Austin Buckett Manager Send Email View Full Bio

As businesses grow, among other things, they need solid financial oversight.  However, it is hard for business owners to know exactly what level of financial oversight they need, whether to have in-house support or when to ‘upgrade’ these capabilities.   In addition, the role of the CFO gets very muddy, as job titles are not consistently aligned with job descriptions in smaller or medium-sized businesses.  As a result, we have seen ‘CFOs’ performing controller-level duties and vice versa.

Most small or medium-sized businesses will not need the services and expertise of a CFO on a regular basis.  Therefore, hiring for this position will often result in an employee whose skill set is not being fully utilized and is probably costing the company more than they need to pay.   So how do you know if you need a CFO?  Below is a summary of the main roles and duties performed by a Controller and a CFO.  Once you have identified the main roles required in the business the hiring process can be more aligned with your needs.

Typical job duties of a Controller are as follows:

• Preparation of monthly financial statements
• Oversee accounting department
• Prepare reports for the bank and CPA
• Perform miscellaneous human resources (HR) functions
• Perform miscellaneous information technology (IT) functions

The difference in roles between a CFO and Controller is often not fully understood by Business Owners.  While a controller is mainly focused on providing accurate and timely financial reports, a CFO’s role only really starts once accurate financial information is available.  Below are some significant duties that should be expected of a CFO:  

Participate in strategic planning activities

This includes developing the organization’s vision, formation of the core values, performing SWOT analysis, setting goals for the next one to 10 years, expansion/contraction planning, etc.  A CFO should contribute ideas, as well as evaluate the feasibility of the plan from a financial perspective.

Perform financial statement analysis

Preparing financial statements is important, but interpreting the data is critical.  A CFO should identify as early as possible whether the organization is on track to hit the goals for the year, if corrective action is required (e.g., downsizing, expansion, investment in equipment), if there is sufficient cash available, etc.

Manage budgets and projections

Both profitability and cash needs to be budgeted and monitored. Specific tasks include creating an annual budget and cash flow forecast, performing a monthly budget-to-actual analysis, explaining material budget variances, and recommending any applicable corrective actions.

Establish and maintain financing

A CFO should take responsibility to find and interface with sources of funding (banks, private equity, friends/family, etc.), secure adequate financing, and maintain relationships with financing sources. A CFO should also be monitoring cash reserves and identifying additional sources of funding in case the need arises.   

Manage risk

The majority of organizations feel that managing risk is as simple as purchasing insurance. Although it is critical that all of the proper insurance is in place (workers’ compensation, umbrella, etc.), new products and services, acquisitions, currency fluctuations, regulatory changes are just a sample of other risks a CFO needs to manage. Managing risk includes running the applicable what-if analysis and determining the cost-vs.-benefit of hedging the applicable risk.

Once you have identified your needs you can make sure you have the right financial oversight in your business and the responsibilities and costs of your key financial employees are appropriately aligned.

If you have questions about your business’ needs in this area, contact Austin here.

CyberSlacking: What is it and what can you do about it?

Led by Trevor Dierdorff

Trevor Dierdorff is President and CEO of Amnet, a premier IT support company throughout the Front Range.  Amnet provides netowrk management services for business of all sizes.

We’ll discuss:

• How your company should address employee internet usage
• What liability areas your company should be aware of that may expose your business to data loss or lawsuits
• What the top CyberSlacking safeguards are for your business

Thursday, May 17, 2012

7:30 – 9 a.m.

BiggsKofford’s Office

R.S.V.P. here.

Deborah Helton Director Send Email View Full Bio

We are proud to announce the promotion of Deborah Helton, CPA, to Director. Deborah joins Chris Blees, Kurt Kofford, Greg Gandy, Greg Papineau and Michael McDevitt on the team of Directors.

Throughout her career at BiggsKofford, Deborah has gained experience in the areas of individual and business taxation, specifically in the industries of physician groups, manufacturers, oil and gas companies and expatriates. She also serves a major role in the supervision and training of the BiggsKofford team.

Deborah received a bachelor’s degree in accounting and a master’s degree in business administration with an emphasis in accounting from Colorado State University – Pueblo in 2004. She was named a 2009 Colorado Springs Business Journal Rising Star.

