If you’re looking for a quick way to cut costs, boost efficiency and improve productivity, then consider outsourcing one or more of your business’ support processes.
Outsourcing has many benefits and can give you a greater competitive edge in your market.
It allows you to tap into a large international talent pool and benefit from external expertise. Your outsourced providers can provide services, innovative approaches, and the latest technology along with cutting-edge solutions that your in-house team might be unable to provide.
It also allows full-time employees to focus on your company’s core competencies.
And it means you have lower operational and recruitment costs. The cost-savings you achieve with outsourcing can help you to release capital for investment in other areas of your business.
But outsourcing does have its downsides. For example, there’s a risk in allowing outsourced providers to handle confidential company data, whether that’s the details of employees or customers or competitive information. The penalties for such breaches will be stiff. What’s more, any data breaches will dent your company’s reputation and damage your brand.
Then there’s the risk that the output will be sub-standard or that delivery time frames will be stretched. Both would damage your company’s reputation and possibly result in lost sales.
And there’s a danger that unless the outsourcing is carefully managed, the expected cost savings won’t materialize. It’s for these reasons many companies are still reluctant to consider outsourcing.
That’s a shame because if the outsourcing is well-managed, the benefits will far outweigh the risks. Take the Alibaba.com e-commerce website, for example. Today, it’s known as the world’s biggest global marketplace, but in its early days, its founder Jack Ma had to outsource the website development to a US company. At the time, he couldn’t find development talent in China, whereas developers in America had the skills he needed. It also allowed him to overcome the Chinese government’s tight internet restrictions.
Google is another giant that also outsources work to IT specialists, developers and virtual assistants. At one point, Google outsourced phone and email support for AdWords, one of its top-grossing products, to about 1,000 external representatives.
The founders of the hugely popular WhatsApp, Brian Acton and Jan Koum also hired the services of external providers. In their case, they used the services of an iPhone developer Igor Solomennikov for the core development work on the app.
What can you outsource?
You can outsource any or all of the following:
Administrative tasks such as data entry, typing, travel arrangements and scheduling.
Lead generation and customer service, including cold calling
Marketing including content writing, direct marketing, website design, brand development, press releases, social media, blogging and search engine optimization
Accounting and financial duties including bookkeeping, invoicing, accounts payable and receivable, payroll processing and financial reporting
You can, for example, hire a part-time Chief Financial Officer who knows how to finance a business, deal with growth, present meaningful monthly numbers and get the best deals from banks.
It means you get a highly experienced senior CFO with the experience and knowledge to help you plan, manage and control business growth. The CFO Center will provide you with a CFO with ‘bigbusiness experience’ for a fraction of the cost of a full-time CFO.
To discover how a CFO Center part-time CFO will help your business, contact us now on (800) 919-4022. To book your free one-to-one call with one of our part-time CFOs, just click here.
The CFO Center has put its money where its mouth is. We’ve hired our own Part Time CFO!
The CFO Center has been steadily growing across the US over the last couple years. We felt it was time to hire our own part time CFO to oversee our finance function. We’ve brought on Vince Arnette from our South Florida team. Vince has 30 years of experience in both start ups and in multinational public companies. What a relief it’s been to hear his advice on what we’re doing right, but even more so, how we can improve and continue to grow! We are in this for the long haul and couldn’t continue our extensive growth plans without knowing we have all our ducks in a row!
There can be so many moving parts in business that really can and should be handled by someone with the proper skill set and experience. Running a business can have the owner juggling so many things at the same time that it becomes easy to miss something, make a poor decision, or worse. Having a CFO to help keep you on track, giving you the insight and help you that need can be invaluable. Just see what some of our very own clients have been saying about us here.
We now have 14 active locations with expansion plans nationally. To see all of our team, including Vince, click here.
We’d like to give partial writing credit to John Biasotti, currently attending the University of North Florida, majoring in Journalism.
The CFO Center has been growing so rapidly over the last year, we thought we’d mention some of our new team members as well as some recent moves. So many small-medium sized businesses have taken notice of what we have to offer, and how we can help them grow, it has proven to be a much needed service here in the U.S.
• Paul Roberts has joined Michael Meyer’s team in Virginia. • Tom Moore and Mike Bone have joined John Waterman’s team in Central Florida. • Bruce Murphy (Austin) and Jim Chamberlain (Dallas) joined Brian Noble’s team the second half of last year and more recently has added Paul Whitley and Jim Roundtree • Cliff Lightfoot has joined us in Los Angeles • Steve Coates and Haleh Fardi both joined us as Regional Directors in the great city of Chicago. • Erich Stolz joined us in Houston as a Regional Director, was temporarily shut down due to Hurricane Harvey, and is now up and running. • Darren Allen joined Tom Gentry’s team as a CFO in Atlanta. • Juan Ramirez has stepped into the RD role in Miami and has added David Schoenberger as a CFO to his team. • Din McCallum and Luis Brito joined Vince Arnette’s team in South Florida. • Nelson Tepfer joined Brian Raphael as a CFO in New York. • Adam Marder is not new to our team, but he has left South Florida and is joining our team in Dallas! • Last, but not least, Alfredo Diaz joined the team as a Regional Director, tasked with setting Panama up as the next country on the map.
