CFO for Hire

This article from The Buffalo Business Journal captures the essence of our business model. However, I have interjected a couple of my opinions in italics as shown below:

Small to mid-sized companies - the ones that need to turn a corner but are short on the right personnel - usually can't afford a CFO. Facing the prospect of growth, or problems such as poor sales or difficulties with banks, some companies need one. For those companies, the financial services industry has developed CFOs-for-hire. They are professionals who act like financial superheroes by descending into a situation, getting the ear of the CEO and offering their best advice before moving along to the next assignment. Their engagements can be short and specific or a bit longer and advisory, but they are always temporary. "Most companies don't need a full-time CFO. They bring us in when they do," said Jack Livingston, owner of CFO Solutions Plus of Buffalo.

What they do
The first thing short-term CFOs unpack at the client's place is the understanding of the fundamental principles of business. Sometimes this basic approach is just what an entrepreneur with little business experience needs. "The typical entrepreneurs know their products, but they're not salesmen (I disagree. Although they might not be stereotypical salesmen, effective entrepreneurs should be passionate/evangelistic about their company, which ultimately "sells" whatever they have to offer....JH) . What they don't know is how to make money," said David Pontrello, vice president of Phoenix Consulting Group of Grand Island.

He recalled a client who complained: "I'm spinning my wheels. Five years into the business, and I only made $35,000 last year. That's not enough for the owner of a company." Pontrello and his partner Darren Graff, Phoenix president, might suspect the problem is linked to pricing, which would require their financial and operations expertise. But before they jump to conclusions, the partners first perform an assessment to determine a logical next step. And when they do, "we want to sit next to the owner and say, 'Here's how you do it'," Pontrello says.

A CFO-for-hire's role is purely advisory. They have no signing authorization, they can't make decisions for the company, and they're not employees of the company. These CFOs don't serve as emergency bail-out consultants, nor are they "temps" in the classic sense of the word. "We're not a placement agency for CFOs or controllers," Livingston said. CFOs-for-hire may work at a company for as little as one day a week, or even one day a month, and help in various ways:
Restructuring the business' practices
Preparing owner to seek capital investment
Reviewing candidates for financial positions

Who they do it for
"We provide advice to the owners. Lots of business owners don't have anyone to talk to. It can be a very lonely spot to be in," said Gregory Meyer, who heads Business & Technology Consulting Inc. in Lancaster. Teddie Granville was one such business owner. Her 6-year-old Web design company was going gangbusters, with new and bigger clients knocking and sales doubling for each of the past three years. Busy on the creative end and juggling administrative duties, Granville's own time was limited. She needed an objective point of view and fresh ideas to position Conbrio Design for the future. The time was right, she thought, to call Phoenix Consulting.

"I wanted to make sure the infrastructure was here so we could continue to grow in a healthy way. I wanted someone to relook at the roles in the company see if should be shifting people and responsibilities," Granville said. "I have a CPA who does the books and balance sheets and makes sure the paperwork is in order. I brought in Dave to work our numbers with me. He acted very much as a CFO sitting down with me, working through the numbers and giving advice."
Clients do self-diagnose, like Granville did, but others are referred by bankers, attorneys or accountants to recognize a change is necessary, Pontrello said. Other times, a "shock event" - a sudden resignation, the defection of a major client or a called bank loan - will trigger a call, he said. "The common denominator," Livingston said, " is they don't have a high-level financial head in the organization. Maybe they have just a bookkeeper." Clients span a variety of industries and range in revenues from $300,000 to $25 million. (Don't let this article's revenue range limit your consideration of Hannum & Co.....JH)

Four Common Mistakes to Avoid in Running Your Small Business

I'm not sure of the source of this article, but it contains some good information...


You are the master of your domain. And as a small business owner, your domain is nothing to sneeze at. So let’s make it a little easier by learning from other people’s mistakes. The following are four of the most common mistakes made by small business owners.

