The Friday cocktail: Balance Sheets to the Wind

Quarter close is nigh. What better way to steel yourself than with one of RoseRyan’s 20th anniversary cocktails?

Balance Sheets to the Wind, a tequila-based, berry-colored inhibition loosener, is guaranteed to take the sting out of any financial close.

  • 2 oz reposado tequila
  • 1½ oz apple juice
  • ¾ oz lemon juice
  • ½ oz creme de cassis
  • lime peel

Shake all ingredients in a cocktail shaker and pour into a coupe glass. Garnish with a lime peel.

If you’d prefer to keep your balance, you can try the equally lovely nonalcoholic option, with a well-mannered shot of vanilla. It’s a bit complicated (you have to start two weeks in advance), but worth it.

  • ½ oz Meyer lemon juice
  • 1 oz blackberry shrub (recipe below)
  • Soda water

Mix juice and blackberry shrub in a tall glass. Add ice and top with soda water.

To make the blackberry shrub: First, make vanilla-infused balsamic vinegar. Add two vanilla beans to a bottle of good-quality balsamic vinegar and let it sit in a dark place for two weeks.

Mix 2 cups fresh blackberries or berries of your choice with 1½ cups granulated sugar. Stir and let macerate for 24 hours in the refrigerator. Place in cheesecloth, squeeze out juice, and pour into a jar. Add 2½ oz of the vanilla-infused balsamic vinegar and shake to combine. Store in an airtight container.

To sample all 20 of our anniversary drinks, view the RoseRyan 20th Anniversary Cocktail collection recipe book. Each libation was lovingly crafted for us by the fine mixologists at the Bull Valley Roadhouse in Port Costa, California.

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Big data’s big impacts are not going away

Big data is the big thing these days, and I don’t know much about it, so I attended the AAMA’s Big Data–Big Impact conference recently at the Tech Museum in Mountain View. It was very well done, with a good variety of speakers and panelists.

While I’m not a technologist, I am very interested in market trends and the history of technology. I wanted to find out if this was truly one of the ‘next big things’ in the technology industry, and what it could mean for us and our clients.

It turns out that big data really is big. I think there is no question that it’s significant in terms of its impact on consumers and businesses. As we look to the future, it’s important to understand how to leverage and control big data, and what and how to gather, analyze and use all of this information.

There are multiple opportunities in a variety of industries. For example in transportation, it is used for air traffic control, and the logistics of airport operations. Airport logistics, for example, are very complicated and involve multiple systems working together. The ability to harness this amount of data helps end customers as well as the airline industry.

Utility companies, traffic control for roads and bridges, all have numerous applications that couldn’t be done before. Whether big data applications are integrated into existing solutions or they are complete systems, there are huge opportunities to harness the data they gather, which opens up new markets such as data analytics in sports and gaming.

Big data breakthroughs are now possible due to the rapidly dropping cost of computing power and communications infrastructure. They weren’t affordable as recently as five years ago, even though ideas and applications were there.

After a day of listening and learning, I concluded that big data is not a temporary trend or bubble. The number and extent of potential applications is phenomenal, and will be embedded in existing technology, and evolve into a mature business, creating new technology, new infrastructure and possibilities for many kinds of companies.

If CFOs and management teams have access to the right big data, and know how to analyze and interpret it, will big data help their business decisions? Will it change the CFO world in some way? I think these questions have yet to be answered. One thing is certain:  we will be hearing much more about this technology in the near future.

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Why we don’t do lunch (not to build partnerships, anyway)

I’ve been thinking a lot lately about what partnerships mean in Silicon Valley. In building our ecosystem of partners—service providers that complement RoseRyan’s offerings—I’ve realized two things: One, partnerships between service providers are tricky. And two, many people throw the word partner around, and yet it has different meaning for each person.

