Category Archives: financial reporting

Five Steps to Committing to Financial Management Fundamentals

Five Steps to Committing to Financial Management Fundamentals 

Mindy Barker | Barker Associates

We seem to take one step forward and two steps back lately – with the pandemic, the economy, and life in general. In many instances, things are so close to “normal,” we’re ready to embrace it all again wholeheartedly. We need the familiar, especially during the tradition-filled holidays. We long for some normalcy and comfort. Yet, we’re hesitant in many respects, especially in business. And while this hesitancy is understandable after all that we’ve been through, we can’t run a business this way, especially as it pertains to financial management. In fact, our financials never needed more attention. As 2021 comes to a close and 2022 begins, it’s the perfect time to make a resolution to get back to financial management fundamentals. 

Five Steps of Financial Management Fundamentals 

  1. Read Monthly Financial Statements 

While this may sound entirely too elementary, we’re starting with the basics because there are those who tend to ignore them. By reading (and understanding) financial statements, you will quickly see what looks good and what doesn’t, if there are any red flags, and any trends. Monitor inventory levels against projected sales, receivables, and cash and identify other critical financial indicators and ratios from the balance sheet. If something doesn’t make sense to you, chances are there may be a problem that needs to be solved.  

  1. Review Bank Statements 

Similar to your review of the financial statements, how will you know if something is off, if you don’t review the company’s bank statements monthly?  

  • What’s coming in?  
  • What’s going out?  
  • Do the amounts look reasonable?  
  • Do the canceled checks (reviewed online) look appropriate?  

With this review, you shouldn’t be in the details of every single transaction (or you’ll never get any work done). Rather, your goal should be to get a good sense of the company’s overall activities. In this way, you can track monthly sales-to-expense ratios to better understand when to adjust spending and to identify the top impediments to profitability, so you can deal with them quickly. 

  1. Review Payroll Reports 

Payroll reports should be reviewed quarterly when Form 941s are filed. During this review, you want to look at year-to-date wages paid for employees and ensure everything looks reasonable. If it doesn’t, find out why immediately. 

  1. Assess Expense Reports and Spending 

Review credit card usage, expense reports, and overall spending, including meals and travel expenses. Take note of any entries that appear off, whether they are too high, too low, or too frequent. Once again, you don’t need to have all the details, but rather perform a high-level view – often, all that is needed to identify an issue sooner rather than later. 

  1. Listen to Feedback 

No one has all the answers. The best leaders understand the intrinsic value of listening. In this case, that feedback should be from far more than the accounting department. It should also include feedback from operations and any other impacted department, as well.  

  • What’s working?  
  • What isn’t?  
  • What are the concerns?  
  • Does anything need to be investigated?  

These five steps will help ensure you are practicing financial management fundamentals, increasing oversight, and increasing overall engagement. Remember, the most successful CEOs are those who delegate, but also who stay close to the heart of the company’s financial picture. The consistent financial monitoring required of businesses takes attention and it takes work, but without a true long-term plan and careful monitoring, you cannot forecast or grow to the next level. So, in 2022, make a resolution to stay committed to financial management fundamentals. Barker Associates has extensive experience in financial management. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.  

The Impact of Management Practices on Business Outcomes

The Impact of Management Practices on Business Outcomes 
New Research Shows Direct Correlation with M&As and Financial Performance 

Mindy Barker | Barker Associates

It’s no secret – good management is good business, plain and simple. But is it possible to actually quantify the impact on business outcomes, such as mergers and acquisitions and financial performance? According to research conducted by the Harvard Business Review, we can. 

In an effort to determine whether there is a direct correlation between management practices and certain business outcomes, researchers used data from the US Census Bureau to examine the practices of 35,000 manufacturing plants. And while it is well established that much of management may be subjective, including leadership styles and how they align (or don’t) with various team members, objectivity can be found with the right questions. 

Quantifying Management Practices 

According to the article discussing the research, studies were conducted using more unbiased, neutral questions, leading to more definitive, measurable answers. For example, questions such as how much managers tracked employee performance, if they used the data found to improve practices, how production goals were set, and if they utilized standardized incentives are a few variations. Other questions included: 

  • How many key performance indicators (KPIs) were monitored at this establishment? 
  • What best describes the timeframe of production targets at this establishment? 
  • What were non-managers’ performance bonuses usually based on? 

