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The balancing act of a startup—mastering the first stage of the lifecycle

“Business, much like life, is not a movie and not everyone gets to have a storybook ending.” Those were the farewell words of Gigaom founder Om Malik after the San Francisco tech website shut down earlier this year, unable to pay its creditors.

Every startup is its own unique opportunity, but so many are cut short. Few of them make it through the first stage of the business lifecycle when they start their engines. Their runway comes to an abrupt halt. The future becomes bleak and they have to fold up shop.

It can be a struggle to avoid such a fate, for sure, but starting out can also be a very exciting time in the company’s lifecycle. There are so many directions the company can go in, so many dreams that can be dreamt (IPO!)—and so many nightmares that need to be avoided.

The first stop along the business lifecycle is the “start” stage
Having worked with more than 700 companies at all stages since 1993, we have picked up on a natural trajectory that occurs. The first stage of a company’s business lifecycle, the start stage, is a balancing act, as RoseRyan CEO Kathy Ryan noted in a blog post earlier this year. It “involves balancing the fight for survival with getting the small business up and running,” she wrote.

In fact, it is a critical time in a company’s lifecycle. A winning, sellable concept can take the company only so far, whether you’re building a business based on the potential of a life-saving medical device or creating a time-saving app for enterprises. Key to survival is the foundation it’s built on. It’s built in this earliest stage, when the future is unclear but decision-makers need to get their heads around their burn rate and the company’s viability.

An unwieldy finance function—or a nonexistent one—can lead to avoidable mishaps, including cash flow problems, misstatements, inefficiencies and distracted senior leaders. Senior leaders should be focusing their energies on attracting new customers and investors—not spending all their time trying to make sense of spreadsheets that appear to have contradictory findings about the company’s performance.

Figure out your financials and other business performance metrics
Managing the finances and business metrics are not always considered a top priority in startups, but they need to be or there’s a real risk the company will spin out of control. Many startup companies cannot afford dedicated resources to perform these tasks, so they may want to consider outsourcing their CFO advice, bookkeeping and accounting tasks. They may also want to tap outside expertise to help them plan for the long term. At a minimum they need to know and understand what the business is doing at any moment in time.

Many of our clients have found that interim finance is just what they need. RoseRyan worked with cleantech company HydroNovation, for example, from its early days to when it was acquired six years later. We got their accounting going, set them up with efficient workflow and produced informative reports to ease their decision making.

We are similarly working closely with development-stage company Nemus Bioscience. We set up their accounting infrastructure and handle the company’s transactional activities, including monthly financials, accounts payable and payroll. And we also have filled in their resources gap when they needed to take on a big transaction.

When to build up the finance team
For the finances at companies in the start stage, there’s a lot of building up and setting up for the next stage, which is the growth stage. Will the systems being put in place scale as the company grows? Can they accommodate huge changes? Does the company have the metrics needed to see how a change in the business model will pan out? When will they know it’s time to ramp up hiring? A strong financial backbone will give the senior leadership visibility into the true performance of their baby. They can see how the company is truly doing and decide where it needs to go.

The beginnings of a full-fledged finance team, whether it’s a mix of part-time and outsourced help or a full-time operation, is a recognition that there’s a shift in the business to the next stage. It starts to form when the entrepreneurs step out of their idea-generating garage and realize they can no longer do everything on their own. They begin to accept that they can’t stay mired in the nitty-gritty details. If your company gets to this stage, congratulations, as you have made it through the start stage and are entering the growth stage.

RoseRyan helps companies across the lifecycle, from when they are starting out, growing like gangbusters, expanding through M&A or IPO, and evolving as a public company. To find out more about the lifecycle stages, go here.

Stephen Ambler is a director at RoseRyan, where he manages the development of the firm’s “dream team” of consultants. His interim CFO stints at RoseRyan have included a social media company and the management of the financial integration process at a company acquired by Oracle. He previously held the CFO position for 13 years at Nasdaq-listed companies.

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We love to give back—RoseRyan volunteering in action

Our gang loves to give back to the community. It feels gratifying.

The latest request came in from Second Harvest Food Bank for our annual volunteer event in late October. This is the fifth year we have gone to the food bank to help them out with a gang from RoseRyan. This time, we needed to carry out some due diligence, reconciliation and a bit of fixed asset inventory for 4,600 cans of fruit that will be delivered to hungry families in Santa Clara and San Mateo counties. And we delivered—after two hours of sorting and labeling, we had helped pack up boxes for distribution.

Giving back with our time is a gratifying experience for our consultants, and we take on numerous opportunities throughout the year to help out those who are less fortunate. Despite the amazing economic growth we see firsthand throughout Silicon Valley, there are also families in this region who are still struggling. It’s great to work for a company where employees actively give back to the community.

