12 Common Mistakes Business Owners Make · Many business owners plan for increasing profits but don’t spend the time needed on improving cash flow. A wise business owner will devote

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12 Common Mistakes Business Owners Make Copyright ©2017 by Steven Walker, CA www.businessworkscas.com

ContentsIntroduction......................................................................................................2

#1:Profitandcashflow:they'renotthesamething.......................................3

#2:Makingfinancialdecisionswithoutproperanalysis...................................4

#3:Noformalbusinessactionplaninplace...................................................6

#4:Competingonprice,notvalue...................................................................8

#5:Allsalesarenotcreatedequally.................................................................9

#6:Blamingpoorperformanceonexternalfactors.......................................11

#7:Nothavingtherightpeopledoingtherightthings..................................12

#8:Notunderstandingthefinancialimpactofoperatingdeficiencies..........14

#9:Lackofprocessestomanageandmaximizecashflow............................16

#10:NotrecognizingtheSixDriversofProfitability.......................................19

#11:Lackofleadershiptoguideandempowertheteam..............................22

#12:Notarticulatingthevisionforyourbusiness..........................................24

Abouttheauthor............................................................................................26

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Asaprofessionalaccountantandbusinessadvisor,Iworkwithavarietyofreallysmart,creativeandhighlyrespectedbusinessowners.However,Ihavealsoobservedthemmissingopportunitiestoimprovetheirbusinessandhelpthemreachthelevelofsuccesstheydeserve.Someoftheseoversightsstemfromalackoffinancialknowledge.Otherscomefromalackofunderstandingoftheconnectionbetweentheday-to-dayactivitiesofthebusinessandthefinancialresultsthoseactivitieswillgenerate.Butallofthemcanhaveaneffectonthebottomlineofthebusiness-andnotinagoodway!

Inthepagesthatfollow,Iaddressthe12mostcommonmistakesIhaveseenbusinessowners(eventhereallysmartones!)maketimeandtimeagain.Thegoodnewsisthatthesemistakescanbecorrectedoravoidedaltogether.So,considerthisafriendlyheads-upfromyourexternalCFOandbusinessadvisor.Myhopeisthat,armedwiththisbitofinformation,youcanavoidtheseerrorsrightfromthestartandmakethebestdecisionspossibleforyourbusinesstothrive.

Ifafterreadingthisreportyoucanrelatetoanyormanyofthesemistakesandwouldliketodiscussthepositiveimpactyoucanmaketoyourbusinessbyaddressingtheseissues,givemeacallat403.228.2535orsendmeanemailtosteven@businessworkscas.com.IwouldbeinterestedintalkingwithyouaboutyourbusinessandhowIcanhelp.

Introduction

mailto:[email protected]

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Profitandcashflow:they'renotthesamething

“If my company is profitable, where is all the money?”

Mistake#1growsfromthecommonmisunderstandingofthedifferencebetweenprofitandcashflow.Whilethisisabasicpremiseofaccounting,manyentrepreneursdon’tfullygrasptheconcept.Forexample,Iamregularlyaskedbynewclients,“IfImade$70klastyear,whydon’tIhavethatmuchinmybankaccount?”Theanswer:profitdoesn’tequalcashflow.

Profitisthedifferencebetweenrevenuesandallyourbusinessexpenses.Itappearsonlyonthecompany’sincomestatement.Yourprofitexistsonpaper,butmostoftenwillnotbereflectedinyourbankaccount.Profitaddstotheequityofyourbusinessandisametricthat99percentofpeoplebothwithinandoutsideofthebusinessunderstandandreadilyrefertoonaregularbasis.

Cashflowisthenetcashinflow(oroutflow)thatendsupin(oroutof)thebankaccountforaparticularperiodoftime.I’msureyou’veheardthephrase“cashisking”.Thisisreferringtocashflow.It'stheamountofmoneyyouactuallygenerateoveraspecificperiodoftime.Nomatterhowlargeyourprofitisonpaper,mostofyourbusinessdecisionsandactivitiesareimpactedbythecashthatiscominginandoutofyourbusiness–inotherwords,byyourcashflow.Forexample,yourabilitytopayakeysupplierearlytotakeadvantageofan‘earlypay’discountwillbedeterminedbyyourbusiness’netcashflow.Doyouhavethemoneyavailabletomaketheearlypayment?

So,whatcausesthediscrepancy?Cashflowisimpactedbythethingsyouneedyourmoneytodoandthetimeframefordoingthem.Inmanybusinesses,thebiggestcontributorstocashflowissuesarethenegativeimpactthataccountsreceivableandaccountspayablecanhaveonyourcashflow.Thetimingofwhenyoucollectyourmoneyfromyourcustomersismostoftendays,weeksormonthsafteryousendyourcustomertheirinvoice.Similarly,mostcreditorswillgrantyoutimetopaytheirbillsbeyondtheirinvoicedate.However,therealcashflowissuestemsfromthegapbetweenthetimeyoucollectonyouraccountsreceivableandthetimeyouneedtopayyoursuppliers.Thistimegapcanoftenbeasmuchas30or60days,whichputsalotofpressureonyourcashflow.

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Quantify the results before you commit to a decision that will impact your business

Principalpaymentofloansisanotherkeycontributortothediscrepancybetweencashflowandprofits.Debtrepaymentsmustcomeoutofyourprofitsoryouwillneedtofindanalternatesourceofcapitaltoaffordthesetypesofpayments.

Twootherthingsthatoftencontributetothegapbetweenprofitandcashflowarethepurchasesofequipment(capitalassets)anddividendpaymentspaidtotheowner(s).Theseexpendituresreduceyourcashflowbytheamountactuallyspent.Inordertominimizecashflowissues,purchasesofequipmentareoftenfinancedbydebttoavoidlargecash-outlows,anddividendsaregenerallyonlypaidwhenprofitsyieldtheneededcashtofundthedividends.

Manybusinessownersplanforincreasingprofitsbutdon’tspendthetimeneededonimprovingcashflow.Awisebusinessownerwilldevotetherequiredattentiontomaximizecashflowinadditionto(andprobablymoreimportantlythan)theplanningdevotedtoimprovingprofitability.Profitsareimportant,yes.Butevenmoreimportantistheabilitytoaccessthoseprofitswitharobustcashflowsoyoucandowhatthecompanyneedsatanypointintime-akeyadvantagetorunningandgrowingasuccessfulbusiness.

Mistake#2happensmuchmorefrequentlythanyou’dexpect.Itoccurswhenyoumakefinancialdecisionsthataffectyourbusinesswithoutunderstandingthefullfinancialimpactofthemfirst.

