Building Your Financial Plan

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Any competent financial executive will say “a business needs a sound financial plan” to tie the numbers to a business owner’s strategy. But what does that really mean? It’s time to demystify this statement.

  • Define your objective.  Why do you run your business?  Your reason could be any of the following or something else, but it’s important to start with the end in mind:
    •    “I want a good, stable life style maintaining business.”
    •     “I want to increase my net worth so I can retire early and enjoy the good life.”
    •     “I’ll start a ground breaking business, grow it quickly and sell it so I can move on to the next adventure. I don’t want to get bored!”
    •     “I want to create a legacy for my family.”
  • Create a business plan.
    • Now that you have your objective in mind, the plan is simply the day-to-day activities that will help you achieve it.  This can be as simple as determining how many new clients you will need at X dollars per month, or more detailed with specific key performance indicators for all areas of the business (finance, operations, sales and marketing, HR, etc.)
    • It is easy to think of the plan as the tool. And it is – a well developed plan helps you manage to your expectations. It provides business measures to keep things on track. (And as we all know, if you don’t measure it you can’t manage it.)  But often overlooked is the value gained in going through the planning process – whether it’s a simple two-page plan or a full-blown book with multiple chapters. The business idea will be refined and honed, and valuable insights achieved during planning.
  • Execute.
    • Now it’s time to put the plan into action.  Without this step, a plan is just a piece of paper.  Start acting on your plan, find someone to keep you accountable to sticking with it, and celebrate your progress along the way.

Let me know how I can help you build your blueprint.  

Here’s to planning a successful year!   

Mike

Measuring Your Performance

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One of the quotes that keeps coming back to me is “What gets measured gets done.” This simple mantra has held true for me both professionally and personally.  I sat down the other day to look at a set of goals that I had set 5 years ago.  I actually had forgotten about the document until I ran across it while cleaning out paperwork to start my new year.

It is amazing to see the power of writing down the goals and how they actually came true.  Not all of mine happened, but a good chunk of them did.  

Here were my goals:  

  • Take a family trip to Europe.  Checked that one off despite having three teenage girls going in multiple directions with their activities.   
  •  Expand our current home or find one more suitable. . . four years later, a more suitable house became available.
  • Be a part of a charitable foundation that gave back into my community…done, I began serving on the board of New American Pathways three years later.

For me the quote “from lips to pencil tips” says it all.  Once I write down the goal and use the SMART principles…accomplishment is not too far away.  SMART goals are: 

  • Specific
  • Measurable
  • Actionable
  • Realistic
  • Time bound

What are your goals?  Have you written them down?  Can you measure them? 

My challenge to you is to write down up to three goals you want to accomplish over 1, 2 or 3 years.  Check on them every so often, and then 4 or 5 years later you will see the power of performance measurement.

Here’s to achieving SMART goals!  

Mike

Make Your Compliments Count

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One of the best ways to brighten up someone’s day is to give them a compliment.  

However, not all compliments are equal.  In her article “The Secret to Giving a Compliment that Makes People Glow” by Mary Halton, she describes the 3 ingredients for a great compliment.

  • Use their name
    • Using someone’s name says you value them as a person
  • Compliment something specific
    • Instead of using a generic statement like “Good job,” be specific and say something like “Your singing took me back to my childhood when my family would sing around the campfire.”
  • Don’t praise and run out
    • After your compliment, ask a follow up question such as why they chose to sing that particular song

Compliments can go a long way in building your relationships, so make them count.

Here’s to making it count!

Mike

Building an Evergreen Company

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I read an article recently by Bo Burlingham, an INC magazine writer, about what he described as an evergreen company.  The definition is described as a “private, profitable, market-leading businesses that are designed to remain unsold and independent for a long, long time.”   

It was interesting to read about entrepreneurs who had decided that it was not about how high they could get their valuation, how much money they raised, or how big they would grow, but rather looking for a meaningful experience building their companies.

If that vision appeals to you, here are seven tips on building an evergreen company.

