Review, Recalibrate, Reframe: Set the Stage for Success Each Quarter

quarterly

Finish Strong Each Quarter and Set the Stage for Success in the Next One

Four times a year, you have the opportunity to review, recalibrate, and reframe your business’s standing. Practicing this helps you “finish strong” while preparing for the quarter and months ahead. Consistency with this approach sets you up to finish strong year after year.

At the time of this writing, we are approaching the end of Q4, a crucial time for business leaders to prepare for the year ahead. However, the principles in this post work year-round.

Use an end-of-quarter process to get your financials in order, take a step back, and plan strategically for growth. If it’s Q4 for you right now, it’s a great time to review next year’s budget and update it as needed.

REVIEW

I like to get started early on the end-of-quarter process, and many of my clients have adopted a rolling 12-month forecast to stay proactive. This dynamic approach makes planning and budgeting more flexible and manageable. It also allows you to reflect on how the year is going. Celebrate the wins, acknowledge the losses, and leave behind the challenges that didn’t serve you or your business. Being consistently proactive is essential to positioning your business for the future.

RECALIBRATE

If you’ve been operating on autopilot, the end of a quarter/year is the perfect time to recalibrate. Start fresh and get ready for a productive next quarter/year. As you recalibrate, take a moment to reflect: Is your vision for the business still the same? If not, what needs to evolve to keep pace with industry shifts, market demands, and even your own interests and personal growth/lifestyle hopes?

This is a time to check your budget, as well. I’ve always been a fan of zero-based budgeting—starting from scratch and building the budget based on current needs rather than simply adjusting the previous year’s numbers. This disciplined, top-down and bottom-up approach forces you to think critically about each expense and its alignment with your business strategy and goals.

REFRAME

As you plan for new quarters and new years, remember that high performers thrive on challenges and measurable results. They aren’t satisfied with easily achievable objectives—they seek stretch goals that push their limits, drive growth, and elevate both their teams and the company. High performers want to keep score and track progress toward ambitious goals. This may be a good time to reframe your incentives and polish your compensation plans.

In setting these stretch goals, it’s important to stay objective. While we aim high, we must also recognize the real-world factors influencing success. Sometimes, external challenges or personal circumstances come into play. Ask yourself: Did we put in the necessary effort? Were there unforeseen obstacles? Did personal or team dynamics shift? By maintaining this balanced view, you ensure that the drive for high performance remains grounded in reality, allowing for growth and the flexibility to adjust plans when necessary.

Stretch goals should inspire, but they must also account for the complexity of real-world challenges.

Here’s a Quick Recap of the Review, Recalibrate, Reframe Process:

  1. Review Your Organizational Structure: Take a close look at your organizational chart. What roles or departments need to change? Are there gaps that need filling or efficiencies that can be improved?  Get the right people in the right positions.
  2. Analyze Historical Sales Data: Dive deep into your sales history, analyzing performance by customer, segment, or product. The profit matrix is an excellent tool for identifying which customers fall into the low-value, low-margin quadrant (LV, LM). This helps you focus on the most profitable areas of your business. (But remember, even lower-value/lower-margin customers deserve respectful treatment—your business reputation depends on how ALL your customers perceive you.)
  3. Examine Cash Flow, Profitability, and Efficiency KPIs: Look over your cash flow, profitability, and efficiency KPIs to assess the health of your business. What adjustments can you make to boost financial performance in the coming year?
  4. Set Measurable Goals for Improvement: With your analysis in hand, develop clear, measurable, and stretchable goals for the coming year.  These can be firmed up toward the end of each quarter, but get early numbers on paper.  Whether it’s increasing profitability, improving cash flow, or streamlining operations, a solid plan will ensure you’re driving the business in the right direction. Let your team know of new goals they can work toward in sales, efficiency, or living out company values.
  5. Ensure a Clear Financial Model: Create a clear financial model with a detailed monthly income statement, balance sheet, and cash flow statement. This provides a concise yet comprehensive snapshot of your financial health, helping you better track progress and forecast results.
  6. Polish Processes: Are you closing each month in a timely way? Do your reports reflect accurate input and help you make wise decisions? Is your finance team working toward excellence and accuracy in all assignments/routine tasks?
  7. Check In With Yourself: As a business leader, your company can only be as good as you can be. Check in with yourself – mind, body, soul, spirit. Have your needs/goals/desires changed? Is it time to consider a plan that will help you do your best work or live in a more meaningful way? It’s easy to get into a rut, and a quarterly review of and for yourself can help you stay out of one.