Youownabusinesstomakemoney,ofcourse.Withthatcleargoalinmind,it’sobviousthatmostofyouractionsarebasedonthenumericalanalysisthatensuresyouractionswillresultinareasonableprofit.Andwhilesomeimportantdecisionsarebasedonnun-numericalfactors,inallcasesyouneedtounderstandthemathematicalrealityandassessthefinancialeffectbeforemakingdecisionsforyourcompany,right?Infact,theoppositeistrue.

Often,fundamentaldecisionsaremadewithatotaldisregard

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Makingfinancialdecisionswithoutproperanalysis

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The numbers don’t lie; listen to what they tell you before you make a decision

oftheireffectonprofitabilityandcashflow.Iwouldgosofarastosaythatmanybusinessownersgoaboutthiskindofdecisionmakingbeforetheyhaverunthenumbersandcalculatedtheimpact.Soundsilly?Let'slookattwoexamples:pricingyourproductsorservices,anddeterminingthecompensationtobepaidtoyouremployees.Bothofthesedecisionsdirectlyimpactprofits.Didyouconductathoroughanalysisofyourdecisionsabouttheseamountsandquantifytheireffectspriortoactingonyourimpulses?

Example1:EmployeecompensationPayingfaircompensationtoyouremployeesisimperative.Offeringacompensationpackagethatattractsandretainstalentedstaffisalsoimportanttoyourultimatesuccess.However,thesefactorsmustbeweighedinthecontextofyourbusiness’totalfinancialpicture.Forexample,yousimplymaynotbeabletopaytherateyou’dliketorightnowifyouravailablecapitalandcashflowwon’tsupportthenumbers.Perhapsyou’llhavetoworkwithaskeletonstaffforawhile,ordosomethingsyourselfthatyou’dliketoeventuallyhandofftoanassistant.Ifyouabsolutelymustpayacertainlevelofcommissionthatisn’tfeasibleatthemoment,youmayhavetofindothersourcesofshorttermcapitalorfindareasfromwhichtotrimexpenses-orperhapslivewithnotgeneratingthelevelofprofityoudesire.Youcanalsoconsiderworkingoutacreativedealthattiesfuturecommissionincreasestocompanyperformance.

Thereareallkindsofsolutionsavailable;theimportantthingistoreallylookatwhatitwillmeantoyourcompanybeforeagreeingtoacompensationplan.Ifthenumbersdon’twork,thenhiringeventheworld’sbestemployeejustisn’tsomethingyoucanaffordtodo.

Example2:ProductpricingImproperlypricingyourcompany’sproductsorservicesisprobablythemostcommonmistakethatownersmake.Inparticular,manydoharmtothecompanybyattemptingtoincreasesales(andpresumablyprofit)bydiscountingtheprice.Whilethissoundsgoodonitsface,themathematicaltruthisthatdiscountingyourproductsorservicesisalmostneverawiseideaasalongtermprofit-generatingstrategy.Ifyouofferadiscountyouwillhavetosellmuchmoreinvolumeinordertomakeupthelostprofitfromthediscountedsellingprice.Forexample,ifyourpresentmarginis35%andyoureducepriceby10%,yoursalesvolumemustincreaseby40%toproducethesamelevelofprofit.Andthisiswithoutplanningforanyimprovementtoprofitatall!

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“My business is up and running, so why do I need a plan?”

Moralofthestory:HomeworkpaysoffDiscountingyourpricestocompetedoesn’tgenerallymakesensefromalong-termperspective.Competingbyofferingexcellentvalueforthepricethatmakesyourbusinessprofitable,ontheotherhand,makesagreatdealofsense.Likewise,whenhiringnewpeople,studythenumberstomakesureitisatalevelandstructureyourcompanycantrulyafford.

Therearenumerousotherdecisionslikethesethatbusinessownersfaceeachdayandallofthemmakeadifferencetoyourcompany’sfinancialoutlook.Quantifyingtheresultofdecisionsthatyouareconsideringwillhelpyoumakechoicesyoucanlivewith.Thenumbersdon’tlie;listentowhattheytellyoubeforeyoumakedecisionsthatmattertoyourbottomlineandimpactyouroverallsuccess.

Mistake#3isthealltoocommonfailuretohaveaformalactionplanforimprovingthebusiness.Manybusinessownersavoidmakingsuchaplanwithoutrecognizingthepatternthisbehaviormimics:doingthesamethingsbutexpectingdifferentresults,which,asweallshouldknow,isthedefinitionofinsanity.Toseechangeandimprovementinabusiness,asinanyotherventure,youmustchangeyourapproach.Onlythencanyouexpecttogetadifferentoutcome.

InmyyearsofconsultingwithbusinessownersIobservedcountlesssavvycompanyleadersomitthiscriticalstep.Idecidedtoexploretheirreasonsforsuchanimportantmisstep.Theiranswersindicatethatoftentheydon’tdevelopanactionplanbecausethey:

� Don’tknowhowtomakeaplan� Don’tthinkaplanisnecessary� Areafraidoftheprocess� Don’twanttocommitthetimetocreateaplan� Thinkitwouldbeawasteoftime� Believeplanningisonlyrelevantforlargerbusinesses� Believeplanningissomethingdoneonlytoacquirealoan� Believeaplanmustbeathickdocumentcompletewithcharts,graphsandwell

laidoutchapters

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Noformalbusinessactionplaninplace

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Manybusinessownersuseoneormoreoftheseexcusestoavoidmakingaplanbutinfactaregularlyupdatedformalplanofactiontoimproveyourbusinessisnecessaryandrelevantforallbusinessesregardlessofsizeorindustry.Therealityisthatplanningcanbe(andgenerallyis)asimpleandeffectiveprocess–andIstresstheword"process".TheprocessofwritingdownyourplantransformsitfromadreambasedonavagueideaofadesiredoutcomeintoarealisticpathfrompointA(yourbusiness’currentstate)topointB(whatyouwantyourbusinesstobe).Thus,thegreatestvalueofdevelopinganactionplanisintheprocessofcreatingitratherthantheendresult.Buildingastaircaseisfarmoreusefulthangazinglonginglyintotheheavensandhopingforanupdraft.

Ok,sohowdoyoubegin?Creatingyourplandoesnotneedtobeacomplicated.Anactionplancantaketheformof:

� Abulletedornumberedlist� Anactiontable� Alistoractiontablewithadditionaldetails

Thecriticalthingistoincludeadescriptionofgoalsandactionsintermsofwho,what,when,perhapswhyandifnecessary,where.Yourplancanbefocusedonyourbusinessingeneraloraboutanyspecificaspect,including:

� Operationalissues� Strategicissues� Financing� Marketing� Humanresources� Informationtechnology

NotethatalthoughI’mcallingitaformalplan,aneffectiveactionplandoesn’thavetobeterribly"formal".Itmerelyhastobewrittendownandusedasaworkingtoolinyourbusinesstoremindyouofyourgoalsandthestepsyouaretakingtoachievethem.Yourplanwillguideyourfootstepsasyoumakedailydecisionsaboutthingsthataffectyourbusiness,andevenhowtospendyourfreetime.Whenyouknowexactlywhereyouwanttogoandhavecreatedlogicalstepstogetthere,youhaveamuchgreaterchanceofreachingyourgoal.

