When times are good in the Bay Area as they have been generally over the past year, there’s energy in the air. We feel it when we’re working with our clients, and we are feeling it within RoseRyan as well.
We are proud to share some notable achievements in recent months. We ended 2015 blowing past our revenue and our profitability goals, adding many new clients. This was due in part by our continuing expansion in San Francisco, where things are booming and companies on the fast track are turning to us for sage finance advice and to fill the gaps of their resource-strapped teams.
Our proudest moment last year was feeling like we’re getting somewhere in the talent war. It’s tough out here, competition is fierce, but we managed to increase our headcount by 23 percent. Wow. Our current employees raved about us in a confidential survey and earned us a spot on the Top 100 Workplaces list by the Bay Area News Group. And five all-star former employees returned home this summer after spending some time fine-tuning their skills in the corporate world. We’ve warmly dubbed them the “Boomerang Bunch” and are happy to have them back.
A big attraction to RoseRyan, we’ve found, is the fact our culture is so vibrant and real. The four key values that guide our work are very real: a true teamwork approach, being trustworthy, advocating for our clients and the firm, and focusing on excellence in all that we do. Our culture has become a differentiating factor when we look for job candidates and make our case to potential clients. People who work with us like to know they will be in good hands, with collaborative folks who give their all to every project.
While we have successes to report at the start of 2016, there is always room for improvement. These are just three of the many resolutions on our plate this year.
Keep learning: RoseRyan gurus thrive on a challenge and love to stock up on their expertise. It’s one of the reasons people come here—to work on a range of client experiences that keep them engaged and stimulated, and on top of their game.
Within the firm, we have a variety of ways to keep the mental juices flowing, providing opportunities for our consultants to freely share information and tips they pick up in the field. Part of this is due to our camaraderie-focused culture with an emphasis on teamwork and collaboration. We also provide classes, workshops and tools for growth, with access to our Technical Accounting Group, which helps both our clients and our employees stay up-to-date on the latest accounting changes and interpretations.
We expect all our consultants to spend a certain number of hours each year on learning and developing not only their technical skills but their soft skills as well. On that note, we are launching a new internal program, Survive & Thrive, to share best practices in the field and the innerworkings of our firm. It’ll also help us onramp new employees into the fold.
Make new friends: Speaking of new employees, we expect to keep hiring in the months ahead. We are looking for stellar finance aces to join our strong team of “A” players. (If you have top accounting chops and operational finance experience to match, Michelle Hickam, our talent manager, would love to connect with you at [email protected].)
We also plan to add to the stable of fast-moving companies we work with in Silicon Valley and San Francisco, continuing to focus on the technology and life sciences field. Every new client has an intriguing financial challenge, and we’re fascinated to fix the next one.
Be open to change: This wonderful firm I co-founded is getting older in age (22 years and counting) and continues to evolve and change. The world around us is shifting at rapid velocity, and we need to move quickly to remain ahead.
One of the changes we have been seeing is the increased acceptance and demand for remote workers. Some job candidates place high on their priority list, for example, the flexibility to work both on site and off site. It minimizes long commutes, helps a family situation or allows a guru to work on a great engagement with a great company that happens to be several hours away from home.
We want to give our clients access to smart minds and excellent resources in finance no matter where they are located. Let’s say we have access to a brilliant finance mind with a particular expertise who is living four states away. We’ll take it! In some cases our clients have been amenable to remote work situations and have embraced it. We will continue to explore the possibilities, including the latest technologies that make it easier (we can thank our tech-savvy clients for that).
Changes and progress all around—it’s an exciting time. We are propelling into 2016 with a renewed sense of purpose and momentum. More than two decades into this fascinating firm, we are really hitting our stride, and I look forward to everything that’s in store for us this year.
Kathy Ryan is the CEO and CFO of RoseRyan. Since co-founding the firm in 1993, she has served as interim CFO at more than 50 companies. She was honored by the San Francisco Business Times in 2015 as one of the most influential women in Bay Area business.
Lucky for now: Dealmakers are optimistic about the near future
It’s fitting the annual Association for Corporate Growth (ACG) West Coast M&A Conference was held on St. Patrick’s Day. We were all feeling a bit lucky with a nice bounce-back in the markets, and a cautious sense of optimism was shared by many of the upwards of 300 attendees, consisting of specialists in private equity, banking, and finance and accounting, as well as entrepreneurs.
