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Posts Tagged ‘corporate finance’

When Processes & Systems Are Put To The Test…

January 21st, 2015 Comments off

Part of the enjoyment that I get from working at a “start-up” is that we essentially have a blank canvas on which to build the company, configure our systems, and define processes. Processes that are both needed, as well as in the best interests of the company. Essentially the establishment of a back office configuration that will support increasing growth as opposed to legacy decisions that are still carried out within a larger enterprise that are simply no longer adding any value.

However, until you’re tested, how do you know the decisions you’ve been making will be positively affirmed and be of value to the organization? From an operational point of view we’ve had a number of touch points that have tested our systems. Whether it’s been the growth of our employee base, the successful completion of our Series-B fundraising, or our accounting audit….we’ve had multiple opportunities to test our systems.

From an operational point of view, I’ve chose to run headcount in a VERY lean manner and instead invest in systems that would support the highest level of efficiency. I’m probably working with the smallest Finance & HR team that I’ve had at any company, yet we’ve continued to successfully respond to due diligence and audit requests that typically involve the generation of hundreds of supporting documents to validate what we are reporting. While tedious, we have the systems and processes in place to respond to these requests.

We’ve also had to strike a very fine balance between implementing system enhancements and the need to run the day-to-day operations. We could have easily put Commission and Deferred Revenue modules in place earlier, but with a focus on cash management and time resources, we’ve waited on multiple implementations until it was right for the business…not for what was convenient or bragging rights of extra system horsepower that ultimately sat idle in the garage.

The challenge we’ll continue to embrace moving forward is how lean we can continue to run while providing top tier business intelligence to the rest of the team and responding to the needs of our outside vendors and partners. While we might be currently smaller in revenues than most of the other companies I’ve worked with, our trajectory is on plan and we have a great operational foundation in place to support it. The satisfaction I get from testing our systems and processes isn’t much different than the Sales Director who gets that purchase order…it feels like a win. It’s great to be working with a team that’s always focused on the test and ensuring that daily efforts put us in the strongest position possible.

Thanks for reading…

Jeffrey Ishmael

2-Years and Marking The Milestones…

July 25th, 2014 Comments off

It really is hard to believe that two years have already passed since the company was started, as well as equally amazing to see what has been accomplished during those two years. Coming in as employee #8, I still laugh at my first day sitting down with our Founder over a fold-up table in his living room when he handed me a laptop, tells me it has Quickbooks installed and if I can get payroll entered the next day. Welcome to the start-up world!

Fortunately I had already done an honest self-assessment and knew the dedication it was going to take to play a role in the building of this company and the necessary pieces I would need to put in place to have a solid foundation. I knew that I was going to have to hire people that had an equal dedication and focus. While Stuart was going to need to keep a laser focus on the product side of the house and assemble his technical “A-Team”, I was going to need to focus on everything else that would support that mission. I also knew that I was going to have to modify my approach and decrease the level of rigidity in my operational approach since we would have a heavily dynamic environment that was likely going to be changing on a constant basis. However, there needed to be one basic premise that everyone would need to operate under….Deliver what you promise. It becomes apparent, and very quickly, that there is no place to hide in a start-up.

In order for people to deliver on what was necessary we needed to have the proper tools in place. Two years later, it’s very satisfying to reflect on the systems we’ve been able to implement and track the progression of our business and the contributions of individuals. In many respects, while not the grandiose scope of SAP (thankfully), we have an incredibly robust reporting and forecasting structure that started with the implementation of Salesforce.com. We then added additional platforms that have resulted in a seamless flow of information from identification of an opportunity to final invoicing. We’re in the process of implementing additional functionality with the addition of a revenue recognition module to track what is a rapidly growing product offering.

Systems and reporting aside, how can you not be motivated to deliver when other members of the team have developed a fantastic product that is not amazing in our own minds, but being recognized throughout the industry?!?!

  • Cylance was the runner up at the 2014 RSA Innovation Sandbox program. This was only 18-months into our existence as a company. Amazing!
  • Cylance has just been named one of CRN’s 2014 Hottest Emerging Technology vendors.

When I look at the customer base that we have assembled I see a virtual mirror of the customer base that I was servicing during my time with a Schneider division that supported a variety of customer ranging from SMB’s, to Large Enterprise, and Government. We had a $125 million Services & Product business that employed over 300. While we are still on the upward revenue trajectory, it took them decades to build a quality customer base…and we’re 2-years in. Really a fantastic accomplishment!

It’s all the base hits along the way, and the reflection of those, that really keep me motivated and excited about what lays ahead for Cylance.

