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Archive for August, 2013

Working Remotely: Balancing Productivity vs Staying Connected…

August 28th, 2013 Comments off

It seems that no matter how much I think there should be a normal daily routine in corporate finance, there never is. Whether it’s the latest ad hoc reporting need, vendor emergency, or employee related issue…there just isn’t a normal day. I have a hard time accepting this since I have multiple family members who worked in Law Enforcement and I hear them talking about how there is NEVER a “normal day”. Using that same line seems a bit trivial for the work I do compared to them.  However, it really is the case and with the lack of a standardized schedule comes the challenges of fitting in the necessary daily operational tasks, as well as the countless extras that come with working in a start-up environment and wearing a half-dozen hats. Don’t get me wrong, I love all my hats I wear and they’re a necessity in our current environment. However, there is also a point reached where the daily tasks are backlogged, as are the ad hoc requests. At that point…time to consider alternatives.

It’s not something I resort to often, but I’ve taken the approach of basically going into “monk mode” and taking a 3-5 day out of office remote effort. No meetings, very few calls, and just focusing on the backlog of tasks. I have to say, this is a rather unique and somewhat uncomfortable approach for a Finance person. While the majority of our staff takes this approach within our company, it’s a very foreign approach for what I’ve become accustomed to. While it may only happen once every 1-2 months, it’s still a weird feeling. However, I have to say that it provides not only a nice balance to the constant Mach-5 speed we seem to be working at, but the break from meetings and calls provides a fantastic ability to focus on the list of deliverables and make some progress on key items that get bogged down in the daily minutiae.

Even more strange to consider is that almost all of our systems are cloud-based, which allows me to have an even higher level of productivity out of the office in the absence of constant schedule deviations. Provided you’re  not choosing a location where you’re hitting the local night spots, watching your favorite shows on cable, or some other distraction, you basically have nothing more to do than get caught up on the backlog…and write that past due blog 🙂

In all seriousness, with a cloud-based systems structure, I have the ability to stay connected and work on all accounting related needs, HR needs, monitor the progress of bookings, address important emails within minutes, and maintain the same dynamic systems structure I have at the office. Pretty darn amazing! All without the need of utilizing a VPN or being onsite for physical systems access. It’s certainly not an ability, or luxury, I would have envisioned even 5 years ago. To think I can have the same level of productivity on a remote basis is quite an amazing opportunity. The key is infusing a personal level of discipline that if you are going to work remote….you’re really going to get it done. As with everything else in my life, tasks are measured and my ability to deliver is measured.

Regardless of the progress, it’s still a strange & foreign feeling working remote. While I appreciate the gains in productivity, I can see how working on a remote basis would leave one feeling a bit disconnected from the energy and culture of the company. For me, doing this every 1-2 months would give me the edge to maintain productivity while not losing touch with the daily vibe. To do this more would leave me feeling somewhat disconnected from the pulse of the company and team. But then again, that is in perspective to the work I do and needing to check that pulse against the numbers I am seeing reflected in the system.

The challenge of increasing productivity, while working in a start-up, has forced me out of my comfort zones and to find approaches that will allow me to deliver, without taking the easy approach of hiring another consultant or lobbying for another position. Working remote, while absolutely strange, allows for the potential of a fantastic ROI if properly deployed.

