30 Days Left

It’s hard to believe, it’s March first already.  2012.  The end of first quarter is 30 days away.  Now is the time to look at your Q1 plans and get on track for a strong 2012.  

I looked at my Q1 individual plan and noticed a few needed some action.  I developed a ‘next action’ list for each.  It’s a good idea.

I looked at several of my client’s IP’s developed toward the end of last year as well.   Most of them have progressed nicely – some needed some action. 

It’s a good time for everyone to do the same.

I just read 3 books, and I am in the middle of the biography on Steve Jobs.  If you haven’t read it, read it or at least think about how this guy helped change the world with the PC in the 80’s and 90’s – let alone the other great Apple products we have today.  But he also thought differently. 

We need to think bigger – dream big and dare to fail.  Try to change the world.   Even our own world whatever that definition is for you.

I’m big in 30, 60 and 90 day plans – simple with actions and dates.  Whether it’s health and lifestyle, business, personal fulfillment - the point is to take action now. 

I love the Lance Armstrong quote:

“Time is limited, so I better wake up every morning fresh and know that I have just one chance to live this particular day right, and to string my days together into a life of action, and purpose.”

 

Anyway, get out your 30 day plan, type up some bullet actions with deadlines and get going  -  30 days left.  2012.

I’ve logged every workout I’ve done for the last 16 years  -  and I work out generally every day. 

We also just moved in to the fourth quarter.  90 days left until the end of the year.  I’m feeling pretty fit right now, but I’d like to step it up – there’s still time left.

As fall arrives and the weather cools (46 degrees and raining today), I usually start running more and get back into strength training. 

I will then move into my restoration period in late November to enjoy the holidays and let my body totally recover.    

Now, I’m going to focus running more, back into P90X, and improving my diet. 

I was thinking about how the first thing I consume at 5AM is coffee.  The body has been resting and needs to start with regular water – not coffee.  We all need to consider what we put into our body as fuel.    

The better the fuel, the better the engine’s performance.  Our body’s performance is critical to how we perform in everything we do – everyday. 

As business owners and corporate professionals, our body needs to feel good and perform to the max to get the most out everything - our family life, our careers, school, projects around the house  – everything we do.

Here’s what I’m doing going forward:

•        16 oz of water first thing – not coffee first
•          Eating as organic and local  – almost 100% now, but it gets more difficult in the fall
•          1 gallon of water every day - critical!
•          Carrot juice +4x per week - juicing makes sense, but it's a pain - I'm committing for a couple months.

 I'll let you know how I make out.

Take a look at what you’re using to fuel your body.   If you don’t exercise – start!  We are all working animals.  It’s imperative to keep all your systems working properly so you can perform energized and at your optimum.

The 100 Day Plan

Today is the last official day of summer.  I always hate to see summer go - it is definitely my favorite time of the year..  It really marks the time, doesn't it?.  

So here's the deal, as of today, there are 100 days left to the end of the year.  100 days.

In 100 days, all your 2011 new year's resolutions and goals for the year that you optimistically set last year are going to be measured.  In 100 days, you will be setting new goals and targets for 2012.  In 100 days, Thanksgiving and Christmas will be over. 

100 days is a enough time to get important things done.  This is a great time to develop a 100 day plan and close this year out strong.  Spend an hour or two this weekend, and do it right.  I love the 100 day idea - it invigorates, it pushes, it helps create momentum into the following year. The 100 day time frame is perfect - Most plans and initiatives can get done in this time frame.

I use a self developed strategy execution process in my CFO Services practice that keeps leadership teams and organizations focused on the important things. The process is straight forward - focusing on strategic goals with initiatives, deliverables, activities and measures. 

The 100 day plan follows the same general format.  List what you want or need to get done by the end of the year with the necessary activities with a due date.  I use MS Excel to keep things visible.  I list the main goal and the tasks and activities needed to get done below it with target completion dates.  And - I alway list the 'next action step' that needs to get done.  That is a key point.  List next a next action step for each goal.  If you want a copy of my template, send me a quick note.

I'm currently finishing my 100 day plan and a couple for some of my clients.  I usually list 6-8 big items that I'd like to get done by December 31st.  I put reminders on my calendar for follow up items and review the list every Friday.  I keep the 'next action steps' up to date.   

The 100 day plan creates a sense of urgency to get important things done in a short period of time.  Period.

You know what?  Most of the items I list get gone get done.  You know what else? Most of the items wouldn't have gotten done if I didn't put together my  100 day plan.  It works.

The important thing to do is sit down and think was you want to get done.  Set big ass targets.   

Focus and execution - that's the key.  Cut out baloney and use self discipline - focus on locking down what you want to get done.  Review action plans and results weekly.  Everyone should do this- it's simple and it works.

