Simplicity

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The absolute key with any system, financial or otherwise, is to make it as simple as possible.  The gold standard is if someone with reasonable intelligence can come into your company and understand what’s being reported and can independently access similar data results.

1. Use an accounting system that automatically downloads your transactions.
2. Your bank may have a budgeting system that automatically categorizes your transactions, so no further work is needed (note that the categorization may not fit your business, so don’t let it go completely on autopilot).
3. Avoid using a spreadsheet that must be manually updated – it will become too time-consuming and will be abandoned eventually.
4. Once your company becomes sufficiently complex, hire a competent bookkeeper, so you have reliable financial reports to run your business.

TAKEAWAY: If you find yourself especially encouraged (or even overwhelmed) by some aspect of your business, get in touch with Merager Financial Solutions for an inexpensive review and strategy session.

Use Apps

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We are living in amazing times where applications can do much of our repetitive work and with more reliable results. The key is to have really good integration between different apps, so your data isn’t scattered, or even far worse, providing you with varying results between systems.

1. We’re a big fan of QuickBooks Online for many reasons and can help you get a 50% discount for the most basic version for the cost of a couple of cups of coffee a month.
2. Depending on the complexity of your company, using a bill payment system can make a lot of sense.
3. If you’re sending money internationally, there is one system that we would love to introduce you to that is incredibly convenient and the fees are sometimes 90% LESS THAN your bank.

TAKEAWAY: If you have a technology need, get in touch with us for a quick chat with absolutely no obligation. Frankly, we’d love to connect with you again, and this is a great excuse!

Direct Purchases                        

Reimbursements should be a rare event so that employees aren’t burdened with interest-free loans to their employer. It’s also important to note that processing reimbursements are typically very expensive in staff time, so there is a direct cost for what initially seems like an easy solution.

1. When reimbursements are necessary, we can recommend a few reimbursement systems that integrate directly into your accounting system with a mobile phone apps.
2. Where logistically possible, the employer should purchase items directly from vendors or provide an employee with a debit or credit card to make purchases.
3. Creating a direct and substantial purchasing history with vendors creates an opportunity to request an ongoing discount.

TAKEAWAY: Use your company’s purchasing power to your advantage by having it all visible and leveraging a positive working relationship with a vendor to help both of you.

Monthly Review

Having a budget has so many advantages, but the ability to compare what you thought your company would do and how things actually played out is pure gold. Seeing the results of real-world decisions compared to what we reasonably believe will happen leads to wisdom, which leads to growth.

1. Review your expenses each month with your bookkeeper if your company is safe, but not growing in the near future.
2. If your company is growing, or set to grow, review your budget vs. actual numbers with your CFO so the growth can sustainably continue.
3. At the end of each monthly review, identify any new expense categories that have become significant and should be highlighted by themselves on future profit and loss reports.

TAKEAWAY: For every expense, make sure that it has a return on investment (ROI) for the company or classify it as an Owner’s Discretionary item that can be quickly identified if funds are needed immediately.

If you need assistance with anything we’ve discussed here, let’s talk so you can reach your financial goals, growth, and revenue. Spend your time doing what you do best and make more money by having us solve your most pressing financial issues.

Delegation is normal

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Once a company has sufficiently matured, it realizes that the best way to get things done is to have the best people do the work. Mature companies also have a significant amount of work to do, and thoughtful leaders understand that they should focus on their expertise. The world has changed, where extraordinary and competent people create professional-grade results for small businesses in their own area of expertise and only charge only for time spent on task. Offloading these technical and creative tasks to professionals is often the best decision.
TAKEAWAY: Every person has a talent that is most valuable to a company and their time should not be used to solve less expensive needs.

