Are you a CEO or  President of a company? If so, take this survey and be done in less than 4 minutes!!

We want your participation in our Annual NSS CEO Survey. The survey is anonymous, so your privacy is completely protected. The information collected from this survey will be aggregated and only the collective data will be shared.

We are conducting this survey to better understand how you view the current and future state of your organization and what is of importance to your company in moving forward.

We have experienced one of the worst economic cycles in the nation’s history.  From today’s afflictions to tomorrow’s aspirations, the annual NSS CEO survey presents a number of options that will contribute to overcoming challenges. Rank what priorities you think are most important and then find out what your peers are thinking.

How will you prioritize the next steps for your organization?

Within the framework of present state, future state, challenges and resources, please review and rank the following questions. It is a forced rating, meaning that we ask you to choose from most to least.

To take our survey, please go to:  http://www.surveymonkey.com/s/NLHHBP2

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Next Stage Solutions, Inc. 2011- Proprietary & Confidential

On May 11, 2011, NSS held a CEO Workshop concerning Budgeting and Forecasting.  The group discussed the different measurement criteria, value drivers and how to lead an ongoing budget process within your business. Flexible budgets, annual budgets and rolling forecasts were compared.  Here are two articles you may want to read that are relevant to this topic.

Contact Ben Weller, BD & CFO of NSS at weller@nextstagesolutions.com or call at 617-449-7728 ext. 710 for a consultation.

1. Let It Roll: Why more companies are abandoning budgets in favor of rolling forecasts by Russ Bangham of CFO Magazine, May 2011
2. Use a Rolling Forecast to Spot Trends by Harvard Business School Working Knowledge, March 13, 2006

Budgets and Forecasts represent two parts of a business management continuous improvement process. A successful enterprise must first have a clear understanding of its strategic plan. In fact Budgets and Forecasts are the financial GPS tools that carry strategy through to implementation.

How do you communicate and manage the goals for your team?

The workshop posed the following questions to our CEO participants;

• Do you see a budget as a Strategic or a Tactical tool?
• How can your budget reflect your strategy?
• Do you see your budget as more of a tactical tool, i.e. the performance yardstick for annual goals and compensation plans?
• Is the budget made up of strictly financial metrics?
• Where do you capture operational goals and performance measurement metrics?
• Is your budget implementation process a reflection of your company’s culture or is it a process within itself?
• Do you recognize your business and industry drivers within your budget?
• Does your budget have an expiration date, or do you keep it alive through continuous improvement forecasting?

Ben Weller, BD & CFO for Next Stage Solutions compiled the following check list as a hand out:

The measure of how you execute strategy is captured in the topic of Budget. But different areas of your business require different measurement criteria.

Budgets can refer to:

• Marketing Strategies
• Sales Plans
• Operational performance
• Human Resource development
• Capital Investment
• Financing Strategy
• Ownership Return

And can take on many measurement dimensions

• Fiscal
• Continuous Improvement goals
• Key Performance indicators
• Strategic Planning Milestones
• Benchmarked Metrics
• Customer Satisfaction

Budget Implementations can take on the personality of the organization

• Size of Company and distribution of authority
• Top Down versus bottom up management style
• Fiscal Micro management vs  Strategical Macro management
• Cash Flow is Primary Focus
• Performance vs External Expectations is a Priority

And all methods and uses need to focus on Business Drivers

• Variable Sales and Cost (Marginal Profitability)
• Fixed Costs
• Project Costs (New Product Introduction)
• Occupancy Costs
• Variable Energy Costs
• Headcount
• Average Selling Prices (Competitive Positioning)
• Efficiency (Labor and Machine Operations)
• Productivity

What Profiles of budget design fit with various industries

• Software
• Life Science
• Medical Device
• Manufacturing
• Food Production
• Professional Services

What are the various focuses of forecasting and where do they apply

• Traditional Rolling 12 Month forecast
• Sales Driven Top down vs trend based
• Cash Flow vs P&L
• Analysis vs Plan
• Current State vs Future State (This involves lean accounting and is a whole other topic)

If you are interested in this topic and would like to explore rolling forecasts further for your business, NSS provided a customized one-day workshop.

Contact Ben Weller, BD & CFO of NSS at weller@nextstagesolutions.com or call at 617-449-7728 ext. 710

If you are running a company, Intangible Capital (IC) is a must read. This newly published book (2010) by Mary Adams and Michael Oleksak addresses the knowledge economy and its shortcomings in how we value corporations today. It is a provocative book, but an excellent read reflecting a deep understanding of how businesses work and how the intangible is becoming more important than the tangible. How do we account for that?

According to IC, only 30% of corporate assets are tangible, what about the rest? Knowledge assets are simply not measured, leaving 70% on the table. Today we have no good approach in how to account for the changes, not short term nor long term and certainly not in terms of inclusion in Financial Reporting. The book divides the knowledge intangibles into three classes of assets: human, relationship and structural capital and every chapter provides a set of tools.

