As its slogan goes, every company, regardless of size, needs a chief financial officer, and B2B CFO is looking to fill that position on a part-time basis for small- to mid-sized companies.
This unique concept was created by B2B CFO founder Jerry Mills, who felt there was a niche in the market of companies whose revenues total around $10 million. These organizations most likely cannot afford a full-time CFO, the charge for which would be well into the six-figure range, but could still use the expertise an experienced CFO can provide.
“With these companies that are growing, they need a CFO but they typically can’t afford one on a full-time basis,” Mills said. “But they can hire us, someone who has 25 years average experience, and receive the benefit of the firm. Who knows, maybe they pay $10,000 a year or $30,000 a year, but it’s something significantly less.”
The firm has more than 150 partners nationwide, with 4,200 years experience combined. David Mayo of St. Charles became a partner in the firm last November after going through a rigorous screening process, the baseline of which includes a minimum 20 years experience.
“Unless you have that experience, you’re not going to be able to relate to the types of problems your clients have,” Mayo said. “That’s why you need to have at least 20 years experience to get in the firm. Most partners have more than that.”
The internal mantra of the company is to make order out of chaos. That company confusion could fall in the areas of accounting, IT, taxes or operations, but in today’s climate, it is typically an organization’s deteriorating relationship with its bank.
“We don’t need to reinvent the wheel. We’ve been there, done that,” Mills said. “We can sit down with the owner one-on-one and be an advisor and help create a proactive plan going forward to try and help them company get out of the situation it’s in and grow.”
The range of financial problems a small- or mid-sized company can easily contract all fall under the umbrella of solvable issues for an experienced CFO, said Mayo.
“A lot of these small business owners aren’t getting their financial statement timely, they’re not getting them accurately, they’re not really utilizing business information to make correct decisions, they’re not doing any cash-flow forecasting, they’re not looking at expense reduction, they’re not doing any strategic planning,” he said. “We’ll work with them to get both financial and goal clarity. A lot of them don’t have that.”
Mills has outlined a three-tier theory he believes describes most small- to mid-sized companies. The tiers are the finders, the minders and the grinders, or the owners, managers and producers. Owners and entrepreneurs are forward looking, managers look to the past and producers focus only on the present.
“What’s important for the business owner to understand is that because of that, it makes it more difficult for him to communicate with them,” Mayo said. “He’s forward looking and they’re not. So unless he realizes that, it makes it more difficult to get the point across.”
B2B CFO comes in and fills the manager position so the entrepreneur can then go back to the relationship building and selling, for which he started his business in the first place.
The nationwide firm is the largest of its kind, spanning across 39 states, allowing each partner access to the intellectual property of the other partners. So if a partner does not have the specific experience to answer a client’s question, all he has to do is ask one of the other 150 partners.
“I had a client that was in the jewelry business who said, ‘What are the nuances that I should know about the jewelry business?’” said Mayo. “Well one of the partners came back and said, ‘I was the CFO of a jewelry business, here’s what you need to know.’”
So while each partner builds his own practice, working on-site for as long as the project takes, he or she has the resources of more than 4,200 combined hours of CFO experience in the firm.
“It’s truly a hybrid,” Mayo said.
Another unique factor of B2B CFO is each relationship a partner builds with a company is always contract-free.
“We work on a handshake basis,” said Mills. “We tell a business owner that we want to be your trusted, long-term business advisor. For us, the trust goes both ways. We try to build a relationship and when you have a really good relationship with a business owner, a contract just gets in the way.”
Mayo – who has more than 25 years CFO experience with businesses both large and small, and has initiated two successful turnarounds – believes exit planning will become the biggest financial concern considering the impending retirement of more than 78 million baby boomers.
“We think there is a bubble of business exits coming two to three years away,” he said. “If you’re thinking about selling your business, let’s go through a two-year program of certain activities you need to do by quarter so that when it’s time for you to sell your business, you’re prepared.”
Another distinctive characteristic of B2B CFO is the lack of cold calling and mass mailings used to acquire new clients.
“You can’t get to the CEOs in our market with cold calls or mass mailing. It doesn’t work,” said Mills. “You can’t get through the gatekeeper, and every business has gatekeepers.”
Instead, partners in the company acquire new clients on a referral-only basis.
“We do everything through a warm introduction,” Mayo said. “If I’m meeting with a contact and they say, ‘I think you should contact this person.’ I’ll call them and reference that person. From that discussion, we can determine if there is a need. Bankers are a very good source.”
B2B CFO partners also have access to the latest analytical software to help evaluate a client’s needs.
“I can take a client’s financial information and confidentially put it into a national database by industry and it’ll come back and show how they compare,” said Mayo. “That analysis, it helps you do benchmarking. How do they compare to others in that database within that industry?”
Source:http://www.thebusinessledger.com/Home/Archives/CommentaryViewpoints/tabid/86/newsid415/993/Small-companies-find-value-in-outsourcing-CFOs/Default.aspx