Check out everyone’s bios by clicking here: Our Team
Leaving lucrative and secure C-suite positions mid-career to build a part-time portfolio might seem crazy but many of those who’ve done it say it is one of the sanest decisions they’ve made. Take Michael Citroen, who at 58 years old is a 14-year veteran of the part-time portfolio job world. The former Group Finance Director (CFO) relishes the challenge and excitement of working with half a dozen SMEs in his role as a part-time CFO. “It’s nice going into different businesses and meeting different people and having different challenges to deal with. There’s so much more variety every day.” He particularly likes that the businesses he deals with are all at different stages of growth. Some are very new, others are more established, and a couple have been guided through a sale with his help. Citroen had been working full-time as the Group CFO of a large privately-owned company when he made the decision to go freelance. “It was getting very political,” he recalls of his former company. “And I also wanted to be in control of my own calendar,” he says. So, in 2003, he resigned and joined FD UK, a company that offered part-time CFOs to SMEs. When that company was bought out by The FD Centre (parent company of The CFO Center) five years later, Citroen stayed on and is still working with them today—part of an expanding international network of part-time portfolio CFOs. “That’s another great aspect of working within a network of part-time CFOs: there’s massive backup. If there’s anything you need to know, you just ask the network, and you’ll get answers back really fast. I wouldn’t have that if I was working alone.” Besides the enjoyment of working flexibly with entrepreneurs and with other part-time CFOs, Citroen says he values the security that being a part-time CFO with half a dozen clients brings. “You don’t have all your eggs in one basket,” he says, explaining that if one client leaves he knows he can attract and retain another, so his income isn’t at risk. “The FD Centre is very focused on helping its part-time CFOs to win new clients,” Citroen says. “I could never have done as well as I have if I’d had to do it on my own. I had no idea about marketing and the technical aspect of things like websites when I first began.” Like many people starting out on the part-time path, Citroen had been worried about giving up a salary with perks initially. “To begin with it was a little insecure, giving up a regular job.” He quickly discovered that the financial return you get is contingent on the amount of energy you’re willing to expend. He realized early on the new lifestyle would enable him to spend more time with family while maintaining a good level of income. “It gave me time to be with them without having to answer to anybody.” It’s something that another part-time CFO Neil Methold has appreciated about this way of working. Being a part-time CFO for the past six years has meant he’s been able to play a large role in his teenage son’s life: getting him settled into senior school and being able to attend almost every one of his sporting events. “If I’d been working full-time I wouldn’t have been able to do that. And that’s priceless,” says 53-year-old Methold. Like Citroen, Methold has found the move into the part-time portfolio world beneficial in so many ways. Not only has he been able to enjoy more family and leisure time but he’s had the pleasure of coaching and mentoring people working within his clients’ companies. “My greatest satisfaction comes from coaching and mentoring people within these companies so they become self-sufficient and can do more and more of the work themselves. “Nowadays I say to clients ‘My success here will be inversely proportionate to the number of days I charge you. In other words, the more I can get your people to do the work on a daily basis the less I have to do’. I see it as my responsibility to ensure the work is done, not necessarily to do it all myself. I think that has a significant impact on client retention.” So too does learning to adapt your style of working to each client, says Methold. It wasn’t something he was aware of when he first started out, he confesses. “But one day, I was mowing the lawn and thinking it all through in my head. That’s when I realized I was being too harsh, too demanding, too assertive, too telling. You have to be direct in a big company because there are shareholders and high expectations. “But that doesn’t work with SMEs. You have to use a different style—you have to be softer and more accepting that things don’t necessarily move as quickly as they do at large corporations and that there are going to be different priorities.” It was when he began to adapt his style of working to suit each client rather than going in “full guns blazing” that he started to enjoy much better relationships. It’s why he has retained his clients for so long, he says. “You can’t go in and be all corporate. SMEs don’t want that. They want someone they can trust and rely on and build a good relationship with. A friendly face. Not just a very clever big shot. You need to be down to earth and people-focused.” “When I really accepted that and started to slow down my own pace I become more accepted. You have to adjust and be a bit of a chameleon to suit how they are and not how you think they should be.” Citroen says the ability to communicate is critical in your role as a part-time CFO. “You have to have the ability to talk to your clients on a personal level and to be able to relax with them. Clients will call you late at night or on a weekend because they’ve had an idea they’re excited about and want to share with you. People who can’t handle that aren’t successful as part-time CFOs.” Both he and Methold agree that time management is key to success in the part-time portfolio environment. “Although I’m not in contact with my clients every day, I do keep in touch with them every week, whether it’s a phone call, text or email,” says Citroen. “It’s all part of the relationship I have with my clients.” Successful part-time CFOs need to take the initiative when it comes to client contact, says Methold. “You have to work really hard at proactive communication with your clients. It’s easy then for them to see you are valuable. I will go to see a client, and on the way home have three 20-minute conversations with three other clients who I haven’t been with that day just to keep moving them forward. “You have to commit to doing that extra stuff. You can’t just go in for a day, leave and send a bill.” This obviously takes a lot of organization, and that’s another skill a successful part-time CFO must have (or develop!), he says. “I have various lists, so I know what I have to do and at what point each week to make sure I don’t drop any balls because when you have lots of clients doing different things, it’s very easy to forget stuff. “You need to be aware of what’s happening with each client and what you last spoke about. You can’t go, ‘Ah, can’t remember that last meeting. Sorry.’ When they are talking to you, you are their CFO.” Being willing to deliver such high-quality service is something that makes a difference when it comes to client retention, he says. “Clients really do value that you put yourself out to call them on the weekend or speak to them late at night or when you’re on your vacation. That’s when you and the clients really do start to cement the relationship.” The relationships you have with clients are what helps to make this such a rewarding way of life, he says. Citroen agrees, adding that working full-time for one company pales in comparison with working part-time across a number of growing businesses. “The job satisfaction you get working as a part-time CFO is enormous. I would definitely never go back to full-time employment.”
