Posted on Thursday,

Kaizen and Continuous Improvement: A CFO’s Perspective on Lean Efficiency

I’ve been following Mark DeLuzio on LinkedIn for a while. He’s a Lean legend, and as a passionate advocate for Lean myself, I’m always looking for ways to boost efficiency and streamline processes. Mark frequently talks about Kaizen, the practice of continuous improvement, and how essential it is to examine and refine our processes regularly.

I completely agree, and given my deep family ties to Japan, I feel compelled to explore the true meaning and origins of Kaizen.

A Personal Connection to Japan and Kaizen

My great-great-grandfather spent much of his life in Japan. A fascinating book, Verbeck of Japan, written in 1900, details his work and influence there. Recently, I used AI to summarize the book in a modern writing style, making it much shorter and much easier to read. (The photo is my great-great-grandfather and great-grandfather with young students, including the Emperor Meiji.)

Since I have this connection to Japan, I felt compelled to look deeper into the origins of Kaizen (改善) and its true meaning:

改 (Kai): “Change” or “improvement.”
善 (Zen): “Good” or “better.”

Together, Kaizen (改善) translates to “improvement” or “making things better.” In business and personal development, it’s often interpreted as “continuous improvement”—the mindset of consistently refining processes to drive better outcomes.

How Kaizen Became a U.S. Business Term

To be honest, I’ve never liked using less-familiar terms when a good English equivalent exists. But Kaizen is an exception. This word has taken on a life of its own in the world of U.S. business, and for good reason.

Kaizen’s rise to prominence in the U.S. began with Toyota’s manufacturing success in the 1980s. American businesses, eager to replicate Toyota’s process-driven success, adopted the term through the study of Lean Manufacturing. What started in the factory soon evolved, spreading into broader realms like business management, finance, and even personal development. Now, Kaizen is so ingrained in U.S. business culture that it’s hard to imagine a corporate world without it.

Even though Kaizen essentially means “continuous improvement,” the term embodies a deeper, more systematic philosophy that English alternatives like “process improvement” simply don’t convey. That’s why it resonates so deeply and has stuck.

Applying Kaizen in SMB Finance and Operations

At my CFO services firm, we live and breathe Kaizen, constantly refining financial systems and processes for small and mid-sized businesses. Whether we’re streamlining financial reporting, optimizing cash flow, or strengthening internal controls, the objective is always clear: eliminate inefficiencies and create more value.

I recently came across a YouTube video that humorously explains how to make a peanut butter sandwich—yet it highlights a very real business challenge: the difficulty of documenting and transitioning processes. One of the biggest problems I see? Inconsistency.

The first—and most critical—step in improving any process is ensuring it’s executed the same way every time. Without consistency, improvement is impossible.

Real-World Kaizen: Fixing a Broken Back-Office Process

We recently onboarded a new client, and it didn’t take long to uncover a glaring issue: their back-office financial processes were completely chaotic.

No documentation.
No standardized workflows.
Different employees were handling things in different ways.

The result? A perfect storm of inefficiencies, confusion, and costly financial blind spots.

To turn this around, we applied a Value Stream Mapping approach to thoroughly analyze their entire cash-to-cash process—everything from revenue collection to vendor payments. By pinpointing bottlenecks and eliminating unnecessary steps, we created a more streamlined, repeatable system that not only boosted efficiency but also minimized errors. This is Kaizen in action—turning chaos into control, one step at a time.

Kaizen is a Mindset, Not Just a Process

Kaizen is more than just a one-time fix—it’s a mindset, a commitment to ongoing refinement and improvement in every aspect of your business. Whether you’re in manufacturing, finance, or leadership, the core principles remain the same:

Standardize first. Establish consistency in your processes.
Measure and analyze. Identify inefficiencies and areas for improvement.
Improve and refine. Eliminate bottlenecks, cut waste, and optimize workflows.
Repeat continuously. Remember, improvement is a never-ending journey.

At Verbeck Associates, we apply this approach to every client, ensuring their financial systems aren’t just “good enough” but are efficient, scalable, and continuously improving.

So, how are you applying Kaizen in your business? Let’s connect and discuss how we can help you create leaner, more efficient processes for lasting success.

Posted on Tuesday,

Top Strategies for SMB Improvement in 2025

As we dive into 2025, small and medium-sized businesses (SMBs) have a world of opportunities and challenges ahead. Focusing on strategies that boost efficiency, profitability, and financial stability is key to staying competitive and driving growth. Here’s a look at some top strategies you can implement to make 2025 your best year yet:

1. Leverage Data to Drive Decisions
In 2025, data-driven decisions are a must for SMBs. Start harnessing your financial and operational data to unlock insights that lead to better outcomes.