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“But if it's on sale, they'll want lots of it!”

Whatiftheoriginalplanisn'tquiteright?Asyouworkthroughyourplan,youmayfindthatsomestepsneedtobealtered.That’sperfectlyokay.Infact,thisisveryusefulinformationthatyouwillonlyacquirebyhavingaplanandfollowingit.Adjustmentsalongthewayletyoumeasurehowfaryou’vecomeandtherelativeeffectivenessofyourcurrentplan.Iadvisemyclientstomakeanactionplanonamonthlyorquarterlybasisandkeepitascurrentaspossible.Thiswaytheyalwaysknowwherethey’regoingandcanadjustboththegoalsandthestepstoachievethemasneeded.Littlebylittle,yourplanwillhelpyoureachyourdreams.

Mistake#4isthedecisiontocompeteonpriceratherthanonthevalueofyourproductsand/orservices.Ican’ttellyouhowmanybusinessownersfeeltheurgetodothis.Asafinanceguy,thisworriesmebecauseIunderstandthesignificantnegativeimpactthatpricediscountingcanhaveongrowth.

Isatwithaclientonceinaninterviewforanewsalesperson.Thecandidateactuallysaid,“ThefirstthingIwilldoisoffer10%reductionsinpricetonewcustomers.”Wow!Icouldnotbelievemyears.Why?Let’slookatthemath.If,forexample,yourbusinessoperatesata30%grossmarginlevelandyoureducepricesby10%,yourvolumemustincreaseby50%justtoachievethesameprofitlevels.AndIwouldsaythatformostbusinessowners,wheregrowthandprofitarekeyareasoffocus,thisishuge!

Inmyroleasabusinessadvisor,Ioftenhearcommentslike,“Myindustryissocompetitive,”toexplainthisurgetoreduceprices.However,it’snotaneffectivestrategyforgrowthinmostcasesnomatterhowstrongthesurfaceappeal.Mostconsumersmaketheirpurchasingdecisionsbasedonaslewoffactors.Priceisn’ttheprimarykey,contrarytothebeliefsofmanybusinessowners.Innumerousstudiesofwhatdrivesbuyingdecisions,priceranksquitelowonthelist.

Withthatinmind,Iadvisebusinessownerstofocusontheactualvalueoftheirproductsorservicestotheenduser.Myrecommendationswithregardtopricinginclude:

4 Competingonprice,notvalue

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� Developauniquesellingproposition(USP).� Createapointofdifferentiationfromyourcompetitors.� Understandyourcompetitors’pricesbutnotforthepurposeofmimickingthem.� DeveloppropermessagingandcommunicationlanguagetosupportyourUSP.� Trainyourteamtousethislanguage–includingoutsidesales,insidesalesand

customerservice.� Understandwhatallofyourcostsare(bothvariableandfixed)andincorporate

thisknowledgeasyousetprices.� Developaforecastedoperationalmodelthatwillyieldthelevelofprofitsthat

willmeetyourgoals–pricingmustbebuiltintothismodel.� Considerdiscountingasamethodtoclearoutoldinventoryorasalead

generationstrategy,butinthelattercasebecarefulthatyoudonotsetaprecedentthatwillbeverydifficulttochange.

Discountingyourpriceswithoutaverygoodreasoniscounter-productive.Itcouldindicateorgivetheperceptionthatyoubelievethevalueyou’reofferingdoesn’tmatchupwiththepricesyou’veset,andthiswillacttohurtyourbottomline.Insteadofdiscounting,setrealisticpricesbasedonyourcostsandprofitgoalsaswellasthevalueyou’reproviding.Thensetouttocommunicatetoyourclientsandcustomerswhyit’sagreatdealatthatprice.Thismaynotbeeasyasitcouldtakeyououtsideyourcomfortzonebuttrustme–goforit!

Mistake#5:"Asaleisasaleisasale!"EventhoughIama"numbers"guy,Ihavehelpedmyclientsdevelopandconnectsalesplanstofinancialplans(andviceversa)countlesstimes.Inthemidstoftheseexercises,Ioftenhearthiscommentorwitnesssalesteamsoperatingwiththismindset.Thistypicallystemsfromaperspectiveofweakness,desperation,orsimplyalackofknowledge.

Toputitbluntly,“asaleisasaleisasale”isjustnottrue.Why?Let’sexplore:

1.ProfitthatactuallycontributestoyourbusinessMostbusinesseshavedifferentproductorservicelines,eachgeneratingadifferentlevelofgrossmargin.Understandingthisconceptalone–differentlevelsofgrossmargin–helpstoexplainwhyallsales,whetherproductorservicebased,arenotallequal.

5 Allsalesarenotcreatedequally

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Do all sales deserve equal attention? No!

2.SizeofsalesintermsofmonetaryvalueForamoment,ignoringtheindividualprofitgeneratedbyasale.Ifthatsinglesaleis10timeslargerthanthenext,whichoneisclearlymorevaluabletoacompany?Thisdemonstratesthatsaleshavedifferentmonetaryvaluesand,therefore,differentlevelsofequality.

3.TheeffortandinitiativesrequiredtogenerateasalearenotaccountedforinmeasuringtheprofitRealistically,somecustomerstakemoretimetoconvert,thereforecostingmorethanothers.Thesesalesarenotmeanttotakemoretime,butasalethatishardertoprocuremaynotbeconsideredequaltoasalethatis“moresimple”or“easier”whenignoringallotherfactors.

4.Howthecustomerfitsinrelationtoacompany’ssalesplanBythisImean,ifabusiness’coreserviceissellinghottubs,thenasaleofancillarypartstoawalk-incustomerwhoalreadyownstwohottubsmaynotbeconsideredasimportantasmakingasaletoafirst-timehottubbuyer.

5.FuturesalesopportunitiesThisisfairlystraightforward:asaletoacustomerwithanumberofup-sellingorcross-sellingopportunitiesislikelytobeworthmoretoabusinessthanasaletoacustomerwithalimitednumberofup-sell/cross-sellingopportunities.

6.OpportunityforfuturereferralsReferralsarebyfarthemostcosteffectivemarketinganycompanycando.Asmallersaletoacustomerthatmayprovidelotsofopportunityforfuturereferralsmaybeworthalotmoretoabusinessthanaone-timelargersaletoacustomerwithnofutureconnectionsorreferralopportunities.Beforefocusingstrictlyonthevalueoftheindividualsale,tryandassesswhatthepotentialfuturevalueofthecustomermaybe.

