Search First CXO

Budgeting is a fundamental component of financial planning and management, providing a roadmap for businesses to allocate resources, control costs, and achieve strategic goals. Effective budgeting ensures that companies can anticipate financial needs, manage cash flow, and make informed decisions. Key considerations for effective budgeting include: 1. Align Budgets with Strategic Goals: The first step in effective budgeting is ensuring that budgets align with the company’s strategic goals and objectives. This alignment helps prioritize spending and ensures resources are allocated to initiatives that drive growth and profitability. Define Objectives:  Clearly define your business objectives and ensure that the budget reflects these goals. This involves identifying key priorities and aligning financial resources accordingly. Involve Stakeholders:  Engage key stakeholders in the budgeting process to gain insights into strategic priorities and ensure alignment with departmental goals. 2. Use a Zero-Based Budgeting Approach: Zero-based budgeting (ZBB) is a method where each new budget cycle starts from zero, requiring justification for all expenses. This approach helps eliminate inefficiencies and ensures that every dollar is allocated based on current needs and priorities. Justify Expenses:  Require each department to justify their budget requests, focusing on current needs and anticipated benefits. This promotes accountability and cost-consciousness. Identify Cost Savings:  Use ZBB to identify areas where expenses can be reduced or reallocated to more strategic initiatives. 3. Incorporate Flexible Budgeting: Flexible budgeting allows businesses to adjust their budgets based on changes in revenue, costs, or business conditions. This adaptability ensures that budgets remain relevant and responsive to external factors. Scenario Planning:  Develop multiple budget scenarios based on different assumptions about revenue growth, market conditions, and cost fluctuations. This helps prepare for potential changes and ensures agility. Regular Reviews:  Conduct regular budget reviews to assess performance and make necessary adjustments. This ensures that the budget remains aligned with current conditions and strategic priorities. 4. Leverage Technology for Budgeting: Utilizing financial software and technology can streamline the budgeting process, enhance accuracy, and improve collaboration across departments. Technology enables real-time data analysis and reporting, supporting informed decision-making. Budgeting Software:  Implement budgeting software that integrates with your financial systems to automate data collection, analysis, and reporting. This reduces manual errors and improves efficiency. Data-Driven Insights:  Use data analytics to gain insights into spending patterns, identify trends, and make data-driven budgeting decisions. 5. Monitor and Control Spending: Effective budget management requires ongoing monitoring and control of spending to ensure that actual performance aligns with budgeted expectations. This involves tracking expenses, analyzing variances, and implementing corrective actions as needed. Track Expenses:  Regularly track expenses against the budget to identify variances and take corrective actions. This helps prevent overspending and ensures financial discipline. Variance Analysis:  Conduct variance analysis to understand the reasons behind budget deviations and implement measures to address any issues. 6. Foster a Culture of Financial: Encouraging a culture of financial accountability within the organization promotes responsible spending and effective budget management. This involves setting clear expectations and empowering employees to make informed financial decisions. Set Expectations:  Clearly communicate budget expectations and responsibilities to all employees, ensuring they understand the importance of financial discipline. Empower Teams:  Empower department heads and managers to make budget decisions within their areas, promoting ownership and accountability. How FirstCXO Can Help: At FirstCXO, we provide expert guidance in budgeting and financial planning to help businesses optimize their financial performance. Our team offers comprehensive budgeting strategies, technology solutions, and performance analysis to support informed decision-making and drive growth. Whether you're looking to enhance your budgeting process or improve financial management, FirstCXO provides the expertise you need. Conclusion: Effective budgeting is essential for businesses to manage resources, control costs, and achieve strategic goals. By implementing best practices and leveraging technology, companies can create and manage budgets that support financial performance and drive growth. Partner with FirstCXO to enhance your budgeting capabilities and achieve your business objectives. Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob can be reached at 310-422-6858, bob@firstcxo.com . Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.

