The good thing about the world shutting down for the holidays is that you’ll have some time to re-evaluate what you did in 2009. You can take action to address your marketing plans, strategies and your business in general for 2010. 

Every business owner/CEO can benefit by spending a little time on these 3 Tips and taking action NOW for your success in 2010: 

1.    Budget

2009 was a tricky year because most budgets became obsolete quickly, driven by the economy. Budgeting involves making assumptions about how next year will be different than last. Ask yourself:  

What are sales going to look like each month for next year? Its hard to predict things, but write down your assumptions on why you think this or that will happen, so you don’t go back later and wonder why you budgeted sales that way. Take a hard look at your alliances and business partners. Are you getting the most out of them? What can you do differently in 2010 that would increase your sales? 

What is the best case, worst case, and realistic case for sales, capital expenses, software and tools, and operating expenses. 

How is your process for budgeting going to be different in 2010? Are you using a rolling budget cycle that you pay attention to monthly, quarterly, or even weekly? If not, set that up so you keep looking into the future as dynamics in your market change.

Look hard at your costs to see if they make sense. If the numbers don’t make sense to you, get some help figuring out the story behind the numbers.

Do you have the right employees on board?

2.    Customer Focus

What percentage of time did you spend with your customers or prospects in 2009? If it’s less than 60%, figure out what needs to change starting in January 2010. I realize us business owners wear many hats, so which hats can you give up to spend more time with your customers? If you answer, “None of them, I do it all” then 2010 will probably look a lot like 2009 or worse.

How often do customers and prospects get multi-touch communications from your company? Make specific plans to leverage all the ways you CAN communicate with them.

Look at your technology and systems. Prioritize your budget to ensure you expand your tools so your employees and sales people can perform at their highest levels.  

3.    Strategies

Write down in detail who is your ideal customer. Don’t hold back on things like these for B2C:

• Demographics
• Income range
• Location
• Lifestyle
• How do they feel when they get the benefit from your products/services?
• Why do they feel that way?
• What do they envision will be better in their life after they use your product?
• Male or Female/Single, Married, with kids.

 For your B2B customers:

• What business they are in?
• Who are their ideal customers?
• How easy are they to do business with and why?
• What do they feel when they buy your products and gain benefit from them?
• Why do they feel that way?
• What do they envision will be better in their life after they use your product?
• What type of people are they and do they match your values?
• Can you become their trusted advisor?
• Who pays you the fastest?

There may an ideal customer for each of your business lines or product lines. When you share that with everyone in your company, they can focus on finding and servicing the good ones. Figure out which customers are a drain on your resources and send them to your competitors.

Strategic planning is an ongoing process, not just a binder that sits on the shelf. Its used internally to drive decision making. Make the decision to review and update your strategic plan at least quarterly in 2010. If you don’t have a strategic plan, get facilitated help. Doing this right will give you clarity and direction to crank up your company’s velocity of growth in 2010.

Take positive action over the holidays and focus on budgeting, your customers, and your strategies. 2010 can your best year ever.  Otherwise you’ll look back at 2010 and wonder what happened, as more surprises will be in store for your company.

Every day CxO To Go^TM helps Owners/CEOs accomplish greatness regarding these topics and more. Call us if you’d like to have the same type of trusted advisor relationship with us. 303.995.4523.

6 Things to Know Before Hiring a CFO

by Marty Koenig and Keith McAslan

Partners at CxO To Go^TM

Before hiring a financial executive to guide your company, ask these 6 questions to ensure that you don’t end up paying a whole lot of money for services that are not what you need, expect or want. Hiring an on demand CFO does not have to be a confusing experience. Instead, it can be the most empowered decision you ever make for your company.

1. How do I know if I need a CFO?
   

   Many small companies have a bookkeeper, accountant or CPA. Their roles are important, but very limited in scope compared to the experience of a CFO. Bookkeepers and accountants function mostly in the day-to-day work of keeping up with your records and taxes. Even a controller is often seen as a “number cruncher” that spends a lot of time with their nose in spreadsheets and doing reports. A CFO is very different and provides far greater value to small businesses.

