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ProCFO, LLC is a full service CPA firm established in 2007 providing accounting, CFO, financial
statements, payroll, and tax services for businesses
Vital CFO Services for a Business’s
Disciplined Growth
Businesses that have a plan, able to clearly identify their value proposition, and have control of their
finances have a better chance of avoiding the crash and burn of 80% of businesses.
1. A written 3-5 year strategic growth plan
A strategic growth plan is imperative for the direction and growth of a business, much like a
compass is to a navigator. When writing your plan, consider what will be in your Executive
Summary, the company’s Mission Statement, Analysis of Strengths, Weaknesses, Opportunities
and Threats, Goals, Key Performance Indicators, Target Demographic, Industry Analysis,
Marketing Plan, Team composition, Operations Plan and Financial Projections. ProCFO has a
team of experts that can help with all of these facets.
2. Identify value proposition
Establishing a substantive value proposition is critical to building a successful company.
According to Forbes, a Value Proposition is a positioning statement that explains what benefit
you provide for who and how you do it uniquely well. It describes your target demographic, the
problem that you address and why you are better than the alternatives in the marketplace.
3. A system to get accurate and timely financial statements
Having the right system to efficiently obtain accurate and timely financial statements and
knowing how to understand your financial statements is very critical for every business owner.
Many companies prepare financial statements to get a bank loan or prepare their annual
income taxes, but don’t understand how to use them to manage their business operations.
Accurate income statement, balance sheet and cash flow are the basic financial statements that
will answer the following questions plus many, many more:
 What where your current, prior, and past month’s profits or losses?
 What was your gross margin on the company’s key products or services sold?
 What is your available cash balance?
 How much do you have invested in inventory?
 What will you receive in the future on past sales (receivables)?

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ProCFO, LLC is a full service CPA firm established in 2007 providing accounting, CFO, financial
statements, payroll, and tax services for businesses
 What do you still have to pay on past purchases (payables)?
 How much do you still owe on your long-term debts?
 Did you have positive cash flow from operations?
 How much did you pay down or borrow on your long-term debts?
 Did you receive capital contributions or make distributions?
 Are we operating efficiently?
Running a business without accurate financial statements is like making a cake without a recipe
or building a house without a blueprint. All can be done, but in the end will you have anything
of value and will you know how to reproduce it to make future profits?
4. Develop key management reports to measure critical company metrics
Management reports are reports developed to help management make the decisions that
increase net worth for the company that yield a good return for its investors. These reports can
be developed to determine:
 Which employees are profitable to the company and which may need to be replaced;
 Which projects are profitable and being completed within your customers’ expectations;
 If employee incentives growing or shrinking the company’s profit;
 Which products, divisions, or regions are contributing to the growth of the company;
 If your performance, financing, and liquidity ratios healthy and comparable in your
industry.
Management reports are the proprietary strategy of the company. They are designed to
figure out what the correct “levers and pulleys” are that drive profits which can increase
equity for the investors and be competitive in your industry.
5. Financial forecasting
What is your desired Net Profit? A financial forecast is a tool that allows you to use your
resources where they're most needed, so you can control the cash flow of your business,
instead of it controlling you. A lack of planning and control of cash resources is the reason often
given for the failure of many small businesses
A financial forecast helps you achieve your goals and get your business where you want it to be,
much like a map helps you plan a long road trip.

3.
ProCFO, LLC is a full service CPA firm established in 2007 providing accounting, CFO, financial
statements, payroll, and tax services for businesses
6. Determining the optimal capitalization structure
Capital Structure is how a firm finances its overall operations and growth by using different
sources of funds including debt instruments.
A company's proportion of short and long-term debt is considered when analyzing capital
structure. When owners, investors and creditors refer to capital structure they are most likely
referring to a firm's debt-to-equity ratio, which provides insight into how risky a company is.
A growing company also needs to assess its equity composition as it relates to stock, dividends
and retained earnings. Business should evaluate the proper mix of distributions and retained
earnings to capitalize on its investments and monitor its pay-outs to ensure the cash flow is
being maximized and investors remain satisfied.
7. Managing cash flow
According to Bloomberg, 8 out of 10 businesses fail in the first 18 months and the primary
reason is that they run out of cash. Cash is vital and how you manage it can be the result of an
early death or long-term success. Good management considers:
 Retaining sufficient working capital to paying your employees, vendors, and taxes on
time to avoid losing trust and paying unnecessary financing costs or penalties;
 Quickly and efficiently collecting on past sales of products and services;
 Scheduling vendor payments to take advantage of discounts and avoid financing costs;
 The proper usage of a credit line and long-term debt;
 How to save and invest for short and long-term cash needs;
 How to grow your cash flow.
8. Calculating the return on company investments (ROI)
Whether you have invested your own capital into your company or if someone else has invested
into your company it is your responsibility to be a good steward of that capital. That entails
taking that capital invested and figuring a way to invest in assets, research, product
development, marketing, employees, and processes to create more value. The capital can then
be returned with earnings to the investor. Things to consider when calculating the return on
company investments are:

