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Never Let a Good Crisis Go to Waste

Never Let a Good Crisis Go to Waste

Winston Churchill knew a thing or two about crisis. He served as Britain’s Prime Minister during World War II and convinced an entire nation to fight against a Nazi occupation, knowing that to do so would mean sacrifice, loss and a new and miserable normal for Britain’s people.

Churchill is credited with saying “Never let a good crisis go to waste” in the mid-1940s as the world approached the end of WW ll. It is said that Churchill was referring to Yalta and the alliance forged between himself, Stalin and Roosevelt, an unlikely trio that would lead to the formation of the United Nations, creating opportunities in the midst of a crisis.

What is inspiring about Churchill’s quote is that it causes you to look for a silver lining during a crisis and to seek opportunities where they might not have been before.

How can business owners find a silver lining from this crisis? Brian Meewes, CFO-COO of OODA Health says industry has had a long stretch of “growth-at-all-costs,” where financial discipline may have been less critical, but challenges all businesses to now get their financial house in order.

“That stretch is officially over, and in this challenging time, CFOs have an incredible opportunity,” he said. “If you don’t think there’s an opportunity to completely transform the financial health of your business, and exit this situation far better off, you’re probably missing something. Keep looking!”

Here are some areas FocusCFO recommends you look at, to assure your business comes out of the pandemic stronger than before:

Know Your Numbers

Now more than ever, there should be an urgency to know your numbers. A rolling 13-week cash flow forecast will give you the insight that you need to see what’s coming ahead and to understand when there might be a cash flow shortfall. What we hear from new FocusCFO clients after the rolling forecast has been created for them is “I don’t ever want to live without one again”. There is no better time than during a crisis to put into place this powerful tool for knowing your numbers and having control over your decisions.

Know Your Expenses

When was the last time you did a comprehensive review of your expenses? From your rolling cash flow forecast, you will now have insight on your expenses, giving you a chance to look at each with fresh eyes. If you have contracts for supplies or services, can you negotiate better prices or terms? A crisis, it is said, brings everyone back to the negotiating table. Look at your agreements and see if there is room to gain increased margin if you pay in 25 days? Contact your suppliers and see what is most important to them. Have you had a supplier that you’ve been less than happy with, but there hasn’t been a good time to find another? Now is the time.

Know your Revenue

The rolling forecast will also give you great insight to your revenue sources because it tracks trends, payment issues and vulnerability. If your business is curtailed or shut down completely, will those revenues return when you reopen, or are they gone forever? If you’ve operated fully during the pandemic, has there been impact to a previously steady revenue source? Do you need to look for an alternative? Everyone has seen the news coverage of closed businesses that transformed themselves to help with PPE manufacturing. A distillery starts making hand sanitizer. A dental company starts making swabs. The crisis provides the motivation to take a hard look at income, profitability and growth.

Know Your People

For business owners, this may be the most difficult deep dive that they do. When it comes to people, we tend to be more subjective than objective, and it often is very personal. Certainly, the most important task is to make sure everyone is healthy, both physically and mentally, and can work safely. After your most important assets are protected, it is the time to take a hard look at each associate and decide if they are in the right seat, aligned with their skill set. If not, make those adjustments now Is everyone rowing hard and in the same direction or do you have someone on your team that just messes with the mojo of the entire firm? While making changes during a crisis might not make sense due to continuity and team morale, there is really never a good time and a crisis provides an opportunity for a reduction in your work force.

Find Your Silver Lining

Churchill also said “difficulties mastered are opportunities won.” Yes, this is a difficult time for business owners and we don’t yet know when the pandemic crisis will be over with. If you have bandwidth to look for your silver lining, you should use it. Many companies will come out of this stronger than before, ready to compete and grow at a pace that was previously unattainable.
At FocusCFO, we’re bullish on American enterprise and will help you find your silver lining. Let’s not let this crisis go to waste.

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Being Comfortable with Being Uncomfortable

Being Comfortable with Being Uncomfortable

by Sharon Magee

Twelve months ago, I was asked to participate in the Sandler Sales Training program. My employer, FocusCFO, provides Sandler training for all business development associates and since I’m the marketing maven, it made sense for me to know and understand the ideology and terminology too. I really didn’t know what to expect but jumped in, ready to learn. The program started with a two-day boot camp, followed by 12 months of weekly 1.5-hour sessions. You can easily put in an additional 1.5 hours /week on review, online content and exercises if you want to, which I often did.

Just shut up and listen.

As a marketing professional, what I found most interesting were the psychological and behavioral elements of the course. How and why people make decisions and the importance of always understanding where the other person is coming from. The only way to learn what motivates others, or what problems they are experiencing (pain), or what challenges you can help them with (opportunity), is to ask them.

Just ask them, and then shut up and just listen. What a novel notion! Selling can be very noble if you really care about others. Ask questions, listen, and see if you can help them.

