Discovery - Sep 15, 2011
Posted by: Wendy Nelson in Articles
It's the beginning of most relationships - personal or professional. It's part of an investigative process. A child learns how to interact with their environment through trial and error, and a gradual understanding of how one action leads to a desired response, while another action can create different results entirely.
As in life, business relationships are built on the cornerstone of discovery. Whether meeting with a potential client, vendor, employee or investor, it's important to know who you are talking to. When I meet with a new contact, I take the time to talk with them about their Company. I want to learn where they have come from and where they seek to go. I like to meet with multiple people from the company so I can get a sense of what I like to think of as the three C's: commitment, communication and culture.
If employees believe in their executive team, it generally comes from good management. Employees feel that leadership is committed to the growth and health of the company, and communicates the mission and strategy to the team. Culture is positive in a deliberate, carefully managed way.
Because I'm a known numbers geek, I also like to know their size (number of employees, annual revenue, etc.) and competitive share. (Hmmm... Maybe I should call it the 4 C's?)
I constantly seek new angles from which to view my clients - what haven't I already considered? And if I can't think of anything new - could I compare data that doesn't seem directly related, but that might give us an "Aha" moment if viewed in a new way?
Phrased another way, without curiosity, and an interest in learning something new, it's possible to stagnate. According to Daniel J. Boorstin, "The greatest obstacle to discovery is not ignorance - it is the illusion of knowledge."
So go exploring and let me know what you discover - about your business, your industry, or maybe even yourself.
When Does An End Become A Beginning - Jul 9, 2011
Posted by: Wendy Nelson in Articles
I watched the shuttle launch on Friday morning with mixed feelings. Witnessing the last launch made me think of how far we've come, the tragedies we've survived, the triumphs... But even as the build up for the launch was occurring, clever entrepreneurs have been talking about options to continue the program as a private venture. Virgin Galactic's Richard Branson already has hundreds of excited travelers signed up for future launches. The private programs will use newer, better technology, and will likely improve the end results exponentially.
Products and services have natural life cycles. For a while, something may be all the rage, but it will eventually be replaced with something better, faster, bigger (or smaller), or otherwise more interesting. A business with a sound strategy will watch the horizon, and prepare for the day that their "cash cow" finishes its run long before that day actually arrives. And (likely with mixed feelings) the business will launch newer, better products, ever improving their customer experience.
But change is difficult. It’s a challenge to communicate, implement, and complete. For every person that embraces a change, there will be at least two others arguing why it will never work. I did a Google search for quotes about change, and it appears that the list of options is endless. A couple of my favorites are included below:
Change is inevitable - except from a vending machine. ~Robert C. Gallagher
The only difference between a rut and a grave is their dimensions. ~Ellen Glasgow
Lets keep out of the ruts, shall we?
Are You A List Maker - Apr 25, 2011
Posted by: Wendy Nelson in Articles
I start every day with a list. My lists are living documents with both personal and professional requirements included on them. They are prioritized, and each task has a “due date” associated with it. I think some of this structure is a natural result of the work that I do – providing part time CFO services to multiple small businesses – but also good discipline learned while I was still in school (and the dinosaurs walked the earth).
My lists often extend several weeks (or even months) into the future. They help me fine tune strategy and direction, and help to eliminate “noise” allowing me to focus on what truly (absolutely) needs to be done right now. If I find myself pushing the same items into the future several times, then I reassess whether I need to do them at all. If they truly are critical, then I will only push them a few times before finding the time (or courage) to get them done. Otherwise, I may remove them entirely or at least put them in my “on hold” group.
Imagine a situation where you are in your office and your team members come in periodically over the course of the day – each with an emergency that they believe needs your attention right now. If you don’t maintain a list, you won’t know which emergency to focus your energy on, and which situations you need to provide general guidance for (while simultaneously delegating back to the individual raising the issue). You will spend entire days, weeks and even months resolving these issues and find yourself working constantly IN your business, rather than ON your business.
Whether you choose to maintain your own list is your business, of course. I do recommend that you find a path toward peace and intellectual clarity, though. There is truly something to be said for the joy you experience when you finally get to start crossing things of the list – in fact, I try to give myself a couple of easy items each day, because the energy boost I get for crossing off the easy ones helps me to tackle the larger, more problematic tasks. (4/25 – write blog – check!)
What Are Entrepreneurs Made Of - Apr 11, 2011
Posted by: Wendy Nelson in Articles
Ever wonder what makes one entrepreneur more successful than another? Or whether you have what it takes to beat the odds? I went in search of the characteristics critical to success and came up with the following (courtesy of about.com):
An Entrepreneur needs to work hard. Really hard. It isn’t enough to simply have an idea, even if it’s a great idea. You need to put your energy into making that idea a reality in order to succeed.
"The critical ingredient is getting off your butt and doing something. It's as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer."
- Nolan Bushnell, founder of Atari and Chuck E. Cheese's
It’s also helpful to have a positive attitude. Coupled with a hard dose of reality (optimists need not apply), a positive attitude will help you navigate around obstacles, create solutions to unsolvable problems, and motivate your team.
"When you reach an obstacle, turn it into an opportunity. You have the choice. You can overcome and be a winner, or you can allow it to overcome you and be a loser. The choice is yours and yours alone. Refuse to throw in the towel. Go that extra mile that failures refuse to travel. It is far better to be exhausted from success than to be rested from failure."
- Mary Kay Ash, founder of Mary Kay Cosmetics
While it’s probably safe to assume Fort Minor didn’t write “Remember the name” about entrepreneurs, the chorus caught my attention as a perfect description of what it takes to succeed in starting a business: “It’s 10% luck, 20% skill, 15% concentrated power of will, 5% pleasure, and 50% pain…” Starting a business is no simple task, and it’s important to go into it knowing that knowledge and talent (while helpful) aren’t enough. For each success, there will likely be a couple of painful failures, and for each moment of professional bliss, there will likely be an hour of misery. I’ll leave you with this thought:
"If it really was a no-brainer to make it on your own in business there'd be millions of no-brained, harebrained, and otherwise dubiously brained individuals quitting their day jobs and hanging out their own shingles. Nobody would be left to round out the workforce and execute the business plan."
- Bill Rancic, winner on Donald Trump's "The Apprentice"
Best Tip For Success In Starting A Business - Mar 29, 2011
Posted by: Wendy Nelson in Articles
I started my own business in January, 2010, and with over a year under my belt, I’ve learned a fair amount. There have been ups and downs, successes, and… let’s call them lessons learned. There is one lesson, though, that I think is the single most important, and I’d like to share it: The most valuable asset you have is your network. (If you don’t believe me, take a look at the advice from two other entrepreneurs in “How to transition from Corporate Executive to Small Business CEO”.)
I had worked in large companies for most of my career (prior to starting my own practice as a part time CFO and partner at B2B CFO®). Fortunately, I genuinely enjoyed my co-workers and have stayed in touch with many of them over the years, even as I changed jobs (or moved across the country). When I took a leap of faith (in myself and my career), I was very humbled and touched by the support I received from these same friends and co-workers.
I frequently take calls from individuals who have heard or read about B2B CFO® and are interested in joining us. They have many questions about the Company, the Founder, the other Partners, and what to expect in their first year(s). I remember this diligence process because it’s very fresh – I myself called about a dozen partners in the fall of 2009 with similar questions.
The one piece of advice that I am sure to share with each of them is that it will be critical to their success to have a network of people to help them succeed.
Some of my friends have worked with the same company for many years. They associate with current co-workers and attend Company sponsored events. In the unfortunate event of a reduction in force, these are the friends who struggle the most to find a new place to call their professional home.
It’s critical to maintain interests OUTSIDE of your conventional employer. This might be volunteer work, professional associations, athletic clubs, coaching, or any number of other options. Not only will these activities help you to stay balanced at times when your job is overwhelming, but they will also provide you with a safety net and a sense of security that your job isn’t your whole life.
If you’ve been letting your network slide, consider reaching out to an old friend for lunch or coffee. Update your LinkedIn profile. Join a professional association. Get out there and get connected.
