Debra Christein, B2B CFO®
Part-time CFO available for hire in Ann Arbor, MI

The March 15th New Enterprise Forum (NEF) meeting in Ann Arbor MI  brought together a stellar panel of both investors and entrepreneurs to discuss making the right match between a company and an investor.  This panel speaks from a wealth of experience and has wisdom that can save both investors and investees lots of time and energy.

Christine Gibbons, HistoSonics

• Make sure that your investor shares your vision – talk about the business plan, just don’t hand it over and walk away
• Set up proper expectations – agree to milestones and value creation strategies
• Evaluate any prior start up experience on both sides – what did they do if the going got tough?
• For the investor, what is their depth of understanding of the market place and does their extended network benefit the enterprise?

Andy McColm, Early Stage Partners

For entrepreneurs:

• do your homework:  if you are talking to the wrong investor, you are wasting everyone’s time
• Use resources such as :fund:it (but don’t believe everything you read)
• Do they have an investment in a competitor company?
• Talk to CEO’s of other companies this investor has invested in
• Be open and honest – you are forming a partnership – and if a skeleton comes out of the closet, as it surely will, it could ruin the deal, whereas an upfront conversation at the beginning would not have been a deal killer

David J. Morin, The Advisory Board

• Be aware that some investors are tire kickers – a sign of this is multiple meetings without any forward progress
• How well does the investor know your space – will you have to spend a lot of time educating them?
• Does this money bring with it value added – can bring other market, team or investor contacts along with it?
• What degree of communication is expected?  If you want to send a monthly report and the investor wants a weekly meeting, this is not a good fit

Skip Simms, Ann Arbor SPARK (MI Pre-Seed Capital Fund)

• Ask where the VC is in their fund.  Are they actively seeking to place funds or at the end of the current round and maybe just starting to line up the next fund?
• Keep the investor informed – at least quarterly reports

This article which just appeared in the New York Times explores some of the reasons a company might need a CFO, even if they are not large enough to need a full-time CFO.

Small-Business Guide:  When Should a Small Business Hire a Finance Chief? 

Have you ever taken a basic dance class – swing, salsa, tango?  The class starts out with everyone in a line learning the same 6 or 8 beat step over and over, adding some variations to it until you finally get to try it with a real person.  By the end of the class, you feel pretty good, and if no one got hurt you consider the evening a success!

And then the open dance starts and people who were not in the beginning dance class step out onto the floor and start dancing – and supposedly they are doing the same dance that you were just doing, but you can’t see that basic 1,2,3,1,2,3 step anywhere.  They are moving faster and with what looks like total abandon but still moving together – how are they doing that?. Where did the basic step  go?

Well, the basic dance step is still there – often indistinguishable but allowing for any amount of improvisation – it is driving the dance.  It allows two people to dance together and improvise and move from step to step and stay together and get back on track if they get a little off track and to have the freedom to move away from the dullness and repetitiveness of that basic step.  But the basic step is still there.  Without that basic step underlying the dance, the dancers can’t dance in harmony, have to worry about stepping on each other’s feet and don’t know where they are in the dance.

This same principle applies to running a business.  If the basic steps are in place – structures  which maintain  sound operations -  a business owner is free to improvise, to innovate and to take the company to the next level.  If the basic steps of a sound business model are not in place, the owner will spend all of their time bumbling along, figuratively looking at their feet, making sure that they don’t step on toes or that there toes don’t get stepped on – watching cash, checking operations, looking over their staff’s shoulders, wondering what’s going on, where are they in this business? – trying to keep in control of a situation that seems out of control.

So what are the basic “steps” in a business?

