Vinod Keni, Executive Director, MyCFO
These are exciting times for entrepreneurs. Though it is no walk in the park, more and more people are turning to entrepreneurship and working on exciting ideas that could be large and successful enterprises. Today, businesses have access to capital in the form of angel, venture and growth capital, provided their business models are proven and reasonable, they have a team to execute and are building sustainable organizations. And, of course, there are friends, family and fools.
As an angel investor and consultant, I have been investing and advising startups for a while. I get to meet enthusiastic entrepreneurs and teams looking to raise capital. Several of these are good businesses, but are not necessarily fundable by venture funds or angel groups. Investors and financiers define ‘being fundable’ differently; individual angel investors may fund a startup that is not necessarily attractive to venture funds. What is fundable by venture capital or private equity may not be fundable by angels or individuals, and what is not fundable through equity may be fundable through debt. As a first step, I always tell entrepreneurs and companies that they need to analyze and understand why their startups or businesses may be fundable. This saves time, avoids disappointment, and allows you to focus on building your business.
S Venkat, Co-Founder MyCFO
It is that time of the year when you as entrepreneurs or finance professionals will be planning the budget for FY17 – 18. Having helped over 300 companies with their Budgeting and Business Planning process over the last 5 years, the MyCFO team has put together this blog to help you get more value out of this exercise.
Here are some pointers that will help you plan more incisively and get an output which is not just an excel spreadsheet but gives you a real shot at moving your organisation in the right direction at the right pace. As part of this new year’s new resolutions, make your budget reflect where you want your business to go and how you want it to grow. Take a conscious step back; see where you are and then, move on to see where you want to be. Or where you can be. Your budget is a map. Here are some pointers as to how you could draw it.
Deepak Narayanan, Co-founder, MyCFO
This piece is not about start-ups and young entrepreneurs.
Its about the investors who are wooed by businesses and pump money into the Indian business ecosystem. It is about ‘Investor Delight’ which is not equivalent to appeasement. It’s about making them quote your company as one of the positive examples in their portfolio which can only have a positive spin off for all concerned.
India is the third most preferred economy by venture capitalists and private equities. What businesses need to understand is that Venture Capitalists and Private Equity investors are seeing potential in India, yet, they are looking at more mature and sound businesses/ ideas. After the head over heels rush a couple of years ago, investors are being cautious. They are beginning to understand that the growth spurt of start-ups has slowed down and businesses are beginning to settle down and find their niches. These developments need to be communicated to investors regularly by CFO’s and founders so they are well informed.
S Venkat, Co-Founder MyCFO
Today’s CFO is more than the custodian of the investor’s wealth and a conduit to the Board of Directors and share-holder community at large. The modern CFO aligns with the CEO as an equal partner to increase profitability and improve cashflows while providing operating and financial metrics to measure business performance.
A CEO is the one who has a long-term vision and uses the metrics to deliver on the agreed direction, pace and quality of business growth. To become a CEO is not every CFOs ambition. Those who want to, and make the cut to the corner office, are individuals who have a vision for the organization. They can think beyond ‘generating numbers’; they ‘apply’ them to the business and get results. Needless to say, other CXO’s are in the running for the corner office, but the CFO is getting more and more preferred for this role. But a CFO has stronger connects with the Board and investors, and therefore is already aware of their expectations. Besides, he also has a sound grasp of processes, solid understanding of the levers that move the business and close working relationships with all functional heads in an organisation. With the external business environment becoming more volatile and uncertain, data driven decision making are at a premium. Since the CFO has access and understanding of all these, he/she is being preferred more and more to maintain a steady state of the business.
CFOs also have the ability to translate business performance into a language that is understood by investors. With the proliferation of PE and VC funding and with primary markets looking up again, the ‘articulation’ provided by the CFO is an attractive attribute to look for in the CEO candidate. Continue reading
Arun Sriram, Sr. Finance Professional, Unilever
One can quite easily spot an accountant in an organization during a floor walk. You need no directions to find them. He is that one person whose office is situated close to the seat of management. Yet, with a sense of detachment, goes about his business with minimal influence of the action that dictates the business leadership’s excitement.