4.
ProCFO, LLC is a full service CPA firm established in 2007 providing accounting, CFO, financial
statements, payroll, and tax services for businesses
 Are your assets appreciating? Are your assets helping to create revenue? Are your
assets increasing the efficiency of your processes? These questions can be monitored by
evaluating the assets’ Fair Market Value versus its cost, a multiple of increased revenues
and assessing the efficiency of overall operations with regard to the consumption of
resources.
 Is the investment in research allowing the company to understand new products or
services that the market is demanding? This can create a first mover advantage which
allows for a premium on the new products and services to offset the initial research
costs.
 Would investing in product development give the company a patentable product? This
would give the company a set protected period of time to avoid competition to recoup
their costs and could brand them as an innovative company for future product releases.
 Is the investment in a marketing and advertising campaign building product awareness
and customer goodwill to lower the acquisition costs of new customers? This can be
measured by measuring the payback of the launching of new products.
 Is the investment in employees with education, benefits, and culture increasing your
profitability? This can be achieved through a decrease in employee turnover, higher
than expected customer service that contributes to retaining your customers compared
to continuing to acquire new customers.
9. Controlling inventory and overall operating costs
Having the wisdom and knowledge regarding inventory and cost control is imperative.
 Not having sufficient inventory on hand to fulfill customer orders is not only lost current
sales, but could be lost future sales if the customer pleasurably experiences another
product instead of yours. Conversely, having too much inventory can negatively impact
cash on hand that could be used for other investments.
 Cutting back on advertisement instead of investing in a well executed advertisement
campaign may also be a detriment to your company by missing out on getting your
product or service into the market especially if you have a competitive customer
acquisition strategy.

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ProCFO, LLC is a full service CPA firm established in 2007 providing accounting, CFO, financial
statements, payroll, and tax services for businesses
 Being overstaffed or understaffed can be costly by low employee moral via boredom,
burn-out, or worse poor customer service.
10. Long-term taxation minimization strategy
The government can potentially tax over 50% of the profits of the company so strategy
regarding deferring income recognition and accelerating tax deductions. Also, timely payment
of income and payroll taxes is important. Some of the decisions that should be considered are:
 Entity structure, e.g. LLC, Corporation, Non-profit;
 Deferred compensation, e.g. qualified and nonqualified retirement plans, granting and
exercising stock options, stock buy-back plans;
 Employee benefits, e.g. health and disability insurance, retirement, other fringe
benefits;
 Accounting Methods, e.g. accrual vs. cash, inventory valuation, calendar or fiscal years;
 Leasing or buying a piece of equipment.
11. Retaining key employees
When a key employee is lost via retirement, termination, competitor, or death the company has
to reinvest in training up another employee within the company or hire outside which can both
be costly endeavors. Usually, the costs to implement a few safe precautions outweigh the
transition costs. Some options the company should consider to help minimize the costs during
these times:
 Have regular employee evaluations to keep employees motivated, feel appreciated,
and develop professional development plans to replace employees that will retire to
retain key employees;
 When feasible, cross-train employees so not just one person knows the responsibilities
of the job duties to assist during vacation, sick, maternity days, and terminations;
 Strategically develop compensation packages for employees to keep them motivated;
 Have key man life insurance to replace an employee upon death.
12. Succession plan

6.
ProCFO, LLC is a full service CPA firm established in 2007 providing accounting, CFO, financial
statements, payroll, and tax services for businesses
Many companies eventually get to the end of their life not for the lack of demand for the
product or service, but for the lack of knowing what to do when the key management/owner
decides to retire. Items that should be planned and addressed well before that day comes are:
 What’s the business worth?
 Should the company dissolve and the equity stakeholders get their proportioned equity
returned?
 Are there employees that can be developed to take over the management of the
company and the equity shareholders are retained?
 Does the company continue, but be turned into an ESOP (employee stock owned
company)?
 Can the company be sold as turn-key? And is it to an individual or another corporation?
 Finally, what is the best way to structure the transfer of the business to minimize taxes?
In Closing:
Many different financial decisions are needed to be analyzed and implemented throughout the lifetime
of a company. These are all needs with which a Chief Financial Officer (CFO) would be involved. If you
are a growing company a good investment would be to in-source a CFO until you hire a full-time CFO.
Also, a CFO company, like ProCFO, allows you to access an entire team of CFO’s and financial
professionals.