7.RiskofwarrantyoraftersaleserviceLargesalestoacustomerarefantastic.BUT,looktoseeifalargersaletoacustomerhasahigherriskoffuturewarrantyissues.Ifitdoes,thanthissalemaybeconsideredlessvaluablethanasmallersalewithfarlesschancesoffuturewarrantyclaims.

WhileIcouldgoonandprovideseveralmoreexamplesofhowallsalesarenotequal,myobjectiveisn’ttoproduceanexhaustivelistofexamples.Rather,thisismeanttoget

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“I have no control over my business; I'm completely at the whim of customers.”

youthinkingaboutyourbusiness,yoursales,andwhyyourteamshouldbethinkingstrategicallyaboutyoursales.

Mistake#6isahumantendencythatshowsupinallkindsofareasevenbeyondbusiness.Thisistheunwillingnesstotakefullownershipofpoorperformance,inthisparticularcase,theoperatingperformanceofthebusiness.It'salltooeasytoblamealackofsuccessonfactorsexternaltothebusiness.

Thishascometomyattentionparticularlyoverthepastfewyearsasmultipleclientshaveattemptedtopintheirslumpontheweakeconomyortheoverallslowdownoftheirindustry.AlthoughIunderstandtheenvironmentinwhichwearealloperating,andIdon'twalkinmyclients'shoes,blamingtheeconomycomesacrossasanexcuse.

It'syourjobtotakecontroloftheuncontrollableYes,therearecertainelementsthatwillalwaysbeoutsideyourcontrolasabusinessowner.Regardlessofhowmuchyoumaywanttohavecompleteandtotalcontrolofeveryaspectofyourbusiness,thetruthisthatyouwillnot.Therearesomeelementsthataresimplybiggerthanyou.Ofcoursemanyofthesefactorswillaffectabusinessnegatively,butfrommyperspective,savvybusinessownerstrytoidentifythese

“uncontrollable”factorsanddevelopbusinessstrategiestocompensateforthem.

Forexample,Ihaveaclientwhoisintheflooringbusiness.Foryears,oneofhismajorbusinesssegmentswassellingandinstallingflooringforhomebuilders.Thissegmentmadeupabout25%ofhistotalrevenue.Whentherecessionhitourlocalhome-buildingmarket,myclientwasastuteenoughNOTtoblamehisslumpingsalesonthisexternalfactor.

Itwasbeyondhiscontrol,sohehadtoacceptthechangeinmarketconditions.Insteadofhelplesslycastingblameatachangethatmadesuccessunfeasible,hedevelopedanewgrowthstrategyaroundanexpandedclientpoolwithnewproducts.Thatshiftinhisownstrategyandmindsetallowedmyclientto

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Blamingpoorperformanceonexternalfactors

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Understand the roles and skill sets you need to succeed, then find the right people to fill them.

achievehugegrowtheventhroughrecessionarytimesthatputmanypeopleinhisindustrynicheoutofbusiness.

Today,thefactthatmyclientusedtoselltothehome-buildingmarketisalmostlikeadistantmemory.Headaptedtotherealityofthemarket–afactorhecouldn’tcontrol–tobesuccessfulwithconditionsastheyexistedratherthanfailingandblamingtheworldfornotconformingtoarealityinwhichhewaspreparedtosucceed.

FlexiblethinkingleadstoresiliencyThisisthekindofflexiblethinkingthatallowsgoodbusinessownerstothriveinanyeconomycontextregardlessofindustry.Theworldofbusinessisdynamic,andtosucceedoverthelongtermyoumustbepreparedtoadaptyourstrategytofitthefactsontheground.Ifyourbusinessisn’tdoingwell,somethingneedstochangeanditisuptoyoutocreatethischange.Itmaybeyourbusinessmodel,yourprocess,yourstafforanynumberofotherfactors,butthepathtosuccessneverliesalongthepathofblaminguncontrollablefactorsforbeingwhattheyare.

Mistake#7leadsustotheinfamousorganizationchart.Haveyoueverlookedatyourbusinessinthecontextofyour"orgchart"tounderstandwhyyouhaveitsetupthewayyoudo?Isthestructureofyourbusinessclearandlogical?Doesitmakesense,givenhowyouneedtooperateyourbusiness?

Traditionally,whenpeoplearebuildingacompany,theylookattheindividualstheyhaveandcreatethefunctionsandrolesaroundtheseindividuals.However,thisthinkingisabitbackwardsasitdoesnottakeintoaccountthebeststructureofrequiredfunctionsthatwouldworkwithintheindividualcompany.Rather,itmerelyfocusesonthepeopleavailable.Thisleadstoacommonbusinessmistake:suddenlyyouhavethewrongpeopledoingthewrongthingstryingtomakeabusinesssuccessful.Inotherwords,theroadtosuccessisnotasstraightforwardasitcouldbe.

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Nothavingtherightpeopledoingtherightthings

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Forexample,consideracompanythathasapersoninacustomerserviceroleandalthoughtheindividualmaybeagreatpersonandemployee,theyhaveverypoorverbalskills.Thepersonmayhavebeenplacedinthispositionwithoutathoroughunderstandingoftherequiredskillsetfortherole.Itbecomesmoreabouttheindividualpersonratherthantheindividualpositionandthenecessaryfunctionsoftheposition.

Throughrecentanalysesanddiscussions,I'veconcludedthatbusinessesthatactuallythriveintheirgrowtharethosethatfirstlookattherequiredstructureandrolesneededtomaketheirbusinesssucceed,thenfindthepeoplewiththerightskillsetstofillthoseroles.

AgreatresourcetodelvedeeperintothisconceptisGinoWickman’sbook,Traction:GetaGriponYourBusiness.Ithelpssolidifythesciencebehindfindingtherightstructurefirst,thenfindingthepeopleskillsneededtosupporttherightstructure.

Inorderforyourbusinesstofunctionmoreeffectively,Isuggestthatyoutakethetimetoassessyourcurrentorganizationstructureinrelationtothefollowing:

1.Determinetheright“seats”foryourcompanyWhataretheactualfunctionsthatyourbusinessneedstooperateeffectivelytogrowandsucceed?DonotthinkofWHOyourbusinessneeds,merelyfocusontherequiredfunctionswithinyourbusiness.ThiswillbecomethedevelopedSTRUCTUREofyourorganization.Note–thisstructuremayneedtochangeovertimeasyourbusinessgrows.

