Is it worth to spend your time on strategizing everything when you can easily outsource it to some equally-zealous service? Well, the question is a tricky one. There could be a no fits-all answer to this. The solution provided by services companies could be the major factor in deciding whether one should go for this or not. The other, of course, could be the budget.
But for startups who are looking to have such services, what options are available. Internet is replete with service providing websites offering management, consulting, marketing and financial services. It is, without doubt, to pick the most suitable one.
RogueCFO is one such leading service providing entity providing financial and management-oriented services to startups, entrepreneurs and companies across the world. The company helps entrepreneurs in planning, implementing and executing strategies for growth.
Q1. Going back to the very start, how you thought of starting RogueCFO.com?
I was working full time for an online dotcom startup as CFO, but realized they really didn’t need a full time, in house CFO. A part time, outsourced CFO would have worked much better for them, along with a bookkeeper. It was then that I started to explore the idea of filling that need, and finding out there were plenty of startups who could use the expertise of a CFO without having to pay a full time salary and benefits.
Q2. How the name was chosen? Isn’t it a bit confusing or misleading?
It was inspired by Steven Levitt who calls himself a ‘Rogue Economist’. He is the author of the popular book Freakonomics. To be honest it can be confusing and misleading. I’ve been told before by people that using rogue has negative connotations and I should really consider my branding. It’s okay though, as those aren’t the people I’m after. The people who get it, those are the clients I enjoy working with. I’m a Rogue CFO in that I bucked the norm, left the corporate life, and have the same startup, entrepreneurial mentality that my clients do. I’m just as qualified as any other CFO, more so in fact. Having exposure to multiple companies all in the startup and growth stage of the life cycle allows me to take the lessons learned by one company and apply them to the next.
Q3. How smart is it for a startup to outsource the finance department and what exact benefits are there?
It’s a very progressive way of thinking, and your traditional, old school way of thinking wouldn’t allow for outsourcing of executives. Yet time and again, I’m meeting companies who are enamored with the concept, and sometimes they didn’t even think of it until they met someone like me.
There’s a few benefits. First is the cost I’ve yet to meet a startup that needs a full time in house finance department (or other departments as well such as marketing, HR, operations, etc). Someone like myself works with startups to determine what amount of time is needed, usually somewhere between 10-30 hours a month. Compare that to 120 hours you’ll pay a full time employee, along with benefits and payroll taxes.
The next benefit is the expertise I mentioned. I’m a CFO who works exclusively with startup ventures, and has been around the block with companies all the way from inception to taking the public. Compare that to a typical career CFO. They are looking for safety, and probably have expertise in only a few select industries, and only at specific stages in the life cycle.
The third benefit is the entire 9 to 5 mentality is gone with someone like me. I work 7 days a week, pretty much all hours. When a client calls me and needs something done ASAP, it get’s done ASAP. There’s no well I’ll get to that Monday type of talk. I work exclusively with only a handful of clients at a time. I’m all about serving the startup and growth stage communities, and when a client needs something done, it get’s done quickly and correctly. Believe me, in the startup world there’s a lot of fire drills that arise an investor shows interest but needs thefinancial model tweaked by tomorrow, a new revenue stream is created and needs to be factored into the business model, a founding member decides to leave and now the company needs to be restructured, all true life examples.
Q4. When you provide your services to a client, do you meet in-person on time-to-time basis, or the whole service is provided online?
I do have some local clients in both Seattle and Phoenix, and I have places in both cities. Granted though, I still seldom meet face to face with clients. On average I’ve met about 3 times in the last year with each of my local clients. The need just isn’t there. People are busy, and I’m working with super successful companies. If we can handle things over the phone, via email, or Skype, then we do. So for the most part, I’d say I’m pretty much completely online. It’s only a fluke I ended up with a few local clients, and since I travel often I’m not necessarily around enough to meet up if they wanted to. As well, I don’t want clients who need someone in house all the time, it’d be too close to the full time job world that I left.
I target globally. I’ve worked with clients from every continent except Antarctica, but I hope to someday just so I can say I have. I’ve worked with companies out of India, England, Australia, China, Japan, Canada, and Costa Rica to name a few. There are so many interesting companies around the world, and I think that’s where other CFO s also miss the mark, they focus exclusively on the United States. Some of the most interesting companies I’ve worked with have been international.
Q6. What kind of services do you exactly provide? Given you experience in this field, do you provide consultation, planning and strategy building also?
Primarily I act as a CFO to growth stage companies. Usually companies at this stage need help with financial modeling, cash flow tracking and management, financial reporting & analysis, investor relations, and implementing best business practices on the accounting and finance side of operations. Along with being CFO, certainly for both my ongoing clients as well as others I offer consulting, planning & strategy. If there’s a way I can add value, I’m happy to work with a company in whatever way it needs to happen.
Aside from being a CFO, I also do one-time projects for companies who aren’t ready even for a part time CFO, but maybe need expertise in a specific area such as help building a financial model that they can then manage. Usually the projects are financial modeling, business plan writing & review, investor presentation creation, and one-time consulting on a specific subject to help them get over a hurdle.
Q7. What types of clients RogueCFO handles: I mean do you focus on segments or verticals or could handle all types of industries?