Are you contemplating recruiting a fractional executive for your business? Well, if you are considering it, you are headed in the right direction. It is one of the most advantageous investments you can make for your business. Small to medium-sized enterprises (SMEs) and start-ups can face many challenges and struggle to thrive in the fiercely competitive global market. However, with the assistance of fractional executives, these firms get a genuine opportunity to succeed without the prohibitive cost of hiring full-time personnel. What is a fractional executive? A fractional executive is an experienced professional a business employs to assume an executive position. Like their full-time counterparts, the fractional executive can assume senior management positions and execute crucial decision-making tasks. However, the fractional executive works part-time or on-demand. This type of relationship is an optimal choice for organizations that lack the resources to employ a full-time executive or do not require one. Many companies choose fractional executives as a cost-effective solution to get high-quality business professionals. Fractional executives are typically seasoned professionals with extensive knowledge in the sector or a critical business function, thus making them precious assets. Additionally, companies can engage a fractional executive’s services for a specific project, such as a marketing initiative, and terminate the engagement when the project concludes. This allows companies to maintain quality without the considerable cost of a full-time resource. Why are Fractional Executives Key for Your Businesses? If you own an SME or start-up business, consider recruiting a fractional executive. Navigating challenging periods at any company can be stressful and nerve-racking. During these periods, companies can benefit from the counsel of a specialist. Below are some of the reasons why companies should consider engaging a fractional executive. Business Growth To maintain your company’s expansion, it may be necessary to recruit individuals who possess key expertise and meet the specific requirements you want. Given their extensive exposure to various scenarios, fractional executives can provide guidance and counsel to help steer you on the correct path. Budget SMEs and start-ups are particularly cautious about their spending. Financial limitations hinder firms from recruiting highly skilled industry experts, although this does not imply that SMEs should entirely abandon the notion. SMEs can bring on fractional executives to provide their insights and expertise for a specific period instead of hiring a full-time employee. Strategic Approach Engaging a fractional executive can assist you in formulating a meticulously thought-out strategy. These professionals can examine all aspects of your organization and perform extensive analysis to develop a strategic plan. An effective strategy is crucial for achieving your goals by identifying and addressing opportunities and problem areas. Specific Expertise You may have multiple people on your team; however, they may only possess some of the talents you need. For example, your current team lacks the technological proficiency to develop a new product. A highly effective course of action would be to employ a fractional Chief Technology Officer (CTO) for example. This CTO can collaborate with you to design a customized technology plan for your business. Coach, Mentor, Right Hand It’s lonely at the top.  Making critical decisions is nerve-racking. Successful leaders have experienced and objective partners to bounce issues off and they collaborate with people who are smarter than themselves. Acquiring the services of an expert can help your entire team thrive. The right fractional executive can lead, manage, coach, and train everyone from the leadership team to the staff. Expansion To achieve scalable business expansion, it is imperative to seek the assistance of a knowledgeable professional. SMEs and start-ups cannot afford a pricey full-time seasoned executive, so their only alternative is to hire a fractional executive. Engaging a fractional executive will equip your firm with the necessary resources to facilitate growth and provide valuable perspectives to ensure the sustainability of that growth. Stable Financial Transitions While it is common for organizations to see fluctuations in their finances, the key to success is your ability to navigate these changes effectively. Employing fractional executives can assist here as well. For example, when an organization is performing poorly, it can enlist the services of a fractional CFO to develop a strategy to restore financial stability. A Less Risky Solution The departure of senior staff can place business owners in a highly challenging predicament. Recruiting new personnel with the right experience is difficult, time-consuming, and risky. Choosing a fractional executive is a practical solution. It facilitates the seamless functioning of a business by alleviating the risk associated with losing a key employee. Long-Term Results While fractional executives may have a short tenure with your company, they undoubtedly provide lasting advantages. Fractional executives can help establish a practical and effective strategy for your organization, which can benefit your company after the executive ceases working for you. Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob can be reached at 310-422-6858, bob@firstcxo.com . Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.