The story of how LEGO, the family-owned toy company went from teetering on the brink of disaster and hemorrhaging cash to delivering the highest revenues in its entire history and being voted the 2017 Most Powerful Brand in the World makes for a truly inspirational tale…
Fourteen years ago, LEGO’s Head of Strategic Development, Jørgen Vig Knudstorp, delivered the kind of assessment that most managers would gladly superglue their own ears shut to avoid hearing.
“We are on a burning platform, losing money with negative cash flow and a real risk of debt default which could lead to a break-up of the company,” warned Knudstorp at that meeting.
He’d discovered during six months of examining the company that there was a lack of profitable innovation, according to David C. Robertson, author of ‘Brick by Brick: How LEGO Rewrote The Rules Of Innovation And Conquered The Global Toy Industry’.
“LEGO had plumped up its top line, but its bottom line had grown anorexic. All the creativity of the previous few years had generated a wealth of new products, but only a few were actually making money,” wrote Robertson. “To make matters worse, the LEGO Group’s management organization and systems, shaped by decades of success, were poorly equipped to handle a downturn.”
The company’s management team—twelve senior vice presidents who oversaw six market regions as well as such traditional functions as the direct-to-consumer business and the global supply chain—didn’t collaborate but instead operated in their own silos.
The result was that the LEGO Group was expected to suffer a thirty percent fall in sales with $250 million in operating costs. It had a negative cash flow of more than $160 million.
By the end of the year, it was likely to default on its outstanding debt of nearly $800 million. Its net losses were likely to double the following year.
Knudstorp’s stark assessment should have come as no surprise. Something was going badly wrong at LEGO HQ Denmark: in the years from 1932 through to 1998, the company had never made a loss but from then on, the losses had increased year by year. First there had been a little loss in 1998 but by 2003—the year of Knudstorp’s no-holds barred assessment—that had grown to something deeply worrying.
Much worse results followed a year later when the company recorded its biggest ever loss of about £217 million. By then, Knudstorp had been appointed CEO.
“In 2003, we pretty much lost thirty percent of our revenue in one year,” he told Diana Milne in ‘Business Management Magazine’.
In 2004, the company had a further ten percent fall in revenue. “So, one year into the job, the company had lost forty percent of its sales. We were producing record losses and cash flows were negative. My job was how to stop the bleeding.
“We had to stabilize sales and cut costs dramatically to deal with the new reality of selling forty percent less than we had done two years earlier. We had too much capacity, too much stock. It was sitting in the wrong countries. The retailers were very unhappy.”
Knudstorp, a former McKinsey analyst, told James Delingpole of the ‘Daily Mail’, “We had a dress rehearsal of the world financial crisis: a strong decline in sales and a massive increase in our indebtedness.”
The losses were partly a result of the company’s attempt to diversify in the late 1990s, in the belief its brightly coloured building bricks were losing appeal and were under threat from computer games and the internet.
It was coming under pressure from other toy manufacturers since the last of its plastic toy brick design patents had run out in 1988 and the monopoly it had enjoyed for so long in the plastic toy brick market had begun to erode.
LEGO’s diversification saw it expand the number of theme parks it owned in a bid to help increase visibility of the LEGO brand across key markets. This was despite it having little hospitality experience. Unfortunately, these capital-intensive developments didn’t provide anywhere near the expected returns.
And the company had dramatically expanded the number of products in its portfolio, according to the ‘Brick By Brick’ author. In the years 1994 through to 1998, it had tripled the number of new toys it produced.
“In theory that was a good thing: experimentation is the prelude to real progress,” wrote Robertson. … “Problem was, the LEGO Group’s once-famous discipline eroded as quickly as its products proliferated.