Invest in tools: Affordable software like QuickBooks, Xero, or industry-specific platforms can help you track sales, cash flow, and customer behaviors.
Identify key metrics: Focus on KPIs such as gross profit margin, customer acquisition cost, and inventory turnover to guide your decisions.
Run regular reviews: Make data analysis a habit—weekly or monthly reviews will keep you agile and on track.

2. Focus on Operational Efficiency
Streamlining your operations can make a huge difference to your bottom line.

Streamline workflows: Take a fresh look at your processes and identify bottlenecks. Automate repetitive tasks to save time and reduce errors.
Reduce waste: Apply lean principles to minimize wasted resources—time, materials, or money. Where can you cut out waste?
Optimize inventory: Use data to maintain the correct stock levels—too much or too little can hurt your business.

3. Revisit Your Pricing Strategy
Pricing can make or break your profitability. In 2025, ensure your pricing reflects both market value and profit goals.

Conduct a pricing audit: Look at how your pricing compares to competitors and costs.
Test new models: Consider tiered pricing, subscription models, or bundling to drive more revenue.
Communicate value: Ensure your customers understand the value they’re getting for the price.

4. Invest in Employee Development
Your team is your greatest asset. To go far, you need to go together.

Upskill your team: Offer training programs aligned with your goals—sales skills, technical knowledge, or leadership.
Enhance workplace culture: Foster collaboration and innovation by creating a positive and inclusive work environment.
Review compensation plans: Make sure compensation is aligned with performance and your long-term goals.

5. Strengthen Financial Planning and Cash Flow Management
Financial stability is essential for SMB success.

Update your budget and forecast: Use insights from 2024 to create realistic projections for the year ahead.
Build cash reserves: Aim for 3–6 months of operating expenses in reserves to handle unexpected expenses.
Explore financing options: If growth is on your radar, look into funding sources like expanded lines of credit or SBA loans.

6. Embrace Digital Transformation
Technology can level the playing field for SMBs competing with bigger players.

Enhance your digital presence: Update your website, invest in SEO, and stay active on social media to engage with customers.
Adopt CRM software: Use customer relationship management tools to boost sales and improve retention.
Use AI and automation: Automate repetitive tasks like email marketing and scheduling to free up your time.

7. Build Resilience in Your Supply Chain
Recent disruptions have shown just how critical a resilient supply chain is.

Diversify suppliers: Don’t rely on just one supplier. Build relationships with multiple vendors.
Negotiate contracts: Secure better terms with suppliers to protect your margins.
Improve logistics: Look at shipping and inventory management processes for cost-saving opportunities.

8. Strengthen Customer Relationships
Loyal customers are your business’s backbone.

Focus on retention: Create loyalty programs or incentives for repeat customers.
Improve customer experience: Regularly gather and act on feedback to exceed expectations.
Personalize marketing efforts: Use data to tailor communications and offers to specific customer segments.

9. Reassess Your Strategic Plan
2025 is a great time to revisit your long-term strategy and ensure you’re headed in the right direction.

Align goals with vision: Ensure your goals reflect your business’s mission and values.
Identify growth opportunities: Explore new markets, products, or services that align with your expertise.
Develop a risk management plan: Address potential risks proactively, from economic downturns to regulatory changes.

10. Partner with Experts
Sometimes, the best way to improve is by getting help from outside experts.

Engage a fractional CFO: Get expert financial guidance without the cost of a full-time hire.
Consult industry experts: Work with consultants specializing in marketing, HR, or technology.
Join networking groups: Connect with other business owners to exchange ideas and best practices.

Conclusion
2025 holds plenty of opportunities for SMBs ready to adapt, innovate, and plan strategically. Your business can thrive in the year ahead by focusing on data, efficiency, team development, and solid financial planning.

If you’re ready to take your business to the next level, I’m here to help. Let’s connect and see how a fractional CFO from Verbeck Associates can support you with financial expertise that drives real growth in 2025.

Posted on Monday,

Your Year-End Financial Checklist: Closing Strong and Planning for 2025

As the year winds down, small and medium-sized businesses (SMBs) are at a pivotal crossroads: it’s time to finish strong while setting the stage for even greater success in 2025. This is your opportunity to assess whether your financial performance hit your goals, tackle any remaining obstacles, and lay out a bold strategy for the future.

To help you navigate this critical transition, I’ve created a comprehensive checklist to ensure you close out the year with confidence and kick off the new one with a solid financial foundation. I’m here to help you close out 2024 on a high note and set the stage for a prosperous year ahead!

