It’s Like Riding a Bike

Running a business is like riding a bike. Sometimes, you are pushing a reasonable pace with your eyes focused on the road ahead. Sometimes you are cranking up a hill, watching your feet push the pedals. And sometimes, you coast and enjoy the ride.

Now is not the time to coast.

Summer is (almost) officially over. It’s time to finish Q3 strong, look at the road ahead and ensure we are prepared for a great Q4. Time to finally wrap up last year’s taxes and start planning for 2022. If you’ve instituted good processes, this may feel like a steady ride at a reasonable pace. If you haven’t, it may feel like the uphill climb. But either way, DON’T COAST.

To prepare for Q3, do the following things now:

  • Have a solid August close – ensure your reporting is efficient and accurate.
  • Start developing your sales forecast for 2022.
  • Look at your current org chart and individual capabilities.
  • Plan time to get together with your leadership team to review the quarter.
  • Consider getting an assessment/valuation of your business to help your vision for 2022.

Let’s talk about that last suggestion for a bit.

98% of all business owners do not know the value of their business, even though it is likely their biggest personal asset. Many owners plan to eventually sell the business to fund their goals in later life. As with any asset, they should know the value of it, and learn the necessary steps to keep that value growing. But they are often focused on the day-to-day running and building of their businesses.

While we love to help your business implement solid core processes, consistent reporting, and overall improvements to allow for growth, profit, and cash flow, we’re also excited about a new service to help you assess and find out the actual value of your business.

Our new cost-effective valuation product walks you through a step-by-step process to determine what’s working, what needs improvement, and what your business is worth in dollars. We can also provide other assessments to help you determine strengths and challenges that impact your bottom line.

I’d love to tell you more about it! Contact me!

In the meantime, keep pedaling!

Develop a Mindset of Continuous Improvement

faucet

During the 2021 Summer Olympics, I was reminded of the Olympic Motto:

Citius, Altius, Fortius – which translates to Faster, Higher, Stronger.

Olympians have a mindset of continuous improvement. They are constantly wanting to do a little better. That same type of mindset can be very helpful to companies. It starts with evaluating where you are.

In our businesses, we need to do the same. At Verbeck Associates, several times a year, I’m hired to do a business assessment. Look under the hood. Review the financial statements. Look at the accounting processes and make recommendations for improvement. I look at all the business systems, the accounting procedures and controls, and the processes/duties assigned to each member of the accounting team. This generally leads to additional work aimed at resolving issues discovered during assessments.

I love doing these assessments, and I’m impressed by any company that wants to do them regularly. Why? Because the desire to assess a situation shows me that the organization has a mindset of continuous improvement. Companies that don’t care to be evaluated don’t care to improve.

One of my team members put it this way. We are called upon to come into an organization and clean things up. It’s as if we are janitors – we walk in and see a running faucet in the break room. The employees are busy mopping the floor from the overflow, but never turn the faucet off.

Sometimes it takes an outside, objective view of your business to see that the faucet is still running.

In the case of accounting processes, this may mean we are focusing so much on getting books closed and the reconciliations finished that we fail to see there’s a better way. The current process may be outdated, leading to stress and overwhelm, and it’s taking us far longer than it needs to.

Generally, the leadership of a company wants to improve (turn off the faucet) but that doesn’t mean individuals within the company do – some are more comfortable continuing to mop.

I’ve seen this phenomenon several times in my career. One example is clients that are months behind in reconciling their cash accounts, resulting in financials that haven’t been closed all year. This causes the owner to operate with a blindfold on.

The team is dedicated, but they can’t catch up with the day-to-day, perhaps because they are more comfortable using a mop than a wet vac to “clean up the mess.” Taking advantage of simple automated processes such as downloading transactions and sales information rather than entering data by hand would help them a lot, but they can’t get past the ingrained routine or fears of technology. Insisting on making paper copies and printing out every transaction rather than having a solid backup system adds hours to their week, when a simple scanner at the desk could be a workable compromise.