A faint wariness has been in the air since November, when the economy had a clear drop in financings and valuations. Conference attendees in general believe the dip was due to overheated valuations that had continued to rise despite concerns over whether imprudent investments were getting made.
With the state of the markets setting the stage for the event, there were many takeaways to be had at this San Francisco conference, which I attended with my counterparts at RoseRyan, Terry Gibson, who oversees the RoseRyan Private Equity service, and director Stan Fels, who was there for the small-business perspective. Here are the topics everyone was talking about:
Deal-making has its up and down times, but there are opportunities in the M&A space at the moment. Capital is definitely available. It is a safe bet that there will be more prudent investing, more cautionary growth plans and more options on how to raise money in the coming year.
And there will certainly be new ideas brought to the table by entrepreneurs looking to transform our lives. The last session I attended was an entrepreneurial meetup in the style of the TV show Shark Tank. I watched as Amy Errett, CEO of startup Madison Reed, flawlessly executed her pitch for a prepackaged hair coloring kit billed as “makeup for hair.” Using a combination of technology and healthier formulas, the startup is attempting to be a disruptor in the hair-coloring space.
As the father of three daughters, I took notice when Amy mentioned the hair coloring market is a $50 billion industry. I introduced myself to Amy after her presentation and took the free $75 gift certificate and headed out the door, feeling cautiously optimistic about the prospects ahead.
Chris Vane is a director at RoseRyan, where he leads the development of the finance and accounting firm’s cleantech and high tech practices. He can be reached at [email protected] or call him at 510.456.3056 x169.
What CFOs need to know about the new leasing standard
One loud giant thud is the sound you’d hear if you printed out all 485 pages of the new lease accounting standard and threw it on your desk.
Multiple giant thuds. That’s what we’ll all be hearing when trillions of dollars worth of leases land on many companies’ balance sheets in 2019. That’s when public companies will need to bring right-of-use assets and associated obligations onto the balance sheet and out of the footnotes. (Privately held companies get an extra year to comply.) The full effects are yet to be known, but two things are known for sure: balance sheets will get heavier and many questions for CFOs will follow.
In the works for over a decade, the new standard issued by the Financial Accounting Standards Board in February will affect almost every company. Lessees will feel it the most. As I mentioned in a recent article in ComplianceWeek (sub. required), the new standard will be “pretty pervasive.” The rule addresses leases of property and equipment that are 12 months or longer.
Many companies will be bringing their operating leases onto their balance sheets, which will make them appear more leveraged than under historical GAAP. The new guidance will lead to “a more faithful representation of an organization’s leasing activities,” according to FASB Chair Russell G. Golden.
One of the most common examples given while standard-setters ironed out the details of the new rule was the leasing of airplanes. For aircraft leased for several years but not for their entire “life,” airlines did not have to show their ongoing obligation on their balance sheet. Some viewed this allowance of off-balance-sheet reporting as misleading (this is not just an issue for airlines: Amazon will have to factor in the new rule as it moves forward with its reported plans to lease 20 Boeing 767 planes).
Although it will be awhile before we see the full extent of the standard’s changes in publicly filed financial statements, CFOs are going to have to be ready to answer some questions about how it will affect their company and how they’re going to deal with it. For now, companies will need to add it to their new accounting pronouncement disclosures. And then there’s the detailed work ahead in figuring out what leases the company has and evaluating them.
In the months ahead, companies will need to thoughtfully review their current lease agreements and consider whether any will need to be reclassified under the new rule. It may need to be a cross-functional effort. Companies may want to revisit the wording in some contracts. They may notice that some debt covenants could be affected. There’s some time to get ahead of the changes—but only if the work is put into it now.
Feel like 2019 is a ways off? Some long-term leasing agreements you have in play now could be affected as the standard requires modified retrospective adoption. Comparative financial statements will accompany the reports when it comes time to comply with the rule. And by then the time to transition to this new way will seem to have flown by.
Diana Gilbert has been a member of the RoseRyan dream team since 2008 with almost 30 years of professional experience. Frequently tapped for her insights by Compliance Week, Diana excels at technical accounting, revenue recognition, SOX/internal controls, business systems and process improvements.
The CFO juggling act of managing resources
A crazy sprint in the middle of a marathon would leave anyone gasping for oxygen. It’s not sustainable. Go too fast and there’s a risk of real burnout. Then again, go too slowly and there’s the risk of a competitor catching up and taking away your lead.