2.DeveloptherolesforeachfunctionOnceyou’vehighlightedtherequiredfunctionswithinyourbusiness,definethespecificroles.Thisiswhereyououtlinetheresponsibilitiesandaccountabilitieswithineachfunction.Thesetwoitemstogether–functionswiththeirdefinedroles–becomeyourOrganizationAccountabilityChart.

3.EnsureyouhavetherightpeopleOnceyouhaveaclearunderstandingofthepositionsandtheirresponsibilities,findtherightpeopletofilltheseroles.Thiscanbedonebylookingatwhoyoucurrentlyhavewithinyourcompanyandputtingthemintheroleappropriatetotheirskillsetandpersonality,oryoumayhavetolookoutside.

Ifyouarelookingatrestructuringyourbusiness,youmayfindthatyouhavesomeseatsthatyoudonothavetherightpeoplefor,orpeoplewithnoseats.Inthiscase,youmay

http://www.amazon.com/Traction-Get-Grip-Your-Business/dp/1936661837

http://www.amazon.com/Traction-Get-Grip-Your-Business/dp/1936661837

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One small change in your business operations can yield large results

havetohireoreliminatetheseatanddistributetheaccompanyingresponsibilities.Youmayalsohavetoletgoofthepeoplewhonolongerfitarequiredseatwithinyourrequiredstructure.

Theobjectiveofstructuringyourbusinessshouldn’tbeaboutfindingpositionsforpeople,butfindingtherightstructureforyourbusiness,thenfillingwiththerightpeople.It’saboutmatchingtherightstructurewiththerightrosterofpeoplebothinskillsetandinpersonality.

Mistake#8resultsfromnotunderstandingjusthowco-dependentallofthepartsofyourbusinessare.Businessesarefascinatingbeastswhereeverythingisinterconnected.Ifyouchangeonepartofthe“beast”,theorganismasawholemayexperiencesideeffects–bothpositiveandnegative.

Unfortunately,inmyexperience,thisisnotoftenrealizeduntilacompanyisforcedtodoadeepdiveintohowtheircompanyisfunctioning,particularlywhenassessingfinances.Forinstance,ifacompanyisdeterminedtoincreasetheirgrossmargin,theymaybeinclinedtosimplyincreasetheirprices.However,ifthereareactualoperationalinefficiencieswithinthecompany,thenincreasingpriceswillnotsolvetheunderlyingissue.Rather,thecompanyshouldconsiderthefinancialimpacttheseinefficienciesarehavingontheirbusinessandmakethenecessarycorrectionswithintheirprocesses.

Casestudy:ConnectingthefinancialimpactofoperationaldeficienciesToillustrate,letmegiveyouanexampleusingabusinessinCalgaryIhaveworkedwithforalongtime.Overtheyearswehavebeenmonitoringverycloselythebusiness’grossmarginsbyeachoftheirmajorcustomersegments.Duringoneparticularmonitoringandplanningsession,wewereforcedtolookatthefinancialimpactthatanoperationalhiccup,or"deficiency",washavingonthegrossmarginofoneoftheirbusinesssegments.

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Notunderstandingthefinancialimpactofoperatingdeficiencies

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Interestinglyenough,wefoundthegrossmargininthatparticularsegmentwasbeingerodednotbypricingissues,butbyoperationalglitchesbetweenschedulingandinstallation.

WhatwefoundAfterassessingthebusiness,wefoundtherewasagapincommunicationwithintheoperationsdepartment.Theschedulingdepartment,deliverydepartmentandinstallationdepartmentwerenotonthesamepage,andasaresult,therewasa"waste"oftimehappeningonmany,manyindividualjobs.Thiswasteoftimecouldnotbeabsorbedbytheircustomers,andrightlyso,butinsteadthecostwaseatingintothecompany’sgrossmargin.

BreakingitdownForeveryschedulingissuethathappened,theresultwasroughlyonehouroflabourtimethatwascostingthecompanyapproximately$100.Whilethisalonemaynotseemlikeahugeloss,wedecidedtolookabitfurther.

Whatwenoticedwasthis:

� Inoneyearthecompanycompletedabout750jobs.� Intwo-thirdsofthosejobstherewasabreakdownincommunicationbetween

scheduling,delivery,andinstallation.� Doingthemath,wefoundthatthecompanywasactuallylosing$50,000eachyear-

aprettysignificanthittothebottomline.

Thisamountwouldhavemeantthecompanyachievedtheirgrossmargingoal,howeveritwasbeinglostonsomethingthatwaswithintheircontrol.Clearly,wehadtotakeamomentaswerecognizedthattheoperationsofthecompanywashavingaSUBSTANTIALandDIRECTimpactontheirbottomline.

Oncewedeterminedtheissue,wewereabletoassesswhytheseinefficiencieswereoccurringandwhatsolutionscouldbedeveloped.Fromthere,thebusinesswasabletoimplementbetterinternalsystems.Theyimprovedtheirmarginbyimprovingthecommunicationbetweenscheduling,deliveryandinstallation.Notonlydidthisimprovetheirgrossmargin,buttheirclientserviceimprovedgreatlyaswell!

LessonlearnedThiswasahugelessonfortheclientinunderstandingthatthefinanceswerenotjustaboutthemoney.Itbecameabouttheentirebusinessandallitsdepartments;thattotrulyunderstandwhatimpactsacompany’sbottomline,onemusttakeahardlookand

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Cash flow isn't a once-a-month item for review... it's daily!

recognizetheimpactthatonedepartmentcanhaveonaseeminglyseparate,independentone.

Theconnectionbetweenfinancesandoperationsrecognizesthatsubtleinfluencescanhaveasubstantialimpactonacompany’sbottomline-crucialtounderstandinanybusiness.

Mistake#9isactuallyanextensionofMistake#1,whichwasnotunderstandingthedifferencebetween"profit"and"cashflow".Nowthatyouunderstandthedifference,let'slookatcashflowmoreclosely.

Ifyouwantyour"cash"toflow,assuggestedbythetermitself,it'syourresponsibilitytoconsistentlymonitoritandtakeactiontokeepthe"flow"moving.Seemsstraightforward,Iknow.Butthis“consistentmonitoring”and“action”areoftenthebottleneckofabusiness’cashflow.Wouldn'titbebesttohavepropersystemsandprocessesinplacetokeepeverythingflowingsmoothly?

Managingcashflowcanbeassimpleasunderstandingwhatfactorsimpactyourbusiness’cashflowandhow,andtheneffectivelymanagingthosefactors.Factorscouldincludeissuessuchaswhensalesinvoicesgoout,whenyoupayyoursuppliers,whenyoufollowuponinvoices,invoicepaymentterms,andthelistgoeson.Eachoftheseisafactorthatyoucancontrol(toanextent)anddevelopprocessestoensuretheyallcomplementoneanotherinawaythatpositivelyaffectsyourbusinessanditscashflow.