It seems that sometimes a team is afraid that efficient systems will eliminate their jobs. It’s simply not true. While there may be some that are ready to move to another position or company that is a better fit for them, team members who choose to learn and grow reap the benefits of professional development. They can be part of the exciting increase of value-add activities the organization can offer when not bogged down with outdated processes.

Like Olympians, we always need to continue to improve our business.  Our team needs to embrace technology and efficiency solutions to increase capabilities. New technology, new processes, and in some cases, new people, will help us get better at what we are doing. 

Do you and your company have a mindset of continuous improvement?

Contact me for an assessment of your organization.

Halftime: Preparing to Finish Well Using a Mid-Year Review

financial

Halftime. I’ve written about this before, but, the year is half over, and it’s a great time to schedule a mid-year review to look at your business’s first-half performance, take what you’ve learned, and re-forecast for a strong second half of your year.

I know a lot of people are going on vacations, but for me, while it’s wise to take a short break, mid-year is a time to contemplate my client’s performances and develop a plan to come out strong for the rest of the year. In fact, for some, an offsite half or full-day session is a perfect means for this exercise.

I have had a couple of full-day, offsite sessions with my clients already this year, and while it’s not absolutely necessary to carve out a full day, whatever time you can set aside is valuable for reviewing information, and re-forecasting the business plan.  Plus, it helps you distill Q3 action plans into several big quarterly goals and get the entire team on the same page.

A quick and thorough financial close process is essential in order to have the information you need.  We’ve talked a lot about that in the past, but a strong quick close paves the way for better decision-making. It gives you more confidence in the numbers and is more efficient. Regularly gather your performance statistics: sales by segment, gross margin, expense comparisons to budget and to prior years, and any capital /investment needs for the rest of the year.

At your halftime meeting or offsite, evaluate your team and have candid conversations to maximize performance.  Look at your sales department’s performance and marketing successes/failures.  Take a close look at the current data and strengthen your plan for the rest of the year.  Gather the facts, reevaluate your assumptions, and get your team all focused and rowing in the same direction. 

Whether you decide to have an offsite, or just take some time in the office, here is a Second Half Checklist to help you prepare for a proper halftime business review:

  • Gather overall 5 Performance Stats actual versus plan: Sales, Gross margin, Operating expenses, Net income, Asset velocity
  • Update the Org Chart
  • Obtain your Income statement by month – 2021
  • Download your Balance sheet by month – 2021
  • Print out your 2021 Budget by Month (original)
  • Collect an invoice register download or sales by segment data
  • Prepare documents for an Income statement comparisons: month to date versus budget versus last year: quarter to date versus budget versus last year, year to date versus budget versus last year.

Don’t miss the halftime opportunity to take stock, reevaluate, and develop action plans to improve performance, net income and cash flow.

I’d love to see if I can help! Contact me!

Improving Your Backroom

accounting

The “Backroom” (your finance and accounting department) has always been a vital piece of a company’s framework.  I’ve been pushing backroom efficiency since I was with KPMG 30 years ago.

Back then, most internal control and accounting processes were manual and spreadsheets were just coming on the scene.  Manual methods were often inefficient, inaccurate, and boring. The larger the company, the larger the accounting department needed to be. We needed enough people just to bill customers and post cash to accounts receivable.  Things have changed significantly now; we have automated solutions where we scale differently and efficiently.

Most businesses consider that their value comes from sales and marketing. They are always thinking about how to create customer value. The finance department exists to support the business’s value creation, and we need to operate it as effectively and efficiently as possible.

In my years of work in the turnaround and profit improvement space, I’ve encountered many bloated finance departments that have grown over the years, some because of company growth, but some because of using outdated and inefficient processes.

Companies should regularly evaluate the needed functions in the company’s admin support and backroom.  Take the employee’s names out of it, and create lists of what needs to be done and what positions should be accountable for it.  You can talk with the employee(s) who currently own the process … they may have ideas about streamlining or automating processes – or even let you know if they’d rather be doing something else!

