TurboCharge Your Business

Business Lifecycle: Start Up Phase

Wed, 19 Oct 2022 19:45:59 +0000

If you’re a serial entrepreneur, then you’ve been here before. In fact, you likely spend the majority of your business life here. Welcome to the Start Up Phase.

The Start Up Phase is where businesses are born. Concepts become prototypes. Critical decisions are made. Direction is determined. Traction is achieved. Plans are solidified.

In this stage of your business: You’ve decided to pursue a business idea Your product and/or services are determined You need to learn & adjust a business model to ensure profitability

This phase’s challenges include: Obtaining initial funding Managing cash reserves Managing sales expectations Accounting management Establishing customer base Establishing market presence

Here’s what you need to do / how to navigate through these challenges: 42% of startups fail due to a lack of demand for their products or services; don’t be a statistic! Ensure your business model provides some level of sustainable cash flow; your survival is riding on it. Establish your business entity structure, otherwise you just have a hobby.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

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Business Lifecycle: Rapid Growth Phase

Tue, 25 Oct 2022 15:07:29 +0000

Are you in the lucky 16%? Because that’s the percentage of startups that survive and move on to the growth phase. If so, kudos to you because you’ve done some things right! But surviving the Startup Phase is only the first stage in the gauntlet that is business ownership. As your company takes off, you’ll encounter a whole new set of challenges…and opportunities.

In this stage of your business: Your business is consistently generating revenue Cash flow opens new opportunities You’re fine-tuning your business model You’re expanding to new markets/channels

This phase’s challenges include: Dealing with increasing sales Dealing with increasing customers Increasing market competition (pricing, etc) Moving into new markets Effective management Adding new products/services Expanding existing business

Here’s what you need to do / how to navigate through these challenges: Evaluate & address your internal expertise needs Strengthen & leverage client relationships Re-invest in the company, don’t kill the cow

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Business Lifecycle: Maturity Phase

Tue, 25 Oct 2022 15:07:58 +0000

This phase reminds me of an AARP commercial I saw recently. The message is something like, “We may be older, but we’ve still got some spunk!” The same is true for companies in this stage of the Business Life Cycle - they have been around for a while, with products/services that have served a purpose, that may need a refresh/reposition/repurpose to reach a new audience.

You’re in a groove with your business. It’s providing stable, predictable profit and cash flow…but for how much longer? What’s around the corner that might disrupt that cushy situation?

In this stage of your business: You have a dominating market presence You’re still growing, but not at an explosive rate It’s time to step back and re-assess growth options

This phase’s challenges include: Increasing market competition Moving into new markets Adding new products/services Expanding existing business Exit strategy

Here’s what you need to do / how to navigate through these challenges: What are the options to reinvigorate/jump start growth? Rediscover the spunk and unleash it! Are there any acquisitions that might make sense to consider? What are your thoughts on an exit plan or strategy? This is the time to plan what it might look like.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Business Lifecycle: Decline, Rebirth & Death of a Business

Tue, 25 Oct 2022 15:08:22 +0000

This collection of phases may as well be titled “The Good, The Bad, and The Ugly”, with Rebirth being “The Good”, Death being “The Bad,” and Decline being “The Ugly.” After a period of stability and success, a company may encounter a decline in revenue and profits. The decline can be exacerbated by an owner’s unwillingness to invest in people or technology, otherwise raiding the piggy bank and withdrawing their equity.

The Decline Stage of your business is marked by Decreasing sales, plunging profits Survival mode, cutting losses, exiting the business Searching for new opportunities & business ventures

You can avert this stage with innovation. This phase’s challenges include: Rejuvenating product line Re-evaluating customer needs & value provided Protecting cash flow Exit strategy

From the Decline Stage, your business will either move into Death or Rebirth.

The Death Stage is marked by insolvency, bankruptcy, and the business having no value. Yikes! The challenge is to reposition/rethink markets, customer needs and product offerings, and/or to start over.

The Rebirth Stage is marked by a successful turnaround effort, financial restructuring, new leadership, strategic focus, and process improvements. Challenges with rebirth include: Re-gaining traction in market Re-building sales Re-invigorating employees Rebuilding financial strength & equity value Re-formulating exit strategy Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Strategic Planning: Horizon with Patty Lawrence

Wed, 26 Oct 2022 17:59:18 +0000

Business planning consists of the planning activities that guide the success and direction of your organization. This week, we are going to talk about a specific type of business planning: strategic planning. You’ll want to listen to the next four episodes because I’ll talk about why we do strategic planning, the four components to strategic planning, and exactly how to create a one-page strategic plan for your business. If you can do a one-page strategic plan every year ahead of your budget, you’ll be able to better dial into what you need to do in the next year, understand how your performance is measuring up against your planning, and get closer to your goals and targets both big and small. Picture

Horizon is the first key component of your strategic plan. What is the horizon? It’s the timeline you’re looking out. Most strategic plans go out multiple years, including all the way up to ten years. I personally find that 10 years is too far out, with too many variables outside of our control, so I usually do a 3-5 year horizon with my clients. It’s much more manageable and impactful because things are closer in. If you do want to do a 10-year plan, you’ll want to consider only really big targets (like acquiring a business or being acquired) out that far.

With my clients, I ask: what are you looking at doing in the next 3 years? Perhaps you’re growing so you imagine needing more people, or a new building. What are those horizon issues that you might come across? How might the economic and political environment shift along that timeline? Maybe you can see a recession or a big election coming. What other kinds of environmental impacts are going to happen in that 3-5 year horizon that could impact your business? All of those things need to be addressed in the horizon section.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

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Strategic Planning Core Values with Patty Lawrence

Wed, 26 Oct 2022 17:59:46 +0000

What are your organization’s core values? What’s driving your organization’s performance and direction? What areas are in your wheelhouse, telling you what you should and shouldn’t be doing? How does your organization show up every day for your customers and clients?

These are core values questions. In a nutshell, core values are your cause, your niche, your passion, your mission.

What are those things that define you? These are critical to put in your strategic plan because you need them as an anchor to ground you in moving forward. When you have your core values front and center, it’s easier to understand what the best channels, areas, and scenarios are to move your forward strategically as a business.

Your core values and your “why” are very closely intertwined because what you should and shouldn’t do is aligned with your why. Those are your alignment and grounding areas that will guide you in the right direction for your business. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Strategic Planning Targets with Patty Lawrence

Wed, 26 Oct 2022 18:00:08 +0000

Targets are pie-in-the-sky things to aim for. Envision an actual bulls-eye target, pretty far out. That’s what you’re putting up in your strategic plan to ask: in 3-5 years, where could we be?

Those targets could be things like: Revenue numbers Profit targets Number of clients Market share

Targets could be anything that is really important to you. What do you measure currently that’s quantifiable that you can relate to from a 3-5 year time horizon? Those targets become your places to aim towards. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Strategic Planning Goals with Patty Lawrence

Wed, 26 Oct 2022 18:00:28 +0000

In the last key section of your strategic plan, your targets get boiled down to goals. Goals are more immediate than targets, and they happen in the one-year timeline. What are you doing next year to move you closer to your targets?

Goals quantified are really a budget. What does your budget look like and what kind of activities do you need to be doing to move the needle towards your targets? The one-year category is very close in, so get specific. These should be very specific items to act on and prioritize.

Key thrusts and capabilities capture what’s going to get you in the 3-5 year priorities range. What capabilities and qualities move you closer to your goals and targets?

In a nutshell, goals and key thrusts and capabilities answer the question: what do we need to achieve, how are we going to achieve it, and by when? Delivering on those key initiatives will allow you to achieve your goals. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TurboCharge Your Business is a show for business owners who are tired of just working IN the nuts and bolts of their businesses and ready to work ON the business itself from a big-picture, growth-oriented, strategic perspective.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Patty Lawrence is a money finder, consulting CFO, right hand to growth-minded CEOs, and founder of TurboExecs. At TurboExecs, she works with $2M+ professional services and non-profit organizations that struggle to get the timely & accurate financial reports they need to function, often because one person holds this information hostage or lacks the skills required to do the work.

Through outsourced accounting and CFO services, she and her team reveal the story behind the numbers so leaders confidently can make data-driven decisions that allow them to leap forward, trusting they have the team and finances in place for manageable, profitable growth. As a result, TurboExecs’ clients typically increase the bottom line by at least 15% and feel in full control of their finances and results.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

Cash Flow Planning: Strategy with Patty Lawrence

Mon, 07 Nov 2022 19:26:48 +0000

Cash flow planning requires some strategy, and it’s all captured in the cash conversion cycle pictured below.

We can look at the cash conversion cycle in terms of: when does $1 of cash outlaid for your output come back to your bank account as collected from your client or customer? The cash conversion cycle is a measure of how long it takes from your first dollar out relative to your product or service to your dollars in.

There are a few different aspects encompassed in the cash conversion cycle:

The sales cycle. How long does it take you to sell and deliver a product or service once you start the clock ticking? If you have a product, you have to make it. If you have a service, you have to fulfill that service. The production and inventory cycle. This includes physical goods you make or need to source. The delivery cycle. Are you performing a service for a client, or warehousing product and need to deliver it? The billing and payment cycle. Once you’ve fulfilled your revenue promise, you’re now billing the client and getting paid.