Prepare for Success!

The business landscape is evolving, and staying ahead requires smart, proactive planning. Use the remainder of this quarter to solidify your strategy, ensuring that you enter the next with clarity, focus, and a clear plan for success!

I’d love to talk with you more about this. Contact me today!

Building a Strong Business: Compensation Plan Lessons from BE 2.0

Incentive

I’ve always been a fan of great business books, and lately, I’ve been diving into Jim Collins’ BE 2.0 (Beyond Entrepreneurship). This book is packed with insights, many of which feel especially relevant to the challenges most companies face today. One principle that stood out for me was a key concept from his classic Good to Great: “First who, then what”—which means getting the right people on the bus before deciding where to drive it.

Collins emphasizes the importance of aligning your team with your company’s values and ensuring they’re in the right roles. It’s not just about talent; it’s about passion, long-term vision, and fit.

The Problem with Compensation Plans

One powerful lesson in BE 2.0 is that compensation plans alone do not guarantee performance. Collins highlights that some of the highest-paid CEOs aren’t necessarily leading the best companies. In fact, short-term financial incentives can sometimes lead to behavior that undermines long-term success, even if they boost short-term results.

I’ve seen this firsthand. I implemented an incentive program several years ago that failed because it created unhealthy competition. The plan prioritized individual success over team success, and the friction between employees started to affect the culture. It was clear that I hadn’t read the culture correctly. After tweaking the plan to encourage more teamwork, the results improved—not just for the company but for the employees themselves.

Individual vs. Team Incentives: Finding the Balance

What fascinated me about Collins’ perspective is the evidence he presents on individual versus team rewards. He argues that short-term rewards can backfire, and I’ve seen both sides. While I appreciate his viewpoint, I tend to favor a balanced approach, especially for smaller businesses. I often see a mix of individual and team-based incentives work best in SMBs, particularly with smaller teams where roles and contributions are more visible.

For example, I’m currently working with a client who’s facing this challenge. They have a “star performer” who isn’t delivering, while the rest of the team is stepping up to pick up the slack. The issue? Their compensation plan heavily favors individual performance, and it’s starting to erode the sense of fairness within the team. To solve this, we’re overhauling their comp plan to reflect not just individual contributions but also team efforts. However, before making any changes, we’re re-forecasting the entire business to ensure the new plan aligns with the company’s strategy and market conditions.

Back to Basics: Using KPIs to Guide Compensation

As part of this process, we’re going back to basics by focusing on key performance indicators (KPIs). For this client, we’re using an 80/20 profitability matrix to evaluate their customer base. By analyzing sales and gross margins, we can identify which customers contribute most to profitability and which ones may need to be let go.

For example, we’ve developed a 90-day strategy to either move low-value customers to higher-margin categories or phase them out. Don’t wing it—having a business plan with targets is essential. Many business owners rely on gut feel, and while that can work, it’s critical to back it up with solid data. That’s why we’re using a simple forecast model, which includes an income statement, balance sheet, and cash flow statement tied to customer-specific sales forecasts.

Guidelines for Building a Compensation Plan

If you’re considering developing or revamping a compensation plan, here are a few key points to keep in mind:

  • Assess your culture: Is your team more collaborative or competitive? Do they value individual rewards or group success?
  • Align with your values: Make sure your compensation plan reflects your company’s core values.
  • Use accurate, timely data: Ensure you have reliable monthly financials to understand what revenue you have available for incentives.
  • Test and adjust: Trial your incentive plans before committing. Gather feedback from key stakeholders and make tweaks based on performance.
  • Keep it flexible: Never lock a compensation plan in stone. Business environments change, and your plans should evolve with them. If stability is needed, pay fair base salaries, but be transparent about potential changes to incentive plans.

There’s no perfect compensation plan, but a well-thought-out incentive structure can drive results, boost morale, and increase profitability. For SMBs, I often prefer short-term goals with regular rewards, such as quarterly incentives. This approach fosters urgency, accountability, and results without sacrificing long-term thinking.

