Welcome to BlogFather.net - home of the free Blog offer you "just can't refuse!"
If you have ever wanted to carve out your own little place in the online world, a personal weblog (aka Blog) is just what you need! BlogFather has been designed to be incredibly easy to use. Even the more un-technical people find it as simple as "point and click!" You can be up and running with your very own personal Blog in less than 10 minutes. Just following the steps...
Simply submit the form
to the right to signup...
Enter your Blog content through
your BlogFather Control Panel...
Publish your site and allow
others to syndicate your content!
It's as simple as that... get started right now!
You can also scroll down to browse through thousands of Blogs from people just like you all around the world! Just select a Channel and you're on your way! You can subscribe to any Blog by simply using the RSS Feed link displayed on that page. Have fun... and be nice to Guido!
My name is Michael Barbarita and the name of my company is Next Step CFO. At Next Step CFO we provide Chief Financial Officer Services. You see, companies from start up to 10 million in sales cannot afford nor do they require the services of a full time CFO. We provide Cost effective CFO services on an as needed basis.
I am an entrepreneurial CFO with over 25 years of experience in owning retail manufacturing and service companies. I truly understand the risks of business ownership.
I understand what it feels like to have to make a payroll on a Friday with no money in the bank account on Wednesday. I know what it feels like to see employees sitting around or being disruptive. I know what it feels like to have a lot on the line.
What are CFO Services? Well as I go through these CFO services please keep in mind that you can choose one of them, some of them or all of them and at any time. You certainly do not have to do everything at once. That is the beauty of the flexibility of having a Part time CFO. And remember, I am hands on. I work in your office in real time.
And now for the services….
I make sure you have good financial numbers. Making business decisions without good numbers is like a Doctor making a decision to operate on your ankle without X-rays. It simply shouldn’t be done. So the first thing I do is if your numbers are not right I make them right.
I also Identify, assess and mitigate risk. Whether you are Microsoft or the local Laundromat your business has risk. The question is how severe are those risks. You and I will work together to Identify the risks in your business. I will also assess the severity of that risk and if severe I will suggest actions to mitigate the risk. Severe risks in your business could be cash flow problems, low or no cash reserves, the need for financing, employee risks, inventory obsolescence risk, legal risk and personal liability risk. I will help you Identify, assess and mitigate risk.
I tell you when it is cloudy not when it is raining.
Business Owners hate surprises. They need to be prepared so they can review options and have time to fix whatever needs to be fixed. The last thing business owners want to do is go into fire drill mode and have no time to react. I developed an exclusive forecasting and modeling tool called CashTell. CashTell is used exclusively by Next Step CFO and gives the business owner the needed foresight to take action. CashTell gives the business owner the time to react to both downturns and upturns in their business. Click the CashTell link on the Navigation Bar of our website to learn more.
I also help you determine and develop metrics to evaluate your business. Metrics are quantitative parameters that help you evaluate the performance and productivity of every aspect of your business. Metrics are a terrific management tool and I will show you how to determine and develop the right metrics for your business.
I also help you Drive results, contribute to business development, help shape your financial strategies, identify employee theft, improve controls and processes leading to operating efficiencies and also help you develop and execute exit strategies. After all someday you will be separated from your business. I will work to make it a great day.
It is important to note that I work free of charge while I learn about your business. As a fellow business owner, the last thing I want to do is pay someone while they’re learning about my business.
It all starts with a free consultation. So please give me a call at 781-326-3822 and let’s start working on improving the financial health of your business. Thank you for listening.
Feeds for CFO [Information and Resources For Business Owners from an Interim CFO ]
When you click on the link some software will download and only take a minute or two. The play button to the presentation is in the top left hand corner just beneath my name
Thank you
Michael Barbarita
Next Step CFO™
Tel: 781-326-3822
Web: Part Time CFO
One of the biggest challenges I have as a Part Time CFO is working with distressed companies. These are companies that are very insolvent and have had a recent history of significant operating losses or were companies that were always on the edge and then developed more significant problems during the current economic downturn. These are usually companies whose business owners never admitted there was a problem until it was too late. These are usually companies who did not prepare business or cash flow forecasts or a strategic plan or exit plan. These are usually companies who are reactive versus proactive. Since in business is is 80% ingenuity and guts and 20% luck. These could be companies that were simply not lucky. Most of the time the softest landing possible crushes the hopes and the dreams of the business owner and it is not an easy position for the CFO.
