profitability Archive



August 2012



Strategy – why do we even bother with all of this? (b)

Written by , Posted in Strategie

Balance sheet Your balance sheet – yes, you have seen it when the yearly accounts were prepared but it really did not matter to your start-up. For you the one and only key was liquidity in the beginning, followed by profitability but what now? Yes, those accounts become important eventually. What do I mean by that – well, once you have established your strategic goals you will need to optimize your balance sheet accordingly. If you are preparing for a sale, potential investors (and their highly-skilled forensic accountants) will look at your accounts. Are you planning to change your debt to equity ratio and work with more capital? Will a bank lend you money? Are you going to build / buy your next office or remain a humble tenant? There are a lot more questions to ask and you are now playing with the big boys. A Fortune 500 CFO will be very concerned with her balance sheet and watch movements in these accounts closely. As an eCFO of a start-up this is a new area for you and you should slowly get into it as your business develops. In summary a balance sheet can also teach you lots of […]



Mai 2012



Controlling – a CFOs sole purpose in life!

Written by , Posted in Allgemein

Controlling is a key aspect for each new venture. It starts out initially with a solid understanding of cash flows and moves across various phases as a business growths. In my experience the key aspects for each venture development stage can be summarized with the following headlines: Liquidity awareness Profitability measures Balance sheet optimization Each of these three steps requires different controlling techniques and management focus on various aspects of the business. As a venture develops it is not only these above mentioned points but also controlling techniques for each key business resource that will keep management busy. Also be aware that, “measures” and “optimization” have been picked on purpose – your role as a CFO will change with each of the steps listed above. You will move from making decisions that might be bad for profitability but good for liquidity to pure financial engineering actions that will optimize your balance sheet. This also requires a move in your strategic thinking from survival (liquidity), to operations (profitability) to strategic, long-term goals (balance sheet and capital structure optimization). eCFO Tip: Controlling is all about data ANALYSIS and FOLLOW-UP ACTION. If you cannot effectively collect, store, organize and eventually analyze data you […]



Februar 2012



Liquidity – the one and only!

Written by , Posted in Allgemein

It is no coincidence that the first post is about liquidity. Liquidity is the ONLY measure that eCFOs need to focus on from Day One and should focus on for the entire life of any venture. All other considerations, from profitability, growth to balance sheet optimization are irrelevant if you run out of cash. 1st day measures For a new venture or an eCFO joining a new company I would recommend the following steps for the first 3 months to become instantly familiar with the cash flow profile of your company: 1. The second you arrive make sure that all bills and invoices have to be signed by you and that you cover all cash out- and inflow channels eTips: Don’t forget about online specific issues such as PayPal, Adwords & Adsense accounts, facebook ad accounts; linkbuilding accounts etc. Here you have a source of expenses and income that can come as quite a surprise. 2. Establish a spending limit – currently any expense that is above EUR50/USD40 should be approved by you – any you only. This lets you get an insight into the spending pattern of the company. 3. Check every transaction on your bank account daily. Don’t […]