years in Lower Manhattan.

        While there, I became a member of the "Englishmen in New York" club - a very exclusive society that only met once a year to celebrate Christmas - typically in very boozy fashion. Most of the members were, of course, Brits, and in insurance, and many of them were from AIG .

        Perhaps if I had had more insight into the future, I could have nudged one or two of them in a different direction (under a car/ into academia?) - a la the Butterfly's Wing - and twenty five years later saved the world from Credit Default Swaps (or is it Credit Swap Defaults? - guess it doesn't really make a difference).

        So with hindsight what can we learn from the meltdown that seems upon us. An article on the Harvard Business Online site made for thoughtful reading, and I think has some pointers for companies at the lower end of the scale.

        1. It doesn't work to let dealmakers make all their money up front. Whether it's lenders hawking mortgages, bankers pushing bonds, or salespeople closing contracts before the end of the quarter, dealmakers have to have responsibility for the health of those decisions years down the road. Where possible, the individuals who make the deals should also have their compensation depend on the long-term performance of those deals. And sales commissions should be based on collected cash not receivables.

        2. Risks may correlate more than you think. In other words, a single problem can take you down if it's severe enough. In even other words, don't put all your eggs in one basket - and don't let one customer provide 80% of your revenue.
        
        3. In a crisis, liquidity can disappear overnight. So make sure someone competent projects out cash flow, and maintain solid relationships with several banks.

        4. It's incredibly dangerous to buy a business unless you understand it in excruciating detail. And just as dangerous to operate without adequate and timely financial information.

        5. Whenever anyone says they've managed to do away with risk, head for the hills. Can never be said too much, along with free lunches, if it sounds too good to be true...

        6. Perhaps the greatest lesson of all is that bad strategies can happen to great companies and smart people. Which means you have to plan for the worst, and find a sounding board to constantly reality-check your strategies.

        The next generation of great leaders will be the ones who absorb these lessons. Everyone else is doomed to repeat the same mistakes. In other words...it will be deja-vu all over again.

         

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        Live From Radio City All About B2B CFO - Nov 7, 2008

        Posted by: David Kirkup in Articles

         

        Listen to two excerpts from a recent radio broadcast by Paul Shackford, a B2B CFO partner who speaks about the B2B CFO model:

        Part 1

        1. What does B2B CFO^®  do?

        2. How does a CFO differ from a CPA?

        3. How can B2B CFO^® help with company funding?

        4. How does an owner focus on their business?

        5. What is the process for hiring aB2B CFO^®?

        Part 2

        1. How does it work?

        2. How much time do you spend each month with a company?

        3. What happens when sales increase but cash goes down?

        4. When should you bring in aB2B CFO^®?

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        Fighting The Dark Force - Nov 7, 2008

        Posted by: David Kirkup in Articles

        Many years ago I worked on Wall Street. As CFO of a large insurance company it was my job to collateralize $1 billion in deferred cash flow Fortune 500 insurance programs - typically with letters of credit. In a constant search for a competitive edge to fight the dark force i.e. AIG, I spoke with an investment banker who suggested we look at securitization of client obligations.

        I duly visited with the Securitization Guru in his mid-town lair - this was Gordon Gekko times and everyone had slicked back hair and power suspenders, minions tapped furiously on computers (it was so long ago - maybe it was abacii - but you get the point), and $2,000 cell phones with separate 5 lb battery packs were the status symbol.

        The securitization guru explained how we would securitize the obligations, using a Special Purpose Vehicle, multiple tranches, Rating Agency Blessing and then package the obligations for resale. My reaction was:

        a. This is way too complicated, and will never work

        b. The fees are astronomic and are all up front. No one would do that.

        c. The regulators will never buy it.

        Turned out that I was wrong on all counts - but I decided to take a pass anyway. AIG continued to take business away from us. Well...it sure took a while for vindication.. but in hindsight I think I made the right decision.

        Fast forward 20 years and to paraphrase Joe Kennedy , "even the shoe-shine boy knows about securitization." Lessons?