Answer choices provided were specific and assigned a value. As noted in the article, “For example, responses to the question ‘What best describes what happened at this establishment when a problem in the production process arose?’ were: i) No action was taken, ii) We fixed it but did not take further action, iii) We fixed it and took action to make sure that it did not happen again, and iv) We fixed it and took action to make sure that it did not happen again, and had a continuous improvement process to anticipate problems like these in advance.” The results were gathered and quantified to define more structured management practices as those that were more specific, formal, and frequent. 

Impact on Mergers & Acquisitions 

Researchers then tracked mergers and acquisitions among the companies included in the management practices study with additional data from the U.S. Census Bureau. The intent of this comparison was to quantify the extent to which management practices influenced outcomes in mergers and acquisitions and overall financial performance. 

The findings included the following:  

  • Companies with more structured management, operations, practices, and procedures are more likely to become acquirers in an M&A. 
    • Companies even one deviation higher in management score were 7.5% more likely to become acquirers. 
  • Companies with less structured management and fewer standardized policies and procedures are more likely to be targets. 
    • A mere one deviation point lower in management score resulted in companies being 2.8% more likely to become targets. 
  • There is a strong spillover effect post-acquisition. A target company is more likely to adopt more structured management practices, similar to the acquirer company. 
    • The management scores of target companies increased by an average of 26% post-acquisition, including additional KPI monitoring, goal setting, and incentives. 
  • There is a direct correlation between improved management performance and productivity. “[F]or plants whose management scores increased by one standard deviation following their acquisition, productivity increased by an additional 3.3%, while value added per employee, value added per worker-hour, and profit margins increased by an additional 3.13%, 4.19%, and 1.16% respectively.”  

Ultimately, the last point is what we should all take out of this research. It’s about much more than the effect management practices have on mergers and acquisitions. Rather, it exemplifies the importance of structure in management practices that affect the day-to-day operations and productivity of a company. Simply, it adds value, which will inevitably improve business outcomes – whether its M&As, increased profitability, or looking more attractive to investors who understand that implementing stronger management practices now is an effective strategy for long-term success later.  

Barker Associates has extensive experience in both specific CFO needs and more general management practice ones. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.  

Acquisition Integration – After the Ink Dries

Acquisition Integration – After the Ink Dries 
The “3 Ps” of Integration 

Mindy Barker | Barker Associates

Last week, we talked about defining your corporate strategy, and that oftentimes, those strategies include acquisitions of other entities for your company to grow to the next level. Whether it’s to streamline operations, introduce new products or services, or both, many companies define their corporate development strategy within the parameters of an acquisition.  

There has been a shift in our global economy. And in that shift, acquisitions have become the norm, not the exception. Yet, according to Harvard Business Review, historically, 80% of companies that have been involved in an acquisition fall victim of the plethora of moving parts essential to the process and ultimately fail. Combining not only two companies, but two sets of stakeholders is fraught with potential landmines.  

This week, we take the acquisition strategy a step further. The inevitable questions surface after the ink dries on the legal documents … How do we increase the chances of success? What exactly happens now that we’ve acquired another business? The due diligence is complete, the documents are signed, the lawyers have left – so, what’s next?  

Acquisition integration is the process of combining the systems, process, operations, and personnel of the acquired company into your own by maximizing synergies and efficiencies. Logistically, the integration itself should be focused on what I like to call the “3 Ps” of Integration – Personnel, Plan, Practices. 

Acquisition Integration – Personnel Issues 

  • Appoint an Integration Manager and Team. The integration manager should have seniority and experience with your company, and be able to hold the team members accountable. The integration will be his or her full-time responsibility for as long as the process takes. The team should be made up of those with expertise in the various areas of integration, including information technology, operations, finance, and marketing.  
  • Communicate the Good and the Bad. Meet with those you plan on bringing onto the new team from the acquired company as soon as possible. Without some reassurances that they are staying, they will soon look elsewhere for career opportunities and may consider offers from competitors. For those who will not be moving forward, let them know quickly. This is for your own benefit, as much as their own. Indecision will lead to rumors, which inevitably paves the path to a lack of morale – no way to start a new venture. 
  • Focus on Cultural Integration. Decide how much of the acquired company’s culture you are bringing into your own. Will they mesh? Are their conflicting values? What are the priorities on each side? Culture will have a huge impact on the new relationships going forward. 

Acquisition Integration – Plan Issues 

  • Develop and Follow a Conversion Plan. The conversion plan should incorporate all of the changes that need to be effectuated, as discovered during due diligence pre-acquisition. Additionally, understand who is responsible for each task and goal, along with applicable due dates. The manager and team must be held accountable to the conversion plan. 
  • Modify the Plan as Needed. Through the integration process, additional opportunities may be discovered. Modify the plan accordingly to adjust for these opportunities, including the required resources, and communicate any changes to the team. 
  • Use Metrics Consistently to Measure the Plan’s Success. Measure everything you are doing as it relates to the integration. Compare actual results to those anticipated, including timelines. 