Is Luck A Factor In Business Success - Mar 11, 2011
Posted by: Wendy Nelson in Articles
I had lunch yesterday at the newly expanded Mr. Lucky’s on 6th with an impressive group of professionals. The sandwiches were delicious and the conversation was interesting (Thank you, Alecia, for putting it together).
Driving back to the office, I was thinking about the name of the restaurant and the fact that March 17th is St. Patrick’s day. I started to wonder just how much luck matters in achieving success. So, naturally, I did a Google search.
As it happens, this is not a new question. Going as far back as the mid-first century AD, a Roman Philosopher was quoted “Luck is what happens when preparation meets opportunity.”
I found an article on About.com titled: Do Entrepreneurs Need Good Luck? (Alex Rovira and Fernando Trias deBes). They came to the basic conclusion that “In Business, we make our own luck”. They found that individuals who were generally perceived as lucky shared certain traits (Responsibility, Learning from mistakes, Perseverance, Confidence, and Cooperation).
The Harvard Business Review posted an article by Anthony Tjan: “Make Luck Work in your Favor”. The article breaks luck into three categories: Circumstantial Luck, Constitutional Luck, and Ignorance. The themes are very similar, however, in that it seems as though what we like to call luck is really the result of hard work, a positive attitude, and a reasonable ego.
So the good news is that it appears as though with hard work and determination we’re all capable of creating our own good luck. The bad news is that if you were counting on winning the lottery, you may have to re-evaluate (though you could revisit “dumb Luck” above).
And if you think you might need a little help along the way, I did find a site covering good luck symbols for business. As I scrolled down the page, I came to a section about lucky coins, and I was reminded that I carry a $2 bill in my wallet – it was a gift from my Grandmother when I was a child and I’ve never parted with it. I can’t say I keep it for luck, exactly – it’s more of a sentimental thing – but I would sure feel unlucky if I ever lost it.
Companies Plan New Hires And Merit Increases In 2011 - Mar 3, 2011
Posted by: Wendy Nelson in Articles
I read a CFO Zone article this morning: http://www.cfozone.com/index.php/Newsflash/Merit-raises-are-coming-back.html full of encouraging statistics for the year ahead of us. Companies are budgeting 3% in merit increases on average this year. It's still a bit down from the 3.5-4% averages we saw per recession, but it's a notable improvement of the 2.7% budgeted last year.
In addition, some 42% of companies plan to hire "critical skills" employees this year, and 40% are seeking professional and technical employee additions. It has been my direct experience that companies are moving faster with lower level positions (ie less expensive resources) than higher cost executives. I think this is a natural starting point and will begin to shift as companies develop greater confidence that the recovery is “real”.
Some of the intended hiring could end up covering attrition as overworked employees may be seeking "greener grass" at new companies. Because of the layoffs and hiring freeze actions of the past 3 years, some employees feel overworked and underappreciated. These employees will likely seek to move as the job market improves, but the overall message appears to be one of positive strides out of recession.
Some of these companies are turning to contract labor to fill gaps in their infrastructure. Often, a company can acquire access to a considerable amount more experience and knowledge in a part time resource for the same cost as a full time employee with less developed skills.
This applies to me directly as a part time CFO, but it's also applicable in other fields such as IT, HR, and Social Media. Smaller businesses have many of the same needs as large companies in these areas, but have less working capital available to hire full time resources, and less work for that employee to complete. Part time employees and contract labor can provide a perfect solution until the position is “big enough” to occupy a full time employee.
What Can We Learn From Us Presidents - Feb 16, 2011
Posted by: Wendy Nelson in Articles
With President’s Day rapidly approaching, I thought it would be interesting to take a look at some famous presidential quotes for inspiration. After searching Google for a while, I came up with three favorites, all of which have practical application in business and life for all of us….
“My Great concern is not whether you have failed, but whether you are content with your failure.” Abraham Lincoln
Starting a business, and running a business can be rough work. Challenges abound and failure is more common than you may have anticipated going in. According to the SBA, something like 30% of new small businesses with at least one employee fail within the first 2 years, and by the five year point, about half of the businesses will have closed their doors. It takes perseverance and a willingness to start over after failure in order to succeed. And speaking of perseverance…
“Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan “press on” has solved and always will solve the problems of the human race.” Calvin Coolidge
If you started a business to follow a dream, keep this thought front of mind. Nothing can prepare a person for the stresses, disappointments (and fortunately successes and validation) that running a business of your own can bring.
My final selection feels especially timely in these, the first timid days of optimism following the recession:
“In the emerging global economy, everything is mobile: capital, factories, even entire industries. The only resource that's really rooted in a nation--and the ultimate source of all its wealth--is its people.” Bill Clinton
Americans are made of some incredibly stern stuff. Our capacity for innovation has always made us a great nation. Let’s celebrate our presidents on Monday, but let’s celebrate ourselves as well.
How Much Do You Spend On Advertising - Feb 8, 2011
Posted by: Wendy Nelson in Articles
While reaction to advertising is subjective and each of us has a different response, I would venture to say that the E Trade commercials were just OK this year in comparison to prior years. The Chrysler commercial with Eminem was very well done, and that Groupon/Tibet commercial was just... not great. I think my favorite commercial was the Volkswagon Passat ad with the miniature Darth Vadar.
Whether or not the investment in a Super Bowl commercial (or several) will pay off, though, remains to be seen. Tracking success of advertising can be challenging to say the least.
If you are running a direct mail or email campaign which invites the recipient to respond in some way, you will be able to determine a % success rate. For example, if you mail out coupons to a certain geography and track the number of coupons used in your stores, you will be able to determine cost of the campaign, % response rate, and $ return for initial responders. If you see that you are able to sustain an increased level of sales (ie, the consumers came back multiple times after their first experience), then the return will be higher over time.
On line campaigns can be tracked through click through rates and eventual purchase activity. Other metrics might include the number of visits (and unique visits) to your site, time spent on the site, and number of pages viewed.
Regardless of the type of campaign you choose, it’s critical to keep an end goal in mind. If you are a small business, “brand awareness” is probably not enough. Campaigns should be targeted, trackable, and representative of your product or service. They should be designed to draw customers to you.
Make sure that you spend only what you can afford to spend, and stick to your budget. It may make sense to set your advertising budget as a % of sales rather than a hard dollar amount such that you can increase spending on successful campaigns.
Manage Inventory To Maximize Cash - Jan 30, 2011
Posted by: Wendy Nelson in Articles
If you operate a company which sells products, then you need to keep an eye on your inventory. Inventory can consume large amounts of cash, hampering your ability to grow as it limits your liquidity.
It is important to understand the relationship between inventory and sales. You may have certain high dollar inventory items for which sales occur at a lower volume, while lower cost inventory may turn much more frequently. You will want to manage your purchases in order to ensure you have enough of the high volume items in stock, and purchase the expensive items less frequently and in lower quantities.
Do a physical count at least once a year, in order to keep the dollar value on your books accurate. A policy requiring frequent physical counts may also discourage employee theft.
Less formally, though, you should take a quick surf through your inventory to conduct what I like to call the “dust test”. No need to pull out the white gloves, but obsolete inventory may come to your attention sooner if you conduct this sort of walk through every couple of months. If you have inventory that isn’t moving, consider offering this product at a sale price. Better to make less profit (or even take a small loss) than to lose the entire cost in addition to the storage space.
Keep an eye on industry trends as well, and manage your inventory more closely for products which may be on the verge of an upgrade. If possible, take certain items on consignment or with a right of return so you don’t get saddled with last year’s version of something. Buy just enough (or just enough to meet the next price break if you’re confident you can sell it).
Often a business owner will reach the end of the year, and celebrate a successful, profitable year. Then they will take a look at their balance sheet only to realize that they have less cash now than they did at the beginning of the year. If accounts receivable are well managed, then the issue could be that they’ve been stocking up their inventory. Managing this asset closely will allow the business to keep more cash on hand to fund operations and growth.
Turn Sales Growth Into Cash Accounts Receivable Management - Jan 10, 2011
Posted by: Wendy Nelson in Articles
Small business owners work hard to grow their businesses. They focus on important facets of their business such as product/service quality, customer satisfaction, business development, etc. If they aren’t also keeping an eye on the cash flow, however, they could be on a path to troubled times ahead. I’d like to offer up a few tips on managing accounts receivable to maximize cash flow into the business.