That entire timeline is a number of days. What you want to do is shorten any of those cycles to bring money back into your organization more quickly. Then, you can reinvest that money back into the business. That’s the fuel for growth.

Strategies could include:

Shortening times at any point in the cycle Eliminating mistakes (which cause delays in payments and deliveries)

This leads to better cash management and increased cash balances so you can use the cash more quickly to fuel your growth.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping

Cash Flow Planning: Hidden Cash with Patty Lawrence

Mon, 07 Nov 2022 19:27:14 +0000

What kind of cash is hidden in your business?

They call me the money finder for a reason: because I locate the money hiding within your business that you didn’t know you had.

That could look like:

Freeing money tied up in old inventory. Lowering your level of accounts receivable by changing your terms or how you get paid by customers. Looking at waste. For example, maybe you’re a service business and you have to go back to your customer to redo things that weren’t done right the first time. How can we eliminate that waste by doing it right the first time? Checklists, better training, or other strategies might work.

Once we free up those kinds of hidden cash in your business, those balances become available to fuel the growth of your company, an investment, or an acquisition. The point is: you have many more choices. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping

Cash Flow Planning: Techniques with Patty Lawrence

Mon, 07 Nov 2022 19:27:48 +0000

Cash flow management techniques are the tactical execution of your strategy. These are techniques you can use to improve your cash flow, like:

Shortening cash cycles to get money back into your accounts faster Fixing leaky buckets - the areas where you’re spending way more cash than you need to

Fixing leaky buckets could look like:

Accelerating collection of accounts receivable. Stretching accounts payable (especially if your business has grown and you’re purchasing more with a vendor, you could ask for better payment terms like net 30 instead of net 10). Cost cutting wherever you’re spending more than you should. Regular cash flow monitoring to understand where you’re cash flow positive, where you’re spending too much, and where you could be hemorrhaging cash. Using banking services and upgrading with technology. Fintech used to be expensive, but now if you’re not leveraging some of those platforms you might want to change services to get better insight and clearer cash flow management in your business. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping

Cash Flow Planning: Rolling 13-Week Projections with Patty Lawrence

Mon, 07 Nov 2022 19:25:44 +0000

The rolling 13-week projection is an actual tool I use with clients (and bankers love it, too). It’s an operating cash forecast or projection, and it’s a simple way to understand what a quarter is looking like in terms of cash flow.

Typically, we look at this when we’re looking to either cut costs or identify all of the different areas cash is flowing out as well as in. We keep rolling the projection to understand the ins and outs of our cash and discover any surprises we might not be aware of.

Understanding the cycles of your cash including when you have heavier inflows and outflows and inflows is critical to your business. By knowing your business’ flow, you have better awareness of what’s going on in your business, what the demands are within the business, and what’s coming in from customers.

And if you’re going to a bank for a SBA loan or other loan, they want to understand your cash flow! Being able to present this projection is super helpful. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: cash flow forecasting, cash flow statement, cash flow, bookkeeping

Growth Planning Drivers with Patty Lawrence

Fri, 11 Nov 2022 16:09:08 +0000

S11 E13 The 4-D’s of Growth Planning: Drivers Drivers drive the framework for the organization’s growth. Drivers include:

Leaders in the company who drive the implementation of good habits and ways of doing things within the organization, with their respective teams. They mobilize their own teams to execute on certain things.

Continuous learning in the organization. The teaching of certain principles and habits to teams helps them perform at their highest and best.

Technology, which enables us to do things better, quicker, and faster. It often gives us more robust information to better make decisions and it provides us with a platform to measure numbers and make choices based on those numbers.

Habits. What habits will help you drive towards your growth goals?

These are some of the key habits (AKA best practices) we need to instill in our teams in order to function as growth drivers in the business:

Alignment. Everyone in your business needs to be in alignment on the number one priority for the quarter that will move the company forward. When everyone is on the same page, they can play their part in the movie.

Communication. Communication should be robust, effective, and at a particular cadence.

Accountability. Each person needs accountability and to understand their role in achieving the growth plan.

Feedback loop. Team members need to be able to voice what obstacles and opportunities are in their path.

Reporting and analysis of data. We need to have the technology platforms to support the business’ growth and let us know exactly where we are (and how far we still have to go).

Alignment with our core values and purpose. At TurboExecs, alignment = velocity. We can get there farther and faster if we all work together and are aligned with our purpose.

Objectives. These should be communicated to the team so we know we’re all pulling for the same goal.

Measuring plans and performance. Those results need to get posted front and center so everyone understands the metrics and how close or far we got to our goals.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

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Growth Planning Demands with Patty Lawrence

Fri, 11 Nov 2022 16:09:30 +0000

The 4-D’s of Growth Planning: Demands The second D in the framework is Demands. Demands consist of the demands on your people and demands on your different processes. Leaders need to have balance between the demands on those two elements. That’s where leadership development comes into the forefront. There’s a fine line to maintaining both people and process elements.

The people element isn’t just the people inside your business. We’re also talking about your customers, investors, and/or stakeholders. In terms of our employees, how do we manage those people? People are a resource and we need to look at them as both a whole person and a member of the team. What are their roles and functions within the company? How do we break that down into tasks? What are the role responsibilities? How do people function within the company at a high level? We want our team functioning at the highest possible level for our company.

The same holds true with our customers. Happy team members functioning at a high level with high job satisfaction treat our customers well. Think of the front line folks answering your phones. When those people are happy, they’ll answer the phone with a smile and you can hear it through the phone! That’s the energy we want conveyed into our concentric circles. The other circle that comes out from that is community. How are we engaging with and supporting the community? Are we good corporate stewards?

We want to make sure we’re walking the talk internally with our team and externally with our customers and community, whether it’s our shareholder community or the community at large where our team lives and works.

The second piece of this balancing act is process. When we look at process, we’re actually analyzing productivity. That’s why there needs to be a balancing act between the people and the processes! When we measure the effectiveness of processes, that’s going to show us what kind of productivity we’re getting from our people, systems, and processes (including on the make/buy side and sell side). What do we have down as far as our processes and SOPs? Are they manual or automated? Can we go automated and keep quality? A lot of these things need to be evaluated before we put them in play.

If we’re going to drive growth in our organization, we have to look at what demands we’re going to put onto the organization in the form of people and process because those are going to be the way that these things get accomplished. We have drivers and leaders that will take up these demands and make them on the organization, so we can grow and achieve our goals. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Growth Planning Disciplines with Patty Lawrence

Fri, 11 Nov 2022 16:09:55 +0000

The 4-D’s of Growth Planning: Disciplines The third D in our framework is Disciplines. There has to be some level of discipline as we grow our business and plan for that growth. In order to do a good job with the execution side, you need 3 fundamental disciplines or routines.

1. Priorities. You need to have priorities in your business. Otherwise, you’re just chasing whatever pops up. In the first segment, we talked about having one main focus for the quarter. What’s the one thing that’s going to take us further towards our goal? What do leaders need to have everyone focus on in order to make baby-step progress towards our one big priority?

2. Data. We need to gather qualitative and quantitative data in order to understand where our business is, where it’s been, and where it’s trending. There’s a lot of discipline that needs to go into getting good data. It needs to be consistent, timely, insightful, and relevant so we can make informed decisions based on it. That all goes into data processes and collection. This includes qualitative data as well, like what kind of feedback you’re getting from your customers!

3. Rhythm. What kind of cadence or routine do we need to have for our regular data-sharing, meetings, and check-ins on growth progress and priorities. Inside our company, do we have routine meetings built in like stand up meetings? Some meetings are milestone-based, while some are daily or weekly updates/recaps/check-ins. What kinds of meetings are important to have, and on what basis do they need to happen? Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Growth Planning Decisions with Patty Lawrence

Fri, 11 Nov 2022 16:10:24 +0000

S11 E16 The 4-D’s of Growth Planning: Decisions Decisions is the fourth D in the scaling up growth planning framework. Decisions transcend the other 3 D’s because the other 3 D’s need to have decisions take place in order to move them forward. Decisions are a necessary part of planning the growth of your business, growing, and scaling. We make multiple decisions every day, and they typically fall into 4 categories:

1. People. Decisions regarding people have to take priority. Ask yourself: do we need this role? Is it time to fill this role? Is it time to bring someone in to perform this function? What are the growth plans requiring of our people?

2. Strategy. Are we asking the right questions about the strategy we’re pursuing in our company? Are we going in the right direction? Are we serving the right customers and clients? Are we serving our team? Are we in alignment with our guiding principles? Are we executing on our mission? If we aren’t, then we’ve wandered off track. Depending on where we’re taking the business, questions in this category can drive into other categories.

3. Execution. Execution allows us to drive profit at the bottom line. How we execute the plan is going to put money back into our accounts. It also has to be done in accordance with a timeline.