The Wall Street Journal has highlighted several key reasons for the growing trend of accountants quitting their jobs, leading to a shortage that impacts financial reporting. At FirstCxO , we are acutely aware of these challenges and strive to provide solutions that help businesses navigate these turbulent times. As a leading provider of interim CFO services and financial strategies, we recognize the crucial role accountants play in maintaining the financial health of organizations and the broader economic landscape. 1. Burnout and Work-Life Imbalance Accountants frequently face demanding workloads, especially during peak seasons, leading to long hours that often encroach on personal time. This relentless pressure results in high burnout rates, with many professionals reporting negative impacts on their personal lives. The traditional "busy season" in accounting, which can stretch from January through April, sees accountants logging extensive hours to meet tax deadlines and audit requirements. This unsustainable lifestyle pushes many to seek careers offering better work-life balance, where their personal and professional lives can coexist more harmoniously. 2. Technological Disruption The rapid advancement of AI and automation technologies has significantly transformed the accounting field. While these innovations streamline routine tasks, they also raise concerns about job security. This technological shift is not merely a matter of efficiency; it reshapes the nature of accounting work. Tasks that once required a human touch are now being performed by sophisticated software, leading to a reevaluation of the skills that accountants need to remain relevant. Consequently, many accountants are pivoting towards roles that emphasize creativity and strategic thinking, reducing the reliance on traditional accounting positions and opening opportunities in financial analysis, consulting, and business strategy . 3. Limited Career Growth and Monotony The hierarchical nature of accounting firms can restrict career progression, leading to frustration among employees. Many firms follow a rigid structure, where promotions are based on tenure rather than performance, causing stagnation for ambitious professionals. Additionally, the repetitive nature of accounting tasks contributes to a sense of monotony and lack of fulfillment. As a result, many accountants are transitioning to more dynamic and meaningful careers in other fields, where they can leverage their analytical skills in new and exciting ways. 4. Competitive Salaries in Other Industries The economic boom has created lucrative opportunities in sectors like banking and technology, where individuals with quantitative skills can command higher salaries. This shift has intensified competition for talent, making it difficult for accounting firms to attract and retain top graduates. Industries such as fintech, which blend financial services with cutting-edge technology, offer enticing salaries and innovative work environments that appeal to the younger workforce, further draining the pool of available accountants. Impact of the Accountant Shortage on Financial Statements 1. Diminished Talent Pipeline The decline in the number of students pursuing accounting degrees, coupled with high attrition rates, exacerbates the shortage of qualified accountants. This talent gap hampers the ability of companies to maintain accurate and timely financial statements. Universities and colleges have reported a steady decrease in enrollment for accounting programs, reflecting a growing disinterest in the profession among young adults. This trend signals a long-term challenge for the industry, as fewer new accountants enter the workforce. 2. Delayed Financial Reporting The shortage is evident in delayed financial reports and an increased reliance on temporary workers. Companies struggle to fill accounting positions, leading to potential inaccuracies and delays in financial disclosures. The implications of these delays are significant, as timely and accurate financial reporting is crucial for investor confidence, regulatory compliance, and strategic decision-making. 3. Salary Increases and Incentives To combat the shortage, firms are offering higher salaries and various incentives to attract new talent. However, these measures often fall short of addressing the broader issues driving accountants away from the profession. While financial incentives can attract candidates in the short term, they do not solve underlying issues such as work-life balance, career progression, and job satisfaction. At FirstCxO , our mission is to empower businesses by providing expert financial strategies and interim CFO services to ensure they thrive even amid these industry challenges. We offer a comprehensive range of services, including strategic financial planning, mergers and acquisitions support, and coaching and consulting services. Our team of seasoned professionals brings a wealth of experience and a commitment to excellence, helping businesses navigate complex financial landscapes with confidence. Whether you are looking to optimize your operations, prepare for a sale, or develop your leadership team, FirstCxO is here to support your journey towards sustainable success. By addressing these systemic issues and offering innovative solutions, we help our clients maintain robust financial health and operational efficiency. Your success is our commitment, and we stand ready to guide you through the challenges of today and tomorrow​. Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob can be reached at 310-422-6858, bob@firstcxo.com . Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.