First, take a look at your customer contracts and payment terms. Understand the terms you are offering, and then see what your competition is up to. If you don’t require a deposit, but most of your competitors seem to, you may be missing an opportunity to increase the speed with which cash comes in the door. Unless it’s a deliberate policy to create a competitive advantage (and you have sufficient cash reserves to keep it in place), consider modifying your payment terms to require a deposit. This is especially helpful with establishing payment terms for new customers.
Second, if you offer a service that will take place over a period of time, or you sell a large product that requires manufacture & installation, consider progress billings. You will want to agree to the terms up front with your customer, but establish mileposts to enable billings though out the lifecycle of the agreement. Maybe the terms are: 30% deposit, 40% upon delivery, and the remaining 30% within 30 days of installation and training. This will limit your losses in cases of customers who cannot pay, and increase cash flow into the business to purchase materials, pay employees, etc. during the contract period.
Third, invoice as soon as you have delivered on your commitment (or as soon as your terms allow). The longer you wait to send the invoice, the longer you will wait to receive payment. Consider offering a discount for invoices paid within 10 days if cash is tight.
Finally, establish internal policies to follow up on past due payments immediately. The longer it takes to secure payment, and the more effort you have to put into collecting it, the less profitable that sale becomes. Customers who purchase frequently, but pay late habitually should be assessed to determine if they are truly “good” clients for your business.
Managing accounts receivable involves minimizing risk. You may also want to implement a policy that requires credit checks on new customers so that you can evaluate the risk/reward of a new customer before you’ve overextended your resources on a potential credit risk.
Want A Big Year Make A Small Change - Jan 3, 2011
Posted by: Wendy Nelson in Articles
It’s that time of year again – people all around us are shaping their New Year’s Resolutions. Whether these resolutions are personal or professional, they are usually BIG. The challenge I find with big resolutions is that they require a huge effort – you will need to change your behavior in a material way, and probably overnight. In my own life, I’ve found that I can actually accomplish a lot more by committing (truly committing) to much smaller changes in behavior.
In 2010 I wanted to “get in better shape”. This was not a well defined goal, though, and it would have been easy to fail. I was already exercising “some”, so “better” was a little too vague in terms of what I would need to do to get there. I went back to the drawing board and committed to increasing from 3-4 workouts per week to 5. Now that is a well defined goal, and only a slight change from what I was already doing. (You will be happy to know that I succeeded.)
I make similar commitments to myself professionally. Each January, I draft a short list of my personal and professional goals for the coming year. Each goal is clearly defined, measurable, and (most importantly) something I REALLY want to achieve in the coming year. I post the list directly above my computer monitor.
I keep the list short so that I’m not overwhelmed, and I build on the list from the prior year so that I can succeed without having to make large changes in the day to day. If in 2010, I wanted to read 9 business books, for example, in 2011 I will set out to read 1 each month. The behavior is already there, and I’m only looking to increase my challenge slightly – yet I will have an opportunity to learn so much more!
As you consider the year ahead, think about the goals in your heart – the goals that you want to achieve which will impact your life years from now. Then consider what you could do this year to get on the path toward achieving them. If you want to sell your business and retire in 2020, for example, what steps can you take this year toward that goal? Are there people you should recruit? Customers you need to understand better? Do your sales goals for 2011 align with your long term vision?
Make a small change today, to set in motion a plan for big things to come.
Testimonials - Presentation to Denver Entrepreneurs - Dec 22, 2010
Posted by: Wendy Nelson in Testimonials
Wendy Nelson was an excellent speaker who presented the topic Creating Financial Success: 5 Tips to Grow Your Cash to our group. Unlike most accounting types, Wendy made the presentation fun, interesting, and spoke in terms that the audience could easily understand. This was not the typical boring accounting presentation that people dread going to. Her points were on topic and were immediately applicable to any business owner. I like how she tailored her talk to our audience and have no doubt she could do the same for any other. If anyone is looking for accounting type person that can speak to their audience and provide solid advice that can improve businesses, Wendy would be the person they would want to bring in.
- Rick Skurla, Co-organizer - Denver Entreprenuers and Principal - Skurla and Associates, LLC
A Year Of Cautious Optimism - Dec 15, 2010
Posted by: Wendy Nelson in Articles
I’ve been reading forecasts for 2011 from multiple sources. While they might not all agree on every point, I do see a theme emerging: we anticipate that 2011 will be a year of small, bumpy improvements over the past couple of years.
In a survey conducted by TD Bank released in the 4th quarter, I picked up the following encouraging statistics from a survey of 100 executives back in August, 2010:
· 45% have seen sales start to pick up in the past year (and 58% are expecting growth in 2011)
· 39% are planning capital investments – the front runner is technology, but increases are also anticipated in development, staffing, facilities & office equipment.
The Wall Street Journal conducts periodic surveys of 56 economists and their latest update is full of encouraging signs in manufacturing, retail, consumer sentiment, etc. They also noted that the Bush-era tax cut extensions will likely further improve the outlook for next year (especially when the employee FICA reduction is factored in).
No report is without warnings and caveats, but it does feel like the consensus is that the worst is probably behind most of us.
So what are the things we’re still concerned about? Unemployment? Absolutely. Housing/Construction? Sure. But 69% of the financial executives in the TD survey worry most about cash flow management going in to 2011. There have been any number of lessons learned around use of cash, managing liabilities, evaluating staffing vs. company performance/growth. Gone are the days of excess spending. Today’s executives are carefully evaluating the use of their limited resources.
As you evaluate your strategy for 2011, I hope you’ll reach out to your network for guidance and constructive feedback. If there are areas where you business needs bolstering and you have sufficient resources to invest, go for it. We can’t exit the recession by staying home. Spend, my friends, spend.
And with that, I’m off to the mall for some last minute Christmas shopping…
How To Make Difficult Decisions With A Coin Flip - Nov 29, 2010
Posted by: Wendy Nelson in Articles
To be fair, I never make a decision based ENTIRELY on a coin flip. On occasion, though, it provides final confirmation for me.
When analyzing a problem or situation, especially a difficult choice, it’s easy to become mired in the details. You collect all of the available data, confer with friends, colleagues, relatives, and sometimes even perfect strangers if the checkout line is long enough. All of this data and these opinions can lead further into indecision, though, slowing progress toward action.
So you may decide to go back out and get more data, and more feedback. The issue with this loop, though, is that it’s endless. Consensus building is challenging, and it’s likely that a democratic approach will fail you if this is a decision for you or your company – where the buck really does need to stop with you. Chances are, there will be winners and losers, and the impacted parties will vary on either side of the decision.
This is where the coin flip comes in for me. Once I’ve accumulated the relevant data and spoken to the key people (people who will be impacted by my decision), I pull out a quarter. I pick heads or tails, and I flip. Now, there is a key element to WHY this works for me – it doesn’t really matter which side I pick, or how the coin lands. It’s just a tool for me to figure out what my gut instinct is.
For example – when I graduated from college, I was fortunate enough to have a few different job opportunities. I created a spreadsheet of the pros and cons of each, but was unable to come up with a final selection that felt rational. When I had narrowed my options to two, I flipped a coin. Heads = Job A; Tails = Job B. The coin landed on heads and my immediate thought was “I’ll do 2 out of 3”. So now I knew that the job I really wanted to take was Job B.
If you are struggling with a decision, give it a try – you just never know.
2011 Increasing Expectations - Nov 15, 2010
Posted by: Wendy Nelson in Articles
As we slowly lumber out of the recession and evaluate the landscape for 2011, there is much to be thankful for. Without question, it’s been a rough couple of years, and many business owners and employees alike have been faced with the most difficult decisions of their careers.
Turn this perspective on its side, though, and it’s possible to see a world of increased opportunity. While credit can still be a challenge to obtain, many businesses are actually sitting on a higher cash balance than they have historically. Back in June, WSJ.com’s Justin Lahart reported that “The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963.”
Caution and risk adversity have prevented (or delayed) investments in the business. Small business owners have been “hunkering down”, waiting for confirmation that the recovery has taken hold. As you consult your crystal ball for 2011, consider a couple of strategic investments with growth in mind:
1. Marketing and Advertising – Often among the first expenditures reduced in times of financial stress, these investments are crucial for businesses seeking to surge ahead through the recovery. Keep your focus sharp and invest only if you will be able to calculate your return on investment, but do start investing.
