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Posts Tagged ‘forecasting’

Anaplan…& Implementing a Robust Forecasting Platform: Billings & Revenue

March 24th, 2017 Comments off

For the first few years at Cylance there was not a huge reliance on our forecasting platform and the need to put a pricey tool in place. There was simply no need to spend a six-figure amount when our business was still an entirely domestic story and the core revenue stream was still Professional Services. While we implemented NetSuite within our first few Quarters as a company, we opted for the NetSuite as our core platform so we could then bolt on additional modules as needed. We opted for their forecasting module almost immediately, but for a very basic forecasting function. As a Professional Services story, we only had a basic need to forecast gross labor hours, utilization rates, hourly cost rates, as well as estimated billing rates. At this point, we still did not have any consideration to Product revenue, and in the absence of, did not have any considerations for revenue recognition at that point. Considering that our Services revenue was not invoiced until completed, it was a very straightforward modeling exercise.

Fast forward to the launch of our Product offering and we knew it was going to necessitate a jump to a new platform as we were already starting to see some weakness in the NetSuite module. This new phase required an entirely different level of forecasting considerations for which there was no historical activity and for price points that had not been previously seen in the security sector. Would we actually realized, and stabilize, at a pricing level that would be many multiples over the incumbent first generation AV offerings. With consideration to the Product forecasting;

  • Average price per node on an annualized basis
  • Billings distribution by contract length…12, 24, and 36-months
  • Flexibility to easily adjust the anticipated weighting of billings
  • Subscription or Perpetual agreements (very few perpetual, but still present)
  • Robust deferred revenue modeling as a result of signed contracts
  • Sales staff hiring and assigned quotas.
  • Implementing any “seasonality” consideration into the model
  • Existing quotas, annualized growth, as well as ramp up period for new hires.
  • OEM, Consumer, and Government assumptions.
  • International entities & expected exchange rates for a consolidated USD view
  • Contra revenue accounts

It’s pretty easy to see that, even the short list above, there was going to be an entirely new level of complexity to our forecasting efforts, which could not be accommodated in our original module. After meeting with one of our key investors and discussing some of the options available, Anaplan seemed to emerge as a strong candidate and we made the decision to move forward. It was time to put a more robust tool in place as we started moving towards 9-figure revenue goals.  Even with the move to a new forecasting tool, we also had an entirely unique challenge as in developing a the components of this Forecast without a wealth of historical performance metrics. This meant that we would be constantly updating the Forecast as we compiled more Product transaction data. Fortunately for us, we saw a relative level of stability in our average PPN and our contract lengths. The two most difficult elements we had to work through during the implementation was the buildout of the deferred revenue forecast and the buildout of the revenue forecast that was supported by a detailed hiring plan and the assigned quotas for each one of those individuals. This was not going to be a simple spreadsheet exercised based on modifying a few cells and voila’…you have an annual number! The goal was to build a platform that would hold up to the scrutiny of our investors as well as easily identify & bridge any performance shortfalls that were realized versus planned.

In taking one example of where Anaplan excelled was in the modeling of our domestic revenues through the quotas that were assigned to each of our sales staff. While a painstaking exercise, there was an itemization of every existing sales staff, as well as those who were recently hired, or planned to be hired. There were individual quotas assigned to each one of these individuals. For those new hires, there were additional considerations to a ramp up period as they learned our tech, the inner workings of the Company, as well as seeding their existing network in their new employment. While these assumptions were usually conservative to reflect a few Quarters of nominal contribution, most were ramping extremely quickly. However, were we going to see the same level of immediate success as we scaled from a few dozen to sales staff to a multiple of that? That’s where we would have flexibility in Anaplan to adjust the model accordingly. From a billings and revenue modeling perspective, the only limits in Anaplan would be those that we placed on ourselves. However, we also had to be careful that the levels of planning detail we opted to incorporate would be important in the planning of the business and not turn into an exercise of planning paralysis.

