Finance for Non-Financial Managers

Costco readers respond to Your CFO for Rent

Costco Connection readers reacted favorably to one of our articles, co-written by Gene and Don Sadler, our PR outreach guy, and published this month. While Costco publishes an article of ours about once a year, readers particularly liked the clarity and value of this one. Check it out at: http://www.costcoconnection.com/connection/201204#pg46 (and scroll to the right to bypass the HUGE tire ad, or go to page 43 in the print edition)

As always, I welcome your comments and feedback.

IT Threats - some useful ideas from an expert

The April 2012 issue of Nonprofit Business Advisor (Wiley Periodicals, Inc.) has an informative article about security concerns for nonprofit organizations. Since we are wrestling with this problem at one of the nonprofit agencies on whose board I serve, this caught my eye. We have noted in our search for better IT security, that we will never be able to afford being fully protected. Heck, the US Government can't afford that, apparently, judging from the hacking they've been victims of in the past year. And we don't have as big an army as they do to chase the bad guys down.

The expert, Chester Wisniewski, wrote about cloud computing as a helpful idea for smaller agencies that have tiny IT budgets. He said: "...smaller organizations may find cloud computing advantageous, because it's relatively inexpensive and can free organizations from the complex rules, regulations and legalities related to storing data such as credit card information." He also suggested changing passwords frequently - we've heard that before - and using thumb drives that come encrypted if you allow employees to copy any sensitive information, such as for work at home. We all know how easy it can be to lose one those little guys.

One thing we do know - you can't ignore technology security just because it isn't a big enough line item in your budget. If you maintain sensitive information, donor contact info, credit card data, employee social security numbers, etc., you must take some action to reasonably protect that information from theft. How much is reasonable care? That's for you and your board to decide, preferably with the help of a good security expert. If you don't know one, we do. Ask us.

As always, I welcome your comments and feedback.

Hooray! The Wall Street Journal finally gets it!

At last! The Wall Street Journal just realized that CFOs are a part of the strategic management team as well as the overseers of financial information. In a piece written for them by a New England college professor, the Journal says "The current view...sees finance officers as little more than number crunchers...the people who have the strongest grasp of a company's finances need to be part of the strategic thinking from the ground up."

It seems the Journal has confused CFOs with controllers, the traditional keepers of the financial records, whose job is primarily recording, analyzing and reporting the financial numbers for an enterprise. But truly qualified CFOs know their job only begins when the reports are produced, and their role in strategic decision making is critical to any enterprise that has a financial goal, whether that goal is a merger, a profit or, for a nonprofit organization, avoiding a loss.

Or maybe the Journal and their guest writer professor don't know the difference between a CFO and a controller - a mistake often made by CEOs of smaller companies too. Perhaps they need some consulting assistance from Your CFO for Rent (R). OK, just kidding there. Happily we know the difference. Do you?

As always, I welcome your comments and feedback.

They just don't get it, do they?

The February 1 Wall Street Journal (today's) carries a front page article ("When the Home Bank Closes") about the founder of a startup company that has no financing, has garnered huge potential orders for his products, but is inconvenienced by the bank pulling the home equity line he was using to finance his business because the value of his home had sunk. Awww shucks!!!

Despite all that we and others have written on this topic, it seems there are always aspiring entrepreneurs who don't get the message, or don't believe it. In this case he even got Big Media attention. I'm certainly not a fan of the big banks' methods of managing their businesses at customers' expense, but that's not what this is about. If the value of the bank's collateral goes down, they should be entitled to ask for more collateral, since their job is to lend the money and then get it back again. No, what this is about is a startup that is inadequately financed, not yet profitable or self-sustaining, going after a chunk of business that it cannot hope to support without a loan for which it has no collateral. That perennially bad idea that if we just sell enough stuff, everything else will take care of itself.

The reality is that it doesn't. Selling more than you can deliver simply causes a sequence of bad things to happen. the CEO is euphoric about the sale, then stresses about how to deliver, THEN looks for the source of capital, and typically guesses low on what it will take, when it will be needed, and how much profit will be earned when the deal is done. And finally, of course, the customer will have gone through such trauma to get their goods, or not get them, that they'll certainly not come back again.

Wouldn't it be simpler to just plan your growth rate and resource needs together? Or does that make it less exciting?

As always, I welcome your comments and feedback.

PS: The same paper carried another article today entitled: "How to finance your startup without home equity."

Message to ex-military: Pentagon Federal Credit Union - Stay Away!!!
This organization is actually working hard to keep its members' information private - even from its members! Easy to enroll and send money, but requires THREE NOTARIZED DOCUMENTS sent to them before I can actually get any account information - OR CLOSE THE ACCOUNT. Procedures must have been designed by the CIA! Am I angry? Nah...

