Building A Brand In The CFO Services Space

1. Building A Brand In The CFO Services Space

2. Deepak Narayanan and S. Venkat’sentrepreneurial journey commenced in the year 2007 when a number of companies from international markets were trying to set up business in India. “The larger ones would go to larger consulting firms like E&Y and KPMG to help with India entry strategies, but what about the midmarket companies? These companies are neither too small nor too big to be able to approach large organisations without being ignored,” points out Deepak Narayan. Hence, they held on to this niche and setup Wealthtree Partners, to offer India entry strategy consulting to companies from around the world. Both partners were so bored of their finance functions in their previous organisations that they did not want to get into it. However, as luck might have it, they stumbled upon the idea of setting up MyCFO, a network of CFOs to offer corporate finance implementation services to clients. “The recession in 2008 taught us that we were relying too much on companies which are coming from outside India,” states Narayanan. The gap that the duo identified was while companies were scaling up, the finance and accounts functions were light-years behind. And most companies didn’t have a CFO or even if they had one, they were so caught up in day-to-day cash flow, finance and accounting operations. http://mycfo.in

3. “Sometimes you need people who have seen companies scale from a Rs 50 crore company to a Rs. 500 crore company. It will depend on the aspirations of the person on the ground” Hence, they got into this space and engaged with a few of these companies. “One thing led to another and eventually, three years back, we branded this service as MyCFO,” states Narayanan. MyCFO is now a part of Wealthtree Partners. Today, MyCFO is a prominent CFO services firm in India, which provides CFO and finance effectiveness services to clients across industry verticals and size. The company’s CFOs do not sign balance sheets, but actively get involved in all other tasks, which a CFO does and also provide strategic level inputs. Their typical engagement period is now one year and above. “Three years back it used to be below six months, then it moved to nine months. Now it is 12 months and above. Maximum we have worked with a client is four and a half years,” recalls Narayanan. http://mycfo.in

4. MyCFO currently services clients pan India with a team size of 130 people spread across seven cities including Mumbai, Delhi, Bangalore, Hyderabad, Pune, Chennai and Coimbatore. The market opportunity for the company’s business is large, as many listed companies do not have a CFO (almost 2,000 out of 6,000). The company is also working with around 36 PE and VC funds to aid their portfolio companies. It has a current client base of 90 and has serviced almost 225 companies in the last three years. The founders did not raise any external capital when they set up the company. They brought in Rs. 1 lakh when they started and won their first client when they started the service. The company is debt free even today. http://mycfo.in

5. Into The Finer Nuances MyCFO works with companies to plug the wide gap that exists between the demand for high quality finance services felt by high growth companies and the inadequate supply of such services at the right levels of ownership, quality, timelines and more importantly, one that aligns with the company’s vision. With a number of companies sprouting, companies growing, and family-managed businesses becoming PE invested, how does one fill the huge gap? “We are in a space not as a company that body shops but as people who will take on responsibilities of a CFO and service it through a team of people on the ground,” says Narayanan. The engagement model is a tight onsite model which allows companies to see that it is taking a lot more responsibility and is present when it actually scales up or down. Hence, the two roles that the company plays are that of a CFO (business plan, MIS, budgeting and cash flows) and support role (helping CFOs improve finance effectiveness within the organisation by designing ideal organisational structure, internal controls, implementation of ERP systems and more). The company also helps its clients get exit ready, prepare for initial public offering and strengthen internal processes and practices of listed companies. http://mycfo.in

6. What may vary in our model is the number of days in a week that we engage with the client. For example, if it’s an extremely small company, it may need just three days in a week. Then, that CFO will be assigned to another project he or she can work on in parallel. “The challenges with smaller organisations lie in providing high quality CFO input at the cost they can bite. Therefore, the shared concept helps,” says Narayanan. For midcap companies, the team is larger – around three people will be assigned to handle the project. MyCFO doesn’t position itself as an outsourced service firm because it doesn’t operate on a cost plus model. “With this model, there will probably be a 15 to 20 per cent savings for the client. Moreover, the CFO that they hire might take six months to really hit the ground and start running. But in our case, since we have seen the situation and we come in as a team, we will be able to do it much quicker,” says Narayanan. Secondly, when companies scale up, they will be able to bring the right team more quickly than when they identify someone and hire them. MyCFO does not allow its client companies to choose the team or candidates and its entire business model is built on trust and reputation. “We have given up clients who insist on looking at the candidates before placing them there. It does not gel well with the philosophy for which this brand has been built,” states Narayanan. http://mycfo.in

7. Meeting The Challenges “If a company needs to move to the next level and if you have people who have worked only with start-ups and not organisations that have scaled up, that in itself is a problem,” states Narayanan. He continues, “Sometimes you need people who have seen companies scale from a Rs 50 crore company to a Rs. 500 crore company. It will depend on the aspirations of the person on the ground.” So how does one deal with a situation like this? One needs a very strong team, a good project management system and the ability to cross leverage learnings. Two other challenges the company faces, apart from business challenges in terms of expansion and foraying into other services are, one, non-standardisation of services and two, getting the team which has the mindset to be able to deliver. “What I mean by mindset is, if you typically look at an audit or consulting firm, they have the mindset to be able to look at multiple clients and change companies within a period of six months. They have a better sense of what it takes to work with multiple clients but they lack functional skills. They have always been advisors and they are used to a culture where they ask companies for information and never get into the details,” states Narayanan. On the other hand, those from the industry, may not have worked with multiple clients, but are functionally about 80 per cent better than someone from audit background. “They are more hands on and our preference is to tilt towards the latter,” says Narayanan. The company does not recruit freshers as the time taken to orient them is high. It typically looks for people with an experience ranging from 3 to 30 years. “We recently got the CFO of BASF and Hiranandani to join us. They are a part of the leadership team,” states Narayanan. http://mycfo.in

8. Going Forward “We don’t sponsor any events, but we are called to speak at forums,” says Narayanan. He is also a part of several mentorship networks such as – NEN, GenNext Ventures, TIE and more. “Even though start ups are just 15 per cent of overall company revenues, we still engage with them because it gives us a satisfaction of giving something back. We don’t work only from a revenue stand point,” says Narayanan. These apart, the ecosystem is strong now and, many CFOs know them. The company may not enter new markets, as it believes that seven cities constitute 85 per cent of its market in India. It will only get deeper in each of these cities. It has about 20 clients in each of the cities, other than Mumbai and aims to get 100 clients in the next three years in each city. “We may also look at overseas expansions by providing services in markets like Africa and Middle East where the skill deficit is higher as compared to India,” says he. Additionally, MyCFO aims to grow its team size from the current 125 to 1,000 in the next three years. http://mycfo.in

9. Going Forward “We may even get into products at some point of time,” states Narayanan. One of them could be the automation of MIS services. Currently, the company supervises 2000 people across all clients in finance and accounts space. “Can we provide intervention and curriculum that will help an entry level person to become a better finance manager and soon? And, how do we bring such practical level interventions? There are some possibilities we are looking at over the next three years,” says Narayanan on a parting note. http://mycfo.in

10. Official Website http://mycfo.in/ Social Profiles Like us on Facebook : https://www.facebook.com/mycfo.in Follow us on twitter : https://twitter.com/mycfo1 Join us on LinkedIn : https://www.linkedin.com/company/mycfo-india Find us on Google+ : https://plus.google.com/u/0/+MycfoIn Watch us on Youtube : https://www.youtube.com/channel/UCMYQ39U3O8Pbvhtrp8hs6OA