Process Makes Perfect: Helping Your Small Business Avoid Failure

Process

Small business is not as small as you think. Did you know that there are 32.5 million small businesses in the United States and that they generate approximately 45% of the US economy? A small business is defined as a company with less than 500 employees. 80% of these small businesses have NO employees! The other 20% account for 40% of all private-sector jobs, and 60% of all job growth this year. And it’s worth remembering that all large corporations started out as small businesses. There’s no question that small businesses are essential and significant.

Sadly, 20% of small businesses fail in the first year, and over 50% fail within the first five years. Those are sobering statistics given how important small businesses are. Why are these businesses failing?

The Top Five Reasons for Small Business Failure

  • Poor cash flow management
  • Losing control of the finances
  • Bad planning and a lack of strategy
  • Weak leadership
  • Overdependence on a few big customers.

As a virtual CFO helping companies become more profitable, I see the above happening on a regular basis. For most of those challenges, there is a common solution.

Strong processes.

I believe a disciplined approach is key. For example, when it comes to accounting, I help my clients use a simple framework that incorporates a weekly scorecard to project financial results and cash flow with a look toward monthly goals. For this to work, having accurate, up-to-date numbers are essential. This allows for wise decision-making.

Another benefit of a disciplined approach is the documentation of processes. I find this is best done with a 2-person approach. One does the actual procedure while the other documents what is being done. The final documentation doesn’t have to become a cumbersome ‘operations manual’. Written checklists are great. You can screen-record the actions or have an employee make a demonstration video and save the links in a company-wide folder or intranet for easy access. Such documentation resources can help you in training your employees to be on the same page with how processes are to be done.

Consistency and efficiency in processes are vital. One of my client experiences was helping unite the staff who were differing over how they approached systemic processes. One department was, “We do it this way”, and another was “Well, we do it that way”, etc. I helped them get to, “No, this is how WE do it as a company.”

Consistency and efficiency can also help the company succeed without the owner having to be involved in day-to-day operations, allowing them to focus on their business’s longer-term vision. The secret lies in systems that make sure transactions are handled consistently no matter WHO is doing the work. As an added bonus – strong documented processes significantly increase overall business valuation!

How is it in YOUR company? Do you have good systems in place? Are they documented? If not, I can help. Contact me!

Cash Flow: Examine to Advance

I did a cash flow exercise the other day with a new client, and they were blown away by the simplicity of some cash flow enhancement techniques.

The company was a $6,000,000 manufacturer with approximately $600,000 in accounts receivable, $1,000,000 in inventory, and $300,000 in accounts payable. We calculated simple annual cash flow velocity (amount of time to turn a sale into cash and pay the respective vendor).

Right off the bat, we noticed that inventory seemed much too high, accounts receivable collections hadn’t been a priority based on the aging, and vendor terms could possibly be adjusted to improve cash flow.

Inventory

We looked at the inventory valuation and noted excess and slow-moving inventory. When touring the facility, I noticed that raw stock seemed high. Some of the excess inventory was pre-planned due to current supply chain issues. This made sense, but there were some inventory levels that could be reduced immediately. After our evaluation, the leadership made some decisions regarding purchasing reductions and are going to look at selling some of the excess inventory. If they can increase inventory turns and decrease days of on-hand inventory, they are expected to increase cash by $400,000.

Accounts Receivable

The next step we took was to look at their accounts receivable. With a little more attention to collections, they believed they improve the aging and could easily reduce DSO by 5+ days increasing cash by $80,000!

Vendor Terms on Accounts Payable

We looked at their accounts payable and determined we could push two of their main vendors’ payments out without any negative vendor impacts. We also noted a few of their vendors were offering 2% 10, net 30 terms. Our calculations showed that pushing two vendors out would increase cash by approximately $100,000 and by taking advantage of the discount terms offered by other vendors, the company would add approximately $36,000 of purchase discounts to their bottom line. See my previous discussion of purchase discounts here.

They were shocked by the impacts of these simple cash flow techniques, and how small gains can make a huge difference.

Your turn. Here’s how to increase your cash flow:

*         Ask your vendors for five more days to pay. See if they offer quick pay discounts.

*         Study your inventory levels and determine if it makes sense to reduce them and still be able to meet production and customer needs. Most companies have too much safety stock on hand.

*         Review your accounts receivable. Make calls to the slower paying customers not only for collections but to reframe your expectations. If they can’t comply, consider increasing pricing to cover the extra carrying cost or if the case is an ongoing challenge, it might be time to suggest they transition to another supplier.