The second painstaking, but worthwhile effort, was the buildout of the deferred revenue model. With the help of one of Anaplan’s premier implementation staff members, this was efficiently tackled and resulted in a clearly mapped Forecast that was easily trackable after any changes were made to new sales hires, quota modifications, or changes to average contract lengths. It was no longer the “black box” that we were challenged with on our prior platform. The additional benefit of the new Anaplan deferred revenue forecast is that it was easily audited and reviewed against the underlying assumptions. This would have played a pretty key role in our prior financing round in which there was a divide between the models presented by investors and our internal view…on the older platform. As one investor had noted during those efforts…”We’re familiar with that module and it is a bit of black box…”. A nice affirmation of our decision to move to Anaplan, but we were not yet fully deployed on Anaplan to supply the new view.

With respect to our choice to move to Anaplan, we also chose to work directly with the Anaplan implementation team as we wanted to keep our entire efforts and focus inside the Anaplan camp. I opted not to risk having a point of weakness between Anaplan and the efforts of a 3rd party reseller for implementation. It was a great decision and the Anaplan team was fantastic. In the end, the primary goal of moving to Anaplan was to be able to provide complete transparency to our investors, provide them the confidence that there was a robust set of underlying assumptions in the Forecast, and to allow for an intelligent dialogue on the integrity of the underlying Forecast. That once unbundled, it would be easy enough to see where any weakness might be occurring if there was a shortfall against Plan. We’ll jump into the cost of goods and operating expenses in the next round…

Thanks for reading.

Jeffrey Ishmael

Preserving Culture & Success In a Hyper Growth Environment…

February 22nd, 2017 Comments off

After my departure from Cylance, one of the biggest topics that I’ve been asked about, and given extensive consideration to, has been that of culture and how you preserve the success factors that were part of the early stages. Cylance was started with some key cultural goals in mind, which were primarily based on the disdain and avoidance of silos and politics. We had all experienced it at larger companies. The early efforts and decisions were all focused on the building of a product that would change an industry…nothing else mattered and everyone was committed to that vision.

As we had shared with investors, analysts, and media, it took us the better part of 3 years to reach 115 employees. There was a focus on our burn and regulating our spend in a prudent…and almost surgical manner. It then took another year to grow our employee base to 450. Even this number, while certainly aggressive, did not give us an undue amount of concern. Yes, we did tap the brakes a few times to make sure our billings were continuing to trend as they were…multiples above our original plan. However, as I’ve discussed in prior posts, we were also focused on making sure the underlying metrics of billings and revenues per employee were also continuing to trend upward, as well as ensuring that our cash burn was in the confines of the original plan. Some might take the view that a tripling our headcount was an unhealthy growth, but we were cognizant of the number increase and actively discussing the potential risks with our key investors. We wanted to learn from their other portfolio companies and couldn’t afford the distraction of having to correct course under the trajectory we were on.

Let’s take that tripling of headcount and why that wasn’t necessarily an unhealthy number. When you look at the hiring of 335 over the course of a year that equates to 6.5 people per week that are hired in across every functional area…Sales, Marketing, Engineering, Research, etc. While the new hires might be coming in with some of the “corporate baggage” from the larger companies, there was a significantly larger number of incumbents that are able to offset that influence, properly onboard the new employees, and successfully indoctrinate them into the culture that had been the foundation of our success. Even in the latter part of the year, when you’re bringing in the other 165 hires, you still have a fairly large & established group that can help in the absorption and molding of new employees. Will you make some mistakes in hiring? Absolutely. But you also need to take the necessary steps to course correct early on. I also believe, but wasn’t successful in enforcing, was the need to have hiring managers outline the roles & responsibilities for their newly requested hires, which would later play into assessing the quality of their delivery, and ultimately, qualifying their work relative to bonus payouts. This was an extreme challenge as we were also confronted with a trajectory that was multiples of our original plan, which meant that we also were having to manage headcount growth that was nowhere near the original plan, or the first revision…or the second or third revisions. You get the picture…hyper growth demands quick reaction.