CommoncashflowmistakesInmyexperience,therearesixcommonareaswhereabusinesscanfirstlooktohelpimproveitscashflow.Takealookandseeifanyofthesearehappeningwithinyourcompanytonegativelyimpactyourcashflow:

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Lackofprocessestomanageandmaximizecashflow

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� Timegaps:Thereistoomuchofagapbetweenwhenyourproductorserviceisdeliveredandwhentheinvoiceisactuallysenttoyourcustomer.Thiscouldincreasethelikelihoodofcustomerstakinglongertopayyou,aswellasincreasetheriskofnotinvoicingforworkatall(althoughthisissliminmostbusinesses).Bysettingupadaily/weekly/bi-weeklyinvoicingprocess,youaremorelikelytocaptureallcompletedprojectsandhavethempaidinatimelymanner.Itisalsorecommendedthatyoumakeitaseasyaspossibleforyourcustomerstopayyou(e.g.acceptingcreditanddebitcards,directdeposit,andsoforth).Ifyouprefertohaveyourcustomerspayyouviaacheque,that’sfine,butbesuretodepositthechequesonthedayyoureceivethemandnothavethemsitinadepositbookfordaysonend.Intoday'sworld,e-transfersarequitecommoninmanysmallbusinesses.

� Nodefinedfollow-upprocedure:Whileyourinvoicemaygooutinatimelymanner,thereisnoclearstructureinplaceforwhenandhowtofollowupwithunpaidinvoices.Doesyourcompanyfollowupatthe15-daymark?Beforethe30-daymark?Isitviaemail,phonecall,orinperson?Orisitacombination?Whoisresponsibleforthefollow-upsandwhathappensifitneedstobeescalated?Makesurethesequestionshaveclearanswers.Letyourcustomersknowupfrontwhatyourproceduresaretoremoveanymisunderstandingaroundinvoicingandpaymentexpectations.

� Timingofvendorpayments:Doyoupayyourvendorinvoicesatthesametimeyousendoutyourcustomerinvoices,depletingyourbankaccount?Howareyoumanagingwhenyouarepayingyoursuppliersversuswhenyouaregettingpaidbyyourcustomers?Isthereasystemorprocesstoensurethatyourcustomersarepayingyoufirstbeforeyouhavetopayyourvendors?Havingtheseprocessesinplaceallowsyoutoproactivelymonitorandmanagewhenmoneycomesintoandgoesoutofyourcompany.You'llimproveyourcashflowbymitigatingoravoidingmovingintoadebtscenario.Sometimesthiscannotbeovercome,butyoucanatleaststartbypayingattentiontothetimingofwhenyoupayyourvendorsrelativetowhenyourcustomersarepayingyou.

� Investmentinyourinventorylevels:Areyoueffectivelymanaginghowmuchinventoryyourbusinessisputtingonitsshelves?Doyouhavetoomuchinventoryrelativetoyoursaleslevels?Isyourinventoryturningovertooslowly?Ifyouarenoteffectivelymanagingyourinventorylevels,thiswillnotonlynegativelyimpactyourcashflowbutitwillalsoputyourbusinessatriskoflosingmoneyoninventorythatbecomesobsoleteorwithoutvalueandcannotbesoldatall.

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� Requireddebtrepayments:Debtrepaymentshavetocomefromeitherafter-taxprofitsorotherformsofdebt.Ifyourlevelsofprofitarenotsufficientrelativetoyourdebtstructure,yourbusinesswillstarttohavecashflowissues(subjecttoaninjectionofcapital)andmaysoonrequireyoutoimplementthenottoouncommonstrategyof“robbingPetertopayPaul”.

� Investmentincapitalassets:Acommonerrormanybusinessownersmakeisusingoperationalcashflowtopurchasecapitalassets.Thiscausesunduehardshiponcashflow.OneofthefirstthingsyoulearninFinancing101istofinancecapitalassetsusinglong-termfinancing,notoperationalcashflow.Agreatexamplewouldbepurchasingapieceofequipmentoratruckbywritingachequefromyourbusinessbankaccountorlineofcredit,asopposedtousingatermdebtfacilitythatbettermatchesthepaymenttermswiththelifeoftherespectiveasset.

WheretostartStartingtoeffectivelymanageyourcashflowcanbedaunting.Irecommendaskingyourselfthefollowingquestionsandmovingforwardbasedonyouranswers.

1. Doyouunderstandwhatisdrivingyourcashflow?

2. Doyouunderstandwhichactivitiesyoushouldbeundertakingtohaveabetterimpactonyourcashflow(e.g.moreinvoicingfrequency)?

3. Doyouknowwhatrequiredactivitiesyouarecurrentlynotdoingthatshouldbedoneforbettercashflow?

4. Areyouandyourteamwillingto“rollupyoursleeves”tocompletetheseidentifiedcashflowmanagementactivities?

Onceyou’veansweredtheabove,youhaveastartingpointfortheday-to-dayactivitiesrequiredforproactivecashflowmanagement.AlotofbusinessesarenotawaretherereallyisNOTasilverbulletthatwillhelpimprovecashflow.It’saboutimplementinganumberoftacticalitemsthatneedtobecompleteddailyandmonthlytohelpimprovecashflow.

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Small improvements in these areas can bring big growth to your bottom line.

Mistake#10:Thebeliefthatonedrasticchangeisallittakesforimprovedbusinessgrowth.Notquite…

Havingworkedwithamultitudeofbusinessowners,mymostsuccessfulclientshavefoundtheoppositetobetrue;thatimprovingthebottomlineisn’taboutmakingonemajorchangewithintheirbusiness.Rather,tohavelong-lastingpositiveimpactonthebottomline,itisimportanttounderstandthatchangehappensinsmall,incrementalstepsinsixdifferentareas.TheseareasareknownastheSixDriversofProfitability.

Infact,itisactuallythroughsmall,incrementalchangestoseveralofthesesixareasthatsubstantialtransformationtoyourbottomlinewillbemade.Asabusinessowner,youwillbringaboutgrowthbymakingsubtleimprovementstodifferentareasofyourbusiness,asopposedtolookingforthatmagicalorfictionalsilverbulletthatverylikelydoesnotexist.

So,whatarethe"SixDriversofProfitability"?Thekeytomakingchangeistofullyunderstandthesixareasthatactuallyinfluenceyourbottomlineandrecognizehowtheyinteractwitheachothertopositivelyaffectyourbusiness.