I’ve been open to all industries. If the company has a good management team in place with a track record, a viable business model, and terrific potential for growth then I’m interested. Originally I thought I’d focus exclusively on dot com types of companies. Over the years though I’ve worked in all sorts of industries import/export, health sciences, branding & marketing, retail, manufacturing, and I have worked with a few dot com’s as I had original intended. I learned quickly it wasn’t all about the industry and more about the company, how it was run and its potential that makes it interesting or not.
Q8. Tell us about how you market your services to the clients and what makes your USP?
I market in a few ways, although for the most part my clients these days come from referrals. Social media marketing has paid off, such as posting links on Twitter, Facebook and Linked Into my site. I don’t just blindly post links, I actually have valuable content on the site, free resources for entrepreneurs. As well, I created a podcast which has multiple episodes where I discuss topics of interest for startups as well. My USP is really that there needs to be a synergy on both sides. I don’t take anyone who comes along as a client, which seems odd when it’s tough times economically out there. I have no interest though in taking on clients only for money, if I work with someone it’s because I truly believe in their business and want to work with them.
Q9. What is the competition and what market size you target?
There are other virtual CFO’s out there, both independent ones and companies who provide the service. It’s quite okay, no one else is the Rogue CFO. The other guys at the end of the day are still the suit & tie, stuffy CFO’s who look good on paper, but at the end of the day haven’t been around the block with startups. Not to mention they are out to get any client they possibly can, and are more focused on their own bottom line than the clients.
I primarily target companies that have traction, usually about $1 million or more in revenue, and are IPO bound within a few years.
I think it’s important for an outsourced CFO to be just as innovative as the startups out there. I like to believe I’m ahead of the others in what I do, and will always be looking for ways to stay ahead. Clients needs change, and as a whole the entire staffing model is evolving in the last decade and will continue to evolve. For example, I’ve had at least one client ask if I would ever expand my company to be a full service accounting & finance department company instead of just the CFO role. My company would then be able to serve as a completely outsourced accounting & finance department, but still all under one umbrella. Definitely it is something I’ve considered and is an option. Beyond the business model, the tools I use to work with clients are constantly evolving, and I’m always looking for the best ways to facilitate our relationship, to make it as seamless as possible.
Q11. In your experience with startups, what types of hurdles you have noticed while startups are coaxed to outsource their finance department?
There’s a couple of hurdles. Some people have a hard time thinking about a virtual company, whether it’s the CFO or a programmer compared to the classic everyone in the office type of setup. It’s not for everyone even if I believe the benefits outweigh the costs of an outsourced team. Still, some people put a high value on that face to face time, and a virtual team just won’t work.
As well some people tend to be controlling, they want to be able to always have an eye on their employees. Naturally an outsourced team would be a nightmare for them.
Lastly, some people have the idea in their head that they will grow so quickly that they would outgrow a part time CFO in under a year, so they should just get a full time in house person now. The problem is of course they can’t afford someone worth hiring, so it’s a catch 22 for them. I typically argue that point as well, I’ve yet to have a client outgrow my services in under a year, or at all to be honest.
Q12. Do you have a stand-out story where your client felt that you helped them grow?
One of my original clients who I’ve been with for years as an outsourced CFO I’ve helped from a few hundred thousand dollar company to over a million in revenues per year, have raised a few rounds of funding, and currently is exploring some IPO options for the future. We’ve taken what was a 1 man show to a 15 person company and over time have implemented plenty of best business practices so that as we continue to grow, all the pieces are in place from the accounting & finance side. As companies grow and especially once they start thinking about going public there is a lot of accounting policy that needs to be clean. Especially for startups, usually there are plenty of stock issuances, options and warrants to be accounted for correctly, financials to be reviewed and audited, assets to be depreciated, etc. Things that smaller companies don’t necessarily get too worried about until they grow into a sizeable company.
Q13. How rewarding has been the experience till now?
It’s been more rewarding than I could have imagined. Originally I wasn’t sure what types of companies I’d get to work with, and what experiences I would have. Over the years I’ve worked with companies all the way from early, idea stage companies who just needed to help validate their idea to taking companies public. I’ve gotten to meet entrepreneurs and investors from all over the world, travel all over the world, and really learn and identify some common traits in successful companies. I’m excited about what the next decade has in store, as it gets better each year.
Q14. What is for future and expansion of rogueCFO?
My plans are to continue working with great companies with a lot of potential. I’m currently with companies who are going public, and I’ve trended towards working with those growth stage, pre-IPO companies as they are exciting and fast moving. I’m looking forward to taking a few more companies public. In the future I’m also looking to act as an angel investor/managing director of some companies myself, get involved both from a consulting and a skin in the game perspective. I’ve also thought about getting more involved in helping turn around once-successful companies who have fallen on hard times. I’ve done a little of this over the years as well, and possibly would want to get involved in it further.
Q15. Share some advice for startups from your experience.
I’d say a few things to startups. First off, never try to be a one-man show for too long. Entrepreneurs are great at what they do, but no one person is great at all the things needed to run a successful business. Having a team in place earlier than later can benefit the company in the long run as experts in their areas will only help you. As well, you’ll always need more money than you think you will from investors, so don’t try to fool yourself. Lastly, be flexible since I’ve yet to see a company end up where they originally planned. Opportunities arise as do problems, so the flexible entrepreneur can work around the problems and find solutions.