Casually rattling off names of potential acquirers is little better than having no exit strategy at all. Well-prepared entrepreneurs should be able to answer as many questions about potential acquirers as they can about their own operation.

Understanding the acquisition patterns of target companies is a matter of research. Acquisition data is readily obtainable for many of the largest conglomerates, through either public filings or media coverage derived from investor capitalization tables. There are three areas in which a founder should be prepared to answer questions when identifying an acquirer.

1. Does this company actually grow by acquisition? How frequently do they acquire? Legitimate prospects have demonstrated that they acquire often—or, even better, have a committed merger, acquisition or strategy arm. In general, larger diversified companies are viable possibilities because they typically have greater cash flow, as well as a size and scope that makes internal innovation more difficult.

2. What is the typical acquisition profile? Once it is clear that a firm intends to grow by buying others, the next step is to figure out what they acquire. Does their acquisition history uncover trends about size and stage of targets? If a company generally buys others for $50 million to $100 million, how does that mesh with your company’s goals and timelines? Aside from market cap, what other metrics—types of revenue, head count—stand out? Translating those major patterns into a justified window of opportunity is a critical second step.

3. What is their reason for acquiring, and does your company fit that rationale? Would this be a diversification (horizontal) or penetration (vertical) play? How does that jibe with the trends identified earlier? For instance, of the 100-plus companies that have been acquired by Google, few are related to online search. That suggests that Google typically acquires to diversify its businesses, and thus might not be a credible target for a new search engine. In contrast, when Sprint bought Nextel it expanded its subscription base, suggesting the company might be in the market for other carriers that could add market penetration to their existing cellular business.

Investors make money on exits. Knowing the ability, frequency and buy-profile of potential acquirers not only conveys that an exit is your goal, but contributes substantially to shaping your business to meet that goal one day. Your investors are thinking about it, and so should you.

Fill in the blanks
Make sure your invoice template includes completed fields for information required by your clients, such as date and Tax ID number.

Invoice immediately
Sometimes the lag between completing an order and generating an invoice can add a week or two to your collection time. “You need to treat the invoicing process as seriously as you treat your business overall, not just as a back-office function,” says Flint Lane, CEO and Founder of Billtrust, a Jamesburg, N.J.-based billing company.

Consider online invoicing
Lane says using an online billing platform from Intuit, Billtrust, Tradeshift and the like reduces the cost and time associated with traditional invoicing. Tradeshift estimates a reduction in the cycle time (from when an invoice gets generated to when it gets delivered) from eight days for traditional invoicing to three days for online invoicing.
Use invoice as a promotional tool
Lane advises his clients to use the invoice as a tool to promote other products and services. “If you’re invoicing for bottled water and also sell coffee and snacks, put a message about a special on coffee or a coupon in there,” he says.

Gwen Moran  is a freelance writer and co-author of The Complete Idiot’s Guide to Business Plans (Alpha, 2010).

©Entrepreneur November 2011 by Entrepreneur Media, Inc. All rights reserved.

Companies like Fair Isaac use secret formulas to crunch data from your credit report, comparing it to millions of other people. Such formulas spit out a single number that helps banks and credit card companies decide how much to lend you and at what terms. This number is your credit score (the most common, from Fair Isaac, is called a FICO score).”A good credit score can make a big difference in a small-business owner’s life,” says Liz Weston, author of Your Credit Score, Your Money and What’s at Stake. She notes that while there are lots of different credit scores out there, most lenders base their decisions on your FICO score.

So, how can you boost your score? “There’s only one way to improve your score quickly, and that’s if there’s untrue negative information,” Weston says. “If you have somebody else’s account showing up on your credit report and you get that taken off, for instance, you’re likely to see a quick improvement in your scores. Other than that, it’s really a game of small improvements over time.”