4. Cash. Cash is king, and it fuels our businesses. We need to be sure we have the right amount of cash to continue to fuel the growth and trajectory we’ve outlined in our strategy and our execution against it. Every baby step we take towards our goal will require some outlay of cash and hopefully some inlay of cash when we manage well and derive profit from it.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

People Planning Roles with Patty Lawrence

Fri, 18 Nov 2022 00:00:19 +0000

Companies are people driven. You need great people inside and outside of your company: employees, contractors, clients, community. It’s important to manage the relationships, which are the fabric that knits all of us together.

As business owners, we want to be happy and we want our people to be happy. Happy, engaged people are way more productive in the business. That applies outside the business, too! You want community, clients, and stakeholders to be engaged, too, because that means we have alignment which equals velocity.

All of those different pieces of the puzzle are critical to the success of our companies. We need to ask ourselves as it relates to people day-in and day-out, would you “rehire” those people into your company or would you rehire that client? These are important questions that we need to be asking ourselves. If we say no, we need to determine why. Why wouldn’t we ask that client to come back? Why wouldn’t we rehire that team member? Why wouldn’t we engage again with a vendor or another stakeholder?

Let’s reference “Scaling Up” again from the last episode, and pull in some of the concepts from the people section. When we look at roles, we’ll examine dynamics, functions, and processes.

The first role we’ll look at in our company is Leaders. Our leaders are required over time to grow and evolve in our skillset and maturity. As the business grows, we need to grow, too. There are three key leadership roles:

Accountability. Accountability is really the one person who is tracking and in charge of progress. There can only be one accountable. Responsibility. Responsibility is anyone who has the ability to respond in support of something. You can have more than one person responsible. Authority. Authority means final decision making power. You don’t want to be accountable without authority.

With the chart below, you can take inventory of all the functions in your company. Go through, list all of those, and then attach names to those functions. Then, attach KPIs or measurements you are going to hold each function accountable for. How do you measure performance? Then, list the results and outcomes.

Once you have all those items completed, scan the list. Is there more than one person in a seat? Is there a person in more than one seat? Or are there empty seats? Would you enthusiastically “rehire” each one of those people? This is one quick tool you can use to evaluate your company’s functions and the people in them.

The second idea we’ll explore is Team. You need a great team of people to provide the level of output, service, and production you require. Hiring the wrong people is a waste of time, energy, and money, so it’s important to get that right. You hire for cultural fit, will, values, results, and skills, in that order.

The third idea we’ll explore is Coaches (managers). Their job is to retain, grow, and educate our team. This will keep your team happy and engaged, and you want to make sure you’re listening to these people!

My recommendations from Verne Harnish’s “Scaling Up” in regards to Team are:

Hire fewer people, but pay them more. Give them recognition and show appreciation. Set clear expectations and give the team a clear line of sight (how do they impact the KPIs and measurements that are important to you?). Don’t demotivate. De-hassle the function and make it easier for them to do their jobs. Help people play to their strengths. This is essential to helping people play at their highest level, which will take your company to its highest level.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

People Planning Succession with Patty Lawrence

Fri, 18 Nov 2022 00:00:20 +0000

Succession planning is the process of identifying critical positions within your organization and developing action plans for individuals to fill those positions.

That entails:

Putting job descriptions together for every role. Documenting what specific roles feed into and are accountable for certain processes and workflows in your organization. Looking at your processes and make sure you have enough support for those workflows as designed to support the delivery of your goods and/or services to your clients and customers.

Seeing all of this laid out visually, on a whiteboard or something similar, will give you the ability to see what might be missing and understand what’s actually going on.

Here’s how to create your plan:

Identify the critical roles in your company. Construct “success profiles” answering: what does success look like in those roles? Assess your staff to see what unique talents and abilities they have to offer the company (which could allow them to grow within the company). Create development plans outlining what expertise and skills staff need to obtain to grow. This is how you create successors. Develop and ready those successors over time to do the jobs you need them to do. Make sure they’re getting what they need along the way. Review! After you create your succession plan, you should revisit and update it annually. The organization’s needs will change all the time, so you don’t want this plan to get stale. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: succession planning,how to succession plan,people management,human resource management,talent management

Growth Related People Planning with Patty Lawrence

Fri, 18 Nov 2022 00:00:14 +0000

As you grow, you’re going to need more help. You’ll need more people and more of the right people in the right seats.

The right seats are the roles. What roles do you need as you continue to grow?

And for people, how do you get those people? Where do you get those people? What do those people look like? How do we staff and continue to successfully staff our organizations so that we can continue to serve our customers and clients at the highest level?

Here are a few tips:

It begins inside of the company. It’s really building an attractive place to work that people want to come work for. Always be hiring. If you’re in fast growth mode, you should always have your fishing pole in the pond. Evaluate: what are we going to need next? Have job descriptions written down.

As you go ahead with growth-related hiring, after you’ve figured out the roles you need, the market value for those roles, and the job descriptions for the roles, you’re going to need to do an interview process. Do you need peer group interviews? Do you want them to meet the team? Do you want them to do interviews with multiple people in leadership? What’s important to the people already on your team? What does your culture dictate?

Think about the things that will attract people to the company, in terms of hard benefits, soft benefits, and compensation. Think about the recruiting tools you’ll use (like recruiters and job sites). How do you get the word out most effectively? These are all important things to take into consideration as you grow your company and face this growth-related people planning aspect.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: how to attract talent, how to retain talent, talent attraction, succession planning,how to succession plan,people management,human resource management,talent management

People Planning Accountability & Metrics with Patty Lawrence

Fri, 18 Nov 2022 00:00:22 +0000

Accountability is the person owning a particular metric. They’re accountable for it. The opposite of that is if you have two people who are accountable, then you have nobody who’s accountable. So there’s only ONE person who’s accountable, and there are metrics that go with it. That’s what we measure against.

In the scope of people planning, we need to have job descriptions. That’s really where accountabilities and metrics are laid out. It obviously depends on the role and function, but metrics come down to answering the question: are we achieving success in this role as a team member in the company?

The answers can be qualitative and quantitative. What systems do we have in place to measure what we want to track and turn them into stats? Make sure these metrics are communicated and that they have the skills and qualifications needed to meet them (or that you’re training them to meet them). You’ll also need a feedback mechanism to give feedback to her person in the role so they can learn, grow, develop, and take on more responsibility for your clients, customers, and community.

People generally want to grow and make a positive impact in your company. Your job is to help them do that through offering the feedback, communication, and training they need. Accountabilities and metrics help keep people engaged and motivated – that’s the secret. Once you have that for each role in your company, that will be the difference-maker for you that allows you to uplevel your company and make it a huge success.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: succession planning,how to succession plan,people management,human resource management,talent management

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

Capital Planning Growth with Patty Lawrence

Mon, 28 Nov 2022 16:14:04 +0000

S11 E21 Capital Planning: Growth Capital planning is the annual process of budgeting for resources that are aligned with the company's strategic and growth plans over a planning horizon. In previous episodes, we talked about the strategic planning process. One of the things that goes along with that strategic plan is capital planning, which addresses the resources (including money and people) needed to support and grow your business over the planning horizon of your strategic plan.

The capital planning process can also help you avoid problems down the line, like not having the resources your business needs to achieve your strategic plan over the long term.

In the capital planning process: Identify investments and the dollars that are required to support those investments. Identify the ROI of your investments. For growth capital, you need to invest in activities or capacity that will expand your business, geographic footprint, and/or products or services. Evaluate and prioritize options for your capital expenditure dollars. To prioritize, understand where each option fits into your mission and vision for the company and the strategic plan.

As you decide which capital expenditures to undertake, ask: Is now the right time for the project? Are we going to get the biggest ROI? Is there a safety or other compliance issue, or some other type of deadline?

The different types of growth planning expenditures in terms of capital projects can take the form of capacity increases in your plant setting, factory setting, or distribution setting. You might be pursuing new markets, you might be pursuing an acquisition, you might also be choosing to rebrand at some point in time, or you might be developing new products. All of those have requirements for capital in your business because they’re very large expenditures and they're going to require some level of planning, prioritization, and ROI evaluation.

Here’s a little bit about the steps for effective capital planning, which will set the stage for all elements of capital planning:

Your plan needs to be grounded in reality and achievable (you can’t say we’re going to grow 300% in one year when the previous three you’ve grown 50%). You have to evaluate where you are currently and where you’re headed in your strategic plan, then what’s needed to attain that goal or target. Use your 3-5 year strategic plan to drive the capital planning process. This will define your priorities, the timing of these expenditures, and how much is being expended at any point in time. Use financial modeling to quantify the impact of the capital expenditures and answer the questions about timing. Do a scenario analysis to understand the impact of all the potential what-ifs. Select projects and implement the plan. This is the stage where you mobilize money and start rolling things out. After the project is done, measure your ROI. What happened? Did we do it right?

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: capital planning, business planning, strategic business planning, strategic planning

Capital Planning: Facilities & Maintenance with Patty Lawrence

Mon, 28 Nov 2022 16:15:39 +0000

S11 E22 Capital Planning: Facilities & Maintenance Capital planning for facilities and maintenance is typically done for larger companies. Larger companies (and educational institutions) often have very large capital planning budgets, large needs, and large scale projects. We’re looking at companies with physical locations, maybe warehouses or manufacturing facilities, plants, vehicle fleets.