The one whose mother tongue is excel. The one who thinks smiling a bit extra would leak dollars from his teeth.
Come to think of it at a slightly deeper level, the accountant’s profile has two components. By an accountant, I am including the CFO and the Controllership org in entirety.
One is more straight forward – as a custodian of the investor’s wealth. So there is a natural tendency to be guarded about information sharing. Continue reading
R. Murali, Vice President – Client Delivery
Ask any start-up Founder and CEO how big her company is and she is bound to rattle off revenue, cash-flows and projected profits. But ask her if her founding team includes a finance expert, chances are that the answer is ‘No’.
“Given the emphasis on finance, valuations and million-dollar dreams that entrepreneurs set out with, it is ironical that too few start-ups actually have finance as an in-house function,” said Sachin Sancheti, Chief Technology Officer and Founder at the 18-month old cloud-service provider Scalable Solutions. “I have not yet met or heard of a technology start-up that has a finance expert as one of the co-founders.” This, he attributes to the fact that business ideas, which go on to become business offerings, typically emerge from technologists and business folk. “Before we start out on our own, we tend to meet with and ideate with those like ourselves in technology or project management teams. Rarely does a finance person figure in those sessions.” Mr, Sancheti got lucky, when a relative, a qualified accountant, was willing to bet his all on Scalable and wanted to be part of the founding team. “You need a co-founder you trust and with a close relative, trust comes first.”
Deepak Narayanan, Co-Founder, MyCFO
With increasing complexity in the business environment, CFOs need to work closely with key stakeholders in drawing up risk mitigation plans
Every finance department and CFO aspires that the function that he/she leads adds value to the business. Finance and the role of a CFO in being a driver rather than just being a record keeper is now a part of virtually every finance transformation session. Most of us are aware of the role of a CFO in being able to contribute to the company’s strategy, growth, work with cross functional teams, manage and lead board discussions and investor relations and build robust systems. While these are part of the daily discourse on the role of a CFO and also a part of their job descriptions, there are areas where CFOs and finance teams are doing interesting work to improve the effectiveness of the finance function and contribute to the business. Here are my three picks:
Founder & Director
Come January and many companies will commence the annual ritual of the Financial Budget. Last year Budget will be dusted off, actual year-to-date performance will be reviewed, next year performance target will be demanded from business heads, numbers will be negotiated, financial planning and analysis (FP&A) folks will crunch and consolidate and voila, the EY 16-17 will be ready!
Certainly, this is how the ‘classical’ budgeting process works. But is this how companies now do their budget today? A large number of companies no longer follow this approach and even if they do, the Budget is no longer the ‘Holy Grail’ of annual planning.
Here are 5 reasons why.
Lakshminarayanan Hariharan, PMP
Vice President at MyCFO India
It is an assumption that implementation and use of technology – hardware, software and tools – will result in fueling growth to business. Growth must not be merely defined as top-line growth. It should be inclusive of efficient supply-chain management for inventory control, cash management, fast-tracking period closing and performance management.
The leverage of technology is very diverse from industry to industry. Aerospace, medical, digital, media, research & development etc. witness higher adoption of technology to provide an edge for companies. On the other hand, companies in retail, manufacturing and BFSI segments leverage technology for efficiencies in business process and delivering quality customer services.
There is a conscious effort across industries to eliminate or limit the amount of in-person services that the organization used to provide and instead the customer is being provided the platform to use / source the products or services, get data and analytic’s , and provide intelligence for decisions, all through the leverage of technology. The following graph gives an industry-wise representation of IT spending as a percentage to revenue, providing an insight on the extent of IT leverage across the board. Continue reading
Founder & Director
“The company benefits immensely if the finance and human resource functions are in accord”
The HR Head and the CFO are the respective leaders of the ‘soft’ and ‘hard’ domains in a company. The former deals with people,culture, and behaviour – the soft side;the latter with data, facts, and money – the hard side. While these may look like completely divergent functions, for a company’s success, they need to be in harmony.Most crucial decisions are usually taken collectively, often with unanimous feedback from both the soft and the hard sides of businesses. Continue reading