Media Business Strategies

The Blog of David Polakoff

Suit Up – Sooner Than Later

Posted by David Polakoff on December 5, 2011

The Windmills of My Immediate Mind

Media Business Strategies – David Polakoff

“Suit Up – Sooner Than Later”

Utilize Financial Expertise at Every Step of Your Business’ Life

If I told you that any of these trained accountants, Chuck “The Iceman” Liddell, John Grisham, Bob Newhart, or Kenny G., would lead your finance team, you would be quicker to hire your CFO, right?  Right – well, maybe not the Kenny G. choice.  Entrepreneurs and founders that I meet desire to have a seasoned finance executive team member early in the company’s formation, but many, along with their investors, view the addition of the Finance Guy as postponable, often until revenue generation.  Real life experience, however, has shown that utilizing financial expertise at every step of your business’ life saves money, reduces risk and volatility, facilitates balanced decision-making, and allows founders to focus on their specialties.  Let’s see if the suit has merit.

Finance Guy is a catch-all term that variably translates and may mean one or more of these suits in the deck:

  • Bookkeeper

  • Preparer of the initial business model who is then is asked to disappear

  • Indirect/direct source of investment financing

  • The person who establishes and then supervises business and office operations

  • Report preparer for management, investors, strategic partners, and other third parties

  • Financial results and key business metrics reporter and interpreter

  • Budgeter and forecaster

  • Management’s second set of eyes and ears to help fine tune decision making and to also prove business cases.

Don your suit of armor, here are the war stories:

  • Yeah, I had some MBA student do my initial business model, but they’re long gone, so many things have changed, and it’s outdated; we have no idea how to update it.  Even when he was around, and we met with potential investors, we were poorly perceived without someone with financial and business operations experience, both behind the model and also to help launch the business.

  • We just had some bookkeeper here who had no knowledge or familiarity with the accounting rules for our industry and no real business operations sense.  So the revenue recognition is all wrong; there’s no reconciliation between what’s in the general ledger, the deal memo database, and the cash flow forecast; and third-party recoupable expenses are in the income statement and not on the balance sheet.

  • We started off with just the three principals but soon had the luxury of investment cash and good revenue so we grew the staff quickly.  The bookkeeper didn’t set up policies or procedures for purchasing, travel and entertainment, computer security, and eligible office overhead chargebacks.  So not only did we burn through cash unnecessarily, but we had to bring someone in to clean up the books (expensive!).  Then when we implemented some policies and procedures, it was a big morale buster to go from Dodge City to the Ponderosa.  Plus, we were neophytes in interpreting the financial reports, so we made some bad business and strategic decisions without the benefit of the analysis and interpretation from a more senior finance person.

  • Each of the head of sales, marketing, and product development would submit their department plan, and I not only wasted my (business development) time trying to integrate and coordinate those plans, but I really needed the sounding board of the Finance Guy to economically rationalize them.  Once on board, the Finance Guy sat down with each department head and asked the hard questions to get the plans adjusted and defendable.  He then combined each department’s plan to get a synchronized story and budget.

  • I was preparing my business deck – who knows my product better than me?  The Finance Guy ripped it apart (not literally, he’s not that strong), not because of the numbers, but because he was able to point out all of the questions left unanswered by any third party reader, not to mention the target audiences for the deck.  The Finance Guy was able to ask me questions to the point where my answers became valid and cogent enough to draw the reader to my desired conclusions.

  • You’ve heard how Viagra was originally invented for high blood pressure but turned out to have a totally different purpose?  Well, our website had an intended target demographic audience that upon presentation to potential strategic partners and a couple of potential investors, turned out to be the wrong hypothesis.  I’m a tech person, so when I was referred to a Finance Guy, she helped me rejigger the strategy and supporting documents to accommodate the change in purpose and target audience.

Beyond the basic needs and requirements of finance functionality, the use of a Finance Guy provides:

  • Interpretation of financial, operational, and marketplace metrics

  • Thought leadership and support through rationalized decision making

  • Assessment of the residual effects of one operating department on the company as a whole

  • Relief for senior management from administrative responsibilities and third party communications requirements.

When you suit up your executive team, the financial arm initially may not be required 100% of the time but can be sourced in an array of freelance arrangements, like other such business requirements during early stages of the enterprise.   The advent of the Finance Guy, sooner versus later, allows her to establish a responsible business environment that factors office culture, life stage of the company, relevant accounting and regulatory issues, and economic realities.  Remember, this Finance Guy is not a Fortune 500 company CFO; she will know how to grow the company’s financial and office requirements commensurate with the growth stage of the business.

Beyond financial proficiency, expertise, and relevant experience, the key element in the selection of the part-time and eventual full-time hire is compatibility with the rest of the executive team.  The financial executive needs to have a complementary and harmonious personality and demeanor to function with the rest of the team; a factor equally important to their skill set and experience – this may seem obvious, but you would be surprised.  Work hard to find your Bob Newhart and not your Larry, Darryl, or Darryl.

Presenting your organizational chart with the name “Future” in the finance box or without even as an asterisk as to regular use of outsourced financial expertise may intend to appear that you are being economical with start-up funds, but many suitors will view your vision as myopic and unsuitable.  In the usual “what would you have done differently” discussions with entrepreneurs, with great frequency, the shortsightedness in a timely resourcing of seasoned financial support is cited.

With early engagement of Finance Guy expertise, successful growth of the enterprise will follow suit.


Media Business Strategies is the blog/website of David Polakoff, a New York based, Media & Entertainment Industry Financial Executive.

David Polakoff’s media/entertainment industry experience and expertise results from his tenures in senior financial and development roles with Ernst & Young, HBO/Time Warner, Granada America/itv plc, and independent consulting.  Currently, David provides financial, operational, and strategic services to media/entertainment companies.  Read more in About.

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