  • The creation of a team that is intensely focused on delivering the Cylance mission.
  • The establishment of a successful and profitable Services business
  • The creation of a truly industry disruptive technology that is already being embraced by a notable customer base.
  • The continued development of relationships with key financial partners, as well as new partners brought in during a successful Series-B.
  • Establishment and collaboration with Board level committees adding additional oversight to the business.
  • Successful onboarding of a key accounting partner for additional oversight & auditing.
  • Successful onboarding of a new Director of Human Resources and the continual building of an already successful program.

It’s been a pretty darn fantastic ride over the last two years and I can only imagine where we’ll be in another two years with the team and partners we have in place. The only thing that will limit us moving forward will be the limitations we place on ourselves and our inability to properly plan for the success ahead.

Thanks for reading…

Jeffrey Ishmael

Is Corporate Influence Impacting Your Brand Performance…?

May 17th, 2013 Comments off

In my last blog entry I provided an overview of all the areas that could potentially impact the value and performance of the company or brand that you are responsible for. Essentially, are you squandering brand value through your own actions, or conversely, are you having to work through parent company influencers that are impacting your results?

At DC in particular, I was hired one month on the heels of a new President, who in his words, “was not brought in because things were going well”. Very true words, and in the beginning, we were given all the corporate support we needed to make the necessary changes. Gradually, as we continued to improve our results, we began to see an increasing restriction in our available resources. Not because our results were deteriorating, but out of support for the other brands who were not performing as well and the need to post a strong consolidated result. The availability of resources started to become scarcer as we consolidated locations and became an embedded brand at a corporate level as opposed to our previous situation of operating as an independent brand…down to a geographic level.

Now to be clear, the issue wasn’t fiscal accountability at a corporate level, but the frustration in the inability to deliver the value that we knew we were capable of. A level of performance that would not have been at “any cost”, but a level of performance that would have easily been achievable while still showing improved financial results, a methodical leveraging of our expense base, and an investment in headcount that would have supported the necessary growth initiatives.

For our brand team, we had complete transparency on our goals, our financial performance, and the mapping of what would get us to that point. So when the brand was denied the resources to perform, the entire team felt the same level of frustration, as well as sharing the common question of why there wasn’t the same level of fiscal accountability across all brands. It was pretty easy to see where there was a prevalence of “legacy” management and staffers across the other brands that held their positions as a result of their tenure with the company, as opposed to the value they actually delivered on a daily basis. It was necessary to accept that the environment we worked in was one of lifestyle, as opposed to the responsibility of driving corporate performance & drive shareholder value.

Conversely, if there was a common drive for performance, knowing that we all designed, developed, and sold a similar product, the allocation of resources should have been a very straightforward process.

  • We should have been looking at the growth rates across all brands, both at a realized level, as well as a forecasted level. We also would have been looking at the historical ability to deliver on previously committed results as opposed to who delivered the most favorable presentation.
  • We should have been looking at the allocation of operating expenses and whether each of the brands was achieving the necessary leverage in their forecasted results.
  • We should have been looking at headcount levels relative to our existing revenues, forecasted revenues, as well as the impact on forecasted OpEx. Would we be looking at an increased revenue per employee metric with the impact of new hires? We’d be looking at that metric across the brands on both a current and proforma basis.
  • We should have been looking at brand level inventory performance and whether we were showing an increased turn versus prior seasons. We should have been measured at a brand level on our performance with reserves, past season inventory, and not merely arbitrary opinions that inventory levels were too high because overall corporate inventory levels had become bloated.

In the end, it’s important to understand the environment that you are working in, or being forced to work in, and whether it fits your own approach and what motivates you. Regardless of whether you’re being forced into a position of compromising the performance of your brand, it’s still important to track what the capabilities are for the brand and to still strive for those levels, even if it is in the face of headwinds that are over and above the normal market, product, and customer challenges.

Thanks for reading…

Jeffrey Ishmael

Ken Tudhope notes: Techno-Networking….

October 15th, 2009 Comments off

     If you have kids, you know what MySpace.com is all about.  It’s the cyber-place where the teenagers go to flirt, be creative, gossip, and even be a little (or a lot) rebellious.  As parents, we often look to see what our kids have on their MySpace.com page and after we assure ourselves that our child hasn’t posted anything too embarrassing or inappropriate, we breathe easy again.  We tend to forget, however, what kind of crazy pre-cyber things we did when we were teenagers! 

 

     The technical name for MySpace.com, Facebook.com, and other similar sites is “social networking”.  Networking!  Now you know why I’m writing about MySpace.com.  Don’t worry, I’m not going to ask you to create a MySpace page, but I am going to encourage you to embrace emerging technology tools as you build your network of connections. 


