Indianapolis Star Article
Mar 08, 2009
B2B CFO, others offer part-time expertise to help smaller businesses cut costs, get bigger
By Ashley Petry - Star Correspondent
FISCAL FITNESS: Steve Soule (left), chief executive of Indianapolis-based CMR Construction Roofing, hired B2B CFO's Ken Knapik to improve his accounting, evaluate profitability develop forecasting procedures.
When a former corporate executive ponders buying a franchise, it's usually a restaurant or retail store. But Ken Knapik, who has more than 20 years of experience as a chief financial officer, bought into a different concept – a nationwide network of part-time CFOs.
In April, Knapik became the Indiana partner for B2B CFO, a Phoenix-based company that offers CFO-level services on an hourly or daily basis.
Part-time CFO services, such as B2B CFO, let companies get the help they need without paying the salary and benefits of a full-time CFO. The concept is increasingly popular as businesses seek new ways to cut costs in a shaky economy.
"We operate on the assumption that better (financial) information creates a competitive advantage," said Knapik.
Knapik, who served as CFO at several local privately held companies such as Wood-Mizer Products and Central Indiana Hardware, already is working with five Indiana clients. They include manufacturers, a trucking company and a farm-based food company. His focus is on emerging and growing companies with up to $60 million in annual revenue.
One such client is CMR Construction & Roofing, a rapidly growing $35 million construction company with about 30 administrative staff and 65 contractor sales representatives.
HOURLY EXPERTISE: Ken Knapik (right), a Carmel resident who is now the Indiana partner for Phoenix-based B2B CFO, draws on more than two decades in financial management to help clients such as Steve Soule.
Founded in St. Louis in 2002, CMR was ranked by Inc. magazine in 2007 as the 30th-fastest-growing privately owned company in the nation.
Owner Steve Soule moved CMR to Indianapolis in 2006 to serve customers hurt by a big hailstorm that hit the metro area that spring and to be closer to eastern markets.
The growth was good news for Soule, but it also meant he increasingly was bogged down in administrative tasks, such as accounting overhauls, financing requests and budgeting issues. Soule knew he needed a team member with financial expertise, but he also knew the company wasn't ready for a full-time CFO.
It was the perfect fit for Knapik, who is helping improve CMR's accounting infrastructure, developing forecasting procedures, establishing lines of credit and evaluating the profitability of its various business lines.
"He's helping take the blindfold off of some aspects of our business," Soule said.
Soule said he expects Knapik's services to have an impact on the bottom line as CMR establishes better budgeting procedures and obtains the financing it needs to get volume discounts on materials and equipment.
"There's a market for these types of services for a reason, and that is that for the right type of business, they provide good return on investment," said Cameron Carter, vice president of small business and economic development for the Indiana Chamber of Commerce.
"You have access to people with a lot more experience than what you could normally afford."
B2B CFO was founded in 1987 by Arizona accountant Jerry L. Mills. It operated as a one-man shop until a few years ago, but it has grown to include 90 partners, who assist about 400 clients in 42 states.
The biggest hurdle for a company's clients occurs when the owner starts spending too much time handling administrative tasks, Mills said.
"Our job is to unchain the business owners and let them do…the things they're good at doing," he said.
B2B CFO partners don't replace their clients' accountants because they don't handle payroll, bookkeeping or taxes.
In contrast, other local financial consulting companies have begun to offer a wider range of services to meet clients' needs.
Milestone Advisors, for example, provides financial services to companies from the startup phase to about $25 million in annual revenue.
The Northeast side company at first offered only CFO-level services, such as management accounting and corporate finance. It since has expanded to include advice on marketing and strategic planning, as well as lower-level services such as bookkeeping.
"What we've found is that our clients like having . . . access to the full range of services they're going to need," said Tom Gabbert, a managing director. Gabbert and Glenn Dunlap founded Milestone in 2003. It has added a third partner, Jeff Good, and now has a staff of 22.
Milestone worked with about 100 clients in the past year, such as Polaris Laboratories, which does oil analysis; Mainstreet Capital Partners, a real estate investment company; and ChaCha, a search engine.
"I think there's more market awareness for the kind of service that we offer," Gabbert said, adding that his client list is growing.
For companies with more limited needs, SCORE is another option. The national nonprofit organization, which works in conjunction with the Small Business Administration, offers free business advice through a network of volunteer counselors.
About 50 volunteers – many of them retired business executives – are active in Central Indiana.
"We offer face-to-face, serious counseling. All of our counselors have ongoing clients," said Michael McEvers, vice chairman of marketing for the local SCORE chapter. "(But) we don't sit there for half a day or a full day, and offer free help, because we are volunteers."
No matter which option businesses choose, Soule said, the key is for owners to recognize that they may be holding themselves back by trying to do everything alone.
"We knew that we were flying by the seat of our pants, and we wanted to do it better," he said.
Ken Knapik, new Indiana partner for the B2B CFO network, identifies the top three challenges for businesses making the transition from startup to stable enterprise:
- Maintaining cash flow: Most business owners underestimate their need for working capital, which is used to purchase inventory and equipment and run the business before it can collect on accounts receivable. "Businesses like this need a line of credit from a bank to support their working- capital needs," he said. - Building a team: Entrepreneurs often struggle to delegate, so they need help building their teams. "The founder and owner can only take the business so far, and he needs to build a management team to support his dream," Knapik said.
- Developing a product or service: A company's original product or service needs to be refined, he said, so it "has some staying power and can be expanded or diversified to support growth."