FocusCFO Joins JumpStart’s Preferred Partner Program

FocusCFO Joins JumpStart’s Preferred Partner Program

Cleveland and Toledo, OH − December 3, 2019 − FocusCFO announced plans to join JumpStart’s Preferred Partner program, giving JumpStart clients across Cleveland and Toledo access to seasoned professionals for help with cash management, financial reporting, forecasting and managing growth.

“We are excited to be joining the JumpStart Preferred Partner program and look forward to sharing our expertise with JumpStart clients,” said Fred Dannhauser, FocusCFO Area President in the Toledo region. “We love entrepreneurs and our entire business is built on helping companies scale and grow.”

JumpStart’s Preferred Partner program offers partners in several core focus areas, including legal, accounting/finance, marketing, advertising, product development and human resources.

“The program allows us to connect our client companies with services they need from providers we trust who know how to serve them,” said Adam Salon, Partner at JumpStart. “It’s a mutually beneficial relationship. Our clients get high quality services at a price they can afford and our preferred partners build connections to a new pipeline of valued clients.”

As a JumpStart preferred partner, FocusCFO will carefully select one of its experienced CFOs to work onsite with each client. During the first several months, the CFO will work with the business owner to create a financial roadmap and as part of the company’s internal management team in all aspects of cash flow, finance and operations. This results in unprecedented clarity and a strategy to meet the client’s goals.

“Our CFO’s have an average of 30 years of experience, in just about every industry,” said Greg Gens, FocusCFO Area President in the Cleveland region. “We know how to help entrepreneurs provide the financial reporting and forecasting that funders want to see.”

About JumpStart:
JumpStart is a nationally recognized investing, entrepreneurial support and economic development organization dedicated to unlocking the full potential of diverse and ambitious entrepreneurs to economically transform entire communities. For more information, visit www.jumpstartinc.org and follow @JumpStartInc on Twitter.

About FocusCFO:
Founded in 2001, FocusCFO works closely with small to medium sized businesses, helping business owners gain control over three the key financial and operational areas: increasing cash flow, reducing business risk, and creating a platform for scalable growth. This allows business owners to then realize full financial control and increased value in their businesses. FocusCFO provides CFO Services on a fractional basis, meaning clients get all the advantages of a full-time, highly experienced CFO under terms that are flexible, affordable and within each client’s budget. What really sets Focus CFO apart is their CFO’s are highly experienced and work exclusively onsite at the client’s office under a recurring schedule. Typically, engagements range from two days a month to several days per week, and many clients are in the $2 to 6 million revenue range when they initially engage with FocusCFO.

FocusCFO is the leading onsite fractional CFO services provider in the Midwest, with more than 90 CFOs and Area Presidents serving over 200 clients throughout Ohio, Michigan, Pennsylvania, Kentucky, Indiana and West Virginia. For more information, visit www.focuscfo.com or follow us on LinkedIn.


Mark Snyder Announcement

Welcome Mark Snyder

Welcome to Focus CFO

Mark joins our Northeast Ohio team with over 20 years of diverse experience in finance, accounting, operations, and administration. His background encompasses the Manufacturing, Wholesale, Distribution, and Service industries. His experience also includes family owned businesses as well as publicly held entities and involvement in mergers and acquisitions and liquidation events. Mark and his wife Sarah and three sons live in Wadsworth, Ohio.


Small Business Travails

Small Business Travails

By Mike Derringer

According to a recent unscientific and informal survey of small and medium sized businesses, the following are the top five problems they were looking to solve, with the percentage of businesses suffering from each malady:

1) Lack of proper information (77%)
2) Deficient internal processes (68%)
3) Insufficient cash flow (50%)
4) Margins below benchmark (27%)
5) Desire to expand/grow without the proper resources (23%)

Let’s take a look at the details of each of these five.

1. Lack of Proper Information

It’s common to have a lot of data but still not have the right information to run your business. This can be as basic as periodic financial statements or as sophisticated as daily or weekly key performance indicators. What drives your business, and are you properly measuring it? Do you have the right tools in place to potentially measure it? If you cannot give a definite ‘YES’ to both of these questions, then this might be your top item too.

