Providing CFO services in Delafield, WI and surrounding areas

There has been a lot of focus at this time of year regarding Not-For-Profits (NFP).  The Wall Street Journal devoted a whole section to them today.  Wayne Breitbarth featured his weekly Linkedin E-mail on how to “pay it forward” to your favorite NFP.  During the holiday season, a lot of us donate money and goods to charities who do a lot of the good work in our communities.   Some are NFP organizations like the Salvation Army or Pregnancy SupportCenter.  Others are our churches, parishesor synagogues.  Each and every one has to assure that the money and treasure they receive is invested properly in the services that they provide.

NFP’s are typically staffed with volunteers whose skills may not match their enthusiasm or staffers whose pay is below what they could earn in a profit making environment.  Overhead expense, a tough issue with For-Profit organizations is the “Third Rail” for many NFP’s.  Keeping it low – with a target of 10% to 15% is difficult enough without the demands modern donors have on fund control.  Depend on the outside accountants, and they risk damaging their audit independence.   So how do you maximize your mission impact while providing the controls necessary to assure donors and directors that the money received by the NFP is being spent properly?  Where do you spend money for the “right” investments in overhead?  Make the wrong decision and you become a headline?  The news is rife with NFP’s being subjected to fraud from trusted employees or volunteers, theft of cash donations, and misspending.

Hiring a full-time CFO to monitor the expenses and the donations isn’t an effective use of cash – not when local NFP’s can “Share” a CFO with the skills and abilities to make an impact on the organizational controls, enabling the outside accountants to remain independent for their audits and assuring the Board that the monies coming in – and going out – are having their intended effect.  So a B2BCFO is the BEST alternative for most NFP’s who are looking to wisely spend their donor’s money and treasure to make the biggest impact during this Holiday and every Season of the Year.  If your NFP doesn’t have one, perhaps you should introduce them to a B2BCFO.  It could be their best present ever!

Zombies get a bad rap!  Sure they are the brain eating undead.  But they have many attributes that make GOOD businesses GREAT.

First – Zombies are always after brains.  That is what they survive on.  Great businesses thrive on brains – smart employees
build strong companies.  Great managers always try to hire workers that are smart and capable as well as retain the
best and brightest of their employees.  Smart employees solve problems and create opportunities.   Great businesses are focused on getting brainy employees and enabling them to apply their brains to their work.

Second – Zombies are very mission focused.  They really have only one purpose – to make more zombies.  Good businesses are focused as well.  They know what they want to do and do it well – and they don’t get distracted by opportunities that don’t fit their mission.  One of the ways that they stay focused on their mission is the make sure that each and every person who works for it.  If your team doesn’t know their mission, they aren’t as focused as a zombie.

Last – Zombies are team oriented.  Who hasn’t seen a zombie movie where the a mob of zombies engulfs the innocent victim.  GREAT companies build a team that includes solid suppliers;  smart, focused employees; and customers whose expectations are being anticipated and met.  The  most important aspect of teamwork is a shared sense of accomplishment – the win is due to the efforts of each team member doing their job.

Zombies can be disgusting, sure.  But they also have attributes that can build a GREAT company – They thrive on brains, they are mission focused and they are team oriented – sharing success with each team member.