Acquisition Integration – Practices Issues 

  • Identify Best Practices. Determine if the acquired company had practices that worked well and could enhance your own operational practices. If they bring value, develop ways to incorporate them into your own. Then, as always, communicate these Best Practices to the rest of the team.  
  • Evaluate Practice Similarities and Differences. What services, products, and operations are the same? Which ones are different? Are there overlapping vendor practices or relationships? Which parts of the accounting and marketing are complementary? Which are contradictory? 
  • Provide and Receive Feedback. Ask yourself the following: What went well with the integration? What didn’t? What are the expectations moving forward? Provide this feedback to the team. Additionally, accept any feedback provided to you and use it for improvements going forward. 

Focusing on the “3 Ps” in acquisition integration is crucial for the long-term success of your business post-acquisition. Barker Associates has extensive experience helping companies with acquisition integrations. If you need assistance with yours, or have any other questions, we can help. Please click here to schedule a 30-minute consultation at a rate of $100.  

The Check is in the Mail – How E-Payments Render that Saying Obsolete

The Check is in the Mail
How E-Payments Render that Saying Obsolete 

Mindy Barker | Barker Associates

If you’re like me, you probably can’t remember the last time you heard “the check is in the mail” with any seriousness. While it had been a fairly common sentiment for many years, with online banking, cash apps, Zelle, and more e-payment options materializing every day, it seems to have become a saying of times past. 

According to the Federal Reserve Bank of Philadelphia, paper checks are projected to become obsolete by the year 2026 – that’s just five short years away, begging the question – Are you ready? And while it may seem sudden to some, this trend is not at all that recent. According to the Federal Reserve, even as far back as nine years ago, in 2012, only 15% of all U.S. noncash payments were checks. By 2019, that percentage was reduced to a mere 8.3%. 

Some “Ancient” History about E-Payments 

The history of e-payments goes back much further than 2012 though. One of the significant impetuses of e-payments was actually due to the effects of September 11th; specifically, the grounding of all air traffic (and many checks in envelopes on those planes). The Federal Reserve took action shortly thereafter with the “Check 21 Act.”   

The new legislation authorized fully electronic clearance of checks, rather than presentation of the physical check. At the time, the “new” verification process was explained by the Federal Reserve Bank of Philadelphia, “This legislation initially permitted a paper substitute digital image of a check, and later an electronic digital image of a check, to be processed and presented for payment on a same-day basis.” 

And the rest, as they say, is history. 

Paper Check Usage … A Question of the Ages 

In our tech-driven, fast-paced world, with e-payments and cash apps paving the road to the future of payment processing, it is probably no surprise that check usage is a numbers game in more than one way. It is often based on the person’s age range. For example, younger generations feel the process of checks (and mail in general) is annoying, takes too long, and is inefficient. They’ve grown up with deposits on their smartphones and Venmo payments. In fact, the Google search term “how to write a check” has increased drastically over the past decade, presumably by younger people unsure of the check-writing process.  

In contrast, older generations do not quite “trust” these apps and transferring their cash to anyone with a swipe on their phones or the click of a mouse. They are familiar with paper checks and live by the motto, “if it’s not broke don’t fix it.” But the question is, “Isn’t it broke?” 

E-Payment Savings 

E-payments have a huge impact on business savings. They save money by reducing the costs associated with using paper checks (as much as $9 per check). They also save time with increased efficiency of payments. They even help save our environment by enhancing a company’s green initiative. They do all of this while keeping the foundation of a check alive and well – the ability to securely move money from one entity or person to another. 

Other benefits include: 

  • Reducing a company’s exposure to fraud. For years, checks have been the payment method most susceptible to those committing fraud.  
  • Increasing the ability to quickly process last-minute bill and payroll payments. 
  • Improved client-vendor relationships due to rapid, more efficient payments. 
  • Better reporting and workflow surrounding payments. 

This may be a shift for some businesses, who haven’t been ready to take the full e-payment leap yet. But doing what they’ve always done will not only make them inefficient, it will cost them more money in the long run. Yet, we understand that making the shift and trusting in these systems may still be overwhelming to some. That’s where Barker Associates can help. 