2. Deficient Internal Processes

This does not necessarily mean internal controls, although if fraud is a possibility within your business then maybe it does. But more general, having the right processes in place to run your business is essential to eliminating waste. Simply speaking, this could be as easy as properly receiving and then recording subsequently sold inventory. Without proper procedures to capture the right data, chances are good you are either not able to sell something you think you have on hand or slow in billing the item after you sell it.

Have you paid for the same thing twice? Hey, don’t laugh, it happens way too often.

Chances are also good that your people are stressed out and complaining about being overworked; they need help. Fixing the process can eliminate the need to hire and lower the stress level of your employees.

3. Cash Flow Insufficient

This is not profit but cash flow, and there’s a huge difference. Here’s a question – is your cash flow sufficient to fund your growth plans? Acquiring inventory to subsequently sell requires cash, and possibly even a short-term bank line of credit. For example, small businesses selling products to larger companies are going to get hit at both ends – lack of lengthy payment terms from suppliers and ever-increasing payment terms from customers, sometimes ranging 90-120 days. As a result, if you have to pay for your inventory within 30 days, and if you turn your inventory 4x per year (thus holding it for 90 days), you are potentially facing a working capital cycle of 150 days. How do you fund this? Better yet, how do you keep on hand the items you can sell while still being able to acquire the latest and greatest models to sell? Both require cash.

4. Margins Below Benchmark

Companies may want to look at Turn and Earn ratios – looking at the average inventory turn while combining that with the margin on each item. Are you keeping in stock items that turn 2x per year at low margins? Why? Sometimes reducing the number of items sold can drastically increase the bottom line on cash flow. For more on margins, see a separate article “Gross Margin Improvement”.

5. Desire to Expand/Grow Without the Proper Resources

Do you have a growth strategy? Does it involve new product lines, expanded sales efforts or territories, or even acquiring another business or two? Do you have the proper resources to address these areas? What is your plan to achieve the next cycle in your business evolution? Without a strategic plan that prepares for expansion, you’re doomed to fail.

Nobody can do it alone. There are solutions to each and every problem above. Surrounding yourself with great business and financial advisors can help you identify when problems arise and guide you to resolution.


The Importance of Gross Margin by Segment

The Importance of Gross Margin by Segment

By Mike Derringer

Do you have multiple product lines or categories? Are you tracking the activity separately? If not, then do you really know where your cash is generated, and where it is being lost? A quick, real life example will help illustrate why this is important.

In this example, this local business has 10 different products being sold. They have the ability to split the sales and costs but chose to look at the combined numbers – the details bored them. However, they could not understand why their results were so much lower than those of their peers – they were netting 3% while their peers were around 20%.

We started by breaking out revenue and costs by line, splitting the fixed and variable costs (more on the importance of fixed vs. variable in a forthcoming article later). We separated fixed costs and analyzed the expenses, finding a few minor tweaks that made a slight difference (up to 4%) but we still knew we were not where we wanted to be.

The next step was breaking down the fixed and variable costs by product. After sorting through the data, we found that of the 10 lines, 8 were at or above the industry benchmark of 50% and more importantly, 2 were below the benchmark. Both were older contracts where the costs significantly outweighed the revenues, to the point of negative margins. Big time negative. We were faced with two options – renegotiate the dated contract to the point of profit (or to at least break-even), or to walk away from the business. Because of the strong relationship we had with the customer, we chose to sit down with them and talk it out. It turned out to be an easy conversation – the customer admitted that we were so far below our competition that they were wondering why we were priced so low. We were able to negotiate a new 5-year deal with gradual increases to get back to our 50% target margin. This still left us below our competition, so the customer was happy. Once the impact of these changes started flowing into the business, we found the business to be healthy again – cash was positive, getting stronger every day, and the owner was much more relaxed.

The point of this illustration is to consider: have you taken the time to break down your products and take an individual look at them? Are your margins below that of your competitors, to the point where you are bringing down the benchmark? Maybe it’s time to take a deeper dive into the numbers. The results could be significant.