Working with early stage companies, I often found push back from CEOs not wanting structure for their businesses, as it was viewed as a hindrance to innovation and entrepreneurial thinking. Intrigued by this fact, I wrote an article From Dissonance to Harmony to emphasize the importance of striking a balance between no structure and a hierarchical structure within the innovative community. I agree with the book that today’s business must have fluidity and flexibility and be an engine for ongoing learning, to allow for new thinking and better ways of problem solving from all employees with the ultimate goal to bring best value. Since the Google phenomena and vast technology advances, we have moved further into the knowledge economy. The authors were right on in suggesting leading as a conductor (horizontal) rather than the more traditional as the commander (vertical). I love that vision.

Another intangible asset is collective knowledge, a topic near and dear to me and how I believe Next Stage Solutions (NNS) is evolving. IC points out that markets coupled with technology today move so fast, that no one person can have all the information. This is certainly true in financial services where rules and regulations are changing almost daily. Within NSS, we work as a team of senior level financial experts exchanging ideas and solutions empowering each member to greater knowledge on behalf of our clients. The book explains how shared knowledge multiplies and emphasizes the necessity for value creation.

It continues to describe how it is imperative that a business today examines what its core competency is and looks at outsourcing all other aspects of a business. This leads in their opinion to the relevance of strong external partnerships or ‘relationship capital’ where what is not core to you is core to your partner, collectively creating a powerful engine, what the authors call a Knowledge Factory, displayed creatively with Legos in the book. The importance of networks and technology are significant facets of doing business.

All in all, I loved this book because it describes so well in how to think about a 21^st century business. It validates NSS’ approach in many aspects, but more importantly for me, it gives me tools and metrics in the continued development of our knowledge and innovation strategy. The Knowledge Factory demands that we look at our business holistically and all involved must be engaged. Only then does the collective knowledge fuel our economic engine.

Make sure to get a copy of Intangible Capital today. The flexible business model is here to stay. It includes a mapping of the networks, multiplicity of goals and benefits with bottom up thinking. Congratulations to Mary and Michael with the publication of this innovative and pioneering book, helping businesses look at intangibles in a better way for doing business today and the future. Let’s continue the discussion in how to account for intangibles in business valuations and in our financial reporting.

Title: Intangible Capital, 2010
Authors: Mary Adams and Michael Oleksak
Publisher: Praeger, Santa Barbara, CA
ISBN: 978-0-313-38074-7

Laurie Taylor joined the NSS team recently.  He has over 20 years of experience and has worked with multiple start-up as Controller. We are delighted to have him on board.

Most Satisfying: In your CONTROLLER work you have done in the past, what is the most satisfying feedback you got from the CEO?

Nineteen out of twenty client companies have offered me a full time position during the engagement.

Most Inventive: Given that as CONTROLLER we understand the importance of providing our clients with more than just accounting and financial reporting, share with us a project that truly made you a value creator.

I began a two person project to determine why a major bank’s ATM conversion had an out of balance total of $19M after the merger of the two banking systems.   The bank booked a 200k reserve to cover this reconciliation exposure.  I requested a Bank Tiger team to assist my current consulting team and at the end of the project we had completely reconciled the account and were only unable to account for $9k in bank funds.  We also discovered a major systems glitch that was the result of the systems merger and trained the banking staff to recognize the problem and how to correct the system if it occurred again.

Most Positive: CONTROLLER’s have different skill set, yet often we are viewed as one of the same.  Tell us a story where your actions made a powerful positive change and why.

I was assigned a project to take over for a Director of Finance at a specialized moving van company.  I first determined that there was a massive amount of misspending going on and no one was managing the AR accounts.  In 6 weeks we were able to make enough corrections that company was stable enough for sale to a much better funded and staffed regional carrier.  The sale of this business unit saved 250 staff member’s jobs as a result of the merger instead of a company closure due to prior management neglect.

Best Business Book: What should every CEO be reading going forward in this tepid economy?

The Why of Work: How Great Leaders Build Abundant Organizations That Win by
David Ulrich and Wendy Ulrich

Funniest Fact: Tell us something funny about you.

I am crazy about WWII aircraft that have massively supercharged engines that “go fast, stay low, and turn left!” also known as the National Championship Air Races held each fall in Reno, NV.  The only rules are that these planes must have a prop and straight wings.

By Mark Ott, CFO Consultant, Next Stage Solutions, Inc. (NSS)

While the M&A market is fairly quiet as we enter the summer doldrums, it is a perfect time for owners and boards to think about what preparations can be made now in anticipation of selling a company when the market does open up.  Over the next several months, I will highlight some of the key financial issues that you should be thinking about and preparing for during this quiet period.

Are Your Historical Financials In Order?

In discussions with potential buyers, one potential red flag is a set of historical financials which doesn’t stand up to scrutiny.  You should have a complete set of financial statements (Income Statement, Balance Sheet, Cash Flow) for the previous three years (two minimum) which have either been reviewed by or, better yet, certified by outside auditors as well as unaudited interim financials for the current year.  If your accounting is currently on a cash basis, you should consider changing to an accrual basis (after consulting with your tax advisor) and it would be advisable to ensure that your accounting is in compliance with GAAP (Generally Accepted Accounting Principles).