When we talk about facilities and maintenance, facilities require both capital expenditures and maintenance expenditures. What’s the difference? Maintenance expenditures are expensed as a normal course of business. Repairs and maintenance type spending are expenditures that go towards sustaining your current revenue and profits. You want to make sure you’re following your preventative maintenance schedules so you don’t have a catastrophic failure down the road that shuts everything down so you can’t deliver to customers. So let's keep on schedule and let's make sure that those preventative maintenance activities continue to happen. Relative to capital expenses, these expenses should be pretty minor.

If you’re totally changing the life and longevity of a particular asset, beyond routine maintenance, that’s a capital expenditure. You'll want to make sure you plan for that as you’re looking at your maintenance budget and facilities.

For example, say you’ve got something safety-related with OSHA that needs to be done ASAP for compliance reasons, or for compliance with a new law going into effect. You need to make some capital improvements to fall into compliance with that. That needs to be in your capital planning. Typically, these types of investments either have a very low or no return on investment because they’re required, they're safety related, they're compliance related. They're not really doing much for the business other than allowing you to continue on. They’re sustaining capital expenditures.

You're sustaining your current level of revenue and profits by making these investments in your business. So think of it as a reinvestment in your business to enable you to continue to make the same revenue and profits that you had made in the previous years that you were manufacturing or selling these particular items.

That's a big differentiator versus the growth capital. Growth capital is obviously related to growing your business. The capital that sustains your business also needs to be budgeted for in your capital plan, and your business needs to have this reinvestment happen in the company to sustain revenue and profits, as well as be in compliance with the laws. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: capital planning, business planning, strategic business planning, strategic planning

Capital Planning Cash Flow Budget with Patty Lawrence

Mon, 28 Nov 2022 16:17:03 +0000

S11 E23 Capital Planning: Cash Flow Budget Cash flow budgeting for capital planning is one of the most forgotten pieces of your capital budgeting, but it’s really important. Every year, people assume that they've got everything covered when they're doing cash flow planning because it's coming from operations. So when you prepare your budget, you're just looking at: what does your income statement say? What are your revenues? What is your gross profit? What is your net income on the bottom line?

That's awesome. But a piece that is forgotten every time is what cash is required from your operations to support the capital plan. What did your strategic plan say you were going to invest in? Growth capital and maintenance capital / sustaining capital all have to be paid for. What are the resources you're going to have for this? That's why cash flow budgeting is a part of capital planning because it's cash and resource intensive.

Where is the cash going to come from to fund the investments that you need for your business, either for sustaining your business or for growing your business?

Well, for the most part, there are two sources for cash related to capital.

You can get cash internally generated from your business — cash from operations. The other source is external or other people’s money (OPM). OPM could be borrowing from a bank, could be from investors, could be equity, could be just loans from investors. It doesn't really matter, but you're still going to have to pay it back, right?

With external funding sources, you’re typically going to have a return expectation from folks in the form of either interest, ownership, and/or equity. With internal funding, you should still have an expectation that you’re going to achieve your plan and create an ROI on the project, whether you’re adding more to the bottom line or expanding your sales.

How do we plan the funding of the capital expenditure outlays?

These projects can sometimes span years, so we need to make sure to take that into account. They can be so large that maybe you need a combination of funding. Whatever the split is, make sure you account for them in how they’re going to be timed. You need to know at a pretty granular level, maybe at the month level, when you need to have certain things funded.

Time out the expenditures and model that in your cash flow budget. Map out expenditures and when you expect the timing of them to take place. You’ll probably need to work with your capital planning folks or facilities folks to understand the timing, vendors, vendor payments, and contracts.

The other thing is this whole cash flow budgeting process needs to be in alignment with your strategic plan’s priorities and the resourcing. Don’t include projects that don’t align with your priorities, and make sure you understand which projects need to get done first. When do all of these start? When do you start laying out the money or drawing down the loans? When do you have to have all of those things in place so that you can move this forward and also complete it in a timely manner so that your profit and loss statements start reflecting the profits from these projects being implemented?

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: capital planning, business planning, strategic business planning, strategic planning

Capital Planning Products & Services with Patty Lawrence

Mon, 28 Nov 2022 16:17:22 +0000

S11 E24 Capital Planning: Products & Services

Products and services are a specific kind of growth capital that has a life of its own and relates to new product development. Usually, there’s a whole team around it where people are researching environment, trends, and consumers. What are consumers looking to buy? What problem are they looking to solve? What are the things that are going to make their lives easier? How do we disrupt the market and come up with something brand-spanking new? Those types of things typically determine the new products coming down the pike (and they can also be about making an existing thing better, faster, more effective, more efficient, than it was before).

A lot of companies spend years and millions of dollars trying to innovate, throwing money at the wall. New product development is a special category because it's a risky area and it's typically very intentional and aligned with the company’s mission. It's in the strategic plan. You go down this path because it gets you wherever you want to be. You understand the risk and you’re willing to put your money into developing these new products.

What does that look like? It looks like a bunch of financial analysis. There are a lot of financial, what-if scenarios that go into putting together capital expenditures for new product development. The time horizon on these is usually pretty darn long.

You need to understand the total project cost from inception to market, which is really a moving target. It answers the questions:

How much are we going to need to really achieve the end game, meaning a commercially viable product? How much will consumers or users pay for this item? What’s the competitive landscape? Is there nobody in the market and this is going to be brand spanking new? Or are you in a competitive race to get to market? How many other companies are out there developing the same thing or a similar thing? What is the estimated cost and margin that you can expect? What's going to be the cost to produce? What is going to be your sell price and your margin? (Margin is what really pays the bills). How many of these can you sell each year? What’s the demand? Can you create more demand? How many years are you going to have to wait to get your investment back?

Some of these expenses, especially labor costs, can be classified as R&D if it's early on, until you can prove that the product will become commercially viable. You need to separate those costs and track them separately so you know how much you’re investing.

And remember: somebody else may already be developing the thing you want and you may be able to buy / acquire it instead of having to develop it in house. Much more efficient use of your capital resources.

TAGS: capital planning, business planning, strategic business planning, strategic planning

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

What is Budgeting with Patty Lawrence

Fri, 02 Dec 2022 00:00:09 +0000

The strategic plan is the source of everything coming down the pike, so like capital planning and people planning, budgeting needs to align with your strategic plan’s vision.

Budgeting is:

A quantification of your goals, extracted from your strategic plan. A roadmap of how to get to your goals and targets, laying out the path to achieving your goals.

Budgets also provide control mechanisms, risk mitigation, a basis for measurement, and keep us on the path to achieving our goals. If you want to know what went right so you can keep doing it and what went wrong so you don’t repeat it, budgeting is key. It helps ensure your success against your goals and the roadmap you’ve set out to follow.

Your budget says: here’s what I’ve said I’m going to execute against for the next year. If things change, of course, you can shift. But you don’t need to make decision making on the fly. You can make faster decisions because you’re already thought through some of those different scenarios, assumptions, and factors that have already been quantified into your budget.

When you’ve done all that work up front, you have the ability to make decisions faster. Budgeting enables you to reduce your risk, make decisions faster, promote your measurements against your goals, and it provides elements of control. All of those things are beneficial to you as the business owner. Having those insights throughout the year is invaluable as you run your business.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: budget for small business,budgeting,why budgets are important,small business budget,small business budgeting,business budget,budget,how to create a budget

Why Do We Budget with Patty Lawrence

Fri, 02 Dec 2022 00:00:16 +0000

As business owners, we have a million things to do. So bottom line, why do we budget?

It’s planning for the future and tying all of our planning tools together. We’re quantifying exactly what we’re doing with our business over the next year. It supports cash flow management and financial resource planning for your business. You need to know what kind of cash flow you’re going to have in your business over the next year. It will help you understand where you need to secure financing in your business. It can help you respond to unexpected changes in your business. It can help you measure performance against metrics. It can help you track and monitor where there’s waste in your business.

Putting the plans for the next year into a budget helps get everyone aligned with expectations and vision, and it makes responding to unexpected changes easier because we all know what we’re expected to do.

With a budget, we can dig deeper and understand the sources of favorable and unfavorable gaps to get clear on the drivers, what’s working, and what’s not working. Our budget functions as our GPS for the year. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: budget for small business,budgeting,why budgets are important,small business budget,small business budgeting,business budget,budget,how to create a budget

How Do We Budget with Patty Lawrence

Fri, 02 Dec 2022 00:00:10 +0000

There's an art and a science to doing budgeting in your business, but everybody can do it. Sometimes it just takes a little bit of practice.

To me, the biggest indicator of where you’re going to go is where you’ve been. Past performance can offer a very good indicator of where you’re going in the future. On your expenses side, many of your recurring expenses will probably remain the same. Things that will differ may be things you’re going to do differently this year (according to your strategic plan). You need to take those assumptions, quantify them, and overlay them on top of past performance.

Another resource in addition to past performance is looking at the assumptions that went into those past budgets as well as research on the competitive landscape. The more inputs, especially high-trust ones, you put into your budget the better it will be.