As a CFO, I often talk to my clients about their METRICS – the key numbers or performance indicators that they use to decide and control the direction of their company. The analytical indicators should, and often do, change over time. The rule of thumb that may have worked ten or even five years ago simply no longer hold true today. Organizations that have learned to change their key metrics to support company-wide decision making have focused on seven basic principles to create, adopt and retire metrics enabling their companies to generate and retain more value.
1. Measure where you are – Understand the company’s current state and pick a starting point for implementation of metric based performance. An honest, third party assessment is the first step in understanding your current capabilities – and the gaps that need to be closed. A B2BCFO Phase One analysis provides a firm foundation for that understanding.
2. Enhance visualization– The method of presenting information is just as important as the information itself. It must be in a format that engages, and is easily understood by, the user. Good data presentation promotes follow-up questions to find alternatives that may otherwise be overlooked.
3. Think crunchy questions – Knowing which questions to ask to develop the most relevant and valuable insights is the foundation of any initiative. Crunchy questions, ones with real substance that require some chewing, are often best asked by someone who doesn’t have a stake in the answer and has a broad business background to apply situations from other industries. A B2BCFO can ask those questions and provide context to explore the answers.
4. Right-fit analytics – Invest in tools that fit now and that will be flexible and powerful enough to grow with the organization. Train your organization in efficiently using those tools so that their creativity can be unleashed.
5. Insight Acceleration – It is essential that your systems automate the information delivered to processes and people. Information that has to be handled, or manually adapted, slows decision-making and increases the cost of subsequent action.
6. Carefully Listen and observe – Signals are everywhere and the ability to decipher and integrate these signals into a coherent reflection of performance is vital.
7. Shape a fact-driven culture – To operate in today’s complex, highly regulated business environment, leaders can no longer just “trust their gut” because “guts” can often be wrong. Fact based organizations benefit from 360 degree vision – the hindsight to learn from the past, the insight to benefit from current conditions and the foresight to build for the future. Leading organizations are building a fact-driven culture to drive streamlined accelerated execution – and execution is the key.
Metrics can be a tool to accelerate your company’s performance. They can provide objective measures of success and help you to determine the direction your company can take to avoid the fallout from the current economy. You should first determine where you are and where you want to go before establishing the key measurements of your organization. A Phase One study is a good place to start. Normally the study would cost $1,600. As a newsletter subscriber it is a free service that I provide. Call today to schedule your Phase One, so that your firm can have “Direction, and Then Velocity”

“Sacha White is a rock star in the elite, $100 million handmade-bicycle industry” wrote Toni Greaves for The Wall Street Journal

Sacha White  runs a Portland, Ore. custom bicycle maker “Vanilla Bicycle” .  They are known for their smooth ride and speed and for a unique look that blends retro features and unusual paint colors with hand-carved lugs and silver bonding. Customers wait five years and spend from $5,000 to $12,000 for his creations.  Mr. White, 34, won’t say what he earns, but the company sells about 50 custom bikes a year plus almost 100 of its newer Speedvagen line, which is built in-house by other frame makers, all of which would generate about $600,000.

The most important decision he made was to concentrate on the business.  He hired two people to take care of the business side of the shop. “The big thing I have learned is to free myself up to do what’s important to me and what
I enjoy.”

It is hard to know how important this decision was in his success.   It wasn’t until a friend won a cyclo-cross race on a Vanilla bike that Mr. White felt confident in what he was doing. When friends of friends started requesting bikes, he turned his hobby into a profession.  But by getting the right people involved in running the business side, he is able to explore more options and build his brand’s identity.  He knew that just because he owned the company he didn’t need to be an expert in everything.

Most business owners I meet that are challenged by the current business environment believe that they have to be experts in all aspects of their business.  As a result, they start to hate the company that they own, the finances, the accounting, the human resource issues, the customer complaints and the vendor arguments.   Most business owners know how to sell stuff or make stuff – and their way of doing it makes their companies special.  Being able to get back to concentrating on that specialization can make their business fun again….and more profitable.

Your insurance agent can often offer great advice on how you can control your insurance costs.  These controls rarely create immediate improvements in your rates – they demand consistent application over time.

One great piece of advice I got from R&R Insurance is knowing your employees driving record.  If you have employees who have to drive a company vehicle, you should be reviewing those records on a regular basis anyway, and having alerts placed on them for any changes that may occure.  But if they drive forklifts or non-over the road vehicles, you should still pull their driving reports.  Why?  If they are poor over the road drivers – speeding tickets or other infractions – that same lack of care will show up in their forklift driving.  Once manufacturer in our area significantly dropped claims for forklift damages after they implemented a review process.

I recently had my eyes checked as part of my annual physical.  The Optometrist was able to make minor changes in my prescription so ensure that I had 20-20 vision.  Annual checkups are important for your personal health and vital for your company’s health.  Checking your company’s Vision annually is the first step to maintaining your corporate health.

