Ken Saddler, B2B CFO®

Good Advice

In the attached article written by David Worrell in AllBusiness.com, there is a quote that sums up a lot of what I believe in as a professional. It happens to be great advice too. Here it is, “There is a huge difference between a good accountant and a strategic finance professional”.

Source: http://www.allbusiness.com/outsource-finance-department/16738143-1.html#ixzz1i3q60QJS

The rest of the article has good insight as well, but this line is particularly powerful.

http://www.allbusiness.com/outsource-finance-department/16738143-1.html

Give and You Will Receive

Happy Holidays to anyone who happens to be reading this blog entry.

Strange, but I do some of my best thinking…(you didn’t really think I was going there, did you?) actually when I’m out running.  Probably should be more focused on my exercise, but oh well.  Anyway, I digress.

Yesterday, while in a client’s office, I found a dime on the floor of the controller’s office. So I did what just about everyone would do, I picked it up and gave it to him.  Today while I was out on my rather chilly (this is Minnesota) run, I found a dime in the street.  Coincidence?  I think not!

It made me think of an important business lesson I have learned since joining B2B CFO.  When you give your customers more than they expect and don’t expect anything in return, the result is you get more business.  In my case, I work very hard to help my clients get way more cash into their business than I will ever cost them.  That’s my focus every day when I go to a client’s office.  It seems so simple, yet without staying focused it is not always easy to practice.  However, I find if I operate by this principle then my business remains strong and will continue to remain strong.

Maybe a little life lesson in there as well.

The Joy of Helping Clients

Our managing partner and founder, Jerry Mills, is  up for the Top Small Business Influencer in Americaaward.  Never heard of it?  Neither had I until I learned Jerry was nominated.

Well, when I start to think about this a little further, it occurs to me how much our firm does influence small business in America in a very positive way.

As an example, one of my clients recently accepted an offer to sell his business.  He is very happy with the situation, but just a year ago, this wasn’t very likely to happen.  The company was losing a substantial amount of money and cash flow was negative every month.  As a result, the business was digging further and further into the line of credit.  Maxing out the line and getting into difficult cash flow issues was directly on the horizon.

Over a year later now, the company has posted a substantial YTD profit, the line of credit has been completely paid off and there is a substantial amount of cash on the balance sheet.  All of this was very attractive to the buyer and will net my client the value he hoped to obtain on the sale.

How was this achieved?  Four areas were targeted.  First, instead of simply charging one blended average rate for their services, we analyzed the rates and costs of various levels of resources and determined the market would accept higher rates especially for higherr level resources.  Through this process we substantially increased gross margins.   Second, we began forecasting weekly cash flow and tracking performance against the forecast every week.  By using this tool to manage cash, we began to make better decisions and were able to significantly increase cash flow.  Third, we completed and implemented a budget for 2011.  Finally, in conjunction with the budget we implemented purchasing and travel and entertainment policies to help control spending.

This is just one example of many from our firm, but it is a feeling of accomplishment to help small businesses in this way and it is meaningful.  So, should Jerry Mills be considered for the Top Influencer of Small Businesses in America?  I think so.

B2B CFO Annual Partners Meeting

Recently returned from the annual meeting of our firm in San Antonio.  What a pleasure it was to be with so many talented business people…and in a warm climate (not something I’ve been used to during the long Minnesota winter we’ve just experienced).

I’ve heard it said, “You should spend time with people who you want to emulate.”  Initially that sounds like we should all be followers.  That’s not how I see it.  My translation is, we can all learn from people we choose to be around.  We can learn good and bad things, depending on who we want to hang around.  Well, I choose to be with positive, goal oriented, driven, professionals.  This describes my partners around the country very well.  I gained so many good and creative ideas at the conference, a lot of times just speaking to my partners between meetings.

When you spend the money to travel to a meeting like this, you want to get a return from the investment.  Well, as a CFO, I’ve done the math and there is no doubt I got a well above average ROI on the 2011 B2B CFO Annual Partners Meeting!

(somewhat) Random Thought While Jogging

Yes, it’s still cold in Minnesota…despite the desperate prayers of many, many local folks who have had quite enough of old man winter 2011.  Even though it was snowing this morning, I decided to head out for a jog along the shore of (frozen) Lake Minnetonka near where I live and serve clients as a Part Time CFO in Minneapolis.

While I was jogging, I was struck by a conversation I had with a young business owner last week.  I asked him if he had ever considered expanding his business beyond the main product line he had been successful with to accelerate growth.  His answer was no.  He stated that he was satisfied with the consecutive years of double digit growth he had achieved in a difficult economy.  To summarize the rest of his answer, he has been very focused on execution of his strategy for the core product line.  As a result of this focus, the company has gone from nothing in 2007 to a growing, thriving, profitable business he is planning to sell for a multiple seven digit sum in the next five years.

Simply stated, I was very impressed with this young man’s success largely driven by his commitment to stick with what he was good at.  Despite his relative youth, there is a lesson here for all of us in business.  Focus, focus, focus on the core business and do not chase every seeming opportunity that presents itself along the journey.

The Filter of Business Value

My firm, B2B CFO^®, currently has 178 partners in 39 states with a combined 5,130 years of experience.  One of the benefits of being a partner is it gives me access to many wonderful articles written by my knowledgeable partners to pass along in my newsletter. Due to this benefit, it has been awhile since I’ve written my own article for the newsletter.  When the passion for a certain topic motivates me however, I write!  With that said…

Before leaving for the office tomorrow, please consider this.  The question is: would you like to increase the value of your business so that it’s the most valuable on the day you sell it?  If asked the same question, a very high percentage of business owners certainly would emphatically say, YES!  So why don’t the same percentage of owners run their businesses with this goal in mind every day, every week, every month and every year until they sell their business?  It could be because many owners and CEOs get caught up ‘inside’ their businesses.

What does it mean, to work inside the business?  Unfortunately, it means that business leaders are so involved in the short-term decision making of day to day operations that they are unable to make insightful decisions that also bolster the long term value of their company.  A side effect of this is also that the business becomes so reliant on their involvement that if they are absent for even a day the operation suffers.

So what is it that drives long term business value?  The following are some examples of key value drivers.

• A strong management team who can handle the business in the owner’s absence.
• Good financial controls to guide the business and ensure progress towards goals.
• Diversified customer and vendor bases.  If long term contracts are in place with either, this will increase value.
• Well documented systems and processes in critical areas of the company.

Instead of getting caught up ‘inside’ the business, avoid making stopgap decisions simply for today.  Ask yourself when confronted with difficult or even ‘easy’ daily decisions, will this increase the value of the company in the long run or are you just getting by doing ‘business as usual’?  This decision making process requires long term thought and value creation versus simply solving this minute’s problems.  It is not necessarily an easy conversion, but it will be worthwhile.

What results can a business running primarily through the filter of long term business value expect?  A consistent growth trend, a healthy gross margin percentage that is expanding, better than industry average net income, and strong equity on the balance sheet to name a few.  These are all good indicators that a business is focusing not only on seamless day to day operations but also on long term business value.

B2B CFO NAMED IN PRESTIGIOUS INC. 5000 LIST

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/