To build your score:
 Pay off debt. “The most powerful thing you can do to improve your credit score is to reduce your credit utilization,” Weston says.
 Pay on time. According to Weston, if your FICO score is 780, one late payment can drop it 100 points.
 Limit new accounts. Opening new accounts has a noticeable effect on your credit score. Keep new accounts to a minimum, especially if you’re planning a big purchase.
 Don’t close old accounts. This may seem counterintuitive, but to maximize your credit score, keep accounts open, but unused.
 Keep tabs on your credit. Even small errors can hurt your score.

J.D. Roth is the founder and editor of the personal finance blog getrichslowly.org and the author of Your Money: The Missing Manual.

©Entrepreneur August 2011 by Entrepreneur Media, Inc. All rights reserved.

In a 2005 issue of the Review of General Psychology, Sonja Lyubomirsky, Kennon Sheldon and David Schkade looked at years of research to determine what contributes to long-term happiness. They found that about half of our happiness is biological, determined by a sort of happiness “set point.”

About 40 percent of happiness comes from the things we choose to do, like exercising, setting goals and building friendships. Only about 10 percent of our happiness is based on circumstances like age, race, gender—and, perhaps surprisingly, financial status.

Although your financial situation plays just a small role in your overall happiness, it does affect it. According to a paper published in the April 2011 issue of the Journal of Consumer Psychology, some financial habits bring greater satisfaction than others. “If money doesn’t make you happy, then you probably aren’t spending it right,” write authors Elizabeth Dunn, Daniel Gilbert and Timothy Wilson.

They offer some principles meant to maximize happiness, including:
 Buy more experiences and fewer things. Material goods depreciate. The day after you buy something, it’s probably worth less than you paid for it. Experiences, on the other hand, appreciate. Your memories of the things you do—vacations you take, concerts you go to—tend to become fonder with time.

 Use your money to help others. Personal spending has only a small effect on happiness, but pro-social spending—money donated to charity or used to buy gifts for others—consistently produces strong, positive feelings.

 Buy many small pleasures instead of a few large ones. In the words of the authors, people are happy with “frequent doses of lovely things than with infrequent doses of lovelier things.”

 Pay now but consume later. Buying today but paying tomorrow leads to debt—and to unhappiness. Deferred gratification makes us happier, and not just because we manage to avoid debt. It builds anticipation and usually leads us to make smarter choices.

 Beware of comparison shopping. If you’ve read The Paradox of Choice by Barry Schwartz, you know that people tend to be happier with fewer options. Then you’re less likely to make a “mistake” while shopping, and therefore less likely to suffer buyer’s remorse. Plus, it can be tough to know which features actually matter most. Find a good option and go with it.

What’s the best way to be sure money will make you happy? At the 2010 Berkshire Hathaway annual shareholders meeting—also known as “Woodstock for capitalists”—Warren Buffett’s business partner, Charlie Munger, shared a pearl of wisdom: “The secret to happiness is to lower your expectations.” If you can’t be content with what you have, you’ll never lead a rich life, no matter how much money you earn.

©Entrepreneur July 2011 by Entrepreneur Media, Inc. All rights reserved.

J.D. Roth is the founder and editor of the personal finance blog getrichslowly.org and the author of Your Money: The Missing Manual. e-mail him at jdroth@getrichslowly.org.

Legendary Indian cricketer Sunil Gavaskar often comments that when a batsman who has just scored 100 runs comes in to bat in the next innings he needs to keep telling himself that this time round he is starting at zero! This ability to refocus and tell yourself that each-time you start something new you are at zero, no matter how much you have scored in your “previous innings,” is what separates a champion from a successful cricketer.

I believe this is what holds the key to a successful entrepreneurial career post having worked as a professional for some years of your life. Let me explain this some more. When a mid-career executive wants to start a business, amongst the many problems/dilemmas that he/she faces the biggest one probably is the battle with self-image or self-worth.

As a mid-career executive there are certain things that you’ve already started taking for granted; air travel, your office cabin.

But the biggest one is the fact that you are used to having people who “report to you” and so the necessity to do things “yourself” is low.