Our clients often ask us for referrals to attorneys, HR specialists and other service providers that can help them build their business. When I refer a business partner to a client, the partner’s work is a reflection of our firm. I want it to be a good match. I need to be confident about their values, how they work with clients and how they treat people.

But the typical Silicon Valley methodology doesn’t reveal this information. It usually goes like this: I go to lunch with X service provider, they tell me what they provide, and I explain the services we provide. After 90 minutes, we feel we know each other. Time goes by. Now I have a client who needs what X does, and I try to remember exactly what X told me three months ago. Nothing stands out—and I assume X’s services are like everybody else’s in their industry.

Couldn’t be more wrong! All service providers are different—their services are just part of the mix.

That’s why our process for building partnerships goes beyond the typical 90-minute lunch-and-go scenario. We spend a lot of time getting to know our partners. We do a deep dive into their business, we know their strengths and weaknesses, and we talk about the squishy stuff. We come to understand their values, what it’s like to be their client, and how they treat their clients when issues arise.

I’ve learned that this type of partnership isn’t for everyone. It takes time and a lot of energy to develop and maintain the relationship—just like any relationship—and many firms don’t want to make that investment, for a host of reasons.

But it’s worth it, because in the end, we are truly partners. I know their work complements ours, and that our goals and values are aligned. We have each other’s back, and we create new energy. Our clients love it. They get what we promised them in our referral, and I know the partner will treat them as well as we do.

And now I have an extra skill: I can spot the energy in a meeting quickly, and I know when people are present and engaged, and willing to have tough discussions and to push the relationship forward. And I’ve learned you sure don’t want to have these meetings during lunch!

 

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Can accountants really do that? Creating the 20th Anniversary Cocktail Collection

There’ve been plenty of times we’ve wanted a drink in our 20 years as finance and accounting gurus to some of Silicon Valley’s fastest-moving companies. So what better way to celebrate our 20th anniversary than with 20 custom cocktails?

Thus the RoseRyan 20th Anniversary Cocktail Collection was born. Since releasing the recipes last week, we’ve been getting questions: “How did you do that?” “Which ones are appropriate before noon?” and “Why wasn’t I invited to the tasting?” 

Well, it was an arduous task, which we approached with an accountant’s attention to detail.

The mixing
Fortunately we had connections, and asked the mixologists at the Bull Valley Roadhouse (an up-and-coming Bay Area restaurant and bar) to create 10 original cocktails and 10 nonalcoholic counterparts (these are clearly appropriate before noon; otherwise, you’re on your own recognizance). Their mission was simple: be fun, different, sophisticated; give us some festive party drinks and some we could mix up any time.

The tasting
Jaime Rossini and Kathryn Mussell sent us 24 superlative recipes, so the RoseRyan marketing team had no choice but to spend an afternoon at the Bull Valley Roadhouse in Port Costa sampling each one to arrive at the final cut. (In re: question three—sometimes marketing has all the fun; that’s just how it is.) Jaime and Kathryn told us about the more esoteric ingredients (blackberry shrub, gomme syrup, rhubarb bitters) as they mixed and we sipped, scribbling our impressions on worksheets. We compared tasting notes and winnowed the list down to the final 20 with cool accountant-like efficiency.

The naming
Now we had to name them—a task almost as much fun as the tasting. We wanted clever finance names that didn’t veer into the land of cheesy accountant jokes, so we called in the entire brain trust. The marketing team created a starter list and then called for contributions. Almost 100 names poured in. We narrowed the list and put it to a vote.

Many great names didn’t make the final cut: Double Ledger, FASB Fling, Rev Rec Detonator, Mind the GAAP, Slush Fund, Auditor Exterminator and Fiscal Freeze, among others. Winning names from RoseRyan gurus are the 10K-O, from Miranda Chook; Knock Your SOX Off, from Moira Berman; and Lori Young’s Per Diem.

To find out the rest of the winning names—and most importantly, start mixing—download the RoseRyan 20th Anniversary Cocktail Collection recipe book.

