Sometimes you are struck by online marketing, and not in a good way. I think the author Catherine Aird was correct – “If you can’t be a good example, then you’ll just have to be a horrible warning.”
This week, one of the LinkedIn paid advertisements messages that came across my feed was “We will make you an expert financial analyst in 1 week”. REALLY? 1 week, 1 course, 1 anything and you are an expert? Give. Me. A. Break.
This type of marketing wastes time and money to push out and inevitably destroys something even more valuable – TRUST. Don’t do it!
I can show you a lot of tricks in a short time and give you valuable insight that comes from 25 years of experience, but becoming an expert takes time, effort, and thought. There are no magic bullets out there, stop looking. Stop listening to promises that are destined to be broken and start putting in the effort.
I see many folks
struggling to adapt to the curve balls Covid-19 is throwing right now, and
I grew up on a commercial farm and have been working with Ag businesses for over 25 years. That experience has given me a unique perspective on the current economic environment brought on by Covid-19. In agriculture, every day has the potential for disastrous events, many of them completely outside of your control with far reaching consequences. Early or late frosts, droughts, floods, disease, wild price swings in your products and supplies, all can dramatically impact your business. So what can you learn from Ag during these trying times?
- Take care of your people. Period. You need your customers, vendors, employees, and your family to make it through tough times. You take care of them, they take care of you. Alienate them, and you will never recover.
- Cash Flow is critical. I like to think in terms of the good, bad, and ugly scenario planning. This year, I am including a really ugly category as well.
- Stop thinking in terms of absolute numbers and start thinking in probabilistic terms. Play the odds for success.
- Highly leveraged businesses are at high risk. Borrowed money is an accelerator, and it works both ways – up and down. Its it probably to late to change your debt position, but think about that as banks try to loan you money. Banks have marble floors for a reason.
- The higher your risk level, the more cash reserves you need.
- Adapt to changes quickly. Be flexible and fast. What worked yesterday isn’t going to work tomorrow.
- Diversification can be a good thing. 9 times out of 10, my advice to entrepreneurs is to focus, because they have so many ideas, they need reigned in. But businesses that have multiple income streams and diverse customer bases are in a much better position now than those who are dependent upon a single customer or single income steams. It works best if you build complementary and synergistic segments.
- Mindset is everything. Focus on what you can control, work on the biggest problems first. Recharge each night so you can be fresh the next day.
- Tough times are followed by good times. Think long term to stay focused on what matters most. Your monthly and quarterly targets are gone, position yourself for the long term.
- Remember, hard times make for great managers.
Step back, breath
and think logically. Put numbers to
thoughts. We are in this together, don’t
forget to ask for help if you need it.
Put aside the fear and get excited to be thinking differently and
challenging the assumptions we once knew as fact. You can do this, AND make your business
better than ever.
Stay apart and stay
Covid-19 has changed the business environment more in the past week than anything in the past decade. I am looking at not only budgets, plans, and strategies, but at my business model as well. Everything from the customers to products, logistics, employees, and processes that connect all of them.
Step back, breathe, and think logically. Put numbers to thoughts. Don’t worry, we are in this together. Some are scared, and with good reason. Put aside the fear and get excited to be thinking differently. Challenge the assumptions you once knew as fact. You can do this, AND make your business better than ever.
Stay apart and stay
As we approach the end of the year, it is a perfect time to think about strategic planning session to develop meaningful metrics and monitoring systems. We offer a free year end strategy session, you can find out the details at https://successscorecard.com/financial/.
During a financial review, we dig into the numbers behind
your business. No cookie cutters, just good old-fashioned elbow
grease. Sessions can be a broad overview for a fresh viewpoint, or very
detailed to answer specific questions. We use our experience to help you
develop the business processes and metrics to ensure your success.
I know first-hand the importance of developing key
performance metrics and the impact it can have on the bottom line. We love taking our experience and helping
entrepreneurs build lasting and sustainable businesses that reach their goals. We have found that many businesses start with
a dream and a fantastic product, but next to no business skills. It is our mission is to give entrepreneurs
the skills and information necessary to thrive.
I went back to high school this morning. Not to make up those missing detentions, but for mock interviews for seniors. It was a fun and interesting way of giving back to my community. I met some talented young people and had some interesting discussions.
One of those discussion was is multitasking a strength or a weakness. I had told the counselor who set up the interviews that one of the people I interviewed talked about her ability to multitask as a strength. I told the student to be careful about saying multitasking is a strength, because to me, the ability to focus on one thing at a time, despite interruptions, is a much more valuable tool. In my world, I want someone who has the ability to block out distractions and completely focus on solving one problem at a time. I want it done one time- quickly, efficiently, and correctly.
We live in a culture that constantly bombards us with attention grabbing stimuli. Just from our phones we have hundreds of options. One sound means a Facebook post got liked. Twitter has a bing. Dong, there goes Pintrest. A text. An instant message. Snapchat. All have different songs for us to instantly categorize and pigeon hole without even looking. Different ringtones for different people. Customers walk through the door, phone rings, strange noises from the plant that should be investigated.
Is it multitasking? Or distracting? Pay attention to your productivity and ability to get done what is most important before bragging that you can multitask.
Budgeting is the one thing that most owners hate. Many owners hate it so much, they never do it. “I’ll wait till my taxes are done to see how much money I made.” “Sales are going up, must be doing something right.” “Money in the bank, it’s all good.”
If things are going along well, why bother? Why bother going through the mental gymnastics of planning your finances with a budget? For me, that’s the perfect time to plan your finances. Because we have all been in the position of working harder and longer and questioning is it worth it. And often we forget that dollars in the bank is not the only measure of success.