Actively managed costs 

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While it is a milestone for any company to create a profit for itself, sometimes the most challenging task is to manage costs. The best way to do this is to have accurate reports that are created by a competent CFO and reviewed by management at least monthly for opportunities, waste and budget vs. actual spending. We should also make a point to revise vendor contracts whenever possible. Explore reducing expenses such as duplication, overhead, change billing to longer periods, and look into deductions for early payments. Some vendors may be willing to provide the same service at a lower cost if their contract is more secure or more business is promised. On the other hand, there can be the temptation to move from a trusted vendor that charges more to a lower-cost vendor who is not reliable and that may lead to a trusted vendor parting ways.
TAKEAWAY: Vendor management is a crucial management obligation and opportunity.

Bid management                  

Bid management is a function of both long-term data, an in-depth knowledge of the marketplace, very detailed business requirements from the client, and an understanding of project management. While working with bids, set the expectation that there may be overages. There may be an increase in material prices and that vendors naturally include a profit margin. A properly managed project can leverage knowledge about how to do something based on past work experience and very often a company that has specific, in-depth knowledge about a deliverable is in an excellent position of charging based on the value that they bring to the potential client. It's important to remember that the potential client may perceive a higher-priced bid as a higher quality deliverable.
TAKEAWAY: Use historic data to create high-profit bids by leveraging your company’s expertise, industry knowledge, and pricing sophistication.

If you need assistance with anything we’ve discussed here, let’s talk so you can reach your financial goals, growth, and revenue. Spend your time doing what you do best and make more money by having us solve your most pressing financial issues.

Companies that seek overall health are the ones that not only survive but go on to even better things and create opportunities that would never appear otherwise.

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The first attribute of a healthy company is that it has a stable roster of clients or steady sales of its product or service. This typically means that the company has a product or service that is valued by its customers and they choose to do business with that company. The challenge at this stage is never to presume customer loyalty or that their product will continue to be desirable.

Stable revenue is another attribute that ties in with steady sales, but the accounts receivable and accounts payable must be watched very closely. Uncollected bills are lost profits, and unmanaged vendors happily take inflated fees from clients.

Having a budget is a next-level indicator of a healthy company, and a cash projection is a natural extension of a budget. Beginner companies are satisfied with merely knowing where they presently are, or worse yet just making sure they don’t overdraw their checking accounts, but the real power comes from knowing how much growth potential a company has and leveraging all of that potential. A beginner company also incorrectly believes that staying in the same place as “we can pay the bills and put some money in our pockets(!)” is safer than reaching for the next level, but the companies that search for long-term success know that stopping in the middle of the road will surely lead to being run over.

A company that expects that it will naturally grow is healthier than one that remains stagnant. We know from practically everything else in the universe that there is only growth or entropy and the same holds for business. Just think of that store that you walked into that hadn’t been updated in twenty years and how your regard for that store immediately dropped to one of possible suspicion of their offerings (maybe you look if the milk is out-of-date or expect horrible customer experience?).

Having solid books is not only the exclusive way for a leader to understand their company’s position, but it creates opportunities to exit the business at some point. Did you know that a company needs three to five years of rock-solid financials before any investor will even look at a company for purchase? Even if there is no plan right now to sell one’s company, there must be planning for that, even if that preparation is used to secure an emergency line of credit from a commercial lender.
 
This one is more for a company that deeply understands itself, but every healthy company is hungry to provide a desirable service, create new offerings and remain a leader in their industry. This comes from the correct understanding that taking the foot off the accelerator will eventually lead to decline.

We will continue with attributes of a healthy company next month, or you could contact us directly and get those answers immediately!

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If you need assistance with anything we’ve discussed here, let’s talk so you can reach your financial goals, growth, and revenue. Spend your time doing what you do best and make more money by having us solve your most pressing financial issues.

Long-Term Bid Awareness

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Creating a Bid and Managing a Project

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Each Task in a Project Has Its Own Profitability

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If you need assistance with anything we’ve discussed here, let’s talk so you can reach your financial goals, growth, and revenue. Spend your time doing what you do best and make more money by having us solve your most pressing financial issues.

Tip #1

Every business owner should always know which products or services are making the highest NET profit. To know true profitability, every relevant aspect of the business should be integrated into product profitability. This includes machinery, marketing, staffing and the materials themselves.

