October 2019 Newsletter

“Put your hand on a hot stove for a minute and it seems like an hour. Sit with a pretty girl for an hour and it seems like a minute.
That’s relativity.”
– Albert Einstein
And yet, for those of us not blessed with an astronomical IQ, time does seem to be speeding up. I often compare the second half of a year to the second half of a gas tank. The first half seems to take forever; the second disappears in the blink of an eye. Which is how we find ourselves, ready or not, in October with the holidays staring us in the face.

Before things spin too wildly out of control, this would be a good time to step on the brakes, at least temporarily, and do one of those quarterly business goal assessments we talk about from time to time.

As a reminder, the most worthwhile goals are SMART, a handy acronym that helps ensure they are clear and reachable, and stands for:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-bound

In the words of noted French poet and author Antoine de Saint Exupery, “ A goal without a plan is just a wish.” In the remaining sections of this newsletter, we talk about specific ways to plan and budget properly.

For now, think about where you’ve been so far in 2019, and just as importantly, what you will accomplish during the balance of this year.

Goals, Performance, Success
Fundamentals:Financial – Part 1

“The best time to plant a tree was 20 years ago.
The second best time is now.”
– Chinese Proverb

“I believe that through knowledge and discipline, financial peace is possible for all of us.”
– Dave Ramsey

A fundamental dynamic of business is paying attention to the organization’s financial performance and stability, not just for now but sustainably into the future. The best way to do this is dropping the old mentality that the accounting and finance department is strictly for reporting history and counting widgets.

The financial department should be proactively involved in supporting the future of the organization through value-added activities. These include contributing to leadership discussions, identifying areas for improvement, leading cost effective design, detecting inefficiencies in processes, changing the way accounting is utilized, participating in the implementation of strategic plans, conducting benchmarking studies, developing best practices, supporting integrated information systems, analyzing trends and opportunities, and building relationships throughout the organization along with outside stakeholders from investors to lenders with capital funds for expansion. Simply put, the financial team members are critical to building, shaping and developing a successful transferrable business.

With today’s technology, the old transaction processing and data entry of the traditional bookkeeper should not make up your entire financial department.

More to come in our next issue.

The Five D’s: Disability

Over the last few newsletters, we have been discussing the concept of the “Five D’s,” five major events that can create severe disorder in a business. These are:

  • Disagreement
  • Divorce
  • Disability
  • Distress
  • Death

Every business needs a contingency plan for Disability, the third D. Even the Constitution of the United States makes allowances for questions raised by presidential disability, which has happened a number of times throughout our history.

Before age 65, we are all more likely to need the benefits of disability insurance than life insurance. All owners and executives stand a reasonable chance of becoming disabled for three months or longer during their time at the helm, anywhere from 21% to 38% according to some insurance studies. Long before you or your executive team might need it, define and understand the parameters, protections and obligations of your company, your partners, your spouse and others in the event of your disability. Disability can create many problems, including questions of who will make the emergency decisions, how to keep the company running, who will make the long-term transition choices, and how to support the disabled owner and their family.

Beyond visiting with insurance advisors and financial planners to discuss disability insurance policies to shift some of the risks, you need to craft the necessary contingency plan documents to grant the proper authority to trusted individuals.

Disability insurance might be an added expense, but it’s not as expensive as losing your company and your livelihood in the event of accidents, medical issues like cancer or being the victim of a violent act.

All too often, business owners take a “set it and forget it” approach to budgeting. They plug in some numbers on a spreadsheet, hit “save” and smile with satisfaction knowing this cursory task is out of the way for another year.

What they fail to realize is that a business budget should be a living, breathing document, something not just thrown together to keep the bankers happy, but a useful instrument to keep your business on track. As a planning tool, it combines past trends with realistic forecasts to enable you to evaluate your successes and failures, and determine what’s happening with important metrics like your gross profit margin and anticipated capital expenses. Meanwhile, it is updated as resources are reallocated every time decisions are made to adjust to changing market conditions or goals not achieved or exceeded.

Budgets help with setting goals and establishing priorities. A budget should detail where funding will come from to execute new strategies and how much revenue can be generated by executing the strategies successfully.

Budgeting should also account for long-term needs. These can include costly expenditures such as additional staffing or wage increases, upgrades to computer hardware and software, purchasing equipment, adding a new location, or developing a new product line.

As we prepare for 2020, we know that many external forces are beyond our control. If our company procures raw materials or finished products from China, for example, budgeting will indicate how ongoing tariffs are cutting into our margins and will necessitate proactive response measures. These may consist of raising consumer prices, finding a new product source, or even abandoning that product line entirely.

Regardless of which path or paths we choose, budgeting the dollars helps direct our most vital decisions. As a reminder, 2020 isn’t just a year, but a term used to express visual acuity for hindsight. And foresight.

Business owners often feel as though they have no one to talk to, no one who really understands the frustrations and loneliness of entrepreneurship, not to mention the occasional sleepless night. They find it difficult to truly open up and share everything with employees, friends, family, or even business partners, who may mean well, yet don’t have the experience, ability, or objectivity to provide meaningful support and direction.

It’s as though the business owner is sitting at his or her desk, with piles of obligations and concerns, while across the desk sits an empty chair.

Chuck Mohler often walks in and claims the previously empty seat as the best person to fill the void. Chuck uses his 25+ years of experience in business and his multiple professional certifications to guide owners, after careful listening, with sound advice and action. In his role as a qualified, trusted advisor, coach and mentor, he shares hard-won lessons, addresses specific challenges and helps implement vital systems and processes, all while lending an empathetic ear. Or, sometimes, a needed kick in the pants.