08/08/2021
What does a small business CEO and an Olympic athlete have in common?
by Tricia Taitt
The simple answer is they both have to strengthen their core in order to move their bodies forward. While the Olympic athlete strengthens their physical core to move at peak performance, the CEO must strengthen their financial core in order to grow the business forward and reach their vision of success.
There are five critical components to strengthening your business’s financial core to achieve peak performance. These may already be familiar to you but it's worth a reminder. Practice makes perfect or in the spirit of the Olympics, practice leads to GOLD!
Have the right financial experts on your team.
I bet you didn’t go into business because you’re good with numbers. You went into business because you had an idea and a passion to make it happen. So don’t fall into the trap of trying to do it yourself or totally relinquishing the accounting/financial stuff to a CPA or family member. Have a CPA and bookkeeper at minimum to manage the finances if you don’t have time to do it or simply don’t want to do it. At some point you’ll need an outsourced CFO to help you forecast future growth and make strategic decisions to improve cashflow, profitability and the overall value of the company. Read here [artofmoneymatters.us17.list-manage.com] to figure out who you need and when. No matter whether the team starts with you and a CPA or you have a full financial department, know that accounting is an investment you can’t afford, not to make.
Keep good financial records and a reliable system.
Set up accounting systems like Quickbooks, Freshbooks, Xero - where financial records are categorized correctly for easy reporting. If needed, use third party systems (like Bill.com, Melio, Expensify, Harvest, Shopify, PayPal, etc) that integrate into the respective accounting systems so that all financial information is seamlessly captured in one place. Have a financial expert periodically check that all the systems are working and feeding numbers correctly into your accounting software.
Document everything.
The above brings me to my next point. Document the steps your financial department takes to manage all the accounting and financial processes. I know we’re all trying to work our 2021 plan and rise from the pandemic ashes so improving financial operations is probably a 3rd or 4th priority. But you can’t afford to have the financials be the weakest part of the business. Work with your financial team to create a basic outline of steps and tasks to be completed weekly, monthly, etc (for invoicing, bill pay, payroll, sales tax, bookkeeping) and have an admin or an intern document it. You'll be glad you did especially if that bookkeeper that has been handling the business's money matters for years suddenly decides to quit or terminate your agreement. At least you'll have something to help transition the next hire into the role.
Take control of your numbers.
Review the financials monthly or with some regularity. I can’t stress this enough. It was painful to see how many business owners who were managing their books themselves, missed the opportunity to get PPP loans, EIDL loans and other SBA related COVID 19 funding because they didn’t have good financial records or they were so focused on not paying taxes that they reported no profit or negative profit. If numbers are not your forte, hire a bookkeeper pronto. Be sure it’s someone who has accounting experience, not just experience with software like QuickBooks Online and Netsuite. On a monthly basis, ask the bookkeeper to review the income statement, balance sheet and cash flow movements so you’re familiar with the trends - in income, expenses, margins, - and know what to expect in terms of incoming cash and cash used to pay down debt. Engaging with your numbers is like engaging in a relationship with people. At first we all start off shy but as we get to know each other, the relationship is more relaxed and fun. That’s what I want for all of you.
Watch the scoreboard
Select 5-15 data points that you track regularly. In his book TRACTION, Gino Wickham, sees this as a way for business owners to “cut through all the feelings, personalities, opinions, and egos and boil their organization down to a handful of objective numbers that give you an absolute pulse on where things are”.
By following these five critical steps you’ll strengthen the core of your business, make better decisions for business growth and scale in a profitable way. Excelling in your financial performance means that you also get to pay yourself what you’re worth and ultimately make the impact you want in your families and communities. Isn’t that what it’s all about? Achieving goals and the GOLD!