Document  progress and next action steps for each goal.  Hold yourself accountable and keep moving the ball forward.  

It's amazing what you get done in 100 days.  

Another benefit of developing the 100 day plan now, is it gets you prepared for 2012. You miss 100% of the shots you don't take. Take some shots on goal to finish this year strong.

The Power of Purchase Discounts

I was teaching my senior level college finance class a few years ago and really discovered the power of quick pay discounts. I was teaching the class the basic formula outlined in the textbook:


We did a couple problems and moved on.

When we were reviewing the material for the test, someone asked me a question on quick pay discounts, and I explained it differently.

I took basic vendor terms of 2%10, net 30 terms. I went through the math (.02 ÷.98) x (360 ÷ 20) and calculated 36.73% - the cost of not taking the discount.

We discussed the math and simplified saying you figure out how many 20 day periods there are in a year (365/20=18.25) and multiply that by 2% = .365 or 36.5%. I used 365 days in a year vs. the text book’s 360. That’s when it hit me. I can make 2% 18.25 times per year - assuming you pay the vendors exactly at 30 days, in this example.

That’s a lot of extra margin - by paying vendors 30 days instead of 10, I make 36.5%. If I borrow the money at 8%, I still make a net 28+%.

Think about it - what’s your gross margin on your sales?

By using purchase discounts effectively, you can double your gross margin – how’s that for adding profit!

60 Days Left

Trick or Treat – only 60 days left to the end of the year.


It’s hard to believe there is less than 60 days left to the end of the year. Time does go fast.

If you’re like me, you base goals – personal and business, and business plan results on the end of the calendar year. If so, it’s time to kick the goals in high gear with a big push to end the year - and start planning for 2011.

It’s also time to get your team committed to the same.

I did this at October 1st – planned the last 90 days. I pulled out my goals and business plans – took out a calendar – reassessed some targets – and developed a 90 day plan with actionable targets. I have reviewed and updated the plan weekly since. You know what? I was able to get a few priority things back on track.

For me, I had accomplished some of the things I set out to do in 2010, but others had lost priority and slipped out of sight. This re-engagement at 90 days reprioritized everything, and created focus and urgency. My business picked up, and I feel better about myself.

If you haven’t re-assessed your 2010 goals and business plans, do it now – you have 60 days left. It’s late, but you can get a lot done in 60 days. It is amazing to how a daily focus with a short time frame helps get the important stuff done.

Up Your Cash

We see many businesses that are growing profitability, but are having difficulty continuing their growth specifically due to the lack of cash. You’ve heard the expression ‘cash is king’, well it is true.


Several things can be done to ensure this does not happen to you. Even if you are growing profitably and you have enough financial resources to fund the growth, improvements in cash flow will enhance your profitability with the ability to pay down debt or take advantage of vendor discounts.

The following are the 7 best ways to enhance your business’s cash flow:

1. Negotiate better terms with your vendors – payment terms of 40 days vs. 30 days significantly enhances cash flow – a business with vendor related costs of $14m that extends the average days to pay from 30 to 40 days enhances cash flow by $400,000!

2. Get some cash down up front - This is a great way to have your clients fund the projects not you.

3. Be careful with your payment terms with customers – balance due on completion is much better than 30 day terms. If you do extend credit terms, be diligent in your collection practices. Even slight improvements in day’s sales outstanding (DSO) can be a significant enhancement to cash flow. If you are a $20mm business with $2.2mm in accounts receivable, a 5-day improvement means a $274,000 incremental increase in cash flow.

4. Manage your inventory better – the same principal as DSO and average days to pay applies to days of inventory on hand. Any improvement here has serious implications to improve cash flow.

5. Watch your operating expenses. For most businesses, the most significant operating expense is payroll and payroll related cost, but carefully watching all expenses is imperative. Any improvement directly enhances cash flow.

6. Use a line of credit at the bank to plug any shortfall of cash flow and allow you to take advantage of vendor programs

7. Watch what you take out of the business. Shareholders use the business to pay business related and other expenses, but anything you take out directly reduces cash.

Additional cash generated by using the above techniques can be used to grow the business, to paydown debt, or to take advantage of quick pay vendor discounts. Remember taking advantage of quick pay discounts is an excellent way to leverage your cash flow to enhance profitability. Taking advantage of a 2%10, net 30 discount returns approximately 37% – so it may make sense to tap your line of credit occasionally to take advantage of the vendor discount.

Use the following formula to calculate the cost of not taking a discount.

Cost of failing                    = Discount %             X     360
to take discount                   100% - Discount %       Final due date - Discount period

So, in the 2%10, net 30 example above .02/.98x360/20 = 37% - That’s a lot to give up by paying in 30 days instead of 10.

Budget Season

Budgeting season – is it just finishing or just starting?