“Production costs soared but sales plateaued, increasing by a measly five percent over four years,” Robertson said.
The company had little idea which products were making money and which were failing to produce an adequate return on the sometimes-heavy tooling investment, according to a case study from John Ashcroft and Company.
LEGO had even created its own lifestyle clothing range and brand shops and launched its own TV series, DVDs and video games.
So, by the time Knudstorp delivered his assessment, the company was in serious trouble.
The Turnaround Begins…
Which is why with the help of Finance Director, Jesper Oveson (former Chief Financial Officer of one of the largest banks in Scandinavia, the Danske Bank), Knudstorp began to make sweeping changes.
Oveson discovered there was an inadequate degree of financial analysis within the company. While there was a profit and loss account by country, there wasn’t product analysis or line profitability, according to John Ashcroft and Company. In other words, the company didn’t know where they made or lost money. Likewise, the theme parks were a massive cash drain but no one knew why.
The two men decided on a short-term life-saving action plan rather than a long-term strategy for LEGO, which would involve managing the business for cash rather than sales growth. Key moves included:
Setting financial targets. Ovesen introduced a near-term, measurable goal of 13.5% return on sales benchmark and established a financial tracking system—the Consumer Product Profitability system. It measured the return on sales of individual products and markets so the company could track where it was making and losing money. Every existing or proposed product had to demonstrate it could meet or surpass that benchmark.
Cost-cutting (including cutting 1,000 jobs)
Improving processes (many processes were outsourced which meant employee numbers could be cut by another 3,500)
Managing cash flow
Introducing performance-related pay
Reducing the product-to-market time.
Selling the theme parks and slowing retail expansion.
Cutting the number of components from almost 7,000 down to about 3,000.
The result of these and other changes was that LEGO recovered and went on to become the most profitable and fastest-growing toy company in the world. During the worst of the recession in the years 2007 through to 2011, for example, LEGO’s pre-tax profits quadrupled. Its profits grew faster than Apple’s in the years 2008 through to 2010.
LEGO the Super-Brand
LEGO’s success has continued. Earlier this year, LEGO (now being run by Bali Padda, as Knudstorp has moved into a role where he can expand the brand globally) announced its highest ever revenue in the company’s 85-year history.
And it overtook Ferrari and Apple to be voted the world’s most powerful brand. Each year, Brand Finance, a leading brand valuation and strategy consultancy, puts thousands of the top brands around the globe to the test to find the most powerful and most valuable of them all. This year, LEGO won.
“LEGO is the world’s most powerful brand,” it announced. “It scores highly on a wide variety of measures on Brand Finance’s Brand Strength Index such as familiarity, loyalty, staff satisfaction and corporate reputation.”
Its appeal to children and adults in this tech-centered world also garnered praise from Brand Finance.
It continued, “The LEGO movie perfectly captured this cross-generational appeal. It was a critical and commercial success, taking nearly $500 million since its release a year ago. It has helped propel LEGO from a well-loved, strong brand to the worlds most powerful.”
Which goes to show that even when disaster seems certain, it is possible to revive an ailing company. Of course, it helps to have a top-level financial advisor working with you to ensure the changes you’re making are the right ones.
What To Do If Your Company Is Suffering A Cash Flow Crisis
If your company is in dire straits, take action now—don’t imagine you can wish the crisis away or continue to do whatever you’ve been doing in the hope things will get better. They won’t.
Until you identify and fix your cash flow problems then put systems in place for managing cash flow, your company is at a very grave risk of insolvency.
Without well-defined and well-managed strategies to avoid running into cash flow problems and a plan to improve cash flow if such problems should arise, your company will continue to flounder.
Fortunately, you don’t have to do it alone. The CFO Center will provide you with a highly experienced part-time CFO with ‘big business experience’ for a fraction of the cost of a full-time CFO.
He or she will assess your company’s cash flow position and take the following steps:
Identify and address all the immediate threats to your business
Prevent cash flow problems from recurring and
Instigate the use of regular cash flow forecasts.
Having control of your company’s cash flow will allow you to operate within your means, and move away from a ‘feast and famine’ situation that plagues even the largest companies.
Having the right cash flow management processes in place and being able to spot peaks and troughs in trading to improve cash flow is one of the most critical components of any finance function.
Put an end to your cash flow problems now by calling The CFO Center today. To book your free one-to-one call with one of our part-time CFOs, just click here.
“We have an allergic attitude to failure,” he says. “We try to avoid it, cover it up and airbrush it out of our lives.
“For centuries, errors of all kinds have been considered embarrassing, morally egregious, almost dirty.
“This conception still lingers today. It is why … doctors reframe mistakes, why politicians resist running rigorous tests on their policies, and why blame and scapegoating are so endemic.”
This notion of failure needs to change, he writes. “We have to conceptualise it not as dirty and embarrassing, but as bracing and educative.”
