The Financial Stages of Growing a Market Research Company


Another in the Innovate MR Series “How to Build a Market Research Company” including Tips on Finance, Hiring, Management and Sales.

LOS ANGELES, June 20, 2016 — There are days when being a finance person within a market research company feels like herding cats. Different departments constantly asking for resources and managing those expectations, while keeping a company on track, is not easy. Depending at what stage a company is, the finance professional requires different skill sets. Bottom line, it is critical for the finance professional to understand what’s entailed in each stage so he or she can be the best herder possible.

Startup Stage: $0 – $5M

In many companies, the founding partners usually have someone on their initial team that manages accounting. That person may have had some interactions with finance/accounting in their past and tries their best to put together some semblance of a working model. The company usually starts with basic software like QuickBooks (QB) and some elementary Excel modeling. Tie in a basic subscription to SalesForce and you have the foundations for the company’s accounting and sales. As I am a football “freak,” I call this blocking and tackling.

At this stage, there is limited need for a strong finance professional, like a CFO. The organization is in top line growth mode so discussions about gross margin percent improvements may fall on deaf ears. The entity is mostly trying to prove it has legs. But not having solid processes in place can be messy. Because QuickBooks is so open, anyone can pretty much touch AR, AP and all the critical pieces of a company’s cash flow. At this stage, there is also some basic board reporting as well as bank relationship management required.

Toddler Stage: $5  – $15M

Right about the $5M mark, organizations start to grow out of their crazy wild west days into a more steady, forecastable revenue stage. Once this happens, cash flow management becomes critical. This means a skill set change from someone who knows how to block and tackle (football reference again — can’t help it!) to someone focused on strategy and guidance. The business must move to a more seamless exchange with customers to remove any obstacles to a clean invoice-to-cash process.

Most companies bring in a CFO at this stage. Having consulted for over six years, I have seen many companies make the mistake of hiring the wrong type of CFO at this stage. A CFO might look great on paper but without any true hands-on cash management experience, the wrong CFO may insist on staffing up in accounting thus diverting resources to back office when to the company should be investing in sales and business development. Remember to ask the right questions when looking at different CFO candidates. You’re not looking for the General Electric CFO, you’re looking for one with cash management skills.

Growth Stage: $15-$50M

The organization is now on a growth trajectory that can be illustrated using basic charts. Finance professionals can begin to assist sales teams with data mined  from SalesForce. These reports help build bridges across company lines so departments are able to work together.  The company is now in the profit-finding  phase and the team starts transitioning from basic accounting to operational finance and accounting. Your finance team should be able to review gross margin with the C-suite team and help find several points for improvement.

Examples of Using Finance Reports to Streamline Our Online Sampling Business:

  • Provide better understanding of bidding accounts behavior and provide feedback to the sales team as to “fish where the fish are” and “cut bait” with unprofitable bidders
  • Understand inbound supply traffic costs and work with Business Development to maximize the return per panelist vs. cost to recruit
  • Reviewing all “Other” cost of sales categories including email and cloud expenses

Over 22 years of experience has shown me there is always room for improvement. Companies will usually bring in a strong controller to build an accounting team as they transition from QuickBooks into a mid-tier accounting software platform (Oracle, Microsoft Dynamics, etc.). The CFO may also need to start managing board reporting as well as look at more global banking relationships. The cats start to go wild here so remember managing growth involves having a solid budgeting process and implementing a culture of staying on budget.

Enterprise Stage: $50M and above

In organizations of this size, Head of Finance is now fully removed from day-to-day and instead functions at the strategic and operational level. The Head of Finance skill set requires political know-how, outstanding modeling and analysis, people management, board guidance, global finance operational skills and HR/Facilities management. At this point, the budget culture should be top of mind and true finance leadership should be guiding the discussions. Understanding all the inputs into a company’s financials is critical as any profit improvement projects require astute insights and leadership.

Knowing the stage of your company will help in bringing in the right talent at the right time. Instead of just being the “numbers person,” flexibility and a willingness to learn all aspects of your organization can help you become a valuable and trusted resource.

Rodney Lazar is Innovate’s SVP of Global Finance and Accounting. Rodney comes to Innovate from uSamp/Instantly, where he defined and implemented a massive overhaul of Instantly’s supply costs thus yielding significant profitability in its core business. His 22-year career at CPG companies such as M&M/Mars, Nestle, Disney, toy company MGA Entertainment, as well Time Warner Music, brings a wealth of knowledge and real world experience to the team.

About Innovate:

Innovate’s founders pioneered the modern digital sampling industry, creating the world-class uSamp and goZing panels. Today, Innovate’s global First Class Panel™ and Human-Powered Sampling Service™ generate the highest-quality data from its engaged audiences. By applying out-of-the-box creative thinking with exceptional client service, Innovate offers a superior panelist experience and the timely delivery of relevant consumer insights. With offices around the world and an experienced team of sampling veterans, Innovate provides 24/7 client service to thousands of market researchers and research departments.

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