THE ROSERYAN CREW AND FAMILY MEMBERS HELPING OUT AT SECOND HARVEST

THE ROSERYAN CREW AND FAMILY MEMBERS HELPING OUT AT SECOND HARVEST

 

Volunteering at Second Harvest Food Bank (San Jose)

Each year we bring a big team to volunteer at Second Harvest Food Bank after work. One year, we packaged oranges and apples, another we were dealing with pallets of carrots. This time, we were asked to label canned fruit donated by Del Monte. Each can had to be inspected for any rust, leaks or breakage. Small dents were okay but any others had to be discarded.

Then came the fun part: reconciliation. We looked at the code on the bottom of can and matched it to the correct label (for example, OMP was the code for peach pieces). As accountants, we love reconciling everything and anything! Plus, it was kind of like a fixed asset inventory where we locate items and make sure they are tagged. Then, once they were labeled, in they went, into boxes of 100.

Our sorting was a small part of the more than 1 million pounds of food Second Harvest Food Bank manages to deliver to low-income people every week. We love to know we are a part of the engine that makes Second Harvest successful; in fiscal year 2015, 314,000 hours of service were donated by volunteers like us, and those hours add up to real dollars: Second Harvest says it has saved them the equivalent of $7.8 million in personnel costs.

Some of the team gathered for a last picture before the school supplies were hauled out for delivery. Thanks to everyone who donated!

SOME OF THE TEAM GATHERED FOR A PIC BEFORE THE SCHOOL SUPPLIES WERE SENT OUT FOR DELIVERY

 

Backpacks of school supplies for Grail Family Services

We’re passionate about education, so it’s no surprise we’re helping the Grail Family Services with both literacy volunteers and a back-to-school backpack drive. This worthy non-profit, which is also a client, supports needy families of East San Jose. One of our consultants sits on their board, and the RoseRyan team donated dozens of backpacks loaded up with school supplies for kindergartners to start off the school year right.

Literacy Volunteers for young kids

Another way we have helped children in our area is through literacy and mentoring. We have signed up several volunteers for individual reading time with elementary school students. It’s a critical time in their lives to learn to read and to nurture the love of learning. And, who knows, maybe there are some budding accountants that we’re helping!

A big thank you to our colleague and friend Dorcas Kelley for helping us out with this partnership with Grail Family Services and rounding up the contributions from our troops. She has also been invaluable in coordinating past giving events, like the Family Giving Tree, where we provided presents to children in our community who are in need.

Giving back to the community is satisfying on so many levels, and I am grateful to my RoseRyan colleagues for rallying together and all doing what we can. As we live and work with clients across the entire Bay area, we do not always have a chance to work elbow to elbow, so these moments together are a great opportunity for camaraderie and to work toward a common goal.

Theresa Eng, a member of RoseRyan’s dream team, is a superstar whether she’s working with a client or rallying her coworkers to volunteer for a good cause. Her areas of expertise include financial planning and budgeting, finance operations, and SOX.

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How fast is your monthly close process? Better take a look at it.

Ask a finance team how quickly they can pull off closing the books, and you’ll likely get some groans in response. Chances are they want to be faster but something—or many things—are clogging up the works. Inefficiencies have crept up along with trails of approvals and sloppy systems that have not kept up with the times. Errors and frustrations abound.

The result: a financial close that lasts for weeks and makes everyone involved sweat from forehead to chin until it’s over. And even then, no one’s happy. “Outdated and inaccurate financial information can lead to bad decision-making,” warned RoseRyan Senior Consultant Susan Wong during a recent Proformative webinar with Intacct Principal Sales Engineer Linda Pinion.

Both speakers offered ways companies can improve and accelerate the close process to get up-to-date, accurate information flowing, to feed the need to make smart decisions and provide the kind of real-time data craved by senior leaders.

There’s another sweet effect too: an improved close can free up the finance function, giving the team time to assist on other meaty matters, like analysis, strategy and planning. A faster, better close sets up the finance organization to be more efficient and responsive to the changing tides of business, according to Wong.

To see what’s mucking up the close, companies need to take an eagle-eye view of the key pieces involved. “If you have the right people, processes and systems in place, it will help you get closer to realizing the dream of the daily close,” Wong said. Below are just a few of the tips Wong and Pinion offered during the webinar.

Focus on the folks

“Your financial close is only as good as your people,” Wong said. “It sounds like a commercial, but it’s true. It’s all about having the right talent.” Is everyone involved in their own world? Rein them in by establishing well-defined roles and responsibilities. “Each participant should know exactly what needs to be done and when,” Wong said.

Track the close cycle time and errors that occur as part of the team’s KPIs to incentivize employees to keep learning and improving, she added. A backup plan is another smart move; by cross-training everyone and having contingencies if someone leaves or gets sick, the process won’t get stuck on just one person and will be more likely to run smoothly.