Sound familiar? Companies are always in the turbulence of growth, whether they’re chasing after it or striving to complete a mega transaction, like an IPO. And CFOs are at the helm of it all. On top of all the roles that they already take on at their company, finance chiefs are also guiding the velocity. Are they deploying the right amount of resources, or are they expending them much too quickly? Thoughtful growth is the secret.
RoseRyan director Stephen Ambler, who has served as CFO in several companies, shares his wisdom about the essential areas in finance that need the close attention of senior finance executives. These include:
Cash flow: Finance organizations can’t afford to look away for a minute. Literally. In RoseRyan’s latest intelligence report, A CFO guide for managing resources, Stephen relays the tough squeeze one company fell into when it lost a grip on its cash position. Sounds unbelievable, but it does happen, and it can sink the ship.
Growth strategy: The pace of growth is not always something the company can control, but a realistic forecast and deliberate path should be developed—wild guesses have no place here.
Talent: It’s about timing and understanding that you get what you pay for—even with people. That includes knowing when hiring junior-level employees does or does not make sense. Having the wrong mix of people may actually cost the company more over time. And today’s world is all about outsourcing. Know when to bring in the ninja team to get things done in a tough, overflow situation.
Upgrading systems: Get a sense of when the company has outgrown processes and systems (QuickBooks can be awesome as a small-business accounting program but an upgrade will be needed when the company has the public markets in its sights). Are the systems in place scalable and appropriate for the company’s size and complexity? If not, it might be time for an upgrade.
Managing resources well is an ongoing effort. No matter what size company or how fast you are growing, the same essential best practices will help you to stay in control of your financial situation. Be the steady hand at the helm. Along the way, don’t hesitate to lean on trusted advisors who can help you over the finish line.
Is your company galloping ahead without a well-centered plan? Or are you too conservative in your spending approach? To understand growth path considerations, check out A CFO guide for managing resources.
3 big reasons why I love the RoseRyan culture
You know you’ve found the right job when the moment you show up, it feels like home. There’s none of the usual butterflies swirling around the belly or awkward handshakes. That was my experience when I interviewed with RoseRyan over two years ago.
Talent Manager Michelle Hickam and I clicked right away (as do most people who talk to the always friendly Michelle), and later, when I went to the Newark office to interview, I had a similar experience with everyone I met. Everyone was so easy to talk to. They were all strangers but I instantly felt like I was catching up with old friends. Even now, as time has passed and I spend most of time away from the office with clients, that connectedness is still alive.
Here’s why it works: RoseRyan has the kind of business environment I haven’t experienced elsewhere. It’s not forced or fake. The talk is open, honest and down to earth, and there’s a thoughtfulness in what everyone does. We’re all practical folks who are kind, respectful and considerate in all that we do. These are my top 3 reasons why I’m loving this firm’s culture:
1. It’s supportive: You won’t find any bloated egos around here. At RoseRyan, we have a distinct culture of helpfulness. If one of us needs a second opinion on a technical issue, we have a whole group of people who will help us out—fast. Our clients know when they hire one of us, we have a supportive group of knowledgeable, savvy experts available as backup.
2. It’s flexible: This is a big reason I love working here. I’m a full-time consultant (some of my teammates work part-time hours) with a handful of clients. In our field of work, it’s tough to get a predictable schedule. At RoseRyan, however, I can plan my life around my calendar, knowing that I’ll always be busy toward the end of every month.
3. It has values that match my own: Another reason RoseRyan has clicked for me is our shared common values. We defined our values (Trustworthy, Excel, Advocate and Team) that people around here believe in and actually live by. I was amazed to receive our TrEAT Award in 2014. It’s our highest honor for living our values. Honestly, I want to nominate everyone I work with because I think we all are trustworthy in our work, we excel at what we do, we advocate for our firm and our clients, and we are team players. It’s why I’m sticking around.
RoseRyan is a unique and stimulating workplace, where collaboration and camaraderie are made possible even though we’re not physically working with each other every day. Does it sound like your kind of place? Michelle is on the hunt for seasoned pros skilled in finance and accounting who will appreciate being a part of tight-knit team and all that we have to offer. Check out our current positions here.
We’re always on the lookout for top talent—full-time and part-time. So if you like what we’re about—and you have the right stuff—contact Michelle Hickam or call her at 510.456.3056 x134.