We have seen the “deer-in-the-headlights” look that clients get when trying to sort through the options to choose the best solution for their company. But the fact of the matter is the use of checks will eventually fade away completely, and if the Federal Reserve is correct, that time will be fairly soon. There are simply too many options and solutions now for the old method of writing, signing, and mailing a paper check to live on. If you would like to discuss these services, or if you have other specific areas of concern, please click here to schedule a 30-minute consultation at a rate of $100. 

Financial Literacy for Raising Money

Financial Literacy for Raising Money 
The Questions You Need to Ask Yourself 

Mindy Barker | Barker Associates

As we continue to discuss increasing our financial literacy, we must also consider the ways in which a company increases its chances for securing money for growth. The list of possible ways to obtain money to finance the growth of a company is extensive, including multiple forms of debt and equity instruments. The question of which is right for you is dependent upon your particular situation and your level of understanding of each. In order to navigate through this scenario, we have come up with a list of questions you need to be able to answer to make the best decision for you and your company overall.  

Do you really need money for growth? 

While there are many professional organizations that make endless promises to help you raise capital for your business, and while they all sound tempting, you must first understand whether or not you actually need money for growth. Contrary to popular belief, you will not always answer this in the affirmative. If you decide your organization requires capital for growth, then begin the process by speaking to your trusted advisors about their opinion on your plans. This discovery process should happen with professionals you already have a relationship with and who know about your company. Think about your attorney, CPA, outsourced CFO, or someone in a similar situation who has previously advised you in these matters. Only after this discovery and pertinent conversations can you then move forward with first designing a strategy, and then executing that strategy in a way that does not allow the fund raising process to consume the C-suite and deteriorate the business itself. These results can occur whether you are a small start-up or a large organization.  

How do you know in which direction to go?  

If you’re the decision maker and have governance over an organization, the first step is to evaluate your ethics and check your ego at the door before you begin to have the necessary conversations. Raising capital has become so sensationalized that those with decision-making authority tend to think of fund raising as a necessity. However, that is not necessarily the case. While raising funds is a common impetus to growth, it isn’t for every company.  

Start by looking at the historical and projected financial information. Ensure the use of funds you expect to raise is clear, and that the financial strategy for growth is viable. This initial step will require that you have quality up-to-date financial information.  Click here to see my blog about the need for financial infrastructure. 

How do you know who to trust?  

Many entrepreneurs tell me about situations where a third party offers to help them raise capital, but charge them a percentage of what they raised. Keep in mind, if the person who made that statement is not a broker or investment banker, that arrangement could be illegal and cause issues as the company grows. My biggest piece of advice is to ask if the person if he or she has a license to effectuate this type of arrangement.   

The other issue is that some of the investment bankers have had a difficult time getting clients in the pandemic environment. As a result, they have started consulting to assist with cash flow and to provide themselves with additional companies to move into the investment banking sales funnel. The issue with this is that these companies are signing up to be with the investment banker before they even know if that is the right fit for them or not.   

As a true professional, both of these instances are painful to witness. Before executing a contract or providing a deposit to anyone to assist with fund raising, proceed with caution. Make sure their culture and track record are consistent with your goals and strategy.  If you have partners that have different goals and ethics, it could be catastrophic to the organization.  Do your homework to make sure it is the right partner from the outset! 

Do you need debt, equity, or a combination of the two?  

Banks are conservative, and it is difficult for any size corporation to secure debt these days.  This form of capital is, of course, cheaper than equity overall as you do not have to give up ownership and the interest rates are currently so low. 

Equity partners can potentially have in-depth experience with the industry you are in and can actually help you build a larger and more robust entity. The saying is, “You can have a smaller piece of a big pie and actually have more value than a larger piece of a small pie.” If you do your homework and make sure your equity partner is aligned with your values and the right fit overall for your company, you can accomplish this goal.  

In a scenario with a combination of convertible preferred stock, it provides the investor with a liquidation preference. In the event a few unlucky events happen, this could mean the common stock investors could wind up with nothing in the end, which is exactly what happened when BlackBerry liquidated.  In that case, the company emphasized to employees that they should buy in while they could. When they were granted stock, they had to pay the taxes at the value at the time, and then when they sold the stock, it was, at time, at 1% of the value on which they paid the taxes. So, that could mean they were granted stock worth $45 per share, paid the taxes on it at their rate, let’s say 20% or $9, then they sold it for $.40, which was all the cash they received for that share, despite the taxes they paid. If they had a number of shares, that is a lot of money wasted. 

In the situation with a SAFE combination, there is a debt instrument that converts to equity at the next round of investment. This is a great instrument when companies are at an early stage and the discussion over valuation is difficult. When valuations increase quickly for successful companies, this can actually turn into an uncomfortable conversation that can hold up an exit transaction under certain circumstances.   

