Almost Half-Time

Well, the second quarter is ending.  June 30th is Tuesday and July 4th weekend is NEXT WEEKEND!  On Tuesday, 2015 will be half over.

There are two more business days of the year to bring your business’s Q2 objectives down the field.  It’s just a measuring point, but a very important one.  From a CFO’s perspective after Tuesday can be the ‘lull before the storm’.  It is about to be an extremely busy and important time of year for many of us.

We need to take a deep half-year look – see what we did well, things that we didn’t, and look forward and tune-up the second half year strategy and business plan.

It is halftime. In sport, halftime is a time the coach and the players review the first half’s results, evaluate the competition, and develop a strategy and action plan for the second half.

That’s exactly what CFO’s and business owners must do next week.

How did you do during the first half? What were your sales? What was your gross profit? How do they compare to last year’s numbers? Compared to plan? How was your customer profitability? Expenses? Overall Profitability? DSO? Inventory levels? Cash in bank? Other metrics?

It is extremely important to take a critical look your business profit and cash drivers – where you are today and prepare a second-quarter plan.  You need to check the scoreboard and develop what-if’s for the second half of the year. You need to plan your cash needs for the rest of the year and identify efficiency improvements.  You need to provide your team some inspiration.  What’s their mood?  What support do they need?

Check and, if necessary, reset your mindset!

So, use this ‘lull before the storm’ to get prepared now.  Take a couple hours and put pen to paper; numbers to Excel.

  • Review your first 2 quarters’ objectives – the top 3 overall business goals
  • List some wins for the year so far
  • Begin prepping your team for the month-end close – many balance sheet reconciliations and checklist items can get done in advance.  Do them next week.  We need to get solid numbers fast.
  • Identify all your business drivers (growth, profit, revenue per patient/per invoice, cash flow drivers) and have your historical data formatted.  If you haven’t done so, do.
  • Plan Cash needs now – update your 13 week cash flow forecast
  • Set-up the Q2 Team Meeting to review the scoreboard results and the 2ndHalf-Year Business Plan – set the deadline on your calendar now.  How about July 18th or the 23rd?  Book it  – if you’re a big company or a one man show, book it on your calendar.

Also, get prepared to take some time over the Fourth of July weekend for some R&R.  It’s summer and life is moving fast.  Get outside and enjoy it!


Back to Cash

I’ve been using a cash flow process for all of my clients for years.  It helps business owners get a handle on their cash situation – be prepared and get in control.  We meet on a weekly basis and go through the 13-Week Cash Flow worksheet.  We review results for the prior week and recast the next 13-Weeks.  Simple, but very effective.

When you first start using the process – it’s awkward – scary – and most likely inaccurate.

I first started using a 13-Week Cash Flow process with a company I owned  – primarily out of fear.  We were a small company with 12 employees.  Every week, we’d freak out about how to make payroll and pay our bills.  The insurance bill in August almost put us out of business.  We made the typical mistake of reducing our salaries to reduce payroll.  Several times had come out of pocket to cover payroll and vendor bills.  We were growing our sales revenue, and we were profitable – but it was very very stressful and not very much fun.

We started using a 13-Week Cash Flow process.  A very simple concept tracking inbound and outbound cash on a weekly basis.  We started monitoring/tracking/predicting cash ins and outs on a daily basis for the first 4 weeks, then weekly for the other 12 weeks.  We’d predict cash receipts and accounts receivable turnover.  We’d schedule out all cash disbursement – payroll, rent, telephone, vendors, health insurance, worker’s comp, etc.  Again, daily for the 1st 4 weeks, then weekly thereafter.  We met every Wednesday – review the previous week’s predictions vs. actual and recast the next 13 Weeks.

First, we were petrified.  Cash out was (generally) predictable.  Cash in was not.  We had big negative cash weeks, but we could see the light at the end.  We started focus on profitable and steady sales growth and accounts receivable process and collection.

After time – we were more confident.  We focused and improved on our A/R collection  – developing a much better and accountable credit process.  We smoothed out the sales cycle and production and became much more profit and cash oriented.  A better, less stressful, and more valuable business.

I do this now with most of my clients – it not only get business owners focused on their cash flow, but more importantly takes some serious stress out of the business owner’s life.

No matter the size of your business, cash is king.  I love George Cloutier’s book ‘Profits Aren’t Everything, They’re the Only Thing’ – but profit isn’t usable until it become cash.  Also, when profits take a hit, intelligently using cash let’s you survive and keeps you in business.

If you have a cash flow process, I’d love to hear about it.  If you don’t have a process in place – download my template and get started.  It takes a month to get in the swing, but this straightforward process will make your life better and less stressful.

Think Cash!





Ye ole 2HYBP.  I love the term.  I got the it from working with a couple guys from Okidata years ago.  It’s just what they called it.  The second half year business plan.

June is coming to a close.  I know – It’s hard to believe the year is almost half over.  As they say – time flies.  In our business year, it’s almost half-time and now is the time to start putting together the 2HYBP.

Your initial 2015 business plan was published in November or December with data and assumptions from whenever.  Fact: We now have better data, a solid history for the year, and hopefully a good read about orders and sales for the second half of the year.

It’s time now to look at second quarter goals and take stock as to where you are.  Make a focused final push to finish the half out strong.

Finance people – Start planning the quarter financial close so you can get your data finalized quickly. Many general ledger accounts can be analyzed and finalized now.  Get started on the close now.

As a business leader, it’s now time now to begin to 2HYBP planning cycle – start getting your historical info, meet with your team, and prepare to update your operating plan for the second half of the year.

I am working with a client now with 2 business segments – a wholesale model and a direct to consumer business.  The initial targets we set for each business made sense in December, but now with actual results, we are making some significant changes with the direct to consumer business.  We didn’t hit the targets we thought we we would – partially our fault and partially the reality of the market.  Nevertheless, we are  redoing the 2HYBP so we finish strong.  You need to do the same.

Quarterly, I recommend getting out of the office with your team to ensure everyone is in sync.  People take vacations in the summer, so get the meeting on everyone’s calendar now.

Remember – a lesson learned from triathlon racing and my business consulting – finish strong!  Now is the time to focus on a strong finish to the 2nd quarter, prepare for half-time and the second half.