“Deborah is an extremely valuable member of the BiggsKofford team,” said Chris Blees, CEO of BiggsKofford. “We’re very pleased to have her contribute to our growth and become the sixth Director in our firm.”

Austin Buckett Manager Send Email View Full Bio

Right now, we are well into the second quarter of the year.  Have you evaluated your Q1 performance against your original budget?  The budget process should be an ongoing event, not a once-a-year chore.  To make the most of your budget process, an evaluation should be made at least quarterly to determine if the budget that was created originally needs updating to remain relevant and useful. 

Failing to update a budget appropriately, especially when large difference accumulate during the year, will normally result in negative consequences.  As an example, exceeding a budget significantly can lead to complacency (especially among sales teams) and not fulfilling your company’s potential for the year. On the flip side, not adjusting a budget to reflect some reduced performance can lead to bad morale and a self-fulfilling prophecy until a new year comes around. 

Here are some things to consider when comparing your actual performance to your budget and possibly making changes for the remainder of the year:

• The process of reviewing any variances between budget and actual performance is much more important than setting the budget and seeing how close you came.  This review process will ensure you spend time ‘on’ your business and step back to consider what is happening to your business so you can make adjustments throughout the year and not miss opportunities.   
• If a revised budget is necessary, make sure you keep an original budget in play, especially if it is tied to bonus plans or personal performance reviews.  The revised budget becomes the one that everyone uses for future operations only. 
• If your budget is only slightly different than actual performance, leave the original budget in effect.  However, run ‘scenario’ budgets for your own benefit to determine a more likely result in case the original budget does not get back on track. 
• Many events will occur during the year that impact your business, make sure these are considered and your budget is updated to account of these situations so you can be prepared for the resulting financial impact. 
• Understand the reasons variances occurred before adjusting future targets?  For example, if revenue is up for the year but no one can point to specific reasons why, do not make an assumption that the trend will continue and adjust sales targets to a much higher level. Rather, reset the annual expectation to account for actual performance to date and leave the rest of the year at the original target. 
• How do the variances in your budget compare to your Key Performance Indicators (KPIs)?  For example, if revenue is up but your number of customers has reduced, then you may be too reliant on a handful of customers to drive your growth.  Not that you would want to turn their business away but you would want to understand why other customers are not growing proportionately or why your customer base is shrinking.

The overall objectives of budgets are to motivate your team and minimize financial surprises. You want to make sure your budgets remain achievable and realistic throughout the year, striking the right balance between optimizing your company’s performance and keeping your employees motivated.  Careful review of your budget vs. actual performance on a quarterly basis will ensure you accomplish this and drive your business forward.

For questions, contact Austin Buckett here.

Chris Blees President & CEO Send Email View Full Bio

Chris Blees, BiggsKofford’s CEO, wrote an article that was recently featured on portfolio.com and is geared towards business owners who are preparing to exit their business.  

Check out the article here. 

If you have questions about selling your business or building value to sell it in the future, feel free to e-mail Chris here.

Business Tune Up: Monitoring and Measuring Your Performance for Optimum Business Health

Led by Kurt Kofford, CPA, and Austin Buckett, ACA, CM&AA

Kurt Kofford, CPA, is a director at BiggsKofford.  He plays a major role in the management of the firm’s clients, overseeing all of the firm’s auditing and accounting engagements, as well as consulting clients on long-term planning.

Austin Buckett, CMA, CM&AA, is a manager in BiggsKofford Capital, BiggsKofford’s Investment Bank department and also acts in an outsourced CFO capacity for clients, providing consulting in financial performance as well as developing growth and exit strategies.      

We’ll discuss:

• Determining your profit and cash breakeven
• Growing a business efficiently
• The key numbers you need to know about your business

Thursday, April 26, 2012

7:30 – 9 a.m.

BiggsKofford’s Office

R.S.V.P. here.

The Broadmoor focuses on giving 5 star client service to their internal clients, their team members first, trusting that a positive atmosphere will spread to the property’s guests.

Check our her presentation here.

If you’d like to be on BiggsKofford’s list for future events, e-mail Stephanie Johnson at sjohnson@biggskofford.com.

Chris Blees President & CEO Send Email View Full Bio

Recently, Chris Blees, BiggsKofford CPA firm and BiggsKofford Capital’s CEO, was featured in a Colorado Springs Business Journal article, written by Monica Mendoza.