1. Vision – why are you in business and where are you going?   What does success look like?
2. Seaworthy business model:   Are you operating in a way that is geared to make a good profit AND maintain positive cash flow?
3. An accounting system that supports the business model:   Do your financial statements tell a story about the company’s operations?
4. Metrics and management reports which compress lots of data into useful information that allows you to steer the company by looking at trends and variances.  Useful metrics are industry-specific and it’s important to be watching the right ones for your industry and company:   Which direction is your company moving – is it getting stronger? getting weaker?
5. Projections:  Once the building blocks and interrelationships of the company are understood, then the question can be asked:  Will the current or proposed business model take you where you want to go?
6. Understanding  of BreakEven:   Where are the edges – how close can you go to the edge without falling off?
7. Processes and systems to guide behaviors and bring the information to decision makers when they need it:   Where are the bottlenecks?

With the basic steps in place driving your business, the business owner can relax and then, let the dance begin!

Today I was at a client site – having the time of my life!

This company has grown substantially over  the past several years.  And reports that used to be fairly simple and quick to produce had taken on a life of their own.   The office staff had done a tremendous job and kept up with the ever growing data, but at a huge cost to peace of mind and general enjoyment of their workspace.  Also, the dangers of data errors in the entering and maintaining of separate and redundant data sets was not acceptable and a big source of worry to the owner.

I saw that most of the data  in the reports was in QuickBooks, but not accessible as simple reports.  I knew I could make a difference. First, I spent  some time getting to know the books, the staff and the reporting needs before digging in, defining the goal and developing a plan for inputing missing data and combining non-uniform data sets.

Today I worked with the office manager to pull the data, taught her how to do some excel magic to combine the non-uniform data and then run pivot tables that showed just what the owner wanted to see.  I did some of the driving but when ever possible, I gave her the mouse and let her go through the process.  She was so excited and we had so much fun – It’s probably hard for many to believe we were doing accounting!  But after next month when we reconcile the two methods, she will save 10-15 hours a week, including countless hours of checking and rechecking data,  and replace it with a once a month procedure that will take about  1/2 day.  And the process is scalable-the time will not increase as the companies continues to grow.  The owner is happy to know that the reports he wants will be solid and relieve him of  worry about not knowing what is happening in his company  – and as a bonus his staff will have reduced stress.

It’s a good day to be B2B CFO®!

The fourth annual  WXW Forum – Now We’re Talking is being held at Eagle Crest Conference center on Friday, May 20th.

To hear what people had to say last year, watch the video: http://www.youtube.com/watch?v=0K8DFDn6RN4&feature=player_embedded

The Early Bird special ends May 2nd.  To register, visit  http://wxwbusiness.com/

I attended the MIT Enterprise Forum last week on tips for securing Angel Investing – I attended the one in Ann Arbor, MI  but there are several around the state held simultaneously and connected virtually – http://alumweb.mit.edu/groups/efgreatlakes .

Some tips that I gleaned are:

• Dilution may seem painful, but a small percentage of something is better than 100% of nothing
• You need a team to grow a company successfully and Angels don’t want to see a one-man show
• Don’t let your valuation get too high before seeking funding.  High valuations can keep Angel Investors away
• Convertible debt in the early rounds can be preferred because it defers the pricing question
• Especially if you are planning a VC round of funding later on, the Angel Investor will prefer preferred debt
• Make sure that your Angels are with you for the long run, that you can approach them for future rounds and they have the staying power for the long haul – you won’t have to woo new investors and it also is not a good sign if your original investors are not still in the game
• Ask for enough money to last for a while – you don’t want to go back to the well too soon
• Your investor is not interested in providing funds to pay you the salary you made before you quit your corporate job – they want to invest in product or service and they also want to see that you have some skin in the game

Last week I was privileged to present my workshop  ”Creating your Dream Business:  Reaching for the Sky with your Feet on the Ground”  at the Lenawee Economic Development Corporation.   What’s dreaming have to do with business?  I say “Everything!”  Just like artists create art as fulfillment of their dreams of  self-expression, I believe that entrepreneurs create businesses as a self-expression, as a creative act to fulfill their dreams.

Is this crazy talk from a part-time CFO?   I  don’t think so.  I believe that business owners can create sustainable and profitable businesses – ones that really work for them, that provide  financial rewards AND the personal satisfaction they dreamed about when they started their business.