You’ll be pleasantly surprised how much these few steps can help your bottom line. Contact me for a free chat about your current situation!

Quarterly Review: Review. Reframe. Realign. Rekindle.

The first quarter just ended. It’s time to check in to see how your performance is tracking compared to your goals. Do you need to rethink any goals or realign any projects? Are you on track with your financial forecast and the large projects you laid out last fall in anticipation of the new year?

Things constantly change, and we are facing new challenges already this year. Inflation. Interest rate increases. Global conflict impacts. Supply chain issues. Attracting and retaining talented staff. There’s likely something going on in your company that isn’t coming together in quite the way you expected. (If that’s not the case, keep up the good work!)

For many, a quarterly review provides the opportunity to discern what needs to change to get back on track. It could be the plan itself. Maybe it’s too ambitious given current challenges. Then again, maybe it’s not a big enough stretch! Or it could be the approach to daily work and decisions that needs changing. Are the processes and expectations set up in a way to encourage movement toward the goals?

Schedule a time to take a deep dive with your team to review, reframe, and rekindle what the goals and priorities should be over the next quarter. This meeting is also a good time to realign all team members to the common goal, if necessary. (Doing this quarterly helps everyone stay on the same page.)

Here are some questions you can use at your meeting:

Review

  • What went well last quarter?
  • What didn’t go so well last quarter?
  • How are we tracking with our revenue, margin, and net income goals?
  • Are one-year and three-year goals still on target?
  • Did we finish any Q1 goals? If so, celebrate! If not, determine why not.

Reframe

  • Are our current projects aligned with our long-term goals?
  • Overall, are we on track with our mission?
  • What goals are too ambitious that we can modify while still stretching ourselves?

Realign

  • Are all team members on board with the mission of the company?
  • Do all team members understand our upcoming quarter’s goals?
  • Are we working in a collaborative way (not silos) to accomplish goals that benefit the entire company?

Rekindle

  • Are we tired? What do we need to do to refresh ourselves and the team?
  • What haven’t we celebrated that we need to?
  • Have team members had the opportunity to personally speak about the company goals so they can be part of the goal-setting process?

Let me give you some real-life examples.

Kicking Myself into Gear

I do my own reviews, and I find that when my goals have slipped, it’s generally because my focus has slipped.

For example: in the first quarter of this year, I had set three prime goals for one of my clients. I misjudged the amount of time the projects would require, and I had to push like crazy in March to make the deadlines. It was a scramble, and honestly, I rushed more than I should have in order to get them done. Lack of focus/misjudgment of time in January and February caused the buildup in March. But I didn’t give up. Instead, I dug deep, focused on meeting shorter, bite-sized, biweekly milestones, and got two of the projects done. (We were able to push the third to Q2.)

The Big 3

For another client, we publish quarterly “Big 3” goals, breaking each one into smaller tasks for visibility and accountability. This really helps the team know where they are at and stay motivated.

Beefing Up Accountability

I’m also seeing many goals and projects slip with some clients. Their intentions are good, but there is a lack of accountability for unmet goals. For those clients, I help them strengthen accountability structures/policies and build in some “intolerance” for continued deadline slips. (My CPA upbringing plays into this – deadlines were unbending.)

You can see that there isn’t a “one size fits all” with quarterly reviews. The important thing is to DO THEM so you can review, reframe, realign and rekindle enthusiasm for your organization’s goals and dreams.

How CEOs Can Transform Financial Stress into Success

stress

CEOs and business owners are under a tremendous amount of stress these days. Even if the business is profitable and has decent cash flow, leaders face uncertainties such as supply chain issues, inflation, difficulty finding staff, the potential of rising interest rates, the pressure of the board of directors to perform better and corporate taxes.

It is said that the bigger your business, the bigger your problems. But effective leaders can handle the challenges, if they are prepared. The key is to notice potential problems early enough to let you develop a plan and be ready to execute early to avoid or soften the impact. For many business owners and CEOs, forward-looking financial reports can really help.

Here are a few tools I use to help CEOs and business owners reduce the stress load caused by the financial side of their business:

  1. A weekly cash flow forecast process that lays out incoming and outgoing cash activity on a weekly basis
  2. A weekly scorecard to get early detection of upcoming issues
  3. Systems and processes that produce consistently accurate financial results

I’ve discussed the weekly cash flow process in the past and can’t emphasize enough the importance of this tool – it’s one of the best tools to see and predict cash sources and uses and spot any problems in advance. Many of us are used to running our companies using monthly financial statements. While they contain valuable information, the numbers tend to come out too late and are based on accrual accounting. Using the 13-week cash flow forecast, we can see more granular changes more quickly on a cash basis. This gives the company and the team a weekly view of results and time to mitigate any cash crunch.