Further, as you are a high achiever in your company, you start seeing success as a having floor “value” (pretty much like the 100 runs a batsman made in the previous innings).

Now, when you want to start something of your own, you need to start from scratch. So it is back to the days when you started your career i.e. two-wheelers, public transport, AC train travel, small cubicles and, most importantly, executing most things yourself.

Again, as it is a startup, there is no track record of previous success (which you have in your job and could have quoted when you were applying for another job).

So, what actually happens? The reality of a startup at the bottom starts conflicting with the self-image of the person. You feel that as you have already climbed four steps in the corporate ladder you need to start at the fifth step and not at the first.

So, usually when such aspiring entrepreneurs start writing a business plan and the consequent funding requirements which follow the business plan, most of what he/she ends up putting in the Excel sheet as the fund requirement is actually the ego requirement of the person! There are two types of people here—first, those who “do not want to get their shoes dirty” and the others are those who do not have shoes on the ground. Ironically, both actually then end up walking on air!

Not wanting to get your shoes dirty
The biggest head of expense on most funding sheets is salary and with large self egos you need to have people who can execute your ideas as you cannot do it yourself. As they need to be paid market rates your funding need for salaries start sky-rocketing.

This gets disguised by elevating potential employees to ‘rock star’ status who bring skills without which you cannot do business. (I am really tempted to then say that maybe I am better off funding this person rather than you!)

If you start adding office and other costs then this excel sheet starts becoming really heavy, not with actual requirement but with your ego. Or, in this case, even laziness.

Shoes not on ground
Such people are those who feel that just because they’re professionals with 10-15 years of experience attempting an idea, less than one that generates Rs.100 crore revenue in five years is a waste of time.

Good so far, but the trick here is that with no proof of concept this person wants to raise Rs.4.5 crore or even more? If you want to reach Rs.100 crore in five years, please go ahead but first you must calculate what you need for the first crore.

Don’t take that for granted just because in your previous job you were handling a Rs.100 crore-a-year target.

What all you actually need to start a business:

1. Living allowance for yourself and your co-founder—this number should be between Rs.30,000-Rs.40,000 per person, per month (in fact, if there are two founders then certainly not more than Rs.30,000 pp). If you are a mid-career executive starting a business then this should be zero.

2. Work space costs that should not be more than Rs.10,000-Rs.15,000 per month.

3. Overall salary bills which should not be more than another Rs.40,000-Rs.50,000 per month.

4. Vendor fees (outsourced expertise) of Rs.20,000-Rs.25,000 per month.

5. Costs around travel, communication and promotion amounting to Rs.20,000-Rs.25,000 per month.

All this adds up to Rs.90,000-Rs.1.1 lakh (if you are not taking a monthly living allowance) or Rs.1.4 lakh-Rs.1.5 lakh (if you are taking an allowance).

Now, to build a funding plan, you need working capital for 18-24 months and that is an amount between Rs.15 lakh and Rs.25 lakh. This is what you need to start your business and prove your concept.

This should also take care of some of the capital expenditure although one should also try and finance most of it from debt and not actually use equity money for things for which debt is available.

With some revenue thrown in (even though you don’t break even before 24 months) you should have enough cash to run your business for 30 months or are good to go.

I happily concede that the numbers that I have given above are not cast in stone and each business has its own investment and working capital cycle.

However, the point that I am trying to make here is that as an entrepreneur, it is your job to make sure that you have drawn up a skeleton of the funding needs first and not really filled in the flesh.

As I meet more and more people during my current career as a professional seed investor, my first attempt is to understand this aspect and see which ego state (if any) the person/entrepreneur is in.

It is at these times that I understand the significance of Sunil Gavaskar’s statement, which I mentioned at the very outset of this article.

Remember, as an entrepreneur you are starting out at the zero level and no matter what your designation, lifestyle or achievement was in your previous job, it does not matter anymore in your new set up.