2. Employees – If you have talented, loyal employees, who have stayed with you for a year or two without a merit increase, consider your motivational plan for next year. According to The Society for Human Resource Management (SHRM), most employers are planning modest increases in 2011 (less than 3%). About half of the companies surveyed were planning on a yearend or holiday bonus. If you don’t have the cash for financial rewards, consider intangibles like work/life balance opportunities, increased autonomy or training on a new responsibility, or increases in allowable time off.
Celebrate your successes – truly enjoy and communicate the things that are going RIGHT. An increased focus on the positive may just result in increased satisfaction and productivity and therefore more reasons to celebrate next year.
5 Tips To Grow Cash - Nov 4, 2010
Posted by: Wendy Nelson in Articles
Running a business is hard work and there are a number of critical priorities at any given time. It can be difficult to prioritize in the midst of everyday reality. It can also be difficult to measure success. One of the most common issues I’ve run into is that if a business is too focused on revenue or profit without assessing the cash impact of their growth, they can find themselves in a precarious cash position. Always keep an eye on your cash balance and upcoming events that may strain your resources. A few suggestions:
Tip 1: Keep the cart in front of the horse
Let actual revenue drive infrastructure investment whenever possible. In other words, try to keep your expenses below your inflows. This is especially true in a new business or a business with new funds from a loan or equity infusion. If you can make do with part time resources vs. full time employees and virtual office space in the short term, these early sacrifices should help preserve your working capital in case revenue growth doesn’t keep pace with your forecast.
Tip 2: Negotiate Everything
You may be surprised to realize that nearly every expense is negotiable from your office rent to your office supplies. If you are evaluating a contract that will represent a material expenditure for your business, engage the assistance of a professional to help ensure that the terms of the contract are reasonable.
Tip 3: If you’re not a bank, don’t act like one
Always bill promptly upon completion or a service or delivery of a product to minimize the time it takes for you to collect cash payment. If you are working with a client that appears to be a credit risk, seek a retainer. If it’s a big project, set up a payment schedule with a deposit, interim billings and a final payment upon completion. Then FOLLOW UP on past due receivables.
Tip 4: Don’t be tempted by year end close out sales
Timely advice, I hope. If you don’t need it, don’t buy it. On the other hand, if a product that you use or sell quite a bit of goes on sale and you have the space for it, that’s a different story. Buy what you can afford without straining the bank account, and track use of it to see if the return is good.
Tip 5: Leverage “Other People’s Money” when it makes sense
Credit can be scary for a small business because it means you will need to generate sufficient cash in the future to service the debt. On the other hand, if you’ve got good credit and funds are available at a rate lower than your average return, accessing these resources will allow you to grow your busi....
Posted by: Wendy Nelson in Articles There is a danger to becoming obsessed with one metric – if all you watch is top line revenue, you may not realize that you aren’t achieving a high enough gross profit (or worse, you’re losing money on each transaction). If your focus is on paying down a loan, you may miss an opportunity to earn a higher rate of return by investing that cash into your business. On the other hand, if you are trying to accomplish too many things at one time, you will likely fall short of your goals on most, if not all, of them. I’ve found that if you can establish a short list (2-4) of key goals, you’ll be well positioned to achieve them. It varies from one industry to the next, and is dependent on your stage in the Company’s life cycle (Start up, Rapid Growth, Maturity, Decline…). Generally, though, there are a couple of things that you will need to accomplish most in order to succeed: The goals should be readily tracked, and you should make it a habit to review them at the appropriate frequency (at least monthly – probably daily or weekly). I have a friend, Mike Tafoya (Estrada Strategies), who gave me the idea to look at a Company in a similar way to a car’s dashboard. When you’re driving your car, you are likely monitoring your speed (no tickets, please), how much fuel you have left in the tank, and maybe something else – in my case, I keep an eye out for low tire pressure (it’s been an issue, what can I say?). If you are trying to do too much at once (like read your email, dial your voice mail, change CD’s, etc.) you run the risk of an accident. If you apply this logic to your company, you might find that the key goals define themselves: How quickly are sales growing? Do I have enough cash to meet my obligations? Am I collecting my receivables fast enough? Once you’ve identified the items for your dashboard, create the report. Oh, and keep an eye on your performance with at least as much focus as you would monitor your speed on the highway. J Posted by: Wendy Nelson in Articles I was walking my dogs this afternoon. Frankly, they were excited to be out and not on their best behavior. They were straining at their leashes a bit and as we walked past someone who was walking in the opposite direction, he paused and said “Are you walking them or are they walking you?” They were walking me in case you were wondering, but his question got me thinking. So much of what I do as a part time chief financial officer with B2B CFO® is help owners and CEO’s step back to find a way to take control of their companies. It’s easy to get caught up in the day to day grind of business operations. I experience this myself. I sometimes find myself working crazy hours – but when I take an honest look at what I’m doing, I find that I could do a better job of prioritizing my activities. There will always be fires to fight, emergencies to address, etc. The key seems to be in taking a moment to figure out a few things: 1. Is this truly an emergency and if so, is it MY emergency? If the answer is yes, you probably need to address it. This is particularly true if ignoring it could have a negative impact on your revenue, cash flow, or customer/employee satisfaction 2. Does it need to be addressed RIGHT NOW, or would tomorrow be soon enough? Prioritizing between competing priorities and letting the occasional problem sit over night may result in a pleasant surprise. Maybe by tomorrow it will have worked itself out. 3. Should I address it personally, or could I delegate the problem successfully? Delegating can free you up to focus on the things you should truly be focused on and it may also instill confidence, accountability and job satisfaction in your employees. With this in mind, I may take 5 minutes to play fetch in the back yard before my next effort at walking my unruly dogs. Or maybe I should invest in a trainer? J Posted by: Wendy Nelson in Articles I read a blog this morning titled “20 Things I’ve learned as an Entrepreneur” by Alicia Morga. Great advice, all of it, but I was particularly struck by #1: It’s rare when someone is their word; treasure it in others and cultivate it in yourself. This immediately brought to mind Mahatma Gandhi’s “Be the change you want to see in the World”. Continuing down the list, I also noted the (ever present) “Perception is reality – you’re always creating an impression” (#13). We work in an immediate world these days. Often, we send an email on impulse that we may later regret. We are constantly accessible with our smart phones and our social media applications. At some level, we have set aside the importance of consideration, patience, and truly thinking before we speak or act. As business owners, we need to build that time back into our routine. Often, our customers, clients and employees look to us and make decisions about our character based on our actions. It is critical that our actions are consistent with our belief systems. I practice as a part time Chief Financial Officer, assisting my clients with financial strategy, cash flow planning, and other various financial requirements. If I commit to completing a project by a certain date, I will deliver it on time, period. I strive for objectivity in the guidance I provide, and I seek to balance my natural conservatism with the need to take calculated risks in order to grow business. I am honest and hold myself to a high standard of integrity. These are the character traits that I hold myself accountable to every day – in my personal life as well as my business. Consider how much you value the people in your life that you can truly rely on, and take a hard look at yourself and your Company. If you feel that you are coming up short, take heart in that you can always make a change. Another of my favorite quotes? It’s a Chinese proverb: “The best time to plant a tree is 20 years ago. The second best time is today.” Posted by: Wendy Nelson in Articles
As a professional, I find that LinkedIn is one of my most valued resources. If you’re not using this resource, you may want to reconsider. The benefits of this site are limitless, and for me, they include: · Profile Review: o If I’m meeting an individual who was referred to me, I’ve never seen them before. Unless the meeting is at their place of business, I’m going to need to get a sense of what they look like. If they are on LinkedIn, I can pull up their profile (with their picture) so I can spot them when they arrive for our meeting. o From a person’s profile, I can also learn important background about their company, their employee base, their education and their interests. It’s surprising the number of people who attended the same college that I did, are in the same groups that I have joined, or have worked at companies where I worked too, or where I knew someone. o I can also tell if we have friends in common. It’s such an easy ice breaker to ask a new contact how they know our shared connection. · Company Searches: o If you provide a B2B service like I do at B2B CFO®, you can readily search your contacts for potential clients. There is a toolbar on the upper right hand corner of the screen that you can change to Companies, type in a key word, and then click the magnifying glass. From there, you will get a tower down the left side of the screen where you can narrow your search by geography, company size, etc. On March 23rd of this year, President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law. This massive healthcare legislation was over 2,400 pages long and included language around 1099 filing requirements which, if not repealed, will place an enormous burden on small business owners. Historically, and through December, 2011, under § 6041 of the Internal Revenue Code (IRC), persons engaged in a trade or business who make payments totaling at least $600 to another person in a single year are required to file an information return (typically a Form 1099) with the Internal Revenue Service (IRS) and to provide the payee with a copy.[1] Payments made to corporations (other than legal fees) and hospitals / extended care facilities, however, were excluded. The new language removes the exclusion, requiring that a 1099 be issued to each “person”, including corporations. In addition, IRC § 6041(a) specifies a list of payments that can trigger its information reporting requirements. For payments made before January 1, 2012, these include “rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income.” If the aggregate amount of these payments to a single payee equals $600 or more, then IRC § 6041(a) requires the payer to report the amount of those payments and the identity of the payee to the IRS.