Thanks for reading…

Jeffrey Ishmael

Performance Metrics In The Absence of Standards…

August 20th, 2013 Comments off

One of the things I enjoy so much about my position and working within Finance is that there is no “average” workday and each day brings a new challenge and opportunity to drive the operational and financial performance of the company. One of the challenges I enjoy is developing a level of performance reporting to help the executive team measure the business and make the necessary decisions. What this does not mean is merely distributing the standard financial or accounting metrics that are spit out of the system on a daily or a weekly basis. There is simply no value added if that were the case.
What I am referring to is really rolling up the sleeves and measuring what makes the company tick and understanding its pulse. In the case of a start-up you can virtually throw the majority of the standard metrics out the window until you start assembling enough data to actually provide some relevance to figures. In the early stages it’s too easy to take a number out of context and start making assumptions about whether it’s good or bad. The one thing to keep in mind though is that once you start moving outside the standard working capital ratios, you have to be very mindful that not all measurements are created equal. While there are standards in place for revenue recognition, as well as the key spends that need to be rolled into your cost of goods sold, or the treatment of R&D spending, there are other elements where it’s a coin toss between classifying them in your cost of goods or rolling them into your operating expenses.
I came across this during my time with DC Shoes where I started to compile a benchmark study on gross margin performance with other companies in our space. Partly to show our corporate parents how well we were actually performing in contrast to their constant criticisms, but also to see what the performance trends were over the prior few years. The revenue part came together quite easily, but as I started to dig into the gross margin portion of the equation it appeared that there was a significant variance in performance within my peer group. As I started to review the cost elements that were being included it became quite clear that it was not an apples-apples comparison. Additionally, while there may have been some transparency in the elements that were being included, there were no figures cited that allowed for adjustments and the viewing of equitable figures.
In the absence of reasonable comparisons I turned the mirror inward to review our own results over the last 3-4 years and found that was also a challenge as well. I had inherited a collection of financial results that had been modified on a somewhat regular basis….either at the directive of corporate, or at the decision of prior management teams to include/exclude certain costs. Trying to have a clear story about our own performance was equally difficult. This situation makes it extremely challenging to communicate a company’s progress to the Executive team in a clear message, not to mention, it basically condones the constant change of reporting standards that makes reporting, accountability, and planning a huge challenge.
While having GAAP or IFRS standards for every calculation on the income statement or KPI scoreboard is not the answer, the Executive team shares a responsibility to have consistency in the reporting that is produced and understanding the business well enough that an internal set of reporting standards can be deployed and used to measure performance. It doesn’t do anyone any good in the end to have a continual string of asterisks noting changes in your reporting. The only thing that will drive improved performance is accountability supported by accurate and consistent reporting.
Thanks for reading…
Jeffrey Ishmael

Financial Reporting, Coaching, & Supporting the Team…

August 9th, 2013 Comments off

After taking a few days off this last week and having some time to think over a few of the companies I’ve worked with, it occurred to me that there is a distinct difference between many of the finance colleagues I have worked with and the approach they bring to their position. For some, and without trying to hyper analyze how their childhood is affecting their work approach, it seems that the process of reporting the monthly results & highlighting the deficiencies of others is something they enjoy a bit. What has puzzled me about these individuals is that they are also part of the same team and should assume a more vested interest in partnering with each area to ensure that their colleagues have the proper tools and information they need to succeed and deliver the expected results. It’s really a matter of balancing the needs of consistent financial reporting, enforcing accountability across the organization, and partnering with each area to ensure that you’re giving them the support they need.

For myself and my work with Cylance, there is a huge correlation between the Services business I reported on and partnered with at MGE. At MGE, we had over 150 field engineers and reported on almost 340,000 labor hours annually. While a mature organization, there was still the need to develop and refine our ability to accurately report on that portion of our business and have the information to make business decisions that would help us continually improve our performance. It’s no different here, except that we are a 1-year old start-up that has a smaller staff. We have incredible talent who bring a wealth of experience from some of the top companies in the security space, but as a start-up, it takes time to deploy the necessary tools and provide them all the necessary information. While it took a bit of time, we do have that information and are constantly using it to measure the business and make informed decisions.

Managing the Finance side of the organization, it’s not just my responsibility to throw a set of numbers on the table at the close of each month, but to partner with our Services team and ensure they have the proper reporting and can focus their efforts on customers and project management. I want to provide them the information so they can audit and tell me the system isn’t properly reporting…or it is and they can adjust their business as necessary. It’s not just hindsight reporting, it’s about a complete performance picture:

  • What is the current utilization rate and what are the trends you’re seeing over time?
  • What is the estimated proforma utilization based on the bookings pipeline being reported?
  • What is the current hourly cost rate and how do the actual results compare to the Plan?
  • Is the existing skillset of the staff aligned with the bookings that are being recorded?
  • What is the average billing rate and how does that compare to the Plan?
  • What is the cadence of new bookings and project kickoffs relative to available staffing levels?

In the end, the responsibility of Finance should be much more than publishing revenue or margin results. It should be an ongoing partnership with the areas that significantly influence the results and helping them optimize those results. When it comes to working within a start-up, we are all vested parties and need to drive towards the best result possible.

Thanks for reading…

Jeffrey Ishmael