All good coaching staffs commit to a game plan they believe will lead to victory. As the CFO of VeriShip, one of my tactical contributions to our “game plan” is to forecast revenue and expenses, and to project related cash flow.
VeriShip was a decade into existence when our coaching staff made the strategic decision to expand the Parcel Intelligence services we provide customers. We had a great base product of parcel audit, but knew our technology could deliver even more significant data to assist our customers in better understanding, and ultimately reducing, their logistics spend.
Capital is the “point guard” of growth. The acquisition and distribution of capital sets the tone for your success. The foundation of the VeriShip platform centered on the accumulation and analysis of parcel data. As a result, it made sense for most of our capital to go toward resources that would directly impact data, such as computer software and hardware, as well as Data Scientist and Software Engineer positions.
We also knew we’d need to expand our sales force to accomplish our desired rate of growth. That meant our capital outlays would primarily fall into two buckets: employee resources and the hardware that would allow them to be successful.
We have always owned our equipment at VeriShip, and benefitted from the expense deductions the IRS allows through depreciation guidelines. However, as we looked to double our employee count, the capital investment necessary to arm existing and newly hired employees with the latest technology, began to put pressure on our projected cash flow. Enter our in-game plan adjustment—leasing the equipment.
Leasing is one of those finance topics that can generate strong opinions. People are typically firmly entrenched in the “buy” or “lease” camp. However, like the coaching staff who switches their team from a standard man-to-man defense to zone, the adjustment from owning to leasing equipment gave us greater opportunity to achieve our goal of winning growth. We were able to minimize our initial capital outlay for equipment because there were no upfront leasing costs.
Other VeriShip teams also benefited from us leasing the equipment.
- Our sales and marketing teams were able to attend key trade shows and implement new promotions using some of the available capital.
- Known monthly lease payments simplified the budget for the finance team and eliminated the need to account for equipment disposals and sales.
- Leasing reduced the time our IT team spent on maintenance and upgrades, disposal of old equipment, and other general technology issues, because the leasing company assumed many of these responsibilities.
However, the ultimate game changer for VeriShip was that leasing the equipment ensured our team had the latest technology to provide and support our expanding platform of meaningful data for customers, which facilitated their ability to control their parcel spend and optimize their parcel spend.
If the basketball references didn’t make it apparent, I’m a college basketball fan—especially KU basketball. Bill Self and his coaching staff make multiple in-game decisions to increase the Jayhawk’s chances of winning. This ultimately increases the program’s success, and of course, elates fans like me. In the business world, successful coaching staffs will pivot from their original game plan to drive and propel the evolution and growth of the company. These in-game adjustments help achieve victory for the business and elates their fans: the customers.