I always advocate for keeping your budget as simple as possible with as much granular detail as you need to support your direction and decision making. For example, if you want to track labor cost and don’t want it to be buried in overall payroll cost (which includes overhead wages for support things) in one bucket, separate that out. Keep it simple, but make sure you have enough detail to be able to make good and insightful decisions, and make it measurable because you’re going to want to be able to pull levers.

Making your budget measurable means you’re able to impact it. You also want to make your budget impactful, in that sense that it can offer insight into what is causing things to be better or worse in your company.

When you make your budget measurable and impactful, you can improve your business as a result.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: budget for small business,budgeting,why budgets are important,small business budget,small business budgeting,business budget,budget,how to create a budget

What to Do with Your Budget with Patty Lawrence

Fri, 02 Dec 2022 00:00:16 +0000

A tool is only as useful to your business as you use it. So how do you use your budget now that you’ve built it?

Measure and manage. What gets measured gets managed, and you need to manage your financial results with regular reports referencing a benchmark of the budget. Look at variances in the numbers versus the budget. These translate into potential action items. What’s the story they’re telling us, and where do we go from there? Use the budget on a monthly basis to reassess and learn. Then, take that information into your next budget cycle and planning horizon. Question expenses. Make timely, impactful decisions and respond to unexpected changes (this is predicated on your reporting being timely). Update the budget based on changes (for example, if sales are taking off in a big way we might need more labor to support that).

TAGS: budget for small business,budgeting,why budgets are important,small business budget,small business budgeting,business budget,budget,how to create a budget

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

Accounting Fundamentals - Chart of Accounts with Patty Lawrence

Fri, 09 Dec 2022 19:05:24 +0000

A chart of accounts is a framework for accounting for your business.

But why does it matter?

As a business owner, you need a basic understanding of your financials. You need to know this to:

Communicate it better with your advisors, bankers, etc. To better understand and communicate what your needs are for your business To know which metrics and KPIs are important to watch in your business

You should be watching those metrics on a regular basis to take action on them and stay in control of your business…rather than descend into chaos!

There are a few main buckets that make up the chart of accounts:

The income statement, where you can measure your revenue, cost to deliver on your revenue promise, and overhead costs. This resets every year. The balance sheet, where you can see your assets (such as inventory, cash, and accounts receivable), liabilities (such as accounts payable, sales tax, and loans), and equity (what you as the business owner have in as far as the business’ financial value). This is cumulative and represents a snapshot of our business since inception.

The chart of accounts is the framework that holds all of these different areas. We can structure it to see more clearly and get the reports that really matter.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: accounting fundamentals,fundamentals of accounting,income statement,income statement and balance sheet,cash flow statement,what is a balance sheet,finance training,finance education,how to read a balance sheet,how to make a balance sheet,how to do a balance sheet,balance sheet

Accounting Fundamentals: Balance Sheet

Fri, 09 Dec 2022 19:05:46 +0000

The balance sheet is the most critical of your financial statements because it’s the report that’s been with you since you founded your business. It’s cumulative, and it shows the numbers in your business since inception. It includes:

Assets - what you own. Liabilities - what you owe. Equity - the difference between the two (hopefully, a positive number!)

Assets include two distinct areas:

Current assets, which are liquid. For example: cash, accounts receivable, inventory, other cash equivalents. Non-current assets, which are more long term over at least a year. For example: investments, property, plant equipment, office furniture, computers, goodwill.

Liabilities include two distinct areas as well:

Current liabilities, which are one year or less. For example: accounts payable. Non-current liabilities, which are financed into three to five to ten years. For example: debt like a mortgage or vehicle loan.

Equity breaks down into:

Capital - what you paid into the business. Retained earnings - earnings retained into the business over time. Owner distributions - a reduction in your equity Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Accounting Fundamentals: Income Statement with Patty Lawrence

Fri, 09 Dec 2022 19:06:03 +0000

The income statement is the most paid attention to report in all of accounting.

Why?

Because it includes those vanity numbers, like top line revenue/sales.

The income statement breaks down into a few different buckets:

Revenue - sales Cost of sales / cost of goods sold - the direct cost to deliver on your revenue promise Gross profit - revenue minus the direct cost of sales.

You need to have cash generated in your business above and beyond profit, because you have obligations for that cash and towards the growth of your business. You need to be generating lots of profitability in your business so that you can fuel your growth and move the business forward.

Gross profit is the engine that prints money and generates that cash flow. This number needs to cover your overhead costs (such as administrative expenses, utilities, rent overhead, marketing expenses, R&D, general expenses), cash flow items, debt payments, charitable contributions, etc.

A monthly income statement, set up to measure against a budget, will help you have your controls in place and understand what your numbers are actually communicating. With a budgeted income statement and an income statement for this period versus a prior period, you can understand progress and where to make adjustments.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Accounting Fundamentals: Cash Flow with Patty Lawrence

Fri, 09 Dec 2022 19:06:21 +0000

As I always say, cash is king! It’s the most important aspect of your business because without it, you can’t take your business anywhere. Cash gives you options, and you want to have as much of it in your business as you can.

Profit isn’t necessarily cash flow. Profit really only looks at income and expenses. You can be profitable, but cash poor because you can be making sales that aren’t generating enough cash to afford the activities that you have going on (like your balance sheet items). You won’t see vehicle loans or a mortgage on your income statement, and yet you need to be generating sufficient cash and profit to satisfy those cash requirements that sit on your balance sheet. That’s what cash flow is all about.

Cash flow concerns the movement of money in and out of your business. It moves in ebbs and flows, and it functions as the gas of your business engine because you need cash to make cash.

Something important to consider when it comes to cash is: where is cash tied up in your business? Obviously, you have cash in your checking account and we need that on hand. But where else could you have cash tied up in your business? It could be on your balance sheet in accounts receivable or inventory as cash to be converted. You can rework those AR terms to pull cash back into your business more quickly or free up that inventory back into your checking account.

There are other places cash could be tied up in your business, and I call these leaky buckets. Maybe you’re spending cash you don’t need to be spending, or labor inefficiencies are costing you money. We need to fix those leaky buckets because they’re costing us not only profit but cash.

When we understand what our cash flow is, we can start to manage our cash better. Because remember: cash is king!

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

Cash Flow vs. Profit: Mythbusters with Patty Lawrence

Fri, 16 Dec 2022 00:00:18 +0000

CASH FLOW VERSUS PROFIT (SHOW ME THE MONEY!)

Today's show is all about cash. By the end of our time together, you'll gain an understanding of why cash is king in your business!

S11 E33 Cash Flow vs. Profit: Mythbusters Profit is revenue minus expenses. It’s what’s left over after you’ve sold something and paid all the expenses related to selling that thing. Cash flow, however, concerns all the movement of cash in and out your of your business.

Remember: cash functions as the fuel in your business engine. People put way more emphasis on profit in their businesses than they do cash flow, and it’s a mistake.

I want to debunk the measures of profitability and revenue. Many people think these are the most important measures in your business, but they’re not. With profit, revenue, and cash flow together we get a much clearer picture of the health of our business. But when we only look at vanity numbers, we miss a key component.

I would argue that cash is the most important measure in your business. It’s your business’ fuel. It gives you options. It allows you to grow, to get loans, to make choices for your expansion.

So, how much cash do you need to have?

Prior to COVID, people would say having 3 months of expenses was a good rule of thumb. But COVID taught us we need to have more than that on hand. We need to have at least 6 months of cash on hand for emergency use only.

It might sound impossible to stock away that much money, but it’s not. You’ll need a plan to squirrel some money away every week. How much will you not miss out of your business? It depends on the size of your business, the money you’re generating within your business, and how much money you need to run your business. It’s different for everyone and I work with my clients on what the right number is.

But for example, let’s say $100 a week is what you wouldn’t miss on a week in, week out basis. Set something up with your banking platform where you’re transferring it somewhere else. By the end of a year, you’re going to have a nice head start on a good balance in there. That makes it easy and consistent to create a safety net for your business.

Another myth out there is that being profitable means being cash rich. Actually, you can be profitable and cash poor. On your income statement, you could be plenty profitable but you may have so many other requirements for cash that it drains down and you end up with not even enough for your operations. It’s critical to figure out your cash requirements so you can track and plan for them.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: cash flow,cash flows,cash flow statement

Cash Flow vs. Profit: Defining the Differences with Patty Lawrence

Fri, 16 Dec 2022 00:00:17 +0000

Profit is not cash and cash is not profit. These are two completely different things, and you need both of them in order to be a successful business and grow. What are some of the specific differences between cash flow and profit that we look at as business owners?

Some of the things that typically show up as profit and not so much as cash are non-cash type items that run through our profit and loss statement, particularly depreciation and amortization. These are fancy words that recognize the useful life of an asset over time. Maybe we’re paying for a vehicle over time, but what runs through our P&L statement generating a profit or loss is depreciation, which is non-cash. The full value of the vehicle goes on the balance sheet, and in the P&L statement we recognize a portion of the depreciation of that asset over its useful life.

Say that vehicle has a useful life of 5 years. Then we’ll take roughly 1/5th of that value into account in our P&L statement as an expense each year. By the end of year 5, the vehicle will have been fully depreciated on our balance sheet. Yet each year, we’ll only recognize depreciation expense related to 1/5th of the vehicle’s value. That’s one big difference between cash flow and profit. The same goes with amortization. It’s very similar, except you’re getting an intangible asset like goodwill, patents, or other IP in your business that will depreciate over time.