[2] The new language has been modified to include “amounts in consideration for property” and other “gross proceeds”. The reality of these changes is that small businesses will now need to obtain Tax ID numbers and complete 1099s for ANY VENDOR that they pay more than $600 to throughout the year. In other words, if you buy a new laptop from Best Buy, you’ll need to issue a 1099 to them. If you use Verizon for your office phone system and spend more than $600 over the course of the year, you’ll need to issue a 1099 to them as well. Given that it takes an estimated 16 minutes to prepare each formRead more... Posted by: Wendy Nelson in Articles I’ve been giving a fair amount of consideration to mission statements lately, and the impact they have on the bottom line. On the one hand, I’d like to say that they tend to be too general and not influential enough on the day to day performance of a company. On the other hand, I realize that a carefully crafted mission statement can make an enormous difference in the unity of your employees and the strategic direction of the Company as a whole. If your mission is something really long and vague, like “Our mission is to create a friendly work environment where our employees work hard to ensure that our clients are satisfied with our products and that our customer service is great.”, then you aren’t really helping yourself or your employees to drive in any particular direction. There’s no real world application to a statement like that – no way to measure its effectiveness. On the other hand, take a look at some really great mission statements: Google: "To organize the world’s information and make it universally accessible and useful." Walt Disney: "To make people happy." Western Union: “the fastest way to send money worldwide” A mission statement doesn’t need to be long, and it doesn’t need to capture every aspect of your business. It just needs to speak to the heart of the company – the power that drives success. If all of your employees are working toward a common goal (like making people happy) and it’s front of mind, then their behaviors and decisions are much more likely to align with the vision of success the owner has for the company. If Disney’s mission was to produce great movies for kids, or build amazing theme parks, or the like, they might have missed the mark in terms of the consumer reaction to their products. By focusing on making people happy, they actually have greater flexibility to engage in multiple revenue streams, channels, geographies, etc. So as you begin to consider who you are and who you want to be in 2011 and beyond, your mission statement might just be the right place to start. It might even be the driving force behind your future successes. Posted by: Wendy Nelson in Testimonials I want to thank you for the great model that you put together for MW, and for the level of interest and knowledge that you have achieved in a relatively short period. My compliments to you for your work and the incredible detail and audit trail you put into the model, and for your input on the business aspects.
Posted by: Wendy Nelson in Articles When I meet with potential clients, among the first things I try to understand is whether or not they are ready for a little help. As a start up business, the owner typically takes on a lot of responsibility, managing multiple disciplines simultaneously. They put long hours, energy and resources into the launch and early growth of their new business. The business will (hopefully) grow beyond the owner’s capacity to manage everything by themselves, though, eventually. As business owners start to feel worn out, burned out, and stretched to capacity, they begin to seek solutions. Often, it’s more economical to bring on outsourced support at this stage. It may also extend the business owner’s reach from an experience and efficiency standpoint. The business may not be large enough to support full time experts, but delegation of some of the day to day tasks could free up the owner to focus more clearly on the customers, pipeline, and long term strategy for their business. By the same token, a part time resource will generally cost less and offer more experience, knowledge, and clarity to your business than their full time counterpart. Consider the tasks that take you the longest, or that you enjoy the least. If you feel social media is a key component of your overall growth plan, but dread setting aside the time to manage your on-line presence, this may be a good area in which to seek help. Perhaps it’s the financial statement management or internal control environment that gives you a headache. Or maybe you know that you need to improve your data security and back up, but you simply don’t have time to think about it (until your network crashes). The recession and resulting downsizing measures have combined to create an incredible pool of consultants and entrepreneurs. These individuals have years of experience, on the job knowledge, and talent that you could engage and apply to your business. Take the time to consider where you need help, and if it makes sense to outsource a portion of your to do list. Maybe you’ll find the time for that late summer vacation after all. Posted by: Wendy Nelson in Articles As we approach the end of summer, my mind turns to the annual plan. I have begun to formulate strategies and consider the best approach for this year’s budget; there are a few things that really jump to mind: 1. Revenue Growth: A few years ago, we used to think that estimating customer behavior was challenging. Today, we are dealing with economic issues that can swing perception and behavior in a much more material way. Customers are starting to open their wallets again, but in fits and starts, and unpredictably. Business customers are delaying spend decisions where possible and negotiating tougher deals. Consumers, too, are seeking the best, smartest use of their available funds. Nearly everyone is seeking to set something aside for a rainy day. These shifts make determining reasonable revenue growth (or decline) projections challenging. Strategies to address this in planning: a. Scenario Plans – consider developing a business as usual, best, and worst case plan. Once developed, evaluate your current infrastructure against the worst case plan and consider whether adjustments are necessary. b. Pipeline – evaluate options to reduce churn and/or turn more of your leads into paying customers. How specifically has your sales strategy been communicated to your team? Do your reps have a script or a set of bullet points to convey to potential customers? c. New sales & marketing strategies – look at the way you spend your advertising dollars and calculate the return on each item. If you can’t calculate it, consider an alternative form of marketing that you CAN track. 2. Update, Review, and Reforecast: I typically prepare an updated forecast for the remainder of the year (or the next 12-18 months) at least quarterly. Preparing an annual plan and leaving that document to stagnate will result in challenges later in the year. It’s a good idea to keep ....
Posted by: Wendy Nelson in Articles I’ve been spending some time lately analyzing gross profit $’s and margin %’s. It’s interesting, because even if it’s trending in a relatively flat line, you may not be seeing the whole picture from 30,000 feet. Whether you see your gross margin increasing, decreasing, or holding steady, you may want to do a little research to determine if the results are truly what they should be. The issue is that there could be hidden risks or opportunities in there. If you’re selling 4 products, for example, you may find that one of them has been getting more expensive to produce while another has gotten more cost efficient. And if you were to review them individually, you may opt to increase your pricing to your customers on the product that currently provides a lower individual return. You may also find that you’re not selling as much of the more profitable product than you used to, because the pricing is no longer competitive. Maybe your competitors have been tracking the improvements in cost to produce and passing a portion of the savings on to their customers. What if you need to reconsider your product mix, and your marketing spend on each product line in order to achieve desired returns on your marketing dollars? What if one of your vendors raised their unit prices without notifying you? Without an understanding of the “numbers behind the numbers”, you’re operating your business in a bit of a dark room. Taking the time to understand the financial statements supporting your business will equip you to make better decisions whether your goal is to grow your current company organically, or grow through acquisition. It will help you to determine the best time to invest in new equipment, hire staff, request a loan from your bank, or reach out to investors for additional working capital. Posted by: Wendy Nelson in Articles I’ve been reading “The Business of Happiness” by Ted Leonsis over the holiday weekend. I’m about half way through the book and have been giving a lot of thought to the “6 secrets to extraordinary success in work and life” laid out in the book. Only the first, goal setting, strikes me as an obvious business secret to success. Of course goal setting is critical to the success of your business. If you don’t have a plan to get to a destination, the odds that you’ll ever get there are slim. If you have clearly defined goals for yourself and your company, you are better able to manage toward achieving them and rewarding yourself (and your employees) for success. The remaining secrets are slightly more personal in nature at first blush, but with logical parallels to business on further consideration… The message I’m taking from the book is that a “happy” company generally has motivated employees and loyal customers. And generally that same company enjoys success and profitability. As in life, setting goals that revolve around doing the right thing will generally produce favorable results. Remember that business IS personal; focus on finding reasons for your customers to love your product/service and you’ll go far. Posted by: Wendy Nelson in Articles According to an article in the Denver Business Journal today, we are seeing an uptick in Banker confidence. In a recent bank executive survey covering a 12 state region (including Colorado) conducted by Grant Thornton, respondents indicated more optimism related to U.S. economic growth than they had 6 months earlier. · Thirty-four percent of bankers in the region said that they expected the U.S. economy to improve in the next six months, up from 14 percent six months ago. · Fifty percent said that they expected their local economy to improve over the next six months, up from 19 percent in December 2009. On this question, they were more optimistic about their local economy than bankers in other regions in the country, including those in the Northeast (43 percent), the Southeast (29 percent), the Midwest (27 percent) and the West (25 percent). · Twenty-nine percent of central-region bankers said that their bank would hire more people in the next six months, down from 32 percent in December 2009. Grant Thornton’s national 17th Bank Executive Survey was published on June 18, but the regional data breakdown was reported Wednesday. Grant Thornton and Bank Director Magazine conducted the national survey of bank CEOs and CFOs from May 4 to May 24, 2010, with 230 respondents. Of those, 38 were from what the survey calls the central region, including Arkansas, Colorado, Kansas, Louisiana, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Texa....