If you’re developing or revamping your compensation plan and want to ensure it drives results while supporting your company culture, let’s talk. Contact me to discuss how we can create a plan that fits your business.

7 Ways to Help Your Small Business Perform Better

Growth

“What does a fractional CFO do?” I’ve been getting a lot of questions like this lately. It’s prompted me to think about my role and how I help companies. Turns out, it’s a position with multi-faceted responsibilities, but the bottom line is

My CFO firm helps small and medium-sized business (SMB) owners perform better.

I admit, that’s a pretty broad statement. Many different elements of business fall under the goal of “performing better.” Owners want to make more profit, grow in size, efficiently deliver better customer value, and perhaps most importantly, experience more fulfillment with better control and have less stress as they lead their company.

As a Fractional CFO for over 18 years, I’ve enjoyed coming alongside awesome small business owners to help them reach their goals and sleep better at night while doing so. I am continually learning and reading books and getting information from other successful business people such as Geno Wickman from EOS Systems, Michael Gerber author of the E-Myth), Kevin O’Leary, Brendon Burchard, and Tony Robbins. Many of their doctrines influence how I help my clients. Here is a list of solid recommendations that have grown from reading leaders such as these and the experience I’ve gained “boots on the ground” with clients.

These aren’t in priority order as they are all valuable toward the goal of performing better. I encourage you to pick the one or two that resonate most with you.

1. Know your numbers. I cannot stress enough how important it is to understand your company’s financial picture (even though you tell me, “But I’m not an accountant!“) Many business owners don’t even understand the basics and that’s a recipe for failure.

2. Implement four pillars of strong financial practices: a) solid numbers, b) forecasts, c) weekly scorecard reviews, and d) monthly CFO reports. All of these are outlined in more detail in my Be Your Own CFO booklet, a 29-page guide to help business owners have better CFO practices. Free when you subscribe to my blog at VerbeckAssociates.com.

3. Show up strong and practice a daily rhythm. What I mean by “show up strong” is to come to work with a great attitude with physical/mental readiness to work hard. A daily rhythm, unique to you but repeatable, will help you be even more productive, perform better over the long term, and let you push through the messy middle we all get stuck in from time to time.

4. Plan your time and work your plan. I find it helpful to plan my week in time blocks, with periods focused on client service, business development, exercise, etc. My calendar is detailed and consistent week to week. As Michael Hyatt has said, “What gets calendared gets done.” Even if your day goes off track, having a planned approach can help you regroup or keep you motivated to complete the day’s goals. It also helps you identify which types of interruptions routinely knock you off track so you can come up with strategies to eliminate or reduce them.

5. Cultivate an attitude of growth. One of my early mentors, Alan Weiss, said “If you are not innovating, you’re not growing, and if you aren’t growing, you’re dying.” Stability is vastly overrated. I love that. The guy is still progressive and considered a rock star in the consulting world.

6. Document processes. Well-thought-out systems and processes help small businesses scale. Documenting forces you to slow down and evaluate each step, making it teachable to others on the team (videos and screen recordings can help.) Plus, it can help you identify tasks that may no longer be necessary. And when you need to go on vacation, (and you do NEED to go on vacation) documented processes help work continue in your absence.

7. Remember that slow is smooth, and smooth is fast. We live in a world that prioritizes rushing, speed, and “efficiency.” While it’s great to get systems in place that help us move more quickly through day-to-day minutia, it’s also important to slow down and not have to go back and re-do tasks or fix small errors. Pay attention to mistakes you or your team are making. Are you encouraging people to move too quickly (or making yourself move too quickly?) Naturally fast-paced people need to consciously slow down and learn to double-check work (and naturally slow-paced people may need to trust themselves after one or two run-throughs rather than going over things several times.)

What principles have you found helpful in running your small business? I’d love to hear from you! Contact me!

Being a Winner Doesn’t Have to Be a Curse: Take Time To Celebrate

celebrate

During the 2024 Summer Olympics, Nike came out with a commercial focused on how winning is a curse, because you never want it to stop, and you are always striving for more wins.

It’s like that in business, too. Businesses are always striving to win at the next thing. Whether it’s increasing profits in the next quarter, upping production, or opening another location, there’s a drive to grow, hire more people, and make more money.