        1. Never pay the deal maker up front.

        2. Never do a deal unless you understand it in excruciating detail.

        3. If they say it's risk free ... head for the hills.

        4. Never wear yellow suspenders - you will look stupid in 5 years.

        And to see what we have wrought..here is an prophetic warning about the Financial Meltdown . I first saw this video at the May 2nd, 2008 Berkshire Hathaway shareholder meeting.

         

         

         

         

         

         

         

         

         

         

         

         

         

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        What Do You Want From A B2B CFO - Sep 20, 2008

        Posted by: David Kirkup in Articles

         

        Sometimes the hardest task I have, is to explain to business owners and my networking contacts what exactly a CFO does. They tend to imagine a pin-striped executive in a very large office with minions and think ...not for me! And no wonder. Because mid size and emerging growth companies need self-starting, high impact, low overhead, highly motivated help - there's just no time for prima donnas! So here's a simple list to help you find a CFO who can really help:

        Technician: A professional accounting designation (ACMA, CPA) is the foundation. Your CFO has to have the accounting, process and tax knowledge needed to steer a company’s finances.

        Financier: A good CFO not only runs the process for fundraising, but should also bring financing into the company. They will have a track record of originating and closing deals and should have a list of potential financing sources that are eager to take a call.

        Closer: Your CFO can be a key member of your sales team, available to help negotiate and close sales. The CFO can be actively involved in managing and optimizing your sales pipeline and should be capable of being deeply engaged in sales.

        Operator: Your CFO should take a leading role in bringing operational quality into your company. That means installing just the right amount of process, reporting and structure. Not so much that it slows you down, but enough so that you smoothly run and grow the machine.

        Lawyer: It will be a long time before you have in-house counsel and you don’t want to go to your outside law firm every time you get an NDA to sign. So, choose a CFO who’s comfortable reviewing legal documents.

        IT: No, you don’t want your CFO troubleshooting Windows Outlook on your desktop, but you do want someone who’s savvy enough in information technology to take the lead in driving your information systems.

        Cheapskate: This isn’t usually a problem with CFOs but you want someone who can stretch your dollars by knowing where to cut expenses without harming your business.

        Consigliere: Your CFO should be a trusted advisor. Running a company can be lonely. Your CFO can be a key, objective source of advice and counsel as you make the big and the small decisions.

        As you probably noticed, only one of these points (the 1st one) actually deals with accounting. Despite their accounting beginnings, the best CFOs go far beyond this foundation. They are capable of adding value to every aspect of the business. Judge yours accordingly and make sure you have a high impact B2B CFO.

         

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        Why I Love My Clients Part 1 - Sep 20, 2008

        Posted by: David Kirkup in Success Stories

        What do the RNC, the DNC, Mercedes, Lexus, Foo Foo Fighters and George Michael have in common?  XL Video is an international company run by two Dutch brothers that provides large screen video technology to a variety of corporate and entertainment events worldwide.  Using the latest LED lighting technology and pioneering the innovative use of stage design and engineering skill, XL Video has carved a niche as the premier provider of creative video technology for prestige events. 

        The Democratic National Convention had multiple LED video screen providing a stunning backdrop depicting American Flags, and the Republican National Convention had...well pretty much the same.   In both cases XL Video - in a major sales coup - provided the goods. 

        How about Auto shows: Chicago, Detroit, LA, New York, Frankfurt, Zurich and even Shanghai - XL Video provides state of the art high definition pictures of "cars on curves" for Mercedes, Lexus, Acura, Infiniti and GM. 

        Entertainment Tonight, the Emmys, the Oscars, MTV awards...XL Video.  Foo Foo Fighters, TSO, Beyonce, U2, George Michael (yes, people do still pay to see him), most of the major touring artists use creative video from XLV. 

        We recently made a proposal to cover the Brooklyn Bridge in computer controlled LED video for its 100 years anniversary.  Unfortunately, New York went with fireworks.  But, not to worry, LA's annual Christmas Tree will up the ante with a highly creative LED display from XL Video this year.