  • Purpose  
    Passion driven organization from its vision/mission.  It’s not about the money.
  • Perseverance
    The resiliency to keep pushing forward and overcome obstacles
  • People First
    Have an engaged workforce aligned with its culture.  Team members who are taken care of will in turn take care of your customers, suppliers, community, and stockholders
  • Private
    Taking advantage of the long term view as a private enterprise
  • Profit  
    Success is measured and that includes the bottom line
  • Paced Growth
    The discipline to focus on growth that is steady and consistent.  Every company has a speed limit to profitable growth
  • Pragmatic Innovation
    Embrace the mantra of continuous improvement and be willing to take calculated risks that don’t jeopardize the company

Here’s to knowing how you can drive your evergreen company to the results that you want!

Mike

Simple but Powerful Rules for Business

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Charles “Red” Scott was a President and CEO of several public companies over his career, including Intermark and then Fuqua Industries.  His business philosophy for success in running a business resonates with me, seems timeless, and cuts across all industries.  While simple on the surface, these rules and principles remind us as business leaders of what is important. 

Below are some of Red Scott’s “rules” that I think you will also find are key to business success:

  • Don’t run out of cash. . . no matter what!
  • No surprises: Give fair warning when you hear bad news
  • Never compromise quality for price
  • Plan strategy and set objectives before fixing structure
  • Be careful of a “quick fix”
  • “About right” now is better than “exactly wrong” later
  • Creativity is great. . . but not in accounting
  • Always ask “What if?”
  • Hire smart rather than manage tough
  • Do the “right thing” rather than do “things right”
  • Invest in business with a low cost to exit
  • Hire for attitude, train for skills
  • Be careful: A little success can create a whole lot of overhead
  • “I will” beats IQ every time!

These are just a few business tips that can help you pull through all your circumstances.

To your business health!
Mike

5 Ideas for Becoming a Better Leader

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I recently read a short article that addressed 5 interesting metrics to measure as you build your leadership skills.  The author, Verne Harnish, who wrote the book “Scaling Up” has these key measures that will help you grow the impact of your leadership.

1. Just say “No”. Initially when a business owner is starting out, it pays to say “yes” to a lot of opportunities to network and gain experiences.  However, as you get clear on your strategy, Verne recommends turning this upside down and aim for a ratio of 20-to-1 “No”.  Why?  So you can     get laser focused on getting to the results that you want.

2. Spend time with other leaders. Develop a “meet and greet” strategy with other     influencers in your industry.  Set a goal of how many coffees, breakfasts or lunches to have so that you will gain knowledge from other leaders in your field.

3. Put the highest priorities first. Spend uninterrupted time “in the flow” for at least 90 minutes a day.  Put this on the calendar for every day.  If you don’t focus on your high priority items, they will not
get done.

4. Use a sounding board. Get input from lots of other brains that can help propel your company forward.  Get a brain trust or advisory team who have experience and wisdom that you want to obtain.

5. Make space for thinking. Spend time thinking to let your best ideas incubate. Even Ben Franklin spent time devoted to learning each day.  Reading and thinking are a must for a leader.  As it’s been said “leaders are readers.”

Measure these leadership metrics on a regular basis and you’ll give yourself a chance to take your leadership skills to the next level.
  
Here’s to becoming great leaders! Mike

Buffet’s Advice for Financial Success

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The “Oracle of Omaha” has created an impressive following of people and his investing results have proven the test of time.  Below are 10 simple bits of wisdom that I believe are timeless:

Never lose money.  Buffet’s rule # 1 is to not lose money.  And his rule #2 is to remember rule #1.  Keep in mind if you lose 50% of your investment, then it takes 100% return to get back to even.

Get high value for low price.  What he means is value is what you pay for.  Make sure that you are paying the right price for the value in the product, business or investment that you are buying.

Build healthy money habits.  Habits are what drive our behavior.  It’s been said that finance is 80% behavior and 20% math.  If we don’t change poor behaviors with our wallet then we can’t expect to find success with money or building a business.

Avoid debt and, more specifically, avoid credit card debt.  Credit card interest rates can be as high as 18% and more.  If you have to roll over your credit card balance regularly, then you can’t afford spending on it.  In effect, you are trading your future for your present satisfaction.

Keep cash on hand.  Come up with what your minimum cash balance needs to be.  Is it 3 months or 6 months of expenses?  “Cash is to a business as oxygen is to an individual: Never think about it when it is present, the only thing in mind when it is absent,” said Buffet.