You’re Always a 10

And here’s the good part, you’re always a 10! You’re born a 10, you die a 10 and you remain a 10 throughout your life. Your R score should not impact your I score. Ever. So, if you are having a bad day, or if you’ve just performed badly, or missed an opportunity, that should not impact how you think about your Identity and your value which remains a constant 10. Pretty cool, huh?

Sandler also taught that on average, people will perform in their roles only in a manner that is consistent with how they view themselves conceptually. So, keeping your I high will help you perform your Roles better.

Get Comfortable with Being Uncomfortable

My third and final biggest takeaway caught me totally off-guard and has become a personal and professional mantra since I heard it. Get comfortable with being uncomfortable. Of course, in the Sandler course, this applies mostly to the strategies and tactics of talking to people about their problems and pain, which can be pretty uncomfortable at times. But it can also apply to how you approach your own personal and professional challenges.

Pushing ourselves to operate outside of our comfort zone not only exercises our tenacity muscle but it builds confidence, strength and hardiness. It makes us more curious. Moreover, it likely makes you more empathetic to others who are just trying to grow their company, be a good employer, employee, friend, parent or spouse.

I’d like to thank Tom Thon, Mike Jones, Jordan Mullet, Ken Guest and all the coaches at The Ruby Group. It’s been a great year of self-exploration, camaraderie and super interesting content and sales strategies. You have demonstrated over and over your care and concern for your clients and your desire to help us be better business development professionals. Also, many thanks to FocusCFO’s Founder Brad Martyn, for giving me this opportunity for professional and personal growth.

 

Keep your I’s high, people. Listen more. And here’s to living outside your comfort zone.

 

Sharon is the Director of Marketing at FocusCFO based out of Columbus, OH.

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Is Making A Profit Intentional or Wishful Thinking

Is Making A Profit Intentional or Wishful Thinking?

By Jeff Semple

Most small business owners figure out the price they need to sell a product and be competitive in the market, then subtract their expenses hoping to make a profit if they do everything really well. What if you turned it upside down and became intentional about making profit? Set your selling price, subtract your desired profit first, then subtract your expenses? Too often I meet with business owners that build a business model based on what they need to get done vs. building a model designed to intentionally make a profit. If you subtract your profit first, you know exactly how much you can spend to produce or bring a product to market. Would you have to do things differently? Would you have to be more creative to accomplish everything? Henry Ford said, “Whether you think you can, or you think you can’t — you’re right.” Either way it’s a great exercise, all you have to lose is improving and becoming intentionally more profitable.

Jeff is a FocusCFO Area President based in Akron, OH.

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Cash Flow Statement 101

Cash Flow Statement 101

By Mark Snyder

The cash flow statement is the most important and insightful financial statement for any organization. This financial statement shows how management is generating and spending the cash of an organization over time.

Unfortunately, most small companies do not have a good cash flow statement. The reason this key financial statement is missing is that generating an accurate cash flow statement is a manual process. All accounting systems are set up to automatically generate a balance sheet and income statement, on an accrual basis, based on the transactions that are entered, but not a cash flow statement. A good accountant can pull together an accurate cash flow statement, but it takes time, knowledge of the business, and access to the transactions within your balance sheet and income statement.

The cash flow statement is organized into three sections: Operating, Investing and Financing.

Operating

The Operating section takes the organization’s net income and adds back any large non-cash items, which is usually depreciation and amortization expense. The depreciation and amortization amounts are the costs of larger and long-life assets on your balance sheet [think property, plant, and equipment] that are being expensed over their useful lives. Additionally, the Operating section evaluates how your organization is managing their working capital, which is primarily their accounts receivable and accounts payable balances. This provides great insight in assessing the effectiveness of management, for example if Accounts Receivable shows as a negative amount, that means the organization has more cash tied up on their receivables than in previous periods. This could be indicative of future collectability issues or poor cash collection efforts of customer receivables. Ultimately the most important line is the “Net Cash provided by or (Used for) Operating Activities” as this demonstrates whether the operations are generating cash or consuming cash. 

Investing

The Investing section shows the money that the organization has put back into their business.  Normally you will see in this section the amount spent on large capital purchases such as buying new equipment or facilities. The investing section also shows if the company is liquidating any assets such as selling off equipment or land. This is especially important for those businesses that are very capital intensive and evaluating how management is maintaining or building their long-term property, plant, and equipment assets.

Financing

The Financing section shows what is happening in the business regarding their debts and investors. Organization’s will show all debt repayments as well as any new debt that was obtained during the period. Also, any payments to investors such as dividends, as well as any issuance or repurchase of company stock.

The total of the three sections (Operating, Investing, and Financing) will demonstrate the change in and organization’s cash balance during the period being evaluated.

The cash flow statement demonstrates how management is doing managing their working capital, the impact of their operations on cash, as well as the investments being made into the business along with how debt and investor activities are affecting cash. All these activities are critical in evaluating the status of the business and managements stewardship of the business’s resources. If I only had time to evaluate one financial statement for an organization, it would be the cash flow statement.

Mark Snyder is an Area President with FocusCFO based in Cleveland, OH.

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