That’s because success in business (as well as in sport and in our personal lives) can only happen when mistakes are confronted and learnt from and there’s a climate in which it’s safe to fail.
It’s what the airline industry has done so successfully, he says. Instead of concealing failure, the aviation industry has a system where failure is inherently valuable and data-rich, says Syed.
In fact, his ‘Black box thinking’ refers to the black box data recorders that all aircraft must carry to provide information in case of accidents. One box records instructions that are sent to all on-board electronic systems and the other records the voices in the cockpit.
“Mistakes are not stigmatised, but regarded as learning opportunities,” he says. After a crash, an independent team investigates.
“The interested parties are given every reason to cooperate since the evidence compiled by the [independent] accident investigation branch is inadmissible in court proceedings. This increases the likelihood of full disclosure.”
What’s more, after an investigation into an accident is completed, the report is made available for everyone.
“Every pilot in the world has free access to the data,” writes Syed. “This enables everyone to learn from the mistake, rather than just a single crew, or a single airline, or a single nation.”
Syed gives the example of United Airlines Flight 173 which took off from JFK International airport in New York on December 28, 1978, bound for Portland Oregon.
Just before the airplane went ito land, the flight crew became convinced the landing gear hadn’t locked into place. They then spent so long trying to fix the problem that they ran out of fuel and had to crash-land into a residential area, killing eight people onboard.
An investigation discovered that the flight engineer hadn’t been assertive enough in telling the Captain the fuel was running low. The Captain meantime was obsessed with trying to fix the landing gear problem and avoid giving passengers a bumpy landing.
As it turned out there had not been a problem with the landing gear in the first place.
Afterwards, new protocols were put in place and training methods were revised. As a result, nothing quite as bad has happened again.
So much so that flying on airplanes is now safer than any other form of travel because the industry investigates and learns from its mistakes.
“Openness and learning rather than blaming is the instinctive response – and system safety has been the greatest beneficiary,” Syed told Director magazine.
Dyson Vacuum Cleaners
Sir James, the designer, inventor and entrepreneur, is another committed to learning from failure.
He made 5,127 prototypes of his bagless vacuum cleaner before he got it right. This practice has obviously paid off because Sir James is now worth more than $3 billion.
“Creative breakthroughs always begin with multiple failures,” says Sir James. “…True invention lies in the understanding and overcoming of these failures, which we must learn to embrace.”
Without them, innovations won’t happen, he says. “Failures feed the imagination. You cannot have the one without the other.”
Great inventors always develop their insights not from an appraisal of how good everything is, but from what is going wrong, Sayed wrote in the Daily Mail.
Using Failure To Grow Your Business
Obviously, failure is only useful if it’s acted upon. “You can build motivation by breaking down the idea that we can all be perfect on the one hand, and by building up the idea that we can get better with good feedback and practice on the other,” says Syed.
Some of the world’s most innovative organisations like Pixar, the Mercedes F1 Team and Google “interrogate errors as part of their strategy for future success.”
Take Google’s decision to test which shade of blue in its advertising links in Gmail and Google search worked best, for example.
Rather than ask its designers to choose the shade of blue for those links, Google decided to run tests known as ‘1% experiments in which 1% of users were shown one blue and another in which 1% of users were shown another blue. Then Google went further and ran 40 other experiments showing all the shades of blue.
It paid off: Google found the perfect shade of blue (the one that users were more likely to click on) and made an extra $200 million a year in revenue.
Why Don’t Companies Embrace Failure?
One of the biggest problems in business is the collective attitude we have to failure, says Syed.
“We love to think of ourselves as smart people, so we find mistakes, failure and sub-optimal outcomes challenging to our egos,” Syed said in an interview with Director magazine. “But the reality is, when we’re involved in complex areas of human endeavour—and business is very complex—our ideas and actions not being perfect is an inevitability.
“If we’re threatened by our mistakes, and become prickly when people mention them, we don’t learn from them. We need to eradicate the idea that smart people don’t make mistakes.”
To really be successful, businesses need to encourage a company-wide failure-embracing culture which in turn will create a “process of dynamic change and adaptation”.
“Success happens through a willingness to engage with, and change as a result of, our failings. Get that right and everything else falls into place,” he says.
If you would like to download the CFO Center’s report on Risk you can do so here
You can also arrange a complementary 1:1 Finance Breakthrough Session with one of USA’s top CFOs here
The CFO Center appoints Peter Caltabiano, Senior Executive, to open 2nd U.S. Territory, located in South Florida
SOUTH FLORIDA— The CFO Center (www.thecfocenter.com) has appointed Pete Caltabiano, Senior Executive, as Regional Director for the Southeastern United States and Caribbean. Headquartered in South Florida, he will develop and lead a team of professionally qualified CPAs providing CFO services to small- and medium-sized enterprises in Florida. “We are very fortunate to find a partner like Pete, who brings 20 years of international experience in a global multisite organization,” said The FD Centre/The CFO Center Founder and Chairman Colin Mills.
