Posts by Dave Cain, CPA:
- The bank is more willing to give you a loan.
Banks don’t loan money to business owners they can’t trust. When you develop a relationship with your banker, not only do they get the chance to know you better, they get broader insight into your company and the objectives that drive your business. Yes, your cash flow, collateral and financial statements are important, but so is your character. If your banker knows you, likes you and trusts you – and knows, understands and believes in your business – you could be more likely to secure the financing you need when you need it.
- You and your business are often top-of mind.When you have a strategic banking relationship, you’re more likely to get a call when a great opportunity arises. Your banker has greater insight into your short- and long-term strategies and will be able to alert you when a low interest loan program lands on their desk. Additionally, they are in a great position to recommend your business to other clients and professional acquaintances.
Why You Need A Banker On Your Team
A lot has changed since the first time I sat behind my desk at Rea & Associates in 1979. Technology has advanced in ways that no one could have imagined or predicted. Our nation endured – and survived – The Great Recession. And someone somewhere decided that Pluto isn’t a planet anymore (and I just became a grandpa!).
But with all these changes going on, one thing has remained the same: to be successful in business, you can’t go it alone.
You never know when you will need a sounding board, some insightful guidance or even someone to go to bat for you, but if you are looking to hit a home run, you need to make sure your team is stacked with advisors you trust – and be sure to make room on your roster for a banker.
As a business owner, it’s easy to get caught up in the daily responsibilities of managing operations, customer needs and stakeholder interests. If your banker is just watching from the bleachers, you are missing out on a great opportunity to improve your business. Get a banker on your team, and if it’s the right one, you’ll see results.
Is Your Business Batting A Thousand? – Created with Haiku Deck, presentation software that inspires
A Key Player
Maybe you’re already making payments on a business loan, or perhaps you’re in the market to refinance or secure a new loan. Either way, you’ll have better results if you see your banker as a teammate.
When your banker is a key player in your business, you will find:
If you talk to your cousin’s neighbor’s dog-walker more often than you talk to your banker, it’s time to make a change. Try setting a recurring reminder on your calendar to meet for coffee, visit the batting cages or hit a few golf balls. Before long, you’ll start to see a return on your efforts.
By Dave Cain, CPA (Dublin office)
Spring is the season of renewal. It’s the time of year when we emerge from our dens to enjoy warmer weather, the melting of snow and an abundance of greenery as nature appears to come alive. Spring is also an opportune time in the business world. And before we lose ourselves in the hustle and bustle of increased production and revamped initiatives, take this time to review and solidify your company’s cash flow projection.
Managing your cash flow now will help minimize mistakes later – when business and economic trends become more favorable. Still not convinced? Here are five more reasons to consider maintaining your company’s cash flow projection.
5 Reasons Why Managing A Solid Cash Flow Is Just Good Business Sense
- A cash flow projection will provide you with the information you need to make better, more lucrative decisions. For example, if you had insight into which of your company’s non-core assets are viable would you make changes to support future growth or would you simply maintain the status quo? With a well-maintained cash flow projection at your fingertips you can make decisions that will help secure a more lucrative future for your company.
- If you’re looking for a way to hold you and your team accountable for the company’s success and failures, look no further than your cash flow model. This tool can help you fine-tune your management strategy, which can help you and your team achieve better quality standards, increased production, enhanced efficiency and an improved reaction time.
- Your cash flow strategies can empower your team to take further ownership of their work and pride in the company. When they have a chance to see that their actions influence how well the business does as a whole they will be more likely to seek out opportunities for improvement.
- When you have a cash flow projection then you have the tool needed to develop timely and attainable goals. When you have a better idea as to how much money is going out and coming in (and why), you and your management team can put plans in place to better manage the company’s cash flow in a more favorable way.
- Are you managing cash that you acquired from an external source? Will you manage acquired cash in the future? Stakeholders love cash flow projections because they provide them with the information they need to monitor their investment. Oftentimes banks require you to provide quarterly financial information to prove that you’re complying with the terms of the loan package.
Cash flow is arguably more important to your company’s success than your bottom line because it takes your past, present and future projections into consideration to arrive at a compressive analysis of your financial wellness. Email Rea & Associates to learn more about the importance of cash flow projections and how you can use yours as a valuable management tool.
By Dave Cain, CPA (Dublin office)
Did you ever notice that little sticker in the upper left-hand corner of your windshield? The one that informs you your next service date for changing the oil and tire rotation. As you fire up the ignition, the fuel gauge is activated and the miles per gallon information is displayed. The on-board computer lets you know that the headlights are in the automatic position and the tires are properly inflated. The navigation system may even provide a weather update or a construction delay on the interstate. Within a matter of seconds of entering your vehicle, you have virtually all of the important metrics for your upcoming road trip.