Another difference in cash flow versus profit is loans. Say you bought a vehicle and put that vehicle on your balance sheet, but you only made a down payment on it. Maybe you paid $10,000 for the $30,000 vehicle. You had $10,000 cash flowing out of the business, but zero of that was on your P&L statement. So where does it show up? The rest of the $20,000 loan will show up on the balance sheet, and the interest you pay on the loan will go on your P&L statement as an interest expense. But the actual loan payment is a cash flow item, not a P&L item.

Those are some of the major differences we can see between cash flow and profit. We can also look at some of the types of cash flow we have for our business:

Cash from operating activities Cash from investing activities Cash from financing activities (usually for larger companies) Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: cash flow,cash flows,cash flow statement

Cash Flow vs. Profit: End of Year Tax Maneuvers with Patty Lawrence

Fri, 16 Dec 2022 00:00:20 +0000

End of year tax maneuvers are some of the moves you can take advantage of with some help from your tax professional to lower your tax liability for the end of the year.

You can take these actions now, in the current year, to affect your tax calculation for April. What does that actually look like? How do we actually do that and what are some of the kinds of things that we're talking about here?

I’m not a tax professional, but I have enough experience working with tax professionals and business owners to bridge the two together because it’s important to me to protect my clients from the information gap they might get from their tax professional. The devil’s in the details, and they may need a little bit more translation.

If you’re working with us, we would be projecting or forecasting a full year P&L for you. That’s a tool you can provide to your tax professional so they can see where your business is going to finish. Depending on what kind of legal entity your business is and how you’re organized from a tax standpoint, these numbers will come through and be reported.

Here are some ideas and concepts to talk about with your tax professional as they go into end of year tax planning:

Projecting your full year profit and loss statement Understand what your balance sheet looks like The cash level in your business as of end of year Optimize retirement contributions Accelerate or defer spending in your business Review your accounts receivable for bad debts Contribute to an HSA Increase charitable contributions

Knowing your cash position is important so you can take advantage of maneuvers or not based on your cash position. But I can’t stress this enough: some of these maneuvers don’t require cash. If your tax professional says go buy a vehicle, that doesn’t mean you have to pay cash for it. You can put down the down payment and finance the rest because from a tax perspective, you might be able to take advantage of accelerated or bonus depreciation, which is non-cash. If you buy a vehicle, you should be paying for it over the time it earns you revenue. If you don’t, you can end up in a cash crunch (and maybe not have enough cash on hand for your tax bill).

Carefully consider these maneuvers in relationship to your cash position, and remember to always consult your tax professional for your specific circumstances.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: cash flow,cash flows,cash flow statement

Cash Flow vs. Profit: Operating Profit vs Tax Return with Patty Lawrence

Fri, 16 Dec 2022 00:00:13 +0000

Our focus at TurboExecs is making business owners aware of how they can make more money and where it may be hiding in their business. My hope for you is that you make as much money as you possibly can – as much operating profit as you can.

Operating profit translates into cash flow, because operating profit drives cash flow. What does that have to do with your tax return? Well, the more profit you make, the more tax liability you may have on your tax return.

I’m not a tax professional, but there are tax professionals out there who are going to give you the best and most personalized tax advice. I work with people like that all the time, so I know they’re out there and they're there to serve you. I invite you to seek them out. I’ll give you ideas and you need to take those ideas and concepts and run them by your tax professional.

What I will tell you is that your tax return is what you ultimately have to pay the IRS from, in addition to any state and local tax obligations. Those are the drivers, but your P&L statement is the starting point. Why does that matter? It makes a lot of difference what you have in there and the decisions you make in your operating profit versus your tax return.

There are some end of year tax maneuvers we discussed in the last episode that can lower your taxes. If you’re making those choices, it’s important that:

We try to get you as high operating profit as possible. We make decisions for the business that won’t impact you as a going concern (i.e. that won’t put you out of business, interrupt your ability to continue making operating profit, etc.)

You need to make these decisions with a couple of tools in front of you:

Your projected full year P&L Your cash position at the end of the year

Whatever you choose is going to carry forward and have a ripple effect into the future. It’s either going to harm you or help you align with your mission, vision, and values. If a decision gets you a deduction on your tax return but makes you worse off than you were before, it’s not worth doing. The juice isn’t worth the squeeze.

Let’s be very cognizant of what’s being proposed to us and what the benefits are. Ask questions, ask why. Be curious about what the impact could be. That's the best thing you can do and the best way you can protect yourself, your company, and your operating profit going forward.

TAGS: cash flow,cash flows,cash flow statement

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

Reading Financial Statements: Chart of Accounts with Patty Lawrence

Fri, 23 Dec 2022 00:00:17 +0000

READING FINANCIAL STATEMENTS

Today's show is all about reading and interpreting basic financial statements for business owners. By the end of our time together, you'll gain insight into the story that is being revealed by your company's basic financial statements. S11 E37 Reading Financial Statements: Chart of Accounts

The chart of accounts is the index of all the financial accounts in your business. It’s an organizational tool that when set up right can lend itself to great reporting. It can be an amazing tool that tells the story of what’s going on in your business operationally.

Your numbers tell a story about what happened during the week, the month, the year, whatever time frame you're looking at – and the chart of accounts is the foundational starting point.

So what does it do?

It basically provides a way for your financial transactions to find their way to the right place on your financial statements. That’s huge for a business owner, because with a well-organized chart of accounts you can look at your reports and make sense of them.

Sensible reporting leads to insightful reports, and it gives you the data that allows you to make good decisions that take your business where you want it to be.

The chart of accounts shows your:

Assets Liabilities Equity Revenue Expenditures

Some of those are balance sheet accounts and some are income statement accounts. Together, they are the foundational elements that allow for all of the reporting in your business.

If you’re thinking, “oh, I use QuickBooks” – all of that is driven by your chart of accounts. If your chart of accounts is a mess (or you’re using accounts inconsistently), you’re going to have problems. Consistent and proper accounting of transactions month in and month out is one of the critical keys here.

Ask yourself: are you measuring things that are important to you in these reports? We need to be paying attention to those numbers so we can make good decisions to affect them how we want to affect them. Without up-to-date and accurate measurements of what matters, you’re not going to be able to make the decisions you need to be making as a business owner in the frequency you need to be making them.

Bottom line: the chart of accounts is the fundamental framework that every other report in your business from the accounting software side is based on. So you want to make sure it’s organized in a way that’s conducive to getting you the information you need at the level you need it!

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Reading Financial Statements: Balance Sheet with Patty Lawrence

Fri, 23 Dec 2022 00:00:21 +0000

The balance sheet is one of your “Big Three” financial statements. What does the balance look like, how do we read it, and what does it really tell us?

The biggest benefit of the balance sheet is that it goes back to Day One of your business. It’s the only financial statement that goes back to the inception of your business, so it includes a ton of rich history. If your balance sheet is correctly stated, then changes are so are your income statement and statement of cash flows.

We can look at the balance sheet on a monthly basis for trends. What are we looking for? We can look at changes from the prior month for many different metrics - like inventory, accounts receivables, and accounts payables. You can also look quarter to quarter and year over year to get a sense of what’s going on from a cumulative standpoint and how we’re managing resources over time.

The balance sheet is broken down between three things:

Assets - what we own. Liabilities - what we owe. Equity - the difference between the two. This is the value of your business.

Internally, we use this information to manage our business. Externally, the balance sheet can be used by somebody who’s interested in buying your company or lending you money. They need to see the balance sheet to understand the financial health of your business and perform metrics like liquidity and profit debt to equity ratios. Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

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Reading Financial Statements: Income Statement with Patty Lawrence

Fri, 23 Dec 2022 00:00:15 +0000

As a business owner, you need to own your numbers and understand your numbers in order to make the best, data-driven decisions in your business. The income statement (also called the profit and loss or P&L statement) is where you keep score in your business. You’re keeping score of how your business is operating, and it’s a critical measure that goes hand in hand with the balance sheet. All of your results from your income statement end up on your balance sheet.

The income statement summarizes all the income and expenses of your business over a given period of time. Monthly, quarterly, semi-annually, and annually are the standard periods of time. Those frequencies are relevant to your decision making in your business. You can look at these numbers compared to previous periods of time to get a lot of good information.

The income statement is really measuring the profitability of your business. We can also see some really helpful trends across time and different metrics like income and expenses. You get to look at those numbers and ask: why? Be curious. Understanding why things change over time is one of the real benefits of your income statement.

We can also look at the income statement in relationship to expected performance from last year or expected performance in the form of our budget. Benchmark reporting can help us understand how our operations are performing. Every month, we should be looking at some type of benchmark for comparison purposes even if you haven’t done a formal budget.

I love looking at the last twelve months report (aka the LTM) on a rolling basis because that really tells a powerful and clear story. All together, this whole collection of reports tells the story of your performance. And when you know that, you can make choices on how to move forward.

The buckets in an income statement include:

Revenue. Cost of goods sold. Gross profit - the first subtotal we see. Total revenue less cost of goods sold. Expenses (overhead). Operating income - gross profit minus expenses.