Evaluation often leads to change, and some people handle change better than others. I’ve worked with several companies where the employee is unwilling to change – they aren’t interested in learning new ways to do things, like their routine, or lack confidence.  If an employee just won’t change or isn’t willing to grow, the best way to improve the process may be to change the person who does it.

I’m currently working with a company to create a start-to-finish process manual from the ground up. We are documenting every process.  We just finished tweaking the billing process to improve efficiency.  Implementing this improved process led to an immediate improvement in cash flow ($200,000!), a reduction in one full-time equivalent, and a much better forward-facing process for the customer.

Change like this is both rewarding and difficult. It’s not an easy decision to streamline staff, yet a healthy company cannot hang onto employees just for the sake of having people around that they like or that they don’t want to upset.  Are there other positions that person is a better fit for? Or have they contributed all they can and are unwilling to grow and change with the company? In the long run, it may be healthier for them, too, to find a better fit.

Evaluating, polishing, and documenting your backroom processes can also do the following:

  • Improve leadership skills – it makes owners and the leadership team step up and pay attention to what is taking time and money
  • Mitigate distractions – a step-by-step process helps employees stay focused, and if they happen to get distracted, be more quickly able to pick up where they left off
  • Provide a planning calendar – accounting processes are often tied to a calendar, so you’ll be building a planning tool that will  help you in the future
  • Create weekly checklists – having these written out will help if the current process owner suddenly isn’t available. It’s a tool for cross-training and prepping new employees to take on this task.
  • Encourage discipline – repeated routines help create needed “muscle memory” and could free up mental space for employees to problem-solve
  • Build efficiency – who doesn’t want a more efficient company? Comprehensive and documented processes streamline tasks for everyone involved and helps you avoid individuals adding their own, possibly unneeded, steps. (i.e. do you really need to make photocopies of everything if there is a computerized record – and backup – available?)

Does the idea of streamlining your backroom intrigue you? Let’s chat. My experience can help!

Five Good Reasons for Documenting Your Procedures

You repeat your core accounting processes on a daily, weekly, monthly, and yearly basis.  For some of you, they are so ingrained, you could almost do them in your sleep.  However, that’s not the best way to handle such important tasks, even if they are routine.  ±

Here are Five Good Reasons for Documenting Your Procedures

  1. Assist with cross-training and backup. If you depend on one person to take care of your accounting every month, what are you going to do if that person leaves the company, has to stop work due to health, or worse? If processes are well documented, you at least have a fighting chance to bring someone in to continue these routines with minimal interruption.
  2. Help you discover bottlenecks and inefficiencies.  While you (or your accounting staff) may do things as “we’ve always done it”, having to document each step may point out what could be eliminated, or what may need to be added.
  3. Give you the opportunity to do the required evaluation and documentation of your internal controls (steps required by accounting standards.)
  4. Align team accountabilities by addressing the who, what, where, when, why, and how.
  5. Ensure consistency. A checklist of steps in the order they should be taken streamlines processes and helps you avoid omissions.

 

Here are some procedures you should document:

  • Revenue Cycle, including receivables, receipts, and collections.
  • Disbursement Cycle, including purchases, payables, and disbursements.
  • Inventory and asset accounting
  • Payroll, HR tasks
  • Month-end close, journal entry process, and financial reporting

 

Steps to Documenting Well

For larger organizations, there is software to assist.  For smaller companies, a manual approach works well.  I like to prepare an overall flowchart of the process to ensure I’ve captured all the related source documents and systems, then prepare a general outline of the steps to complete the process, adding a brief narrative to supplement the flowchart.  To visualize this, see the EOS process documenter.