When working in these situations you look for the softest landing possible. 95% of the time the softest landing possible is viewed by the business owner as a nightmare. This is understandable because the softest landing possible usually isn't selling the business for millions of dollars which is the dream of most business owners.
The personal liability situation of the business is an important consideration when seeking the softest landing possible. Usually the rule of thumb is the more personal liability exposure the harder the landing. This is usually the case because the more personal liability exposure the business owner has the less the impact the corporation has to protect the business owner.
I am going to write about 3 possible options when a business is insolvent that may provide the softest landing. I am going to explain each one only briefly because I am not an attorney and I urge everyone contemplating these options to consult an attorney.
1. Bankruptcy. I think we are all familiar with this one. This may have to be combined with personal bankruptcy of the business owner due to excessive personal liability incurred in the business. Another consideration with this route is also the cost. It can be expensive especially the business bankruptcy. Sometimes a bankruptcy filing can be used as leverage with creditors and also at times with hostile partners. You have two forms of business bankruptcy which are Chapter 7 which is a complete liquidation and closure and Chapter 11 which is a reorganization. With a Chapter 11 or reorganization one of the most important factors is will the trade supply you? This is when the business owner has to rely on whatever relationship equity they have built with the trade. Chapter 11 is only viable if there is some type of debtor in possession financing available or if operations can be funded by only paying current expenses and a very small piece of old debt.
2. Private Foreclosure Sale. This is when there is a bank or other senior creditor in first position to be able to take all of the assets under a security agreement with a filed UCC. An acceptable offer is made to the senior creditor by an outside investor usually for less than what is owed the senior lender but probably for more than the senior lender would get if they liquidated the company. Only the assets of the company are simultaneously seized and sold to the investor in a private foreclosure sale. The liabilities are left in the old company. A deal is made by the outside investor with the current business owner for either equity in the new company or a job/consulting position or both depending on the business owners desires. Available cash before the foreclosure sale is used to pay down or negotiate with personal liability creditors. On one hand the trade loses what ever the company owed them, but on the other hand they could perceive new management and new majority ownership and a new day to do business with someone who will pay.
3. Strategic Buyer. This is when you can find a buyer who is in the substantially the same business. A strategic buyer will be in a better position to work fast and also will pay the most while seeing an opportunity to expand their business. The strategic buyer buys all or selected assets and none or selected liabilities. The purchase price and earn out (there is likely to be an earn out as we are talking about a depressed business with an uncertain future) needs to exceed personal liabilities and any secured creditors with perfected security interests (filed UCC's). The seller needs to be prepared to offer settlements to creditors giving priority to creditors with personal guarantees. This is not easy to do but can be a way out. In this option the trade knows the strategic buyer and although the trade knows they have probably lost the receivable they have a stronger company to do business with who they are familiar with.
Once again, these are all complex strategies and every situation is different. Experienced lawyers must be obtained to see if any of these options is right for you. I have personal experience with all of these scenarios and it is important to review each option carefully to flag the risks and opportunities. These are 3 possible options to provide the softest landing possible for an insolvent company. The challenge here for the CFO is to explore all of the options available to the company knowing that each option likely presents unpleasant downsides for the business owner and you must identify the option that presents the least unpleasant downsides. Keep in mind that it is also likely that the worst thing you can do is nothing. Therefore it is important that the Chief Financial Officer stays focused on continuously influencing the implementation of the softest landing possible.
Should I acquire new equipment and if so should I lease or buy it?
Can I afford another employee?
Should I layoff an employee?
Where is cash going to be next week, next month or even next year?
My name is Michael Barbarita from Next Step CFO where we provide Chief Financial Officer Services to small companies on an as needed basis.
Through the use of my exclusive forecasting and modeling tool called "CashTell" I can create multiple what if scenarios to get concrete answers to all of these questions that business owners literally stew over.
Michael Barbarita
Next Step CFO™
Tel: 781-326-3822
The reason you need a Part Time CFO and the reason why I am in business is to empower the business owner with the information and analysis they need to achieve business success. I do this through the use of proprietary tools and strategic planning and the end result is improved cash flow, increased profit and reduced business risk.
Michael Barbarita
Next Step CFO™
Tel: 781-326-3822
There are 3 components of cost. These 3 components of cost are material, labor and overhead. As a Part Time CFO, I see a lot of business owners eliminating overhead from their cost calculations. This can lead to operating losses and cash flow problems.. Usually the reason the business owners misses overhead is they do not understand how to calculate overhead nor do they know how to incorporate overhead in their analysis.