Plan for this as you would have done when you started your career as a rookie and, in most cases, you will not end up being disappointed. Happy starting!

©Entrepreneur July 2011 by Entrepreneur Media, Inc. All rights reserved.

Gautam Sinha is Partner, MyFirstCheque, a seed fund that writes the “first check” for Indian startups.

Companies are running on leaner budgets and many have cut back their HR departments, but there is still market competition for the best employees. And those employees’ needs have changed dramatically, so they are demanding consumer-driven cafeteria plans that may have multiple options for health coverage, vision coverage and other benefits.

How can small businesses offer plans that are competitive with those offered by larger firms?
They must keep looking at the needs of their employees. Many companies purchase plans and stay with them for years, simply watering down the benefits to save money. Instead, they should be looking at which benefits are used. There may be too much benefit in one section of the plan.

What are some of the more popular optional benefits in cafeteria plans?
Child-care benefits, disability insurance, long-term care insurance and critical-illness insurance, which pays a benefit if the covered employee gets a debilitating illness like cancer, are increasingly important to employees.

What else should a small business consider when administering employee benefits?
Compare your benefits program to those of other companies. Look at companies in your industry and those of similar size in your region to determine how you stack up against the people who are competing for talent. Often, industry associations or other independent organizations or consultants conduct benchmarking studies for this purpose.

The flex option
While it may not be possible for every business, a flexible workplace can provide an important benefit without driving up hard costs. Recently the Society for Human Resource Management (SHRM) and the Families and Work Institute (FWI) launched Moving Work Forward, a partnership to advance workplace flexibility.

In a recent FWI survey, 87 percent of employees reported that flexibility in their jobs would be extremely or very important in deciding whether to take a new job. Eighty-nine percent of HR professionals from organizations with flexible policies said that this workplace benefit had a positive impact on retention. Some hallmarks of flexible workplace policies include:

• Flextime, where employees can set hours within a range periodically.
• Time off during the workday to address family matters, when needed.
• Paid time off to care for sick children or other family members.
• Desirable and predictable work shifts.
• Control over work schedules.
• Regular breaks allowed when needed, instead of at a predetermined time.
• Working at home, if the position allows it.

SHRM published information about the partnership and resources for adopting flexible policies at weknownext.com/movingworkforward.

Pay what?
Who’s paying for which benefits these days? The U.S. Bureau of Labor Statistics’ latest National Compensation Survey includes some interesting findings.

• Employer-provided retirement plans were available to 74 percent of all full-time workers and 39 percent of part-time workers in private industry.
• Medical care benefits were available to 71 percent of private-industry workers.
• Employers paid 82 percent of the cost of premiums for single coverage and 70 percent of the cost for family coverage for workers participating in employer-sponsored medical plans.

Healthy choices
As of last year, thanks to the Patient Protection and Affordable Care Act, small businesses providing health insurance to their employees may have become eligible for a tax credit to offset some of the premium cost.
In general, the credit is available to small employers who paid at least half the cost of single coverage for single employees in 2010. Through tax year 2013, the maximum credit is 35 percent of premiums paid.

This may be welcome news for some business owners, but it can raise new questions about tax credits and increased compliance requirements, says Dorothy Miraglia, a principal of strategic benefit solutions with AlphaStaff, a human resources outsourcing firm for small to midsize companies based in Fort Lauderdale, Fla. Employers may wonder whether it’s best to deduct their individual benefits expenses or to opt for the tax credit.

In general, Miraglia says, those companies with 11 or fewer employees would be better off with the Health Care Tax Credit, but you should consult your accountant before making a decision.

For your benefits
Looking for an employee benefits provider? These firms range from soloist consultants to divisions of multinational insurance companies. Use the resources and information available from these organizations to help you find the right option for you.

• Employee Benefit Research Institute: Offers information on providing sound, robust employee benefits programs.
• National Association of Employee Benefit Administrators: A trade association of third-party benefits administrators.
• International Foundation of Employee Benefit Plans: An independent, global source of employee benefits information.