Just as with our previous financial literacy articles, it’s not just about improving your financial knowledge of the present, but about strengthening that knowledge to predict a brighter future, especially as it pertains to the growth of your company. If you would like to discuss various growth strategies and what makes the most sense for your business, or if you have other specific areas of concern, please click here to schedule a 30-minute free consultation. NOTE: beginning May 1, 2021 consultations will no longer be free. 

How to Avoid Driving Down the Interstate Blindfolded

How to Avoid Driving Down the Interstate Blindfolded 
Our Kick-Off to National Financial Literacy Month  

Mindy Barker | Barker Associates

April is National Financial Literacy Month, and I personally cannot think of a better time to discuss the importance of understanding financials. You don’t have to be the CEO of a Fortune 500 company to have a healthy grasp on your numbers. In fact, I sincerely hope that many others do. Financial literacy is important whether it’s for yourself and your family, as the owner of a small business, as a non-profit director, or in any capacity where you have some control over money coming in and money going out. This month presents a timely opportunity to review and upgrade not only your financials, but equally as important, your financial knowledge. 

First, some history. National Financial Literacy Month had its beginnings over twenty years ago, and has since evolved into a month-long observance. The idea of dedicating a month to this topic has broad support – the House and Senate have issued joint resolutions in support of National Financial Literacy Month, and the U.S. Department of Education promotes its observance. 

What is Financial Literacy and How Does it Affect Business? 

According to Investopedia.com, “financial literacy” is the “ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.” And unless the business you’ve started or are otherwise running is a financial services firm, accounting, budgets, and numbers may not be your strong suit. That’s okay – they’re not a lot of people’s favorite things either (we are a select few)!  

Yet, understanding your business’s finances, including cash flow, profit and loss statements, balance sheets, and budgets, is essential to understanding the overall health of your business. In fact, according to a study by U.S. Bank, as reported in Business Insider, 82% of small businesses fail because of cash flow problems. That’s why every for-profit and non-profit organization owner, officer, and director should prioritize financial literacy in their continuing education. And it’s also why we’re going to help you do just that. 

For the next few weeks, we are going to observe National Financial Literacy Month in the best way we know how. You can expect our own version of financial tutorials right here in our blog. We will talk about everything from the terms you need to know to common misconceptions to why it’s so important to review some basic concepts, such as EBITDA (Earnings Before Interest Taxes Depreciation and Amortization), Working Capital (Cash and other Current Assets less Current Liabilities), Aged Accounts Receivable, and many more. 

Where Do You Stand? 

For this week, let’s start with some basics. Take this financial literacy quiz to see if you’re on the right path to financial brilliance, or if maybe you have some brushing up to do.   

1. Do you have a financial professional on staff? 

Having the expertise of a CPA or internal (or outsourced) CFO can save you time and money in the long run. 

2. How often do you forego infrastructure development to save money?  

Saving money is, of course, important, but so are efficiencies.   

3. Do you have an annual budget?  

Navigating the fiscal year without a budget is just like driving down the interstate blindfolded! By reviewing past revenue and expense flows to forecast future income and expenses you can create a budget to see clearly where you are going. 

4. If yes, do you monitor actual vs. budget?  

The annual budget is a living, breathing document, meant to be part of your monthly financial review process – planned versus actual expenses. It’s okay to make periodic adjustments, a process that helps you know if the company goals are on track. 

5. Do you firm grasp on your profit and loss statement and balance sheet? 

Both documents are crucial, but each provides its own benefits. A balance sheet provides a snapshot as to how effectively a company’s resources are used. A profit and loss (P&L) statement provides a summary of the company’s revenue and expenses incurred during a specific period of time. 

6. Is your G/L infrastructure meeting the need?  

If your monthly financial reporting: (a) is either non-existent or (b) is not helping you run your business, consider a review and restructuring of your GL. Make it work for you – not the other way around. 


How many “Yeses” did you score on the Financial Brilliance Meter?
0 – 1 – Financial Dunce 

2 – 3 – Financial Aptitude 

4 or more – You are on the road to Financial Brilliance! 

No matter where you scored, we’ve got you covered. Stay tuned for the best ways to increase your financial literacy this month, so that a perfect score is waiting for you the next time you take the quiz. And if you scored perfectly now, congratulations! But, as you know, as a leader, professional, and human being, there is always room for growth. 

If you need additional assistance, we’re only a phone call or email away. Barker Associates has extensive experience working with organizations to better understand their financials and help them drive into their future blindfold-free. Use this link to my calendar to choose the best time for your free 30-minute financial analysis consultation. 