The biggest question though is where does the process actually break? What is the percentage of “tenured” incumbents that need to be present relative to hyper hiring…and is this even a valid statistic? This becomes the key question when you find yourself in a Quarter where headcount grows by 50% and there is a push to increase an incremental 30% the following Quarter…or effectively doubling your headcount growth in two Quarters. When you start hiring at the rate of not 6.5 new hires per week, but 18 per week…and then mix new hires with an equally new group of individuals who have not fully adopted the success elements of the existing culture. New hires, who when combined with undefined roles & responsibilities and a lack of guidance, are treading water at best and not sure how to direct their efforts in the rapidly expanding environment they just got tossed into. Combine the cultural challenge with the financial challenge where the majority of the cash flow is affected by headcount and how the Company is then performing relative to the billings and revenues per employee…and the cash burn metrics that have been committed to the Board. It’s all about keeping an engineered and discipline approach, but balanced with the unplanned needs of the business. There is no textbook approach in hyper growth and you can’t look to your past experiences to guide you through this scenario because in all likelihood…you haven’t been there. Ultimately, the success will be predicated on keeping successful communications going with the team, healthy collaborations, and knowing the pulse of the business…PERIOD. In the absence of these your destined for performance mediocrity, or worse yet, course corrections that will affect morale and momentum.

Thanks for reading…

Jeffrey Ishmael

Who Is Your Go To Mentor When You Don’t Have The Answer?

August 20th, 2016 Comments off

One of the staples that I have had in my career has been a mentor. Fortunately for me I was able to meet this individual and strike a good relationship, and friendship, that has lasted the better part of 20-years. He’s been there in my early career transition days where I was moving from Operations and Product Planning into a more Finance-specific track. In fact, it was his prompt that really directed me towards the Finance path I am on today.

While he has been a staple through those years, I’ve also aligned myself with people that I very much enjoyed both working with…and for. Folks that challenged me individually and people that I was able to learn from as well. There were three CFO’s in particular that I was able to work for that really challenged me and gave me all the rope I ever wanted…with the challenge presented that it would only by my actions that would cause my hanging. Fortunately I always kept the rope pretty taut…

However, as you move higher on the climb, the challenges become more pronounced and quite often the experience you bring to the table may not be sufficient to get you through the next challenge. This is when both the strength of your mentor(s), as well as the strength of your network, need to be of sufficient levels to carry you through. Each individual’s challenges will be unique, but still a minefield that needs to be walked and navigated.

In particular at Cylance, there is nobody on our team that has been through the kind of growth that we are currently realizing. From the increase in our billings, to the increase in our headcount, or the international rollout and rapid formation of subsidies. We’ve never seen anything like it, and typically have only come across it in a B-school case study. We’re living the case study right now at Cylance…

  • How do you accurately forecast growth when you continue to blow out your numbers and nobody has seen similar growth in quite some time?
  • How do you ensure that you’re preserving the culture, intimacy, and execution in the coming years that you’ve seen over the last 4-years?
  • What are your key metrics to measure and how often will those metrics evolve as the company continues to mature?
  • What are the key areas of risk that you need to have on the radar and keep a focus on regardless of how well things are going?

For someone that measures every watt, pedal stroke, and heartbeat when I’m on the bike, these are the things that I completely geek out on when measuring the performance and health of the Cylance organization. This organization is an athlete that will be continually be subjected to fine tuning and unplanned shifts. Shifts that will be influenced by our employees, our executive team, our investors, and the mentors that we all should have in place to successfully navigate a race that is ours to lose…

Who is your go to mentor when the race stakes get high?

Thanks for reading…

Jeffrey Ishmael

The Value Of The CFO As An Operational Partner…

June 11th, 2014 Comments off

For those that have followed my posts over the years, I have always been a strong advocate of the CFO not just being the financial partner to other functional areas, but a true operational partner. It was great to see the recent article in CFO.com, “Double Duty”, outlining the trends of CFO’s assuming the role of COO.

http://ww2.cfo.com/leadership/2014/05/double-duty/

While some might view additional title as a bit of a “land grab”, it really comes down to the CFO’s desire to partner with the other stakeholders in the company and provide as many tools and insights, which are aimed at increasing the financial & operational performance of the company. One of the statistics mentioned in the article was the decline of the COO role at companies, which fell from 48% in 2000 to 35% in 2013. As one person interviewed mentioned, It was a layer of management that caused the CEO to be a step removed from the business at times”. While it will not always be the CFO that necessarily assumes the COO role, it will really depend on the type of company and the how specialized the underlying COO responsibilities are. However, as I have also mentioned in prior posts, it’s critical for the CFO to be involved in the daily operations of the company in order to quantify what the developments or strategy changes will mean to the Forecast and reported financial results. It’s about working with the broader team and ensuring that the deployment of resources are appropriate to support the mission at hand and that all areas are aligned in their execution. By being involved at the operational level it’s pretty easy to see where promises are being made to customers, timelines are being communicated, and expectations placed on internal resources, and if all the parties aren’t working together….then what that will mean to the actual achievement of the Forecast.

