Adam Torres and Anthony Nitsos discuss cash forecasting.
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Show Notes:
Mastering cash forecasting can mean the difference between success and failure for many businesses. In this episode, Adam Torres and Anthony Nitsos, Founder, CEO Saas Gurus, explore what it takes to master cash forecasting and how Saas Gurus can help.
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About Anthony Nitsos
Anthony Nitsos elevates your financial strategy to meet challenges and drive your company value. Working with pre-seed to Series B stage SaaS startups, he ensures that founders have reliable metrics and a solid understanding of the true economics of their business to maximize valuation. He optimizes financial operations, sales operations, human resources operations, and risk management systems. He’s worked with various startups, including two unicorn exits.
About Saas Gurus
The best-in-class finance and stakeholder “ecosystems” that always produce the right numbers, save cash, protect assets, and free CEOs and Founders to focus on what matters most–growth. SaaS Gurus evolved from years of experience building B2B SaaS finance and admin ecosystems for many companies including Duo Security (exit to Cisco $2.35Bn), LLamasoft (exit to Coupa $1.5Bn), and 10+ other start-ups. The deepest pain point we address is setting everything up properly the first time so Founders and CFOs can focus on optimizing revenue and cash instead of dealing with back-office roadblocks.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of mission matters. My name is Adam Torres. And if you’d like to apply to be a guest in the show, just head on over to mission matters. com and click on, be our guest to apply. All right. So today’s guest is Anthony Nitzos and he is the founder and CEO over at SAS gurus, Anthony, welcome to the store.
Thank you. All right. So we got a lot to talk about today. So we’re going to talk about how to master cash forecasting. And we’re going to talk about this subject for tech founders and just overall, really so excited to get into that, but we’ll start this episode, Anthony, the way that we start them all with what we like to call our mission matters minute.
So at Mission Matters, our aim and our goal is to amplify stories for entrepreneurs, executives and experts. That’s what we do. Anthony, what mission matters to you? The mission that matters most to me is making sure that CEOs of founders of tech startups can sleep at night, really. And what usually causes them to lose sleep is cash and cash management.
In the end, these are businesses and you’re employing people and they need to go home and pay their bills and pay their mortgages and send their kids to school and have food on the table. And the mission that matters to me is that we keep our clients companies open so that they can keep their folks employed and they can make the world a better place with whatever software it is that they’ve developed.
Amazing. Love bringing mission based individuals to come on the line to share, you know, why they do what they do, how they’re doing it, and what we can learn from that. So great having you on. And I guess just to kick this off here, were you always an entrepreneur? Like when did that piece of this start for you?
I think for me, the entrepreneurship really started while I was an employee. One of the things that I realized early on in life is that I was, I was good at identifying root causes to problems and coming forward with solutions. To fix things permanently. I, there’s a kind of an attitude towards let’s just fix this and move on or put a bandaid on it and move on.
And I was never that, I was never that type of person. I was originally trained to be a physician. I decided I didn’t want to be one, but I never left that. Let’s find out what’s really causing the problem here and cure it. And then move forward. So for me, that was, you know, the beginning of the mindset of being an entrepreneur and that began while I was an employee and at the time I was doing ERP implementations, so this was back around the Y2K problem era.
And after that, I did take one more salary job, but I would say the true entrepreneur started doing work for myself, began around 2006. So 18 years later here, I am still doing it. Yeah, it’s great. Obviously when you first decided to make that entrepreneurial leap, like if this was one of the, how did you know that this idea was like the right one for you?
How did you know? The truth is I didn’t. Yeah. I didn’t. I’m glad you say that by the way, because this is a real show and I tell entrepreneurs.
I’m going to tell you your path like it’s, you can give advice, but it’s, it’s difficult. Everybody thought I was nuts. Okay. That’s what I would think. They’re like, you’re leaving a six figure Cush job to go out and do what? And I’m like, well, you know, that six figure Cush job is about as boring as watching these bricks behind me dry.
And I need to do something that’s more interesting. And I gotten into these jobs and I’d max them out and I’d be bored doing it. And I’d move on to another job. And it’s like, well, you know, my father, first of all, he was an entrepreneur, he was an immigrant in Greece and yes, they started off with restaurants, but in the end he, you know, founded a collection agency that ended up being really, you know, fabulously successful and was able to fund our kids college, you know, my college and everything.
Oh, so I kind of always took dad as like a role model. It’s like, well, you know, dad is his own business owner and, you know, Why can’t I do it? Right. And so I took a leap and at first I thought I was going to crash on the rocks and there were some bumps on the way down, but you know, in the end, if you see it through and you really want to do it, you can make it happen.