Someone recently asked me, how does a CEO know if his/her company is at an Inflection Point?  By definition , an Inflection Point marks a significant change or a change in an entity’s growth curve. From my early days working in investment banking, to leading the finance and strategic planning functions of multi-billion-dollar divisions of public companies, to sitting on the board of a 3,200-location North American retailer going through bankruptcy, to leading strategy and M&A at a small-cap public company, to successfully prepping a tech start-up for sale, I have experienced many instances of companies at Inflection Points.  After 30+ years of doing this, I have concluded that there are three fundamental factors that indicate a company is at an Inflection Point.  They loosely fall under the headings of - Strategy , Management, and Money.  Let us take a quick look at each.   Not too long ago, a CEO came to me with the desire to sell his company.  After about a month of working with him and his team, I came to the following conclusion: if the company did not change how it was doing business, it would not sell in, but more likely it would be out of business.  It is safe to say the company was at an Inflection Point (e.g., possible bankruptcy).  Certainly, that Inflection Point was not the one the CEO thought the company was at when he engaged me (i.e., ready for sale).  The CEO’s strategy  to sell the business in the next year must be set aside.      I shared my assessment with the CEO.  To be honest, he did not initially agree with my thoughts.  It was not until the company closed the quarter with a significant loss that the CEO understood and accepted which Inflection Point the company was at.  This is where money kicked in.  A significant change in a company's financial condition (i.e., “ money” ) will indicate an Inflection Point.   So, what was the Money issue:  The company’s fixed costs were too high, and its revenue was too concentrated on a few client relationships nearing the end of their contractual lifecycle.  Several things needed to change.  In short, a significant loss (aka money ) led CEO to reassess the company’s strategy  and ultimately its management (the third key driver).  For the sake of time, I will not delve into details of management change, but rest assured, there were changes. Leap forward, the company has a new and more streamlined management approach and team, a far more efficient cost structure, and a more focused overall strategic direction.  As a result, its profit margin went up nearly 50% from historical rates, and overall profits went up by nearly one million dollars.  In other words, strategy , management , and money  all changed.  Fortunately for the company, the CEO was open to making these changes.   The CEO may still consider selling in a few years, but he is also more open and even excited about expanding the company through new service offerings, new partnerships, and even acquisitions.  So, a new strategy may be emerging, meaning changes in management  and a need for more money  are not too far behind.  I look forward to helping the company work through the next set of Inflection Points in its evolution.   If your company is at an Inflection Point and you are looking for an experienced strategic advisor to help you through it or considering selling your business, please feel free to contact me.  I look forward to assisting you.   Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.