Pitch and Storytelling According to “Schitt’s Creek”

Pitch and Storytelling According to “Schitt’s Creek” 

A Successful Pitch is the Result of a Good Story 

Recently, I have been watching the Schitt’s Creek series on Netflix … for the second time, and enjoying it even more this time around. When I watched it the first time, I found myself getting irritated. But several Schitt’s Creek fans I knew encouraged me to stick it out, and I am so glad I did. What I learned watching the entire series twice is that each character surprises you from many different dimensions throughout the six seasons, representing numerous similarities to the world of pitching investors.   

The story centers around an ultra-wealthy family that loses everything. The first episode shows the authorities taking all of their possessions, forcing the family to move out of their large estate. They soon learn that they can retain a small town they purchased as a joke years earlier. So, they get on a bus with their suitcases and head to their new life. They are immediately immersed into a stark contrast from the luxurious lifestyle to which they had been accustomed. Yet, despite the lack of luxury, their experiences in this small town teach them many lessons they never would have learned before about life and business, including how to pitch to investors. You can see why my interest was piqued! In fact, I was so interested in the story that I watched an interview with the two creators. 

One of the creators insisted on developing the backstory of each character for hours prior to starting the script, while the other got increasingly frustrated with the time and energy “wasted” on backstories when they had an entire script to write. However, he soon realized that the investment of time in creating those backstories was one of the primary reasons for the success of the series.   

The parallelism to pitching to investors was uncanny. An essential element of a successful pitch to investors is having a compelling backstory. It is far beyond the “script,” or in this case, pitch deck. Working on the story behind the company so that it is authentic and backed by sustainable facts is the key to reaching investors. And connecting with them authentically through your story, coupled with ensuring you are the right fit for their investment criteria, will ultimately secure the investment!  Success! 

I recently became an investor in the Seattle Angel Group and immensely enjoy the education the group provides for both investors and companies preparing for pitch competitions. Bob Crimmins, a repeat successful entrepreneur, was one of those educators, and he was fascinating. He called successful stories “Cogent Stories,” as they are believable and can help an investor understand how they are going to invest their dollars now and receive a significant return three to five years later. As I watched Schitt’s Creek, I thought a lot about Bob and the impact of “Cogent Stories.” Apparently, they work for more than investor pitches. They are also what is behind a hugely successful series. 

Now, back to our regularly scheduled programming! (Spoiler alert here – if you have not watched the entire series you may not want to read further, but schedule a chat with me (link to my calendar) to discuss your backstory and pitch deck.). 

In the show, Johnny Rose (the family patriarch), Stevie (the hotel clerk), and Roland (the mayor of Schitt’s Creek) are business partners and pitch investors, achieving success at the end of the series. There are many circumstances that bring these individuals together, and their collective growth leads to the overall success of the pitch. 

Johnny Rose had been a successful businessman and made a lot of money with his business “Rose Video.” The events that led to the loss of his fortune were based only on his business partner’s actions. The business itself was successful. While Johnny’s story is fictional, similar stories happen every single day in the “real world.” What happened to Johnny could happen to anyone if they are not paying attention to governance, controls, and  financials.  Yet, the loss of Johnny’s fortune was itself a growth experience. 

Stevie was working the front desk at the hotel in Schitt’s Creek, feeling like she was a failure.  In an effort to “get her life together,” she decides to branch out and interview for a professional position with an airline. After she secures the position, she learns it is not for her after all.  This experience actually creates a huge appreciation for who she is, her talents, and her previous role. Similarly, for the C-Suite to be successful, confidence and self-identification for the position must exude when the investors begin their due diligence.  

Roland is the mayor of Schitt’s Creek, which is a position filled with pride, in part, because it was bestowed upon him through birth rite.  Roland struggled with who he was, and there were many times that his self-discovery process irritated Johnny and Stevie. But despite all of those irritations, he showed he was trustworthy and loyal to them in many ways as their relationship grew.   

Through trial and error, often hysterical ups and downs, these three professionals began to trust each other. They respected the talent and contribution they each brought to the team. Johnny knew that Roland would always have his back, and vice versa. One of my favorite episodes is when Johnny and his wife, Moira, are celebrating their wedding anniversary, and they run into some of their old “rich” friends, along with their new friend, Roland. The encounter is a life lesson in itself. Johnny and Moira attempt to fit in like they used to, but soon get irritated and offended when their old friends begin to talk negatively about Schitt’s Creek. Johnny, standing up for Roland, who is even more offended, mentioned that while their so-called friends never reached out once after they lost everything, Roland and Schitt’s Creek welcomed them with open arms.  

