| 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 |
Can A Controller Help You Grow Your Business?
Hiring administrative staff is an area that can be overlooked as an opportunity to help a business grow. Why is it so tough for a business owner to make this move? Because hiring a controller is a big step and it’s not necessarily cheap either. Going from having a bookkeeper or staff accountant to a controller is a much bigger shift in thinking and the expected activity that should be the result of this hire.
Below are four ways in which a controller can help a business owner grow their business and gain better control over their finances:
- A controller will own the financial reporting. This person should have complete responsibility for the data inputs into the accounting system, along with how reports are formatted and distributed for effective financial analysis. The controller will be familiar with your backlog of sales, why expenses increase or decrease and if something does not seem right in your financials.
- A controller should find cost savings. This person should look for ways to help improve your business’s bottom line. This includes looking at vendor relationships and the price you are paying for the goods and services you need to run your company. They look at your product profit margins to understand what levers can be pulled to help improve it. The right person enjoys finding cost savings.
- A controller is a data manager. This person will manage the staff who enters the data into the accounting system. You don’t want your six-figure controller entering data, but rather finding ways to enter it faster and more efficiently. This means looking at technology and applications that can enhance the speed and accuracy of the financial data entered to your systems. This person directs, manages, and advises in this role and makes sure action is taken where needed.
- A controller is the person willing to say “No.” You want your controller to have the confidence to say “no” and be at times with vendors and your staff as a pain. This does not mean the person is rude or unprofessional, but rather someone who has thick skin to handle tough discussions with vendors or staff in spending or policy issues. The controller is your partner who is watching out for the company and employee’s interests. This sometimes requires a person to say no.
Cheers to growing your business with a controller!
Mike
Numbers Coach Helps Medical Firm Stay Financially Focused
The Company
Georgia Pain and Spine Care (“GPSC”), founded by Dr. Charles Brownlow in 2010, is a leading pain management medical services firm that provides comprehensive solutions to help restore each patient to their original lifestyle. The company uses progressive approaches to pain management with education, counseling, and minimally invasive procedures. Their mission is to relieve pain, increase productivity, and improve the quality of life for its patients using technologically advanced treatment regimens through is various metro Atlanta offices.
Situation
In 2020 the GPSC team wanted to enhance their financial management and reporting capabilities. They wanted to create a platform to communicate the company’s key performance indicators (“KPI”) and help educate its key team members on what drives its company’s financial results. In addition, the GPSC team wanted a “road map” that could guide them as they made financial decisions impacting strategies for growth.
Solution: The Numbers Coach Financial Leadership Services
The Numbers Coach (“NC”) financial leadership services were an ideal fit for developing GPSC’s performance metrics. NC developed a financial scorecard to focus on the financial measurements that drive company profits and cash flow critical to sustained profitable growth. The scorecard offers an “at a glance” view of results. NC developed a financial model from its proprietary software the Numbers NavigatorTM . The software provides a road map for the GPSC team to see where they are headed with profits and cash flow. The software’s rolling financial forecast provides the GPSC team with a tool to make critical decisions “on the go” to achieve their desired results.
Results
NC pulled together financial and non-financial data to complete a scorecard and financial model. Each month NC meets with the GPSC team to methodically review results and provide the input and analysis from the Numbers NavigatorTM financial software. From the monthly financial coaching meetings, the GPSC team can take actions on activities that improve the company’s bottom line results.
For more information on Georgia Pain and Spine Care visit www.gapaincare.com
To learn more about the Numbers Coach financial leadership services, click here
“Mike has become an important part of our team. His understanding of financial processes, cash flow, and approach to educating us on our results gives our team the right tools to help us understand how to navigate our finances successfully and stay focused on our financial goals.”
Dr. Charles Brownlow, Founder / Medical Director
Is an Angel Investor Right for Your Business?
As an entrepreneur, you are inherently a risk-taker. Starting and running a business is not for those who only play it safe. But like almost everything in life, risk is on a continuum. There is lots of distance between carefully weighed risk and recklessness. “Carefully weighed” risks are optimal.
Many small business owners consider taking on funding as a necessary risk to grow at their desired rate, since they need more cash than they can invest personally. Before enough revenue starts rolling in to cover costs and produce a healthy margin, businesses need to invest in expenses like research and development, materials, staff, marketing, or operations – and most likely, a combination of those factors.
Traditional options for funding are commercial (bank) loans and government-backed loans, such as Small Business Administration (SBA) loans. Another option is to come to an agreement with one or more angel investors. These are private, high net worth individuals who are willing to take risks on businesses they believe will succeed. Make no mistake though: Angel investors are in it to earn money at a higher rate than traditional investments, and they typically require equity ownership in the company and expect returns via company profits of 25% or more (such as what you see on the aptly-named TV show, Shark Tank).
Here are a few pros and cons of acquiring capital through angel investment:
Pros:
- Debt financing has to be paid back (with interest), but if the business fails, angel investments typically do not have to be repaid.
- Angel investors are willing to take risks on companies in which they see potential.
- Most angel investors are experienced and successful business owners who offer their expertise in addition to funds, as well as other bonuses like investor networks and supplier and distributor contacts.
Cons:
- Because angel investors typically require equity ownership, they can expect to play more of an active role in the business.
- As part owners, angel investors are entitled to a share of profits. Handing over equity in a company is basically handing over part of your future net earnings.
- Relationships with angel investors are typically more personal than with venture capitalists. Business challenges can have a negative impact on those relationships.
- It can be difficult to find angel investors. They can be friends or family, but many are found by word of mouth and through business associations or networking, such as the local chamber of commerce.
- Angel investors are usually looking for a higher rate of return than traditional debt financing from a bank, although not as high as venture capitalists.
Many angel investors and business owners develop mutually satisfying, long-term relationships. Success depends on detailed business planning, extensive upfront communication and documentation, formalized legal agreements, and then ongoing communication and relationship management. With solid planning and communication, using angel investment to fund your business can be an effective risk that accelerates your business growth.
Contact us if you would like us to help you determine if angel investment is right for your business.