RoseRyan consultant Jacqueline Bray is our 2014 TrEAT Award winner. She’s often on the go with emerging-growth clients, helping them with general bookkeeping and accounting.
Super Bowl 50: A kickoff to remember
We had a fantastic year in 2015 and were looking for ways to thank our loyal clients and partners. Super Bowl 50 coming to town provided the spectacular backdrop to bring us all together (even if our beloved 49ers didn’t make it to the big game!).
A week before the Super Bowl, RoseRyan hosted a joyful mix of clients, friends and partners for a warm-up party at the Quadrus complex in Menlo Park. The event featured fine wines, tasty appetizers and some amazing giveaways, including two free Super Bowl tickets. The suspense was palpable.
Congratulations to our winners and to the Denver Broncos!
Get ready: FASB is dumping some big items on your to-do list
The Financial Accounting Standards Board has a bunch of resolutions that affect many companies. The board is offloading some of their weightier projects that have taken up a lot of time (several years!) on their docket.
Fortunately, they are giving financial statement preparers a lot of time to come to terms with the changes ahead, providing a couple of years to implement new standards for lease accounting and the classification and measurement of financial instruments.
The most highly anticipated one—the new leasing standard—will result in some companies looking more leveraged on their balance sheets, starting with their 2019 financial reports (privately held companies get an extra year). Companies that lease any property and equipment for one year or more will be impacted. This will be a really big deal.
In the works for a decade (the SEC called for a revamped standard in 2005), the new leasing rule created a rift during the ongoing convergence effort between FASB and the International Accounting Standards Board, leading the two boards to come out with two different standards. Call it a divergence if you will.
The IASB recently released their final standards and the FASB’s is expected this quarter. Companies will appear to be burdened by more debt than they do now, as disclosing leases only in footnotes will no longer be acceptable under GAAP. Studies estimate that the changes will raise the reported liabilities of U.S. public companies by $1.5 trillion to $2 trillion.
It is expected that the new rule will take more effort to put in place than the new revenue recognition standard (and that’s saying something). Consider that every lease must be reviewed with assumptions updated each reporting period. Under the new guidance, lessees will be required to present right-of-use assets and lease liabilities on the balance sheet.
FASB has passed down a couple of other big agenda items when it released its rules concerning financial instruments last month. Although not in the works as long as the pending changes to lease accounting, this project was also divisive for FASB and IASB. For FASB’s part, the board will require companies to follow new rules on classifying and measuring financial instruments in 2018 and financial instrument impairment in 2019.
FASB’s standard for how to classify and measure financial instruments will be relevant to most companies, in particular those that have equity method investments that are not currently measured at fair value. Current fair value measurements and disclosures can be confusing to investors, and the new rules are intended to simplify things. Companies can adopt parts of the standard early if they wish.
As for the new revenue recognition standard, the Joint Transition Resource Group had its last scheduled meeting in Q4 2015 and will reconvene if new issues arise around implementation of the new rule. The FASB is expected to finalize proposed amendments to the standard this quarter. So the rules are settling, and there is no more reason to delay your implementation efforts. You are already in the first fiscal year that will be effected by the new standard when you implement in 2018.
FASB’s agenda will appear a bit thinner by the second quarter of 2016, while yours has grown. Let the fun of implementation begin!
Diana Gilbert has been a member of the RoseRyan dream team since 2008 with almost 30 years of professional experience. Frequently tapped for her insights by Compliance Week, Diana excels at technical accounting, revenue recognition, SOX/internal controls, business systems and process improvements.
Jazzed for the year ahead: CEO reflects on why
When times are good in the Bay Area as they have been generally over the past year, there’s energy in the air. We feel it when we’re working with our clients, and we are feeling it within RoseRyan as well.
We are proud to share some notable achievements in recent months. We ended 2015 blowing past our revenue and our profitability goals, adding many new clients. This was due in part by our continuing expansion in San Francisco, where things are booming and companies on the fast track are turning to us for sage finance advice and to fill the gaps of their resource-strapped teams.
Our proudest moment last year was feeling like we’re getting somewhere in the talent war. It’s tough out here, competition is fierce, but we managed to increase our headcount by 23 percent. Wow. Our current employees raved about us in a confidential survey and earned us a spot on the Top 100 Workplaces list by the Bay Area News Group. And five all-star former employees returned home this summer after spending some time fine-tuning their skills in the corporate world. We’ve warmly dubbed them the “Boomerang Bunch” and are happy to have them back.