Get wellness soon
Before you dismiss wellness programs as touchy-feely endeavors, consider this: A survey by NYC HR consulting firm Buck Consultants, found that of the 40 percent of U.S. employers who measured how wellness programs affect the cost of providing healthcare benefits, nearly half reported success in slowing healthcare cost increases, as much as 2-5 percent pa.

If you’re interested in launching an in-house wellness program, you can use these tools.

• Small Business Wellness Initiative: Funded by the U.S. Department of Health and Human Services, this site offers free downloads of workplace wellness plans.
• Workplace Wellness Grants: The Patient Protection and Affordable Care Act of the U.S. provides up to Rs.900 crore in grants to businesses with fewer than 100 employees that launch new wellness programs.

GWEN MORAN is co-author of The Complete Idiot’s Guide to Business Plans (Alpha, 2010).

©Entrepreneur May 2011 by Entrepreneur Media, Inc. All rights reserved.

1. You treat sales as revenue before the product or service is delivered.
Stuart Reisch, co-founder of Transform, a company that makes custom storage units, learned this the hard way after unwittingly counting deposits as income his first year in business in 1999. The New Rochelle, N.Y.-based company had Rs.5.4 crore in expenses versus about Rs.6.3 crore in sales, resulting in what looked like a Rs.90 lakh profit. However, Rs.90 lakh worth of products that were sold weren’t actually installed until January of the next year. As a result, Reisch ultimately had to revise the company’s financials and realized the business had only broken even—not earned a profit after all. He then decided to temporarily halt plans for growth.

“[Instead] we worked on cost containment to improve our bottom line,” says Reisch, whose 65-employee company now has annual revenues of Rs.2,925 lakh. “By the mid-point of the following year, we [were able to] modestly increase advertising and add a salesperson.”

Lesson learned: When you make a sale, don’t count it as income until your company has delivered the product or service to the customer, according to Christopher G. Gamble, a certified public accountant at Kroner Gamble & Co., a Rochester, N.Y.-based accounting and financial-planning firm. Great sales in a month that will be delivered to the customer later, but are improperly posted as revenue for the current period, can give a company a false sense of profitability, Reisch cautions.

2. You don’t consider the financial ramifications of a large purchase, such as equipment.
When you pay cash for a new server or piece of equipment, one of the benefits is that you can depreciate the equipment over time. But experts say dipping too far into cash reserves can put a business at risk in more ways than one.

“What many business owners don’t understand is that making a capital expenditure on equipment or furnishings not only depletes their cash reserve in the short term, but will come back to bite them at tax time,” says Franka Winchester, founding partner of Pacific Crest Group, a Larkspur, Calif.-based business- management and financial-services firm. For example, when you have to gradually write off a large asset you can’t claim it as a one-time expense on your taxes, according to Winchester. And if you can’t claim that expense to offset profits, your business will likely be on the hook to pay more come tax time.

Lesson learned: When making a major purchase, such as equipment, consider a short-term loan if purchasing with cash would put a serious dent in your reserves. Using a credit card is an option for items you know you can pay off in a few months, but beware of high interest rates. Leasing is also an alternative if, say, the equipment you’re considering requires periodic updates or you need to use an item only temporarily.

3. You confuse profits for cash flow.
When Anne-Marie Faiola tried to ramp up expansion of her soap-making supply company shortly after its founding in 1998, she couldn’t figure out why she was showing a profit on paper but never seemed to have any cash left at the end of the month. As it turns out, she was spending money on product development faster than she could earn it back. Her business was staying afloat by borrowing from credit cards and a line of credit. “If you do that for too many years, you will find yourself heavily in debt while still being profitable and wondering why you can’t seem to get ahead,” says Faiola, founder of Wash.-based BrambleBerry.com, which now generates annual revenue of Rs.5.4 crore. Once Faiola realized more money was going out than coming in, she slowed spending for three years to curb debt.

