Often business owners feel the financial numbers of their company are no buddy’s business but theirs!  This may be fine if you’re a one-person shop but as you grow your business you will have to rely on others to achieve your organization’s financial goals. 

Your managers should have a good understanding of their specific departmental financials and how those numbers effect the organizations financial performance overall.  They don’t have to fully understand the cash flow statement and they may never see the balance sheet in a privately owned company, but they do need to manage to the numbers on the profit and loss statement.   Remember, the profit and loss statement is a management tool showing the operational effectiveness of your organization.  

One important financial tool for managers is an operating budget.  By having an established budget, your managers will have a target, a benchmark, and set goals.  The best budgets are the ones your managers will have helped to develop.  At the end of the day you want your managers to believe they can achieve the target budget numbers and a great way to accomplish this is to have them contribute to the development of those numbers.  It is harder to say the numbers are bogus and unreachable if they had a hand in building the budget with your support.  Half the battle in reaching your organization’s overall financial goals is having a positive attitude and believing you can accomplish the budgetary goals of each department. 

Let me know what you think.

Take Care

Short-term goals are usually one to two years and long-term goals are more than two years out in the planning.  Each goal must have at least these three elements; 

·        What is the goal

·        Who is accountable for achieving that goal

·        When is the goal to be completed

Your company’s key management and their employees should have input into the goals.  They can know the organizations overall objectives and help develop goals and identify the tools necessary to accomplish the gaol within the designated timeframe.

Besides being tied to the overall objectives of the organization, your company goals must be written out and the person who is accountable for the goal must be aware of the timeline and know who to go to when they need support to accomplish that goal.

Accountability is crucial for accomplishing your company goals.  If you as the owner are responsibility for accomplishing one or more of your company’s goals, who will hold you accountable?  We will assist with holding the owner(s) accountable within your organization.

Your short-term and long-term goals are a critical part of your company’s ‘Strategic Plan’.  For more information on strategic planning visit this website.

Let me know what you think,

Take Care

The best way for me to describe this is with an example.  You and your buddy have bought an auto service repair shop.  The both of you do all the work and you are both excellent mechanics.  You both have a passion for your work and it’s nothing for you two to work 10 to 12 hour days under the hood of a car, truck, or SUV.  Business is good and you can make the bills.  The issue is that both you and your partner are working over 90% of the time as managers and less than 10% of the time as owners.  The last thing to do at the end of the day, after working 10 to 12 hours, is to do the books, or think about advertising, or review the financials from two months ago.  Does this sound familiar?  I hope not, because its’ a recipe for disaster.

 If left to ourselves, we will most often choose to do the things that we like to do.  We are good at them because we like them and we feel we have accomplished something when we’re done.  To a lot of business owners, setting marketing strategies, analyzing financial statements, reviewing the budget (that is if you have a budget) and other things such a collecting account receivables or balancing the checkbook is something that happens when time permits. 

To have a successful, sustainable business model you will have to divide your time between you as “manager” and you as “owner”.  You will have to schedule time doing each job much like you may schedule time for lunch.  Mark it on your calendar and between you and your partner you have to hold each other accountable to do the “owner” jobs. The other manager jobs are the FUN jobs and we always find time to do them, but the “owner” jobs, that’s different.  You and your partner will have to be the ones that decide what’s best, maybe 70% as manager and 30% as owner?, and you both will know what is right because both the manager and owner jobs will be done on time.  And you may even sleep better at night as a result.

It may seem silly, but if it helps you to accomplish this you may want to leave the shop area and put on a clean white shirt while you’re doing the “owner” jobs and when you’re done, put on that ‘dirty’ shop shirt again and get greasy.  Whatever it is, find what works for you and stick with it. Your business will thank you, your banker will thank you, and you will be building a sustainable business that you and your partner will be able to enjoy well into the future.     

Let me know what you think,

Take Care