Posted by: Wendy Nelson in Articles I spend a good bit of time meeting with business owners and discussing their particular “Strength of the Franchise”. While some businesses are starting to see small shoots of new growth, there is still a lot of ground to cover in order to reach their former status pre-recession. What I find interesting is that while the industry may change, and the target market may differ slightly (businesses or consumers or a mix of both), the things that are working seem to be relatively consistent. With this in mind, I wanted to share some of the topics that seem to be recurring: 1. Reputation is everything – whether you are a business owner or an individual seeking employment, it’s really more about who you know than what you’ve done. If you provide a good value to your customers and word gets around, you will benefit from increases in your business because people are coming to know and trust you. You need to actively cultivate relationships, partner with complimentary vendors, and consider hosting low cost, joint IN PERSON marketing events. 2. Continue to set goals and track progress – your goals may be different today than they were two years ago, but you should still have goals. Keeping a portion of your attention on the future will help you to make the right decisions today. It will also motivate your staff if they see you working not just IN your business, but ON your business. And excited, motivated manager creates a greater sense of accountability and unity among their staff 3. Value your employees – remember that you can’t do it alone and you’ve hired intelligent, competent staff to help support your goals. Do what you can to reward your team and you will reap long lasting benefits by retaining your staff into the recovery. 4. Maintain a positive attitude – chances are good that you’re in business because you’ve found something you’re passionate about to do. You may be running leaner and you may be experiencing profitability challenges, but seek to find the positive. Trust the advice of experts while retaining your initial enthusiasm and spirit. As my Mother always told me, “This too shall pass”. Posted by: Wendy Nelson in Articles This is great news for the small business community. Senators sponsoring the investment were Kit Bond and Christopher Dodd. It was co-sponsored by senators Mark Warner, Scott Brown, Maria Cantwell and Mark Begich. This amendment will impact the financial reform bill under debate in the senate, easing restrictions around accredited investor requirements. It will accelerate the access to start up capital for small businesses by eliminating the 120 review period by the Securities and Exchange Commission. In addition, while the requirement that investors prove annual income in excess of $200k and net worth over $1M held, the requirement that these amounts increase annually with inflation was amended to allow for a review every 4 years instead. With unemployment holding near 10%, it’s crucial that this bill doesn’t limit investment in small business. The bulk of new job creation happens in these small localized businesses and without the necessary startup capital, the national economic issues would have compounded further. Increased regulation for large businesses does appear to be necessary as we continue to experience the fallout from the Wall Street failures, but the original language increased the regulatory burden for small business beyond what was reasonable. This amendment is a critical improvement to the bill, and will allow our innovators and entrepreneurs to get back to the business of growing. As any small business owner knows, cash is king. Without it, growth is impossible. This amendment will enable small business owners to continue to access cash from angel investors, and access that cash in a reasonable amount of time. The result will be continued growth in this sector and gradual increases in job growth for our communities. Posted by: Wendy Nelson in Articles Last week, I was talking with a friend of mine about a new business idea he’s incubating. I offered to help him get started with an outline for a business plan, and now he’s off and running. It got me thinking about my own business plan and how long it’s been since I looked it over and/or updated it. According to the experts, you should give it a good overhaul at least annually, if not every 6 months. This update should include things like talking to your clients/customers to understand if your products are still meeting their needs. You can also ask how you might improve your offering to add more value. You can also look at your company from a different perspective. I read an article written by Tim Berry a few years ago where he recommended reassessing your market segmentation. If you currently have a product focus, maybe shift to a client focus or a channel focus, or maybe even geographical. The idea is to get a little distance from your current perspective such that you might bring new focus and different ideas to mind for implementation in your business model. In this process, re-evaluate who your competition is, what they are doing, and if you are current in terms of technology and popular business trends. If your plan doesn’t address SEO, for example, it’s probably time to dust it off. Beyond the annual update, though, your business plan should be a living document. There are certain components that you will want to update more often. Consider updating the financial statements and your forecast at least quarterly. Because cash is the lifeblood of your business, you should keep your cash flow forecast front of mind at all times. Whether your business is expanding or contracting, or even if it’s business as usual but with a rent increase pending, you need to know how much runway you’ve got. As I page through my own plan, though, it becomes clear to me that I’m actually making constant adjustments to it in my head. Each day, I jot down new ideas on scraps of paper throughout the house (not a method I recommend). As I exercise in the morning, I formulate my plan for the day. In the evening, I review my results and make small mental adjustments to the plan for tomorrow. Applying the discipline to make these changes to your plan will help you clarify your goals and strengthen your plan to achieve them. So please join me – take a look at your business plan and evaluate the track you’re on. Posted by: Wendy Nelson in Articles As with any other kind of planning, it’s critical for a business owner to develop some sort of exit plan. Whether the owner intends to sell the business, transfer it to a family member, or transition it to their employees, they need to put the pieces in place to make it happen. One of my favorite questions for a CEO is: “If that individual were hit by a bus, would your company be able to function without them?” There are some positions and employees who have been with a business for long periods of time. Their role is often undefined and poorly documented. All too often, these individuals hold the keys to many areas of a business’ operation. Perhaps they are the only employee who fully understands (and knows how to calculate) commissions payable to your sales force. Maybe they developed your operating system and have maintained in a manner that doesn’t include sufficient documentation for a new person to sort it out. And – this is the big one – maybe they aren’t part of the owner’s vision for the company in that vague, distant place in the future when the owner plans to retire. According to Wikipedia, there are 4 stages to developing an effective succession plan: These rules apply whether the owner sells the business or retires from it. In order for the business to run without the founder, significant thought will need to ....
