Entrepreneur and Family-Owned Business Interview Series - Jim Elgart, CPA
I'mpleased to introduce our entrepreneur and family-owned business interviewseries.
Theseinterviews are designed to help entrepreneurs and family-owned businesses thinkthrough the benefits, implications, and consequences of taking outsideinvestment.
Aspart of this project, I am interviewing private equity fund managers, middlemarket investment bankers, attorneys, accountants, and consultants that adviseprivately held firms.
This first published interview is with Jim Elgart, CPA, who has over 20 years experience advising small and medium-sized businesses. Over his career, he has served in many roles, including: CFO, founder, and investor in multiple entities.
Jim is a partner with MarthonCFO, an on-demand, outsourced financial services firm.
Somekey points that Jim highlights include:
- Impinging freedoms: why owners might not be ready to give uptheir unfettered control;
- Private company expenses: many business owners run significant personal expenses through theircompany. Once outside investors arebrought in, this practice will be discontinued;
- Lack of clarity about big picture, finish line goals: Jim sees this as a common problem betweeninvestors and entrepreneurs;
- Being able to recreate a workflow to explain how the firm makesmoney: surprisingly, many firms find itdifficult to articulate how their process results in profits;
- Financial reporting that mirror the workflow story: closely tied to the workflow narrative aretight financials that tell the same story in numbers;
- Financials are a looking glass into how seriously an owner takesthe tax code: this might be an importantindicator for potential investors;
- Different levels of financials: compiled, reviewed, audited, and why reviews a more cost efficient, and;
- The Quality of Earnings Report: from the owner’s perspective, unpackinga recurring, repeatable, scalable, and profitable revenue stream.
You can access the interview transcript here.