When documenting …

  • Interview process owners and record step-by-step instruction (using a tool like Screencastify can provide a great visual aid.)
  • Source documents to the general ledger.
  • Develop an overarching flowchart.
  • Walk back thru the process steps with the process owner(s).
  • Evaluated for process alignment and efficiency – eliminate any unnecessary steps.
  • Ensure the process is followed by all.
  • Regularly reassess for alignment and improvement

While documenting, you can also ensure that

  • There is a segregation of duties of risk areas and a one over one review plan.
  • Accounting systems have access controls.
  • Your physical assets are handled in a safe and secure manner.
  • Account Reconciliations are done regularly.
  • You have competent personnel in these roles.
  • There is a structure of approval authority.

While a tedious process, documented procedures help companies become more efficient and scalable.  It is well worth the time invested in a project like this.  If I can help, contact me!

Gear-up For Q2

Well, happy spring!  I hope you had a successful first quarter.

Now that Q1 is over – how did you make out with your first quarter goals?  For me, the year-end CPA audits are done, my “big rock” goals were completed, and my teams are ready to jump into the second quarter.  It feels good to finish strong, and I hope you did too.

If you didn’t finish as strong as you hoped, I urge you to get your first-quarter financial results wrapped up early and do a solid comparison to your projections.  Take another look at your 1-year plan to ensure that you are on target.

Also, set up a meeting with your banker to ensure they are up-to-date with your financials.  A strong relationship with your bank can be so important in good and bad times.  Banks don’t like surprises and will appreciate you being proactive. Review your year-end financials, first-quarter numbers, and forecast for the future so they can have a clear view and be confident that you know what you’re doing.

As the second quarter kicks off, it is a great time to evaluate your team. How did they perform over the quarter? Are the right people on the bus and in the right seats?  I’m currently going through an exercise with one of my clients to evaluate the finance team.  We are reviewing the org chart based only on accountabilities, not names.  We will be making some adjustments. We are starting with what needs to be done, then ensuring we have the right people in the right spots.

As I look back, Verbeck Associates and my clients had some huge goals for Q1 that seemed unreachable at the time … and yet … we nailed them.  We held each other accountable, reviewing the ‘Weekly Big 3’ weekly, and if someone is behind, we help them with resources and reprioritize priorities so we hit the targets.  That process was the key to our reaching those ambitious Q1 goals.

Let’s check on your progress:

Compare your Q1 financial results to your Q1 budget and to Q1 last year. Look at sales and gross margin by segment, overhead and payroll expenses, and cash flow. How did the quarter stack up compared to your plan and to last year?

If you’re behind on your goals – be honest – face it head-on and up your discipline. Don’t use the excuse you didn’t have enough time. There’s never enough time. You need to make time and keep your focus on the important things.

Now, set up your next 90 days. Set your “big rock” goals in place and get to it!

 

Q1 Review Time: Goals, Closing, Tasks

It’s almost the end of the first quarter of 2021. Hard to believe. That was quick!

Let’s take a look at a few things you should be reviewing as the quarter comes to a close.

Goals and Targets

Business leaders who want to have strong and profitable businesses tend to set big goals for the year, and often, per quarter.  How did you do with your goals?  I’m slightly behind on a couple of the “Rocks” (high priorities) that I intended to get done by the end of this quarter.  I still have a couple of weeks to turn up the heat and get them done, and so do you!

How are your financial results so far? Are you close to where you thought you’d be? There’s still time!

Q1 is tough for us accounting types. There’s a lot of activity, including closing the prior year, meetings with your CPA, preparing for taxes, finalizing your budget and goals, and communicating with your team.  It’s not unusual to miss some targets in Q1, even significantly.

There are three options if you are missing your targets already:

  • Realign
  • Refocus
  • Give up

Option three is already off the table for an intentional business leader. But realign if you discover that your sights were set too high, and refocus if you came close but didn’t quite make it. Perhaps there are a few details you can narrow in on for the next couple of weeks to hit the target.

Financials and Recordkeeping

I’m amazed at how few companies and organizations have a solid financial close process and still don’t use a simple closing checklist – every month.  I know it’s easy to try to wing it, but from experience, things will slip – not all balance sheet accounts will get reconciled, dates will pass without action, and the overall accuracy will degrade.  I’ve experienced this myself.  We need to maintain the monthly discipline of following a checklist – every month.

