One of the many reasons I like working within the CFO consulting services group at 8020 Consulting is the constant challenge of the engagements, ranging from assisting an up-and-coming movie production company in Hollywood to aiding in the restructuring of a newly acquired technology company in the Silicon Valley. We are sought out for our interim financial management services, and projects could last anywhere from three months to over a year.
Engagements in the CFO consulting services group generally fall into four categories:
- Identifying and solving business performance and profitability issues
- Helping rapidly growing companies that need to upgrade their finance and operational capabilities
- Assisting an investor such as a Private Equity firm with a new or troubled investment
- Helping a start-up that was recently funded with their initial accounting and operations setup.
Let’s review some real-world interim CFO engagements that I’ve consulted on, in order to shed some light into how those types of engagements work:
Business Performance and Profitability Issues
In one project, I was assigned to a technology company as the acting CFO. The company had tremendous historical topline growth, but it was highly unprofitable and had serious cash burn issues. The investors wanted me to analyze and determine the source of these problems. I focused on the procurement and manufacturing of the company’s main products. I determined not having a standardized product offering and trying to customize each product to specific customer needs created inefficiencies. It also created a big loss in gross margin, excessive inventory levels and associated obsolescence. Because of this insight, the company was able to streamline and standardized its product offerings and ultimately became more profitable.
Scaling Finance Capabilities in Rapidly Growing Companies
Many times, I come in to help an early-stage, fast-growing company that needs to better scale its business and put more sophisticated processes in place. One such company was in the media industry and had recently experienced rapid revenue growth. I came in as the acting CFO with the mandate to put the processes and proper systems in place to help them grow successfully.
Companies can implode from within if any of the core functions and departments cannot scale and facilitate a high revenue growth environment. I proceeded to have the accounting system upgraded to NetSuite and put in a new treasury management process. Due to issues with payroll and tracking labor time against products and projects, I also switched to a new payroll service provider and put a new time tracking system in place.
The company was also not calculating its grow margins correctly, and I was able to provide insight into the true profitability of products. We made alterations to the operations group as a result. Further, I added several more experienced members to the finance team and instituted a proper management reporting deck to give key insights to the leadership team.
The company is still growing and thriving to this day, and it was very rewarding helping them at the right time to lay the foundation to be successful.
Helping New Investors (Private Equity Firms) With New or Troubled Acquisitions
One of my favorite types of projects is working with a PE firm and helping them with a new or existing investment. For example, I was deployed to a technology company recently purchased out of a bankruptcy process. I was the acting CFO and worked with, and on behalf of, the PE firm in the execution of their Day 1 plan. During the diligence period, the Day 1 plan was created, and it outlined the key changes and points of focus for the first 120 days after the close of the deal. We had various daily and weekly check-in meetings with the PE firm to give updates and discuss key items as they arose. I was able to help implement the plan and work closely with company management and the investors through a very challenging period. Some of the specific items I worked on included consolidating and/or eliminating foreign operations, renegotiating lines of credit and amounts owed key vendors, and recruiting and staffing the permanent accounting team.
The outcome was a healthy company built according to the plan, currently on a high growth and success curve.
Working in Start-ups That Have Never Had CFOs
Another common type of project assists start-ups that have not had a CFO or any financial leadership before. Most entrepreneurs are focused on bringing their ideas to market and are not thinking about setting up accounting or bringing in a CFO early in the company’s evolution. Coming in and establishing the initial financial infrastructure is a very interesting type of project, requiring hands-on engagement, knowledge of a wide variety of start-up issues and the opportunity to work directly with the founders.
One project that comes to mind was at a start-up television production company. I was their first CFO and set up the initial chart of accounts, implemented QuickBooks, and set up vendors and worked with the bank to create a disbursements process. The project required not only setting up the initial infrastructure, but also managing the investors and creating a 3-year plan and rolling 13-week cash flow forecast. These projects are an opportunity to flex all your financial muscles and see things that you would not normally see at a much larger organization. I even helped move furniture from one the founder’s house to the office with my truck!
More About CFO Consulting Services
For the prospective CFO consulting services candidate: As you can see from the examples above, you become exposed to all types of projects and learn and grow professionally by always being in a state of challenge. Often you find you’re not working with perfect information, and you need to learn things quickly.
For the prospective CFO consulting services client: We can help you with a wide variety of issues. Our CFO services group can help you analyze your business, identify opportunities and solve problems that improve business performance and results. Learn more about our service offering in our free service sheet:
About the Author
John is an Alumnus of Arthur Anderson and a CPA with over 25 years of diverse, hands-on financial and operational leadership experience in entertainment, technology, retail and distribution environments, including CFO, VP of Finance, and Controllership roles at companies ranging in size from early start-up through middle market as well as Fortune 500. John also has strong international management experience with time spent in the UK, Germany, India, and the Middle East. In fact, he managed global operations teams including the formation and expansion of India offshore operations and expansion of a company into the European market. Across his career, John has worked very closely with VC firms in the raising of multiple rounds of financing and negotiation of lines of credit with banks and he has helped lead companies through the successful exit / sale process.