If you could go back and talk to that younger self that was just getting started, like obviously we all have these bruises and you know, bumps, like what would you have told them? What would you have told the just getting going guy? Just keep believing in yourself. Really. Fundamentally, that’s what it takes.
In the end, no matter how much stuff goes sideways, no matter how much fecal matter hits the fan blades, you gotta just stick with it. Because in the end, I think, and I see this with my clients, it’s that relentless pursuit of the goal. And they don’t really let stuff stand in their way. They, they fall down, they get themselves back up.
They fall into a pit, they climb out of it. You know, it’s really a mindset of, I will get this done. I will succeed at this. And that’s what I think separates the, the, the successful ones from ones that don’t make it. Is that what keeps you going to like when things go sideways? Is it like the goal aspect?
Is it like, like what keeps you going? What keeps me going ultimately is that I feel really confident that I know what I’m doing. And that the value that I provide my clients is clear. If I take a look at my retention numbers, they’re stellar. And if I take a look at what my clients say about me that I hear about afterwards when I’m not in the room, kind of, you know, reinforces that, no, we’re doing a great job for them and they really appreciate what it is that we do.
And again, we’re helping them achieve their mission. I look upon my role as a strategic enabler. And I enable my clients to achieve their goals. And then in the process, I get to talk to people with the coolest damn ideas and software that you’ve ever heard and the greatest solutions. And it’s like, you came up with this when and how, I mean, origin stories are not limited to Marvel comics there, you know, they’re there in the, the entrepreneurial world as well.
And it’s always fascinating to sit down with the CEO for the first time and say, so tell me how you came up with this idea. Hmm. And we’re just listening to their stories and there’s, you know, there’s some common threads. And one of them is like, you know, I worked inside this industry for X years and I saw this problem that nobody was solving.
And I just came up with, you know, I bet I could fix this. Lo and behold, now you have a company. So speaking of these founder stories and sitting down with them, I see you have the great mic set up and everything else, but I don’t think I asked you this before the show. We, before we got going, do you have a podcast?
No. Oh, man, we’re gonna change that one. Another day, another conversation, but these founder stories that you’re talking about. So this is part of the reason that Mission Matters even began was I when I was in finance many years ago, I mean, I’ve been out of that business now for eight years, at least, and I’ve been in media full time.
But I remember having access to all these individuals when I was investing their money and business owner was my like 98 percent of my practice. So I’d be having these conversations one on one met much like what you’re talking about, but from the standpoint of, I was managing their money and I was just blown away and I just got like more and more fascinated with the idea.
And it really became an obsession and just these stories. And whenever I’d go out with friends. Friends and otherwise, and I’d be talking about them and this and then like, Adam, will you shut up about all these entrepreneurs and I couldn’t help it. So I guess maybe that’s how the podcast got started at some point and on some level, because I believe, and I’d be interested to hear your input on this.
I believe that through sharing these founder stories and otherwise, we also have the potential to not only help others, like whether they’re going through something. And that’s why I asked you these questions about like, what keeps you motivated? It’s not, well, it’s for me too, right? Cause that motivates me and it teaches me as well, but it’s also for those that are out there going through it.
So for that entrepreneur community, what we do, like nothing’s easy about being an entrepreneur. So the value of sharing those. I mean, the value is, and I see this all the time, is what you just said, you’re not alone. The problems that you’re facing are the same problems that almost literally every entrepreneur faces.
Everybody who starts a company faces. And getting to that, Conversation with them and listening to their anxieties. I mean, again, I go back to the fact that maybe I should have been a doctor. I’m a doctor for companies. I’m not a doctor for people, which is, you know, if the CEO is worried about something that takes emotion away from what they should be focused on.
Which is growing their company and achieving their mission. And when we come in there and I’m listening to them tell me, what, what is it that’s bothering you? What’s keeping you awake at night? Yeah. And the commonality of the themes is really comes down to why, you know, I suggested cash forecasting. It might be a really valuable topic for us to talk about because literally 80 to 90 percent of my time as a strategic resource Is spent predicting where their cash is going to be at the end of each month for the next year or two.
Now, where did that originate at? Was it kind of a buildup where you knew this was going to be the focus or was it like an aha moment? Like, how did you know that this is where you were going to spend the bulk of your time? Okay. I was working for a unicorn. I was working for a CFO at one of the unicorns that I worked for.