Posted by: Wendy Nelson in Articles In times of economic challenge, I think it’s fair to say that we’re all impacted. Some companies will flourish while others struggle. 10% of the workforce has lost their livelihood. The remaining employees may stay employed, but find that they’re doing more work than they did in easier times, wearing more hats, and perhaps earning less pay with fewer perks. With the above weighing heavily on employee satisfaction levels, some 54 percent of employees plan to search for new jobs once the economy rebounds, according to a survey by Adecco Group North America, a work force solutions provider. If ever there was a time when leadership mattered, this is it. Great leaders will emerge, providing excitement, growth and enrichment to their labor force. According to Susan Scott, author of Fierce Leadership, “If you want to become a great leader, gain the capacity to connect with your colleagues and customers at a deep level… or lower your aim.” What does this mean to you and to your organization? Do you personally make the effort to connect with your employees and customers? This can mean many things… If there is a conflict between two employees, are you ignoring it in hopes that it will resolve itself, or actively working with the impacted employees to resolve it? Is there a customer you are worried about losing – so you are ducking their phone calls and responding with email? Find the courage to reach out to your customers in person. Take them to lunch, or out for a coffee. Schedule a visit to their office so you can sit in the same room, make eye contact, and assure them of their importance to you. The same goes for your employees. When was the last time you sat down with the individuals on our team and talked, really talked, with them? An employee is typically loyal to their manager vs. their company. If you understand their lives, hopes and dreams, you will find that you are in a better position to challenge them and reward them in a manner they will respond to. Ask for their opinions and be prepared to listen to their response. Encourage open communication. If you are open with your employees and customers, if you are willing to have the necessary conversations and take the time to understand the real issues, then you will truly be in a position to lead your team, and enhance not only satisfaction but productivity as well. Posted by: Wendy Nelson in Articles I was reading the Denver Post business news this afternoon and came across an article written by Miles Moffeit and Aldo Svaldi about the recent collapse of New Frontier Bank in Greeley, Colorado - http://www.denverpost.com/ci_14074991. According to the article, this $1 billion bank failure was the costliest in Colorado history. Among the factors leading up to the failure was a case of employee fraud. One of the bank’s highest producing loan officers had stolen up to $75,000 out of multiple customer accounts. Unfortunately, employee fraud is more common than you might think and the results for a small business can be devastating. According to the 2008 Report to the Nation on Occupational Fraud and Abuse, the Association of Certified Fraud Examiners reported that “the median loss suffered by organizations with fewer than 100 employees was $200,000. This was higher than the median loss in any other category, including the largest organizations.” The most common schemes included check tampering and fraudulent billing, and the bulk of the frauds were committed either by the accounting department personnel (28%) or upper management (18%). If you subscribe to the 10-10-80 rule, then you believe that 10% of your employee base would never steal from you, an equal group of 10% is actively searching for a way to rob you blind, and the 80% in the middle might be swayed in either direction, depending on the circumstances. With this in mind, there are some basic steps you can take to reduce your risk: Hire the right employees: Complete criminal background checks on candidates, check references, verify education and certification claims, and consider drug screening. (Make sure you have the written consent of the candidate.) Deter Fraud: Establish adequate internal controls and segregation of duties. It’s never a good idea to put too many financial responsibilities in the hands of one individual. Review the accounting records regularly and require annual vacations for accounting staff. Conduct audits in high risk areas such as Payroll and Purchasing. Investigate customer complaints personally. Pay Attention: There are usually “red flags” to help identify higher risk employees. An employee may suddenly appear to be living beyond their salary. They may have a loved one who is ill. They m....
Posted by: Wendy Nelson in Articles I met with some really interesting people this week and had several conversations about alternate income streams. It’s challenging to be a small business owner in that your time is limited to, well, to your time. There are so many things you could be doing and so many ways you can drive your business that it can become frustrating trying to find the “right” options. Regardless of whether you are a single consultant, an owner with 5 employees, or a company with a larger staff, you are limited in the time available to get the work done. There are only so many hours in a day. With this in mind, you may want to do a simple exercise to help sort out your priorities. Consider your potential income streams and the available resources, and test out some options. If you have an annual revenue goal in mind and you are finding your current plan to get there is falling short of your hopes, you may want to think about making small changes now. For example, maybe you had $1,000,000 in revenue last year. Things were looking up in the fourth quarter, so you projected that you would sell $1,150,000 in 2010. We’re nearing the end of the first quarter now, and maybe you are on track to sell $240,000 for the quarter. Don’t despair, but consider reviewing your plan for areas to improve. You might discover that the “cash cow” from 2009 is looking a little anemic so far this year, but there is a new product taking off. If you shift your advertising focus to the growth product you may be able to move back into a growth mode overall. Or perhaps you’ve invested some time in social media and now have a fan base on-line. An occasional special discount to this group may result in increased sales as well as growth in your fan base. If there are no obvious adjustments, however, you may need to think bigger. Is a product line expansion feasible? Maybe you could find a company offering a complimentary service and partner with them to expand sales for both companies? Have you considered conducting webinars or speaking engagements? Haven’t you always wanted to write a technical book about the work you love? OK, maybe a book is a bit ambitious, but there are options out there just waiting to be found. Posted by: Wendy Nelson in Articles I read an article this morning called “25 ways to jump start your business by the Inc. staff (http://www.inc.com/guides/2010/02/25-ways-jumpstart-business.html) and it really got me thinking. I’ve shared my comments on some of their recommendations below: 5. Improve the Accuracy of Your Sales Forecasts During difficult times it may seem hard to set realistic sales projections. Jeffrey Hollander of Seventh Generation discusses looking at your products item by item and finding out what is going on with your customers' business so you can best meet their needs, In particular, identify the cash-flow issues faced by your distribution partners. That will not only give you a clearer sense of the health of your business—it may also present you with a new business opportunity. I think this is great advice. Often, when I evaluate a client’s products individually, I find that there are some products which are marginally profitable (or even unprofitable). There are also products that are very profitable and growing. When you look at gross margin as a whole, you might miss opportunities to shift the focus of your sales team to the products that are more in demand by your customers (and earn more profits for your company). In addition, if you evaluate the trending for the individual products, you can often identify areas to expand your product offering to better meet the needs of your customers and step ahead of your competition. If you incorporate cash flow analysis into your product review, you may also find that there is room for improvement in your cash flow forecast and in you accounts receivable collections efforts. 9. Look for Partners in Struggling Industries Posted by: Wendy Nelson in Articles Small businesses in today’s economy have found that the rules associated with borrowing money from a Bank have changed significantly in the past two years. It’s no longer a simple matter of bringing you prior year’s tax return into you bank and acquiring the funds you require. Fortunately, banks are still lending. Small banks, in particular, still have funds available for loan to small business owners. It’s a matter of proving to the bank that you are creditworthy. This requires some preparation on your part. You need to have a business plan. A well written business plan will help you in communicating to others that you know what you’re doing, where you want to be, and that you’ve done enough research. You need to include information about your products or services, the industry analysis you’ve completed, and you will need good financial data. Bankers will be looking at certain aspects of your financial plan very carefully. They will want to see your prior year tax return, and they will review your personal credit rating. Beyond those things, though, the banker will need to see historical financial statements to establish credibility for the business. These financial statements will include actual historical results as well as forward looking projections (typically 2-3 years). You will need to provide an income statement, balance sheet and cash flow statement. The projections are important because they will illustrate your anticipated cash shortfall and will help the banker understand and document the amount needed and the specific intended use of the funds. It’s critical that you are able to show the banker how you intend to use the funds. Don’t be surprised if you are asked to provide a Global Cash Position that reflects not only the business for which you are seeking a loan, but your personal net worth and any other companies you may own as well. A banker today will want to take a deeper look into your overall liquidity rather than limiting their review to the individual business you are presenting in your request for funds. It is also likely that the banker will want to ensure that you have some “skin in the game”. In other words, if you anticipate needing $1M to reach breakeven, the banker may ask you to cover $100-200k with your personal funds. Your personal credibility will be a factor too. It’s easier to qualify for a loan if you have been doing business with the bank for a period of time and have a relationship with your banker. A long time client who already has a good relationship with their bank is in a much better position to request a loan than a brand new customer who has no history with the bank....
Posted by: Wendy Nelson in Articles If you are fortunate enough to find that your business has moved back into a growth phase or you are beginning to see accelerated growth in early 2010, congratulations. This is good news and could signal a reduction of the impact of the recession on your bottom line. It also means you’ve got to keep a close eye on your bank account. Increases in revenue are good, but if not monitored carefully, the improvement to your bottom line may be less than you anticipated. Please find a few scenarios below to consider: Even if all is well on the income statement, you may want to take a closer look at your balance sheet. Some items to consider include: · Cash – Do you have enough cash to sustain the growth? In other words, if sales continue to accelerate and you need to hire additional employees, or purchase components for manufacturing or goods for resale, will you be able to meet demand? · Accounts Receivable – Are you collecting quickly enough? Are there vendors that aren’t paying you in accordance with your terms?....
