Maximizing Your Business in the New Year


If anything highlights the importance of maximizing cash flow and reducing the cost of leverage, it is the surge in interest rates: from 3.75% in December 2021 to 7.5% at the close of 2022. As we embark on this new year, all small and medium-sized businesses (SMBs) need to set targets for improvement – the stakes are high.

What methods are effective in maximizing your business in the new year?

The Weekly Scorecard

One way to achieve this is by implementing a weekly scorecard to provide feedback on the business’s performance, instead of relying on month-end financials. This allows for real-time analysis of your business’s performance, making it easier to identify areas that need improvement and take corrective action as needed. I provide a tool here to make this easier.

13-week Cash Flow Forecast

Additionally, updating a 13-week cash flow forecast on a weekly basis is essential to understand and monitor inflows and outflows of cash, and the ability to identify any potential shortfalls, so you can take steps to mitigate them. Check out mine here and read more on increasing your cash flow.

Automation of Processes

Automating and improving processes is another way to maximize cash flow and reduce the cost of leverage. Streamlining processes not only saves time and money but also increases efficiency and accuracy – and ensures that results are real-time.

An Up-to-date Valuation

In these times, national business valuations are down, with public companies’ valuations being down as much as 20%. For small businesses, as defined by the Small Business Administration (revenue between $1 million and $40 million, and fewer than 1,500 employees), valuations can be even lower.

This makes it an opportune time for small business owners to update their valuations. I use BizEquity for a high-quality, relatively inexpensive, current valuation with industry comparisons and key performance indicators (KPIs) to improve your company’s overall valuation. Understanding the value of your business helps you to identify any areas that need improvement.

A High-performing CEO and Team

None of the above will work if your leadership and team aren’t performing at their best. High-performing CEOs and team members:

· Closely monitor their results

· Are aware of the drivers of the business

· Consistently track progress

· Adapt to achieve their goals

As a business owner, it’s important to not wander through the year without measuring your results and implementing tools for improvement, and encouraging your entire team to do the same. A consistent methodology, rhythm, and measuring can help identify what works, what doesn’t, what your competitors are doing, and how to best serve your customers.

This year, take a more disciplined approach to maximize cash flow and profitability. Implement a weekly scorecard, automate and improve processes, use a 13-week cash flow forecast, refresh your business valuation, and develop high performance in yourself and your team. You’ll increase efficiency, improve performance and ultimately increase the value of your business.

Let me help you evaluate and implement these methods for a very successful year!

Grow or Die? No, Scale or Die

scale or die

The old saying “grow or die” is now “scale or die.”

I love the Grateful Dead song, “Uncle John’s Band.” There are so many great lyrics …

When life looks like easy street, there’s danger at your door …

but the lyric that hits me is

Woah, oh, what I want to know, where does the time go?

And like that it’s November. And November means “planning season.”

It’s time for us to push to finish the year strong and set our plans for next year. For business owners, it’s a crazy time of the year with getting budgets together, starting CPA audits, holding forecast planning sessions, scheduling the annual offsite, and conducting year-end board meetings to finish the year strong.

As you set your targets for next year and plan for growth, here’s a tip.

Don’t let overhead get ahead of you.

For many companies, overhead equals death! We have all seen businesses that grow the company’s headcount and overhead costs based on planned revenue. They add a marketing department instead of outsourcing specific expertise or making sure they have strong operational processes in place. They add staff based on expected volume without thinking about outcomes. This is a big mistake.

The idea is to scale. Do more with the same or less. Not do the same with more. Expected revenue does not equal actual revenue. When we decide to add people, we need to ask, “Are we making things bigger or are we making them better?”

I love using modeling projections tools – it’s a very powerful exercise. But we need to be careful to use the correct assumptions. By definition, projections will be wrong, but with a focused plan, accuracy dramatically improves. Businesses need to look at their people and processes and think about expected outcomes. What are the rhythms of daily, weekly, monthly, quarterly, and annual tasks? Specifically – what are the metrics and measures that indicate staff has achieved the outcomes expected of them? Work on scaling by using efficiencies, training, technologies, and tools.

Effective scaling increases your revenue at a faster rate than your costs. Today’s technology and tools combined with improved processes and training can help your company grow using the same or less overhead (obviously dependent on your business.) Be intentional in setting specific goals, milestones, and measurements for the upcoming year, and involve your team in the process. (The last thing you want to do is overwhelm them, but you can incentivize them to be more efficient and intentional in scaling their own processes for the good of everyone.)

And while doing this, don’t forget to focus on your current priorities to complete the goals you set earlier this year. Even if you only get 80% of the way there, you can still finish strong rather than taking an unfocused approach and accepting whatever happens. Use what you learn to prepare for next year’s proper scaling so that your growth can be a result of actual earned revenue to set you up for the future.