The 100-Day Ramp Plan for Newly Hired SaaS Finance Leaders (Part 1)
You’ve just landed a new job as a finance executive at a young software-as-a-service (SaaS) company. Now what?
It’s a crucial question, because what happens over the next few months can make or break your new employer's success — and your own career.
The challenges are many if you’re a SaaS vendor’s first CFO, or a newly hired finance VP or director — fix messy accounting practices, identify financial weaknesses and growth drivers, and build rapport with the CEO and other stakeholders. They didn’t teach the roadmap back in business school.
To help guide your strategy, we brought together a trio of experts in SaaS financial management, finance community networking, and executive search. Tune in to our on-demand webinar, “The 100-Day Ramp Plan for New Finance Hires,” to hear practical guidance from:
- Michael Bayer, CFO of cloud storage provider Wasabi Technologies, whose 25-year career in finance leadership includes raising almost $400 million in venture capital over more than 30 funding rounds, and a leader of one of the largest SaaS CFO communities in the Northeast
- Tom Kirby, a leader in Next Series Club, a Midwest-based community of business leaders in finance and accounting focused on best practices for new ventures, and the founder of PrepDD, a workspace for accounting teams.
- Jamie Ceglarz, the founder of Guild Talent, a boutique executive search firm focused on finance and operations leadership placements within venture-backed startups and scale-ups, as well as the founder of The Operators Guild, an online community of early-stage SaaS operating leaders.
In this blog post, we’ll focus on the 100-day plan once a new finance leader is on board. Stay tuned for a follow-up post that shares Ceglarz’s insightful tips on the hiring process, including top interviewing techniques that can help you land the perfect job.
The CFO’s Role in SaaS Strategy and Growth
The 100-day plan in finance is a proven framework for newly hired leaders to pinpoint and correct inevitable accounting problems, and just as importantly, help devise an actionable and sustainable growth plan. As Bayer noted, the CFO’s job has shifted from bookkeeping oversight to higher-level strategy.
“The role of CFO has transitioned from being a problem solver and "fix-it" person to being more strategic and helping the business take advantage of opportunities,” Bayer said. “You'll have to fix some accounting stuff — but how is the business going to move forward and what can you do to advance that?”
The job starts with what Bayer calls “100 days of turning over all the rocks. Some rocks are going to have diamonds underneath, some are going to have all sorts of bugs and worms crawling around. It’s about assessing the situation, figuring out how you’re going to solve it, and putting ideas in action.”
A new SaaS finance executive also needs to play the role of salesperson, Bayer says. Building organizational capital with understanding and partnership is essential.
“Ultimately the CFO needs to be able to sell," Bayer said. “You’re always selling — you're selling customers, you're selling lenders, you're selling shareholders, you're selling employees, you're selling vendors. To do that sales job, you have to make sure that there's a current business plan that allows you to tell the story.”
A 5-Point Plan for 100-Day Success
Bayer draws on his experience in putting together five pivotal focus areas for a new SaaS finance leader’s first 100 days.
#1. Assess Business Maturity
At the start, a new finance leader needs to focus on understanding, aligning, and optimizing both the business plan and financial plan, Bayer said. A sound business plan covers key areas such as go-to-market operations, product roadmap, competitive landscape, and overall strategy.
Is the business plan complete? What have the founders thought through, or not thought through? What did they miss?
Similarly with the financial plan, is it backed by a disciplined planning process and realistic forecasts that account for the many dynamics of a SaaS business?
“A lot of CFOs are focused on profitability and that’s all that matters,” Bayer said. “Too often, they overlook the balance sheet and how to raise enough capital to support the business, get it to profitability, and help it realize its long-term goals. If you don’t have the financial resources to support sustainable growth, you're going to run out of steam at just the wrong time.”
#2. Understand Business Systems and Flows
The accounting system the SaaS vendor uses should be evaluated for both immediate needs, and scalability for longer-term growth. Bayer said that when joining a company with a QuickBooks environment, he’ll assess how soon the business will outgrow QuickBooks, and whether it makes sense to upgrade to a solution like Sage Intacct.
“Not all businesses need an advanced accounting system, on the other hand, many businesses can't survive without one,” Bayer said. “Getting a sense of whether your accounting systems are up to the task is really important.”
It’s also vital to assess management reporting and whether KPI metrics are clear, measurable, and backed by sound processes and systems. Kirby noted that junior CFOs will often focus on month-over-month results, while experienced CFOs will drill down into unit economics of the sales pipeline and the effect on KPIs such as CAC and LTV.