Whether my role has been at a mission critical IT infrastructure company, Retail and Apparel, or now Security, the focus has always been on ensuring that Finance is truly operating as a strategic business partner to the other functional areas. While there was always some level of resistance in the beginning, it ultimately developed into a great relationship and one that was valued on each side. In instances where that wasn’t the case, then it was usually due to underlying agendas and actions that weren’t ultimately in the best interest of the brand or company.

My involvement from an operational aspect has also been to achieve further clarity to all the inputs contributing to the achievement of the Forecast. The worst disservice a CFO can bring to an organization is to treat the forecasting process as simply a spreadsheet exercise driven by assumptions cells that are updated to provide the desired output and then push out the changes to the rest of the company. It’s about being involved and knowing if the assumptions are achievable, sustainable, and if not in the long-term, are there operational changes that can be made to ensure they are.

Part of the value I’ve always strived to bring to a company is the implementation of both financial and operational platforms that deliver sustainable results. Results that are not the product of short-term or one-time low quality deals or internal cuts, but platforms that create longer term relationships and financial results. In the end, happy customers that are properly supported by their chosen partner…us.

One of the closing points brought up in the article, and one I’ve also always tried to see realized, is the “CEO understands that the overall risk to the company will be diminished if the CFO has some direct involvement”. If you’re ultimately striving to operate in a “company first” environment, then it’s not just the CFO that can provide this value, but every member of the team.

Thanks for reading…

Jeffrey Ishmael

Are You Part Of The Solution or Part Of The 62% Non-Operators?

March 28th, 2013 Comments off

If you have read my blog over the years, you know how much I have advocated the involvement of CFO’s in the day-to-day operations of a company. Maybe not necessarily leading the charge with the assumed role of COO or VP of Operations, but collaborative involvement with other members of the Executive team who oversee this area. When it comes to developing the budgets and forecasts of a company, it needs to be more than just a spreadsheet exercise. It needs to be based on a solid knowledge of the flow of resources through a company and what levers can be pulled to improve the operating results of the company.

This is why I was a bit surprised by a recent poll posted on CFO.com, which perceived most CFO’s to be poor operators and having very little involvement in that area of their company. A surprisingly high 62% were only “somewhat involved” or “had little or no involvement”. Regardless of whether you are overseeing a services-based firm and your operations involve labor productivity metrics & similar KPI’s, or you’re part of a manufacturing entity with a dynamic flow of resources, it’s your obligation as a CFO to be involved and have an intimate knowledge. If you have a COO or VP of Operations on your team, it’s your obligation to work EXTREMELY closely with that individual and not only ensure they have every level of support they need to perform to plan, but they are transparent in their results with you so that you can accurately forecast the results of the business.

With the companies that I have worked with, it has not been the home run sales contracts that have typically allowed me to report stellar annual results, but more the sustainable changes in operations that have led to an improved bottom line. Those changes will obviously be different for every company, but it’s diving in and analyzing all of the individual contributors and how they can be improved. If you’ve assumed the CFO role within your company, you are not in a position where you can just sit back and wait for the results to post. You have a team that you should be working with, supporting, and identifying the areas that can be improved, thus influencing the bottom line. If you’re part of that 62%, expect an eventual lesson in Darwinism and don’t be surprised if you’re no longer part of the herd.

Thanks for reading…

Jeffrey Ishmael

Are You Striving For Improvement or Optimization?

July 16th, 2012 Comments off

     As my prior colleagues can attest, my pursuit of improved financial performance has never been focused on our results versus a prior year, or even a competitor, but in striving for the optimal position for our business relative to our goals. While I will always report our position relative to a Budget and the promises made to key stakeholders, we know Budgets are a static view in the midst of market dynamics that are constantly changing. Improvement in an of itself can very often be characterized as mediocrity, while a sincere drive for optimization implies a focused drive on pursuing the highest caliber of result. You might say that’s a rather general statement so let’s put this in a more specific context.

