In today’s business, things seems to move at the speed of light. Decisions must be made more quickly and with less information than ever before. At the same time, leaders and managers are overwhelmed with data and research which also risks paralyzing your decision making. New rules and regulations are implemented and you need to try and stay on top of it in order to capitalize on your opportunities while working hard to minimize the risks. It seems complicated and overwhelming.
It doesn’t have to be so complicated and overwhelming though. By putting together a strong, effective leadership team, you can get back in control and ensure your organization can implement the plan successfully. And a lot of planning, organizing and control has to do with your accounting and information system. And for this, you need effective accounting management focused on accountability.
If you are growing but the profits don’t seem to be following, perhaps it is time to reevaluate your plan and controls. If you are losing ground and don’t know what is eating up your cash flows, perhaps cost cutting decisions need to be made. Costs do not exist in isolation; and sometimes spending takes on a life of its own. Getting control of your organization’s finances will help you see the challenges more clearly and help you stay focused on the mission and its execution.
Two Primary Challenges in Business
Every organization faces challenges. Accepting and overcoming challenges are why you got into this position in the first place. But you are now facing your second straight year of losses – perhaps after a year that exceeded even your wildest dreams; and nothing seems to work. Perhaps you discussed it with your controller, your chief marketer, your CPA but you are unsure how you can make it happen again.
What you are now realizing is that your absolutely fabulous year was based on luck. That lucky break encouraged you to hire new employees, expand your territories, loosen credit, lease new facilities and give huge raises. And your cash has steadily declined ever since.
First challenge: Know if you are good or lucky
It sounds easy to figure out if your great year was because of executing brilliantly on your strategy or were simply extremely lucky. But in truth, it is often difficult to tell in the moment. You land that one customer who drives 40% of your revenues, pays on time and loves your work. That customer keeps throwing more work your way. You build out your company to meet this customer’s needs and slowly stop spending time with your other customers. You stop prospecting. Revenues keep coming in but new customer growth stops.
You are lucky. And building a business on this is going to cause heartache.
Second challenge: Addressing Starve-Gorge-Starve
I learned this lesson from Eli Goldratt in one of his books on throughput. Your business is a money machine – that is, it is designed to generate money for your shareholders, the owners of the machine. But, to generate money, it needs money as an input.
- Failing to feed the machine means nothing comes out.
- Overfeeding the machine clogs it up and nothing comes out.
Somewhere in between you are successful. But what I have found is that too many managers whipsaw the organization by first starving the business, then stuffing it until it bursts to then starve it again. The starve-gorge-starve model drives up costs, confuses customers and causes employees to withhold their best efforts.
P.O.L.C. is the Answer
The only way to address the “good or lucky” and “starve-gorge-starve” challenges is effective financial
I might be able to help. My approach is simple: I bring clarity to the numbers and help put effective controls in place to first stop the bleeding, separate the lucky from the good and then get the organization back on a steady balanced diet so it can get results without heartburn or heart attacks.
So, if you are, or know someone who is
- An investor in a troubled business
- A venture capitalist with a lackluster client
- An investment banker
- A CPA with a client looking for some direction
- A bankruptcy lawyer with salvageable businesses
- A banker with a client heading to special assets
- A board member on a non-profit that seems to be adrift
Feel free to contact me and let’s see what we can do together to change things for the better. You are also more than welcome to continue reading my pages and blog so you can get a better sense of who I am and how I approach solving problems.
Accounting Clarity 