Article

215 partners in 40 states
6,451 years experience

Fill out the form and receive for FREE The Discovery Analysis (a $1600 value)

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't mean bringing in ISO 14001 or whatever the latest flavor is. 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, or sign up another customer for the protection business. 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.

Penny Pincher: 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.

Consiliere: Your CFO should be a trusted advisor. As Tony Soprano found - 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.

Contact David Kirkup, Partner with B2B CFO on 404 348 0326 or dkirkup@b2bcfo.com.