A recent newspaper article featured a company near my home. It was a start-up in a business segment close to my heart, one which is technical in nature. Because there was a 'Green' aspect to its activities, it had begun to stimulate attention in the press. Like many new ventures they needed financial guidance and investment, so I offered my services. I have experience as the CFO of a publicly traded company, and I thought my initial discussions with the CEO and VP of Sales went quite well.
I signed an NDA, then received their business plan and other legal documents. The plan showed where they wanted end up, but did not explain how they would get there. What little financial information was provided was very elementary and lacked supporting detail and credibility. I thought their production time-line was unrealistic, considering where they were in the development process. They readily admitted their plan needed help, but being focused on the product development phase, they had set it aside.
In subsequent communications, I asked more tough questions about their technology, the target customer and marketing strategy. I had obviously struck a nerve. The response was something along the line of, "We don't need people to question our vision." I was disappointed. I would have expected the response to be "Glad you asked. Let me explain our strategy." Certainly, a knowledgeable investor would ask questions at least this challenging or even more probing. While keeping an eye on product development is important, it's not the only thing. Today, attracting and keeping investors is a key role of the executive team. The CFO must be objective at all times and is compelled to ask senior management the difficult questions, because sooner or later an investor will ask them too. Clearly, this particular CEO didn't get it, and wasn't going to win an investment round.
The investment pie has shrunk and will no doubt shrink even more. Times are tough. Conservative investors play their cards close to their vest. To win the game, you cannot falter, not once. During the boom of the late 1990s, business plans were done in pencil on post-it notes. No more. . . Getting investors to take the bait - big investors who can get the job done, not mom and pop speculators - means having a bullet-proof business plan with the full credibility of an experienced CFO behind it.
I recently met with a private investment firm who explained they had stopped investing in start-ups and early phase companies. In their eyes, start-ups were too risky and took too long to mature. These days they look to invest in companies that are more maturealready up and runningand running well. They also examine the whole enterprise in greater detail, and it really does not matter what industry, but a company must have established itself and be up and running to attract their attention. It does not have to be high tech, biotech or anything "sexy". They want to invest in good companies, help them to grow and become better, thus increasing in value. So a company that demonstrates good performing internal processes is much more attractive than one that is a mess and requires a lot of attention to fix - even if the potential downstream opportunity is better.
Stock declines are a sign of the times. Equity markets have been chewed to ribbons by broken lending models, huge deficits, dead credit and sky-high energy prices. Taxpayers are saddled with a clean-up none can afford and the economy, while not totally stopped, is grinding to a screeching halt. The country, every sector of the economy, must reinvent itself. Detroit must re-tool, airlines conserve even more, companies drive toward novel ways of limiting transportation and energy costs. They all need money to do it. In the middle of this situation, how are you going to move your own ball forward? Do you have what it takes? What makes you stand out? Everyone is looking for investment. You will have to scramble for each and every penny. Why makes you so deserving?
So the point is clear.the executive team must keep their eyes on the ball, manage the whole business, in order to successfully grow and reach the next level. This is nothing new. This is where the people at Thomas Financial Services (www.thomasfinancialsvcs.com) can help. They have the experience and knowledge to analyze, create and roll out the roadmap for a stronger and more efficient company through the development of internal processes such as finance, accounting, planning, forecasting, internal controls, project management, and the whole customer experience.
Lots of great ideas die on the vine. Companies implode for the dumbest of reasons. The biggest and oldest banks and investment houses of our time are falling in on themselves over simple missteps that could have been easily avoided. It's not about oversight, it's about execution. CFOs and their credibility with investors make a huge difference. Chief executives who are at odds with their CFOs are a red-flag warning for any company. Run from them. Listen to your CFO. Stay on track. Execute to a realistic plan and you'll never lack for investment. Plenty of companies are liked, but few are admired. Be one of them.
I signed an NDA, then received their business plan and other legal documents. The plan showed where they wanted end up, but did not explain how they would get there. What little financial information was provided was very elementary and lacked supporting detail and credibility. I thought their production time-line was unrealistic, considering where they were in the development process. They readily admitted their plan needed help, but being focused on the product development phase, they had set it aside.
In subsequent communications, I asked more tough questions about their technology, the target customer and marketing strategy. I had obviously struck a nerve. The response was something along the line of, "We don't need people to question our vision." I was disappointed. I would have expected the response to be "Glad you asked. Let me explain our strategy." Certainly, a knowledgeable investor would ask questions at least this challenging or even more probing. While keeping an eye on product development is important, it's not the only thing. Today, attracting and keeping investors is a key role of the executive team. The CFO must be objective at all times and is compelled to ask senior management the difficult questions, because sooner or later an investor will ask them too. Clearly, this particular CEO didn't get it, and wasn't going to win an investment round.
The investment pie has shrunk and will no doubt shrink even more. Times are tough. Conservative investors play their cards close to their vest. To win the game, you cannot falter, not once. During the boom of the late 1990s, business plans were done in pencil on post-it notes. No more. . . Getting investors to take the bait - big investors who can get the job done, not mom and pop speculators - means having a bullet-proof business plan with the full credibility of an experienced CFO behind it.
I recently met with a private investment firm who explained they had stopped investing in start-ups and early phase companies. In their eyes, start-ups were too risky and took too long to mature. These days they look to invest in companies that are more maturealready up and runningand running well. They also examine the whole enterprise in greater detail, and it really does not matter what industry, but a company must have established itself and be up and running to attract their attention. It does not have to be high tech, biotech or anything "sexy". They want to invest in good companies, help them to grow and become better, thus increasing in value. So a company that demonstrates good performing internal processes is much more attractive than one that is a mess and requires a lot of attention to fix - even if the potential downstream opportunity is better.
Stock declines are a sign of the times. Equity markets have been chewed to ribbons by broken lending models, huge deficits, dead credit and sky-high energy prices. Taxpayers are saddled with a clean-up none can afford and the economy, while not totally stopped, is grinding to a screeching halt. The country, every sector of the economy, must reinvent itself. Detroit must re-tool, airlines conserve even more, companies drive toward novel ways of limiting transportation and energy costs. They all need money to do it. In the middle of this situation, how are you going to move your own ball forward? Do you have what it takes? What makes you stand out? Everyone is looking for investment. You will have to scramble for each and every penny. Why makes you so deserving?
So the point is clear.the executive team must keep their eyes on the ball, manage the whole business, in order to successfully grow and reach the next level. This is nothing new. This is where the people at Thomas Financial Services (www.thomasfinancialsvcs.com) can help. They have the experience and knowledge to analyze, create and roll out the roadmap for a stronger and more efficient company through the development of internal processes such as finance, accounting, planning, forecasting, internal controls, project management, and the whole customer experience.
Lots of great ideas die on the vine. Companies implode for the dumbest of reasons. The biggest and oldest banks and investment houses of our time are falling in on themselves over simple missteps that could have been easily avoided. It's not about oversight, it's about execution. CFOs and their credibility with investors make a huge difference. Chief executives who are at odds with their CFOs are a red-flag warning for any company. Run from them. Listen to your CFO. Stay on track. Execute to a realistic plan and you'll never lack for investment. Plenty of companies are liked, but few are admired. Be one of them.
About the Author:
Good companies seeking investment and investors looking for great opportunities have a tough time finding each other. Small Business Consulting through Thomas Financial Services LLC applies operational insight to connect the dots. CEO Thomas Mezger, tmezger@thomasfinancialsvcs.com and SVP John Sawinski, jsawinski@thomasfinancialsvcs.com have over sixty combined years getting companies to the next level. Call Thomas Financial Services first.
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