     Let’s take one of the more significant categories relative to working capital management…Inventory. Let’s make the assumption that a company is growing at 15% and has determined that there is a goal to keep inventory growth to no more than 5%. In this situation, you’re essentially going to realize a higher velocity on that inventory, thus a lower amount of inventory days on hand, and theoretically, a more “optimal” position. Right? Not necessarily. You reach the end of the year, pat yourself on the back for achieving the revenue growth and keeping inventory growth to only 4%. Hitting your goals doesn’t imply that you’ve achieved an optimal position. It could easily be the contrary.

     Have you taken the time to run a more detailed analysis of your revenue stream, what those trends are in the most recent 4-8 Quarters, and how that compares to the anticipated growth in the coming year? Have you taken the time to run a more detailed analysis of your on-hand inventory relative to the revenue statistics to ensure that you have an appropriate pairing between the two? What’s even more challenging is to add the complexity of multiple seasons, product categories, demographics, or even regional elements, and you have a very challenging situation to manage.

     This is the analysis that is so critical when it comes to not only the management of working capital, but the management of resources throughout the entire organization. Whether you’re the CFO, CEO, or the Director of a key functional area, have you taken the time to analyze how headcount or marketing resources are allocated throughout the company? During my time with MGE, this would have been a question for not just our own operating division, but a question that Schneider Electric would have been tabling across all their brand divisions. These are the tough questions that need to be pursued when you’re really striving for optimized results.

Thanks for reading…

Jeffrey Ishmael

Qualifying The Elements Of Your Forecast….

July 29th, 2009 Comments off

     We’ve recently began the process of transitioning to a 5-Quarter Forecast process, primarily to provide a greater level of insight to our Sales & Marketing folks. As we speak, they are already making trade show commitments, planning regional sales meetings, and finalizing ad placements. How can you be making these significant commitments without your plans in place for the following year? For the previous company I was at we were able to work under a more traditional annual budgeting process. This worked because we had a predictable activity flow, did not have large marketing or development efforts,  and we typically did not have more than 6-8 weeks visibility for our revenues due to the nature of the offering. But now, in the midst of a much more volatile & dynamic environment, not to mention, a Sales & Marketing calendar that is working almost a year in advance, such an approach isn’t feasible.

 

     As I regularly speak with folks in my network, which isn’t just inclusive of my finance friends, I’m surprised by the lack of information that is tabled/submitted with respect to qualifying a Budget or Forecast. I’m surprised that there are still Management teams that accept Budgets which don’t itemize the individual areas of growth or improvement for the coming year. How can you hold specific teams accountable if there are no specific actions tied to achieving the goals?  For instance;

 

          You’re citing revenue growth of 10%.

a.                   For the coming year have you itemized the various channels that will contribute to that growth, or taken into account any shrinking channels?

b.                  Have you timed the growth of your revenue to coincide with the calendars necessary to drive the growth plan?

c.                   Have you erred in forecasting a linear growth plan w/o even a plan to support that?

 

          You’re forecasting an increase in gross margin.

a.                   What are the contributing elements?

b.                  What are the non-recurring elements that will support the increase?

c.                   Have you reviewed the make-up of sales and looked at the margin quality of those transactions? Do you need to look at Domestic vs. Intl or any inter-group sales?

d.                  What portion of your increase is volume based vs. productivity based?

e.                   If productivity-based, what are the specific areas that you are targeting?

 

          Have you discussed your assumptions for OpEx with the rest of the team?

a.                   Do they buy into your preliminary assumptions or are you facing a potential shift in the business model that will necessitate new expenses?

b.                  Are there certain areas that need to be bolstered for a turnaround in 2010? Do your expenses support the revenue growth being projected?

c.                   Have you incorporated the necessary amount of consideration to mitigate unforeseen shifts increases?