     For me personally, I really like LinkedIn.com.  First, you can find people when they move, even people with whom you haven’t been in contact for several years.  For example, I searched on LinkedIn for the company “SMC Networks”, and to my pleasant surprise I found many of the people I worked with at SMC in the late 90’s.  With most of us having gone in different directions over the years, it was remarkable to me that I could connect with them with just a few clicks!  Second, and even more remarkable, you can be introduced to people you’ve never met through your LinkedIn contacts.  Type in the name of someone you’d like to meet and you’ll find out who you know that knows that person you want to meet.  A very powerful tool when used properly.  To connect with me on LinkedIn go to http://www.linkedin.com/in/kentudhope


     In addition to LinkedIn there is Plaxo, a service which will send an e-mail periodically asking people in your database (e.g., Outlook, Act!) to update their contact information:  a recent job change, a company change, a move, new address and the like.  Another very powerful tool is ConstantContact.com which helps with letters, announcements, etc.   A very simple way to stay in touch with your contacts is to utilize an online directory provided by various networking organizations – FEI has one for its members.


     If I can help you learn about these powerful networking tools, or if you need a quick tutoring session, please give me a call.  Maybe someday you’ll introduce a new networking idea to me!

 

Ken Tudhope

Project Pro Search

ktudhope@projectprosearch.com

 

 

Do you have a fiscal strategy or fiscal workout?

October 25th, 2008 Comments off

Every so often we’re reminded about the need to have a specific plan in place, and without that plan, you’re not going to achieve your ultimate goals. I’ve seen this play out in two different ways over the last few weeks. One was my recent commitment to race the Southern California Time Trial Series this year, while the other is my new position as the CFO of a small footwear manufacturer.

Let’s start with my cycling training. I have all the top tools that would enable me to have specific and regimented training programs. I have PowerTap wheels for both my roadbike and TT bike, the latter a PowerTap disc. I have all the latest software to analyze my wattage history and taper accordingly. My wattage levels have been great. However, I hit the first two races and they were an utter disaster. I finished outside of the Top-5 and was not awarded points. My wattages during the race were 15-20% below my recent results. So….the local shop Pro tells me I was probably overtrained and not rested enough. He set me up with a daily program that I have been following diligently every day. While the “numbers” tell me my fitness is dropping, the legs feel fresh and strong. At my last race, I raced in the Pro 1/2 class, received points for second, and set a personal course record. Go figure…..

Carry the same analogy into my new company and I’m finding a team that is working very hard to make sure they hit their annual goals and achieve whatever level of profitability they can. However, just like my previous training plan, there were no day-to-day specifics, or in this case, month-to-month specifics. In particular, the Finance team does not have a forecasted P&L, there are no cash flows, there are no specifics as to how they will move back into profitability, and a host other non-existent reporting tools. The great news is, as I was, they are very willing to change and aware that they need to in order to achieve their necessary results. We are already putting some of the necessary plans in place and I’m very optimistic about the 2009 outlook. In a handful of weeks we already have reconfigured P&L info, we have a preliminary 2009 Budget, and we’ve identified a number of areas that will provide us additional product margin or expense improvements.

In both these cases, we were both working extremely hard but just not getting the necessary results. The effort was there, the necessary tools were there, the skill set was there, but what was lacking was a specific plan. In my case, it took a fellow competitor to bring out my best, while in the case of my new company, they hired me to bring out the best in them….and I’m looking forward to the results on both. So ask yourself – Do you have a fiscal strategy or fiscal workout?

Thanks for reading. . . .

Jeffrey Ishmael

IFRS planning & IT collaborations

September 3rd, 2008 Comments off

In my post this morning about making the jump into an IFRS conversion, I wrote about the platform upgrade we had completed prior to our move into the adoption of IFRS. We had implemented Hyperion HFM, which would allow us to report under the new standards. I wrote that a word of caution was necessary knowing whether your current or planned system would be able to support IFRS since not all platforms are capable at this time. Just posted to CFO.com is a great article regarding the necessary collaboration that needs to happen with the Finance and IS departments. Definitely worth the few minutes to read.
CFO.com article:Can your CIO spell IFRS?

We’re mid-Q3, are you achieving your plan?

August 19th, 2008 Comments off

I apologize in advance for republishing an earlier white paper, but I felt that this one was worth revisiting considering recent conversations about Finance departments and their staffing levels. I am continuing to hear from my peers, as well as recruiters, that departments are being run extremely lean. With this in mind, it becomes even more necessary to keep our groups motivated and focused on the task at hand. When the targets for hitting our annual plans are those home runs that take the better part of a year to achieve, it becomes harder to keep teams focused, and should those goals not be met, almost instills a sense of failure within the group. Something we can certainly do without in this demanding environment.

I would also have to assume at this point that most organizations have already achieved their “big hits” over the last year since we really started to see the current slowdown in the latter part of Q3 last year. If you’re a company with a revenue range of $200 million and OpEx in the $50 million range, and you want to trim 5% from you expenses, where do you begin? For starters, you not only need to trim the 5%, but you also need to counter the inflationary impact on salaries, insurances, and other variables. However, if you start breaking that $2.5 million down into smaller increments, it becomes much more achievable and manageable. You can also keep the team motivated as you check off the incremental goals achieved through the year.