Step up the processes

Is the word “process” laughable when it comes to getting a close done at your company? Wong said most companies have informal processes that are not documented—and risk getting forgotten if someone leaves the organization. Documented, formalized processes will not only help the exercise of closing but can lead to satisfied auditors who are looking for consistency.

Have a financial close calendar accessible to everyone so they can plan around the dates. And have a checklist that includes all closing activities, such as updating depreciation, getting the inventory count and reconciling bank statements.

Review the systems

Is the company stuck in its Excel ways? Wong loves Excel as much as anyone in the finance and accounting world, especially as an analytical tool, but for accounting purposes, it can slow things down. Some companies are stuck with manually entering the same data into multiple spreadsheets—and risking mistakes with each entry. Others are still matching invoices and purchase orders by hand. Automation can quicken the pace and improve accuracy. “We know from our talks with CFOs that this is number-one on their list,” Pinion said. “They want to be able to streamline and automate processes within their organization.”

Automation can turn companies that have a vague idea of how they’re doing in the moment into a real-time data machine. “Visibility is in my opinion the key to accountability,” Pinion said. “If you’re responsible and you need to be accountable for these closings and these reports and documents you’re preparing, one of the first things you need is visibility to that information.”

Wong said most companies should take less than five days to close, and some may need more time if they need to consolidate. Sound like an out-of-reach figure for your company? Keep in mind that finding and resolving issues as the business trucks along with its daily transactions should occur outside of the close. Could the one-day close ever become a reality? Not at the moment for most companies, but the help of new technologies and streamlined processes could get them closer to seeing it happen at some point.

Even large businesses, organizations rife with complexities and teams that are mired in unwieldy spreadsheets, can get to where they need to be—an accelerated and smooth process. The fact is it is an ongoing process, with room to improve month over month. Wong suggested doing regular reviews and looking for ways to improve at every turn. “Track accomplishments and setbacks during the close,” she said. “We can all learn from our accomplishments and mistakes.”

With higher visibility, the finance team can provide senior leaders with more reliable metrics that they can use to pull the trigger on smart decisions. And that should mean less sweating all around.

Did you miss the webinar? Click here to watch Realizing the Dream: The Daily Financial Close Is Becoming Reality.

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Meet the Boomerang Bunch: 5 RoseRyan alumni return home

RoseRyan is thrilled to welcome back five finance aces who worked with us earlier in their careers. In the time since their last stint with us, these returning employees have sharpened their skills and gained new insights. They’ve worked at high growth, fast paced companies, experienced acquisitions firsthand from the inside, and had amazing, once-in-a-lifetime travel opportunities. And now they have come back. Why? To experience the positive points of the consulting life.

Who knew we’d have five RoseRyan alumni coming back out of the corporate world during an all-out talent war. We are pleased as punch to get these savvy finance pros back in the fold.

We’re not the only ones getting reacquainted with some all stars. In a survey of over 1,800 HR professionals by The Workforce Institute at Kronos Inc. and WorkplaceTrends.com, 85 percent of respondents said former employees have sent them job applications over the past five years, and 40 percent said about half of those former employees were hired. Taking back “boomerangs,” the report revealed, didn’t used to be so common, but has become more acceptable for industries in the middle of the battle for talent.

A big draw for any of our consultants is the variety of assignments at high tech and life sciences companies, the ability to jump in and actively grow a company, the latitude and individual autonomy to get things done, and a predictable schedule so that they can have a life. It’s OK to actually take vacation, spend time with their families and tend to their hobbies, we think. Not many companies think that way. It also helps that we’re an award-winning firm that our employees believe is headed in the right direction—evidenced by our earning a coveted spot on this year’s Top 100 Workplaces list in the Bay Area.

So who’s returning? We’re delighted to re-introduce these folks: 

LIZ BARCLAY

An expert in SEC reporting, technical accounting, SOX, revenue recognition, M&A and international accounting, Liz left us for several years for some exciting international assignments and adventure. She worked the SOX front at Maxtor. Liz was also the SEC reporting manager, SOX manager and AP manager at Power Integrations, most recently handling SEC, accounts payable and international due diligence work in the United Kingdom and Switzerland. “I was drawn to RoseRyan for its work/life balance and more flexible work options,” she says. “Consulting leverages my career’s wide and deep experience while giving me the opportunity to make family events.”

LYNN CHRISTOPHER

Lynn first got to know RoseRyan as a client, when she was the controller at Blue Coat Systems. She’s joining us after an eight-year gap with a solid résumé of controllerships at Force 10 Networks, Responsys and most recently Adap.tv, which was purchased by AOL. Lynn is a force to be reckoned with when clients need revenue recognition expertise, SEC reporting help or assistance going IPO. 