Mistake #1: Knowing it All
You have chosen your industry wisely. You are already an expert in your field. So much so, that you have a business dedicated to your area of expertise.
But wait a minute. Just because you are an expert in your field does not mean you are an expert in running a business.
A friend of mine who is a tradesman was recently downsized and decided to use it as an opportunity to hang his own shingle out. He figured he was on easy street: he had loads of customer contacts and referrals coming his way, and after a lifetime of perfecting his trade, he was truly an expert.
So it stands to reason that he was more than a little surprised when the business floundered and ultimately failed after some initial success. What happened?
What my friend sadly missed in the equation of setting up his own company is that there is so much more to having a business than providing the product or service in question. His lack of ability to manage the books, file taxes and understand his write-offs, meet legal requirements, and manage employees was immediately telling. On top of that, he was unable to collect receivables effectively, and his lack of ability to stay organized meant unreturned phone calls and disgruntled employees being sent on wild goose chases. Before long, he lost customers, then employees, then eventually, the entire business.
Being an expert does not mean you are a good business owner.
So do you already know it all - really? If so, great. You have circumvented common mistake number one. But if you think there may be just a few teensy things you could stand to learn about running a business, it may be in your best interest to learn these skills from an expert, instead of from the school of hard knocks.
Find a mentor, or take some training. It doesn’t have to be expensive; many local government offices offer free courses to encourage entrepreneurs.

Mistake #2: Doing it All
Being everything to everybody will make your business a ticking time bomb. Without delegation, there is a good chance you will burn out trying to do tasks that are a struggle for you, but would be a cinch for somebody else. If you manage to hang on to your sanity in the process, you may end up losing sight of why you got into business for yourself in the first place. I’m fairly certain it was not so you could spend all your days and nights working.
Effective delegation involves three steps:
1. Trust Your Employees and Contractors - Those who have trouble delegating ultimately have a hard time trusting somebody else to do the job as well as they can (I can attest to this). In some cases, an employee may indeed breach that trust by incorrectly or irresponsibly doing the task assigned. Be patient: if they do it again after you provide extra guidance, then it is time to reconsider their role.
In other cases, you may realize that your employees can do the job at hand even better than you can. By trusting them to take it on, you may be pleasantly surprised with what you find.
2. Trust Your Clients - If you pass on the management of a client account to an employee, trust that they won’t leave you. Assure your clients that you are still at the helm. In fact, to provide the service you really want to, you cannot always be the one answering the phone, sending statements, or even providing the service in question (depending on just how much you wish to delegate).
3. Make Yourself Redundant - A functional principle of good business management is to set it up so that it can run smoothly with or without you. By clearly setting out business procedures for all areas of the company, anybody can take on the job and the customer should be none the wiser.
You may not have ambitions of being the next huge conglomerate, but at some point you will take time off – be it a vacation or illness or otherwise. Your business ideally will not suffer as a result of your absence. A solid indicator of success in business is if you can step away from it and continue to enjoy a passive income from a distance.

Mistake #3: Getting Too Much, Too Soon
Expenditures commensurate with running a business are ugly. It is easy to “need” this item and that, before you even make a dime in income. In some cases the needs are legitimate. In other cases, you can creatively steer clear of spending more money than you need to.
Here are a few tips to avoid the cash crunch by buying and managing sensibly:
1. Although buying in bulk is generally a long-term frugal gesture, it could put you in a tight spot right now. If it is a stock item, confirm that there is sufficient demand for everything you buy before taking the plunge. If it is an office item, ask yourself if you can do without. Remember: cash is king. Without it, your business will be in trouble. Sinking your cash into too many paperclips – despite an eventual need for them - might be disastrous.
2. Although buying equipment outright is generally a better financial option than leasing, sometimes leasing will leave more money in your pocket. If you only need the item in question for a limited time, or if it will be obsolete at the end of the lease term, then spending less and leasing will leave more cash in the accounts, giving you more solvency. If you do have to buy outright, consider used equipment over brand new ones.
3. Avoid state-of-the-art equipment. Sure, that fancy printer does everything except walk the dog, but you will save money by buying second-hand. Liquidation auctions are a great place to acquire business equipment for pennies on the dollar.
4. Don’t be afraid to deeply discount your stock. If it is not selling, be ruthless. The longer it sits on your shelf, the longer it will take for your bills to get paid.