Pete has more than 20 years of international experience in both America and Europe with a track record for successfully implementing business transformation and change management, process improvement, and cost reduction. He is a dynamic leader with excellent interpersonal skills and a communication style that is open and clear to any audience. He is a motivator who thrives on challenges of change and maximizing the development of talent to deliver results. A strategic thinker and negotiator with a proven track record of creating vision and delivering change whilst still upholding personal and company ethos.
Pete attended Florida Atlantic University where he received his B.A. in Economics. Shortly thereafter he left south Florida and moved to North Carolina where he started his career and his family. From there, he advanced further with a move to Europe. He was actively involved in fundraising for the NSPCC and Alzheimer’s charities by activities such as cycling from London, England to Cardiff, Wales as well as a cycle from Paris to London. He’s competed in numerous Triathlons, enjoys scuba diving, crossfit, and endurance racing. Pete currently lives in South Florida with his wife Nancy, daughter Hayle, and two dogs, Binky and Cody. http://www.linkedin.com/in/petercaltabiano
ABOUT THE CFO CENTER: The CFO Center (FD Centre) is the global leader in providing part-time CFO and finance director services to small- and medium-size enterprises.
For more information, contact Regional Director Pete Caltabiano, 800-919-4022, [email protected]
It might look innocent enough, but your office shredding machine actually poses as much a threat to your business as the most virulent computer virus.
How could something that was bought to protect your business be as harmful as a computer Trojan?
It’s simple really: it’s not fit for purpose. Yes, it cuts your unwanted documents into thin strips. But—and this is the important bit—it leaves your company exposed to all kinds of trouble because those strips can be reassembled.
All it takes is a little bit of patience to reassemble those bits and read your documents.
Now, you might think this all sounds far-fetched, a little too James Bond/Jason Bourne for your circumstances but unfortunately, it’s not.
In fact, there’s even software that runs on Windows whose very purpose is to reassemble shredded documents.
Called ‘Unshredder’, it automates the reassembly of torn or shredded documents, thus saving ‘even novice computer users’ the tedious task of doing the job by hand.
What if those documents reveal your company’s strategic plans for the next five years? Or the details of your next big ‘secret’ project? Or the names and personal details of your customers or clients?
Even office memos can reveal valuable information in the wrong hands.
And let’s face it, people who take the trouble to reassemble shredded paper to find sensitive company information aren’t doing it for benign or charitable reasons.
No, they’re most likely doing it for nefarious purposes: to expose your company’s plans via social media or traditional media; to sell the information they find to your competitors; to blackmail your company, or to commit large-scale identity theft using your customers’ details.
The impact of your company’s secrets being revealed could be devastating. But the impact of your customers’ or clients’ details being revealed could be just as bad.
In the UK, for instance, companies that collect customers’ or clients’ personal details are legally obliged to protect those details under a law called the Data Protection Act 1998.
The same law also states that companies are legally obliged to carefully destroy customer records when they no longer need to retain them.
Not doing so results in severe penalties.
Like the £100,000 fine handed out to a local council which was found guilty of dumping the personal records of 100 people in a building it had once used as offices. The personal records were found stuffed inside 45 bags of rubbish left by the departing council employees.
So, allowing your customers’ details to fall into the wrong hands could result in your company ending up on the wrong side of the law.
And it doesn’t matter how healthy your revenue is, few companies can take a £100,000 hit to their monthly cashflow without hurting.
There’s more. If word gets out that your company doesn’t protect your customers’ details, think of the public relations implications. Who will want to risk buying from your company again?
How can you avoid this kind of disaster?
Simple, you outsource your document disposal to companies that offer paper shredding services. These companies use industrial-scale paper shredders with blades capable of transforming your documents into tiny, uneven bits of paper that can’t be reassembled.
Just as importantly, these companies will provide you with proof of destruction so that you have an audit trail, should you ever be in a position where you need it. And as with all kinds of outsourcing, there are many other benefits too.
One, you save on overheads. You no longer need to pay for the repair, maintenance and replacement of an office shredder that, like a photocopier, has an unfortunate habit of breaking down when you most need it.
Two, your employees no longer need to waste time slowly feeding one document at a time into the office shredding machine. Instead, they can do the job for which they were employed.
Three, you save space. No need to allocate valuable office space for the mountain of documents that need to be fed one page at a time into your office shredder.
Four, you save money. And five, you help save the environment, because most reputable professional paper shredding services recycle what’s left of the documents they process.
So, as you see, although outsourcing has attracted its fair share of negative press in the past, it is often a force for good in a company.
It not only allows you and your employees to focus on your core competencies but saves you money and time.
Paper-shredding is just one example of what you can outsource in your business. You can in fact outsource all your technology services and business processes such as HR and finance, which allows you to operate a leaner, more efficient business and use the savings to drive growth.