CLARISSA ENANY

With audit prep and technical accounting among her top talents, Clarissa gives the rest of us a reason to visit the Seattle area, her home base. A KPMG alum, she most recently was the assistant controller at DocuSign, where she managed the month-end close process, accounts payable and payroll. Clarissa was with us for over three years taking on SEC filings, stock-based compensation work, and assignments for our Technical Accounting Group. “I love having the opportunity to work with multiple clients and see a variety of issues each week,” Clarissa says. “My work with RoseRyan allows me to spend time with my family while maintaining my professional edge in accounting.”

LAURA MAGALLON

Laura brings a mix of senior leadership thinking and nitty-gritty accounting expertise to everything she does. Since her first consulting tour with RoseRyan, she has held VP of finance and controller positions, and she has fine-tuned her passion for startups and newly funded companies. She loves setting up financial structures and ramping up companies from the start to grow phase of their lifecycle. Laura’s specialties include the month-end close process, FP&A, accounting systems, SOX, revenue recognition and audit prep. What brought her back to us? She loves the flexibility that comes with being a consultant plus the benefits package we provide our gurus. Plus, the camaraderie and support she gets here can’t be beat. “I really like working for Kathy Ryan—she’s a great boss and mentor,” Laura tells us. “And we have a great team of consultants!”

SUSAN WONG

Susan was here at RoseRyan from 2007 to 2012, working closely with startup clients. She knows the controller and CFO roles inside and out for both small businesses and midsize companies. Her expertise includes cash flow management, audits, business strategy, budgets and debt/equity financing. To top it off, in her spare time she teaches finance at UC Berkeley Extension and Menlo College, where she is an adjunct accounting professor.

All of our seasoned pros want to stretch and grow professionally. We love to provide them with a variety of assignments and challenges to help them do just that. They strive to stay on top of their game. They have found a supportive place in RoseRyan, where we have a healthy learning and development focus, an enviable list of clients, and our culture is known for being friendly and respectful, and for doing the right thing. No sharks here!

Sure, we’re always disappointed if a consultant jumps off for a hot corporate job. But we’ll be here to welcome them back.

LI profile pictureDoes RoseRyan sound like your kind of place? We are hiring! Check out our current opportunities here. As Talent Manager at RoseRyan, Michelle Hickam is always looking for finance and accounting pros who have strong technical chops as well as “soft skills” for melding into our clients’ corporate cultures. She’d love to hear from potential candidates. Email her at [email protected].

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Think a high-performance finance team is out of reach? Think again.

“The whole is greater than the sum of its parts” is a truism whenever companies need to get things done. A superior team leading the charge can make the difference between a profitable move and a ho-hum project that barely gets off the ground.

That’s why there’s a major demand for high-performance teams, otherwise known as groups of smart, talented people with complementary skillsets who as a cohesive unit are able to outperform their peers. It’s a major goal for any growing finance organization to pull off. At RoseRyan, we strive to provide the glue that is needed whenever we bring our expertise and experience to a team.

While a high-performance team is an ideal for any organization or big project, companies do find that they don’t always come together naturally. Having worked on high-performance teams over the course of my career (most recently at a life sciences client of RoseRyan) and volunteer life, I can report that it’s a great joy working together on one.

As McKinsey partners Jon Katzenbach and Douglas Smith described in their ground-breaking work The Discipline of Teams, these special teams share four elements—a common commitment and purpose, performance goals, complementary skills and mutual accountability. It is a tall order but doable.

It is a glorious thing when a high-performance team gets superb results in short timeframes and the team dynamics are respectful, supportive and trustworthy. Such experiences constantly spur me on to find another high-performance team to work with and to find ways to make them happen.

I challenge anyone in a leadership position to aim for the ideal as well. There’s a payoff, which I have seen firsthand not only when I was part of such teams but also when I have created or was the catalyst for other high-performance teams either as a team leader or critical contributor. They’re goals-driven organizations that achieve superior business results. Talk about satisfying.

How can you spark one up? Below are five key characteristics of high-performance teams. Factor them in the next time you’re gathering a team to tackle a problem, building a finance team from the ground up or hiring a bunch of advisors to help you complete a deal.

1. A shared vision: It must be clear, relevant, significant, achievable and relatively immediate in order for the team to come together in a cohesive manner. It should be written down. A shared vision that is maintained and frequently communicated can be used as an anchor to bring the team back to its high-performance track when there’s conflict or changing circumstances.

2. A healthy team culture: The group should comprise diverse (and often cross-functional) team members who know, value and respect the range of skills, knowledge and experience that their colleagues contribute. There is a sense of belonging and a willingness to make things work for the good of the team. Everyone knows that they can produce something together that they could not produce alone.