Posted by: Wendy Nelson in Articles While reports are still mixed, it does appear as though the economy is beginning to stabilize. The unemployment rate may not be declining, but it is no longer increasing, either. According to Dave Carpenter, on 2/22: Economists expect the recovery to remain "firmly on track" over the next two years though job growth is likely to remain slow, according to a new survey. The latest outlook from The National Association for Business Economics, set to be released Monday, sees regular job gains resuming this quarter but no drop in unemployment below 9 percent for another year. Even as the unemployment rate begins to stabilize, we are seeing exciting trends. The American entrepreneurial spirit, it appears, is alive and well. When faced with high unemployment, people are finding ways to create alternate income streams. The Elance blog posted the following on February 18th: “Consider this piece of data from the Labor Department’s recent report: the number of self-employed Americans grew by 126,000 in the last quarter. Add to that another telling statistic: the number of temporary jobs has increased by 250,000 in the last quarter….Our so-called jobless recovery is nothing more than an illusion. What we are experiencing is a long-predicted structural change in the job market. In the span of a single generation, we’ve gone from “company man” to being our own man or woman, thanks, in part by, to advances in computer and telecommunications technology.” It is the growth in small businesses and increased utilization of contract resources that will likely fuel the bulk of the recovery over the next few years. These new companies will rely more heavily on new technologies and social media than their predecessors. Use of on-line document storage such as Quickbase and collaborative document review features like Google Documents, for example, will allow more employees to work productively from home. Likewise, social media reliance will increase as a means of communicating with employees and customers alike and at a reduced cost. Dependence on part time and contract workers will also continue to grow. As these entrepreneurs build their businesses, they will reach levels of sophistication requiring access to knowledge and experienced personnel. They will not likely have access to sufficient working capital or investment dollars, however, to bring in full time qualified employees. The recession does indeed seem to be facilitating structural changes in the job market. The combination of high unemployment and increased access to contract labor will enable new small businesses to acquire necessary resources at a much lower cost, and on an as needed basis. Hopefully the end result will be higher success rates for new businesses coupled with overall improvements in employment – however you measure it. Posted by: Wendy Nelson in Articles There is a popular move afoot among businesses today to shift cost from fixed to variable. This allows the business to react much more quickly to changes in their environment, such as the recession. According to associated Press writer, David Gram, The Society for Human Resource Management, representing company personnel departments nationwide, said it surveyed members in October 2008 and found 12 percent of them were moving to use more independent contractors, contingent and temporary workers because of the recession. For a growing number of companies, including Target, FedEx Ground and Comcast, cutting costs means removing workers from the payroll or bringing on new workers — sometimes through intermediary companies — without making them full employees. If a company employs the bulk of its workforce, downsizing can take time and cost a fortune (especially if severance is provided to the terminated employees). They likely pay employee health, dental, vision and life insurance costs, for example, and the employer’s portion of payroll withholdings. They will also be on the hook for unemployment insurance and workman’s compensation. If that same company utilizes contract labor wherever possible, however, they are much more nimble and able to execute on plans to quickly reduce monthly operating costs. If sales decrease, reliance on the associated independent contractors can decline accordingly. Shifting to a more variable cost structure, however, is not without risk. A company needs to carefully evaluate their worker classification to ensure that they are not labeling an individual as an independent contractor when that person is really an employee. The most widely accepted test is called the “economic reality” test. In United States v. Silk, 331 U.S. 704 (1947), the Supreme Court identified the following factors: By Wendy Nelson I just finished reading the book “Twitterville” by Shel Israel. I found this book incredibly compelling. So much so, in fact, that it prompted me to sign up for Twitter to see for myself what all the fuss is about (@wendyatwork). While I’ve been aware of the existence of Twitter for some time, I must honestly admit that I viewed it more as a social network than a professional one, and was unaware of the value to businesses of all shapes and sizes. It was incredible to learn that while Starbucks was a dominant force on Twitter, with over 750k followers, a small local coffee shop could benefit too. There were terrific examples throughout the book of how companies were joining Twitter to improve customer service, and enhance consumer loyalty to their brand. In fact, several companies now have entire departments dedicated to Twitter. There were touching stories of charitable efforts and the large (and immediate) participant response. The companies and individuals highlighted in the book were all applying a slightly different Twitter strategy, but there was a common thread of integrity, decency, generosity. The topics in the book were organized into logical groups. This allowed the reader to focus on the areas of greatest personal or professional interest. As I read, I began to form thoughts and ideas on how Twitter could be used in my own business model. Not only did I begin the foundation for my plan, I got ideas on how to implement it and track my level of success. I’m the first to admit that I’m new to Twitter, and a bit intimidated. That said I’m excited enough to listen and learn. I believe that joining the right communities in Twitter could enable all of us to do a better job. We will become better informed on trends and new ideas. We will be more comfortable with, and better positioned to recommend, new technologies to our friends and associates. We will be able to share our experiences and best practices within our communities in an effort to help others to succeed. The possibilities are endless. ....
Posted by: Wendy Nelson in Articles I was reading my Twitter updates (Tweets) this morning and came across the following WSJ blog by Kelly Evans: As noted yesterday, the Mid-Atlantic blizzard is likely to impact jobs reports, but the weather isn’t likely to have as large an impact on gross domestic product this quarter, which forecasting firm Macroeconomic Advisers estimates is running 3.1% at an annualized rate after 5.7% growth in the fourth quarter. Some industries are even benefiting from a “snowstorm stimulus” of sorts. Hotels are jammed with travelers. Supermarket shelves were cleared ahead of the storm as households stocked their pantries and purchased batteries. At Barbour Inc., a maker of heavy-duty jackets and sportswear based in Milford, N.H., “we could be doing even better right now if we had more inventory available,” says Tom Hooven, the company’s general manager. But high demand means the company hasn’t had to discount its winter gear as much, so profit margins are fatter. The blizzard is proving a boon to some industries and a stumbling block for others. But it’s a universal headache for those trying to gauge the recovery. As I pondered the blog, I realized that while planning is a critical function in any company, dumb luck and fate will always play a part. In any situation, there will be winners and losers. For an airline, a snowstorm of this magnitude can cause all sorts of problems and delays that will create days of untangling and long lasting customer satisfaction impacts. Though the airline is helpless to control the weather, the customers may hold them emotionally accountable for missed birthday parties or vacations, or lost employment opportunities. It is important for business owners to be prepared for any event that could impact their business, and to capitalize on opportunities as effectively as they perform damage control. The hotels and retail stores were fortunate in this instance, but they may have done even better if they had a plan in place. Perhaps the hotels could have offered discounts or free meals to loyal customers. The retail stores could have made a donation to a shelter in a manner that gained them popular press during the blizzard. Or they could have offered a special discount to their online and Twitter customers. Moves like this would allow them to move even more inventory and generate positive customer sentiments for months to come. It is important as a business owner to realize that your customers must come first. Consumers have more power now than they ever have.
What Is On Your Dashboard - Oct 18, 2010
Do You Run Your Company Or Does Your Company Run You - Oct 9, 2010
Does Your Company Follow Through On Its Commitments - Sep 23, 2010
Are You LinkedIn - Sep 16, 2010
Is Your Company On A Mission - Aug 31, 2010
Mywedding.com - Aug 27, 2010
Bob Fanch
MyWedding.com
Is It Time To Outsource - Aug 16, 2010
Planning For 2011 - Aug 9, 2010
Where Is Your Profitability Hiding - Jul 19, 2010
Would You Describe Your Company As Happy - Jul 6, 2010
Banker Optimism On The Rise - Jun 24, 2010
Surviving In A Tough Economy - Jun 10, 2010
Amendment Improves Small Business Access To Angel Investors - May 25, 2010
Is Your Business Plan Current - May 19, 2010
Succession Planning And You - May 7, 2010
Are You A Great Leader - Apr 16, 2010
Protect Your Business From Employee Fraud - Apr 7, 2010
Is There Such A Thing As Passive Income - Mar 27, 2010
2010 Initiatives - Mar 19, 2010
Small Business Borrowing - Mar 13, 2010
Growth Is Good Right - Mar 6, 2010
Creative Solutions - Feb 26, 2010
Employed Or Independent - Feb 21, 2010
Snowstorm Stimulus Is Your Business Prepared - Feb 10, 2010
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