The drinking
To whet your appetite, here’s the recipe for our signature anniversary drink, the RoseRyan Roaring Twenty. Multifaceted, well rounded, easy to love, and of course, orange, this concoction is RoseRyan in a glass:

1 oz vodka
½ oz Cointreau
½ oz sweet Italian vermouth
½ oz orange juice
¼ oz lemon juice

Shake all ingredients in a cocktail shaker and strain into a chilled small coupe glass. Garnish with orange wheel.

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Booms, busts and finance upheavals: RoseRyan’s CEO looks back on 20 years

When I cofounded RoseRyan (then known as Macias & Ryan) in September 1993, the Internet was just taking off. The word “global” had a different connotation. Cell phones (if you even had one) were the size of bricks. The “cloud” was in the sky. In many ways, it was a simpler time for accounting and finance.

In the 20 years since, we have weathered two economic downturns and countless changes in accounting rules, governance and oversight. Corporate abuses gave us Sarbanes-Oxley, AS2 and AS5, the PCAOB and the Dodd-Frank Act. Business changed, and continues to change, at exponential rates of speed. We have a truly global economy, blazing technology advancements and exciting new ways of doing business.

This all means that the staid and boring world of accounting has become anything but. We have addressed changes with far-reaching implications in the areas of stock-based compensation, accounting for derivatives, business combinations, fair value measurements, codification and accounting for leases, and we’re now facing brand-new ways to look at recognizing revenue. (FASB promises it will be final any day now.…)

CFOs and their teams have had to step up their game. In addition to understanding and implementing new and complex accounting principles, they are rightfully taking on a more strategic role as leaders in the business. No longer are CFOs expected to be just the keepers of historical financial statements and budgets; they also need to understand their business and market trends, and strategically and systematically increase the value of their company. Not easy tasks, but certainly challenging and exciting in today’s dynamic market.

While the finance needs of Bay Area companies have changed, the fundamentals of RoseRyan’s business have not. As in 1993, in 2013 we are dedicated to attracting and retaining top-notch professionals, and to providing an environment where our consultants are challenged but also able to enjoy a personal life. This allows us to provide exceptional finance and accounting solutions to our clients, giving them the right people with the right skills at the right time.

No matter what the level of their assignment, every RoseRyan consultant rolls up their sleeves to get the job done—and they look beyond the cubicle to provide best practices, advice and objective opinions derived from their years of experience. We call ourselves “gurus” because we strive to be leaders and mentors for our clients and one another.

We’ve worked with more than 700 clients at RoseRyan, and they have made for an exciting 20 years. It has been a great time to work with companies in the technology and life sciences industries, participating in the myriad of changes that have taken place and watching companies go up and down—and sideways. What’s most exciting is that we are often with clients through their corporate life cycle. For example, I started with one client as CFO when they were in an incubator. We shepherded them through two-plus years of fast growth as their outsourced accounting department. We later helped them with revenue recognition issues, stock-based compensation and audit support. Finally, as they neared their exit, we helped with financial forecasting, due diligence and integration with the eventual acquirer. We were with the company for over eight years, and it was rewarding to understand their business, walk with them through the ups and downs, and celebrate their successes.

RoseRyan would not be where it is today without our amazing clients or our consultant gurus. I am very proud of all of them, and I am pleased that RoseRyan helps both clients and our employees thrive. They are a huge part of why I think the Bay Area is a great place to work, to learn, to live. I give heartfelt thanks to all who have made the past 20 years possible. We’re looking forward to the next two decades!

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Early workouts and muscle tone keep companies in shape

I have always been active in sports, but as I grow older, I’m starting to experience a few aches and pains. It has made me reflect on the need for an often-ignored element of exercise—muscle development. Without a strong foundation, I could be facing worse physical ailments down the road.