If you’ve read my posts for any length of time, you know that I’m a fan of making a profit. I want to see my client’s businesses succeed and continue to move forward and win in their industry. But this month, I want to encourage you to take a pause and celebrate on the road to even more wins.

CFO types are always forecasting, predicting trends, and preparing for the future. But it’s wise to look back on what the business has done, how it’s grown, and the lessons that have been learned.

For me, this is the time to do that. I almost didn’t put out a blog post this month, but I realized I’ve been blogging faithfully since February 2015, and this will be my 129th published post. I’ve only missed a month here and there, and I’ve blogged every month since January 2021. I’ve kept the blog going on both this site and VerbeckAssociates.com (both have their distinct value in differing designs.) I’m choosing to keep the momentum going and be proud of that.

Another thing I’m celebrating is our Resources and Tools page, a place where anyone can download checklists, sample spreadsheets, and tips to help them manage their company finances better – for free.

We’ve also been working behind the scenes on a new booklet to help people who have to act as their own CFO and look forward to making that available this year.

I’m celebrating steady clients and the opportunity to help improve their businesses and bottom lines.

You need to stop to celebrate, too. Winning is important, but contributing to the lives of others is even more so. Take some time today, (even better if with your team) to reflect on the good things your business has done, and currently does, and enjoy taking a bit of credit for offering something that helps the world around you.

If I can help you celebrate, contact me!

How the Four Pillars of Financial Success Bring Peace

Pillars of peace

As a business leader, do you ever get stressed out over money? If so, you are not alone.

In previous posts, I discussed the four pillars of financial success. In this post, I want to make it more personal – to show you how knowing and practicing these pillars can reduce your stress as a leader. Let’s review the pillars and consider how they help you manage stress.

These pillars are:

1. Understanding: Knowing the basics about typical financial inputs and what the data reveals.

What it is: You need to understand basic financial inputs such as revenue (income generated from your sales), expenses (costs to run the business), profit (what is left after expenses), and cash flow (the movement of money in and out of your business.

How it brings peace: many business owners fly by the seat of their pants and don’t really know whether they are making money. Understanding what your expenses truly are will keep you from spending money you don’t have, and could keep you from incurring debt to keep things afloat.

2. Forecasting: predicting expected results and cash flow.

What it is: Forecasting is a core process to predict your company’s results and financial performance. It’s a view based on historical data, current market trends, and expected future events. It provides insights to make informed decisions.

How it brings peace: when you understand your company’s performance trends, you can plan better for slow and bumpy periods. You can help your team work together in the leaner times and celebrate in the more fruitful seasons. You won’t be going into each new week blind.

3 Analyzing: using a weekly dashboard to determine where you stand.

What it is: A weekly report provides a more immediate view of your business’s financial health, enabling quick adjustments, centralizing critical financial data, and offering a snapshot of performance and trends.

How it brings peace: Having access to your up-to-date numbers will help you decide whether you can afford that new piece of equipment right now, or must save up for a while. You’ll see if you can make payroll – a definite source of stress if you cannot.

4. Reporting and Reviewing: producing and reviewing monthly CFO reports to stay aligned with your mission and course correct as necessary.

What it is: Financial reporting is critical for businesses of all sizes, providing key insights into financial performance, health, and the decision-making process. Financial transparency is the key to operating a business with integrity.

How it brings peace: It’s important to know if the business is performing and progressing at the correct pace. Are the main financial numbers on track and pointing in the right direction? Knowing where you stand helps you determine if you are indeed on the mission of the business (or your own personal mission). You can sleep better at night knowing your day-to-day financial decisions coincide with those priorities.

I highly encourage you to have practices that align with these pillars. Your stress level doesn’t have to be high over elements of the business you don’t know or understand. I can help. Contact me for a conversation!

Keep Your Business Healthy: The Four Pillars of Sound Financial Practices

Four Pillars

There are 33.5 million small to mid-sized businesses in America with $12 trillion market value. But the failure rate of all businesses is incredibly high. 22% of business startups fail in the first year, and 50% of new businesses fail within the first five years – and 70% fail within ten years.* 

Operational savvy doesn’t always come easy, and a business owner sometimes, out of necessity, has to put on hats they aren’t equipped.  I often hear “But I’m not an accountant!” and I understand.  Still, if you are going to own a business, you have to take responsibility for the financial aspects of your business as well as other operations and product/service development and sales.  You just have to choose what direction to go to set yourself up for success – whether that means handling the financial practices yourself, hiring a fractional CFO, or hiring a financial specialist as an employee.