Here’s the article on business transitions:

Middle market businesses could win big this year in the game of mergers and acquisitions as companies with deep pockets come out of stalemate and make a move to buy innovative firms.

Private equity firms have $1 billion they’ve been sitting on for the last three years and are now looking for middle market investments that would pump up their bottom line. And corporate America, which had done its best to downsize in every way since 2008 including in research and development, is now looking to snatch up the middle market businesses’ cool new inventions.

Winning at this game will require the middle market businesses to know who is buying and what they value. And, the middle market firms headed for big paydays will be the ones who thought about how the game would end when they were just beginning.

It’s that kind of end game strategic thinking that separates the middle market businesses from the small lifestyle businesses, whose end goal might be to hand off their business to the next generation.

“Middle market companies sell more strategically,” said Chris Blees, president and CEO of BiggsKofford Capital Investment Bank. “It’s more about identifying the value proposition and then going and finding the right buyer as opposed to throwing it up against the wall in hopes that some buyer comes along.”

It takes careful thought and planning and some market intel on what companies find valuable including profitability, sales force, customers and research and development.

One middle market firm Blees worked with spent a few years doubling his company’s size thinking big contracts would be attractive to buyers. It turned out the buyers in his sector wanted profitability over volume. He had to start over with his exit plan, Blees said.

“I would say, ‘Are you building a valuable company?’ And, people say ‘yes’ and I say, ‘valuable to whom?’ “ Blees said.

Once a middle market firm knows what is hot from the buyer’s perspective, they had better start changing their game plan, Blees said.

“Every company eventually exits,” Blees said. “Either horizontally or vertically, you will exit your business.”

In January, Tony Colon sold his Colorado Springs-based Combat Training Solutions to Cyalume Technologies Holdings, Inc. for more than $5 million. It was something he planned since the day he started his company in 2005.

Colon, an aeronautical engineer, started Combat Training Solutions to build exploding devices that look, smell and perform like the IEDs soldiers encounter in Iraq and Afghanistan. He landed large government contracts in the U.S. and then took business overseas to grow revenue past $7 million.

His exit plan was part of his business plan, he said. He knew which companies were out there and which ones would be interested in his products.

“When you start, you should have the (exit) plan,” Colon said. “I estimated when I wanted to sell — that estimate was based on dollars and time.”

Middle market, big player

Most people forget about the middle market, Blees said.

“The politicians, the media and everyone else talks about Wall Street and Main Street as if that’s all there is,” Blees said. “They forget there is middle market which is just as big as the large businesses.”

Middle market businesses are typically defined as those with more than $5 million in revenue. Across the country there are between 200,000 and 300,000 middle market businesses compared to 5 million small businesses.

But middle market businesses are responsible for about 40 percent of the GDP — the same percentage as large businesses, which are typically defined as those with more than $200 million in revenue.

“The middle market is probably the healthiest segment of the local economy,” said Trevor Dierdorff, chairman of the Middle Market Entrepreneurs and president and CEO of Amnet, a Colorado-Springs based IT support company.

Middle market businesses are mature in business structure but nimble in responding to the market. That makes them attractive to buyers, he said.

With only a handful of companies going public each year, the rest of the middle market businesses will be bought by companies looking to expand their reach or companies interested in increasing their bottom line. More middle markets companies are being sold now as a percentage than small businesses, Blees said.

It just happens that two types of distinct buyers are circling the middle market, Blees said. The strategic buyer is looking for intellectual property and the financial buyer has money to spend because it had nothing to buy in recent years when smaller companies were taken down by the economy.

“Now it’s the perfect storm for the middle market company,” Blees said.

When the economy hit the skids, corporate American cut expenses, including its research and development, in favor if keeping profits up.

“For three years now there has been no R&D, no new product, no new market, no new geography, no new expansion,” Blees said.

It was the middle market businesses that kept innovating. That makes them attractive now to the bigger businesses that want their designs.

“Now, share holders want to see more than profit,” Blees said. “Now, they want growth. So, where do they go to get growth — they buy it.”

But, most middle market businesses have not planned their exit strategy, Blees said. They build their business based on what is valuable to them and not what is valuable to their future buyers.

