Want To Stand On Solid Financial Ground?…Follow These 9 Key Strategies

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Don’t shoot yourself in the financial foot.  Stay clear of common financial mistakes by following these 9 financial concepts.

  • Cash is “king” so keep a handle on your cash by reviewing your cash flow statements, your weekly cash receipts, and weekly or daily cash balance.
  • Understand what would be the right mix of debt vs. equity in your business.  Each business has its own “speed limit” and growing too fast can cause you to pile on debt and thereby, risk to the business.
  • Have a written plan even if it’s a short one page which I prefer.  The lack of a plan is the plan to failure.
  • Know how to read your financial statements, and not just you profit and loss statement but also your balance sheet and cash flow statement.  Otherwise it will be hard for you to make good decisions for the business.
  • Know your costs.  This is especially true to understand at what point of your growth will you need to add more fixed cost to the business in order to go the next level.
  • Keep up good relationships with your bank and vendors.  These are your key stakeholders who can make the difference between success and failure.
  • Missing the “forest” because you are only looking at the “trees”.  You are missing the bigger picture of your business and industry.  Understand the trends and be able to step back from the business to see if you are driving in the right direction.
  • The absence of timely data from operations and finance.  If you are waiting 30 days or more to review this data, its most likely too late for good corrective action and rather you will be more in a reactive mode.
  • Lack of understanding the cause of the results.  Get to know the drivers of your business including your financial drivers.  These metrics will provide insight into the direction you are heading.

Follow these 9 key strategies and you will get the financial results that you want. Here’s to achieving your financial goals!

Mike

Can A Controller Help You Grow Your Business?

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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

Is a Clash Brewing in your Workplace? The Impact of Mixing Generation X and the Millennial Generation in the Workplace

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by Cynthia Miller of cindy.miller.atl.communications

As you watch the impact of the much-discussed generational mix on your company, pay particular attention to this: The most unsupervised generation in American history is starting to become the bosses of the most supervised generation in American history.

Generation X, the oldest of which were born in the late 1960s, is the next generation of corporate leadership. Independent from the time they were “latch-key children,” this demographic is moving into leadership vacancies created by the retirement of the Baby Boomers, now turning 60 at a rate of about 10,000 a day. Often described as a “cynical generation,” Generation X’s formative years were shaped by soaring divorce rates and two-income families, limiting the time they were physically in the presence of adults. They learned to do things themselves, at a young age, with little supervision.

Compare that upbringing to that of the Millennial generation, the oldest of which are now in their mid-20s. This generation saw a return to parenting, and has routinely sought out their parents for advice, encouragement and the creation of structure. Their time has been managed since they were toddlers, and praise was given out daily.

It’s the “Figure it out” generation up against the “How do I do it?” generation, and that’s bound to cause some friction in your company.

So what’s a CEO to do? Here are some ideas to help keep everyone focused on the business at hand:

  • Promote flexible work arrangements. One thing both Gen X and Millennial can agree on is a desire for flexibility. Mandatory face-time is out; results-based management is in. But flexibility doesn’t mean you’ve lost control of employees and the work required. Train your managers in the skills of goal-setting and performance evaluation. You’ll find productivity increases (along with the bottom line) when your staff feels ownership for meeting company goals.
  • Hone your employee communication strategy. Communication is critical to help the different generations understand the intricacies of a successful business. The standard employee newsletter may not be sufficient to a staff with expectations of immediate access to information. Personal communication skills, too, will play a vital role in keeping everyone focused on current business strategies and priorities.
  • Train the next generation of leaders. Gen X and Millennials are poised to sit in the driver’s seat of your business. Is your next generation of leadership up to the task? You’ll skip many frustrations — both for yourself and your managers — if you invest in leadership development to give your management team the tools they need to lead.

Harnessing the power of the generations will move your company to the next level of success.

Cynthia Miller is the principal of cindy.miller.atl communications, a company that specializes in communication strategy including crisis communication and media relations. Learn more at http://cindymilleratl.com/

Preventing Employee Fraud

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by Michael Iverson

Small-business owners often talk about treating employees like family. They work hard to provide environments that support and nurture employees. The nurturing process involves increasing responsibilities over time. Owners want (and need) to trust their employees to exercise authority and help manage the business.

Occasionally, that trust is misplaced. In recent years, small businesses have been hit by a series of high-profile cases. For instance, the vice president of finance for a Midwestern headphone manufacturer is accused of embezzling more than $20 million over several years.

Physician practice embezzlement is on the rise too, according to the Medical Group Management Association. Three out of four physicians will suffer some financial loss from employee dishonesty during their careers.

No employer wants to dwell on the possibility of employee theft or embezzlement. On the other hand, few businesses can withstand the effects of a prolonged financial crime. Here are three reasonable steps you can take to protect your business:

  1. Make Vacation Mandatory

    2. Most financial crimes require constant attention, even diligence, on the part of the perpetrators. A policy of mandatory vacation time can deter employees from even considering any impropriety. Employees fear that any financial misdeeds will be detected during their absence.

    Make the mandatory vacation time commensurate with each employee’s level of responsibility. Don’t allow the vacation time to be taken one or two days at a time. Multi-week absences give a temporary contractor or employee a better chance of uncovering fraud—if it exists.

    Other employees, especially those with access to cash and high-value inventory, should also be required to take mandatory vacations. In addition to thwarting fraud, such vacations provide opportunities for employee cross-training.

  2. Segregate Duties

    3. Through appropriate segregation of duties, it’s possible for a business to remove most temptations to commit fraud. For example, the employee receiving cash should not be the person recording the cash receipts and making bank deposits. The employee receiving high-value inventory should not have any ability to adjust the accounting records pertaining to the inventory.

    The idea is to prevent any one individual from having enough responsibility to misappropriate assets and cover their tracks by altering related financial documents.

    By their very nature, certain work activities lend themselves to detecting potential crimes. For example, reconciling bank accounts often leads to questions about unusual wire transfers out of a bank account or unrecorded cash withdrawals.

    When the person who normally reconciles the bank accounts is on mandatory vacation, make sure his or her temporary replacement completes these reconciliations. Any items that cannot be explained should be brought to the attention of management immediately.

  3. Purchase Fraud-Inclusive Insurance

    4. Finally, business owners should be aware that commercial property insurance policies typically exclude from coverage any crime-related losses. It is possible to purchase a separate “fidelity insurance” policy that protects against the risks of employee theft and fraud.

    Often a policy requires a rider or notification for processes that could be potential fraud risks. If your business accepts credit cards over the phone make sure your business insurance covers for misuse of 3rd party credit cards. If you keep credit card records on file, how do you secure them from unauthorized use? Does your merchant agreement allow you to maintain credit card numbers on file? Some merchants will not allow you to keep credit cards on file without being what is referred to as “PCI compliant”.

    See the advice of your insurance agent or business risk manager to ensure you are adequately covered and in compliance.

If you have questions about preventing or determining employee fraud, contact us. We are happy to assess your situation and make recommendations.