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Smart Steps For Your Success - May 29, 2009

Posted by: Rick Arthur in Articles

Did you achieve your personal and business goals? If you are like the majority of busy people, you didn’t write your goals down. There are many reasons not to write our goals but unfortunately most of them are negative. Does this sound familiar?

“If I write down my goals and don’t achieve them, I have a constant reminder of failing”
“· I like to be flexible, writing goals down puts limits on me”
“I don’t have time; I’m busy trying to get things done”

There have been studies done over the years that confirm writing your goals and looking at them regularly greatly increases your success in achieving them. What is interesting is that goal setting works both personally and in business environments. Many years ago I learned about goal setting and have used it religiously to help me move forward both personally and professionally.

Goal Setting

So what is goal setting? Goal setting is a process that helps you get clear on what you want, make an action plan to help you get there, launch into action, and persist until you reach your destination or find a better one.

Texas oil billionaire H.L. Hunt once said that there are only two ingredients necessary for success. The first is that you have to decide exactly what it is that you want. This is where he believed many stumble. They never decide what it is that they really want. They may think they want something from time to time, usually something generic and vague like "being rich" or "a better job," but it's just a fleeting thought; they never truly get clear on what these things really mean.

Hunt said that once you've decided what it is that you want, the second ingredient is to determine the price you have to pay to get what you want, and then resolve to pay that price by establishing your priorities and getting to work.

Many who get past the first ingredient never apply the second one. They don't understand that you have to pay the price in full before you can claim your....

Five Tips To Improve Your Company's Financial Performance - Mar 31, 2009

Posted by: Rick Arthur in Articles

Investor and billionaire Warren Buffet once said, “Only when the tide goes out do you discover who’s been swimming naked.”

I think it’s suffice to say that the tide has gone out in our financial world and it’s easy to see who’s been left out to dry. The country has just been shocked out of a 10-year economy boon where money flowed freely and success was effervescent. During that time, problems in your company’s finances were most likely hidden because of the tremendous cash flow that was coming in. Financial statements were not exact and operating budgets were not meaningful – and they didn’t need to be. Unfortunately, times have changed and your company’s financial “pains” are now seeing the light of day.

As a seasoned chief financial officer (CFO), I’ve found there are five common “pains” business owners feel regarding their financial well-being. Here’s a brief look at what may be ailing your company’s fiscal health in today’s economy:

Cash Flow – Companies either can’t produce it or their capital lines have been cut. As a business owner, you probably tend to work in the business instead of on the business, which ultimately hinders your cash flow. Most businesses are not able to forecast their cash flow, which reduces their ability to anticipate shortfalls in the future and correct them.
Lack of Timely and Accurate Financial Statements – Often times, financial statements are created by an outside Certified Public Accountant (CPA) and mostly used for tax preparation. Instead, you need meaningful, accurate and timely financial statements that are created with the purpose of helping make business decisions and validating those decisions.
Key Financial Indicators – How do you know things are going according to your plan? You need a dashboard, just like your car, to tell you the speed of the company, if you’re close to overheating or if you need more gas. Your key financial indicators will tell you what’s in the pipeline and if your products and sales are doing what they should. In today’s economy, you don’t have the luxury of reaction – you need to be proactive with knowing where you are today.
Lack of Operating Budgets – You need a budget that is realistic and meaningful. Your budget is used to drive pricing and profitability. In today’s ever changing environment, you may need several variations of your budget. Your operating budget is your measurement tool for success.
Outdated Systems and Processes
– Proper systems and processes help tighten everything up and make your company run efficiently and effectively. You need to make the most use of everyone’s time and do thin....
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Testimonial - Clockwork Marketing Services Inc. - Sep 14, 2008

Posted by: Rick Arthur in Testimonials

Rick has done a tremendous job assisting our company with accounting procedures and systems. He starting working with us as we were making a transition in our accounting operations and entering a growth phase of the company. During this period of time, he assisted with completely reorganzing our accounting systems and processes. His work has been instrumental in our success. As a small business owner, I call on him for oversight, advice and from time to time just a good pep talk. Hiring Rick was one of the very best business decisions we have ever made.
Maxine McBride
President/Owner - Clockwork Marketing Services, Inc.

The Price Is Right Or Is It - Sep 14, 2008

Posted by: Rick Arthur in Articles
"The Price is Right" television show has survived for years by giving people a chance to guess the right price for merchandise and services. Many business owners still play this game, but with much higher stakes. How do you set the prices for the products or services you sell? Do you rely on a fixed-price markup from your cost or on a gut feel? If your pricing strategy is based on either of these tactics, you may be losing money or losing customers.