Whether you decide to have a separate CFO or decide to wear the hat yourself for a while, the first crucial step is to grasp the foundational principles of financial management.  I break this down into a 4-pillar process to take small businesses to the next level – helping business owners see obstacles coming and develop disciplines.

These pillars are:

1. Understanding: Knowing the basics about typical financial inputs and what the data reveals.

The fundamental inputs for most businesses include:

  • Revenue: The income generated from your products or services
  • Expenses: all costs involved in running your business
  • Profit: what is left after expenses are deducted from revenue – a healthy profit is your ultimate goal
  • Cash flow: the movement of money in and out of your business, determining your operational flexibility and financial stability. 

2. Forecasting and Budgeting: predicting expected results and cash flow and creating a budget.

Forecasting is a core process to predict your company’s results and financial performance. While it’s always inexact, it is a view of your company based on historical data, current market trends, and expected future events. It’s a critical component of strategic planning, providing the insights needed to make informed decisions.

Budgeting is the process of creating a financial plan for your business. It translates the insights gained from forecasting into detailed action plans, allocating resources to achieve strategic goals.

3. Analyzing: using a weekly dashboard to determine where you stand.

Weekly reporting provides an immediate view of your business’s financial health, enabling quick adjustments to operations and strategy. A weekly dashboard centralizes critical financial data, offering a snapshot of performance and trends at a glance.

Components of a Weekly Dashboard:

  • Cash and Inventory Position: This includes the current cash balance and any significant changes from the previous week (i.e. from costs) as well as your current inventory status, including any critical shortages or overstocks
  • Accounts Receivable: Overview of outstanding invoices, highlighting any past-due accounts
  • Accounts Payable: Summary of upcoming and overdue payments
  • Sales Figures: Weekly sales totals compared to projections and historical data.

4. Reporting and Reviewing: producing and going over monthly CFO reports to stay aligned with your mission.

Financial reporting is critical for businesses of all sizes, providing key insights into financial performance, health, and the decision-making process. Financial transparency is the key to operating a business with integrity.  Monthly CFO reports form the basis of communication with stakeholders, including investors, creditors, and regulatory bodies.

The key components of a monthly CFO report circle us back around to item 1.

  • Income Statement: Shows revenue, expenses, and profit over a specific period, highlighting the company’s operational efficiency
  • Balance Sheet: Provides a snapshot of the company’s assets, liabilities, and equity at a specific point in time, indicating financial stability
  • Cash Flow Statement: Details the inflows and outflows of cash, offering insights into the company’s liquidity and ability to generate cash.

Additional Analysis reports such as forecast-to-actual, historical-to-actual, KPI’s, asset and cash flow efficiency, and Continual Improvement reports can be very helpful for wise leadership decision-making.

There’s a lot more to running a business than creating a product or service and selling it. Be sure you handle your business financial operations with integrity, consistency, and open-mindedness.

I’m here to help! Contact me for a conversation about where you currently stand and how, together, we can strengthen your business using the four pillars.

* Statistics per: U.S. Small Business Administration (SBA) and the U.S. Bureau of Labor Statistics

How to Keep the End of a Quarter from Feeling Like the End of Your Business

Many business owners think their business is the only business with unpredictable income and cash flow. This makes me grin. Revenue for most businesses is never steady or easy to plan. If you are one of the fortunate ones with predictable revenue, it certainly makes things easier, but you are in the minority.

At the time of this writing, two of my clients had fallen short of quarterly goals. One missed by quite a bit. Their planned net income was now an actual loss. They missed their revenue target by 40%. Expenses were slightly higher due to some one-time expenditures. They had a hoped-for pipeline client deal that didn’t close (and as of this writing, it still hasn’t.) This happens – you think you have a deal nearly done and at the last minute it doesn’t close. Your whole quarter is now toast and you have brackets on your bottom line. They were facing a quarterly result that was much different than they’d hoped for.