Enlisting the services of an experienced part-time CFO, for example, can add value, increase efficiency and maximize opportunities in your business. You get access to a CFO with the experience and knowledge to help you plan, manage and control business growth and who can organize both your in-house and external accounts functions.
Many business owners don’t realize the breadth of the role of a part-time CFO. For instance, a part-time CFO will not only become an unofficial ‘sounding board’ for the often-isolated CEO or owner of the business but can also help devise an efficient outsourcing strategy for the company.
If one of our part-time CFOs helps you to create an outsourcing strategy, for example, the process will include:
• Evaluating your company’s current and future requirements. • Discussing a company-wide strategy/protocol for taking on outsourced providers • Investigating specific outsourced providers (starting with our national network of trusted providers) with proven track records • Evaluating providers’ core competencies to ensure they find the right match • Discussing cost implications in detail and uncover any hidden costs before contracting the supplier • Interviewing providers and ensure they will be a good cultural fit • Ensuring that the provider will be able to deliver the service on time and to the right standard • Challenging providers about their data security and integrity • Asking providers to share their contingency plans in the event of serious problems • Evaluating providers’ training programs and ability to support your business in the event of staff sickness or absence • Discussing providers’ compliance policies to ensure that they will take on the responsibility (where appropriate) to adhere to laws and regulatory requirements.
And that’s just outsourcing. For a fraction of the cost of hiring a junior member of staff, our part-time CFOs will work with you to resolve all of the 12 major challenges your company is likely to face:
Coffee is one of the most sought after commodities in the world but even that fact doesn’t make coffee traders immune to economic turbulence. Such was the case for family-run green bean coffee merchant D.R. Wakefield. During one particularly volatile period, the UK-based business was subject to some tough grilling by its bank but just didn’t have the wherewithal to supply the answers. “We simply didn’t have enough background information, data and statistics collated in a manner required by the bank,” recalls CEO Simon Wakefield. It was then that he and his management team realized they needed someone with sophisticated financial expertise to help them. Hiring A Part-Time CFO Hiring a part-time adviser was the last thing Simon wanted, having had unfavorable experiences with part-time employees in the past. “In my previous experience of part-time employees, I found they would come, they would freelance, and they would go and it didn’t work with us. “I like to have people in-house that work with us and understand our business.” D.R. Wakefield, set up in 1970 by Simon’s father Derrick, supplies both specialist and regular grade coffees to the UK trade, small private roasters and large multinational companies alike. “It sounds simple but when you start drilling into the way we work with multiple currencies, multiple countries, it becomes quite detailed.” Then Simon discovered the UK’s FD Centre (U.S.-The CFO Center) and how it provides part-time CFOs. He changed his mind about part-time employees and made the decision to hire a part-time CFO, Nick Thompson, from the FD Centre. Nick had more than 15 years’ experience as a CFO in entrepreneurial businesses and had worked at CFO level in retail, restaurant, property and auctioneering sectors both in the UK and overseas with such companies as Conran Restaurants, The Conran Shop, Early Learning Centre and Bonham’s Auctioneers. Why The CFO Center/FD Centre? “The FD Centre offered us something: if our first CFO didn’t work out they would quickly replace him with another one,” explains Simon. “If the CFO we took on wasn’t able to support us in the way we expected they could replace him with another CFO.” He was delighted to realize that his new part-time CFO would do far more than look after the company’s finances. “I initially thought a CFO would just look after your finances. Naively I didn’t realize how many extra subjects and areas he would cover.” Nick provided Simon with daily financial reports when the coffee market was exceptionally volatile. He recommended the company change auditors and helped the accounting team to update its accounting software packages and credit control procedures. That all helped the company’s cash flow position to improve, says Simon. Nick also helped Simon bolster his relationship with his bank by bringing in a permanent in-house management accountant to take care of the finances. Five years on and Simon credits those monthly and sometimes weekly financial reports as playing a crucial role in the company’s growth. “I have the figures at my fingertips. It’s not a gut feeling like I had before: it’s presented in data to me on a monthly basis or as often as I want it. This means I can make plans and can justify them. For example, if we want to install some new hardware. “It gives you confidence when you know what your figures are and it doesn’t come as a surprise.” Nick also helps Simon with strategic planning and even his personal finances as well. “The improvements and suggestions he’s given to us have helped our business develop. These include some of the ideas he came up with when he first spoke to us. Once he started settling and grasping what we were about we could begin to implement these ideas. He was quiet, unassuming, and unflustered.” The company flourished at a time when so many other companies floundered. “In the five years Nick’s been here we’ve grown about 30%,” reports Simon. There have been other important benefits from using the services of a part-time CFO, admits Simon. “As an owner, manager, someone working in the business I needed to be able to trust him. Nick built my trust very quickly with his experience and suggestions. “I can sleep better. I’m not quite so cranky when I go home because I’m not only confident, but comfortable in what we are doing here. “He’s added revenue because he’s made new suggestions. For example, he’s suggested that we look at taking on a marketer which has taken that role away from me. He’s also suggested I join another business group, which has meant I’ve been able to benefit from other skills and other experiences. It’s given me a lot more confidence in how I can move forward and develop the business.” The management team have also benefitted from having a CFO on-board, says Simon. “The rest of the team have confidence that they know we’ve got a CFO overseeing us. He’s brought in targets for them and it’s made the whole team come together.” The only regret Simon has is that he didn’t hire a part-time CFO earlier. “I wish I’d done it sooner as it’s really helped. Nick’s brought in a lot of value to us as a company, he’s brought a lot of value to me as an individual. I think they’re the key things you can expect or hope from anyone.” To discover how a part-time CFO will help your company to scale up, please call us on 800 919-4022 or contact us here.