The weekly scorecard tracks key performance stats and leading indicators that help spot areas of concern in advance. With data compiled and reviewed weekly, these leading indicators can signal if some things are heading off the rails. For example, a scorecard can provide early detection for margin erosion or an indictive problem with the warehouse causing customer service issues.

Having solid back-room processes that produce up-to-date, accurate, and reliable data consistently, reduces stress. If leaders are unsure if the numbers are accurate, it’s harder to make wise, data-based decisions. If they can’t rely on the financial system, they are operating a business while wearing blindfolds.

In my turnaround work, most companies I work with do not have solid financial statements and certainly aren’t producing them in a timely way. Leadership can’t rely on the data, and they waste time when they try to figure it out.

Even with tools and processes in place, issues and difficulties will arise. You should expect that. One of my associates does her bookkeeping for business AND personal life every Friday. She self-admits that number-crunching isn’t her core strength, but staying disciplined with this routine helps her spot challenges and make adjustments as needed before they become major issues. She’s learned to be less discouraged about finding an error and celebrate the fact that staying faithful to her system helps her course-correct before a major source of stress develops.

Things happen, but the better prepared we are, the better we can handle the situation. Use these CFO tools consistently. Just like getting a medical physical helps you ensure systems are functioning and indicates where to make corrections, CFO tools like these help you examine and encourage that your business is running optimally. And that means far less stress for you.

How to Add $722,000 to Your Balance Sheet

balance sheet

I work with many bankers and lawyers who call me when they have a customer or client whose company is in trouble or needs help improving their business. The initial assessment takes about a week. We review the companies’ internal controls and backroom systems. Then we look at the historical financial statements, the current forecast, relative cash flow drivers, and their profitability matrix. In the process, we discover the core areas of needed improvement – generally, the situations are related to inaccurate forecasting and inaccurate financial statements. 70% of business owners don’t have an accurate view of their numbers! Sometimes immediate triage is necessary.

Generally:

  • The company is not consistently profitable.
  • The books are in bad shape.
  • The business owner needs to get a better viability on cash flow.
  • The owner doesnt know what their company is really worth or how to improve valuation.
  • Leadership is concerned with the company’s financial performance.
  • Certain financial covenants were tripped.
  • Internal processes are ineffective and needed improvement.

I remember one company specifically. Sometimes you can tell how a business is managed as soon as you walk in the door. I should have realized right away what I would be facing! The controller worked at a long table. Papers and invoices were in piles all over the table. You could feel (and see) the stress immediately.

During my initial conversation with the controller, it quickly became clear that the financial system (Peachtree at the time) wasn’t accurate. He was way behind getting invoices into the system and accounts reconciled. He was making decisions based on the bank balance vs. the book balance. He was manually tracking outstanding checks (with a stack of un-mailed checks) and was barely making payroll every week. On the day of my visit, he had just received his annual worker’s compensation audit invoice and had not planned at all for that $15,000 expense.

This is the way he ran the business. The odd thing was that he thought things were going okay! The phone was ringing, they were very busy and they were making payroll. But he was stressed out every week to make it. And when new inventory was needed, he had to scrape up enough money to get it – usually robbing Peter to pay Paul – which would catch up with him later. He left old accounts payable open with an “I’ll deal with that later” mentality.

This is not okay. To gauge a business’s performance you need timely and accurate financial information.  Also, there’s a huge difference between accrual accounting and running the business on a cash basis.  It’s important to understand the difference and know that many times, using cash-based thinking may be necessary – certainly, in dire situations, cash-based thinking is the only way to have a successful turnaround. See my previous discussions on the 13-Week Cash Flow forecast process. Before I go back to the story, let’s look at the business cycle.

The process starts with sales.  If we follow the cash, sales turn into accounts receivable.  Accounts Receivable turns into cash.  Cash is used to purchase inventory, pay employees, pay operating expenses and taxes with the leftover being cash profit.  Profit is necessary for viability. 

The flow meters and gauges relate to accounts receivable, inventory, and accounts payable. Debt can be used as necessary but comes with a cost. ALL of these things need accurate tracking.