August is the best time of the year for business owners  whose companies are on a calendar year end to sit down with their B2B CFO and “check” their corporate vision in preparation for the annual planning process.  Evaluating how your company perceives, and is viewed by, the customers, vendors and industry that it serves is a vital first step in directing the company’s activities in the coming year.  If the company vision no longer fits the world around it, performance will be impaired and resources and opportunities will be squandered.  Why a B2B CFO Partner?  Because it is the world’s largest CFO services company.  As a local partner, I can bring my own experience as well as the over 5,000 years of cumulative experience of my fellow partners to bear on the challenges your company will face next year.

So ask these three questions to see if your Vision still is 20-20:

How will changes in the economy change my industry? – For example, a few years back most of the construction in our area was
government funded, so being able to compete for government contracts was key to the growth of contractors in the area.
Now, with budget constraints, private construction may lead the demand – how does this affect your company’s competitiveness?

Has my competition changed? – If the economy has closed a number of your competitors, how did their vision differ from
yours?  What are the competitive advantages of the survivors?  How can your company capitalize on its strategic differences to continue to survive and grow?  What opportunities are available now that the competition has changed?

Has my company changed? – Just as your competition changed to react to the competitive environment, your own company may have changed, perhaps in ways that you didn’t notice since the changes may have been gradual.  Do you still have the expertise
that you need to support your customer base?  Have your suppliers changed and can they support your growth?  Have your customer demands shifted and if so, will that shift continue?

All of these questions should be addressed in looking at your company vision.  At one time, Myspace and Facebook were perceived as identical, but as the environment changed and the consumers changed, Facebook continued to tweak its vision to meet the expectations of its consumers.  And that is the point, slowly changing the vision of your company will continue to make it relevant and vital as the economy changes around it.

Having a CFO put dollars to that vision and then help implement that vision to accelerate your velocity will be key to generating and retaining more cash in the coming year.  If you don’t have a CFO, isn’t it time to explore how affordable a B2B CFO can
be?  And if you know a company that doesn’t have one, perhaps introducing them to a B2B CFO may be the best advice you ever gave them.   The Phase One analysis is free, but the benefits of having your own CFO can last forever.  Call 262.271.2522 today for a consultation or e-mail @ dbuslee@b2bcfo.com.

For those of you who have received my newsletter in the past, one issue keeps coming up.  Employee Fraud.  You can call it what you will – Malfeasance, Theft, Misappropriation, whatever – the plain fact is that it is running at an all time high and most, if not all, business owners turn a blind eye to it.  The Milwaukee Journal Sentinel reported on May 21^st 2011 about a recent occurrence at Wisconsin Kitchen Mart that is a text book example.  This follows on the heels of the massive fraud that occurred at Koss Corporation which is still getting settled.

At Wisconsin Kitchen Mart, their longtime bookkeeper systematically had stolen more than $600,000 over 5 years.  Who was this person?  Statistically she EXACTLY fit the Fraudster profile –a long term employee “soccer mom” –  she was someone that the owners “treated like family”.  At sentencing, Judge DeMotto said “The depth and breadth of dishonesty here is breathtaking in its level of betrayal and greed”.

The problem is that it is happening right now at companies all over Southeastern Wisconsin.  Business owners are depending upon unsupervised bookkeepers to keep their books, cut their checks, and reconcile their banking accounts.  The bookkeepr is presiding over a mountain of cash, with no one watching them.  Owners have given their most trusted person the keys to their accounts and not provided sufficient oversight to eliminate the opportunity.  Owners don’t have the time or training to oversee their bookkeeper. The real problem is that it isn’t the crazy pierced guy in shipping that they have to worry about stealing from the company.  It is the “soccer mom” that has been doing the books that you consider part of the family that will literally steal you into bankruptcy.

“I have an accountant look over my books” each owner will say.  Didn’t Koss?  Didn’t Milwaukee Kitchen Mart?  Of course they did!  But “doing the taxes” isn’t a check for potential fraud.  Most financial reviews and audits don’t include the steps necessary to uncover fraud.