This episode reminded me of the loyalty, communication, and respect needed among team members working toward pitching to investors. Working as a team to strategize and execute a fast-paced growth company takes perseverance, intellect, the ability to deal with ambiguity, and many other attributes that can only be achieved when there is open communication among team members who trust each other.  At the end of the day, it must roll up into an authentic story about who these people are because that’s what investors are investing in … the people behind the company.  

When you are preparing to pitch to investors, the best thing you can do is work on your “Cogent Story.” Take the time to create all aspects of your strategy prior to the pitch, similar to how the creators worked tirelessly on creating the backstories of their characters on Schitt’s Creek.  Your story will be more authentic, your confidence will increase, your team will be stronger, and your chances of success will increase exponentially. Barker Associates has extensive experience with assisting companies in developing their backstories and preparing pitch decks. Schedule a free 30-minute consultation with this link to my calendar to talk about how we can work toward getting you the investment money you need. 

At the Intersection of Financial Infrastructure and a Global Pandemic

How a Pre-Pandemic Shift Left Companies Vulnerable 

Mindy Barker | Barker Associates

At the Intersection of Financial Infrastructure and a Global Pandemic

How a Pre-Pandemic Shift Left Companies Vulnerable

Pre-pandemic (do we even remember that time?), the investment world had experienced a huge shift. Unfortunately, this shift did not help prepare companies or investors for what was to come. Priorities had shifted from a company’s sustainability and infrastructure to avenues of increasing revenue as quickly as possible. However, sustainability and infrastructure were exactly what was needed most during a global pandemic.    

What Supply and Demand? 

Everything we had learned in our earliest economics classes about supply and demand seemed to be irrelevant. I remember those classes –training my brain to think of opposites – supply goes up, demand goes down, and vice versa. However, that concept no longer applied to venture capital and private equity firms. The number of firms that were chasing deals with buckets of money created a huge supply of investor dollars. But the number of successful high–growth companies to invest those dollars did not increase at the same pace.   

The result? Investment firms began expanding their reach. They started to invest not only in the usual entrepreneurial high-growth companies, but also in companies that would have typically received funds through stock sales in the public markets or through traditional bank financing. These companies needed to move into the investment firm world to fill the gap that had resulted in too much money and not enough companies. Additionally, investment firms began relaxing the guidelines associated with the due diligence process. 

These changes forced a decline in the regulatory compliance surrounding the movement of investment dollars, financial audits, and other financial items. With the focus almost exclusively on top–line revenue growth, there just didn’t seem to be a need for them. Further, companies with contracts that brought in recurring revenue were trading in the investment world based on multiples of revenue (some as high as ten times what their revenue was currently).   

A Lack of Infrastructure Meets a Global Pandemic 

Enter COVID-19. With so much time and attention previously focused on quick revenue generation, many companies lost the infrastructure to produce the quality financial data and reports needed to make informed decisions for ensuring sustainability. However, infrastructure and sustainability were what was needed to survive the pandemic. 

When the pandemic hit, every stakeholder (board members, investors, CEOs) immediately shifted their focus to cash flow analysis and sustainability. Chief Financial Officers have all noted that their interaction with other managers, officers, directors, and investors increased literally overnight. While no one could have predicted the full cash impact of the pandemic; in particular, the need for short-term cash flow, they could have been better equipped. The companies best prepared to analyze the situation were the ones that had the appropriate level of infrastructure prior to the pandemic. The stakeholders wanted to know if the entity would survive. While most had the ability to enter ‘survival mode,’ one has little to do with the other. Survival mode is simply not sustainable for any extended period … in any situation. 

Next Steps 

The pandemic taught us once again that knowledge is power. Infrastructure is crucial when analyzing different scenarios to make decisions quickly. Chief Financial Officers should take advantage of the temporary dynamic brought on by the pandemic. Using this time to get the right type of infrastructure in place will help prepare them to make critical decisions at any moment. 

There are many companies that were forced to make difficult decisions to lay off employees, not renew leases, discontinue software development, or even close their doors for good. Unfortunately, most had to make these decisions without the confidence that they possessed all of the information. Full knowledge is mandatory for a sustainable future and for the success of any company overall. 

By leading from a position of knowledge, which comes from having the right infrastructure, companies will have an edge over others whose directors or CFOs are blindly making decisions. What does that type of infrastructure mean? We’ve talked about it before – most recently in Oh No Not Again – but essentially it means having an Enterprise Resource Plan, CRM, General Ledger, Cash, HR System, and Payments. A clear vision and financial roadmap on how to achieve that vision, along with cash and a strong general ledger, are the foundation of an essential infrastructure. 