1.AveragepriceFairlystraightforward,thisistheaveragepriceofallofyourproductsorservices.Simplyincreasingthepriceofyourproductsorservicesmayormaynotleadtoanincreaseinyourbottomline–youwillneedtoconsiderboththepotentialforcustomerlossanddropinsalesvolumeinthisequation.Furthermore,donotthinkthatofferingdiscountstoyourcustomerswillyieldgreatersalesandresultinanimprovedbottomline.Asagrowthstrategythisrarelyworksgiventhehugesalesvolumesthatneedtobegeneratedtocompensatefortheeffectofthediscount.Infact,thepriceofyourproductsorservicesisactuallyhighlyinfluencedbythenextdriver,theaveragetransactionsize.

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NotrecognizingtheSixDriversofProfitability

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2.AveragetransactionsizeThisissimplythenumberofunitspertransaction.YouraveragetransactionsizecombinedwiththeaveragepricegivesyouhavetheAverageTransactionValue(ATV)-inotherwords,theaveragevalueofasale.Thevalueofthesaleiswhattrulymatters,notthepriceorsizealone.Upsellingandcrosssellingaretwokeystrategiesthatcanallowyoutoincreaseyourtransactionsizewithouthavingtoincreaseorchangeyoursellingprice.Remembertheinfamousquestion,“Wouldyoulikefrieswiththat?”Ifthisupsalecanbesuccessful,thenlikelyanybusinesscanbesuccessful!

3.NumberoftransactionsThenumberoftransactions(#T)isafunctionofthenumberofcustomersyourbusinessservesandthefrequencyinwhichtheybuy.It'simportanttofocusonthenumberofcustomersyourbusinessservesandthefrequencyinwhichtheybuyfromyou.Donotsimplyfocusonnewcustomers;insteadsellmoretoyourexistingcustomers.It’salwayseasiertoincreasesaleswithexistingcustomersthanitistoconvertanewone.

This,incombinationwiththeATV,givesyouyourtotalrevenue(TR):

TR=ATVx#T

Anexample:Let’ssaythatyourATVis$30andyouhave50transactionsatthatprice.YourTRwillthenbe$1,500.

TR=$30x50TR=$1,500

Great!Youhaverevenueof$1,500.However,youractualprofitisnotthisnumber,simplybecauseofthenextthreedrivers–theonesthatactuallycostyourbusinessmoney.

4.CostsofgoodssoldWhatdidtheproductactuallycostyourbusiness?Thinkintermsofwhatyoupaidthemanufacturerfortheproductoryourlaborcosttosupplyorinstalltheproduct.

Costsofgoodssold(CGS)areactuallyavariablecostastheychangewiththevolumeofrevenue.Indeterminingwhatyourgrossprofit(GP)ishere,youwillhavetodeterminethedifferencebetweentotalrevenueandtotalcostsofgoodssold.

GP=TR–CGS

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A firm grasp of the six drivers equips you to navigate any market.

5.DirectexpensesDependingonthestructureofyour"books",youmayormaynothavethesetypesofcostssegregated.Theymaysimplybepartofyouroverheadcosts.

Directexpensesareoverheadsthataredirectlyassociatedwith,andcaneasilybetracedto,revenue-generatingactivities.Examplesofadirectcostaresellingcosts,orcommissionstoyoursalespeople.Oftenthesecostsaretreatedasoverheadcostsinyourbooks,buttrulytheseareadirectexpenses.Themoreyousell,themoreyouwillpayincommissions.

6.EnterpriseoverheadsTheseareexpensesthatareneithercostsofgoodssoldordirectexpenses,butarestillnecessaryforrunningyourbusiness-thinkofficespace,technology,andsoforth.Oftenthesearereferredtoas"GeneralandAdministrative"orsimply"OverheadCosts".

PuttingthepiecestogetherOnceyouunderstandhowthesesixvariabledriversworktogetherandwhatinitiativesworkbesttogethertodriveresults,youshouldthenbeabletoseesmallstepsyoucantakeinthebusinesstoimproveyourprofit.It’saboutrecognizinghowthesesixareasinfluenceoneanothersothatyoucanworksmarter,notharder,toimproveyourcompany’sbottomline.Youdon’tneedbigimprovementsinanyonearea;youneedsmallimprovementsinmultipleareas.Thisapproachgivesyourbusinessabetterchanceatimprovingyourprofitmarginswithoutbecomingoverwhelmedbychanges.

Justbecausesomethingworksforyouoneyeardoesn'tmeanitwillworkthenext.HavingafirmgraspoftheSixDriversofProfitabilityequipsyoutonavigateanymarket.Byunderstandingthesubtleinfluences,youwillbeabletoknowwhatisbestforYOURbusinesswithinaspecificeconomy.

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The success or failure of a company is generally a function of who's at the top.

Mistake#11isbasedonthefactthatbeingabusinessownerrequiresyoutobealeader.Awhileback,aclientofminetoldmethathissonsaidtohimoneday,“Dad,youremployeesarepeople.Theyarenotrobots,sotheyneedtobetreatedappropriately.”Asthiswasquiteaphilosophicalstatementcomingfromayoungmanwithlimitedbusinessexperience,myclienttookstockofwhathissonhadsaid.

Whilenotanunsuccessfulbusinessowner,oneofmyclient’sstrengths,priortothiscomment,wasn’tdelegation.Onceherealizedwhathissonwassaying,heassessedhowhecouldnotjusttreathisemployeesbetter,butactuallyempowerthemsothat:

1. theywouldgrowthemselves,and2. hecouldactuallystepbackandfocusonthe

biggerpictureofthecompany.

Overthenextfewmonths,Isawadistinctchangeinhowmyclientdealtwithhisemployees,andIwatchedhimbecomeoneexcellentleader…notjustabusinessowner.

WhatdoImeanby“leader?”“Leader”hasaplethoraofdefinitionstiedtoit.Infact,asimpleGooglesearchofthetermbringsuppagesofdifferentdefinitions–allwithslightvariations.ForthepurposeofthisarticleandwhatIsawinmyclientashebecameatrulygreatleader,belowaretheattributesthatIbelievemakeaqualityleaderwithinanorganization.

1."Guide",butdon't"do"Inotherwords,simplyteachyouremployeestheskillsetrequiredtodoarole,thenstepoutofthewayandletthemdotheirjob.Betheretolistenwhentheyhavequestionsandpointthemontherightpath,butdon’tperformtheirroleforthem.

2.BesupportiveWhatyouremployeeswillbeabletoachieveknowingthatyousupportthem–theirtalents,theirjudgement,theirgrowth–willgoalongwaytonotjustseeingyourcompanygrow,buttoseeingemployeesbecomevestedintheirownpositions.Afewwaystoshowyoursupportinclude:

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Lackofleadershiptoguideandempowertheteam

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When those at the top possess great leadership skills, the journey to success is quite a bit smoother.

� Standingupforemployeeswhenrequiredandnot“throwingthemunderthebus”whensomethinggoeswrong.

