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The Pyramid to Success

The Pyramid to Success

The Pyramid to Success

By Mark Clower

 

 The truth about entrepreneurship is that the smallest company and the biggest company must be capable of doing three things beautifully: 

1. The product or service you want to sell must be fantastic 

2. You must have great marketing 

3. You must have tremendous financial management 

Which reminds me of a quote that I think about every day as I’m working with small businesses:

“No one person can do all three and no one does it alone.”

Ernesto Sirolli 
Entrepreneurial Business Expert

 This quote perfectly states what the world is like for entrepreneurs. The goal of most entrepreneurs is to have a successful business. Success will be defined differently for each entrepreneur. Given that success is defined differently, each entrepreneur will still set off on a journey to meet their definition of success. 

Before starting this journey, or early on, you need to ask yourself some questions. Questions that need to be asked include: 

  • What do you do best?
    • Can you make it?
    • Can you sell it? 
    • Can you look after the money? 
  • What is most important role for you in your company and where should you spend your time? Remember Ernesto Sirollo’s quote “No one person can do all three and no one does it alone.” 

Now how does one proceed? At FocusCFO, we believe there are four phases that all businesses will move through on their way to being successful: Foundation, Health, Growth and Value. These areas build upon each other like a pyramid. 

Foundation 

This area is the base of the pyramid. This is your internal accounting and administration. Your internal accounting and administration include, but are not limited to, internal processes, procedures / workflows, timely monthly closing, strong internal financial reports, insurance policies, employee benefits, HR policies and contracts. You should consider a good relationship with your banker and CPA as part of the Foundation. Without a solid foundation the pyramid will be unstable and impact your business. 

Health 

The key items to be addressed in Health are cash flow, finance, and operations. This area includes ongoing operating forecasts and budgets, understanding operating costs/profit margins, meaningful weekly metrics, Key Performance Indicators (KPIs), strong bank agreements and forward-looking cash flow projections with cash flow break-even analysis. These are vital tools. A healthy business allows for successful and profitable growth. 

Growth 

This level of the pyramid addresses revenue and growth. Specific tools that a business needs for Growth are profitability by customer and product line, sales platform, sales growth strategy with pipeline forecasting, a well-documented vision, mission, and values, mid- to longer-term (3- to 5-year) cash flow-based financial projections, defined business goals, SWOT analysis, and a strategic plan. Growth without a solid foundation and health will create serious issues for the business. 

Value 

The top of the pyramid is Value which can be the continuation of the business or a decision to transition the business on (succession) or exit. The Value level will include defined owner goals, options, and path forward, healthy, growing company with real value, strong internal management team with great systems, a team of advisors to help with your goals. These will generate a higher business valuation. This will also give the owner significant control of their business. 

These four phases are critical for your business and build upon each other to make your business successful. However, for most entrepreneurs, their greatest value to the company resides in making and selling their product or service. Utilizing a fractional-CFO will allow the entrepreneur to focus on those roles, while assuring a trusted advisor is gathering and watching the numbers. 

Mark Clower is a FocusCFO Area President based in Dayton, OH. 

About FocusCFO 

Founded in 2001, FocusCFO is the leading fractional CFO services provider, with more than 100 CFOs and Area Presidents serving clients throughout Ohio, Michigan, Pennsylvania, Kentucky, Indiana, North Carolina, 

Tennessee, and West Virginia. FocusCFO works closely with small to medium sized businesses, helping business owners gain control over three 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 services on a fractional basis, meaning clients get all the advantages of a full-time, seasoned CFO under terms that are flexible, affordable and within each client’s budget. What really sets Focus CFO apart is their CFOs 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 10 million revenue range when they initially engage with FocusCFO. 

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Are You Ready for the Upcoming Pain

Are You Ready for the Upcoming Pain

Are you prepared for the upcoming PAIN?

By Mark Clower

The Dayton Daily News recently published the headline “Next few months likely do or die for retail stores”
(February 1, 2021). While the article was about retail, the underlying causes, pandemic restrictions, limited
consumer confidence, etc. will impact many other industries. There are articles just like this one, every day in
local, national, and international publications.
“Yes, there is good news out there. The COVID vaccine is here, but when will the vaccine rollout to everyone? Yes, there is a second round of the Paycheck Protection Program (PPP), however will it be enough for your business? Will your business survive the next six to nine months? Do you have enough cash? What is your plan? Have you
stress tested the plan?”

Knowing your needs in advance is critical. Will you be able to cover payroll? Will you be able pay vendors? Acquiring cash when you are out or close to being out of cash is difficult and very stressful. You probably cannot reach out to your bank and get immediate funding. Remember that bankers do not like surprises. Alternative sources of cash can take time to find and are very costly. Beware that reducing costs and resources without a well thought out plan could be fatal.

We recommend that you start your plan with a thirteen week rolling cash projection. The 13 week rolling cash projection is for you to understand your cash position and will support sound, confident decision making. A spreadsheet is the perfect tool to use to create the cash projections. Start with your current cash balance, add in projected cash receipts, and planned expenses. Also add in any anticipated equipment and inventory needs. Do this for each of the thirteen weeks. If you have a line of credit or access to other capital resources, factor those into the projections.  

