How to Run a Monthly Financial Review Without Putting People to Sleep

Monthly review

Let’s face it—most business owners and staff don’t look forward to monthly financial reviews. They either dread them, delay them, or delegate them. Why? Because too often, the meeting feels like a confusing spreadsheet parade or a guilt trip over missed targets.

But it shouldn’t be that way.

A monthly financial review is one of the most powerful tools you have. Done right, it gives you a clear snapshot of where your business stands, where it’s heading, and what adjustments you need to make. I’m a numbers guy and love numerical tables, but that’s very dependent on the audience of the meeting.  For most owners I deal with, it’s less about crunching numbers and more about telling the story behind those numbers.

Here’s how to run a financial review that’s efficient, insightful, and yes—worth staying awake for.


1. Focus on Trends, Not Just Numbers

Stop obsessing over a single month’s data. Business performance rarely moves in a straight line. Instead, zoom out and study patterns across time.

Ask:

  • Are sales steadily growing or losing momentum?
  • Are margins staying strong, or slowly slipping?
  • Is your cash flow behaving as you expected—or are there surprises?

Lay out the last 6–12 months side by side. This birds-eye view helps you catch subtle shifts before they become full-blown problems. It also enables you to recognize what’s working so you can do more of it.

Pro Tip: Color-code or graph key metrics to make trends jump off the page. Visuals beat walls of numbers every time.


2. Look at KPIs, Not Just Financial Statements

Your income statement and balance sheet tell you what happened. Your KPIs tell you why.

Choose 5–7 key performance indicators that reflect the true health of your business. These will vary depending on your industry, but may include:

  • Gross profit margin – Are you pricing your products or services effectively?
  • Accounts receivable days – How quickly are you collecting money?
  • Labor efficiency – Are you getting the correct output for your payroll investment?
  • Inventory turns – How fast is inventory moving? Are you overstocked or running lean?

Understand the impact of slight improvements.  For example, a 5-day improvement in DSO could mean a $65,000 increase in cash.

Track these KPIs consistently—monthly, quarterly, annually—and discuss them out loud. When you put numbers in context, they become tools for decision-making, not just reports.

Pro Tip: Assign ownership. Make someone responsible for each KPI, so there’s accountability and follow-through.


3. Ask Two Simple, Powerful Questions

Once you’ve reviewed the data, don’t stop there. The real value comes from discussion and decisions. Ask:

  • What’s working that we can double down on?
  • What’s not working that we need to fix—or what do we need to stop doing altogether?

These two questions force you out of passive observation and into active strategy. They help your team focus, prioritize, and align on what to do next.

Pro Tip: Write down the answers. Turn them into real action items and assign next steps with deadlines.


4. Keep It Short, Structured, and Actionable

If your financial review takes two hours, you’re doing it wrong. Aim for a meeting that’s:

  • 45 minutes max
  • Driven by a one-page summary or dashboard
  • Ending with 2–3 specific action items

The goal isn’t to analyze every penny—it’s to surface what matters and make clear decisions. I use our CFO report as the basis for the discussion.  A tight, focused structure keeps your team engaged and turns the review into a rhythm, not a chore.

Pro Tip: Stick to a consistent format and time each month. Make it a habit that your business can rely on.


Bottom Line: Use It to Lead, Not Just Look Back

Your monthly financial review shouldn’t feel like punishment. It’s your chance to lead your business on purpose, not just react to what’s already happened.

When you bring strategy, structure, and storytelling to the table, financial reviews become energizing. They spark new ideas, surface issues early, and give your team confidence in the direction you’re heading.

So no more dreading the numbers. Use them to drive clarity, alignment, and momentum.

Contact me for help in crafting a better approach to monthly financial reviews.

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

continuous improvement

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:

  1. Standardize first. Establish consistency in your processes.
  2. Measure and analyze. Identify inefficiencies and areas for improvement.
  3. Improve and refine. Eliminate bottlenecks, cut waste, and optimize workflows.
  4. 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.

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

2024 year end

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!

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

quarterly

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:

  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 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!

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!

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!