“They say, ‘I love this so much someone else will come along and love it as much as me,” he said.

Exit, stage left

It could be that some middle market businesses are reluctant to think about the exit plan or make a five year plan, Colon said, because they are in love with their idea.

“One of the greatest fears of the prospective owner that prevents the business plan is the fear of recognizing that the plan won’t work, that it won’t be as profitable as they thought it would be,” he said.

But, a middle market business will not sell on a good idea alone, said Chris Younger, managing director CapitalValue Advisors, Investment Banking. Business owners have a strong intuition about risk but they have not thought about it systematically in order to make the changes to be ready to go to market.

“We are seeing buyers are much more discerning, more risk adverse,” Younger said. “As a result, deals are going to take longer. Companies that want to go to market should spend some time and make sure they have addressed the critical risk areas.”

Middle market companies in the same sector will have different strengths and weaknesses, Blees said. And that will attract different types of buyers. But, the companies that get paid the most are the ones that thought about how the game would end.

“If you want to sell five years from now, you have to prepare your company now,” Blees said. “That is the magic.”

If you have questions about selling your business or building value to sell, please contact Chris here.

How does the lease renewal process work?

An important clause found in a standard lease is the renewal option. This allows you to extend your lease for a predetermined amount of time (usually five or ten years) by giving your landlord six to twelve months’ written notice. Renewal options include terms for specific lease rates, concessions such as free rent and tenant improvement allowances, and whether a new base year for operating expenses will be granted. All of these terms are negotiable and play a large role in the financial structure of a lease renewal.

How do I calculate what I am currently paying per square foot?   

Knowing what you are already paying per square foot is especially important if you are thinking about renewing your lease. What you are paying now versus what buildings are leasing for in your immediate area can be vastly different. We have seen a substantial decrease in lease rates over the last two years. The way to calculate your price per square foot is to multiply your monthly rent by 12 months and divide it by your square footage. Keep in mind that NNN or CAM charges (operating expenses for the property such as real estate taxes, building insurance, and common area maintenance) are also calculated the same manner.

What type of cost savings can be achieved through a successful renewal?

If properly negotiated, you can receive significant rent savings and build out allowances. It is very common to start a lease renewal at a lower lease rate than what you are currently paying. As the economy continues to struggle, landlords are offering aggressive concessions and more attractive lease terms to good tenants to keep their buildings leased. The amount of overall savings will depend on the availability of competitive vacancies, the efficiencies of the buildings, the market knowledge of the broker and the broker’s ability to negotiate business points and reduce overall exposure.

What are some common mistakes doctors make during the process?

One of the most common mistakes doctors make is negotiating without the help of a commercial real estate professional, specifically one who specializes in representing healthcare professionals. Some doctors believe they can save money by not using a broker; but to benefit in real estate, you need leverage. Landlords are in the real estate business and negotiate with professional guidance. Selecting an expert to represent you provides the leverage needed to receive the best possible lease terms. Further, landlords are responsible for paying commissions, not tenants, so professional representation is available to you at no out of pocket cost.

Another mistake doctors make when entering into a lease renewal negotiation is not being familiar with their current lease terms and exposure. Prior to contacting the landlord about a lease renewal, you should be well aware of your current lease terms including every option and deadline. As mentioned, most leases contain options that must be exercised within a specific time period, typically six to twelve months prior to the lease’s expiration. If you allow this period to pass, you risk losing all rights outlined in the option, which can cause the negotiations to begin at a disadvantage.

When should the process begin?

As a rule of thumb, you should begin to consider the renewal process 12 – 18 months in advance of your lease’s expiration. This is recommended so that you can compare all relocation options in the market before your current lease options expire. Tenants who miss their lease options incur more risk. Landlords view this as an opportunity to push rents higher as the window of opportunity to relocate closes. If tenants holdover, they often see penalties of 150 to 200 percent of their last month’s rent and can also incur consequential damages if they holdover without permission. The bottom line is that if there is not ample time to relocate if necessary, the landlord has a strong upper hand.

This article was written by Roger Hernandez and Colin Carr, with Carr Healthcare Realty, where they specialize in representing Healthcare Professionals with all real estate needs. They have successfully negotiated over 750 lease and sale transactions. You can reach Roger at (719) 339-9007 or roger@carrhr.com.