A monthly close should take no more than 10 days, and should actually take less time than that. Huge companies can do it – GE, a 95 BILLION dollar company with 250,000 employees, can close in three days.

I have one client that has a complex billing process.  When I began working with them, their month-end close took 30 days.  Not only did the slow billing process affect the close, but it also caused delays in customer payments and cash flow. By focusing on changing the process, we were not only able to improve the close timing, but accounts receivable turnover also increased significantly.

If you are having closing in 10 days or less, investigate what’s slowing the process down.  A recent survey indicated the month-end close (close to disclose) process has slowed due to internal levels of review, growing need to identify and consolidate more detail for financial statements and more time to check for errors.  While these all sound good, the problem seems to be that the close is run by memory rather than clear and specific protocols and checklists

With the quarter ending – plan now to get back to basics.  Get your financials closed quickly (download the closing checklist), compare to your forecasted results, determine what is necessary to get back on track, and plan out an action plan to get back on course.

Tasks and To-Dos

All work isn’t created equal, despite it all feeling urgent.  Step back and ask yourself

What is of highest value right now?

Sometimes, I will look for the path of least resistance.  I can still feel productive checking my email or knocking a small task or two off my list. But deep down, I know I’m avoiding the significant project or important initiative I should be working on.  I have found the following three actions helpful when this occurs, and suggest the following for you:

  1. Delegate routine tasks. An administrative assistant (in person or virtual) can help with recurring tasks so you can focus on what only YOU can do.
  2. Batch tasks. Try to do your “lower value” tasks in batches. Schedule time to process email, read professional development articles, clean up files, etc. as one appointment block so you can knock off a lot of administrative tasks at one time.
  3. Automate.  When possible, utilize apps and other systems to take care of routine details. Automatic payments help you avoid late charges. Weekly reminders through tools like Outlook or Google Assistant help you stop the “try not to forget to …” thoughts swirling in your head. Using tools that snooze email to a more appropriate time can keep you from feeling distracted by a full email inbox.

A quarterly review is invaluable in helping you, and your company, succeed.  I love to help clients grow stronger in their review/closing process. Is it time for some extra help? Schedule a free strategy call today!

 

Planning Sessions Lead to Success in Business

It seems like I’ve just finished my annual planning sessions with my clients and now the first month of the year is already a wrap!  I always come off these sessions excited about a new year.

The format of these sessions varies somewhat, but all have these basic elements:

  • Looking at the past year and acknowledging the good and the bad
  • Checking our numbers to see how they compare to what we projected last year
  • Asking ourselves if we accomplished the big goals we had set the previous year
  • Ensuring that we all have the same vision and look ahead three years, asking “Where do we want to be?”
  • Turning back to the annual plan to set revenue and net income targets so we can achieve the 3-year vision
  • Drilling down to establish what we want to accomplish in the next 90 days.

The teams I work with generally have 4-6 people on the leadership team.  We make an effort to block out two consecutive days with little interruption, to allow time for deep focus on these vital steps.  But you don’t have to have a team or two full days.

If you haven’t had an annual planning session (even if with yourself), get it done now. Evaluate your team to ensure that you have the right people in the right seats, and develop a two-page annual plan (20-page business plans tend to take a lot of time and generally end up sitting on a shelf collecting dust.)  Your two-page plan should contain:

Page 1:

  • Core values
  • Mission Statement
  • 3-year and 10-year vision (What do we look like in 3/10 years?)

Page 2:

  • One-year targets
  • Next 90 days goals
  • List of issues to address

The annual plan is just the start.  You should then book times for a quarterly review. At those meetings, ensure that you review your current 90-day goals and update/list new goals and issues to address over the coming 90 days.

With the correct team environment, these quarterly meetings and the annual in-depth meeting become essential and valuable components to a successful organization.