Rapid growth is the stuff most entrepreneurs dream about as they take their fledgling company through the early years but when it happens, it can quickly become the stuff of nightmares. The bubbles in the celebratory champagne—“Here’s to our success!”—barely have time to go flat before the problems arise across the high-impact growth or Scale Up business. Suddenly owners are beset by problems involving the people they’ve hired or not hired, their cashflow chokes, and processes that once worked so smoothly groan to a halt. Customers then leave snide reviews because products or services aren’t delivered on time, and key suppliers get angry at delayed payments. Bankers who were once so keen for business begin to crank up the pressure as overdrafts or loans get close to the ‘red zone’. No wonder then that so many business owners spend hours every night staring into the darkness wondering what on earth happened to their once easy-to-manage business. The owners of high impact growth or Scaled Up businesses are often the loneliest, most isolated and overworked individuals. While start-up owners get an avalanche of government help and assistance, their Scaled Up counterparts get very little attention or assistance. The CFO Center/FD Centre’s Chairman Colin Mills says he’s seen first-hand what pressure does to business owners. “I’ve sat in sales meetings with entrepreneurs who had literally been brought to tears by stress and frustration and the feeling that it’s all too much.” It’s for this reason that Colin has written Scale Up: How to Take Your Business to the Next Level Without Losing Control and Running Out of Cash. It’s aimed at the owners of companies facing or already experiencing the problems of scaling their businesses to ensure they minimize the problems and achieve growth in a controlled, sustained way. “Our experience suggests that scaleup issues start to bite at about $1M/£1M Sales Revenue or a minimum of 10 employees,” he explains. “By the time a business reaches $50M/£50M Sales Revenue or 250 employees (larger firms tend to have fewer employees per $/£ of Sales Revenue) they can most often be considered a “scaler”: they are past the main dangers of scaleup.” In his book, Colin explains why scaling a business can be so problematic. The business owner has to deal with one or even all of the following: • People challenges • Sales and marketing challenges • Operational challenges • Administrative challenges • Financial challenges Colin explains, “Businesses run the gauntlet of increasingly severe challenges, mostly because they are growing but don’t have the necessary infrastructure to support their expanded operations. “While on paper, they may have the revenue, the manufacturing base or customer reach of a substantial business, the culture, the controls, the processes, the personnel and the leadership remain those of a much smaller business than they were a short time before. “Worse, they haven’t yet accumulated the resources to build and maintain that infrastructure.” This creates a hazardous situation for the business, he says. “The biggest danger in this period is that the business will either outrun itself or get stuck, like a deer in headlights. Outrun, as the company spirals out of control and its cash reserves dwindle trying to meet the expanded demands of the business. “Or stuck, as the entrepreneur tries to cope with everything at once, frustrated that the problems he could happily once deal with—back when the business was smaller—are not being dealt with by the people he is employing, often at substantial cost.” Overcoming such problems or avoiding them is only possible if you revise your business model. “You need to consider your whole business model, because if you have a terrible business model, then the last thing you want to do is to start scaling it. If you do that, then all the small problems that make your life a nightmare now will become major headaches. “If your business model isn’t great, however, it doesn’t mean that all is lost: there’s a lot you can do to retro-fit, design and redesign a business.” Besides explaining the challenges scaling businesses face, Colin also provides the methods you need to use to overcome them—the same methods that the CFOs from the CFO Center offers its clients. They’re also the methods the CFO Center has used in its own scaling up process, says Colin. The CFO Center is a scaleup that has been growing at over 30% for the last three years with close to 400 CFOs but Colin admits he keeps a keen focus on the business, the business model and the key performance indicators. “It might be a scaleup now, but that doesn’t mean to say it’s not going to careen out of control. I have to keep my eyes on the business, re-evaluate the business model, watch the indicators.” Along with practical advice that you can use immediately, the book features an array of case studies in which business owners describe how they overcame the challenges of scaling their businesses. So, if your business is on the verge of, or already experiencing the ‘difficult teenage’ phase and you’re wondering how to overcome the nightmare challenges you’re facing, this book is for you. It’s available on Amazon as a paperback and Kindle ebook here. And to discover how the CFO Center will help your company to scale up, please call us on (800) 919-4022 or contact us here.