Bridging the liquidity gap - a small business dilemma

"...three out of four small businesses that applied to banks for credit in 2010 got none or only some of the amount they asked for; half were rejected outright." That quote comes from a study conducted by the New York Fed and published as part of a webcast sponsored by CFO Magazine and The Receivables Exchange, an asset-based financing company. CFO Magazine's research arm actually conducted a survey late last year to learn about what small business CFOs were doing to cope with the situation. In spite of the study's discouraging findings, 57% of CFOs surveyed said they still intended to go to their bank for additional financing.

The survey report is well worth reading, and if you can't find it online ask me for a pdf format electronic copy.

But the point is not to dwell on the obvious, other than to remind you that you're not alone in being unable to get growth capital from your bank. The point is this: It ain't gonna get better anytime soon, so get used to it and find another way! So how does a small or mid-sized business get the capital they need for growth or restructuring or even as an exit for the long-time owners? one axiom is still true: If you keep doing what you've always done, you're not likely to get a different result. The tools of capital raising are many and varied, and while some work only some of the time, e.g. borrowing from your bank, others will work when the more traditional methods don't.

So look for other options. Get yourself an independent advisor who is not employed by one source of capital and ask them to help you explore the options that are best for your business and your strategic and personal goals. Then when you know what you want, go after that source with the right preparation, the right story, and the right support team. You'd be surprised how different that will make you look compared to all those businesses that DIDN'T get the money they asked for.

As always, I welcome your comments and feedback.

Employment growth in small business - new data

Macroeconomic Advisors reported this morning that the US economy added 110,000 private sector jobs last month, a bit more than predicted. More importantly, they all came from small and mid-sized businesses. All of them. Some things don't change, and one of them is that small business produces most of the job growth in this country because small business does most of the growing. Now is the time. If your business isn't growing today, you're doing something wrong. Find out what it is and fix it.

Gene Siciliano announces new book project

Press Release

A compendium of 26 nationally known business experts. 

Los Angeles, September 16, 2011:  Gene Siciliano, CPA, CMC^® author, consultant, professional speaker and business coach, announced today his participation in a new book project, THE Book on Business from A to Z: The 260 Most Important Answers You Need to Know. Compiled and Edited by Daniel Feiman, MBA, CMC^® the book contains 26 chapters written by 26 of the best experts available on each of the key topics covered in the book.

Gene authored the chapter on cash flow in recognition of his belief that cash flow has become the measure of success or survival during the past few years, particularly for smaller companies that were unable to tap the few drops of credit that banks have been prepared to offer to their customers. Cash management including efficient deployment of cash and proper cash flow planning are often the difference that keeps a company alive and helps them get prepared for the endlessly delayed economic recovery. Gene said “I was delighted to be asked to write on this topic, because I think it’s perhaps the most important topic in the book.”

Daniel Feiman wrote on his website: This book is great especially for people who need a fast read with direct answers to specific business questions Excellent for either a new or existing business. This is for absolutely everyone in search of solid information on a range of business subjects. …

The range of subjects goes from Marketing to Branding to Valuation to Turnaround. If you want the answers to many common business problems and challenges, you will find them in this book.

While it is impossible to do full justice to every business subject in a single volume, what will surprise you is how much useful material the co-authors manage to provide in this one. Although the format is standardized, the individual co-author’s style remains to engage the reader on the essential points in each chapter. 

The book is available on a pre-publication order basis from Amazon.com, Apple’s iTunes, BuildItBackwards.com or a bookstore near you.

Sunny Robilotta - Nonprofit CFO of the Year!

"In a packed Millennium Biltmore Hotel grand ballroom in Los Angeles today, and with a very competitive field of CFO Finalists (40 in total), Sunny Robilotta, CFO of Exceptional Children's Foundation, was named the 2012 Nonprofit CFO of the Year by the Los Angeles Business Journal's panel of judges. The award, in a highly competitive category in a town with literally thousands of nonprofit organizations, places Sunny among the City's elite financial leaders, a place she has occupied for years among all of us who work with and know her."

This announcement was made today by Dr. Scott Bowling, CEO of Exceptional Children's Foundation, a wonderful service organization on whose board I have served for over a dozen years. I was there as the award was announced, and to share this honor with Sunny and ECF.

Great work does bring its rewards. I thought you'd like to know.

Amazon.com best seller: #31 in Corporate Finance

My long-standing best selling book, "Finance for NonFinancial Managers," hit #31 on Amazon's list of best selling Corporate Finance books recently, an indication of how high quality content is truly ageless  even in today's world of rapidly growing information via the Internet.

Available in hard copy or eBook from Amazon, or in hard copy signed by the author at www.GeneSiciliano.com. If you don't have one you might ask yourself "Why not?"

As always I welcome your comments and feedback.