Keep in mind that having a diverse set of players on the team can lend itself to discord and conflict. That’s the nature of having a variety of skills and perspectives. So it is critical to encourage a culture of trust, acceptance, respect, courtesy and a lot of willingness to listen to and understand different points of view. Make sure to recognize the individuals who do just that.

3. Clearly defined roles and expectations: This is the glue that makes it possible for high-performance teams to deliver and go beyond what’s expected of them. To get the job done, these teams need effective processes around solving problems, making decisions, communicating status, running meetings and so on.

High-performance teams tend to be committed to quality and results, and so their leaders need to know ahead of time what they want, what the different roles are, and how the team’s performance will be measured in such a way that the bar will be continually raised.

4. Team accountability: Even high performers need to know they’ll be held accountable. They need transparent agreements around how they will hold each other accountable as well as a short, simple list of operating principles that are agreed upon by the entire team.

5. Leadership: The members of a high-performance team may be more likely than others to act independently, but we all need some guidance. Leadership for these teams is more participative and based on good role modeling than it would be in command-and-control environments or groups. Leaders need to be flexible, to be able to shift their focus and style as necessary, not only to achieve team success but to gain acceptance by team members along the way.

In some situations—such as when you’re restricted to using internal resources—you may not always be able to create and maintain a high-performance team when you want to, especially when you have an organization with a mix of strong personalities and skills that are not fully developed. But in an increasingly team-driven business world, it should be a constant goal.

As a senior finance pro at RoseRyan, Kathi Varas enjoys working with high performance teams, and she’s always a team player. She specializes in startups, budgeting, forecasting, FP&A, IPO support and project planning. Kathi held several controller positions before joining RoseRyan in 2015.

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View the finance work around the IPO as a marathon, not a sprint

Going public takes endurance. The whole process—from the decision to go IPO, to the S-1 filing and the roadshow, to the first day of trading and then the post-IPO phase—usually takes longer than expected and puts a major strain on resources. It takes mental strength and stamina to power through the several years before and after the transaction if you do it right.

It’s understandable why so many executives want to take a great big breath when they get past what they view as the finish line—the day the initial public offering is made. But they’ve got to keep going toward the next milestones and transition to truly operating as a public company, as noted by the experts who participated in RoseRyan’s recent webinar, “Smooth Sailing for a Successful IPO.” Senior Consultant Diana Gilbert, who leads the Technical Accounting Group at RoseRyan; Matthew Rossiter, Partner at Fenwick & West LLP; and Susan Berland, Consultant, Finance & Strategy offered up a lot of advice and warnings in the one-hour session aimed at companies contemplating or going public.

“Everybody’s excited, you rang the bell and you feel relieved,” Gilbert said. “You think, ‘Oh my gosh, this sprint, this crazy thing, is over.’ But the reality is you’re actually in a marathon. You’re not in a sprint. Now you’re in a public company.” There’s a lot more to be done.

The run to each milestone doesn’t have to be sweaty and messy. Companies can move forward in a cool and collected way (although, to be sure, there will be some bumps: Download our report The IPO Journey: 6 Potential Obstacles to Avoid for a Smoother Trip to see what we mean) with some best practices tucked into their back pocket.

Here are just a few takeaways from the webinar:

Start early. Decisions can be made in the very early days of the company’s existence that can set everyone up for an eventual IPO. This means nurturing the kind of culture that highly values accurate information and keeps documentation in order. If certain systems are in place and certain ways of doing things are the way of company life early on, that will make the transition easier if an IPO does indeed become part of the company’s plan.

Instill smart habits. Before going public, finance teams should adjust to tighter reporting turnaround times. They can work out the kinks before meeting deadlines becomes an SEC mandate. They’ll need to streamline the close process and begin getting used to recording the work that they do—not just the results.

“Remember a lot of private companies now going public don’t have people who have been through the Sarbanes-Oxley process,” Gilbert said. “They’re not in the habit of documenting everything they do, so while they may be doing it, there’s no evidence of it.”

Know the timeline. Because of the JOBS Act, many companies get some breathing room when it comes to adjusting to all the regulations they’ll be subject to once they get over the first going-public hurdle (most notably, the requirement that auditors attest to management’s review of internal controls, aka SOX’s Section 404(b)).

“Essentially all high-growth IPO companies right now are ‘emerging growth companies,’” Rossiter said. “Any private company with less than $1 annual billion in revenue will be eligible to be an emerging growth company, and will remain an emerging growth company until the fiscal year ending the fifth year after IPO, or potentially sooner when one of several financial triggers hit,” such as the company becoming a large accelerated filer, with public float of more than $700 million.

Anticipate problems. There will be mistakes along the way as the company ramps up to go-public status, and that’s why building in time is essential. “I usually say it’s not whether the company is going to fail on some controls, it’s which ones,” Gilbert noted. “We need time to remediate and fix it and get things running really sleek and clean before you hit that period where you need to be compliant for 404, before you get the auditors involved.”