Invest in yourself.  Your biggest income producing asset is yourself.  Improve your skills to make yourself more valuable to the market.  Unlike other assets and investments, “Nobody can tax it away and they can’t steal it away,” said Buffet.

Learn about how to manage money as a part of the investment in yourself.  Not everyone enjoys this subject, however, there are simple methods to follow that help you win with money.  Spend less than you make. . . save 15% into a low cost index mutual fund. . . it’s not how much you make, it’s how much you decide to spend.

Trust a low cost index fund. Expenses matter when it comes to returns on your investments.  Consistently adding to your investments each month or quarter exercises an important “money muscle.”

Give back on a regular basis.  Giving of our “time, talents, and treasure” to our community and nonprofits is a natural law of human nature where we want to help others in need.  Giving produces psychic benefits for the giver and it helps society move forward.

Invest for the long term.  Investing not only with dollars but in ourselves is a long term game.  Building true financial security takes time.  Buffet said, “someone’s sitting in the shade today because someone planted a tree a long time ago.”

Together these pieces of advice can help take us on the journey to financial security.  The advice is simple and timeless.

Here’s to reaching your financial goals! Mike

How to be Successful the Second Time Around

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I recently read an article about a study conducted on over 65,000 Swedish earlier stage start-up companies and their owners who successfully exited one company and moved on to their next company.  It pointed out that the second time around for the entrepreneur was not always a success.     Most business owners after they exit from their business seem ready soon after to start another venture.  This includes business owners that transition to the buyer company, but find out that they can’t work for anyone else anymore.

The second business often under-performs compared to the first one.  Why?  There is no one reason why the same skills and leadership that got them a first successful company exit does not work the second time around.     In some cases, the entrepreneur fails to understand the significance of timing and those “make-or-break” moments where their intuition helped lead the first company to its success.  They sometimes forget or underestimate how much effort it takes and the chance events that got their first company the results needed to succeed.

So what are the ingredients for a happy exit?  It depends on the person; however, some common strategies included: The business owner visualizes what life looks like after exit.  They don’t wait for the exit to happen and then decide, rather they are proactive about it before exiting. Test driving the next venture prior to exiting the first one Setting clear goals, deadlines, and amount of capital that will be committed These are just a few of the ideas that can help a business owner avoid moving onto a second or third business venture that ends up disappointing.

Here’s to your next venture! Mike

Make Your Compliments Count

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One of the best ways to brighten up someone’s day is to give them a compliment.  

However, not all compliments are equal.  In her article “The Secret to Giving a Compliment that Makes People Glow” by Mary Halton, she describes the 3 ingredients for a great compliment:

1.)  Use their name

  • Using someone’s name says you value them as a person

2.)  Compliment something specific

  • Instead of using a generic statement like “Good job,” be specific and say something like “Your singing took me back to my childhood when my family would sing around the campfire.”

3.)  Don’t praise and run out

  • After your compliment, ask a follow up question such as why they chose to sing that particular song

    Compliments can go a long way in building your relationships, so make them count.

Here’s to making it count!

Mike

Preserving Cash In Uncertain Times

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I’ve been watching the news and talking with colleagues and clients and wanted to share some strategies with you for preserving cash that may come in handy.

1. Research refinance options for any high interest loans and ask for some or all of the closing costs to be waived.
2. The Small Business Administration has created a program to fast track low interest loans under its Economic Injury Disaster Loan, visit: www.sba.gov/disaster
3. Reach out to your lenders about deferring payments, or reducing to interest only payments, on debt.
4. Ask your landlord if you can pay rent at the end of the month (in arrears) for the next 90 days.
5. Ask your landlord about reducing or deferring Common Area Maintenance (CAM) charges for the next 90 days.
6. Call clients to see who can pay faster/earlier.
7. Call vendors to see if you can get extended terms or defer some portion of invoices to a later date. 8. Ask vendors to take payment on a company credit card.  Ask the vendor to charge the amount just after the credit card statement drop date.  This can defer a payment from 15-45 days if timed correctly.
9. Reach out to your credit card company to ask for reduced or zero interest for the next 90-120 days. 10. Bill customers as quickly as possible.
11. Consider whether you have any customers who might pay now for future delivery of services.
12. Defer your personal tax return filing and payment to July 15th.  The IRS issued a recent ruling that is allowing a delayed 2019 tax filing until this date.  However, if you are owed a refund, file your return now to get the funds.