Every 12 weeks or so, your business enters a new quarter. We often call them “Q1” “Q2” etc. and there’s a good chance that when you are reading this, you may be getting close to the end of a quarter, or far enough into a new one that you can take some time to reflect on the one before. While I hope your review is more positive than the scenario above, every business should ask themselves these questions every quarter:

How did our business do? Consider more than just the bottom line with this question. How is your culture? Is your staff productive and happy? Is your business still operating according to your core values? These all contribute to the financial results.

Did we hit our target numbers for the quarter?
Did we meet or exceed our targets? If so, how are we going to celebrate? What helped our success? If we didn’t meet our targets, why not? What hindered us? What can we do better next quarter? Are our targets realistic?

How healthy is our cash flow plan? If we have disappointing sales or news next quarter, do we have a strong foundation in place to make payroll and other expenses?

Is our pipeline strong? Are we relying too much on one promising client to close or for a big sale to happen? Do we have other streams of income, a wide bandwidth of customers, and efficient processes to help us weather disappointments?

Solid business growth is dependent on a firm foundation that doesn’t completely collapse when a promised sale or promising new client falls through. It depends on daily, weekly, and monthly practices and processes that contribute to informed leadership decisions. An honest quarterly review will help you stay on track and course-correct as needed before an unexpected event upends your business. And it will prepare you to be in an even better position to celebrate should sales and client development be in your favor.

I can help you have an efficient and healthy quarterly review. Contact me for more information!

What Does a Fractional CFO Do?

Fractional CFO

I had a conversation the other day with a small group of venture capitalists and seed fund investors. I love talking with these types of people – they are so passionate and have super creative business ideas. When I shared my Fractional CFO services framework and approach to helping smaller growing companies, I also was able to answer the question

What does a fractional CFO do?

We are a guide who provides strategic financial guidance and expertise to businesses on a part-time contractual basis, helping businesses manage cash flow, plan growth strategies, and make informed decisions without the cost of a full-time executive. This role is especially beneficial for startups and SMBs needing flexible, high-level financial advice tailored to their specific challenges and opportunities.

While every business is slightly different from the next and may require a slightly different approach, most businesses need the following data every month in addition to keeping up with the bookkeeping processes that lead to a strong monthly close:


Three basic financial statements: (income statement, balance sheet, statement of cash flow)
Monthly 12-month forecast
Weekly scorecard comparing weekly KPIs to expectations
13-week cash flow forecast
Monthly CFO reports
A regular, intentional meeting to discuss the results.

I generally start conversations with potential clients by ensuring they understand the three basic financial statements and why these are so important. These are:

Income statement.  Also known as the P&L (Profit & Loss) statement, shows revenue, expenses, and net profit over a certain period. Net income is zeroed out annually and moved to what is called “retained earnings” (which is a balance sheet account and means income that has stayed in the business since inception).  At the beginning of the new year, you start pushing the ball up the hill again.

Balance sheet. This shows your assets, liabilities, and net worth at a snapshot in time. It shows what you own and what you owe on a particular date. The assets and liabilities are listed in the ‘ease of liquidity’ order. Liquidity refers to how quickly you can turn those assets into cash.

Cash flow statement. This shows sources and uses of cash categorized by operating activities, investing activities, and financing activities. (In other words, cash flow from operations, from investing, and financing activities.)

Then we look at the other elements:

The monthly forecast/weekly scorecards generally take a few iterations to become useful for a company. We concentrate on the monthly, first. Once it is solid, then we can more easily parse down the numbers to a weekly forecast and develop the weekly scorecard.

Weekly Scorecard comparing KPIs: Every company’s KPIs are slightly different, and we may need to track a variety of specific things depending on quarterly goals. Business owners usually have questions like:
What sort of data should we be tracking? How many KPIs should we track? Generally, you should track revenue, drivers of revenue, gross margin, labor utilization, cost efficiency, asset velocity, and cash and cash flow – actual compared to expected results for the week.

I track all this in Excel. There are some awesome tools out there for dashboards that are fully automated and contain tons of great information and graphics. I love the look but I find the best scorecards are prepared manually and contain surprisingly little data. This allows everyone to focus on the highest-value data points. High-tech is great, but we still need high-touch.