Want another great tip? Develop a solid finance team with buttoned-up processes and a drive for efficiency and integrity throughout the going-public process and afterward. It’s evermore important when the company has passed the IPO mark and is in the public eye.

“You want to have a solid, solid team in place and make sure that in the process of all of this you are doing things in a disciplined, careful way,” Gilbert said. “That you don’t take shortcuts and you get it right the first time. Because when you are communicating with the outside world, they are not very forgiving if you make a mistake and have to go back and make a restatement. That can be a big negative on your credibility.”

For more sage advice on crafting your successful IPO process, listen to the recorded webinar Smooth Sailing for a Successful IPO.

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Going from good to great: How to be an amazing consultant

Have you ever thought about becoming a consultant? It’s a lot different than being an employee, and that’s what the consultants at RoseRyan love about their role: Our finance pros have joined us for many reasons, with flexibility and variety in engagements being top faves.

Consultants who are great at what they do have the skills required and the experience to match what their clients need, and they have a whole bunch of other must-have abilities that don’t quite fit on the résumé. The following traits are just some the attributes that turn a “good” consultant into a great, in-demand consultant:

1. They get it done. Ultimately clients hire consultants for results—to do the things they can’t do with their current resources. The more ways a consultant can help out, the more valuable a consultant is. The best consultants are always looking for solutions and efficiencies, and they do what’s necessary to finish a project or fix a problem. In some cases this may involve making copies at 7 p.m. to get a report together. There’s no better-than-you attitude here when job-number one is to make the client happy. They do what’s required and follow through to make sure it happens.

2. They add value. Consultants who shine consistently go beyond what’s asked of them. They listen carefully to the client and find ways to make the client’s life easier. A client expects a consultant to be an expert and bring in fresh ideas—but the client may not always know the exact right questions to ask. The best consultants have a sense for what each client needs.

3. They are leaders. You can be a leader without being the one in charge, and great consultants fit the bill. One way to look at leadership is people who take action instead of waiting to be told what to do. They’re effective observers who have the power of persuasion to make smart recommendations when they make sense.

The consultants who understand what the client wants and then makes it happen are the ones who get asked for by name the next time around (we love when that happens!). If a meeting needs to be called, they call it. If tasks need to be divvied out, they do it. No micromanaging needed. Not only do they step back and see the bigger picture, they figure out what must get done and then gather the resources to do it.

4. They stay out of politics. In finance and accounting, in particular, consultants are expected to be discreet. They may a hear a lot of chatter as they work alongside employees who could be struggling to get past politically sensitive issues. Things may have become messy and the consultants are expected to bring in some calm. The best consultants don’t get sucked in to power struggles and office gossip. They do their job and maintain a professional demeanor.

5. They are chameleons. Consultants who get repeat clients are able to fit into any environment, whether it’s a loosely structured startup or a tightly wound corporate culture. They shed their personal agendas at the door and take in the personalities and makeup of the company before making any recommendations. They become a part of the team and zero in on what makes sense for the client, at that moment.

6. They are life-long learners. Clients are looking for people who are on top of the latest requirements and leanings in the field. They want to bring in early adopters who can show them what to do, and they want to know what other companies like them are up to. Consultants can bring them that expertise only if they set aside time to stay on top of trends and innovations. It makes them better at their job—and it makes them more marketable.

7. They are confident but not cocky. Great consultants have an easy confidence that lets the client know “I got this,” but it never strays into arrogance. Clients want to believe the consultants they’ve brought in to fix a problem know what to do. But clients don’t need a big ego to get in the way.

Consultants who have these seven habits are a special group (we call ours the dream team). They’re experts in their field who are willing to do anything they can for the client. They have above-and-beyond attitudes. And they are all about follow-through, professionalism and thoughtful, quality work.

Think you have what it takes? Check out our latest hiring opportunities, and inquire about a career at RoseRyan by reaching out to our talent manager, Michelle Hickam, at [email protected].

RoseRyan can keep track of our consultants’ skillsets and whereabouts because of Matt Lentzner, the firm’s IT guru. He manages the evolution of our internally developed DTS system, a sophisticated scheduling, timesheet and skills management application.

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A 6-point internal control checklist for year end (yes, already!)

Many people say life speeds up as you get older. Maybe that’s why the year-end crunch seems to keep getting tighter. The end of Q3 is upon us and year end is right around the corner. While the company’s SOX testing may be under control, we have some recommendations for your 2015 internal control checklist that expand beyond SOX, and should help set you up for a year end process that runs as smoothly as possible (yes, it is time to be thinking about these issues):

1. Check in on COSO
By now, most companies have transitioned to the 2013 version of the Committee of Sponsoring Organizations (COSO) internal-controls framework, although there are some holdouts. Before you go any further in this checklist, if your company has not yet made the transition, we recommend that you familiarize yourself with the new framework, map your existing controls and identify any gaps.