Most companies have someone in house to do their bookkeeping but it is wise to have an independent company like Next Stage Solutions (NSS) come in and review the historical financials and get them in good shape.  NSS has strategic-thinking CFO’s who have experience in leading companies through the M&A process.  Their participation in this phase will actually pay for itself to some degree as it will reduce the cost of the review/audit by the outside audit firm and accelerate the process.  Furthermore, you cannot use the same firm to prepare the financials and then audit/review them.

One other good reason to have sound historical financials is that they will better enable you to Prepare a Credible Forecast which will be the subject of my next article.

Mark Ott joined Next Stage Solutions this Spring.  Read on to see what Mark has been up to – he has a great story to tell!

Most Satisfying: In your CFO work you have done in the past, what is the most satisfying feedback you got from the CEO?

The most satisfying feedback I received is when the CEO told me that he knew he could spend a considerable amount of time out of the office (with customers, investors, board members, press, etc.) knowing that everything back at headquarters was being looked after with me looking after things.

Most Inventive: Given that as CFO we understand the importance of providing our clients with more than just accounting and financial reporting, share with us a project that truly made you a value creator.

When we moved a company from California to Massachusetts, I had to build a complete infrastructure pretty much from the ground up.  This included the recruitment/interviewing and engagement/hiring of new corporate attorneys, external auditors, Accounting Manager, Office Manager, and Human Resources Manager as well as establishing new banking relationships and corporate insurance programs.  All of this had to be done in a matter of three months.

Most Positive: CFOs have different skill set, yet often we are viewed as one of the same.  Tell us a story where your actions made a powerful positive change and why.

When I was European Controller for a large networking company, I had eight country controllers reporting to me.  Some of the countries (like the UK and Germany) were larger contributors to the results of the overall operation than others (like Spain and Sweden).  In that environment the controllers for the larger countries tended to be more influential in group decisions and the controllers for the smaller countries would sit back and complain that their needs were always overlooked because of their size.  This ultimately led to a team that did not work very well together and this was reinforced by pre-existing cultural differences.  One of the things I did to turn this around was to solicit ideas from the controllers concerning topics to be covered in an upcoming quarterly staff meeting.  When the time for the meeting came, I appointed the controller who suggested the topic as the leader of the discussion leader and subsequent action items.  This forced the smaller countries to play a much more active role in the group in identifying their issues and forced the larger countries to sit up and listen and help find solutions as they were cast in more of a “follower” role.  Following this pattern in subsequent staff meeting resulted in a much more cohesive pan-European staff.

Best Business Book: What should every CEO be reading going forward in this tepid economy?

“Leadership in the Era of Economic Uncertainty:  The New Rules for Getting the Right Things Done in Difficult Times” by Ram Charan, McGraw-Hill.

Funniest Fact: Tell us something funny about you.

My fraternity brothers used to call me “Howard”, which is my middle name.  They thought that it was an “amusing” middle name, so they thought they could get me going if they kept calling me by that name.  It worked for a while but the nickname stuck throughout college and they will even use it today in those rare occasions when we get together.

Stay tuned for our next team member’s story!

Last month the Wall Street Journal published an article For Rent: Chief Financial Officer by Raymond Flandez, commenting in how more and more firms are outsourcing this high level function of management. For businesses small and large, especially companies that want to grow, the finances do get more complex. He points out that many of these ‘Rent a CFOs’ are also Certified Public Accountants.

I agree wholeheartedly with Flandez’  assessment  that an outsourced interim or part-time CFO is a capital efficient way to access this expertise and an outsourced CFO can be more objective and give a reality check. I also agree that many of the CFOs are indeed CPAs and this is partially due to the Sarbanes-Oxley Act of 2002 (SOX)  that has driven businesses and their CEOs more to the compliance and technical side of finance enforcing the common belief that if you have a controller and an accountant your financial needs are covered.  That may apply to life style companies who do not intend to grow but simply run a sustainable business.

From this juncture, however, is where I begin to differ.  A company with expansion and growth in their forecast, the paradigm has to shift drastically from technical to strategic. In fact, not recognizing the importance of strategic finance and solely relying on your controller’s risk aversion, you may be holding your company back from that growth.  Here is why I think so.

For a fast growing company, the financial spectrum has to be broader and therefore more complex as pointed out by the author of the WSJ article.  You want to consider a broad based and strategic CFO, one that picks up where the CPA or controller leaves off.  The CFO is your business partner and brings a strategic organizational mind set to the discussion and understands the importance of mapping out the corporate strategy into multiple roadmaps.  Given uncertain economic times, this is more important than ever.  Finance for emerging businesses brings a complexity that is more than accounting and number crunching.

The CEO needs to fully understand the financial ramification and bottom line each decision triggers. SOX compliancy has driven us too far towards the tactical aspect of finance forgetting the importance of looking forward, checking your Financial Headlights.  The CFO plays an important role acting as conduit to growth and walking the fine line between the risk-averse controller and the visionary CEO.  Your future CFO needs to have average appetite for risk, not too little and not too much, understand how to translate the corporate strategy and be a true value creator and not a gatekeeper of growth.

Rudi Scheiber-Kurtz, CEO
Next Stage Solutions, Inc.