The three most popular approaches -- in order of their use by entrepreneurs -- are cost-based, market-related and competition-driven pricing. Frankly, any wise entrepreneur should take into account all three techniques before publishing prices.
Cost-based Pricing
- Costs plus a reasonable profit
- Clear understanding of all your costs
- Labor, materials, direct overhead and indirect costs
- Estimated volume of sales to allocate costs
- Fixed and variable costs
- Product "break-even point"
Market-based Pricing
- Markets tolerance for your price
- Price sensitivity - wholesale vs. retail
- Value of "sizzle"
- Supply and demand
Competition-driven Pricing
- One-of-a-kind products
- Understanding your distinct advantage
- Consider "introductory" low-price offer
"Right pricing" is the art of choosing the best price for your inventory. It requires information, facts, analysis and a tailored strategy before you establish your pricing policy. At a minimum, your pricing policy should take into consideration the following:
- Your true product costs
- Market supply and demand
- Anticipated sales volume
- Competitors' prices
- Economic conditions
- Business location (retail)
- Seasonal fluctuations
- Customer psychological factors
- Credit terms and purchase discounts
- Customer price sensitivity
- Desired business image
- Market share
The biggest mistake small businesses make concerning pricing is not reassessing pricing on a regular basis. The marketplace is constantly changing making it mandatory you keep a close watch on your pricing. Raise or lower prices as necessary keeping the above suggestions in mind.
In order to ease the pain of your customer when increasing prices, you may want to consider the following:
- Notify your existing customers of the increase and, if possible, give themthe opportunity to purchase at the existing prices
- Try and advertise the increase along with "new and improved" products or services
- Give the customer something in return for the increased costs. For example, free shipping with orders above a certain value
- If possible, delay the increase for existing customers
Successful businesses develop pricing strategies along with written policies and procedures to insure they meet their projected sales revenue and margins. Are you a winner at "The Price is Right"?

Dispelling - Sep 14, 2008

Posted by: Rick Arthur in Articles

For successful companies, timely and accurate financial statements are the cornerstone of sound financial management. While the information is historical it provides information critical to the management of any business. The meaning of the numbers comes alive through meaningful comparisons and analysis. Yet there are many business owners and operators that miss the opportunity to manage their business because of their belief in certain myths. Here are a few truths behind the misconceptions.
Myth #1: Financial statements are just history; I mange my business forward. The banks and tax man can use the financials but they aren't much use to me.
Any business owner who thinks like this doesn't understand the constant loop between financials and the budgeting process. Budgets need to be dynamic, adjusting to changes in goals or results. Planning means understanding how your business will reach these goals.
Your historical financial statements must be the bedrock on which your budget/plan is built. While you can prepare your budget independently from the prior year's financials, it's important to bridge the information back, define differences and consistencies and plan accordingly.
It's also important to understand that budgets are worthless without results to compare them to. Comparing actual result to budgets will tell you where you over-performed or under-performed, where you have opportunities or unexpected superior results. Analyzing this information will help you incorporate the appropriate standard procedures into your business and show you where you need to make repairs.
If you don't take the time to compare budget plans to monthly financials, you are letting opportunity pass you by.
Myth #2: I don't really understand my financials, but they seem to keep the bank happy, so I'm okay with them.
Believe it or not, this statement is too common. Obviously, the banking relationship is a critical one, maybe one on which the life of the business is underpinned. But, why hand financial statements to the banks without understanding how the bank is going to use them? You need to be able to look at your financial statements like a banker.
This is a tall order, so let your B2B CFO® help you. Ask "How will the bank view these financials? What are the points that are critical to the bank? What parts of these statements worry the bank (i.e., losses, excessive leveraging, poor current ratio, inappropriate asset investment)?"
Better yet, address these questions monthly or quarterly so that you can make necessary changes before it's too late. For example, your financial statements may indicate that you should reclassify officer loans, pay some payables, and run the cash balance up or refinance some debt. Having this information monthly or quarterly can enhance your banking relationship.
Myth #3: My financials indicate I made (or lost) money, but I don't believe it.
Not many people say this out loud, but we wish they would, so we can help them better understand their situation. It is not responsible to allow disconnect between your perception of your business performance and the reality because there is wonderful knowledge in understanding the difference.
First, your financials are based upon certain assumptions or accounting policies, which may be minor in some businesses and huge in others. These may include depreciation calculations, amortization, bad debt recognition, revenue recognition and tax provision computations, etc. You need to understand those policies and be okay with them. We cannot productively discuss your financials without basic agreement on the appropriateness of these policies, or at least framing our conversation in the realities of how these policies are applied.
Second, it's important to understand that profits don't always feel like profits. Profitable businesses can and often do have negative cash flow. A vendor screaming for payments or wondering if you can make next week's payroll doesn't feel like profit. Similarly, cash flow issues can mask losses. Many businesses are awash in cash even as they fail. Receivables are collected and become cash; inventory is reduced and becomes cash all while the business is literally cannibalizing itself. So, you also need to learn to understand your cash flow statement, not just your profit, and build appropriate plans.
In any case, it's important for you to ask questions about your financial statements and how they impact your business. And, if you don't understand the answer, ask again, persist again until you sort out where your perception of the financials collides. This knowledge gives you a true realization of issues so that you can fix them before you have consumed years of hard-earned equity.

Smart Steps For Your Success - May 29, 2009

Five Tips To Improve Your Company's Financial Performance - Mar 31, 2009

Testimonial - Clockwork Marketing Services Inc. - Sep 14, 2008

The Price Is Right Or Is It - Sep 14, 2008

Dispelling - Sep 14, 2008