Are you a first generation entrepreneur wanting to professionalize the financial systems of your start up? Or a family business wishing to scale up to the next level? Perhaps you represent an overseas company making an entry into India and looking for experts to navigate the Indian statutory labyrinth. Don’t worry! My CFO is here. The online outsourcing revolution, which has already embraced buying, selling, learning, working and many other aspects of our life, is now extended to business visualization and implementation of financial, IT and change management goals.
MyCFO was born out of the realization of Deepak and Venkat, its co-founders, who were working in global corporations, that there were many gaps in the financial and IT structures in Indian companies which had initially grown on the energy of their family /promoters. Difficulties faced by such companies in finding mid-level and senior management teams appropriate to different points of their evolution was an opportunity aptly tapped by providing what essentially amounts to a Finance function on call
In just 3 years My CFO has become a team of 100 professionals with clients in 6 cities and the largest and fastest growing CFO services brand .Here are some excerpts from their wonderful journey.
What was the motivation for setting up MyCFO? Was there any specific market gaps that you wanted to bridge?
We started our entrepreneurial journey in late 2006 when we set up WealthTree Advisors. The idea of setting up WealthTree was to be able to assist overseas companies looking at a smooth ‘India landing’. My Co – Founder Venkat was the CFO of two large Fortune 250 American companies and he was the 2nd and the 1st employee respectively in these companies in India. He found the setting up process to be extremely complicated and cumbersome and the germ of WealthTree was born. I joined him from Ernst & Young where I was working at that point in time.
The India FDI story was strong, Mid – sized overseas companies ($ 50 Million - $ 1 billion) needed support to help them in the initial phase including market feasibility, identifying and tie ups with local Indian partners, appointing distributors, setting up sales channels and managing their India sales teams etc. We met a number of mid – sized Indian companies on behalf of the overseas companies that we represented particularly on tie ups or distributor appointments and we realised that while Indian companies had grown over a period of time largely on the energy of its founders/promoters, there were significant gaps when it came to them having built mid/senior management teams and Finance and IT systems invariably never kept pace with the growth. This was the opportunity that we decided to grab.
Please share some milestone achievements of MyCFO.
A couple of close friends who ran their own companies were the ones who decided to ‘test’ us out. We did not do any kind of active business development nor were we at that point in time too conscious about creating a ‘brand’. One of the first companies that we worked with was India’s largest Flavours and Fragrances companies, over 350 Crores in size and they wanted us to step in and provide leadership to the Finance and Accounts department which consisted of over 40 people across 5 locations. The next 3.5 years were exciting as we did what a CFO could have wished for –Business Plans, MIS and Budget development, implementation of an ERP system for one of their businesses, helping them with an overseas acquisition, involvement on due diligence twice to help them raise funds from PE funds (the second one being one of the top 3 PE funds globally). While we were on this project, others started noticing us and we were requested to get involved. Till early 2011, almost all our mandates were through existing client referrals as we did not go out and aggressively push this. We wanted to build this brick by brick, do some good work and for our clients / market peak for the work we did. We did not have a website till end of December 2011, we did not call the service ‘MyCFO’ till then and obviously were focused only on building the credibility. We now felt we had enough talking points, we slowly started branding and marketing the MyCFO brand. From a base of 5-6 people in 2011, we are now a team of over 100 people (full time, on our rolls) and service clients in 6 cities in India. We are currently the largest and the fastest growing CFO services brand.
Please share some failures you faced during this undertaking. What has been your biggest takeaways from those experiences?
The single biggest takeaway was that we realised very early on is to be able to ‘tailor make’ our services to every client that we worked with. While the nuances of Finance and Accounts does not change, what changes is the approach and the ability to work with CEO’s/ Promoters across ownership structures whether this is a Family owned or managed business, a Private Equity or Venture capital backed business or the ones set up by technocrats or Indian subsidiaries of Multinationals or companies large or small where there is a project specific role. The solution is not a ‘one size fits all’ approach; ultimately the client has got to be comfortable.
In a nutshell, what services do you offer?
MyCFO assists companies in performance measurement, budgeting, MIS, cash flow management, profitability improvement, business process improvement, risk management, forex management, IT/ ERP implementation, IPO support and general ownership of the finance function. We work with companies in an 'Interim/Ongoing CFO/Controller role' (companies outsource the CFO role to us) or in a project based role to address specific pain areas (in cases where there is a good quality CFO already in place).
How are the services provided by MyCFO more suitable than those offered by other consultants or own employees who are physically available to address an issue?
MyCFO is not an advisory service. We play a highly hands on, operational, client driven, practical implementation service. Tangible, time bound results are delivered through a strong project management system and real time visibility to Promoters, Management and the funds that we work with. Our team members come with several years of practical, 'hands on', industry work experience. We have institutionalized the CFO function. With a pool of several people forming a part of this firm, client companies are able to draw down on the collective experience of the firm rather than an individual. An average individual CFO may work across 3-4 companies as CFO throughout his career with an average CFOing experience of 20-25 years, while a firm has several man-years as experience to draw down upon, having seen varied situations, worked across different life cycles of a company’s growth, with companies of various sizes and with varied ownership structures. High growth companies also require different CFO skill sets at different points in time during their scaling up process. Companies invariably hire CFO’s for the needs they may have at that point in time. It is getting increasingly tough for companies to accurately predict the growth rates and the situations that they will be in at some point in the near future. This also presents them with an issue in that the CFO hired today may or may not have the skill sets to manage the sudden growth. There are several other reasons, however one thing that I must emphasize is that we provide companies/ CEO’s and promoters an option which they didn’t have – it is not either inhouse or outsource, we also work with CFO’s of companies in off projects. Given the shortage of good quality finance talent and what needs to get done across companies, there is space for all.
Is MyCFO’s remuneration for its advice given to clients contingent upon the success of the business plan or profitability improvement suggested? If so, please quantify. If not, please explain how the client can be sure of MyCFO’s engagement with the problem?
MyCFO’s revenue model allows for anything between 15-35% contingent upon the milestones or KPI which is agreed within 3 weeks of the beginning of an engagement. Currently there are very few service providers (almost non – existent) who charge any % of their fee based on success. Our model gives CEO’s/Promoters the confidence that we have our ‘skin’ in the game. Moreover, the model is implementation focused (we are not an advisory company) – no fancy reports are issued; in most cases where we get involved we get involved in implementing the suggestions put down in these reports. Most companies today need us to ‘roll up our sleeves’ and fix issues rather than only advising them. The milestones or KPI’s that we chart are pretty extensive and granular – these are measured every quarter and our variable fee payouts are dependent on the success of the implementation of the KPI’s agreed upon. Remember, the variable fee is not on top of the fixed fee that we charge – this is a part of an all inclusive fee which means in case we do not meet the client expectations, the clients can dock all/ portion of our fee which is our profit margins. We like to keep it that way as it keeps us on our toes and it is a great barometer to measure client satisfaction.