So now that month-one is under your belt, ask yourself

  • How am I/how are we performing?
  • Have I/we made progress on our 90-day goals?
  • Are January financials closed yet?
  • Did we send our December 31 trial balance to our CPA?
  • Have we been using a weekly scorecard for visibility and to ensure our leading performance indicators are tracking?
  • If we are off track, what are we doing to get back on? (If you get off track in the first months of the year, you will have a much harder time getting on track later in the year.)

It’s vital to make sure that you have closed your January financials timely and develop your strategic plan to conquer the upcoming year.  Utilizing these tools will help get an accurate picture of where you are and how you can do better.  Download the month-end closing checklist to verify that you are positioned well for success.

Set Your Business Up for Success: Three Important Things to Do in the New Year

Goal plan success

Happy New Year! As we turn away from 2020, we take many lessons into 2021.

I’m going into the new year with confidence that we will see life improve, in part because of the intense growth many of us had to go through while navigating uncharted territory in 2020.

Hopefully, we’ve all become stronger and more resilient and can apply these freshened skills and attitudes to our business and lives this year. Here are three important things to do in this new year.

Year-End Books

For the business owners, controllers, and finance staff, it’s year-end. It is vital to get your year-end books closed quickly and accurately. And get your CPA audit started as soon as possible. This will position you to make more informed decisions this year. Speed is essential because the longer you procrastinate, the less value this report card has.

I have a current client where we are having trouble getting the CPA audit completed – we are 12 months later than expected. This delay was initially due to sloppy bookkeeping, but now it’s a delay due to CPA scheduling and some subsequent event issues (COVID, PPP, etc.) that now need to be disclosed in the footnotes. If we would have gotten these completed on time, we would have avoided major headaches, extended time – and more professional fees.

Don’t let that happen to you. Banks generally give you 90 days to submit your financial statements, but earlier is best (and if you happen to need a covenant waiver due to ratio misses, the sooner you address it with your lender, the better.) It all starts with a disciplined approach. Get your year-end checklist out and assign expected dates and who is responsible. Push to get your year-end reconciliations done and the books finalized. Do your planning with your CPA and if appropriate schedule the review/audit now. Get it on the calendar. Do the following to have a quicker, more accurate year-end close:

  • Use a month-end checklist – see my resource page for a downloadable sample.
  • Delegate as appropriate and assign expected completion dates and deadlines – don’t leave this to chance.
  • Meet with your finance staff now and review progress often.
  • Make sure all reconciliations are done early. Some could have been completed prior to year-end.
  • Prepare the roll-forward schedules with fixed assets and debt now.
  • Review your leases and know lease accounting (ASC 842) is changing for all companies after this year. This change needs to be considered with bank covenants. Consult your CPA in your year-end planning.

 

For us smaller LLC companies, update your QuickBooks. It’s a discipline of successful companies. It’s a pain for us smaller businesses, but you need to update and look at your QuickBooks.

Income Taxes

Your final tax estimate for 2020 is due January 15th.

I hope you have an income tax problem. That means you’ve had a profitable year. Yes, we want to keep our tax liability as low as possible, but having an income tax “problem” is a good thing because it means you’ve had a steady income. The “problem” surfaces because we’re inclined not to think about taxes until it’s time to pay them. I’ve seen clients scratching on April 15th to come up with the $40,000 in taxes that they owe, (plus the Q1 estimated taxes for the following year.) Ouch. So let me give you a word of important advice for 2021 – if you don’t already have a plan in place to handle estimated income tax, make that a priority this year. Here’s a practical way I do this for my business. It’s a model you could follow, too.

Based on the “profit first” concept, have a separate bank account for owner’s compensation, operating expenses, income taxes and profit.

I take a percentage of each of my revenue sources and physically fund my income tax account. My income tax account is fully funded which works for me.

Those employed by others are already familiar with taxes being taken out of each of their paychecks. Those in business for themselves need to do the same thing. I have colleagues that do essentially the same thing with their small businesses. And every time estimated taxes come due, guess what? None of us lose any sleep over taxes. We simply draw from the set-aside money, pay the taxes, and move on with our business lives. No panic, no frustration, no stress.