Your business metrics and performance indicators should be as easy as locating your vehicle’s metrics. The metrics need to be meaningful to you and your team and used as a decision making tool in the day-to-day operations of the business. Many business owners and managers use daily and quarterly metrics more frequently than the monthly financial statements to run the day to day operations.
Business Metrics To Consider
Your business’s on-board computer can churn metric after metric and ratio after ratio. However, the quality of the metrics is far more important than the quantity. One recommendation is to identify four to six ratios that are unique to your business and industry and continue to study the trends on a daily or weekly basis. As a general rule, every business should consider metrics in the following areas:
- Customer Metrics: How many new customers have you acquired over the last six months? How many customers have you lost? What is the average profit margin for each customer?
- Cash Flow Metrics: These metrics should be designed to measure the company’s ability to meet obligations as they come due. For example: Is your inventory turning? How old are your accounts receivable?
- Sales Metrics: A company should have sales metrics to measure sales and whether the sales are satisfactory for the company.
- Employee Metrics: These metrics could be designed to measure how effectively the company is hiring and managing its employees.
- Borrowing Metrics: This metric will measure how the company is effectively managing its debt.
Once the metrics have been determined than a “windshield sticker” or dashboard can be affixed to your technology devices and reviewed by the management team on a regular basis. In addition, an industry scorecard can be developed to measure how the business compares to the industry.
Just like the oil in a car, the business metrics will need to be changed or enhanced on a regular basis to reflect changes in the economy and the business cycle.
Safe travels and be on the look-out for orange construction barrels and detours. Check your metrics!
Business Metrics Help
If you need help determine which business metrics are right for your business, contact Rea & Associates. Our team of Ohio business consultants can help you determine which business metrics are needed for the success and growth of your business.
Author: Dave Cain, CPA (Dublin office)
Are you out of breath from the impact the economy had on your business during the last several years? Is it time to develop some New Year’s resolutions that will make a difference in your business? Adopting a new diet, jumping on the treadmill or committing to run a half marathon are common items on the “personal” resolution menu. However, is it time to add energy and resources to your resolutions in order to improve the health of your business? Read the rest of this entry “
As a small business owner, you may have started your business because you have a passion for your particular business/industry or you may have had the desire to “take the plunge” and be your own boss. Income taxes, payroll or financial reporting were probably not anywhere on your list of top reasons to own your own business. However, these three items along with many others fall under the umbrella of accounting services, and require the training and expertise of a CPA. So, since your business needs these services, what should you expect from a CPA? Read the rest of this entry “
During the recession, the fiscal cliff and the so-called recovery, did your business develop cracks in its foundation? If you answered “yes,” you are not alone. Many businesses of all shapes, sizes and industries are still trying to rebuild cash flow strategies and bottom line results. Read the rest of this entry “
Outsourced CFO Services Support Small Businesses
Do you ever feel like you can’t seem to get your arms around costs? If so, you could probably benefit from the skills of a CFO. The following are other signs that you may need a CFO:
- You regularly bounce checks.
- You don’t have immediate access to financial information when your banker asks for it.
- Your budget and forecasting is lacking.
- As an owner, you have your hands in too many things to focus properly on your finances.
- You can’t answer the question, “How much money did you make yesterday?”
Most small business owners face at least one of these issues; however, they don’t have the need or resources for a full-time CFO. These owners often rely on a controller, bookkeeper or office manager to manage the internal accounting function.
Sound familiar? If so, you need to recognize that even though these people can do an excellent job for you, a CFO can bring additional skills to the table. You’ll probably wonder how you ever got by without this kind of person. Read the rest of this entry “
There’s no such thing as a free lunch… but a little planning ahead can make it a lot cheaper.
Let’s say you go out for lunch, on average, twice a week. At $8 per meal, you’ll spend more than $800 in one year on those lunches. And if you add in a weekly dinner out ($20), you’ll spend upwards $1,800 per year in restaurants. These little indulgences – fast food here, a sit down dinner there – add up and wreak havoc on your checkbook – and possibly your credit. Read the rest of this entry “
Contrary to popular opinion, profits are not the pulse of business. You can’t spend profits. Most companies go out of business because they lack quality cash flow — not because they lack profits or assets. Read the rest of this entry “
We’ve all been in a networking situation where we’ve forgotten the name of the person we just met. The contact ends, the potential connection is lost and with it, any hope of a business or social relationship. How you deal with people’s names in a social situation can have a profound impact on their impression of you. So what can you do to improve your ability to remember people’s names? Read the rest of this entry “