 

     No matter what, you’re not going to be able to capture everything within your Budget. At a previous company, we received an unannounced increase in our utility rates from Southern California Edison. This happened a month after the Budget was approved by the Board. When your annual utility bill is $1.3 million, a 22% increase is not a minor element. We were able to make the necessary adjustments, but not without some difficulty for other areas. Whether you’re sitting in the CFO chair, CEO chair, VP of Sales or a Director chair, do you understand all the elements of your Forecast and are the assumptions that are incorporated sound? It’s redundant to start asking about why I may not be discussing other elements of the Budget, but again, this is the 40k foot commentary. Are you clear about the elements that comprise the foundation of your Forecast?

 

Thanks for reading . . . .

 

Jeffrey Ishmael

Discipline #3: CFO as the Architect of Adaptive Management

June 2nd, 2009 Comments off

            In the last segment on “Reinventing the CFO”, I covered the CFO role as the Analyst and Advisor, which mainly dealt with the CFO creating a high-performance team that uses the highest level of information available to support the executive team in their decision making efforts. In a slight continuation of this theme we move into the 3rd discipline for the CFO; Architect of Adaptive Management. In Jeremy Hope’s book he discusses the need for the CFO to move away from rigid reporting structures, static sources of information, and to begin adopting new approaches to viewing market information and to try and anticipate negative market forces.

 

            As an “Architect of Adaptive Management” there are 6-key points that Hope believes needs to be in place to effectively master this area. Specifically:

  • Design adaptive systems from the customer’s perspective
  • Manage through continuous planning cycles
  • Make rolling forecasts the primary management tool
  • Report key metrics daily and weekly
  • Enable fast access to resources
  • Focus accountability on the relative improvement of teams

 

            While these might seem pretty remedial in nature, my most recent experience has reminded me how much of a challenge these points can be if the systems in place will not effectively support the generation of these data points. Although the data available has supported basic budgeting and forecasting efforts, the data/systems are not robust enough to support the daily delivery of key metrics or provide fast access to accurate information. The information has to be continually reviewed to ensure consistency with prior reporting. The management of the information is a continual struggle, which is why we’re headed towards a Q4 system upgrade. With the above factors in mind, it makes it difficult to drive accountability when the reporting that is being distributed has an inherent level of doubt that takes 3-times as much work auditing than to actually prep and export.

 

            However, when the systems are trusted and the data has a history of accuracy and integrity, the impact on the team is immeasurable. Towards the end of my tenure with MGE we had a high volume of reporting being requested during our merger with APC. We were operating on an older AS-400 platform while our partners were operating on a new Oracle system. We had years of passing audits with PwC, Mazars, and Moss Adams without a qualified letter. All we heard from the other side were excuses on why data couldn’t be pulled. We were achieving above industry results in Sales and EBIT. Our partners were never quite sure of their results.

 

            Although I was only responsible for the North American operations prior to the merger, we enjoyed a very collaborative approach with our HQ staff in France.  Through an efficient management of data resources, as well as systems that supported our end strategies, we were able to effectively execute on Hope’s 6-points. While not always executed at a perfect level, they were nonetheless strived for and often executed well. Accountability was driven from the Boardroom to the customer’s site through our Field Engineers. It was balance and execution that I look back on and appreciate.  What was achieved at MGE keeps me motivated to achieve at the companies that I now call home and strive to deliver the same excellence.  A single summary page does not do justice to Hope’s view of the CFO as the Architect of Adaptive Management, which is why it’s highly recommended reading.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

Your lack of planning is not my new “emergency”. . . .

April 28th, 2009 Comments off

     It’s really amazing how quickly you can progress from a rather nicely paying Project on a Friday afternoon to a complete implosion over the course of a weekend, culminating in a withdrawal from the project. I certainly wasn’t anticipating it, but that’s exactly what happened last weekend.  The crazy part about the situation is that it was really the product of two inappropriately worded emails outlining the disappointment in progress and the lack of execution to date. Funny, while discussions had been happening the better part of 6-8 weeks, the engagement wasn’t supposed to start until May 1, and the majority of the time until now had been gratis…or perhaps “ungratis”.