As an emerging growth accounting consultant, I have seen a similar phenomenon with my clients. Small businesses focus primarily on developing products and services and bringing them to market. With limited resources, it’s not surprising that they often neglect the development of their muscles—a solid accounting framework.

But that can lead to problems later on. In finance, as in exercise, future pain and messy (expensive) clean-ups are not that hard to avoid with a little forethought and discipline. Clean, accurate books provide a clear understanding of how your business is doing and support key decisions. If your company requires an audit, you’ll have all your ducks in a row. And you’ll be ready for the due diligence that comes with being acquired or going public.

It’s important to evaluate your infrastructure needs as you grow. A great resource is RoseRyan’s Scalable Financial Architecture, a model that shows what’s needed for all finance functions at every stage, from prefunding all the way through IPO and secondary offerings.

And you never know what’s coming down the pike. I had one promising client that simply ran out of money, and in the eleventh hour a potential acquirer appeared. Our finance team had to jump through hoops in a very short time frame, but the transaction got a green light. This was possible because the accounts, reconciliations and financials were very clean and well documented, all compliance filings were up to date, and no significant risks were identified.

No matter what stage you are in, it is critical to have the basics covered. Here are some fundamental but often ignored areas:

  • Policies and procedures. Travel expense, capital expenditures and revenue recognition are just a few areas that require well-documented policies and procedures. Without them, you get inconsistent practices and incoherent books—and possibly tax and legal issues. (And don’t even think about surviving an audit.)
  • Chart of accounts. Set up a scalable structure that will work for your business as you grow. This results in accurate financials and clean compliance reporting.
  • Reconciliations. Reconcile balance sheet accounts regularly. This is especially important with cash accounts, since cash management is critical for small businesses.
  • Agings. Review and clean up accounts payable and receivable periodically. An outdated picture can skew your financial outlook and result in inappropriate decisions.
  • Equity. Implement proper procedures as soon as you issue stock compensation and other equity instruments. Ensure tax compliance reporting is done regularly, and don’t forget 409A valuations. The risk is not only a big accounting mess to clean up, but also tax and legal issues.
  • Compliance. Make sure you are registered with all authorities and file as required. This includes not only the obvious, such as state and federal income tax, but also business licenses, property tax, sales/use tax and secretary of state filings. You’ll avoid penalties and interest, and even the suspension of your right to conduct business.

Developing a muscular, basic accounting structure should be a no-brainer, but many small companies push it off until the pain is too much to ignore. As Benjamin Franklin so profoundly stated, an ounce of prevention is worth a pound of cure.

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New report: Finding and keeping today’s finance dream team

Competition for great finance and accounting talent—always stiff in Silicon Valley—is heating up as the economy improves and companies ride the waves of ever-shrinking business cycles. Companies are leaning more and more heavily on CFOs to take on strategic planning, resource allocation, capital structure management and more—and they need expertise that can support business decisions at all levels of the finance organization.

Who’s hot? Business-savvy finance pros who understand strategic and tactical financial planning, statistical analysis, M&A due diligence and debt and equity accounting, according to Wanted: Finance Superstars, RoseRyan’s latest intelligence report. And smart companies will be on the lookout for people who are attuned to risks and opportunities, and have experience and communication skills that make them persuasive when weighing in on things like product development strategies, market assessments and cost structures.

So pack your finance team with FP&A pros, right? Wrong. That’s just a piece of the equation. Regulation from the Dodd-Frank Act, international financial reporting standards, tax law changes and a host of other challenges make technical accounting pros a critical part of the finance function.

Likewise, CFOs need to keep their hand on the steering wheel. Bad things happen when their attention wanders from company finances. So although it’s true that CFOs need to get into the operational side of their companies if they’re going to contribute to growth, they can’t delegate their primary responsibility of protecting financial integrity.

In short, a great finance team supports and shapes growth. Check out our report to find out who you need on your dream team, and how to keep your best talent from straying to the competition.