A big attraction to RoseRyan, we’ve found, is the fact our culture is so vibrant and real. The four key values that guide our work are very real: a true teamwork approach, being trustworthy, advocating for our clients and the firm, and focusing on excellence in all that we do. Our culture has become a differentiating factor when we look for job candidates and make our case to potential clients. People who work with us like to know they will be in good hands, with collaborative folks who give their all to every project.
While we have successes to report at the start of 2016, there is always room for improvement. These are just three of the many resolutions on our plate this year.
Keep learning: RoseRyan gurus thrive on a challenge and love to stock up on their expertise. It’s one of the reasons people come here—to work on a range of client experiences that keep them engaged and stimulated, and on top of their game.
Within the firm, we have a variety of ways to keep the mental juices flowing, providing opportunities for our consultants to freely share information and tips they pick up in the field. Part of this is due to our camaraderie-focused culture with an emphasis on teamwork and collaboration. We also provide classes, workshops and tools for growth, with access to our Technical Accounting Group, which helps both our clients and our employees stay up-to-date on the latest accounting changes and interpretations.
We expect all our consultants to spend a certain number of hours each year on learning and developing not only their technical skills but their soft skills as well. On that note, we are launching a new internal program, Survive & Thrive, to share best practices in the field and the innerworkings of our firm. It’ll also help us onramp new employees into the fold.
Make new friends: Speaking of new employees, we expect to keep hiring in the months ahead. We are looking for stellar finance aces to join our strong team of “A” players. (If you have top accounting chops and operational finance experience to match, Michelle Hickam, our talent manager, would love to connect with you at [email protected].)
We also plan to add to the stable of fast-moving companies we work with in Silicon Valley and San Francisco, continuing to focus on the technology and life sciences field. Every new client has an intriguing financial challenge, and we’re fascinated to fix the next one.
Be open to change: This wonderful firm I co-founded is getting older in age (22 years and counting) and continues to evolve and change. The world around us is shifting at rapid velocity, and we need to move quickly to remain ahead.
One of the changes we have been seeing is the increased acceptance and demand for remote workers. Some job candidates place high on their priority list, for example, the flexibility to work both on site and off site. It minimizes long commutes, helps a family situation or allows a guru to work on a great engagement with a great company that happens to be several hours away from home.
We want to give our clients access to smart minds and excellent resources in finance no matter where they are located. Let’s say we have access to a brilliant finance mind with a particular expertise who is living four states away. We’ll take it! In some cases our clients have been amenable to remote work situations and have embraced it. We will continue to explore the possibilities, including the latest technologies that make it easier (we can thank our tech-savvy clients for that).
Changes and progress all around—it’s an exciting time. We are propelling into 2016 with a renewed sense of purpose and momentum. More than two decades into this fascinating firm, we are really hitting our stride, and I look forward to everything that’s in store for us this year.
Kathy Ryan is the CEO and CFO of RoseRyan. Since co-founding the firm in 1993, she has served as interim CFO at more than 50 companies. She was honored by the San Francisco Business Times in 2015 as one of the most influential women in Bay Area business.
Drum roll for Diana Gilbert, winner of RoseRyan’s coveted TrEAT Award
Senior finance pro Diana Gilbert is the latest recipient of the RoseRyan TrEAT Award, which honors the guru who best exemplifies our firm’s values (Trustworthy, Excel, Advocate and Team). Given out only once a year, it is the highest honor we award an individual.
And it is especially meaningful this time around, as we marked the fifth-year anniversary of our TrEAT Award and all that it signifies. Our values are a core piece of our overall culture, driving what we do, who we hire, how we perform and how our finance dream team is perceived in the marketplace. Throughout the year, our consultants and the management team submit noteworthy ways the RoseRyan gurus have practiced our values, either within the firm or outside while working with clients or networking at a local event.
Our TrEAT values have helped us form a supportive culture made up of people who can rely on one another, always do their best, look out for each other and are team players in every situation. Naturally supportive of others and giving of her time and expertise, Diana is very deserving of this honor.
“Our award recipient does it all,” RoseRyan CEO Kathy Ryan said at our holiday party just before revealing Diana’s name. “She is active in her professional network, she actively participates in social media and media outreach, she supports our sales team, she interviews job candidates, and oh yeah—our clients love her, too!”
