Paying your consultant

7 10 2013

How to structure payment to your consultants depends on a couple variables. Is the project they are completing a short term or one time effort? Maybe an hourly rate with a cap or a set fee is best. Is it longer term? Eg ongoing Contract CFO Role, then a combination of cash today (lower hourly rate) plus long term incentives tied to your success, such as stock options, might be more appropriate and protects your cash reserves. Anyone you can put on a commission structure believes in your business and in their own abilities. Just be carful to not over pay with too high a rate or tie commission to wrong outcomes. Earning their money will dive their behavior, a powerful management tool when crafted correctly, plus you are only paying them out of what they bring in.
Ask you CFO for advise.

Model – complex formulas to make simple to use Plan

17 07 2013

Just completed a very fun little project. My first mobile app plan! Someone wanted a simple looking model, couple tabs, where they could change key assumptions and see effect. There was a certain milestone for 6 months and a not to exceed in 3 years. I must say I enjoyed that.

Venture Debt

16 05 2013

Attended Ropes &Grey presentation on venture debt and mezzanine debt today. Seems it is more popular now with early stage pre-revenue companies. Good panel. Silicon Valley Bank spoke to competitiveness of this market. Couple entrepreneurs spoke about the CFO role in the Financing Strategy and checking out the venture debt source as business partners.

May Offer

7 05 2013

For May we are offering up to 4 hours free analysis. Explain your business and what you are trying to do, provide data in my secure site, receive back analysis you are looking for. This could be for a ppt, for understanding gross margin, for sales reps commissions, be creative, get value for your time, send me something you really need.

Frequently Asked Questions -How to talk to employees about cash position

7 05 2013

How do you talk to your employees about your cash position? On one side they don’t understand how little there is so they are not as careful, frugal, they insist on autonomy, maybe an expense budget, they say they need more people, need more equipment. On the other side if you tell them the cash balance, and how long and difficult fundraising really is, they may run for the hills!

This is a question I have been asked a number of times by founders and early stage CEOs. My answer is always to communicate, but how you communicate is what makes the difference.

My suggestion, I love to put up a graph. You can put numbers on it or not, that doesn’t matter. The image of a downward line that gets to a plateau and then heads upwards is the powerful piece. You should show how higher spending pushes the line down further and steeper, and lower spending does the opposite. Compare this timeline to the engineering timeline. They better be in sync. You can show how every decision, every action of every employee, affects how low the line goes before it turns around, and how long it takes to get there. You are burning your cash balance and you want to reach a point where you are generating cash, or you achieve a milestone to receive your next funding. The turning point of cash flow positive or next funding, is certain milestones. Reaching these milestones is what drives you everyday and will drive them if they can see how they contribute. Everyone wants their day to matter, to have contributed to the goal.

Communicate, communicate. Tell them the goals, show them the progress. You will gain much loyalty and the behaviors day to day that you were looking for!

This is the kind of thing your Consultant CFO can help you with. These are the ideas we have the experience to know and advise. We can prepare the graphs, ppts, etc so you can have the credibility in front of your team. You don’t need a full time person for this, just the right experience when you need it, no more, no less.

Projects – how do you staff them?

13 03 2013

Do you have ongoing projects that you thought your staff could absorb and handle but now those projects just won’t come to a conclusion? You and many others have had this experience. Your team already works hard. The projects that either make things easier, provide more or better information, or move the business forward are just too much to add on. There are two choices. Either bring someone in to work on the project or someone to do your employees job while they work on the project. There are pros and cons to either. Which one do you want your expert on? Your employee has the history, you want to invest in them, give them the knowledge and experience that they will carry forward in the company. However you can’t afford for your existing books and processes to be broken while your expert is elsewhere. What if the person discovers they love the challenge and don’t want to go back to the day to day.

I think it comes down to who you have. Some people are not cut out for project management. The uncertainty of how things will work out, dealing with the problem solving on the fly, and especially dealing with the people involved. VPs that are stressed, employees that don’t do their part on time, the politics, the technical issues. A project manager must be friendly but firm, know when to stand their ground, be an excellent communicator. Others are the perfect choice as they already have the knowledge, relationships and influence, can manage people and timelines and will thrive. With the added exposure they can more easily move up in the organization.

Whatever the experience level and personality traits of your employees. Whichever way you decide to staff the projects. It is based on the talent you have, the best fit. If something changes or your first approach is not working feel free to contact me to explore how to solve. Talking/brainstorming costs you nothing.

At ExclusiveCFO we have project expertise in small to medium size company ERP and other software implementations, due diligence buy or sell side, audit preparation and management, financial statements, technical memos and other technical accounting to bring you to gaap. Any size company SEC Reporting, technical accounting, process improvement, building models and other excel resources. Personally I most enjoy Rent-a-CFO where I add most value.

Month end accounting review

3 03 2013

Does your bookkeeper give you financials that leave you with questions? Let me come by at month end, review and report. Your bookkeeper can email me any time for real time answers.

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