   Here are some examples of why a small company might need a CFO:

• Rapid company growth has stretched the capabilities of your current accounting staff to the limit, but you still cannot afford a full time senior financial executive.
• You are planning a major expansion and can benefit from adding an outsourced CFO and trusted advisor to your management team.
• You need assistance in dealing with bankers, lenders or outside investors.
• Your company is in a crisis, experiencing financial or other difficulties and requires strong financial leadership that cannot be provided by your current accounting staff.
• You need specialized financial expertise not available internally, and could use the help of an experienced CFO to mentor and coach them to do better at what they do.
• You are planning an exit from your company with a merger, acquisition, or sale and want to gain maximum value and sale price in the future.
• Your CFO leaves unexpectedly and your company has no one internally with the skills and experience to take over. Until you complete the search for a replacement, CxO To Go can provide the financial expertise to keep your business running smoothly.
• You need a periodic financial advisor to keep your company on track, someone that is dedicated to your company as it grows.
• You are a new start up company and want professional advice to begin your financial management correctly.

1. What questions should I ask a CFO to be sure he/she has the experience and personality traits to help me?
   

   Throughout your conversation, determine if the CFO is a people person, not just a number-cruncher. His/her people need to like him and trust him, and he/she needs to inspire everyone around him. Some accountants and professionals do not enjoy working with a lot of people and collaborating for success. These types will never be successful CFOs.

   Ask them about breadth and depth of knowledge and experience. While knowledge of your particular industry fine, a big part of his/her ability to add value to your firm will be his experiences in and around a multiple of industries. He will possess the unique ability to understand and lead several, if not all, of the disciplines of the company with great focus and precision. He needs to have significant experience helping companies obtain clarity, maximize cash, improve profits, and optimize their resources from a multi-disciplinary perspective.

   Ask them to give you examples where they have had to be diplomatic and persuasive. The CFO holds all of the confidential and valuable information to the business model and plans for growth. He needs to carefully and professionally work with others around him without being abrasive but using persuasive communication to engender buy-in and loyalty. These are sometimes rare traits, but a great CFO needs them desperately.

   Ask them if they are open to new opportunities and flexible. If he/she always says no before hearing you out, then he will never succeed as the CFO. In the broad and deep context of all of his experience and strategy for the company, he/she should be able to filter through opportunities and help the company implement the ones that best position the company to achieve its objectives and improve its competitive advantages in the market.

   Ask them if they are a Strategist and Visionary. He/she must always think ahead. Reporting on the past is an important function he/she oversees, but his/her value will come from his foresight and ability to strategically guide the company as a whole, not as individual parts.

   Ask them about their professional designations and education. A professional accounting designation is good, but not required for a superstar, senior executive CFO. Having a graduate degree with 25+ years experience is key. An MBA with less than 25 years experience does not begin to cover the accounting, process, and operating knowledge needed to steer a company’s finances.

   Ask them how hands on they are. The job of a small business CFO is very different from one at a big company. The latter is much more of a hands-off role focused on investor relations, deal making (financing, M & A), governance, reporting and other back office matters. In stark contrast, the small business CFO is much more hands-on and integrated into the day-to-day of the business.

   You want a CFO that is not shy. The CFO is the CEO’s most trusted advisor. If a CFO doesn’t tell you he/she is planning to ask you tough questions that nobody else will, then you won’t get the best experience and value. A good CFO is good at asking questions that force those around him to think through and understand things they are about to undertake. A good CFO keeps asking questions until he/she gets his/her mind around the issue and fully understands it – and is confident that those around him/her fully understand it as well. The discipline to keep after it until initiatives and actions are understood and are sound is the hallmark of a good CFO. It takes much humility and tact to accomplish this, but organizations soon learn to completely think through things before they bring them to you.

   Ask them about their technical and systems expertise. No, you don’t want your CFO troubleshooting Windows on your desktop, but you do want someone who’s sufficiently comfortable in information technology to take the lead in driving your information systems.

   Ask them about their decision making. Your CFO will 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 2nd one) actually deals with accounting. Despite their accounting experience, 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 CFO.

2. How do you bill for your services?
   

   There is no need to be afraid to talk with your CFO about how he/she bills for the work they will do with you. No one wants surprises!

   Since the CFO is a trusted advisor, they will work with you to understand your exact needs and put together a no-surprises cost. This is accomplished by assessing your needs, understanding the current state of your business, performing a gap analysis, and agreeing on specific work that will benefit your company the most. Since these are advisory services, most often they are billed on a bi-weekly or monthly fee basis.