We had to establish some simple systems. Geno Wickman, the creator of the EOS, Entrepreneur Operating System, is an example of how this is done, and some of my clients are successfully using his system. His recommendations include:

  • Review your financials every month.
  • Manage a monthly expense budget.
  • Track the five to 15 most critical numbers for your business every week (e.g. visitors, followers, leads, appointments, proposals, sales, revenue, errors, customer satisfaction, cash balance, accounts payable, accounts receivable.)

I would add to also review your cash flow and sales numbers weekly.

Back to the client’s story.  We implemented several basics.  First, we got the financial process in shape.   It’s arduous at first getting messy books up to date and a solid closing process in place.  But like the utility room flooding  – you need to turn the hose off before you clean up the water.  Once the financial system was up to date and accurate it was easier to run the business with the book cash balance vs. the bank balance.  

We developed a 13-Week cash forecast, implementing a weekly update and review process. 

We re-evaluated the inventory process, measuring the current state, developing plans to improve, and graphing progress.

We developed strategies to improve cash flow.  We looked at customer terms and payment history, we examined and reduced inventory stocking levels, we looked at vendor terms and accounts payable terms.  We developed tracking for these drivers and expense reductions. 

It’s amazing the effect on cash these cash flow drivers can have.  Let’s look at the accounts receivable gauge and the effect of proper strategy.  In another client case, I worked with a medium-sized distributor.  At the time they were doing $20,000,000 in revenue with $2,500,000 in accounts receivable.  The aging was a mix of approximately 100 customers with various balances in the various aging buckets.  Based on the math, the day’s sales outstanding (DSO) was 46 days.  We worked with the credit manager and the sales team to improve the turnover.  We measured and graphed DSO weekly.  After two months we were able to reduce DSO to 38 days and in six months we were at 32 days. 

Based on these actions, we added $722,000 of cash to the balance sheet – and in this case, reduced interest expense by $45,000.

Back to the original story: we saw a major turnaround in the company with more accurate and timely records helping the owner have a better handle on his cash flow and make better, informed decisions. And, as you can imagine, he experienced far less daily stress.

Does any of this sound familiar? Let me help you and YOUR company. We may not be able to add $722,000 to your balance sheet, but we can reduce your stress, forecast results better, and help you become more consistently profitable. Contact me today.

Grow From Here: The Value of a Business Valuation

A report from IBIS World on business valuation firms in the US said 98% of business owners did not know the value of their company. The fact that most business owners don’t know the value of their business surprises me.

I’ve been working with businesses of all shapes and sizes for 37 years, and I used to assume that all business leaders knew the value of their company. After all, this is their biggest asset. Even the public companies I’ve worked with thought they knew their value … then the company sold at seven times share price. For closely-held companies, there are even more unknowns.

How can that be?

Simple. We put our heads in the sand and don’t put pencil to paper to analyze business valuation in a logical way. We’ve been using back-of-the-napkin calculations which we thought made sense. But now we have access to real data – the kind of data that can give us a more accurate picture.

I am licensed by BizEquity, the largest provider of online business valuations, to provide valuations to clients. BizEquity has a huge database having valued 33.5 million private companies globally to date and growing.

Conducting a business valuation is one of the best ways to start off the new year. Some avoid this, thinking it’s too daunting to gather all the info needed. But with new technology, the process is much easier and affordable than it’s been in the past.

The report we produce is extremely professional. It also provides excellent feedback for how to improve the bottom line because the true value of a business is based on what someone will pay for it at a specific date in time – coupled with how they are going to pay for it. See a draft report here.

The value of this report can easily be worth millions to you, depending on your size and growth potential. If you act to implement the recommended improvements, the value down the road is incredible. 82% of all business owners that knew the value of their business at least 18 months before a sale increased their sale price by at least 14%.

If you don’t have a snapshot value of your company, you are leaving money on the table. I highly recommend doing the valuation report now – Invest the $1,500 and get a baseline. Use the information to make actionable plans to increase valuation.

Now is the best time to get a valuation done because you should have closed books for 2021. Starting the year with a true sense of what your business is worth can help you make strategic decisions for increasing the value in 2022. You can easily increase the value of your business 15% per year by knowing your starting point and applying growth principles. That’s a hell of a return.

Ready? Click here to start completing the information directly or fill out the datasheet and send it to me. I’ll schedule a time to discuss your business valuation and its implications. This is a simple process; there’s no good reason to wait. Let’s get started!