Diana’s TrEAT prize is a unique copper enamelware bowl, perfect for holding some special treats or admiring on its own.
The past year has been a significant one for Diana as it was her first full year as head of our Technical Accounting Group (TAG). This means she’s our go-to person for the toughest accounting quandaries and updates on changes underway by standard-setters. Her insights and interpretation are valued by clients as well as reporters—she has been quoted, for example, by Compliance Week for her views on the new revenue recognition rule.
Several of Diana’s peers nominated her for the TrEAT Award, noting that she “does a great job mentoring, being approachable and coaching others.” She was repeatedly recognized by her colleagues for coming through with a helping hand over the past year even when deadlines and her own schedule were tight. She also humbly shares the spotlight with her fellow TAG team members, giving them moments to shine during presentations, for example.
“It is truly an honor to receive the TrEAT Award,” said Diana, who brought her mix of public accounting and operational finance experience to RoseRyan over eight years ago. “Feeling proud of the work that I do and being part of such a great firm is made possible because of my equally ‘TrEATworthy’ colleagues.”
One of her nominations came from a new employee who benefited from Diana showing him the ropes. He called her “simply awesome.” We totally agree.
How to best manage a finance project with several consulting firms involved
Naturally, at some point, a company will yell out a widespread call for “help!” Faced with a complex project or a tricky transaction, they will need to rely on outside experts and consultants who can get them through it. Companies generally don’t have round-the-clock full-timers who can fill every need that pops up.
The call for assistance may require more than one resource, such as legal expertise, an audit firm or consultants, who can dig into a complex technical accounting matter (like, ahem, RoseRyan).
When managing multiple firms on a special project, it helps to consciously build good relationships from the get-go. The service providers can mutually benefit and so can you. I noticed this firsthand during a recent engagement with one of our enterprise clients.
I can’t speak for other service providers, but I have found that teamwork during these projects is truly powerful. It can require a conscious effort to work well together, which in the end can result in better efficiencies and superior results for the client than otherwise may have occurred.
1. Prepare for the unexpected. I was recently working on an ongoing fixed assets project that involved very manual processes. Then everything changed. The client announced a big structural move that put all hands on deck and all milestones on super-crunch mode. Tight deadlines were immediately established. Everything became time sensitive.
When you’re overseeing a big finance project involving multiple people from different firms, whether the team is onsite temporarily or you’re dealing with full-time staff, everyone will look to you—you set the tone. When you’re prepared for potential issues, you’re more likely to be calm when there is a shift in strategy and you can get everyone focused on what they need to do next.
2. Request everyone document new processes. This takes some up-front work but can be a big time saver in the long run. New processes get developed as the team works with managers and other employees, and those new processes should be documented in detail and with illustrations. This was a common practice during the work we were doing and saved us whenever we need to get a new team member up to speed. When everyone has a point of reference, double work can be avoided and so can redundant discussions.
3. Encourage teamwork. When you have a mix of talent from different firms, you’re getting the best of everyone—their particular specialties all at once. You’re also creating a scenario where the people involved may not instinctively act and behave like a team. By letting everyone know you expect them to work closely with each other, keeping everyone and you in the loop, you’ll create a team even if your time together is fairly brief.
Sometimes this can be as simple as setting up a respectful atmosphere and treating everyone like a cohesive unit with multiple people on your status emails as well as regular group meetings. It’s more efficient when everyone is on the same page, and you benefit by getting a coordinated effort by your business partners.
At the beginning of one of the projects we did for this enterprise client, a RoseRyan team member identified a way to automate a process, and she shared that knowledge with the entire team. She could have kept the information to herself and let others on the team try to figure it out for themselves, but that would have slowed things down. The greater good (the end results, efficiencies and project success) should rule the day, not personal agendas or letting one service provider look better than another.
On this project, we heard from the client afterward that we all made a great team. We had “a perfect combination,” according to the client, of experienced consultants from RoseRyan who supported and trained the more junior-level team members from another firm.
The result: The client’s budget stayed on track, we met the deadlines, and the formation of a great team won us great trust all around. We’re team players through and through.
As one of RoseRyan’s finance aces, Susan Tan specializes in general accounting, consolidation, FP&A and financial modeling. She has been with us since 2010.
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.