B2B CFO NAMED IN PRESTIGIOUS INC. 5000 LIST

184% Growth Earns B2B CFO Spot in the 2010 List of Fastest
Growing Companies in America

Phoenix, Ariz. August 24, 2010 – B2B CFO, nation’s largest
provider of CFO services to small businesses, has been named to the
prestigious Inc. 5000 list of fastest growing companies in America.



Now in its 29th year, Inc. Magazine’s annual ranking judges US-based
and privately held companies by their revenue growth. This year’s
list was ranked on the percentage in revenue increase from
2006-2009. B2B CFO’s growth earned 84th place in its industry.

“There are approximately 27 million small businesses in the U.S.
today,” said Jerry L. Mills, founder and chief executive officer of
B2B CFO, “It is a huge honor to be among the fastest growing and the
most successful businesses in the country. Our firm has experienced
tremendous growth over the past few years and we are on track to
continue expanding. I am especially grateful to all of the firm’s
dedicated Partners who continue to advocate our services around the
nation.”

In a personalized letter congratulating B2B CFO on this
accomplishment, Jane Berenston, editor-in-chief of Inc. Magazine’s
wrote “Congratulations: your company, B2B CFO, has made the 2010
list of the fastest growing private companies in America. This
achievement puts you in rarefied company, especially if you consider
that over 27 million businesses are registered in the USA. The elite
group you’ve now joined has, over the years, included companies such
as Microsoft, Timberland, Visa, Intuit, Jamba Juice, Oracle, and
Zappos.com. I look forward to congratulating you in person in
Washington, D.C.”

B2B CFO’s growth is reflected in numerous awards this year. The
company was also recently named in ACE Corporate Growth Awards,
which recognized the most successful and fastest growing companies
in Arizona.
In August 2010, B2B CFO has grown to 170 Partners across 39 states,
representing 5,000 years of cumulative experience. Each Partner is a
seasoned financial executive who serves as CFO to growing businesses
on as-needed basis. Approximately 80% of the Partners have a
background that includes senior executive positions at the Big Four,
and all of the Partners have held high level executive finance
positions in various industries in corporate America. Together, B2B
CFO Partners work with more than 500 businesses in the nation with
combined annual sales of more than $3 Billion.

Jerry L. Mills and many of the B2B CFO Partners regularly dedicate
time to educate business owners on financial matters. Mills is a
frequent speaker and contributor and has been featured on many
national media networks including FOX Business, Fortune Small
Business, Smart Money and many others. Mills is also the author of
The Danger Zone – Lost in the Growth Transition, and Avoiding The
Danger Zone – Business Illusions, both business non-fiction books
that help entrepreneurs understand and build a strong financial
strategy.

“We look forward to participating in the Inc. 500|5000 conference in
Washington, DC this fall,” added Mills. “Along with my colleagues, I
look forward to the October 2nd awards ceremony and to meeting the
entrepreneurs that created the other 5000 fastest growing companies
in America.”

About Inc. Magazine

Founded in 1979 and acquired in 2005 by Mansueto Ventures LLC, Inc.
is the only major business magazine dedicated exclusively to owners
and managers of growing private companies that delivers real
solutions for todays innovative company builders. Inc. provides
hands-on tools and market-tested strategies for managing people,
finances, sales, marketing, and technology.

Inc. Magazine’s 29th annual Inc. 5000 ranking of the fastest-growing
private companies in the country is available online at
www.inc.com/inc5000/list

About B2B CFO

Headquartered in Phoenix, Ariz., the firm was founded in 1987 by
Jerry L. Mills. B2B CFO is the nation’s largest CFO firm serving
entrepreneurial, growth and mid-market companies with revenue under
$75 million. The firm’s partners have an average of 25 years of
experience and each individual partner is a senior level executive
with a broad range of expertise. Please visit online at
http://www.b2bcfo.com/