1. Reconcile Accounts and Review Financial Data.

To set a strong foundation for the year ahead, begin by ensuring your financial records are both accurate and up to date:

Reconcile all accounts: Reconcile bank accounts, credit cards, and loan balances to ensure they match your records. This helps avoid discrepancies that could affect decision-making.
Review key financial statements: Analyze your profit and loss statement, balance sheet, and cash flow to identify any trends, areas for improvement, and any potential red flags. This offers valuable insights into your business’s financial health.
Resolve outstanding invoices and bills: Address any unpaid invoices or overdue bills to ensure your cash flow remains steady.

Tip: Having accurate financial data is crucial for making well-informed decisions as you close out 2024 and prepare for a successful 2025.

2. Set Your Financial Baseline for 2025.

Building a strong financial plan for the upcoming year starts with a thorough analysis of your performance in 2024. This will help you set clear, achievable goals for 2025:

Assess profitability: Dive deep into the performance of individual products, services, or business units to understand what’s driving success and where improvements are needed. This breakdown will guide you in prioritizing the most profitable areas.
Evaluate expenses: Review your spending and identify areas where cost-control measures can be introduced in 2025. Look for patterns in overspending or inefficiencies that can be streamlined.
Analyze cash flow trends: Examine your cash flow over the past year to pinpoint when inflows and outflows peak. Understanding these patterns will help you plan more effectively for liquidity management in the year ahead.

Example: Use this analysis to set goals for key financial metrics, such as gross margins, asset turnover, and working capital.

3. Solidify Your 2025 Financial Plan.

Kick off the new year with a clear, actionable roadmap that positions your business for success:

Create a sales forecast: Analyze current trends, market conditions, and upcoming opportunities to project your sales for 2025. Use this forecast to set realistic revenue targets and align resources accordingly.
Develop a cash flow projection: Use tools like my 13-week Cash Flow Forecast to map out expected cash inflows and outflows. This will ensure you have the liquidity needed for both daily operations and growth initiatives throughout the year.
Outline a budget: Build a budget that balances strategic investments with cost-saving measures. Prioritize spending that drives growth while maintaining a focus on efficiency and profitability.

Pro Tip: Build in flexibility within your financial plan to quickly pivot in response to unexpected challenges or emerging opportunities in 2025.

4. Streamline Year-End Processes
Efficient year-end processes are key to saving time and reducing stress. Make sure you finish the year strong with these actionable steps:

Finalize all 2024 transactions: Reconcile accounts, close out any pending invoices, and ensure all customer payments are received before December 31.
Follow up on overdue receivables: Act now to collect any outstanding payments and improve your cash flow before the year closes.
Prepare for tax season: Double-check that all deductible expenses are well-documented and ready for tax filing.

Action Step: Automate routine tasks, such as setting up reminders for accounts receivable and payable, to ensure smooth year-end operations and free up time for strategic tasks.

5. Align Your Team for Success
Your team is essential to closing the year on a high note and hitting your 2025 goals. Get them on the same page with these strategies:

Set clear expectations: Make sure your team knows exactly what’s expected in the final stretch—whether it’s wrapping up client projects or clearing out inventory.
Review your 2025 financial plan: Share your financial strategy with key team members to ensure everyone is aligned on priorities and performance targets.
Evaluate compensation plans and incentives: Assess how bonuses or incentives can drive your team’s motivation and performance as you enter the new year.

Consider: Boost morale by offering year-end bonuses or hosting team celebrations to celebrate your collective success and inspire energy for the year ahead.

6. Optimize Your Tax Position
Take advantage of your final opportunity to make strategic moves that can reduce your tax burden:

Accelerate expenses: Purchasing equipment or supplies before year-end can increase your deductions for 2024.
Defer income: Push back invoicing or payments until January to shift income into 2025 and potentially lower your tax liability this year.
Consult your tax advisor: Review available tax credits or deductions to ensure you take full advantage of every opportunity.

Remember: Having a solid relationship with financial professionals gives you another layer of wisdom and resources.

7. Evaluate and Improve Financial Systems
The end of the year is the perfect time to assess whether your current financial systems are meeting your needs and setting you up for success in the coming year:

Identify bottlenecks: Review your processes, from reporting to cash flow management, and pinpoint any areas that need improvement.
Invest in better tools: Consider upgrading your financial software or tools to improve efficiency, accuracy, and decision-making in the new year. Hiring a fractional CFO is another possibility.
Set clear KPIs: Establish key performance indicators to track your financial health and ensure you meet your targets throughout 2025.