And you know, when you’re working in a venture backed company, You know, you’re always looking for your next round. Mm-Hmm. . When is the next round gonna happen? And in order to know that, you need to know when you’re gonna run outta cash. Yes. You know, that’s, and part of that, right. The flip side of that coin is what your sales going to be at that.
Hmm. And between the sales prediction and the cash result. Is a whole analysis that has to go on in terms of when does that cash come in? When does it go out? And it was one of those things where the cadence of. What’s the cash like? What’s the cash like? It’s like it was like the only question that really mattered.
And it was like, this is when you think about it was kind of one of those like dumb moments. You hit your life. Yeah, of course. Yeah, right. It’s the economy. Stupid, right? No, it’s the cash. Stupid. Yeah. And what it is is that you cannot spend that income. You can only spend cash. It doesn’t matter what your gap, you know, accounting that income is.
And I, you know, Adam, I am a recovering CPA just so we have that. I do know my debits for my credits really well, but what that is, is that enables me to understand how the cash is flowing. And so when I talk about. I hear all these, you know, Oh, we need to have this metric and we need to have this KPI. And I look at my startup CEOs and I said, you know what, there are only two metrics that I’m going to care about.
And it’s your sales growth and your cash forecast. And that’s it. Because in the end, what’s the response to that? Normally, like, how did that go? They get it immediately. Cause they’ve already been living that even if they don’t know it explicitly. You’re finally, it’s like, somebody’s finally speaking my language.
Is that Right. It’s like, okay, how do I get my next sale? Where’s it going to come from? And how am I going to spend that cash? And it doesn’t matter if you’re venture backed or bootstrapped. We have clients that are both. We have clients that are bootstrapped that have gotten themselves to, you know, several million of ARR, you know, just by dint of effort and not taking in any money from the outside of the, you know, their original founder seed that they put in themselves.
And they did it through whether they knew they were doing it or not. They did it through prudent cash management. And it’s what I bring to them is instead of looking at cash, like next month or just the next month or next week, let’s expand that horizon so that, you know, it’s kind of like, you’ve got the long range radar, you’ve got the short range radar, you’ve got both of them working at the same time, because in the end, that radar, that forward looking view of your cash tells you.
When you can spend on resources that you need and making sure that you’re spending other on the money that you, you are only spending what you should be spending, right? You’re not spending it on something. That’s just frivolous. You’re going to be spending it on something that is going to meaningfully move your needle.
And the needle is. A R R. And if you’re in soft, I mean, we’re sas gurus, right? Software is a subscription. Software is a service. Pick your favorite s. But in the end, it’s all software. And when you are moving the needle on software for valuation, it’s all going to come back to your annualized recurring revenue.
That’s going to be the main driver of your valuation and how fast you got there. And then right behind it is how much cash and do you have the right amount of cash to get to the next level? How does a company know, like a lot of people watch this interview and of course it’s SAS, of course SAS gurus, but how do you know if a company is the right fit to, to seek out your assistance or your team’s assistance?
How does that work? It really comes down to whether the CEO understands that they are not the expert on everything and they need somebody to come help them with this very critical area. We all do it. You know, I’m an entrepreneur too. I’m, I’m not a CFO. I’m a CEO of a company that provides CFO services. I have to also look out for my next deal.
And I also have to go out and do business development and I have to close deals as well. And I have to manage my own cash because I have a team of people that need to get paid. So, and myself in the end, right? This is, you know, this is about how we make a living. I don’t have somebody, you know, stroking me a check every two weeks or twice a month for my salary, my, I am my salary.
And when you take on that level of ownership. Suddenly the world changes and your priorities change along with it. And that’s where I really, you know, I think the CEOs that get that earlier are the ones that are more likely to succeed at it. I mean, you could get lucky. You could have a product that people are just beating your door down to.
Okay. But you know, this isn’t, which is rare. I mean, this isn’t Kevin Costner in the field of dreams. Okay. That’s not how generally most of it works. It’s not as you build it, they will come. It’s you build it and then you’ve got to get out there with a loud megaphone and make sure that people know that you’re there so they can find you.
And you know, there’s a lot that goes into that go to market. We call it the GTM. There’s a lot that goes into the GTM to make sure that you’ve got the right, you know, lead generation, that you’ve got the right closers to close the deals, that you’ve got all the pieces together on the top line so that you can get cash in the door.
From your customers and build valuations, because in the end, if you’re venture backed, your backers want to exit and they’re going to want to exit it way more than what they put in. And your ARR is going to be the number one metric that they’re going to be most concerned about. And it seems like if you’re a venture backed and we’re working with a company like yours, and you’re going towards those metrics and your subsequent raises, otherwise you kind of, You’re not necessarily as caught off guard.