   Sometimes a small business just needs an experienced CFO to help them with a strategic plan, business plan, financial projections, bank lending package or similar project that’s typically charged a flat fee.

4. How will you proactively communicate with me on an ongoing basis?

Unfortunately, many CFOs do a horrible job of proactively communicating with their clients on an ongoing basis. The general thinking in the financial industry is that financial work is back office number crunching.

You want to look for a CFO who will proactively communicate with you regularly so you know what’s going on in your business and you can go be the entrepreneur who focuses their time on company growth. If you are considering hiring a CFO who does not proactively communicate with his or her clients, think again. This CFO might be stuck in an old, outdated mindset that won’t serve your needs in the best possible way.

5. Can I call about any financial problem I have or just about matters you have experience with?

In today’s complex world, CFOs must keep up with a lot of changes. Solopreneur CFOs can only provide value from their own, limited experience. On the other hand, a CFO that has many other CFOs in their practice and their networks leverages the collective knowledge of hundreds or thousands of years experience. Having a massive amount of collective experience means these CFOs have seen just about everything there is to see and have been down the road many times. We like to say that the novice white water rafter cannot see the big rock just under the water six turns ahead. The CFO that collaborates with his/her partners in a larger practice can see the rock because he/she has been down that river dozens of time. And he/she can help steer you away from the rock and keep you from wrecking the boat or getting injured.

Look for a CFO who has an ongoing service program or membership program in place so that you can pay a low monthly fee and be able to call with all of your legal and financial questions without being charged hourly for the consultation. And be sure that when you call, you’ll get to schedule time to talk with your own personal CFO who you know and trust and not get passed off to one of any number of CFOs who happen to work in the office and may not know who you are or what’s important to you.

6. What happens when I am ready to retire or transition the business?

This is a critically important question to ask yourself when beginning a relationship and a question that is far too often overlooked. Many business owners have not considered their ultimate exit strategy, whether it be to sell the business to retire, transition the business to a family member or merge with another company. The CFO who has worked with you as a trusted advisor is in the best position to provide sound financial advice to prepare the company in advance to ensure the highest enterprise value upon exit.

When you ask these 6 questions before hiring an on-demand CFO you will know you are engaging a trusted advisor who will help you to make the very best decisions for your business, your employees and your family.

About Us

Part time, interim, project and virtual CFO’s are one of the cornerstones of our company. CxO To Go’s senior financial executives bring vast experience that is immediately brought to bear on the key opportunities/issues faced your company in today’s market thereby delivering high ROI. Since CxO To Go works on an interim/virtual/ part time/project basis, clients are more readily able to afford resource quality that is usually only associated with a permanent hire and/or priced beyond their ability to afford long term. Our experience is that our CFO’s quickly become trusted advisors to the client company CEO’s and/or Owners.

We have equally powerful resources in Sales, Marketing, Operations, and IT, etc. We are a one-stop shopping partner for all of your corporate needs. Ask us about our services offers in these and other areas. It is our goal to become your trusted advisor partner in all aspects of your business.

Who We Are:

At its core CxO To Go is a team of true “pros” each of whom have 25+ years providing enlightened thought leadership, creative solutions, a real ethos of trust, and ethical business practices. We are bound by a belief that the relationship with our customers is not only essential, but is our business mantra. We only do business where we have an existing trusted relationship. You don’t invite strangers into your home, so why would you invite them into your business? If you have the need and are ready, we’d like to form that kind of relationship with you.

CXO To Go LLC is a national company with thousands of combined years experience. We help small and mid-sized businesses achieve excellence in every aspect of their business. We have hundreds of executives around the country with outstanding experience creating on point solutions to all types of business challenges.

“Begin with the end in mind,” says Stephen Covey in his book, “The Seven Habits of Successful Living.” Steven is often quoted but his advice is seldom taken to heart.

Most businesses address the subject of an exit strategy when some event creates an urgency to do so. Health issues, unexpectedly strong competition, death of an owner, divorce, unexpected departure of a key employee and other events often create an urgent need to dispose of the business and prompt a call to a business broker, who sometimes advertises they are also exit strategy consultants. The consulting they do is primarily focused on checklists of what to do after the business has been sold.