Understanding these numbers keep returning to you over time what’s important, and how to manage it even better. It allows you to benchmark, do ratios, create projections, analyze our business and make decisions about how we can manage our business better to make more money and benefit employees, customers, shareholders, and community.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Reading Financial Statements: Cash Flow with Patty Lawrence

Fri, 23 Dec 2022 00:00:20 +0000

Your cash flow statement shows your business’ cash position and details what happened to your cash during whatever specified time period you’re looking at. It can be cumulative or it can be one period – typically, it follows your income statement period. If you’re looking for answers on what happened during the month, then you'll probably want to see the statement of cash flows for just the month. If you're looking for what’s happened year to date, then you’ll want to look at the year to date time period.

Remember: cash is king. We need to understand what's going on with cash in our business so we can make excellent decisions that move the business forward. Not only do we need to know what happened in the rearview mirror, we also need to look at what’s going forward. We want to be able to project cash, as well.

Cash is the fuel of your business, full stop. If you’re in growth mode, you need cash to propel your business forward. You can invest in opportunities like advertising and fixed assets that can grow your business leaps and bounds. Whatever your next step is, you need cash to fuel that.

The cash flow statement gives you the ability to peek inside the details of what’s going on with your cash: where it’s coming from, where it’s going, how it breaks down. The traditional layout for a cash flow statement includes:

Operating activities - cash our operations are generating for us Investing activities - cash from the purchasing and selling of assets Financing activities - cash from debt financing and equity financing

If you have a software platform like Quickbooks, the big 3 financial reports including your cash flow statement are almost always included. You should be able to pull it up, hit run, and it will populate it. It’s nothing you need an accounting degree for.

TAGS: cash flow,cash flows,cash flow statement, business accounting,small business accounting,basic accounting,business bookkeeping,startup accounting,accounting basics,accounting explained,accounting basics for small business,accounting for business owners, financial reports for business owners,

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

Performance Measures: Common Size Ratios with Patty Lawrence

Tue, 03 Jan 2023 17:08:36 +0000

Business performance measures and metrics are a set of quantifiable measures and metrics taken from various sources of information on your business that, when analyzed, allow for management to track and assess the current status of a specific business project or process.

In a nutshell: performance measures give you the tools to measure your business. Because, bottom line, what gets measured gets paid attention to and managed.

So what measures should you be looking at? We’ve talked about budgeting, benchmarking, and KPIs in past episodes but today we’ll talk about common size ratios.

Common size ratios are a metric that allows you to compare your business with basically any other business regardless of size. Small company? You can use common size ratios to compare yourself to billion dollar companies. How? By calculating each line item as a percentage of the total. Then, it doesn’t matter what size your company is because you’re comparing percentages not absolute dollar values.

You can compare your common size ratios to your competition, industry averages, larger companies, or other benchmarks. You can look at all different kinds of areas from advertising expenses to labor costs to cost of goods sold.

And actually, gross profit margin and bottom line are well-known common size ratios. All we’re doing is extending those measures to every line item on your income statement to make meaningful comparisons, regardless of company size.

This allows us better decision making and to really manage our key numbers.

Knowing common size ratios has a huge benefit to you as a business owner because the more we know, the better we can manage, and the better decisions we can make for our businesses as well as understanding the financial health of our companies.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: performance measures, business metrics, common size ratios, business metrics, business performance, key business metrics,business tips,business solutions,business data,business success,business goals,key metrics,business development,business metrics you should track,product metrics,success tips,business metrics for data driven companies,how statistics helps business

Performance Measures: Operating Ratios with Patty Lawrence

Tue, 03 Jan 2023 17:08:53 +0000

Measures and metrics are about bringing attention to the things that matter in our businesses, the things that we have some level of control over. These are important things that we want to be able to keep an eye on and check our progress on.

Operating ratios are another one of those key measures. These are metrics and measures related to the efficiency of your company’s operations. We’re looking at things that are going on within our operations and benchmarking those so that we understand:

Where we are How we’re performing versus a benchmark How we’re performing versus an industry average How we’re performing against our own internal targets

Once we understand these numbers we can impact them, influence them, change the trajectory of them.

Here are some examples of types of operating ratios:

Inventory turnover, which tells you how long inventory stays in your business before it’s sold Inventory days, which can give further insight into how many times you deplete your inventory over the year Accounts receivable turnover, which shows how many times you’re turning over your receivables in a given period Number of days sales outstanding, which tells you how many days you have money tied up in receivables Accounts payable days outstanding, which shows you how in alignment you are with your payment terms Total asset turnover, which shows how efficiently you’re able to convert assets into revenue Cash conversion cycle, which can tell you how long it takes your company from first dollar outlay to get those dollars back into your company

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Performance Measures: Liquidity & Solvency Ratios with Patty Lawrence

Tue, 03 Jan 2023 17:09:11 +0000

Liquidity and solvency ratios are two different measures relating to the health of your finances.

Solvency ratios look at your business’ ability or capacity to meet its long-term financial commitments, aka long-term debt. A solvent company is a company that owns more than it owes. A solvent company has a positive net worth and enough cash and assets to meet their debt obligations.

A few solvency ratios are:

Debt to equity, which indicates the degree of financial leverage being used by the business. It includes everything related to debt, both short term and long term. This is a huge one that banks want to understand. Debt to assets, which measures the percent of the company’s assets that have been financed with debt. The higher the ratio, the higher the degree of leverage and consequently, financial risk for a lending institution. The interest coverage ratio, which measures the company’s ability to meet the interest expense on its debt. It equals operating income divided by interest expense. The higher the ratio, the better the company’s ability to cover that interest expense.

Liquidity ratios are a measure of the company’s ability to pay short-term obligations, like accounts payable and current loan payments. These measures take out the long-term aspect and look at the here and now. This year, do we have the ability to pay all of our obligations with adequate cash?

A few liquidity ratios are:

The current ratio, which measures the company’s ability to pay off its current liabilities with current assets (which are highly liquid) such as cash, accounts receivable, and inventories. The higher the ratio, the better the liquidity of your company. The quick ratio, which is similar to the current ratio except it factors out inventories. It takes current assets minus inventories and divides that into current liabilities to measure the company’s ability to meet its very short term obligations with its most liquid assets.

Again, these measures are manageable, and we need to focus on them. Cash in our business and high liquidity gives us options.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Performance Measures: Operational Metrics with Patty Lawrence

Tue, 03 Jan 2023 17:09:27 +0000

Operational metrics are measures that relate to operating your business. Here are a bunch of examples of operational metrics that may or may not apply to your specific business:

Sales inquiries Calls per day Clicks per day Calls per day conversion Conversion rates Sales per employee Sales over wages paid Absenteeism rates Utilization rates Realization rates (which look at billable versus non billable utilization) Employee turnover Employee satisfaction First pass yield Product costs based on pieces per hour Machine throughput Sales per labor hour Right sales per labor hour Machine downtime Perfect order rate Picking accuracy Inventory carrying cost Fleet utilization

These are all about looking at things that relate to one another, putting them together, and measuring them over time versus a benchmark. You can put relevant operational metrics into a dashboard to have them right in front of you to make the best possible decisions for your business. And again, you can look at the trends for these numbers and benchmark them against all different kinds of numbers to see the different stories your numbers are telling.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

Connect with TurboExecs at turboexecs.com. Continue the conversation with Patty on LinkedIn.

Financial Intelligence: What is Financial Intelligence?

Tue, 10 Jan 2023 19:27:43 +0000

Financial intelligence is a requirement for business owners and luckily, it’s a skill that can be learned. As a business owner, you need to make sure you’re acquiring these skills to be able to really work in your business and grow your business.

Financial intelligence consists of understanding these four different areas:

Basics of financial measurement, including the big three reports you need to run your business: the income statement, balance sheet, and statement of cash flows
Finance and accounting as two disciplines (both art and science!) that must come together and build an understanding of your business
The analysis of your numbers (including profitability, percentages, and other metrics) so you understand the story they’re telling you
The big picture, where you can zoom out, see relationships and patterns, and understand your business in the larger context of the economy, competitive landscape, laws, technology, and changing consumer needs and desires

All four of these shape the environment of financial intelligence and when you understand them, you can make more insightful decisions towards the goals and targets of your strategic plan, leading your company forward successfully.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: finances for business owners, financial intelligence

Financial Intelligence: Owning Your Numbers

Tue, 10 Jan 2023 19:28:33 +0000

Owning your numbers means that your transactions are entered into your system in real time. It’s not taking a show box and giving it to your outside accountant to update your Quickbooks.

Why?

Because if you’re not getting anything in real time, you don’t have your basic reports available to you in a timely fashion. There’s no visibility to where you’re performing, because those numbers aren’t timely. You can’t really own your numbers because you can’t see them as frequently as you need to be able to make decisions in your business.

Remember, the foundational elements of financial intelligence require you to have those big three reports. In order to have those generated from your software, you need to have transactions going in on a daily basis.

It doesn’t matter whether you have someone do it internally or if you outsource, as long as it’s done in a timely fashion every day to get you the insight you need to take your business forward. Once a week isn’t good enough.