The easiest way to calculate overhead is as a percentage of sales. Take all of the projected overhead expenses for the period you want to analyze. The period can be a month, quarter or year and divide these projected expenses by the amount of projected sales. As you go forward if sales are lower or higher than projections by 10% or more you should recalculate the overhead rate based on the new projected sales. The same recalculation needs to be done if your projected expenses are off higher or lower by 10% or more. This percentage needs to be applied to the sales dollars associated with each sales transaction or quote. You can also simply take last year's actual results for overhead and sales and perform the same calculation on actual results instead of projected results. I like to use projected results. Other than sales there are other ways to calculate overhead using labor dollars or labor hours, but I like to use sales.
There are many schools of thought regarding the calculation of overhead and incorporating overhead in cost calculations. Some do not like accounting for overhead in their cost calculations because they say no matter how much the sales price exceeds material and labor, the overhead will begin to be paid and that is their only objective. I say a couple of things about that. First, sales better be high enough otherwise if you employ this school of thought you will guarantee yourself you will not be profitable. Even if sales exceed material, labor and variable overhead by just a few dollars you will eventually pay for all of the fixed overhead but the sales must be high enough and that is a huge risk. Second, an argument can certainly be made that a sale that at least covers some overhead is better than no sale at all, however are you sure there is no other sale out there that you are not making that covers more of your overhead or all of your overhead or do you justify giving your product and service away just to make a sale knowing it is covering some overhead?
Note I added the term Variable Overhead above. Sometimes there are expenses that a business owner calls overhead, which can be considered overhead but are actually expenses that are variable to sales. Expenses such as credit card fees or gas where a service performed is going to require going to a specific location need to be identified as variable. Variable overhead should be incorporated as part of the expense component deducted from the selling price to determine profit before fixed overhead.
My view on overhead is that the business owner needs to know what the overhead component of their product or service is so that they know what their true bottom line is on each and every transaction/quote. Unless your expense and/or revenue projections are way off, knowing the true bottom line on every transaction will give you the piece of mind that all costs are accounted for and that the bottom line on the transaction/quote is credible. At the end of the day the business owner can use their own discretion as to whether a sale that does not entirely cover fixed overhead is worth making. If it were me I must be extremely confident that there is no other sale to make that will give me a better return before I would accept a sale that only partially covered fixed overhead. For example let's say you know with reasonable certainty that your business is in a state of low demand maybe due to seasonality or economic conditions. If I am convinced there is no other sale out there that is going to give me a better return or if I think the customer is worthwhile to keep because the customer will give me long term potential at higher profit margins then I would make the justification that I am at least covering some fixed overhead. Otherwise make sure your selling price covers all three components of cost which once again are Material, Labor and Overhead.
Calculating Overhead is one of many important CFO Services.
As a CFO for hire I notice that many business owners do not calculate labor burden as part of their actual labor costs. Many put these costs in as overhead or do not include them at all when they are clearly a labor cost which in most cases is variable to the use of labor. The most common labor burden costs are:
Payroll Taxes – This includes the employer’s contribution to FICA and Medicare as well as both Federal and State unemployment taxes,
The employer portion of all employee Benefits: - Health insurance, Dental Insurance, Life insurance etcÂ…,
Payroll processing costs,
Workers Compensation Insurance
In order to calculate labor burden take all of the projected labor burden expenses for the period you want to analyze. The period can be a month, quarter or year and divide these projected burden expenses by the amount of projected labor dollars for the same period. As you go forward if payroll is lower or higher than projections by 5% or more you should recalculate the burden rate based on the new projected payroll. The same recalculation needs to be done if your projected burden expenses are off higher or lower by 5% or more. You can also simply take last yearÂ’s actual results for Labor Burden expenses and payroll and perform the same calculation on actual results instead of projected results. I like to use projected results. This percentage needs to be applied to payroll dollars applied to each sales transaction or quote.
Calculating Labor Burden and incorporating it as a labor cost is one of many important CFO Services.
I have a client who called me and told me that he really appreciated the time I spent and the explanation I gave him with respect to his financial statements and that for the first time he had a handle of what is going on and how to interpret the information.
When I got off the phone I thought about what he had said. I thought to myself I just made sure he understood what was going on. I did not prepare some elaborate report, I did not give him a financial forecast and I did not prepare the key metrics of his business. Those will all come during the engagement. I simply clarified some information that he already had to make him understand what was happening. It made me wonder how many other business owners are out there where all they want to do is understand and how it may only take an hour or two to help them to understand.