        XLV is based in Belgium with operations in the UK, Belgium, France, China and the USA.  As XL Video's B2B CFO, I manage the Atlanta and LA operations.  I supervise two talented controllers - who I hired,  I manage several million in debt financing - which I arranged, I produce analytical reports on a sophisticated Microsoft AX ERP system - which I installed.  I participate in Executive and Board meetings and provide valuable input on strategy, margins, sales growth, infrastructure and a host of other vital tasks - thus allowing the Executive management to focus on business growth. 

         

         

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        Article Credit Crunch For Small Business - Sep 11, 2008

        Posted by: David Kirkup in Articles

        Credit Crunch for Small Business

        A credit crunch could be on the way for small businesses - and it is crucial that they prepare themselves for the possibility. Banks, nervous about the prospect of more borrowers defaulting on loans, have been tightening their rules when it comes to lending money to consumers and major corporations. And industry experts say lending jitters may soon extend to small firms as well, making it harder for them to find loans.
        
        In recent years, credit has been relatively easy to come by as banks aggressively pursued entrepreneurs, offering larger loans at cheap rates to untested companies. Most bank executives say that for now, they have neither toughened lending standards nor raised interest rates on loans to small businesses.
        
        But banks say some businesses that received loans in recent years are falling behind on payments - and default rates are expected to accelerate. As a result, experts say some lenders are already tightening their lending criteria and they expect more to follow suit.
        
        So small companies may want to think about ways to insulate themselves from the possibility of a credit crunch.
        
        Here are some suggestions

        • Pick a bank that caters to your situation
        • Keep detailed and professional financial records
        • Be prepared to put up personal assets like homes as collateral, which can make a big difference for young companies seeking funding

        The Best Bank for You
        
        One of the most important decisions small businesses face as they hunt for loans is which bank to turn to. Business owners should keep in mind how different types of banks evaluate loan applications.
        
        Big institutions that promise speedy approvals or rejections of applications, generally rely on credit-scoring models based on the business owner's personal credit history. By contrast, community banks, credit unions and other smaller lenders often lean more heavily on their knowledge of the local economy and the would-be borrower's business model and track record of running or launching businesses.
        
        Lease financing companies have been aggressive in providing low document leases – usually up to about $75,000, and can be great sources for equipment and asset financing.
        
        Credit unions are nonprofit institutions owned by their depositors. Credit unions tend to make smaller loans than banks and have been making a big push to attract more small-business customers. In addition, entrepreneurs should look for lenders with programs aimed at specific types of small businesses: women, minorities, veterans. Of course, when applying for loans, it also helps to have an existing relationship with the bank.
        
        Detailed Documents
        
        While some banks have been hawking loans that don't require business owners to provide much financial documentation beyond recent tax returns, that's starting to change.
        
        When applying for loans, small businesses should be ready to produce cash-flow statements, balance sheets, and even financial plans. Having it on hand is likely to impress bankers and could tip the scales in favor of getting a loan approved. Companies should consider hiring part-time, high level professional financial help to improve documentation and help present a professional image to bankers.
        
        Collateral
        
        Entrepreneurs in search of funding also need to be prepared to put their personal assets, like a home, on the line. But experts say that with home values stalling or falling in many parts of the country, business owners shouldn't count on that as the only collateral while banks get more skittish.
        
        Bottom line…things will get tougher for small business financing, and banks will tend to favor companies that have their financial houses in order, that produce reliable and accurate financial statements, and that can demonstrate a deep understan....

        Read more...

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        Article - The 10 Must-Follow Cash Flow Rules - Sep 11, 2008

        Posted by: David Kirkup in Articles

        The 10 Must-Follow Cash Flow Rules
        
        When it comes to properly managing the cash flow of your business, the best way to move from where you are now to where you want to be is to get a clear picture in your mind of the benefits you will enjoy as you take control of your cash flow.
        
        The benefits include:

        • Increasing the likelihood that your business never runs out of cash.
        • Eliminating the constant worry associated with not knowing what your cash balance is right now or what you expect it to be in the near future.
        • Improved relationships with your vendors because they are no longer banging on your door demanding that their past due invoices be paid immediately.
        • The ability to see cash flow problems long before they can happen.