Let’s just say when that money is starting to run out, because you’ve been, you’ve been forecasting the whole time and you can see what the numbers are doing and you can see if you’re getting closer to your goal or further from your goal, like definitively. Am I off on any of that, that I said? No, because in the end, one of two things is going to happen.
You’re going to, let’s say we put together a 24 month cash forecast and it shows you running out in month eight. Well, what did, you know, what’s wrong? We shouldn’t be running out that soon. Okay. Or maybe that is when we should be running out and we need to know we need to go raise, but raising money takes a minimum of 90 days, you know, and typically six months is what I recommend my clients, you know, start their motion for raising money just to make sure they have enough.
It’s like, well, if you’re running out of money in eight months, you should be out there right now, getting ready to, you know, go for a raise. The other side of it is you put together a forecast that doesn’t show you running out of cash. Is there something we’re missing? Okay. Did we overlook something? It’s the, it’s the unknown unknowns as Donald Rumsfeld, I think was the one who came up with that one way back in the Bush era, aging, I’m dating myself now.
It’s like, yeah, I remember w it really comes down to being able to look at the PNL, being able to project that forward on a cash basis and say, okay, this feels right, this looks right. That’s experience. Okay. That’s where some, you know, somebody like myself has been doing it for 20 some years and look at it and say, this doesn’t smell right.
And, or this looks, this looks good. Like you’re hitting it. And it really always comes back to, are you properly forecasting sales? If you really want to be, you know, it’s like at the bottom line, your sales forecast is the single most important function that you as a CEO in my mind need to perform. And if you don’t know where your sales are coming from, you have an issue.
You have a weakness because that is a huge blind spot. If you don’t have visibility into that. Yeah. And it would seem like, because, and I always think about when I think about any type of. I don’t know if you consider this a fractional type service or otherwise, but whenever you’re working with a really specialty company, that’s, that’s specializes in one particular thing, whether it’s like an outsource CFO or things like that, you also benefit from their expertise, having worked with many, many companies versus let’s say a CEO, where even if they’ve had a successful exit or two, there’s still, you know, maximum, you know, X amount of companies in versus, well, Working with companies day in and day out on that one specific problem, being in the trenches and being aware of what’s just going on industry wide.
If you believe that that’s any bit of the benefit. Can you talk a little bit about that? If, if I’m not off, Oh, you’re totally on. I mean, I, there, I cannot count how many times where I’m taking an idea from one other, from one client and applying it. Another is it’s just, it’s part of why I enjoy doing what I do is the different views.
The different experiences, the different, Oh, that was a real, you know, landmine that we all stepped on and put our legs off, right? Let’s let’s not do it again. Right. Let’s not make sure, let’s make sure you don’t do that here. I I’ve seen this go bad over here, or this is a great idea. For forecasting cash or for, you know, whatever it is.
I don’t own any of my solutions is how I look at it. I’m always looking for ways to improve it. And I think that comes from, you know, personality and also comes from working for the Japanese for five years. And one of their factories is that they don’t, the, the, the. The relentless pursuit of quality, relentless pursuit of perfection.
You know, the reason why the Japanese, the reason why I studied the Japanese is because I grew up when they were just kicking the living daylights out of the American automakers here in Michigan. And I wanted to find out how they did it. I went over there. I lived there. Wow. I learned their language and I learned their culture as best as I can as an outsider.
And it was like, the one thing that really stuck out was the fact that it was, I’m also in Ann Arbor. So those of you who know Ann Arbor and football are aware that there is a disease here called the University of Michigan football team. That there is. And it infects everything. So there’s this. This coach, you may have heard his name was Bo Schembechler.
And his favorite, his favorite phrase, and they have it literally painted on the inside of the tunnel that the team runs out onto the field is the team, the team, the team. Yeah. And that is what it’s all about. It is, this is a team effort. CEOs that think they can do it all will fail. If they don’t have the right team, they’re not going to achieve it.
And it comes down to. It’s not just the team of the CEO. It’s the team that of all the experiences, the universe of experiences that, you know, your consultants bring to you, that your contractors bring to you. Because I’ve seen. I mean, I used to work in automotive and service and software, and it’s not, there isn’t an idea that originates in one sector that cannot, you know, be applied to another one just because it’s in a different sector, right?