Having spent the last 30 years as an investment banker, M&A advisor, board member, and CFO working with all sizes and types of companies and transactions, I frequently get asked by private company owners, “How much is my company worth?”  Below I will outline the valuation process with the hope of helping you better understand that complex question. In general, there are three main techniques used by thousands of valuation firms, investment bankers, Wall Street researchers, and business school finance professors to value a business.  They are called different things by different people, so I will use the terminology I learned when I first started doing valuations.   For simplicity, let’s call that the company that is the subject of the valuation the “Target” and the party doing the valuation the “analyst” or “valuation firm.”   Comparable Companies   In the “Comparable Companies” methodology, the analyst’s goal is to find publicly traded companies that have similar characteristics as the Target.  Characteristics could include industry, revenue, geography, customers, markets, etc.  The analyst then compares the overall stock market value + debt (the “enterprise value”) of the comparable company to that company’s relevant financial metric (e.g., revenue, EBITDA , net income), resulting in a multiple of the financial metric (most commonly EBITDA ) to the enterprise value of the comparable company.     Example: if a comparable company has a stock market value of $80mm and $20mm in debt then the enterprise value of a company is $100mm.  If a recent 12-month EBITDA of the company is $10mm, then the EBITDA multiple for the company is 10x ($100/$10 = 10). In the Comparable Companies method, like the Comparable Transactions method below, the analyst’s goal is to find as many comparable companies to the Target as possible - the larger the dataset, the better - without compromising the relevance and quality of the comparable companies. There is no hard and fast rule on what makes a company “comparable.” Nor is there a rule on the total number of comparables needed, but let’s assume 5-10 companies for now.     Once the analyst has a list of comparable companies, the next step is to collect the relevant financial information from those companies and create a set of valuation multiples.  From that dataset, the analysts will eliminate the outliers and then look at the low to high range, average, and median multiples.  Lastly, the analyst will apply the results of their analysis to the Target.     Example: Assuming the median EBITDA multiple for a set of seven comparable companies is 10x, the average is 9x and the range is between 7x and 13x.  Assume also that the Target’s latest EBITDA is $5mm, then the potential values for Target are: Median $50mm (10x$5mm) Average $45mm (9x$5mm) Range $35-$65mm(7x$5mm & 13x$5mm) Comparable Transactions:     Similar to the Comparable Companies method above, in the Comparable Transactions method the analyst looks for data from publicly available data for recent sales or acquisitions of companies similar to the Target.  This Mergers and Acquisitions (M&A) transactional information is available through public documents filed through the SEC (e.g., 8K’s 10k’s, etc.) and/or is gathered through other means (e.g., investor calls, new articles, etc.) Then, similar to the Comparable Companies method above, the analyst creates multiples of enterprise value from those transactions and applies those transaction multiples to the Target.   Example:   Again, assume the Target has EBITDA of $5mm.  Let’s assume the comparable transaction analysis comes up with ten recent comparable transactions with a median EBITDA multiple of 11x, and average of 12x, and a low to high range of 6-15x.  The range of values for the Target using the Comparable Transactions method would be: Median $55mm (11x$5mm) Average $60mm (12x$5mm) Range $30-$75mm (6x$5mm & 15x$5mm)   Discounted Cash Flow Method:     The next valuation method comes in various forms and can be called different things.  I am lumping all of them under the generic term of “discounted cash flow” (aka DCF).  In a DCF, the objective is to forecast the profitability / cash flow of the Target in the future (typically 3-5 years), assume a value of the Target at the end of that term (a “terminal value”), and discount all of the above back to today’s dollars using an appropriate discount rate.   There are volumes of financial textbooks written on the subject of DCFs.  I will not address them here as the subject is too complicated.  However, one thing to note is that DCFs are the backbone of how Wall Street investment firms value stocks.  Wall Street looks at the future potential of a company and discounts that future potential back to today.  DCFs are also how many VC firms or other investors value early-stage startup companies.  The idea of looking at future potential earnings explains why companies that have no profit or cash flow can be valued for hundreds of millions or billions of dollars.  (Think about Amazon in the early 2000s.)   Reconciling the Data (aka Averaging):   The last step in the valuation process is reconciling the data which I simply call “averaging.”  Now that the analyst has three sets of data (comparable companies, comparable transactions, and DCF) resulting in many different potential values, what is the Target really worth?  The true answer to this question is - whatever a buyer is will pay for it !  A more technical or legal answer might be: what a willing buyer and a willing seller, neither being under a compulsion to buy or sell and both having reasonable knowledge of relevant facts, agree to the value of the Target.   However, the entire reason for a valuation in the first place is to answer the “how much is my company worth?” question prior to or in anticipation of taking the Target to market.     So what do most valuation firms do with the data they have collected? They review the underlying data, the outliers, the overall market, the resulting valuations, etc. based on their expertise.  They then average the data, using some method of weighting the data as part of their proprietary process.  They then come to a range of values for the Target.     Does this Work?   Hopefully, you now have a basic understanding of the valuation process.  You may have noticed that there is a lot of “science” (i.e., math) to the process.  But you may have also noticed that there is some “art” to it as well.  By “art” I mean assumptions, creativity, hunches, etc. used in the valuation process.  It’s not all science.  For example, one valuation company's “proprietary” method of averaging will be different from another company’s, one company’s comparable sets will be different from another company’s, and one company’s terminal value and discount rate will be different from another company’s.  To hammer home the point, two different people at the same company will likely make different assumptions and can therefore come up with different valuations for the same Target.    So the big question you may ask yourself is “do these methods work?”  Given that most valuation companies use similar methods to value larger private or publicly traded companies, my general answer to the question is “yes these valuation methods work,” if for no other reason than if everyone is valuing companies the same way then they should all come to similar conclusions.     However, note that I said larger private or public companies above.  For smaller private companies, I suggest you read another article I wrote called: Company Valuations in the Lower middle-market.    If you are interested in a valuation, a sale or strategic business consulting and are looking for an experienced advisor, please let me know.  Thanks.    Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob can be reached at 310-422-6858, bob@firstcxo.com . Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.