Think About: Ask the staff that use the tools the most to give you feedback.

Key Takeaway
Closing 2024 with a solid financial position and a clear strategy for 2025 is essential for SMBs aiming for sustained growth and profitability. You’ll enter the new year with confidence and clarity by streamlining your year-end processes, aligning your team, optimizing your tax position, and improving your financial systems.

Need help navigating year-end challenges or building a strategic financial plan for 2025?
Reach out to Verbeck Associates for expert guidance from a Fractional CFO. Let’s set your business up for success in the new year!

Posted on Thursday,

If You Water It, It Grows: Cash Flow Management for Small Businesses

I love the saying, “If you water it, it grows. If you ignore it, it dies.” This principle applies to running a business—especially when it comes to managing cash flow. As a fractional CFO, I often remind clients that cash flow is the lifeblood of their business; it needs regular, focused attention to thrive.

Recently, I spoke with a small group of business owners about my 4 Pillars for Small Business framework (explained more in my free booklet, Be Your Own CFO), and we honed in on cash flow. Cash flow isn’t just about having money in the bank. It’s about understanding where cash comes from, how it flows through the business, and how to measure and manage it effectively.

Why Cash Flow Needs a Detailed Approach

Cash flow management is most effective for small businesses when handled in detail. Here’s a simple but powerful method: use a cash flow tracking tool (like the one available here) and set up a weekly review process. This involves updating expected customer deposits, cash payments for payroll, and other cash payments for operating expenses by vendor. Make it a habit to recast these forecasts each week with actual numbers—this ongoing process will help you identify trends and adjust for any surprises.

Key Cash Flow Metrics to Monitor

There are a few metrics I always recommend tracking to get a clear view of cash flow:

• Net Income: The foundation of cash flow.

• Days Sales Outstanding (DSO): How quickly you collect receivables.

• Inventory Days: Reflects the average time inventory is held before it’s sold.

• Days Payable Outstanding (DPO): Measures how long you’re taking to pay vendors.

Monitoring these metrics gives insights into your cash flow drivers, helping you make more informed business decisions.

Cash Flow Impact: The Power of a 5-Day Improvement in DSO

Let’s look at an example of how a small improvement in DSO can positively impact cash flow.

Say you have a $5 million business with an accounts receivable balance of $575,000. Here’s how you calculate DSO:

1. Average Daily Sales:$5,000,000 ÷ 365 days = $13,699 (daily sales)

2. DSO:$575,000 ÷ $13,699 = 42 days

Now, let’s assume you reduce DSO by 5 days. Your new DSO would be 37 days, yielding $68,500 in additional cash flow:

• New Receivable Balance with 5-Day Improvement:

37 days x $13,699 = $506,500

• Cash Flow Improvement:

$575,000 – $506,500 = $68,500

This means a small change in collections can significantly improve cash flow, freeing up cash for things like reinvesting in the business or paying down debt.

The Strategy: Policies, Awareness, and Consistent Tracking

Managing cash flow doesn’t happen by accident. You must establish policies around invoicing, follow-up, and payment terms and build awareness within your team. You need to use dashboard reporting to track cash flow metrics and keep them at the forefront of your mind. Most importantly, you should focus on the details—cash flow is in the transactions.

You’re nurturing your business’s financial health by giving cash flow the attention it deserves. Remember: if you water it, it grows. And with a steady focus on cash flow, you empower your business to grow sustainably with fewer unpleasant financial surprises along the way.

Have questions? Contact me!

Posted on Monday,

Review, Recalibrate, Reframe: Finish Strong and Set the Stage for Success

Finish Strong in Q4 and Set the Stage for Success in 2025

As we approach the end of Q4, it’s crucial for business leaders to prepare for the year ahead. It’s budget season, and this is the perfect opportunity to not only get your financials in order but to take a step back and plan strategically for growth.

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:

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.
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.)
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?
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.
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.
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?
Check In With Yourself: As a business leader, your company is only as good as you. How are you performing? Are you communicating your vision to your team? Do they see it? Is the company and your team living up to your values? It’s easy to get into a rut, and a quarterly review of yourself can help you stay out of one.

Prepare for Success in 2025!

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 new year with clarity, focus, and a clear plan for success!

PS: You might discover that you need a fractional CFO now. Let’s talk!

Posted on Wednesday,

Building a Strong Business: Compensation Plan Lessons from BE 2.0

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.

Posted on Monday,

7 Ways to Help Your Small Business Perform Better

“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!

Posted on Tuesday,

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

Posted on Monday,

How the Four Pillars of Financial Success Bring 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!

Posted on Thursday,

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

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