     The entity I had been having discussions with was effectively a 3rd round funding candidate who had developed a pretty fantastic product, and in the characterization of any MBA student, was looking to legitimately be a “disruptive technology”.  They had been able to keep their operations lean and were making effective use of existing cash resources. However, as early as the open of Q1 it was clear that they were going to need to bring in additional operating funds. However, there was an incumbent “CFO”, who really did not have the background for the position, but nonetheless was tasked with the responsibility. Quite simply, the Company had an obligation to support this individual so long as they allowed him to remain in the position. Unfortunately for the company, and their need to aggressively pursue additional funding, there were no results on the part of the incumbent. The Company finally decided last week that they wanted to move forward with an agreement that would have me pursuing funding (#1 priority), but would also be setting the foundation for the broader finance function within the company. From the development of a new software platform, to the tracking of cost standards, the development of all their financial reporting, to representing them at certain investor events. This was all last week.

     Within the span of 72-hours after having my first on-site meeting after agreeing to the engagement, I immediately was being called to task as to why the fundraising wasn’t happening in a more agressive manner, that I had been provided all info over the preceeding 6-weeks, and questioning whether I was truly committed to the project. Did I miss something, or did we just agree on a May 1 start to the project?  The wording of the emails was also strong enough, and disrespective enough, that I knew immediately that this was not a long-term engagement I wanted to be a part of.  I was basically being held responsible for the inactions of a previous incumbent and the lack of action on the part of founders to ensure that their financing goals were on track for achievement. The situation was no different than missing key patent filings over the last quarter, hiring a new VP of Design/Engineering, and asking why patents weren’t filed….before their arrival.

     There’s no question working in the role of Finance, we are all accustomed to having to deal with emergencies and having to reprioritize tasks as conditions shift. However, there is also the element of appropriately placed accountability and following up on deliverables that were properly planned for.  It’s also quite clear, that even with proper planning, certain goals aren’t achieved, and that strategies need to be altered. However, a complete lack of planning, a lack of collaboration with current staff, and not supporting them in the necessary way does not translate as my emergency and something new players should be held accountable for. High caliber Finance consultants can provide solutions, but when the work is conducted under a condition of desperation, the results will never turn out positive, and quite often, result in the least desirable situation.

Thanks for reading . . . .

Jeffrey Ishmael

The Q1-09 door is closing – Are you on target?

March 27th, 2009 Comments off

     Between a DJIA that dropped into the mid-6,000 range, a continued loss of jobs, ponzi schemes that seem to be coming up left and right, there is certainly no shortage of news events to distract us from the job at hand. While I am normally one to go through every peripheral news source and scan for info that might give me cause to adjust forecasts or gain some insight into sales channels, it seems most of the news lately has been more of a distraction. I’m not exactly sure when the switch was flipped, but it seems for the most part I have shut most of the information out and have retrenched and narrowed the focus to only what is happening in my specific industry. Right or wrong, that’s my approach right now.

      Not sure if it’s a source of validation, but we are coming up on the close of Q1 and have only a few days left to get last minute orders out the door. I am pleased to say that Revenues will hit our expectations, employee morale is good, Operating Expenses have been kept in check, and we will actually pay out nominal bonuses in Q1. No, I’m not particularly worried since hopefully nothing that will occur in the last 3-days will change what has already happened in the first 87-days of the Quarter. Staying focused on our target was not something that started in the last few weeks, but something that started in the first week of January. Monitoring open orders, monitoring incoming shipments to see what might be late, contacting customers to confirm order activity, reviewing A/R activity to monitor collections…and the list goes on. Nothing can be left to chance in this environment and you have to proceed as if the entire existence of the company and achieving your annual goal will hinge on what happens each week, and cumulatively, each the month.

     We’ll close the Quarter next week, we’ll validate our assumptions regarding Q1, and determine if we need to alter those assumptions in any way going into Q2. Don’t get me wrong, it’s something we’ve already had discussions on and incorporate into our weekly discussions. Where are we against Budget? Slightly off, but then again, I’ve written about the Budget, how that document is dated from the time it’s published, and where I then put a heavier reliance on the Forecast in order to incorporate unforeseen elements in the market that weren’t there during the budgeting process.  With respect to your company’s results, hopefully you already know where you’re going to finish and are already far into discussions for Q2 activities….because it’s already here.

Thanks for reading. . . .

Jeffrey Ishmael