The 13-week cash flow forecast contains cash receipts and cash disbursements by week for three months.   In a turnaround, the 13WCFF is updated daily, but for a typical business, I like to update it weekly so it’s always a rolling 3-month look forward.

CFO Reports (or Monthly Reporting Package, or Monthly Operating Report) are produced monthly. They vary by business but generally contain the three basic financial statements, the 12-month forecasted P&L and Balance Sheet, the current month’s P&L compared to forecast, trend graphs for sales, margin, asset velocity measures, and significant goal tracking, top 5 company goals and status, current 13-WCFF, top customers for the month and year to date.

Regardless of the format, this data should be prepared and discussed regularly. This is where an intentional meeting between CFO and business leaders comes in. Weekly is best but monthly can work. This way you’ll see if you are hitting the numbers or not, and helps you course-correct more easily if you aren’t. It also helps to avoid big surprises later in the year. It allows the CFO to become a vital ally – not just presenting numbers, but helping you understand “why” the numbers are a certain way. A discerning CFO will also have good suggestions for more success in reaching goals.

If your business doesn’t have a CFO, you should seriously consider one. If I can help your company with its fractional CFO needs, contact me!


If It Ain’t Broke …

Break glass

We’ve all heard the old saying, “If it ain’t broke, don’t fix it.”

There’s a lot of wisdom in that. When you’ve implemented an efficient plan (i.e. a quick month-end close, financial processes that keep good data in front of you, etc.) it’s a good idea not to mess with it – to a point. But it’s never good to permanently rest in a routine that isn’t reviewed regularly. It’s then that we fall into a rut, otherwise known as a casket without a top.

And forgive the pun, but if you are not growing, you are dying. Growing requires the willingness to change.

I am working with several new clients who are making changes in their business. Change isn’t easy, but it is necessary to improve. It’s been good to see some of the positive outcomes from this process.

As I mentioned in a previous post, assessing your business regularly and recognizing the need to change is step one. Even if things are going well, the waterline is rising, and things can always be better. We need to continuously deal with any leaks, including new ones that may spring up.

So how do we do this?

I suggest a shift of mindset, based on a fabulous book I read many years ago: If it Ain’t Broke…Break It!: And Other Unconventional Wisdom for a Changing Business World by Robert F. Kriegel and Louis Palter. Their advice shared in the early ’90s is timeless. We must have a mindset toward embracing change, innovation, and continuous improvement as keys to success in both personal and professional life.

Here are some key thoughts from the book, along with a question you can ask yourself in assessing how your business and team are doing when it comes to each theme:

1. Embrace Change: it’s important to be open to change rather than cling to established norms or practices. Change can lead to improvement and growth.

Question: What change in process did we recently implement or consider as a way to improve our productivity?

2. Innovation is Key: Innovation is significant in driving progress and success. When you encourage a culture of innovation, you’ll see breakthroughs and competitive advantages.

Question: Does my team feel comfortable bringing me new ideas?

3. Challenge Conventions: Rather than accept that “This is how it’s always been done,” encourage questioning and challenge conventional wisdom.

Question: What is something we have been doing for years that we should consider changing or eliminating from our processes or policies?

4. Risk-Taking: calculated risks are essential for growth and advancement. Rather than fearing failure, consider it a valuable learning experience.

Question: When did we take a risk in the last 3-12 months? If we haven’t been willing to take a calculated risk, why are we holding back?

5. Continuous Improvement: Individuals and organizations should always seek ways to evolve and enhance their processes and products.

Question: What are three key areas where we are working on improvements in the company? (i.e. personnel, environment, culture)

6. Adaptability: In today’s rapidly changing world, being adaptable is crucial. During the pandemic, we saw a critical need to pivot and adjust to new circumstances and challenges.

Question: While we are not in an active pandemic now, what other concerns threaten our success? How do we need to re-position ourselves to stay relevant?

7. Creativity and Experimentation: encouraging these can lead to new ideas and solutions not considered before.

Question: What is a problem we are experiencing that could use a creative solution? What ideas can we consider for a while without shooting them down immediately?

8. Leadership Role: leaders are the critical component in fostering a culture of innovation and change. They should lead by example, supporting initiatives that promote growth and innovation.

Question: How strong is our leadership team? Do we inspire growth and innovation, or are we stuck in our ways? What would our employees say if guaranteed anonymity?

