Weekly Bookmarks
97th Edition – December 13, 2020
I’m going to make the argument that an IPO is the best long-term strategy for most companies, that IPOs are as valuable, and as important, as ever. Perhaps even more so.
Steve Cakebread
5 Big Ideas – The IPO Playbook
1. The IPO Playbook is for CEOs and CFOs in Small Businesses Too
Last week, I finished an advance reading copy of The IPO Playbook which came out a few days ago by Steve Cakebread. As a CFO, Steve has taken three companies public including Salesforce.
I approached the book thinking this would be for big-company CEOs, CFOs, board members, and investment bankers. Wrong. I wish I would have had the book 20-plus years ago in my old controllership days. Don’t let the title throw you. Chapters 1 through 6 apply to companies of all sizes.
2. The First Priorities for the Accounting and Finance Team
Probably no surprises here, but I was still fascinated with Steve’s comments on building out the accounting and finance team with a focus on skilled practitioners who know the basics:
- payroll specialist
- accounts payable expert
- general ledger accountant
- fixed asset accountant
- one person to help with the closing process
- a billings and AR team
Steve goes on to add that one of the first hires he makes is a credit and collections person.
3. Regarding Systems Upgrades
Are you or your company still using QuickBooks, the 800-pound gorilla?
Even at $20 million in revenue and with just 65 employees, Salesforce was already using Oracle financials, Salesforce CRM, and ADP payroll. Those same systems helped the company to scale to more than $1 billion and more than 4,000 employees.
Systems not only provide the data you need to run a business; they can shrink the cycle time of any process and reduce the error rate. By the way, an Excel spreadsheet managed by a single person is not a system. It is a slow-paced process fraught with errors, and while it may appear inexpensive, it most certainly is not, given the long-term costs that result from inaccurate and untimely operating data.
4. Picking the Right System
Chapter 5 is about systems and choosing the right solution as the business scales. The leadership at Salesforce agreed to implement systems sooner rather than waiting.
The author argues, and I agree, that the, “least expensive and most productive time to install business systems is when you are relatively small and have formulated a long-term vision for the future.”
Below are the core systems Steve recommends in any operational tech stack:
- general ledger
- billing system
- human resources management system (HRMS)
- data warehouse for holding integrated data for analysis and reporting
- procure-to-payment system
- cash banking system
- CRM solution
5. Governance
The first company I worked for after I left public accounting had its own in-house legal team, an internal audit staff, three people working in risk management, and we were subjected to full-scope external audits. I got the concept of governance quickly in my young finance career, and I believe such a mindset is needed even in the smallest of companies.
The line that I have highlighted and underlined is, ” … the very first board action should be to establish the moral and operating standards of the company, making sure they are shared both by board members and by the CEO.”
Even if your company does not have a Board of Directors or an informal board of advisors, just swap that group for the leadership team.
I’m thrilled to interview Steve this week for an upcoming podcast episode in January regarding his new book. One of the first questions I’ll be asking him is about the old, brown Buick – thank you, Mrs. Cakebread. Sorry, no spoilers – get the book, and the Buick story is in Chapter 11, IPO Day.
Thank You For Reading. Thank you for making this a successful newsletter.
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