Lesson learned: Always track what you’re spending versus selling—and take a long, hard look at your financials before moving ahead with expansion plans that would put your business too far into debt.

©Entrepreneur June 2011
©Entrepreneur Media, Inc. All rights reserved.

“Women tended to be a little less confident as angel investors than men,” Sohl says. As a result, the number of investments made by women angels tends to be lower than those made by men. However, in teams where women comprised more than 10 percent of the investment team, investment levels by women also rose, according to the duo’s research.

Sohl is quick to point out that investment levels may be affected by factors like available investable resources, quality of deal flow and individual risk tolerance. In addition, he says the findings must not be construed to mean that women always invest at a more conservative pace.

As the paper notes, “although our data suggests that an entrepreneur is least likely to receive funding from a gender diverse group when women represent a small minority, we cannot speak to the other potential benefits such groups might provide.”

Sohl is continuing his research to examine the correlation between gender diversity and investment levels in angel funds. And while he believes this is an important aspect for entrepreneurs to explore, he also maintains that they should be persistent in their quests for funding, even after being turned down. “If they’re not successful, that shouldn’t end the process,” he says, suggesting that you continue to network and find groups that understand your business, regardless of gender makeup.

©Entrepreneur April 2011 by Entrepreneur
Media, Inc. All rights reserved.

©Entrepreneur May 2011

GWEN MORAN is co-author of The Complete Idiot’s Guide to Business Plans.

“People tend to resist that which is forced upon them. People tend to support that which they help to create,” says author Vince Pfaff. I am sure you can relate to this quote and so can your customers. When you call a past due customer and demand payment in full you won’t get as far if you called and offered a couple of different options for payment plans.

Here are some suggestions for setting up realistic payment plans for your customers. One thing you must do is to make sure your customer knows you understand that every situation is different, and that you will take into consideration their ability to pay, the amount unpaid, their payment history, for how long they have been a customer, and specific reasons why the account is past due. Make sure your customers know that setting up these payment agreements can’t be done all the time; you’re doing it now because there is a problem and you want to resolve it. Often, customers get very comfortable charging more products or services and just making the monthly payment plan payment. Avoid this by putting every agreement in writing with a start date and an end date. Some companies have rules about payment plans, including not entering payment plans by one customer more than once a year or requiring a 15 percent deposit for all new plans.

With the economy a mess and more consumers unable to pay their bills, the objective of setting up payment arrangements is to at least get paid something rather than nothing. Most customers will look at all their bills and then make a decision on which ones will get paid that month based on what is most important to them. It is your job to make your invoice important to them and offer them realistic options so they will pay it each month. You want to effectively outline policies and procedures that will help provide your customers with options when they cannot pay in full.

Something to remember if you don’t like the idea of offering payment plans: If someone owes you money, they probably owe others money, and who ever takes action first or offers a solution, will get paid first.

When setting up your paymentagreement:
1. Review your customer’s history before you make the call.
2. Have two or more options for payment arrangements in mind before the call.
3. Repeat everything to the customer.
4. Get it in writing and then have your customer sign it.
5. Follow up and follow up.

©Entrepreneur April 2011 by Entrepreneur Media, Inc. All rights reserved.

©Entrepreneur May 2011

MICHELLE DUNN is an award-winning author and columnist and has been called the U.S.’s authority on collecting money. She is the founder and CEO of Michelle Dunn’s Credit & Collections Association, and is one of the top 50 most influential collection professionals in the industry.

Let me give you some practical examples across multiple functions to illustrate the importance of a CFO:

Accounting systems
Under accounting, let’s start with bank reconciliation. I have interacted with quite a few companies and a few common responses I get when I ask about bank reconciliation are:
 What is that? Our auditors handle it.
 We prepare it once in a quarter, but it is never checked by us (the promoters/CEO).
 We prepare it, but we clear the bank reconciliation once in a few months.