Far too many times, I come across business owners and CEOs (owners) who say they have a CFO only to find out when I ask a few questions that the person they call a CFO isn’t a CFO.  In all reality, the owner’s CFO is really their bookkeeper, clerk, office manager, accountant, CPA, controller, chief accounting officer, or, God forbid, their uncle, nephew, spouse, or cousin Sal.  With that type of “CFO,” is it any wonder why the company isn’t growing, or profits have stagnated, or why the owner can’t sleep at night or has no viable exit strategy?   Decoding the Role: Unveiling the Functions of a CFO A real CFO is a strategic business partner, advisor, confidant, customer service person, and mentor to an owner.  Too often, owners think a CFO is supposed to put together their financial statements.  No!  A CFO is not your bookkeeper, accountant, or controller.  That is not their job.  Like any good leader, a true CFO will retain and lead people who are experts in those roles.  A true CFO will set the goals, objectives, and timelines for those tasks and will ultimately be accountable for the results.  But if the CFO is doing those tasks day-to-day, then your CFO is really a Controller. So stop calling them the CFO.   If your CFO doesn’t understand your marketing plans, the sales strategy, how your warehouse operates, who your key customers are and what makes them buy, or who the competitors are, or if they can’t speak clearly and confidently to your investors, bankers, or the board, or they can’t look you in the eye and politely point out problems with your strategy and offer up solutions, then fire them now!    One of my first bosses told me something that locked me into the finance field early on in my career; there are only two people at the company who need to know everything about the business - the CEO and the CFO. A CFO is a business planner.   One thing I have learned through the years is if you are CEO or an owner, it is lonely at the top.  A true CFO should be able to relieve some of that burden. If your CFO isn’t your right-hand man, you need to find one who is.    If you are interested in a valuation, a sale, or in strategic business consulting and are looking for an experienced advisor, please let me know.  Thanks.  Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob can be reached at 310-422-6858, bob@firstcxo.com . Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.