The Securities and Exchange Commission has not confirmed a timeline for going after companies that have not migrated to COSO 2013, but lack of COSO compliance can still lead to problems. From an internal control over financial reporting (ICFR) perspective, if one or more of the new framework’s 17 principles are not present and functioning, a major deficiency may exist. This would equate to a material weakness under Section 404 of the Sarbanes-Oxley Act. Not something that management, the board or investors are likely to want.

2. See if you need to expand enterprise risk reviews
The latest COSO framework calls on companies to have an operational risk assessment program, and to identify risks that may derail their ability to reach corporate objectives. Most companies record their significant risks in their 10-Qs and the 10-K, of course, but they may need to rethink or expand the information sources.

The assessment should include input from business units and appropriate levels of management. Has the company also created an upward/downward communication route for identifying, documenting and addressing lower level risks that impact smaller entities and regional operations? If not, now would be a good time to make a change.

3. Put out some fraud feelers
Another COSO requirement is consideration of fraud risk. A proven way to address the issue is to conduct fraud brainstorming sessions with various employee groups. It could provide a whole new perspective. When employees are asked to “think like a fraudster” and brainstorm “how a fraud could perpetrate itself at the company,” they may reveal gaps or risks that had never been contemplated on a companywide scale.

4. Evaluate how management reviews controls
For controls that require management review, particularly for complex processes, it’s important to document the steps taken as part of the review process. Supporting documentation will make any auditor questions that pop up easier to handle and could also make the process easier when next year rolls around, or in the event of a personnel change.

5. Touch base with your auditors
Management must evaluate the adequacy and completeness of the key reports used for preparing financial statements. By now, the company should have the list of key reports handy. If you have not already done so, we recommend meeting immediately with your external auditor to confirm that the list is appropriate, while there is still an opportunity to address gaps prior to fiscal year end.

6. Take a fresh look at related-party and significant or unusual transactions
A new auditing standard could bring this issue to the forefront, even for companies that may think they do not have such transactions. To head off extra questions by auditors, companies should consider: Is the board or audit committee aware of all related-party transactions, including suppliers, vendors and customers? What if employees haven’t disclosed them? Does the company have a documented process to assess related-party transactions and determine when disclosure is required?

Here’s a quick trick that could be revealing: Compare employee addresses to vendor addresses to see if there are any matches. While it may not turn out to be a problem, a match could be a flag that requires further investigation.

Be aware that external auditors need to conduct new procedures to comply with Auditing Standard 18—Related Parties (which became effective for audits occurring on or after December 15, 2014), and they will report their results to the audit committee. The report will include transactions they found that the company had not told them about, as well as deals that were not authorized or approved in accordance with company policies, or that appear to lack a business purpose.

Also make a point to review significant or unusual transactions. Is the company preparing memos or documenting the approval and controls process for significant or unusual transactions? Your external auditor needs to report on this as well.

Ideally, these internal control and compliance areas are already a part of your toward-the-end-of-the-year checklist. If they’re not, you may want to start right now. That clock keeps ticking!

Alisanne Gilmore-Allen is a member of the RoseRyan dream team. She is a Certified Internal Auditor, Certified Fraud Examiner, Certified Information Systems Auditor, and she has a Certification in Risk Management Assurance. Alisanne spent over seven years helping Big 4 clients with enterprise risk management, and she has consulted for and headed the internal audit departments at Bay Area technology companies.

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Is finance an afterthought? The rookie mistake that can doom a startup

During the initial months and years of a startup, CEOs are faced with the daunting task of building a company from the ground up. There are many issues to address, including product development, sales and go-to-market strategy, staffing, legal and finance. All of these are important areas to launch in order to get the company off to a great start.

But how much attention should each one get? All too often, in the push and pull when time is tight and so are funds, CEOs make the mistake of giving the finance side of the business short shrift compared to everything else. Understandably this happens when the biggest motivation at the moment is to get the business up and running. Survival is job one. Getting the finances in order rates as a low priority while other areas of the company receive the bulk of funding and care. “I’ll deal with that later,” the thinking goes, “and build it up in a few years when we’re really up and running.”

In the meantime, the company hires an office manager who takes on purely administrative duties, like handling payroll, processing stock administration, meeting the minimum compliance requirements, signing up for insurance, securing facilities, and creating and handling the initial accounting books of the company. While these are all necessary tasks and someone needs to do them, unfortunately, this person usually does not have the required skills and experience to handle them at a high level.

Is the cash burn rate being managed properly? Are the financials accurate? Is the company making the decisions about equity comp with the future in mind? Are inefficiencies building up and slowing down decisions that need to get made? Can one person pay attention to the changing tides of rules and regs?