Let me share an experience here regarding a finance company I was involved with. They had a bank reconciliation that was regularly prepared, but cleared once every few months. When inspecting it closely, we noticed that there were a couple of cheque returns from a customer lying in the bank reco. This meant that the system showed that he had paid on time. Now, after three cheque bounces, that smart customer prepaid his loan and the company even returned all his papers. Later, the company found out about the three cheque bounces, but by then it was too late to recover the same.

Compliance
When cash flow is under stress, the Government of India becomes the funding agency by default. This happens by virtue of businesses electing to defer Statutory Dues, which is not right and can be dangerous for the following reasons:
 This is not free money. The company will have to pay it back someday. And this deferral comes with a high interest cost, penalties and sometimes settlement cost.
 This becomes a negative remark when you go out to seek external investors. PEs/VCs do not like non-compliant companies.

Cash Flow Forecasting
It is important to have a long-term cash flow forecast for two to three years, and also a detailed monthly forecast for the next 12 months and a detailed weekly forecast for 13 weeks. As an entrepreneur, you don’t want surprises and last minute panic to meet basic payment requirements.

Receivables management
It is surprising to see SMEs chase banks for working capital/OD limits, while running huge receivables from clients. Here are a few steps to keep your receivables management efficient:
 Have a dedicated team and a clear process.
 Calculate your interest loss, and offer some cash discount to your clients as an incentive to pay earlier.
 Draft and provide your teams with standard collection follow-up letters and escalation matrices.
 Include the cumulative outstanding amount in invoices. This is a simple yet powerful tool.

Cost management
Though the domain of cost management is very wide, let me give you a few quick examples:
 Rentals: Check the chargeable area. Sometimes landlords give a sharp per sq. ft. rate but an inflated chargeable area.
 Employee Expenses: Check reimbursements of all key employees. Check fuel and meal bills. Check business lunch reimbursements of the sales team.
 Lawyers: Hiring lawyers can turn into an expensive proposition. Even after negotiating the best hourly rate, check what they are billing you for. They tend to charge you even for the time they spend understanding your case. Sometimes I have seen Associates (juniors) charging for understanding the matter from the client, and then Partners (seniors) charging for understanding it from the Associates. Then there is the actual work done/advice given, which is charged for separately.
 Travel: Check travel reservations of your senior employees. They are the ones who can influence the admin department. Check if the choice of airlines is governed by the cost of travel or Frequent Flier Miles.

Finance reporting
Reporting financials is an art, one that distinguishes a good finance professional from the rest. Let me give you the following three options of financials being reported by a company.
Option 1: The company closed Q3 with Rs. 22.5 crore in sales and Rs.2.25 crore in losses.
Option 2: The company closed Q3 with Rs.22.5 crore in sales, as compared to a budget of Rs.27 crore and a net loss of Rs.2.25 crore as compared to budgeted loss of Rs.90 lakh.
Option 3: The company closed Q3 with Rs. 22.5 crore in sales as compared to Rs.18 crore in sales in the previous quarter, and Rs.9 crore in the same quarter last year, thereby posting a growth of 150 percent YoY. While the company had set an aggressive sales target this year of Rs. 27 crore, efforts are on to focus more on costs and EBITDA, and to avoid chasing revenues, pursuant to strategic decisions made at the last BOD meeting. While the net loss for the quarter was Rs2.25 crore, the company incurred a one-time, non-cash cost on account of ESOPs issued to certain key senior employees, that we want to retain, of Rs.4.5 crore. If this is excluded, the company generated a profit of Rs.2.25 crore, being the highest profit per quarter since inception.

Conclusion
Engaging a good quality CFO is very important to the success of an SME. While it may seem out of reach from a cost/budget point of view, with virtual and part-time CFO services providers, it is no longer a perk that only large companies can afford.

©Entrepreneur May 2011

Bhairav Kothari is the Founder and Managing Director of SuperCFO, a provider of virtual, interim, special purpose and full-time CFO services.