When you own your numbers, your company’s financial status is available to you on demand at any time. You can understand exactly where your business is at any given moment, and have the ability to manage that.

And remember: garbage in, garbage out. If your transactions are recorded incorrectly, your reports are going to be pretty useless. If that’s something you’re struggling with, call TurboExecs - we help people uplevel their entire accounting function.

Honestly, the bottom line for owning your numbers is about being able to take control of your own destiny. Don’t leave that in somebody else’s hands. Once you give away your power in that way, you’ve given away your ability to impact your numbers. So do yourself a favor within the realm of financial intelligence: take control of your destiny by owning your numbers.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: finances for business owners, financial intelligence, owning your numbers

Financial Intelligence: Understanding Your Numbers

Tue, 10 Jan 2023 19:31:12 +0000

As a business owner, you need to know what “good numbers” and “bad numbers” are in your business.

What constitutes doing well (and not doing well) in your business?

There are a lot of numbers floating around your business, but how do you discern what’s good and what’s not? How do you know you’re headed in the right or wrong direction?

Part of owning your numbers is having your financial reports available to you on demand, and that translates right into understanding your numbers. If you have analytical horsepower within your financial function (something we offer at TurboExecs), you have a person who can give you the answers to your “why” questions about your numbers. They can explain why your numbers are so low or so high, why numbers have changed against trends and benchmarks, etc.

As the business owner, you just keep asking those questions. That’s how you drill down and understand what the drivers are for your performance and operations.

The numbers tell a story about your business. It’s up to you as the business owner to understand that story and change the trajectory of it as needed. You can do that when you’re able to look at the trends and the numbers versus various benchmarks.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: finances for business owners, financial intelligence, understanding your numbers

Financial Intelligence: Impacting Your Numbers

Tue, 10 Jan 2023 19:32:27 +0000

Impacting your numbers means that you, as the business owner, have the ability to make decisions to change the trajectory of your financial performance.

We’ve talked about owning those numbers and understanding those numbers. You have your numbers accessible at all times, and now you have some analytical horsepower inside the business to tell the story behind those numbers.

From there, it’s about impacting your numbers: actually executing decisions based on the reports you get. When you understand the numbers, you know what numbers are good and bad in your business (which will vary year to year or even month to month). So what do you do with that information? What do you do about a bad number?

I hate to say it, but it really depends on the kind of number it is and what makes it a bad number for you. Depending on the number, when you understand what it’s telling you then you can make some informed and insightful decisions. One of those decisions is understanding where you can impact your number, like dialing up or dialing down a lever.

For example, maybe your spending on advertising or marketing is too high. How can we reduce that? What do we need to dial down? Or maybe you’re missing your sales targets. How do we dial up that number? Is there an offer we can put out? Do we have enough bandwidth to take on a new project?

What are those levers that you have access to, to be able to impact those numbers? You have the ability to control your company’s destiny via the levers and knowing good numbers from bad numbers.

TAGS: finances for business owners, financial intelligence, impacting your numbers

TurboCharge Your Business is a show for business owners who are tired of just working IN the nuts and bolts of their businesses and ready to work ON the business itself from a big-picture, growth-oriented, strategic perspective.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

It's a Cycle: Measure

Fri, 13 Jan 2023 19:01:23 +0000

Measure is the starting point of effective financial management in your business because, as I’ve shared in other episodes, what gets measured gets managed. Measurement is the fundamental foundation of the entire cycle of business financial management.

I look at that cycle as a circle, where each part points to another in a closed loop. You continuously do it, and when you implement this continuous process in your business you can continue to uplevel the business.

So what does measure actually mean? It can take a lot of forms but the bottom line is you want to measure what’s important in your business – and that may not be the same as what’s important to someone else’s business. Your key metrics will be different based on the type of business you have, the industry you’re in, and your unique strategic plan.

What’s key is putting measurements in place as your benchmarks and putting them in a clear dashboard format that you look at frequently. They need to be where you can see them and communicate about them. How often do you need to have your eye on any particular number? Is it once per shift, per day, per week, per month, per payroll cycle? The correct frequency depends on when you figure out those numbers are going sideways, because as soon as you’re able to determine they’re going sideways, you need to take action.

These aren’t just measurements for measurements’ sake. These are actionable numbers. Don’t measure just to measure, measure what’s actually important, gather those numbers, and put them on some kind of dashboard. After you’ve determined what’s important to you and the frequency of measuring those numbers, you’re going to need to communicate those to the organization effectively.

Communicating key data - and what’s most important - to your team is critical. You want to let people know that the better you are as a team, the better you are as a company. There’s power in communicating what matters and the success of your company without divulging, of course, any personal numbers you’re not comfortable sharing. Communicate the data that’s important to the performance of your overall company and your teams because when your teams want to impact the business and want to be part of something successful. You can help them by communicating what’s important and updating them on the numbers that matter.

Listen to “TurboCharge Your Business” on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

TAGS: business finance management,small business financial management,financial management,what is financial management,business management,business finance for business management,what does financial management do,how does financial management work,financial management system,business finance,business management course,financial management software,financial management business,business advice,business plan

It's a Cycle: Monitor

Fri, 13 Jan 2023 19:02:28 +0000

The next step in the cycle after measuring is monitoring. This is about paying attention to what you’re measuring so you can actually manage it. What good is measuring if you’re not going to pay attention to it?

When we monitor, what are we comparing those numbers to? What can we do with that data? You can compare it against benchmarks, targets, trends, a budget, a forecast, industry standards, etc. When you make those comparisons, you’ll really see the numbers tell you a story. You can see if the numbers are good or bad, and you can start drawing some important conclusions.You can see where there might be issues to pay attention to.

Bottom line: what gets measured gets managed, and it gets managed through the monitoring process. Monitoring leads to us paying attention on a regular basis to our data, so we can start to see the story behind the numbers.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

It's a Cycle: Analyze

Fri, 13 Jan 2023 19:03:19 +0000

We talked about measuring and monitoring. The third step in the business financial management cycle is analyzing. Analyze always begins with asking “why?” - sometimes over and over again until you get to the heart of the underlying cause.

How do we figure out the answer to that why?

In the last segment we talked about monitoring versus a benchmark or trends. When we see that gap, we’re going to calculate variances to those benchmarks (the difference between the two). We look at what it is, what it means, and why it’s there to try to determine the root cause. There’s an unpeeling of an onion a layer at a time to reveal the root cause as we continue to ask why.

You have data in your business, and the answers are in it. You just have to collect it and start figuring out the answer to the why question. When you analyze, you can go back and grab any data set that may lend itself to an answer. Always, when we do analysis, we want the data to reveal the story behind the numbers for whatever you’re looking at, whether it’s the balance sheet or common ratios or the income statement. By going back and understanding what those different numbers have to tell you about performance, you’re going to get a better picture of what’s going on.

Remember, the foundation of this is your chart of accounts. If your chart of accounts is set up properly, that’s going to lead to consistent, trusted reports you can use as a basis to analyze. You can get your numbers more easily than having to go back and recast numbers and reformat reports.

Ask yourself: if you go back two or three years, is that data consistently recorded with how you do it today? You need to look back and make sure your data is comparable. Of course, things change over time and your business, hopefully, is expanding. But you can look back and create some benchmarks that will be helpful to your business so you can analyze and understand what to do next.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.

It's a Cycle: Course Correct & Coach

Fri, 13 Jan 2023 19:04:26 +0000

We’ve measured, monitored, and analyzed.

The last piece of the cycle is course correct.

This is the step where you make some decisions based on your analysis.

When you have a bad number, course correct is about fixing it and getting back on track. It’s about figuring out how not to do it again and how to get out of the hole. For a good number, course correct looks like: let’s do more of that. It’s figuring out how you got the good number and how to replicate it over and over again.

In the analyze step, we found out the root cause. In this step, we’re actually trying to fix the root cause. Here, we fix or amplify things to get back on track to achieving the results we want to achieve.

Remember: there’s no reason to continue to do something that doesn’t serve your business well or support you any longer. Whether it’s the way you’ve always done things or it’s a vanity thing, how successful can you be if you keep doing it? If it’s not returning anything and not doing anything beneficial for your business it’s probably time to stop, even if you’ve done it for a long time.

Another way you can implement course correction is through trial and error. Sometimes you don’t know the exact solution or the exact answer to why, but you can try different things to see what works. We all know that continuing to do the same thing and expecting a different result is the definition of insanity. So even if you don’t know the path to go down, experiment until you find it. Don’t get sucked into continuing to do things the same way that isn’t actually working.

After course correct comes coach, the last step of the cycle. That’s the communication aspect of the cycle: understanding the course corrections and informing everybody. This is where you communicate about changes you’re making, and that can be scary to your team. Explain why you’re making the changes, what the benefits are, what they can expect from the change, etc. Everyone wants to be successful, so let people know how this will make them and the business more successful.

The other thing the coaching process does is encourage empowerment in your organization. That’s huge for engagement and creating a winning team. Bottom line, that’s what success looks like. It’s a winning team. The cycle is there to support all of it and to ensure that you have a winning team, which creates a winning business.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.