        In short, you free yourself to focus your unique talents and abilities on growing your business rather than fighting the constant cash flow fires.

        Here are 10 cash flow rules you can implement immediately that will transform the way you manage your business from this point forward. These rules are the keys to creating the kind of financially successful business you deserve.

        1. Never Run Out of Cash. Running out of cash is the definition of failure in business. Make the commitment to do what it takes so it does not happen to you.
           
           
        2. Cash Is King. It's important to recognize that cash is what keeps your business alive. Manage it with the care and attention it deserves. It's very unforgiving if you don't. Remember, Cash Is King, because No Cash = No Business.
           
           
        3. Know the Cash Balance Right Now. What is your cash balance right now? It's absolutely critical that you know exactly what your cash balance is. Even the most intelligent and experienced person will fail if they are making business decisions using inaccurate or incomplete cash balances. That's the reason why business failures are not limited to amateurs or people new to the business world.
           
        4. Do Today's Work Today. The key to keeping an accurate cash balance in your accounting system is to do today's work today. When you do this, you will have the numbers you need - when you need them.
            
        5. Either You Do the Work or Have Someone Else Do It. Here is a simple rule to follow to make sure you have an accurate cash balance on your books. You do the work or have someone else do it. Those are the only two choices you have. The work must be done. It's like mowing the lawn. You can't just ignore it. Someone has to do it. That means either you do it or have someone else do it.
           
           
        6. Don't Manage From the Bank Balance. The bank balance and the cash balance are two different animals. Ra....

           Read more...

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           Testimonial - Dr. John Cole Md Ihti - Sep 11, 2008

           Posted by: David Kirkup in Testimonials

           David has been a tremendous asset to our organization. We've been fortunate to have his input on a regular part time basis. That is what is so compelling about the B2B CFO concept. David provides us with on going assistance, but when we need more of his time he makes himself available. His projections for product development and licensing strategies have been invaluable. We simply cannot say enough good things about David or the B2B CFO strategy. 

           Dr John Cole, MD - President - IHTI

           http://beta.b2bcfo.com/www.forhair.com

            

            

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           Testimonial - Terry Eggert Tle And Co. - Sep 11, 2008

           Posted by: David Kirkup in Testimonials

            

           Our experience with B2B CFO David Kirkup has been very good.  He has patiently worked with us to unravel the complex contract accounting on a $3.5 million commercial building, explained the process to our book keeper and tuned our Quickbooks system for better reporting.  As we move toward our third major cosntruction, David has set up the systems to more effectively handle the process.  David has also been very helpful deloping cash flow projections for multiplecompanies, meeting with banks and generally proviing high level financial expertise at an affordable cost.

           Terry Eggert - President - TLE Group 

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           Testimonial - John Wiseman Xl Touring Video Inc. - Sep 11, 2008

           Posted by: David Kirkup in Testimonials

            

            

           David has been a very effective CFO for our group. He has faced the challenges of long distance management as we are a Los Angeles based company. He has been effective at implementing a new accounting system, hiring and training our controller, building budgeting and planning systems to help turn around the business, improve margins and ensure that we build a solid base. As President I am on the road constantly, so it's always good to know I have a profesional back-up.

            

           John Wiseman - President - XL Touring Video, Inc.

           www.xlvideo.com

           XL Video provides large screen video display expertise to clients in concert touring, corporate events, outdoor events and television shows. HQ in Belgium the company has operations in Atlanta and LA.

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           Testimonial - Marcel Dekeyser Xl Video Inc. - Sep 11, 2008

           Posted by: David Kirkup in Testimonials

            

           David Kirkup has been our B2B CFO for over three years, guiding us through XL Video's rapid growth in the last few years. He helped us implement a new international accounting system, has hired and trained our accounting department and has provided a valuable resource to our local operations as well as our Belgian parent. The ability to hire a B2B CFO part-time has made it possible for David to also provide services to our LA operation. B2B CFO is a valuable and strategic resource for European companies with US operations.

           Marcel DeKeyser - President - XL Video, Inc.

           www.xlvideo.com

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