PPP Loan

Many of us thankfully received PPP loans in 2020. These were essential for all the companies I’m dealing with, helping them through a period of emergency. My clients have applied for loan forgiveness, but unless and until this is approved by the SBA, these loans are reflected in the books as a liability and will be recorded as revenue when the forgiveness is approved. I was glad (and relieved) to see that PPP is going to be deemed tax free. That was the initial intent, and I feel Congress made the right decision to stick with that. Also, PPP Round 2 is here. If you qualify, contact your bank, and apply! Here are some details on my resource page.

Bonus: A Professional Development Tip

If you’re looking to start 2021 off on the right foot, I suggest all business owners read the book Profit First by Mike Michalowicz. This is an extremely helpful book for getting into the proper mindset as a business owner. There is nothing wrong with making a profit—a priority.

Contact me if I can help you in any way. Here’s to starting strong and seeing 2021 be one of your best business years, ever! Cheers!

/jon

Deep Cuts: Have you Restructured Enough?

There is a saying in the turnaround world that when you cut staff, cut deep and deeper than you think – but only make the cuts once. This approach helps reinforce the morale of the remaining team members, reassuring them that no additional cuts are expected.  I’ve worked with turnarounds for 20+ years and almost every time, we didn’t cut deep enough.  There was always a rationalization as to why we need to keep this person or that person. In the end though, the majority of the time, we wish we’d made the deeper cuts, difficult as they would have been.

With the crazy 2020 economy, all of my clients have restructured in some way.   Business as we knew it changed, and we are all doing things differently than we did a year ago.

But now as we move into the new year, we need to ask the question, “Have we restructured enough?”  When advising clients, I recommend they think from the viewpoint: “If we started this company today, what would we want it to look like?”  Most admit they would want a leaner and stronger team.  Often, there’s a “Sally” who has been there for years but didn’t adapt as the company grew and remains difficult to work with.  Or a “Bob” who was enthusiastic when the company began, but has settled in and coasted for too long now.

My clients often would not have the same systems and processes, either. It’s natural for these to evolve over time. If they don’t, that’s actually concerning. While you don’t have to jump on the latest technology crazes or change a smooth operations procedure frequently, you could be missing out on productivity if you don’t at least stay aware of how you can adapt and take advantage of new tools and ideas.

Now is the time to take a look at staffing, process, and systems, with the new year coming quickly.  If you don’t, you may experience what a business-owner friend did.

He tried to keep things the way they were.  Their business was significantly impacted by the C-19 virus.  He had trouble facing reality.  He told himself, “Things will come back. I want to keep Bob and Jean, I’ll need them.”  He bled through all the excess cash on payroll and rent.  When his cash started to run out he called me.

We looked at his business as if it was a brand new start-up.  Would he need Bob and Jean if he was starting the business today? It was a definite “no.”  He also wouldn’t need his beautiful, but now 3/4 empty office.  He could do 100% remote if necessary.  He was focusing 100% of his time on worry and expense reduction rather than 90% of his time on revenue generation and strengthening his team—key roles for the CEO of a small business.

To be fair, these considerations aren’t easy.  And to his credit, he did the following:

  • He started to work within the 80/20 principle, giving 80% of his effort to the top 20% of priorities for the company.
  • He adopted the 13-Week Cash flow process, and stopped the cash bleed.
  • He gave serious consideration to his business plans and budgets for 2021, even if some decisions wouldn’t be easy.

Things still aren’t perfect for him, but his business is surviving. And these days, a surviving business can almost be considered a thriving one.

How about you? Do you need to make some deep cuts? Do some hard thinking? Make some significant changes? It’s not easy, but being a business owner often isn’t. There are ways to handle these decisions with grace and helping your people adapt or even find new places to spread their wings if your company isn’t the best fit for them anymore. You all may find you come out of this global difficulty a little stronger and better positioned for the future.  Let me know if I can help.