MineralTree CFO, Chris Sands, joined CFOs Mark Zablatsky of Burkland and Corinne Hua of Thinkific on an online panel hosted by Procurify to speak about spend management and growth in 2020.
The three CFOs spoke on the spend culture in each of their organizations and the types of attitudes, beliefs and policies they built for their team around spend.
Corinne noted that the spend culture at her company is transparent. Their goal at Thinkific is to help budget leaders understand what is important for the business. They then evaluate where they are at and what they are trying to accomplish in the next quarter or the next year so that people can align their spending to it. She gives leaders the guidance to make good decisions.
Chris described MineralTree’s spend culture as value-oriented and nimble, meaning they make decisions quickly and execute on them. He leads through empowering his teams to use the allocated budget as they see fit to achieve their goals.
Mark spoke about the going over the monthly budget versus the actual and having monthly budget meetings instead of quarterly. His advice to startups specifically is to evaluate whether to hire long-term positions or experts in a field for a shorter amount of time such as consultants or fractional CFOs in order to get top talent that will drive the start-up forward.
Corinne, Chris, and Mark covered the topics of growth and efficiency, strategies for fundraising, challenges that forward-thinking CFOs need to prepare for, discretionary spend, and moving from a reactive to proactive spend culture. Some of the biggest takeaways that the three panelists provided regarding each of the topics are outlined below.
Driving Growth and Efficiency During a Recession
The panelists gave advice regarding how companies can drive growth and efficiency during a recession. Some of the main insights from this portion of the discussion were to:
- Focus on survival and milestones in the early stages, not profitability
- Work towards the long-term vision to grow during a recession
- Have a balance between looking at both the top and bottom line
- Define metrics during this time such as what is important to the organization, what does success look like, and build a culture around preforming against those metrics
Fundraising Strategies During this Time
All three of the panelists agreed that the capitol is still out there, however, what has changed during this time is investor preferences. According to the panelists, the best strategies that startups can follow to fundraise during this time are to:
- Build the business as best you can then tell investors why it’s a good business rather than designing your business model based on investor preferences.
- Form a management team that knows how to create value; not one that needs to be told what to do.
- Focus more on existing investors for early stage companies. For new investors, don’t wait to establish relationships with them– go to them before you need the money to get on their radar.
Biggest Challenges Tech CFOs Need to Prepare for
When asked about what challenges they think tech CFOs will need to prepare for in the next 5-10 years, Corinne, Chris, and Mark had some valuable advice to give.
Corrinne noted that there will be face-paced tech innovations, so it will be important to be business focused because many other things may be handled by technology. Understanding people and building relationships will be an important component in keeping the job interesting and exciting as well as adding value to the overall business.
Mark advised that CFOs will need to not be only accounting focused and instead be the central depository for any metrics and all data, not just accounting data, but also Salesforce, Procurify, and any data that can be measured. He also stated that CFOs will need to be at the table for all strategic decisions not just things related to accounting and cash.
Chris stated that CFOs will need to be even more of a technologist in the years to come than they are now as the dynamism involved in the CFO’s role will continue to be a trend.
Discretionary Spend Management
The panelists were asked how they manage the discretionary spend for their organizations and what direct controls they have in place.
Chris responded by saying that he has a budget process that is thoughtful and thorough so that there is no micromanaging on the discretionary spend further down the road. He stated that a control he has in place is reviewing actual versus budgets more frequently than a quarterly basis.
Mark said that he sees the use of physical cards less and using ghost cards or virtual cards more, and also reviews budget versus actual more frequently.
Corinne stated that she defines what the total budget is then empowers her teams to make good decisions based on the budget. She does this by having her teams think about what outcome they want to achieve and how the funding that is being spent or the investments that are being made get to the outcomes that the company wants to accomplish. She also forces her team to think big as the company continues to grow.
How to Move from Reactive Cost Control to a Proactive Spend Culture
Lastly, the panelists were asked how they think an organization would move from a reactive cost control process to a proactive spend culture. The advice that the panelists gave regarding this question was as follows:
- Encourage members of the team to present ideas regarding investments as investments are the lifeblood of the business. If the company is going to grow and take advantage of market opportunity it will require investments and doing things differently.
- Think about how the company can be better and leverage spend
- Bring in the tools to best empower people
- Have the finance team talk more about what is happening in the future, not what happened in the past