Dogs Will Lie, but the Numbers Will Not

Mindy Barker | Barker Associates

Are you wrapped around your pet’s little paw? We are, despite the fact that we recently learned they will lie to us.

Last night, I fed our Maltese and Bichon Frise their dinners and went about my evening activities. Later, my husband, Glenn, came into the kitchen and the little guys acted as if they had missed their dinner. Given the circumstances, he, of course, fed them again.

While our dogs may lie about whether they’ve eaten yet, some things never lie, such as the real data you need to run your business each day. And whether or not you intend to, it’s the same data you need to pitch to investors when seeking funding.

With the right infrastructure in place, you have answers at your fingertips, such as:

What is the seasonal fluctuation of my business so that I can prepare for the ups and downs?

What is the demographic profile of my customers so that I know where, when, and how to reach them?

What is the average cost, price, and profit of a sale? Am I losing money on my best sellers?

These questions and many more can be answered by having the right infrastructure in place and capturing the data as you conduct daily business.

What does the “right infrastructure” look like? The answer is different for each organization based on its size and complexity. At a minimum, an organization should have a list of existing and potential customers and a system to maintain communications with them. The optimal tool is an integrated Customer Relationship Management (CRM) system. An organization also needs to manage money and financial information to project cash flow for the next 12 weeks, have the correct information for tax compliance, and make the appropriate strategic decisions. This may mean you need a separate billing system and/or General Ledger. You also need to properly set up your General Ledger with the right coding segments to be able to report on profit and loss by product, location, customer, and department, among others.

If you feel that you are blindly making decisions about hiring, marketing, warehouse space, or any other issue, remember the numbers don’t lie. Let’s talk one-on-one in a free consultation to get you in the right direction. Check out these times on my calendar and choose the one that is best for you.

Keeping Your House…and Your Books…In Order

Mindy Barker | Barker Associates

When I have guests over for dinner, I empty trash cans, pull out the cloth napkins, and replace the everyday hand towel with a nice guest towel. The morning after the dinner party, I almost always say to myself that we should keep the house this tidy and organized all the time. A decluttered house feels really nice. Working at home during the pandemic has allowed me to have the time to keep the house up better and I have enjoyed it.

Think about getting your house in order and keeping it that way, similar to keeping your books and records audit ready. When business owners and their CFOs go through an audit that requires a lot of up-front preparation to get the information auditable, they generally discover facts about their business of which they were previously unaware. The ability to use financial data to think strategically and make sound decisions about the operations of the business is not a luxury to undervalue.

Auditors estimate their costs for performing your audit based on the books and records being clean and auditable. I have asked some auditors how much more first year audits cost than their original estimate due to the books and records being out of order. They report that the range is 20% to over 10 times the original estimate. This is not a pleasant outcome for anyone.

Here are seven tips on how to keep your books auditable and help reduce your audit costs.

Maintain a checking account balance in checkbook style that one person reconciles to the bank statement and then a second person reviews for accuracy.

Reconcile balance sheet account balances no less than once a quarter, if not every month. The two accounts that are generally audit gremlins are prepaid expense and accrued expenses. If you have not reconciled these accounts in the last year, I can almost guarantee you there will be unexplained numbers in them.

Keep a data room with all of your contracts and loans. With the digital age and the end of the metal filing cabinet, this seems to be something that is rarely maintained appropriately. Read more about the data room in my previous blog Who is Your Betty.

As soon as you decide to engage an auditor, your immediate next step should be to get the list of information they will want. Assign a person and a due date to each item on the list and distribute it to the responsible parties. Set deadlines for delivery of the documents and monitor progress until the tasks are completed (Excel schedule, Asana, or other project management software).

Complete the confirmation information and attorney letters immediately after you receive the list of the items the auditors want to confirm. Make sure the auditors give it to you as soon as you have a year-end trial balance for them to review.

Provide the auditors with a complete trial balance. Every adjustment to the trial balance you provide auditors increases the price of the audit.

Work on the format and disclosures of the audited financial statements for the current year as soon as the previous audit is complete. There is no excuse for digging through loan documents to prepare the financial statement footnotes after the year-end, or to read a new GAAP disclosure to figure out how to do it after year-end.

Barker Associates works with companies to access audit readiness, which is a far better investment than starting an audit with false confidence you are able to get through the audit. Let’s work together to make sure your audit fees are not multiples of the original quoted rate from the auditors. Click here to set up a free consultation.