Inevitably, problems will pop up if there is not someone or more than one person paying careful attention to the big-picture questions. Some of the potential problems are incorrect financial statements, serious delays in financial reporting, lack of expense control, payroll errors, inability to pass compliance audits, issues with stock administration, and numerous other tasks not being completed on time and up to par. The company could run into problems with lenders, banks, investors and see its growth potential falter—if inaccurate financial information is preventing smart decision-making.

Sounds messy and time consuming, and it is. It can also get expensive. Work will have to get re-done numerous times and the company could see increased expenses. And the CEO may have to run around fixing problems rather than building the business.

It’s completely understandable why finance does not get the full attention of the CEO in the “start” stage of the business lifecycle. It could be much too early to add a full-time CFO to the payroll. What is usually needed at this point is a part-time controller who can bring order to the mayhem and ensure all the yearly, monthly and daily requirements are done correctly. The role will help the company fend off potential issues and mishaps and keep the back-office running smoothly (and relieve some of the stress that is surely weighing down the office manager). So many startups get themselves in trouble when there’s a lack of order and discipline.

Another smart move around this time is bringing on an outsourced accounting team that can help the overloaded office manager by introducing efficiencies and new processes that will lead to reliable financials and a smooth operation. Over time, the company can work its way up to adding on a part-time CFO, who can provide critical strategic perspective for moving the business forward.

Put another way, the list of risky, rookie mistakes that are distracting to the CEO can shrink dramatically and the leadership can focus more on growth. The goal becomes how to get to the next level rather than “how are we going to get ourselves out of this mess?”

Need more input on the start stage and all the stages that follow? Download our intelligence report, Navigating the business lifecycle, which explores the four stages that companies typically experience, the finance challenges of each, plus real-life examples of organizations that have overcome typical obstacles.

Ron Siporen, a consultant on the RoseRyan dream team, has over 30 years of experience working with startup businesses, and he has been a successful business owner himself. He loves to help companies clean up problems and scale up for growth.

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On the road to IPO? 6 obstacles to avoid at all costs

All eyes are on you when your company goes IPO. Everyone, it seems, wants to know the company’s every move—its past results, its risks, its future projections. Working at a newly public company can make employees feel like they’re in a giant fish bowl with everyone swimming around and crashing into each other. Unless, that is, the company planned ahead for a bit of mayhem.

A new intelligence report written by RoseRyan CEO Kathy Ryan warns top executives of pre-IPO companies about six potential pitfalls that await them on the multi-year journey they’re about to undertake. These are obstacles along the IPO path that can easily sink a deal.

By being more aware of the potential problem areas, companies have a better chance at a better ride (it’ll be bumpy no matter what—as anyone who has suffered through the aftershocks of an IPO can tell you). They’re also likelier to achieve a tighter corporate culture on the other side, a reduced risk of public mistakes (like a messy restatement), and a realistic, satisfactory share price.

Kathy emphasizes in the new report, The IPO journey: 6 potential obstacles to avoid for a smooth trip, that going public is much different that actually being a public company. To do it right, companies should view the entire deal as having three phases—the IPO prep, the IPO process itself, and the IPO hangover of suddenly being public. Along the way they should stay away from the following missteps:

Avoiding the tough questions: Kathy reveals the hard questions that need to be asked, including whether the company is moving forward with the transaction for the right reasons.

Skipping the prep work: There are years of laying foundations before the journey gets into the S-1 frenzy, from getting the financial house in order to figuring out the key metrics that will be shared and how they will be expressed publicly.

Being unprepared for a big culture shock: Senior executives rarely consider the transformation employees are expected to go through as the company changes from an entrepreneurial mindset to the more disciplined, accountable organization of a publicly traded company beholden to new regulations. The culture can—and should be—managed during the IPO process.

Lacking the right talent at the right time: Just as the culture should be evaluated, so should the skills. To what extent can existing employees be trained to withstand the needs of a public company, and to what extent does the company need to look outside to fill in the skills gap? It’s better to wonder this as the company goes along—rather than risk overloading employees more than they need to be.

Being in denial about the IPO hangover: There is a hard truth about going IPO and it’s what happens on “Day 2,” the day after the IPO, when the company starts operating in a whole new world, and the next few years that follow. It is a tsunami of work. It takes awhile for everyone to adjust, for efficiencies to take hold and new processes to become routine.

Not actively managing the share price: Many executives think they cannot influence how investors perceive and thus value their company. But it is possible, with effective messaging by company leaders, who need to put themselves in investors’ shoes and hone their storytelling skills to speak their language.

Preempt the mishaps. Prepare the troops. And get ready for the exciting trip that lies ahead. Download The IPO journey: 6 potential obstacles to avoid for a smooth trip.

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