It’s all business. And so, yeah, I think bringing that Oh, yeah, I’ve seen that happen before. We probably want to do something about it. Or I see this coming. We probably should do something about it. There are many times I lost track how many times I have that thought, even if I don’t say it explicitly, it Oh, yeah, I think maybe we should try something a little bit different.
Let’s try this. Those intangibles that really become really tangible, even if you can’t necessarily put it, you know, down on paper, I just think of it in a simple way, if I can learn on somebody else’s dime, I mean, like somebody else went down that road, it wasn’t the right road. And if I don’t have to, and I get to save that, you know, save that, not just time, but money, all the wiser, all the better, love it.
And that’s, that’s why the cash forecasting piece is so front and center for me with my clients. And the ones that get that are the ones that stay with us. And the ones that don’t don’t or they don’t sign up for us. You know, it’s, it’s not, this is not an accounting role. Accounting by its nature is backward looking.
It’s, it’s, I’m glad you, I’m glad you bring that up actually. So you’re not talking about, and I think you’ve made it pretty obvious, but But when something’s, I don’t like to assume you’re not replacing the current CPA, you’re not doing anything of that nature. I just like to bring that out just so everybody hears it.
That’s all. I mean, I think it’s pretty obvious, but I don’t like to assume you’re right in that characterization. I’m not there to replace anybody. I’m there to enhance, I’m there to take the CFO. Like there doesn’t, yeah. The forward view. In some cases, I am advising the CFO of another company. Exactly.
Because of the fact that I have the experience in SaaS. Let’s say I’m an expert in SaaS, but you know, they don’t have that expertise. What it comes down to is that this is a, this is a strategic role. It’s a forward looking role. The difference between finance and accounting is the direction that you’re looking.
Accounting is looking backwards at what happened. Finance is looking forward and trying to predict what will happen. And in between there’s a meeting point. And that’s why you need to understand both accounting and finance to do it well. But I’ve seen too many times where the controller is trying to be a finance.
Person. And all they can focus on is their historical reports. And I’m like, that’s not going to get you where you need to go. This is a finance role and finance is by its nature predictive. There’s a reason why I have. A crystal ball because I need it in order to be able to predict the future. I wish that thing worked, but yeah, you and me both.
Well, well, Anthony, I have to say it’s been a lot of fun having you on the show and learning more about what you’re doing at SAS gurus and also just getting this information out for our audience and our team and our, and people that are in tech as well. But that being said, I mean, what’s next? What’s next for you?
What’s next for saskura? What’s next on the horizon? You know, what’s next for us is just continuing to grow. We’ve been growing very strongly the last couple, three years in particular, as people learn about us and what we do, we bring a, in my opinion, we bring a unique approach to the fractional CFO world in that I am not primarily a finance person.
I’m somebody who uses finance tools to achieve a goal. Which is to allow CEOs and founders to focus on the stuff that really matters and not waste a lot of time on picky uni details that really don’t matter to the, the fundamental mission, which is you’re out there to provide a software solution that nobody else has provided.
You need cash to do that. How can I best get you that cash? Is it, you know, is it through management? Is it analysis? Is it through finding VCs for you? What is it? And You know, then it just continued their, their company grows. And eventually I love it. You know, they, they get large enough. They can hire a full time CFO.
Great. That full time CFO is going to have all of the tools that she or he needs to be successful without having to go back and redo stuff. Amazing. If somebody’s listening or watching this and they want to learn more, what’s the best way for them to connect with your team? The best way is to go to our website, sasgurus.
io, S A S G U R U S dot IO. And you can go forward slash into the, there’s just a resource page. You can check out some of the resources that we have. There’s an ebook if you want to download it. That walks you through a lot of the stuff that we do. We’re very open with our methodology. We’re very open with our approach because I believe that this is information that should be shared and should be easily accessible.
There’s just so much information out there. That’s garbage that I think distracts from what is really important. And it’s sales. Growth and cash runway, those you just keep, if you take nothing else away from me today, take those two away and focus on how can I better forecast my sales forecast and don’t accept, I don’t know as an answer.
And am I really predicting my cash balances accurately on a monthly basis for the next 18 to 24 months? Because to me, that’s the, that’s the horizon you should be working in. Fantastic. And for everybody that’s listening or watching this, we’re going to put the links and all that stuff in the show notes so that you can head right on over and check out Anthony and his team.
And speaking of the audience, if this is your first time with mission matters and you haven’t done so already hit that subscribe button, this is a daily show. Each and every day, we’re bringing you new founders, new ideas, new thought leaders, and we don’t want you to miss a thing and Anthony, again, thank you so much for coming on the show.
Thank you. Appreciate it