Building a solid budget allows us anticipate issues before they happen and think about ways to avoid them. It helps us answer the question “Is it worth it?”. A budget is a tool to help you focus on your priorities and avoid distraction. It provides a focus for your business.
One of the reasons managers don’t create a budget is because it is hard to look into the future, let alone pull all of the numbers together. Here is a thought process to help you develop a strong budget.
Start with your historical profit and loss statements, hopefully at least 3 years. Break your cost down to a cost per unit value. For a detailed post on how to calculate your per unit cost of production, click here: https://successscorecard.com/2018/02/28/managing-by-the-numbers-per-unit-cost-of-production/. Average the cost per unit for the time period you have and look at the trends per year and what your plans for the next year on before deciding on a good value to use.
The next step is to break the accounts into fixed and variable costs and recreate a yearly budget based upon how much you think you can sell the next year, multiplying the variable costs per unit by your projections and keeping the fixed costs level. With a bit of Excel magic, you can tie all of the variable costs back to one cell that you can change and quickly see what happens to your bottom line when you change your sales projections. I always like to do a good, bad, and ugly scenario because as optimistic humans, we tend to think sales will always go up, a bad assumption all too often.
This process is particularly useful when your business is changing. It gives us a projection tool that helps us answer the question “Is it worth it?” as you take on more responsibilities and work. Take your time, run the numbers and make a good decision based upon numbers.
Sales growth is wonderful, and what most of us like to see happening. But the real indicator to keep your eye on is profit. During growth periods, there are people coming and going on your payroll, new product lines, tools and computers bought, bigger offices, more phone lines, the list goes on and on. But the question remains – are you better off with or without the sales growth?
You don’t need to wait for your taxes to get done to answer this questions. By merging sales data with your profit and loss, you can look at income and expenses on a standardized per unit basis, allowing you to compare how things were to how things are. QuickBooks has a nifty export to Excel feature that make life much easier to make the calculations.
Need help with the process? That’s what we are here for. In person or by Skype, we give you the numbers to make better decisions.
We need to do more with less! I can think of no better way to demoralize a team than by saying this to employees. It is a mentality that is pervasive in today’s business world, from finance to manufacturing. When I hear this phrase, it means we are going to squeeze our employees and vendors for every last drop of blood. It means we have become so lean that opportunities are lost because we can’t take time to investigate them, let alone take advantage of them. It means that something important gets dropped and lost forever. It means high turnover, lost knowledge, and brutal treatment of people for one more penny.
We focus so much on cutting costs and increasing production that we lose sight of the big picture. We don’t factor in the hidden costs of our actions or the opportunity costs of alternatives. As a manager, it is our job to develop a long term sustainable system that makes money. You can do that for a while by beating up your employees and vendors, but after a while, no one will work with you.
Do I know what the answer is? Not entirely. But I am working on it. I do know that balance and moderation are a big part of the answer. Balancing the human side along with the numbers side of a business takes skill and time, but it makes a big difference.
It pays to take care of your people.
I hear on a weekly basis nobody wants to work anymore. Millennials are lazy. People these days are afraid of work. I hired somebody and they left after a week. The list goes on and on.
Maybe it’s not the workers that’s the problem. Maybe it’s your business model. When Millennials have opportunities to do online work at $50 per hour, your minimum wage job doesn’t sound all that great anymore. Don’t get me wrong, I have seen more than one business pay employees more than the owners trying to be fair to employees. But all that does is make the owners resentful of the employees.
There are also great employees out there that are able to do two, three, or four times the work of a new hire because they are motivated, understand the work processes and think about efficiency all the time. I know of a landscaper that went from a 3 person crew to a motivated 2 person crew and did not see any change in productivity. But do these motivated employees make double? Usually not even close.
In just about any job market, there are highly qualified people looking for work. But do you have a business environment that they are willing to come to? It’s a hard pill to swallow, but maybe it’s time to look in the mirror and ask what can you do to make the job better.
So what can you do? Beef up your people management skills. From hiring to training programs to management, work on your skills first. Second, improve the profitability so you can hire and keep better people. It may mean walking away from low margin customers, or changing your product mix to attract a different demographic with more disposable income. Third, share in the successes. Give people a say in their future and reward them for a job well done. It is your job to create win-win situations. Look in the mirror, take responsibility and make changes that work.
I have been working with a maple syrup producer recently. It is a very seasonal business with large fluctuations in production driven by the weather. They have been selling wholesale and looking at increasing their profit margins by moving into the retail markets by developing an online store. Everything was on track until Mother Nature decided to throw a curve ball. The crazy spring weather reduced production by 35% from last year. There was barely enough production to cover the wholesale orders.
The retail expansion plans were shelved until next year. At least until we started looking at the numbers a bit more. We had been looking at equipment purchases to package for the retail market and had some solid cost numbers on the equipment and the cost of production for each stage of the operation.
The aha moment came when we asked the question “What if we bought high quality syrup on the wholesale market instead of producing it ourselves?” When we compared our costs to wholesale prices, we found that not only could we make money by buying wholesale and packaging for retail, but we could make as much money as producing it ourselves.
By shifting our focus and looking at different ways of reaching our goals, we came up with a way to continue the growth rate. The original focus was always produce as much as possible and sell what you make. Shifting the focus to finding a way to sell maple syrup instead of produce as much as possible seems like a small change, but it will mean the difference between an average year and a very good year.
The question is, what small changes in your thinking can have big impacts to your business?