Some of these questions may be uncomfortable, but I assure you they are important. Culture affects the bottom line. An unhappy, stressed out, unproductive team creates leaks that sink your business success and satisfaction. A team that has the freedom to bring up fresh ideas, evaluate processes objectively, and follow values modeled by their leaders will help create an organization that makes money and contributes positively to society.

Which would you rather have?

How Do You Run a Business Without Good Data? 5 Ways to Change That

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As is my custom, I spent New Year’s weekend honing my 2024 plan and updating bookkeeping for my business as well as for several of my clients.

Yes, I was playing the role of bookkeeper for Verbeck Associates. When you have to do the work yourself, you realize again the value of a great bookkeeper. It’s great to have someone whose job it is to get all transactions in on a timely basis and ensure that accounts are all reconciled. I wish I could say I was always THAT someone for my own business! But as they say about the shoemaker’s son …

The further away from the transaction date, the more complicated it is to determine the essence of the transaction. In one case, I had to bring ten (yes 10!) months of a new client’s QuickBooks up to date. Their bookkeeper had completely dropped the ball. It was brutal, but we tenaciously got four bank accounts reconciled to 12/31.

After that, I sat with the business owner, asking “How did you run your business without good data?”

While it may seem surprising for someone to run a business without looking at numbers, it’s not all that unusual. And while some business owners LOOK at the numbers, they don’t study them in a way to benefit from the information.

Here are some reasons why owners don’t look carefully at the numbers.

The books and records are not in good shape.

This tends to happen when a finance team player (i.e. bookkeeper) isn’t kept accountable for entering transactions in a timely way and providing a quick month-end close. They may be overwhelmed with the minutia, or be in over their head. But all financial staff should be accountable to someone, even if the supervisor isn’t finance savvy. They can still ask the right questions to make sure monthly tasks are current.

They assume things.

Business owners have told me, “I’ve been in business for ten years. I know how we are doing.” They assume their books are in good shape. (Most of the time they aren’t.)

They are afraid to look stupid.

Many business owners launched businesses due to their passion and skills in a particular area. They may be great carpenters, restauranteurs, therapists or marketers so they hung a shingle and started a company or practice. That may not mean that they have the financial and administrative skillset to excel in the operational side of running a business. Deep down, they may know that they are not good at math, or an accountant. There’s no shame in that – unless they refuse to acknowledge that they need some help.

They don’t like the “report card” feel.

Many times, when owners finally look at numbers, it’s been prompted by something unpleasant. It could be tax time and they are meeting with their CPA. They may be collaborating with a lender and have to face hard facts. Bookkeeping, when done correctly, doesn’t lie. If the numbers don’t add up, they don’t. I know someone who was gently told that they were making under $5 an hour once their time was accounted for. Facing numbers and facts like this is scary. No one likes to feel like they are failing, especially when they are putting a lot of time and energy (and even their own money) into a venture. 

So what’s the answer? Here are five things you can do right away no matter what time of year it is:

  1. Face facts. The first step to change is knowing. Decide that starting NOW, you are going to make a more intentional effort to keep up with the financial overview of your company.
  2. Hold your financial employees accountable. You can do this in a way that feels collaborative. Set up a monthly or even more frequent meeting. Tell them you need their help in making more informed business decisions and you’ll need transactions entered and month-end figures in a timely way. Set a meeting early in the new month to review last month’s numbers.
  3. Educate yourself. I offer a variety of resources (and am working on more) that can help you “be your own CFO.” You don’t have to become a CPA to learn to understand basic information like financial statements, cash flow, cost of sales elements, and other standard reports.
  4. Think beyond the numbers. Once you know the numbers, figure out why they may feel out of alignment with your goals. I always look at a business’s performance from a numerical point of view, which is objective. But there’s also a good argument for looking more closely at employee satisfaction and customer service. These are harder to tangibly measure, but there are ways to see if your company is hitting the mark more often than not. Remember that dissatisfied employees and/or customers cause profit leaks.
  5. Consider hiring outside help. Whether it’s an additional employee or a contracted company that provides CFO and/or bookkeeping services (like mine) you may find that your numbers improve because you have people with a gift for that side of business playing that role.

    If I can help, contact me. At the very least, start looking at your numbers more closely, more often.