Once the projection is complete it is time to stress test. Look at your assumptions (timing of receipts, planned expenditures etc.). Run “what if “scenarios for delays, reductions and / or increases in those assumptions. Now develop a plan to address your needs. Update this projection weekly. Compare the actual results each week to the plan. This comparison will help you improve your projections skills. The projection is a “living” or “rolling” document so add an additional week to replace the completed week. This tool is critical to your success.

Remember, no one plans to fail but those who fail to plan, fail!
For more detail on the thirteen-week cash for go https://focuscfo.com/13-week-cash-flow-template/
For additional recovery tools and resources go to https://focuscfo.com/resources-recovery/

Mark Clower is an Area President with FocusCFO based in Dayton, OH.

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All Hands 2020 Award Winners

All Hands 2020 Award Winners

2020 Award Winners

Congratulations to these Associates for their recent award at the FocusCFO All Hands meeting.

Client for Life Award

Gold Level

David Bourke

Leadership and Support Team
Director, CFO Services

Tom Flynn

Central and Eastern Ohio
Area President

Client for Life Award

Silver Level

Don Cain

Central and Eastern Ohio
CFO

Pat Lang

Central and Eastern Ohio
CFO

Tom Flynn

Central and Eastern Ohio
Area President

Jim Zins

Central and Eastern Ohio
CFO

Jeff Lacy

Central and Eastern Ohio
CFO

Lynnette Zody

Central and Eastern Ohio
CFO

Client for Life Award

Bronze Level

Dan Bloom

Central and Eastern Ohio
CFO

Forest Bookman

Northern Ohio
Area President

Darren Cherry

Central and Eastern Ohio
Area President

Mike Derringer

Central and Eastern Ohio
Area President

Kathleen Ferry

Northern Ohio
CFO

Tom Flynn

Central and Eastern Ohio
Area President

David Green

Central and Eastern Ohio
CFO

Jeff Lacy

Central and Eastern Ohio
Area President

Pat Lang

Central and Eastern Ohio
CFO

Jim McKinney

Central and Eastern Ohio
CFO

Lyle Rhodebeck

Central and Eastern Ohio
CFO

Jim Rowlands

Northern Ohio
CFO

Jeff Semple

Northern Ohio
Area President

Bob Stecki

Central and Eastern Ohio
CFO

Jim Zins

Central and Eastern Ohio
CFO

CFO Hall of Fame

Gold Level

CURRENT MEMBERS

Lynnette Zody

Central and Eastern Ohio
CFO

Bruce Collen

Central and Eastern Ohio
CFO

NEW MEMBERS

Pat Lang

Central and Eastern Ohio
CFO

David Bourke

Leadership and Support Team
Director, CFO Services

CFO Hall of Fame

Silver Level

CURRENT MEMBERS

Jim Zins

Central and Eastern Ohio
CFO

Dan Bloom

Central and Eastern Ohio
CFO

NEW MEMBERS

Jim McKinney

Central and Eastern Ohio
CFO

Don Cain

Central and Eastern Ohio
CFO

CFO Hall of Fame

Bronze Level

CURRENT MEMBERS

Wendy Brugmann

Northern Ohio
CFO

Joe Dougherty

Central and Eastern Ohio
CFO

Skip Vermilya

Northern Ohio
CFO

Sherif Matar

Central and Eastern Ohio
CFO

Jim Rowlands

Northern Ohio
CFO

Kathleen Ferry

Northern Ohio
CFO

NEW MEMBERS

David Gouttiere

Northern Ohio
CFO

Will Cooper

Central and Eastern Ohio
CFO

Dean Cole

Central and Eastern Ohio
CFO

Todd Peter

Northern Ohio
CFO

David Green

Central and Eastern Ohio
CFO

Bob Stecki

Central and Eastern Ohio
CFO

Area President Awards

Rookie of the Year

David Tramontana

Southwest Ohio
Area President

Area President Awards

Rising Star

Darren Cherry

Central and Eastern Ohio
Area President

Bob Miller

Central and Eastern Ohio
Area President

Area President Hall of Fame

Gold Level

CURRENT MEMBERS

Tom Flynn

Central and Eastern Ohio
Area President

Mike Derringer

Central and Eastern Ohio
Area President

Jeff Lacy

Central and Eastern Ohio
CFO

NEW MEMBERS

Jeff Semple

Northern Ohio
Area President

Area President Hall of Fame

Silver Level

CURRENT MEMBERS

Jim Gilbride

Northern Ohio
Area President

NEW MEMBERS

Forest Bookman

Northern Ohio
Area President


Fred Dannhauser

Northern Ohio
CFO


Peter Geise

Northern Ohio
CFO

Area President Hall of Fame

Bronze Level

CURRENT MEMBERS

NEW MEMBERS

Bob Miller

Central and Eastern Ohio
Area President

Darren Cherry

Central and Eastern Ohio
Area President

Jim Collins

Southwest Ohio
Area President

Greg Gens

Northern Ohio
Area President

2020 Continuous Learning Award Exit Planning Institute – CEPA

VETERANS

Kathleen Ferry

Northern Ohio
Area President

Tom Flynn

Central and Eastern Ohio
Area President

Darren Cherry

Central and Eastern Ohio
Area President

NEW MEMBERS

David Bourke

Leadership and Support Team
Director, CFO Services

Jim Gilbride

Northern Ohio
Area President

Jeff Semple

Northern Ohio
Area President

Brad Martyn

Leadership and Support Team
Visionary and Founder

Mark Clower

Southwest Ohio
Area President

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