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RoseRyan in action: helping a startup navigate growing pains

Imagine this: your company has just moved to a new locale, legal paperwork is stacking up—and so is the accounting, because your books aren’t set up. A big-picture business perspective? Not a chance without details like cash flow and expense tracking.

Helping young, fast-growing businesses with these—and many other—challenges so they can stay on top of hiring, product development, partnerships and other critical business moves is like breathing to us. Check out our latest project profile to see how we helped a high tech startup take accounting off its list of worries, recommended software to support an e-commerce initiative and reeled back some missed tax-benefit opportunities.

And see what else we can do on our startup and emerging growth services page.

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Hardware is dead in Silicon Valley. (Not)

A recent PBS documentary on the roots of Silicon Valley was really a story about Fairchild Semiconductor and the birth of the microchip industry. However, over the past 10 years, the Valley has continued to transform, becoming dominated by Internet and software companies like Google and Facebook. Venture capital funding has followed suit: during the last 10 years, funding for semiconductor and networking companies declined more than 70 percent, and Internet funding grew 83 percent.

The semiconductor and hardware companies are still here, but now they are behemoths like Intel and Cisco. Today, many exciting new hardware companies are focused on the consumer. Kickstarter has enabled companies like Pebble and Ouya to raise millions from people directly before actually shipping a product. Venture capitalists are funding consumer product companies like Jawbone and Roku. A new wave of digital health-oriented companies will also be coming on stream. Many are innovating around the changes brought on by the Affordable Care Act and are based on business models that combine hardware devices with software and services.

Let’s face it: we still love hardware, especially consumer products. Products we actually use. We follow new product announcements from Apple as closely as we follow Kim and Kanye or The Voice.

What does the new consumer focus of hardware companies in Silicon Valley mean for finance and accounting teams? We still have the traditional inventory, costing and working capital management issues of the old guard. But teams today need a broader palette of financial skills. Product sales and distribution now include direct end-user sales in addition to online and traditional retail. Finance teams need to understand credit card processing, third-party logistics, outsourced manufacturing and fulfillment, complex revenue recognition and warranty liabilities. Accounting approaches used in mature hardware businesses must evolve to cover new business models that combine hardware, software and services sold across multiple distribution channels.

Cost accounting is still a critical need for today’s hardware companies. But the focus on standard setting, variances and overhead rates is almost quaint now that most manufacturing is outsourced to a contract manufacturer. Today’s cost accounting must reflect more than just the cost to build a product. A holistic approach to profit margins needs to go beyond the traditional GAAP gross margin line. Companies must understand channel profitability, cost per acquisition, advertising and service cost, and technical support to best understand marginal profit contributions.

There may be fewer Silicon Valley companies designing chips today than there were 10 years ago. But hardware is far from dead. It’s right up front, and it’s the whole device, not just the chips. Isn’t that a whole lot more interesting?

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Do a rebuilt foundation and embedded values make you more strategic? We think so

Silicon Valley is a great place for reinvention. But sometimes the way to stay successful is to shift your great idea to a different foundation, one that supports even more strategic thinking and sets parameters for risk taking. During the fallow period of the financial crisis, RoseRyan did just that. CEO Kathy Ryan shares her thinking about the changes in four short videos based on material first produced for the Build Network series, Building the Strategic CFO.

How we embed values at RoseRyan
Learn why RoseRyan used the financial crisis to rebuild its very foundation, basing it on an embedded values program that guides employees in day-to-day activities and more importantly, through times requiring critical judgment and risk.

How RoseRyan is preparing for growth
Love to accomplish projects but find it challenging to work on initiatives that require continuous attention? Get over it. We did, launching three growth programs during the recession to be ready when times get better.

Building a stronger team
Want to build a better finance team? Ryan’s top advice for CFOs: make values your glue.

Keys to success
How important is making the finance function highly strategic? Pretty important, especially during uncertain times.

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