Planning for a Successful Year

goal setting


What a year! We said that at the end of 2020 and as a business owner or executive, you’ve had your second challenging year in a row. Finding good staff, dealing with supply chain delays, PPP loans, etc. Things have continued to change; I hope you’ve been able to adapt your business to thrive.

Pandemic or not, it’s the time of year to block out some time for next year’s planning and get your forecasts done. For many of my clients, we have scheduled a 1 or 2-day offsite planning meeting with the senior team. I have another one this week.

At these meetings, we review the current year, noting what did we do well, where we failed or came up short, what we learned, how we are progressing toward our 3 and 10-year targets, what condition our culture is in, where we can improve, what our next big initiatives are, and what the team should look like next year. From this, we come away with a synched plan and goals for the new year.

I love this process. It gets teams fired up and ready for the coming year – which is just around the corner.

I use a somewhat similar process for my own business and personal planning. I don’t set New Year resolutions, but I do set solid goals and plans for next year – broken down by quarter. (I’m not saying this is the best or the only way, but it’s what works for me.)

My process starts in December and then is solidified during the week between Christmas and January 1st. I’ve adopted the following approach from several mentors and high performers I follow.

Review, Reflect, Recognize

I start with a full-year review. I reflect on the good and the bad. What went well? What didn’t? I make a list recognizing all my successes and failures. I document 5-10 bullets of the wins and the losses for the year. I process each, then move forward. This allows me to celebrate the wins and no longer dwell on the failures.

15 years ago, one of the businesses I owned had a really lousy year and the company was suffering. We had a couple of large projects go upside down causing a fairly large loss, we had an unexpected workers’ comp audit bill, and we were dealing with an ongoing sales tax audit. The loss and low sales were causing cash flow problems and wondering how to cover payroll was keeping me up at night. Ultimately, we decided to sell the business. Based on all these factors, we got crushed on the valuation. We sold anyway, and the four shareholders took sizable losses.

That year I got stuck in a failure loop, asking myself How could this have happened? Why me? yada yada. This went on for months until I realized these are not failures but life lessons. One of the biggest lessons of this for me was the importance of using the 13-week cash flow forecast. I started perfecting my approach and have used it ever since.

I also started the practice of recognizing and capturing failures and determining what can be learned. Then, I could intentionally put them behind me, leaving the past in the past. It happened. I learned. I’m moving on.

Revisit, Re-affirm and Revise

After spending this time reflecting, and then turn toward revisiting the “why” of my business. My approaches to business have changed slightly over the years to keep up with the times. (That’s the revise part). But the “why” hasn’t. I want to help businesses and business owners be more successful, make more profit, increase cash flow, and increase their business’s value. (In keeping with that purpose, I added an easy-to-use Business Valuation product this year.)

In business, there are plenty of ups and downs. If your purpose or “why” isn’t solid, you’re going to have problems when things get rough (which they will). I love Elon Musk’s answer when asked what words of encouragement would you give an entrepreneur. He said, “If you need words of encouragement, don’t become an entrepreneur.” I am not certain I completely agree as we all need some encouragement to keep going when the going gets tough, but I also understand his premise. I find that revisiting my “why” helps me push through the tough times.

Realign, Ready, and Record

After the reflection and reaffirming comes a new alignment of goals and readiness for the new year. This includes recording my intentions because research shows that written goals reviewed frequently move the needle. I know that really worked for me this year. Written and reviewed often.

I break my goals into four segments with one big goal and 4 ‘subgoals’ for each with targets set for each quarter related to:

Wealth and Financial
Health
Skills development
Personal Enrichment

Some of my goals are achievement-based (I will do “x” by “y” date), some are habit goals. (I will do “x” every day.)

I then consider some really big goals with firm completion dates. I love Grant Cardone’s idea of 10X goal setting. Set your goal, then multiply by 10. 10X everything. Why can’t a 10-year goal be completed in 1 year? Why not try?

I write the goals down, trying to be as clear as possible. This is the deliverable, this is the deadline. I write down the key motivations and why this goal is important to me, the next steps, and a reward I’ll give myself when I accomplish it.

This yearly process helps me celebrate the progress I’ve made and prepare for the next 12 months. I want to be ready for a super-successful 2022. How about you?

Interested, or Committed?

I was listening to a podcast the other day discussing what is necessary to be a high performer. The host posed a thought-provoking question to the guest:

“Are you interested in high performance, or are you committed to high performance?”

There’s a big difference.

This question prompted me to increase my intensity now in order to get my Q4 projects wrapped up by December 31st.