In a recent poll of the 192 partners of B2B CFO, 57% knew of one or more businesses who had been defrauded of more than $20,000. 66% of the perpetrators where either the accounting staff or upper management – the trusted employees of the owner – who had been with the business at least 4 years or more.  But the most stunning statistic – 93% of the partners believe that they have current clients who could be victims of fraud!  And yes, sometimes that fraudster can be their wife.

There are lots of red flags to fraud – questionable financial statements, Balance sheets that don’t balance, receivables that never
seem to be collected, strange payables…they go on and on.  I will be happy to educate any organization, for free, what most of those red flags are and how to prevent them.  But the first step is to recognize that you may have a problem.  Are you, as an
owner, placing one or more employees into a position where they have the opportunity?  Do you have the ability or time to really detect questionable activity?  Most frauds are uncovered by accident…because the owners simply believe that it can’t happen to them.

How much could it be costing me?  Koss is a company with annual sales of approximately $35 Million.  It was their credit card company that uncovered the activity of a fraud estimated at over $30 million.  Small Businesses have a significantly higher rate of fraud AND the dollar value of the fraud is, on average, much higher than for a public company.  Most significantly, if a company has been the victim of a fraud they are statistically MORE likely to experience fraud within 5 years after the initial
fraud.  Why?  Because they never fixed the root problem – they think their problem was a person, not a process or procedure.  I brought this fact up to a networking group I belong to and had two unsolicited local examples of the “repeat” phenomena
given to me by the five other members.  Can you get “fraud insurance”?  Yes ,you can.  But it typically doesn’t cover the extent of the loss and, dependent upon the source of the loss, may be covered at all.

What is your best protection?  Good processes and procedures.  Consistent oversight by a knowledgeable and trained individual who isn’t a signer on the bank accounts.  Prompt action when detected.  What is the best protection at the lowest cost?  A B2B CFO is the best value, where protection comes along with the “Cash. We Help You Get It™” work ethic.

Nine out of ten Fortune 500 companies use them, more than any other management tool.
Why?  Because the cost is small and the benefits are many.

Externally, the mission statement serves as a beacon in the fog.  It provides management a focus when they are faced with uncertainties due to corporate expansion, competitive pressures, or industry regulations.  Internally, it demonstrates leadership and helps to inspire employees.

Every organization needs a written mission statement, especially a small business.  While the boss may manage the company intuitively, the mission statement articulates that intuition and endorses it as company policy.

The Mission Statement describes your company, sets the mood, defines the corporate culture, and helps perpetuate favorable work methods.

In short, it serves as a guidepost on the road to success.

By Robert Grede  www.robertgrede.com

Recently I read “Why a Good Script Is Like a Thong Bikini” by Katie Welch, an article in the Wall Street Journal.   In it she says that screenwriting is like a thong bikini because it has to cover a lot of ground with as few words as possible.

If screenplays are the thong bikini of writing, then a Strategic Plan is the thong bikini of the business world.  It should clearly state the purpose and direction of the company in as few words as possible so that it can be easily communicated.  Too many words, especially jargon, make the plan hard to describe to those who need to implement it.

A Business Plan is like a thong bikini because the process of developing it exposes the areas of the company that need work.  Just like there are some body types that shouldn’t wear thongs, some company’s need to look at themselves and see if
they are flabby in important areas.  The company needs to have the plan available so it can track its fitness as it approaches its goals.  Just as important, it needs to keep trying it on so as to expose and address any lack of fitness that may develop.

A Business Plan is like a thong bikini because it provides an objective view of success.  Everyone can easily see when the bikini fits and when it doesn’t.  A poorly tailored thong doesn’t fit, just like a poorly tailored strategy worn’t fit the capabilities of the company. Everyone can tell if the company is following their stated goals, or drifting off into the cream pies.  If it is shared with the outside world, you need to be sure the plan, like a thong, covers the key areas of the company’s performance and keeps sensitive data private.

So why is a Business Plan like a thong bikini?  Because it is clearly written and as small as possible to address the goals of the company.  It should expose and address the weaknesses of the company and provide objective goals to measure improvement.
It should provide an objective view of success so everyone can see the company is meeting its goals.  But most importantly, it is something that must be tried on over and over again – if styles (or strategies) change, you have to be able to adjust your plan.