I’ve been doing a lot planning with clients for the last couple of months. I believe now is the time to really turn up the heat with nailing Q4 (as best as possible) for the next 30 days and keep those planning sessions active. Big businesses and small.


I’m talking about your financial models for next year – planned monthly P&L and balance sheet, personnel and capex plans, etc. If you’ve just completed the planning a) good job, and b) pull it back out and use as a working document. If you haven’t completed the process, it’s time to get your ass in gear.

‘Times are a changin’, and the world is moving fast – especially now days and there are a lot of opportunities out there, but we all need to be careful. The reporting mechanisms, however simple or complex, need to be in place, timely and accurate. It’s critical everyone understands the business’s strategy and the scorecard of how the business is performing – I always picture a football scoreboard.

With that said, I hope everyone has a strong rest of the year – as in a 10K running race, finish strong and feel good about the race. In your business – the race doesn’t end at 12/31, but it’s clearly a mile marker – so push yourself for the next 30 days – hit the mile marker strong and set yourself up for a great year in 2010.

Guess what? Budget season never ends. I don’t even like the term budget season – it’s planning and execution season and it goes 12 month a year. Get yours going now.  If you need any help, let me know - it's the best part of the game.

Surprise Late SEC Announcement re: SOX Compliance

Look at this announcement by the SEC released October 2nd.  Count they have waited any longer.  Small publics have another year.  What's the guess, that many couldn't comply?  My public clients were prepared.

/jon


Small Public Companies to Begin Providing Audited Assessment of Internal Controls Over Financial Reporting in Nine Months


FOR IMMEDIATE RELEASE

2009-213

Final Stage of Section 404 of Sarbanes-Oxley to Begin in June

Washington, D.C., Oct. 2, 2009 — The Securities and Exchange Commission today announced that the smallest publicly reporting companies will begin complying in nine months with the final portion of a key provision of a 2002 corporate governance law that requires companies to report to the public about the effectiveness of their internal control over financial reporting.

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Additional Materials

Study on SOX Internal Controls

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Under the provisions of Section 404 of the Sarbanes-Oxley Act, public companies and their independent auditors are each required to report to the public on the effectiveness of a company’s internal controls. The smallest public companies with a public float below $75 million have been given extra time to design, implement and document these internal controls before their auditors are required to attest to the effectiveness of these controls.

This extension of time will expire beginning with the annual reports of companies with fiscal years ending on or after June 15, 2010. This expiration date previously had been for fiscal years ending on or after Dec. 15, 2009. The extension was granted so that the SEC’s Office of Economic Analysis could complete a study of whether additional guidance provided to company managers and auditors in 2007 was effective in reducing the costs of compliance. Because the study was published less than three months before the December 15 deadline, the Commission determined that additional time is appropriate and reasonable so that small public companies and their auditors can better plan for the required auditor attestation.

While the reporting and auditor-attestation grew out of the 2002 law passed by Congress, all U.S. public companies have been required to maintain internal accounting controls since 1977.

“Since there will be no further Commission extensions, it is important for all public companies and their auditors to act with deliberate speed to move toward full Section 404 compliance,” said SEC Chairman Mary L. Schapiro.

# # #

Performance Measures

KPI's and performance metrics have been used for years helping companies focus on goals and hold managers accountable. They are typically misused for a number of reasons.

They:
• Are not understood

• They are too complex
• They do not address strategy

For these reasons they are not effective.


Performance measures need to be carefully thought out - they need to drive profitability and strategy. They need to be simple, visible, and understood by the entire company.

Many companies don't address these correctly – most haven't thought them completely through - some companies have abstract measures that are not understood or can not be affected.

The key here is to look at the revenue areas and determine the simplest attributes of each category. Ensure the driving data is easy to obtain on a timely basis and someone owns the driver. People need to take full responsibility for their results. We make assumptions to develop targets for each driver and then measure actual performance. The assumptions need to be reviewed quarterly and adjusted based what we've learned over the previous quarter. This provides a powerful tool that drives results.

It's Budget Season

The typical budgeting process used in today's smaller and midsized companies (all companies for that matter) is an exercise in futility. The process which should be extremely useful consumes significant company resources and has the potential to cause team friction limits business potential.

We should think in the terms of what is possible. Paint the picture - of what that possibility looks like. As in building a house - what the house looks like when it's done. They prepare the blueprint of the individual pieces that need to get done, by who, and when – with the objective to complete the house by end of the fiscal year.

We make assumptions along the way and as things change, we need to re-address those assumptions - quarterly, based on what we've learned along the way. The budgeting process becomes an operating plan that is constantly adjusted.

This now becomes a dynamic process and a powerful tool for strategic growth.

I like the rolling budget concept so as one quarter falls off, we add another quarter to the budget. Then the budget process is a continual process.