Congress is in the process of an enacting special legislation called the “CARES Act” which is in the Senate at this time.

If you think of other ideas, I’d love to hear them!  My belief is that we will come out of this stronger and definitely together.  Scientists around the world will find the path through for our collective well-being.

Stay well!  And if you have any questions, concerns or just want someone to talk through your ideas, don’t hesitate to reach out.    Mike

Is It Time to Hire a Business Coach?

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It has become more accepted today to get a coach for various reasons.  You might want one for physical strength training, for accountability, for financial wisdom, or one for a favorite sport.  Coaches have been more associated with sports teams until recently when CEO’s and others in leadership positions within organizations began to see the benefit of a coach (some might call it a mentor) for work. 

When is the best time to hire a coach?  Here might be a few ways to spot it when you:

  • Feel stuck and the business is not moving in the right direction for you
  • Don’t understand your financial numbers
  • No longer enjoy the work you are doing
  • Are frustrated with your career

Coaches these days come in all shapes and sizes in their expertise.  There are coaches for writing, coaches for finances, coaches for exercise, coaches for cooking….and so on.  When you are leading an organization, the saying “It’s lonely at the top” seems all too true.

I heard a conversation the other day from a colleague who mentioned they hired a coach to help him with his business.  After two years he still felt stuck and the business going nowhere.  He was going to fire his coach who responded “Well if you don’t take any of my advice, it’s no wonder you are still in the same place.”  My colleague took this as a challenge and began taking the advice.  Ten years later, he has the same coach and the business has gone even further than he thought it would. 

The morale of the story?  If you hire a coach and decide not to take any of the advice and expect different results, then you have just entered the “insanity zone.”  As we all know, the quote goes something like this “Doing the same activities every day, but expecting different results is the definition of insanity.”

Don’t go insane.  Not all of the advice from a coach will be right, but if you get the right one who asks the right questions, you should come out ahead.  What are the key traits to seek out in a coach?

  • Curiosity. A good coach is curious and asks lots of questions, and then listens as much or more than talks
  • Business experience. Do they have experience in the business world in leadership or entrepreneurship?
  • Direct. They are direct and are not afraid to push you outside your comfort zone.They tell you what you sometimes don’t want to hear.
  • Humor. Business is hard work and your coach should help lighten it with laughter

Is this your year to get a coach?  If a sports team can’t win a championship without a coach, what makes you think that you can lead an organization to “best in class” without one?  Start working with a coach to take your business game to the next level.

If you need a “numbers” coach for your business, Trillium is here to help.  Check out our services and schedule a complimentary consultation with us today.

One Word Can Be A Game Changer

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One of my regular practices is to write in a journal.  It helps me get out what is stuck in my head so that later I can go back to see any insights.  I also write down what I am grateful for that day.  However, even with that practice I find myself getting stressed out about the various business and family commitments that we all have these days.  And being connected 24/7 amplifies this even more.

It’s easy to focus on my self-talk of “I have to (finish that report, get up early, make that sales call), etc.”  However, if I change one word in that sentence—from “have” to into “get” to—it can be a game changer for my attitude.  It has been said that some of the best hires an organization can make are those people with the right attitude, because you can teach skills, but you can’t unlearn someone from years of a negative attitude.

In an article by James Clear, “How to be Thankful for Your Life by Changing Just One Word,” Clear describes this process of taking the “have to” out of the sentence and replacing it with “get to.”  It pushes you into a new mindset.  Clear used the example of a man who was wheelchair-bound and was asked if it was difficult to be confined to it.  His response was “I’m not confined to my wheelchair—I am liberated by it.  If it wasn’t for my wheelchair, I would be bed-bound and never able to leave my house.”

How is your thinking confining you?  Liberate yourself from “have to” and replace it with “get to” and see how it can transform your attitude.  I’d love to hear about your results at mike@trilliumfinancial.com.