� Empoweringthemtosucceed–givingthemthetoolstomakegooddecisionsontheirown.

� Motivatingthembasedontheirownindividualmotivators.� Encouragingthemtobetheirbestwhileallowingthemtolearnfromtheir

mistakes,ratherthansimplygivingup.

3.Listentoemployees’ideasANDconcernsTakingthetimetounderstandwhatyouremployeesareactuallysaying,whethergoodorbad,demonstratesthatyouarewillingtogrowbasedontheirfeedback.Toletyouremployeesknowthattheyarebeingheard:

� Talktothemandnotatthem.� Becompassionate/sympathetictotheirconcerns,yetfirmwhenyourequire

forwardmovement,whetherinadecision,specificproject,orsomethingelsealtogether.

4.Showpatience,yetbeproactiveatthesametimeLetyouremployeesairtheirissuesandconcernsinasupportiveenvironment,butturntheconversationtosolutions,ratherthandwellingonaproblem.

5.Takeresponsibility/accountabilityforthewholecompanyThisisyourcompany,soyouareultimatelyresponsibleforeverythingthathappenswithinit.Standbyyourcompany.

6.UnderstandthatyoumaynotknoweverythingandbewillingtolearnThegreatestleaderswillinglyadmitwhattheydon’tknow.Theybecomegreatbecausetheycanadmitthis,thentakeactiontosurroundthemselveswithpeoplewhofilltheknowledgegap.Empoweryouremployeestobecomeexpertsintheirrolesandrelyontheirexpertisetohelpyouguidethecompany.Buildyourbusinessoneveryone’sstrengths.

7.BerealisticofyourexpectationsforyouremployeesRememberthatwhilethismaybeyourbusiness,yourdreamcompany,formostofyouremployeesthisismerelytheirjob.Knowthattheywillnotbeasvestedinyourbusinessasyouare…andthat’sokay.

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“If you don't know where you're going, how will you know when you get there?”

8.ActionsspeaklouderthanwordsAgreatleaderisn’tjustabouttalkingthetalk.Rather,asaleader,takethetimetodowhatyousayyouaregoingtodo,andwhenyousayyouaregoingtodoit.Leadbyexample,notbycommand.

Oneofthemostimportantthingsyoucanrecognizeasabusinessowneristhat,inabusinessorganization,thesuccessorfailureofacompanyisgenerallyafunctionofwho’satthetop.Whenthoseatthetoppossessgreatleadershipskills,thejourneytosuccessisquiteabitsmoother.Askyourself,whereareyouatwiththesespecificqualities?

Mistake#12growsoutofthatoldsaying,"Ifyoudon'tknowwhereyou'regoing,howwillyouknowwhenyougetthere?"Ifsomeoneweretoaskyouwhatyourcompany'svisionis,wouldyouhaveaclearanswer?

First,let'sunderstandwhatavisionisandwhyit’simportanttohaveone.Theterm"vision",inthecontextofbusiness,canbeconvoluted.Somedefineitas"theoptimalstateofthebusiness",butIdon’tbelievethisisconcreteenough.

Tome,acompany’svisionissimplywhereyouaretryingtotakeyourbusiness.Thisallowsyourvisiontobecomeconcrete,definingexactlywhatyouwantyourcompanytolooklikeandhowyouplanongettingthere.

Regardlessoftheactualdefinitionyouchoose,it'sabsolutelycriticalthatyouknowexactlywhereitisthatyouwanttotakeyourbusinessandthatyoucanactuallyarticulateittoanyonewhoasks.Infact,itisevenmoreimportantastheleaderinyourbusinesstoactuallyletyouremployeesandcolleaguesknowwhereyouareheaded.

Whyisthisimportant?Simple–ifyoudon’tknowwhereitisyouwanttogowithyourbusiness,howwillyouknowwhenyougetthere…orevenifyougetthere?

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Notarticulatingthevisionforyourbusiness

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Byclearlydefiningyourvision,youcanbuildmeasurablemetrics–financial,operational,andinterpersonalfunctions–thatcanactasguidesforyourbusinessgrowth.Really,yourbusinessplanningshouldbedirectlyconnectedtoyourvision,andyourvisiontoyourplanning.Yourvisionwillhelpguideyourbusinessplanandkeepyoufocusedthroughoutyourweeks,months,years,evendecadesasabusiness.

Beingabletoclearlystateyourvisiontoothersisakintowhyexpertssayyoushouldwritedownyourgoals–iftheyaren’twrittendown,they’renotgoals,they'resimplydreams.

Byensuringthatyourentireteamunderstandsyourvision,youalsogivetheminsightintowhatthepurposeofthecompanyisandhowtheirrolecandirectlyaffectthecompany.Whenyouremployeesunderstandyourvision,theycanthenbetteranswertheirowninternalquestionsof:

1. WhydoIwanttoworkhere?2. ShouldIactuallyworkhere?3. Whydoyou,thebusinessowner,dothespecificthingsyoudo?4. DoItrulyfitinwithwherethiscompanyisandwhereitisgoing?

Whenyouremployeesunderstandyourvision,youempowerthemtounderstandifyourcompanyistherightplaceforthem.Ifitis,thentheseemployeesbecomemoreinvestedinyourcompanybecausetheyseethelinkbetweentheircontributionsandwherethecompanyisheaded.Iftheydecideyourcompanyisn'ttherightplaceforthem,theywillchoosetoleave–whichalsobenefitsyourcompany.

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AsaCharteredAccountantandexternalCFOsince1986,mypassionforbusinessrunsdeep.IunderstandthechallengesthatbusinessownershipbringsandIthriveonhelpingmyclientsrecognizeandovercomethosechallengessotheycanmovetheirbusinessforwardprofitablywithconfidence.

IstartedoutasatraditionalaccountantinCalgary,butitwasn'tlongbeforeIrealizedmydesiretoprovidebusinessexpertiseatamorestrategiclevel,beyondbeingthe"yearendguy".In1996,IlaunchedBusinessWORKStodojustthat.Mygreatestsourceofpridecomesfrommyclients'successesandthelong-lastingrelationshipsIhavebuiltwiththemthroughthiswork.

Outsidetheoffice,familytimeisfront-and-centrewithmywifeNicky,sonSpencerandourdogDexter.IamadevotedSaskatchewanRoughridersfan,andloveplayingandwatchinghockeyaboutasmuchasIlovebusiness.

IfanyoftheissuesI'vecoveredinthisreportresonatewithyouandyou'rereadytogettothebottomofaddressingthem,Iinviteyoutogetintouchwithme.Youcanreachmeat403.228.2535oremailsteven@businessworkscas.com.

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12 Common Mistakes Business Owners Make · Many business owners plan for increasing profits but don’t spend the time needed on improving cash flow. A wise business owner will devote