Tip #2

Your financial reports are your most valuable asset as you grow your business. Knowing where you’ve been is the secret sauce to understanding where you can go. Having a budget and cash projection are the keys to discovering where you can go.

Tip #3

Will you ever need a business loan, seek investors or want to sell your business? If so, having at least three years of reliable financials that match the story that you’re telling these financial professionals is a requirement. The deal will stall, or not go anywhere if these aren’t in place. Hint: They will ask for your tax returns and financials for those years, and they should match.

As each company grows, the type of confidence needed for success changes.  The confidence that serves the beginning company is much like an explorer, where the search is one of matching the company with clients that need that specific product or service.  Once we have a solid company, we need the confidence to fully embrace the larger market that clearly needs this same service or product, but we must shed the thought that we can do everything in a complex organization.

TAKEAWAY:  We can manage the financial side of your business while you create growth and make even greater profits for yourself.

If you need assistance with anything we’ve discussed here, let’s talk so you can reach your financial goals, growth, and revenue. Spend your time doing what you do best and make more money by having us solve your most pressing financial issues.

Quick question: If you were asked to to fully describe your business, would you be at a loss for words?

Most business leaders would be, because there are so many moving parts. Vendors, clients, expenses, income, long-term liabilities, assets, business loans, aspirations, employees, taxes... The list could go on almost endlessly.

Here's the thing: Your business' story should already be captured in your financials. Wait, you might say. My financials are just a bunch of numbers that make my eyes roll up into my head... The truth is that if your financials are crafted correctly, they should tell the tale of your company with the same clarity that you could say in words.

If you ever want to sell your business, get investors in, convince a bank to give you a loan or even just know where your business is at the moment, you need a well-crafted set of books that accurately tells your company's story.

TAKEAWAY: Your company's books are its story. It's just told with numbers as placeholders for the human story behind them.

A bookkeepers job

Bookkeepers should double-check for any unusual transactions, enter any complex accounting entries, reconcile the bank accounts and keep a watch to not overdraw the company checking account.

Bookkeepers are not responsible for advising a company leader on *how* to use the resources in place and will typically choose to not affect the course of the company with the big picture. The bookkeeper's "lane" is typically quite narrow.

So you want to launch a new product?

If you need assistance with anything we’ve discussed here, let’s talk so you can reach your financial goals, growth, and revenue. Spend your time doing what you do best and make more money by having us solve your most pressing financial issues.

Here's a critical question:  What's the one thing that can make 2019 the beginning of your company's best years? Focus on what you do best, delegate the rest.

I've worked with so many companies that are literally making a fortune, but don't see the desired growth in their profit margin. Why does this happen? As the Leader of your company, you are really good at what you do. But like most leaders, you probably find yourself spending too much time on the internal aspects of your company, taking you away from what you really do best.

What I do best is I find opportunities for growth, increased profits and reduce unnecessary spending. I take a deep dive into your company's financials to give you the critical information and planning support to reach your goals.

Strategic tips overlooked by most businesses

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• Make sure your invoice is paid within sixty days
  • Once an invoice goes unpaid for sixty days, a client will question the company's professionalism and wonder if they actually want the money
• Get a professional payroll-processing company
  • Paying a company to disburse your payroll and pay your taxes is a great money-saver
• Closely monitor your company's expense accounts and reimbursements
  • Expense accounts can quickly get out of control and certain reimbursements can trigger an audit
• Make sure your bookkeeper has strategic oversight
  • Not integrating your company's strategy into your books is a direct threat to your company's well-being
  • Unreliable financials are the result of relying too heavily on accounting software
• Save money at year-end by creating financials that are optimized for your tax preparer
• Don't rely on your tax-preparation firm to identify operational problems and opportunities

If you need assistance with anything we’ve discussed here, let’s talk so you can reach your financial goals, growth, and revenue. Spend your time doing what you do best and make more money by having us solve your most pressing financial issues.