Mistake #4: Ignoring Tax Until Tax Time
Your year-end accounting could be a shocking experience if you have not made proper allowances throughout the year. Consider the various forms of tax, mandatory employer benefits, and anything else your accountant can come up with. (Remember mistake #2: delegate and get an accountant.)
Cash in hand does not translate directly into profits. Without making the necessary deductions along the way, you could be in for a nasty surprise.
Avoiding these 4 mistakes is not a guarantee of your business’ success, but it will help you avoid the common pitfalls that sink many small businesses.

Pet Peeve

A pet peeve of mine is when I encounter a company that starts a blog or has a "news" page on their website that is not maintained. You can almost sense that they started with enthusiasm and good intentions to communicate with their customers only to get distracted or disinterested. It kind of makes me wonder if there are other things in their business that they aren't attending to as well! Sure, a blog or news page is a relatively minor part of a business, yet it does create an impression. Little things do matter.

With all that said....I have just created a strict level of accountability for this blog! That's OK because I think that it will be a powerful tool for visitors to get access to great information and to learn more about us. So, our blog commitment is that we will have at least one new entry per week. Check us on it.

The Benefits of Failure

We look forward to providing our friends and clients with regular periodic entries to our blog. It’s our desire that you will find this a faithful source for information, entertainment and encouragement.

The first entry is from J.K. Rowling’s (Harry Potter author) June 2008 Harvard commencement speech. I found it to be very insightful and full of wisdom. As a bit of background, she is from a very modest/working class family in England who never approved of her life long dream to be a writer. So her childhood was a struggle to break away to pursue her dreams. It was seven years after her college graduation that the says she "had failed on an epic scale. An exceptionally short-lived marriage had imploded, and I was jobless, a lone parent, and as poor as it is possible to be in modern Britain, without being homeless. The fears that my parents had had for me, and that I had had for myself, had both come to pass, and by every usual standard, I was the biggest failure I knew."

The following is an excerpt from her speech on the subject of failure.

"So why do I talk about the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had already been realized, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life."

"Failure taught me things about myself that I could have learned no other way. I discovered that I had a strong will, and more discipline than I had suspected; I also found out that I had friends whose value was truly above rubies."

"The knowledge that you have emerged wiser and stronger from setbacks means that you are, ever after, secure in your ability to survive. You will never truly know yourself, or the strength of your relationships, until both have been tested by adversity. Such knowledge is a true gift, for all that it is painfully won, and it has been worth more to me than any qualification I ever earned."

(Her net worth is approximately $798 million per the 2008 Sunday Times Rich List).

PRESS RELEASE
Contact: Josh Hannum, Hannum & Co.
(205) 937-8409 josh.hannum@hannumco.com


Newly Formed Hannum & Co. Provides Comprehensive Financial Management for Local Businesses

Birmingham, Ala., June 15, 2009 – Josh Hannum, who has years of experience as a CPA, industry accountant, and business executive responsible for successfully growing and navigating a start up business, has announced the formation of Hannum & Co. (http://www.hannumco.com/). This new company is a business consulting firm focused on providing comprehensive financial management for local businesses.

The firm’s core competency is providing expert oversight for the financial operations of its clients. Hannum & Co. provides all foundational accounting services for its clients including: general ledger management, financial statement preparation, and financial analysis. In addition, the firm provides other services including strategic planning, budgeting, performance metrics, revenue enhancement and cost reduction services. The firm integrates its services with other professionals (e.g. CPA firms and attorneys) to result in comprehensive and well tuned financial operations. In essence Hannum & Co. provides the services and benefits of having an experienced executive (e.g. controller, CFO or COO) on an outsourced, part-time or interim basis.

“Our vision is to be recognized by our clients as an invaluable part of their organization by providing innovative and cost effective financial solutions,” said Josh Hannum, founder of Hannum & Co. “It’s our deep desire that we provide clients with the peace of mind that the financial function of their business is being performed in an exemplary manner. We want to enable them to stay focused on growing and running their businesses without distractions.”

Hannum pointed out that today’s business environment is at alarmingly high risk levels. Therefore, entrepreneurs will benefit tremendously from having an expert to help guide them. “Having access to new ideas, fresh perspectives and laser like execution can be the difference between achieving success and realizing failure,” Hannum said. By utilizing his firm on an on-going weekly basis, clients are provided with a competitive edge with the help of a “right hand man”. This structure is both highly cost effective and relevant in these uncertain economic times.