Depending on how efficient your entity is operating, those incremental savings might pose a significant challenge if your company is seeing significant growth, which then comes down to evaluating whether you’re leveraging your OpEx. In that situation, what would your Budget look like if viewed on a constant basis year over year? Winning the “Budget Game” is about consistent base hits and keeping our teams motivated.

Thanks for reading . . . .

Achieving your plan with Base Hits

Strategizing your facility lease renegotiation….

August 1st, 2008 Comments off

There’s no question that we’re all fully consumed with the current economic climate and focused on making the Q3 and Q4 numbers, with only slight considerations at this point for 2009 and beyond.

Where are you with the lease(s) on your facilities(s) and when will those be coming up for renewal?

If you’re a service-related entity then you might have a smaller planning window for this consideration, but if your a manufacturing entity, your time horizon needs to extend out much farther. Even if you’ve been in your facility for an extended period of time, say a decade or more, you can’t let yourself fall victim to complacency and plan on re-signing in the quarter before the lease expires.

The obvious concern of waiting until a very short time before the expiration is that you’ve lost all leverage in your negotiations and the property owner will know that you have few choices, especially if you’re a manufacturing entity. Start this effort farther out and you can determine what your options are and take those to the negotiating table with you. In my previous company, we worked through 2 different lease renogotiations, which ultimately saved the company in the high six-figures over a short-term lease and avoided significant CapEx investments tied to a relocation due to original condition clauses. By starting early we were able to determine the sensitive points for the property owner and appropriately leverage those, and in a way that the owner did not feel exploited or that he was getting a poor deal.

This is a topic that needs to be addressed in more detail, but other considerations might include:

1. What facility investments are you planning on making and are those decisions aligned with your lease terms?
2. What would the true cost be to move your operations? Would you be able to effect a quick move with little downtime or would you need to run parallel?
3. If you were forced into a relocation what is your exposure to returning your facility to “original condition” (do you have exposure in this area)?
4. Could you secure additional concessions from your current property owner through additional lease term commitments.

Lease negotiations turn into a bit of a sleeper for years at a time but have the potential to sneak up and inflict some hard financial pain if not addressed appropriately. Don’t let this one fall of your radar….

Thanks for reading . . . .

Are you an Expense or an Accretive Asset…?

July 25th, 2008 Comments off

     Over the years as I have looked to add members to my team, or more recently, navigating my way through the interview process, there has always been one question I have asked regarding a new hire – What will be the value you will create for the organization? 

 

     The view that I have always taken is that headcount needs to be increased in the same manner that you are making an investment in a new product line, additional inventory, or a new ERP system.  The investment needs to have a calculated ROI and the impact to the bottom line assessed.  If I’m being told that a number of new hires are not going to support an additional increase in sales or be associated with a specific project aimed at operating efficiencies, then I would need to question the true need.  This was the question that I would pose to all managers within the organization throughout the year.

 

     For any mid or senior level Finance position, the investment in a new hire is absolutely huge. Between the time spent recruiting, potential recruiter fees, salaries, additional benefits, and the short-term investment to bring that person up to speed, the investment is significant. The expectation for any position is not to just cover the expenses, but to realize a return that is a multiple of that investment. What will I do for the organization to help them achieve a multiple of their investment in me?

 

     As Finance professionals we have an obligation to not only generate timely and accurate reporting that will enable good decision making, but to identify areas within the operation that can be improved so as to increase revenues, margins, or result in a decreased expense structure. The same holds true of your staff, including cost accountants, A/P and Credit personnel, or your IT staff.  All have their specific expertise that should enable them to identify inefficiencies within their functional area.

 

Read the remainder of my commentary –   Expense or Accretive Asset? 

 

Thanks for reading . . . .

Book Review: Reinventing the CFO

July 22nd, 2008 Comments off

     Reinventing the CFO, by Jeremy Hope, is an absolutely fantastic book if you’re looking for a little perspective on how you’re approaching your own Finance department and the value you are bringing to the company.  It goes without saying that the role of the CFO is has moved beyond that of a simple Accountant or Controller and has progressed to that of financial strategist and partner to the rest of the executive team.  There’s extensive commentary that prompts the introspective question of what value you are bringing to the organization outside of month-to-month reporting. It questions the approach you take in your personal approach and whether you are seeing realizing the highest levels of efficiency within your group.  A must read for any finance professional who has achieved, or aspires to, a senior finance position.  It never hurts to question your own approach……after all, it never hurts to have a little more humility within a Finance department.

Thanks for reading . . . .