“Clearly understanding and articulating that is a very critical aspect of the business,” Kirby said. “You can drive a lot of value by understanding your sales pipeline, how you’re measuring progression, partnering with your sales leaders, and making sure you have clear visibility into the pipeline.”
#3. Ensure Important Communication Is in Place
Along with management reporting, a SaaS finance lender needs to ensure timely, accurate reporting and communications with external stakeholders, including lenders and investors, to help build and strengthen relationships.
“I'm a believer in radical transparency, telling people everything that's reasonable to tell them, knowing that different people need different things," Bayer said. Another external audience is auditors, so a finance exec needs to size up whether the company is ready to be audited, if it doesn’t already have those processes in place.
“Not every company is ready to be audited, and it’s a big investment in time and resources,” Bayer said. “Is everyone ready to make the commitment to that higher bar?” As Kirby noted, in some cases it can make sense for a new CFO to call off a planned audit if he or she finds the business isn’t ready.
#4. Review Records, Controls, and Compliance
Bayer’s fourth focus area consists of checklist items that a new CFO needs to examine, with an eye to strengthening, streamlining, and standardizing. Bayer noted that early-stage companies do things in an “opportunistic way,” so you may have, for example, different sorts of contracts that vary by customer.
- Corporate records: Is documentation complete and in order?
- Financial policies: Are controls and policies current and broadly distributed?
- Tax and regulatory: Are filings current and accurate? Is the 409A valuation up to date?
- Legal and contracts: Are standard documents and adequate document management in place
“These are seemingly small bits and bobs, but they can be huge roadblocks with all sorts of problems, so you want to take care of them early,” Bayer said. "Don’t be fooled – small details like documentation and recordkeeping can be a block to a successful fundraising or audit. And the reality is that this is the stuff that actually lets you do the job."
#5. Consider Administration, Risk Management, and Capitalization
A new finance leader will need to wear several hats, including HR and IT, Bayer pointed out. The person may have charge over HR at a smaller company, so it’s important to evaluate resource quality and maturity, ensure resource alignment to goals, and balance resource allocation between go-to-market and product development.
IT also frequently falls to the CFO. IT systems, including the accounting platform, need to assessed for scalability, availability, affordability, and security. “This is where SaaS, IaaS, and really everything-as-a-service comes in,” Bayer said. "SaaS turns your fixed cost into a variable cost. You can dial it up and down as you go.”
Capitalization needs to be prioritized along with profitability, Bayer added. A focus on the balance sheet will pay off with insights into how much and what kind of capital is needed to drive the business forward. Finally, a new finance leader must scrutinize the business for risk and ensure that suitable risk management policies are in place.
“It’s really standing back from the business and assessing where the major risk areas are because with every risk, there's an opportunity,” Bayer said. “If you can solve risk in a creative and interesting way, that means your competitors will have to catch up with you. You can really create some value.” To summarize point #5:
- Human capital and compensation: Are resources sufficient to accomplish goals; is compensation appropriate?
- IT and systems: Are IT and systems available, scalable, affordable, and secure?
- Risk management: Have key risks been identified and articulated; is insurance in place in appropriate areas?
- Capitalization: Does the capital plan address the sustainable growth rate?
As one key to success, our speakers emphasized the value of collaborating with industry peers in networking groups to share best practices and lessons learned. The CFO’s job can be a lonely one, Bayer noted, so engaging with peers pays off in several respects.
“Having a collaborative network to share with is really important," Bayer said. "Both virtual and in-person groups are very valuable to meet new people, build connections, and learn all at the same time and together, with a lot of information shared."
As progress is being made, Bayer also advises looking to reduce monthly close time to five days. That typically requires a best-in-class accounting platform that can automate multiple processes, eliminating manual Excel work and improving efficiency.
“Once you get the close to five days, you can be confident that you're really moving the business along," Bayer said. "You’re not spending too much time on accounting functions and you can spend the rest of the month doing actual, real value added work. And that's where great systems come into place.”
Tune in to our on-demand webinar to hear our experts discuss how finance leaders can land the ideal position, and get on the fast track to success with a sound 100-day ramp plan.
And be sure to check out our SaaS Success Series for additional webinars focused on helping SaaS finance leaders guide their companies and to build great teams.
David Appel is the Head of Software & SaaS at Sage Intacct, and is passionate about creating great B2B SAAS companies. Over time he has developed a series of SMB, Mid-Market, and Enterprise customer-lifecycle playbooks that focus on creating value for customers, increasing return for shareholders, and building great teams, that have generated over $1.1B in market capitalization for his clients.
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