Let me emphasize that at this point it is too late.

An exit strategy has a good chance of working when the owner of the company puts him or herself in the mind frame of the person who may buy the organization. What does this person want to see and what do they want to know in order to love this company as much as you do and want to own the company? Also, keep in mind that buyers, or their advisors, are generally financial people who truly believe that the numbers tell all. They will not know all the nuances that you do that create value in your mind.

Generally, the structure of an exit strategy begins with a clear vision of what the owner wants out of the business. For example, I have dealt with an owner who wanted to fund an educational foundation with the proceeds of his sale of the business. Another wanted the business to continue to grow and prosper under the ownership of his children. Some want time off or to live a leisure lifestyle. Whatever the goals, the best strategy is to set up a documented process where you can truly show that the business is under control and can be understood by a buyer. I discuss sales to buyers because, except in the case of a liquidation, the company will be sold, even if it is to one’s own family.

This means that the company should put together a realistic business plan and measure progress against that plan, whether you are financing the company or not. It also involves maintaining books on a GAAP (Generally Accepted Accounting Principals) basis. Many smaller companies maintain their books on a cash basis, using a bookkeeper, or doing them themselves. While the owner can understand what is being done, an outside buyer or independent valuation expert will generally underestimate the value of the company because there will be assets that are not being tracked. Additionally, the results should at least be reviewed every one or two years to provide outside credibility of the results.

Once a company knows where it is going and can document how it is done, it needs to justify the value to an outside purchaser. I worked closely with the owner of a company who had a clear goal in the sale of his business, a track record of realistic budgets, quality financial statements, steady growth and a profitable market niche. He had one thing missing; he had an unacceptably high business risk. 95% of his sales were of one simple product and 85% of his sales were to two companies. Despite my strong recommendation that he greatly diversify his product line and customer base before selling, he chose to market the company without disclosing these conditions. As one can predict, he failed in the sale of the company after due diligence of two potential buyers. He also rejected two feasible alternatives and took a course of action that, to date, has not produced a sale.

If you think you have all the bases covered, you should decide on the best exit alternative. That alternative may change depending on the stage the business is in. If it is in the early stage, a sale to support the owner’s family or partners may be the goal. Later, a sale to an up and coming family member may be the goal or some charitable or outside organization funding may be the objective. In these stages, different strategies may be developed concurrently. In any event, having a good documented plan, quality financial reporting and strong management practices will show value to a potential purchaser, or to a financier of an employee or family member and produce less stress at a critical time for the business and owner’s family.

Make it a great week!

The Smart Money article is an excellent view of how our fears about “a big crash” are sometimes unjustified.

Few have questioned the basic premise — the notion that many of our financial institutions are truly too big to fail. The underlying theory is not, of course, that the world cannot live without Bear Stearns, but rather that if Bear failed, it could pull under other financial players to whom, through a complex array of trades and credit obligations, it is linked.

For more SmartMoney Magazine features, turn to the October issue.

Exponents of this view often employ the metaphor of a house of cards. Remove one card and the rest collapse. I have never — not when I wrote a book about LTCM, and not now — thought the metaphor was quite right.

Is the economy really so fragile, and is finance really a house of cards? A single firm certainly may implode. When Enron’s books were exposed as a sham, no one would lend to it, and the company did collapse.

But the economy is composed of thousands of firms. They do not all fail at once. David Ranson, an economist at H.C. Wainwright Economics, thinks we are unduly alarmist. A better metaphor, he suggests, is a beehive.

Picture thousands of bees furiously building — and when necessary, rebuilding — the hive. When one bee falls, another takes its place. The bees work in association with each other, but not in a pyramid. If a section of the hive crumbles, the rest of it continues to function. Meanwhile, nature compels the remaining bees to repair the damage. With bees, the motivation seems to be collective. With capitalist human beings, the motivation is individual — but the result is not dissimilar.

Of course, when a house of cards collapses, the entire structure is leveled; the restoration must start from scratch. But that isn’t what happens in the U.S. economy. No sooner does an enterprise fail than others swoop in to snare either the fallen firm’s assets or market share or both. This is how humans repair the hive.

See the entire article here: http://www.smartmoney.com/smartmoney-magazine/index.cfm?story=october2008-financial-firm&split=0