Here are a few things I’m committed to now that may inspire you:

  • Time Blocking
  • Budget Wrap-Up
  • Process Documentation
  • Business Valuations

Time Blocking
I’ve returned to blocking time on my calendar to devote to projects – essentially making appointments with myself. I’ve done this in the past, but it seems that my day gets eaten up quickly with video calls and meetings, and I don’t schedule time for the other important things I need to get done. The simple act of blocking time on my calendar for projects as well as meetings has helped immensely.

Wrapping up 2022 budgets.
Most of my client’s 2022 budgets are very close to being solid. For smaller organizations this can be a quick and painless process, but as companies grow things become more complex. Why? Because we need to get other departments involved, the sales pipeline is fuzzy, new business segments are soaring/sinking, logistic and product costs are increasing, and there are questions about what is the fed going to do with interest rates. The key is to get the plans started and get the team engaged even with some incomplete information. Targets need to be aggressive, but also realistic (arguably). I just scheduled several working meetings and company presentations to kickoff 2022. Getting these dates on the calendar now helps get the budget solid by the end of the year.

Completing Process Documentation
As I’ve discussed before, I’m a huge advocate for writing procedures with the intent to simplify and improve. Documenting these can be an arduous process, but it helps with staff alignment, training, and process improvement. I’m working with one company now that wanted to focus on developing “best backroom practices.” The notion of best practices can be somewhat deceiving. Once we deem a procedure a “best practice,” we tend to stop looking for improvement or a better way with that particular procedure. Since organizational learning and process improvements need to be continuous, I instead encourage “better” practices. Best practices imply they have reached the endpoint. We should always be looking for better practices. So in this case, I guided them to change their mindset.

Business Valuations
Verbeck Associates has a license agreement with BizEquity to enable us to provide an efficient and accurate business valuation. Last month, we did three business valuations – one for a business sale and the other two to develop a value baseline. For those two, we are developing plans to increase the relevant key performance indicators with the goal to double the business value. These business owners are making better choices by simply understanding the things that increase their company’s overall value.

What are your big projects to wrap up by the end of the year? Set the deadline, block the time on your calendar, and commit to getting these done. If you want to achieve big things, you have to be more than just interested. You have to be committed. I am, and I can help you be, too. Contact me for help with any of the initiatives mentioned above!

Fourth and Final – Finish Strong and Be Ready

fourth quarter

The fourth quarter has started – the final quarter of the year.  In this fourth-and-final quarter, there are four things you should do in your business to stay strong and successful.

Get Your Team Energized to Finish the Year Strong and Be Ready for 2022

With most of my clients, I am focusing on helping them have a solid Q3 close and a strong finish to 2021.  In the quarterly review meetings, we are looking at the numbers and ensuring that everyone understands the business’s vision and long-term strategy.  I find that, generally, everyone is 70% aligned. We use the opportunity to increase that percentage by having an in-depth discussion of the historical quarter’s results, and then looking at the rest of the year and going into 2022 to align the teams’ vision and long-term strategies. Knowing where you stand can give you motivation and energy for what needs to happen next.

Ensure a Solid Q3 Close

If you’ve established effective processes and routines, your accounting staff should be keeping up with the necessary tasks to ensure you have accurate numbers and information for future decisions. If not, focus on getting these procedures polished (checklists are a great help to this) and getting your staff on board with doing them well EVERY month.

Get Your Short-term Targets in Focus

What are you hoping to see happen in your business during the fourth quarter? Write these goals down, narrowing them to be realistic, measurable, and fitting for your team.

Start the Budget Process

2022 will be here soon so you’ll need to have your budget in place to ensure an effective transition. It may be a simple matter of copying and tweaking this year’s budget. Or, you may have to revamp if, for example, some areas of income didn’t match your expectations. Get input from your staff. Consider cost-cutting measures or redirection of funds to more effective endeavors such as product development or marketing for next year.

Bonus Task

I find it interesting the statistic that 98% of business owners don’t know how much their business is worth.  Their business is their most valuable asset, yet most have no idea of its value until they decide it’s time to sell. I know several owners currently looking to transition out and “retire,” but the offers they are receiving are substantially less than they anticipated.   

In addition, not knowing the current value of your business makes it harder to intentionally increase it over time with well-informed decisions.

I suggest all business owners do a business valuation every few years. If you haven’t done this, let’s arrange to do one now. Our valuation process is inexpensive and efficient and you’ll be pleasantly surprised at how the information helps you as you head into 2022.

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!