This experience gave me a new perspective on my business as a Part Time CFO. The first thing I will do now when meeting a client is instead of first identifying their need I will first identify what they do not understand. One I identify what they do not understand I will work to make sure they understand and then work on their specific needs.
One of my clients is having a real good year. I know that is unusual for the current economic environment but this particular client makes very unique and effective sales presentations which has lead to his success.
My client recently (within the last two weeks) added some new employees in order to keep up with the demand and he asked me if he should buy a new truck. He said he thought it would make one of his new crews more productive.
I said "hold it" as I immediately went back to my business experience and how when I had a peak in demand and was doing really well how I went overboard with capital expenditures, how I added locations and how I added product lines as I thought the great demand was never going to end. This was a big mistake. I said to my client "Exuberance" as I thought of my own exuberance. I went on to tell my client that we have not even tested our new employees to see if they are going to make the cut as permanent employees and we are thinking about buying trucks to make them more efficient. My client went on to say that he could take one of the new guys and let him go solo on the truck to do some lower end jobs. I told my client that we should do nothing and review this in another two months. In two months we will see if we still have the same sales backlog, we will see if the new employees are working out, we will also have a better idea how as a business we handled this excessive amount of sales activity from a quality standpoint and we will know if it is profitable to do these smaller jobs. We will also have a better idea to see if there is time to market the smaller jobs for the truck strategy my client talked about. I told my client that business owners (me included) have a tendency to really over spend when times are good. They almost do it because they have the cash available to do it and things are going so well so they think they need to capitalize on this success without thinking that these great times are not going to last forever and the overspending still has to be paid for. As I told my client this he began to understand and he thanked me for putting the breaks on the idea. I told him you must be equally as disciplined in managing upturns as in managing downturns and you must never think you can afford something just because the cash is currently available. You must constantly look to conserve cash unless a real return on the investment can be forecasted with accuracy and all of the other areas of the business are stable and tested as cash is the lifeblood of your business.
This exchange between my client and I is just one more example of how it is a great advantage for a business owner to have an entrepreneurial chief financial officer. The entrepreneurial CFO can reflect back on the many real life business experiences and apply those experiences for the benefit of their clients.
Below is an interview that took place on April 16, 2010 on WBNW 1120 AM in Boston between the host of Money Matters in the Afternoon, Scottie McCall and the President of Next Step CFO, Michael Barbarita. The subject is Chief Financial Officer Services:
In this so called new economy it is time for retailers to get more aggressive with suppliers to get more support:
For example:
Is the supplier making sales reps available at big sales events,
Are they providing co-op advertising
Is the supplier offering Special makeup inventory
How about Special signage, displays and fixtures
Is the supplier offering Better terms
And what about Mark Down Money
The supplier always talks about wanting to be your partner when they are trying to sell you product, itÂ’s time for them to prove it.
I have gotten all of these things from suppliers and I am prepared to help a potential client do the same.
Over buying inventory if youÂ’re a retailer or distributor and over producing inventory if you are a manufacturer can cause significant cash flow problems.
One of the things that my forecasting tool called “CashTell” can do is identify the optimum inventory receipt and manufacturing plan for any level of sales that you project.
This information helps you to know what adjustments to make to inventory receipts or production as sales fluctuate in the real world. It puts a measure of control on the inventory flow.
You are invited into Next Step CFO's internet conference room. Come in any time for a LIVE 15 minute presentation on the benefits of having a part time CFO. If I am not there I always have a daily LIVE presentation at 8:30 pm Eastern Time. If that does not work for you call Michael Barbarita at 781-326-3822 and we will schedule a convenient time. You can tell I am in the conference room if when you enter the conference room, the name Michael Barbarita appears above your name on the left hand side. To enter the conference room please click on the link Below, some software will download which will take a minute and then key in your first name as your user name. It is not case sensitive:
The CFO needs to have answers for all situations. For very troubled companies, sometimes there are more options than filing for bankruptcy. After all you may be very surprised how expensive filing bankruptcy really is. It costs a lot of money to go broke!
An option for some companies is called a private foreclosure sale. It is when you can prearrange an investor to buy only the assets of a troubled company from a seller who is a secured creditor of the troubled company. The end result is a brand new company with all of the assets of the troubled company and none of the liabilities. I have actually worked on one of these.
When companies are looking for outside investment capital, one thing they need to do is to work on cleaning up their balance sheets.
One way to do this is by working with existing stockholders to convert any stockholder debt to equity. When new investors put new money into a company they want the money to go to something that will move the business forward like Equipment or Research & Development, not to
service or pay off stockholder debt.