As fractional CFO and M&A advisor, I frequently come across CEOs and business owners (“Sellers”) who are thinking about selling their company. Frequently, Sellers are skeptical about the need to hire an advisor like me.  Afterall, advisors are not cheap.   For example, an M&A advisor will cost anywhere from 2.5-10% of the overall sale price of the company, depending on the size of the business sale.  Or maybe Sellers do not want to engage an advisor because they think they already know to whom they can sell their company. Or maybe they even have a buyer currently courting them.  So why, then, should a Seller hire an advisor?  The top 6 reasons are below.     Valuation As a business owner, chances are that you do not have a realistic expectation of the value of your company.  I cannot tell you the number of times I have been quoted unrealistic company valuations by potential Sellers.  So rather than guesstimate your company’s worth, why not engage an advisor whose primary occupation is to advise buyers and sellers of companies and can therefore give an objective and experienced business valuation based on tangible data? Make the Market:  One of the primary purposes of an M&A advisor is to find lots of potential buyers for your company.  M&A firms “make a market” for a business sale.  To be clear, one buyer does not make a market.   A market consists of multiple potential buyers.   So, while a Seller may get approached from time to time by one or two possible buyers, that does not mean those buyers represent what the company is really worth. The only way to know what a company is worth is to take the company to market!   The Benefits of Competition:  Running a competitive sale process has the potential to drive several key benefits.  For example, more potential buyers  increase the likelihood of more offers .  More offers increase the likelihood of a higher price .  More potential buyers also increase the probability of finding the “right” buyer  for your business.  More buyers also increase the company’s leverage  during the sale process.  If a Seller is only talking to one buyer, then that one buyer has all of the leverage .    Objectivity:   Let’s face it, most business Sellers only sell a company once in their career if they are lucky.  And when they do, chances are that their experience during the sale process is an emotional rollercoaster.  On the other hand, an experienced M&A advisor will sell hundreds of companies over their career thus giving them insights into what works and does not work when selling a business.  And because an M&A advisor does not have the personal and emotional attachment to the company that an owner, CEO or other member of management have, the M&A advisor should be able to remain objective during the sale process.   By remaining objective, the M&A advisor helps increase the probability of success. Keep an Eye on the Bottom Line:  Using an M&A advisor allows the Seller to keep their focus on operating the business at its highest level  during the sale process.   Any slip in company performance during the sale process opens the door to “re-trading” – the practice of renegotiating the purchase price of a company after initially agreeing to a higher price.  One of the key roles of the CEO or owner during a sale process is to make sure the bottom line stays healthy.  So let the M&A advisor focus on keeping the sale process moving forward while the CEO/owner keeps the business humming.   Momentum:  No matter what type of business deal you are working on, if someone does not keep the deal moving forward, then the deal dies.  Since M&A advisors are not distracted by day-to-day operating issues at the company they are trying to sell, and as M&A advisors are mostly compensated based on a success fee, M&A advisors are highly motivated to keep up the momentum during a deal process.  At the end of the day, momentum makes deals.     Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob can be reached at 310-422-6858, bob@firstcxo.com . Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.

Over the past few years, the term “fractional” has become popular in the business consulting world. But what does “fractional” mean? Let us break jobs down into 3 basic categories: Full-time. I think everyone knows what this means - right?  Someone works 40 hours a week exclusively for one company. A full-time role is intended to be permanent and exclusive to the employer. Interim:    For example, a full-time employee leaves a company for some reason (fired, parental leave, etc.) or a company feels the need to hire someone full-time but hasn’t yet.  In these cases, the company is looking to fill a role for a specific period of time. The person filling the role works for the company exclusively for that period of time. Another term for “interim” is “project based.” Fractional. A fractional executive works with multiple companies at the same time (say one day a week per company). They are not full-time, and they are not interim. Using more dated and clearly less sexy terminology, a “fractional” executive is a part-time consultant.   So, what is a Fractional CFO?   A fractional CFO is a strategic advisor to you and your company. They may hire, train, monitor, and lead your internal and external finance and accounting teams, but they themselves don’t do the accounting or booking. However, they will use the information provided by the finance and accounting team and the sales and marketing, operations, legal, technology, and HR teams at the company, as well as information from third parties (e.g., banks, CPAs, etc.) to create analyses, plans, metrics, and other strategic data to advise, guide and mentor a CEO or business owner as s/he looks to the future.   A true fractional CFO is a business planner, not a bean counter. If you hire a CFO to do your accounting and bookkeeping you are likely overpaying for that resource or you are inflating the title of the person doing those tasks. Both are costly to you.    Bob Fiorella   CEO and Founder of First CxO.  Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management.  Bob can be reached at 310-422-6858, bob@firstcxo.com . Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals.