business finance Archives | Page 2 of 12

How Business Consultants Can Help America Compete

Think of your latest large purchase. Was the technology or production based in the USA? Recently we purchased a Panasonic plasma flat-screen. Panasonic is based in Oaza, Kadoma. The other options were flat-screens from Mitsubishi and Samsung.

Why no USA? It may not surprise you to see that the USA has fallen from 1st to 4th in innovation-based competitiveness according to the Commerce Department. This conclusion prompted the America Competes Reauthorization Act which reported that research, education, and infrastructure has been neglected in the US.

There are many reasons for the poor US showing, but instead of pointing fingers, business consultants should be working with their clients to help innovate. Even though the report list recommendations concerning government commitment, business consultants can play a role on a micro level. Here are a few of the report’s recommendations and the possible role of a business consultant:

Support regional clusters: Though the report encourages all levels of governments to support regional clusters (like Silicon Valley), a business consultant can facilitate the development of a regional supply chain of a client. “Just in Time” inventory system is one example where a business consultant can facilitate a client’s processes.
Accelerate high-growth entrepreneurship: The federal government’s Startup America program seeks to match businesses with resources. A business consultant, however, can position a client’s strategically to take advantage of such opportunities. What resources are available in a particular industry?
Promote exports and access to foreign resources: A business consultant can make a large contribution to a client in the area of exports by advising the client to register with the US EXIMBANK. The government agency insures foreign receivables allowing clients to finance their manufacturing of products to be exported.

Business consultants can play an important role in facilitating business development. Small and medium sized businesses must innovate with the view of creating a market segment where competition is (at least temporarily) irrelevant.

A recurring problem though is that most business consultants can’t implement the strategy. That is where CPA/strategists dwell. An external CPA could implement a strategy that he/she has designed.

The business consultants who are advocating this strategy during the Great Recession are now becoming industry leaders in the Great Recovery. If you, as a business consultant, have not already been promoting an aggressive strategy, then already you are behind the curve.

Employee Development of the Cucci

I worked in my grandparent’s Italian Restaurant from ages 13-18. I started by pointing arriving customer cars to unpainted stalls in the dirt parking lot. When I graduated to busboy, my grandfather personally trained me. Imagine George C Scott as General Patton on a bad day. That was my grandfather’s system of training employees. If I survived, I walked out with the skin of alligator. I was then well-equipped to work for anyone. However, when I screwed up, he called me a jackass in Italian, “cucci.”

As a business owner, I take great care in training my employees. Alix Stuart’s article, 7 Easy (and Cheap) Ways to Develop Employees offers some advice, some of which I don’t agree with.

Set up a feedback framework. This network deminishes in importance with smaller businesses. Usually, companies with 20 or fewer employees that work at a single site, communicate better unless the owner has an ego.
If you’re planning to hire, share with the team how the organization will likely evolve over the coming year and give them a sense of what opportunities might be available. We strategists call this “Tier 3” of implementing a strategy. Tier 3 is the alignment of the plan at the employee level. Available opportunities should be a part of this.
To build communication skills, regularly ask people in your group to stand up at staff meetings and give a brief overview of what they’re currently working on, with the right context for the group. I disagree with this. Meetings are such a waste of time. There are so many opportunities to communicate in smaller workgroups. If you want other departmetnts to know what you are working on, send an email or newsletter.
Help staffers develop a two-minute “elevator pitch” on your company, and have them present it to you and to others in meetings for practice. This may have some benefit, but I believe the downside outweighs the practice. Not everyone is a sales person. They should understand the company vision, but not practice reciting it.
Let a finance staffer tag along when you make customer visits. Again, this advice seems to try to develop a person outside of their expertise. If there are finance issues, then the finance person is valuable. But, only in that case.
Get everyone in finance to regularly help with certain tasks that might otherwise fall through the cracks. This type of cross-training can be valuable. Never train only one person to do a task. If that person were to leave, it could cripple your business. In finance, it is an invitation to fraud.
Encourage employees to ask their managers, “What’s on your plate that you don’t want to do?” and to then find a way to get it done. It is hard to find employees that ask to venture out of their comfort zones. The ones that do are golden.

Employee development is often overlooked, but just like in football, it’s what’s up front that counts. My grandfather knew that concept, he just had his old ways from Italy of implementing it. By the way, he would still think of me as a “cucci” if he were alive today. We all miss him.

Jeff Bridges: Be an Actor or a Singer, His Skills Are Transferable. And In Business, So are Yours

Many articles surfaced earlier this year about Jeff Bridge’s crossing over to country music. Some were not flattering. For example, theweek.com quoted comments that branded Jeff as “country-lite,” and “a troubadour tourist.”

But the critics missed the biggest point about Jeff Bridges. Back in the late 1980s I work on the Bridges family(Lloyd, Jeff, and Beau) in a business management firm. I remember my boss commenting about Jeff being the consummate artist. He said Jeff knew what he loved to do (act) and did it intensely. He also mentioned that Jeff’s wife, Susan, took care of the typical things in life and family allowing him to pursue his career unheeded. It is no surprise that Susan was the first person Jeff acknowledged after receiving his Oscar.

But the critics missed the point. What Jeff demonstrated, was that he could transfer his artistic skills from one medium to another. The movie Crazy Heart was just his first vehicle, and it won’t be his last.

The same can be said for anyone today, whether an artist or small business person. This is echoed in 8 Tips: How to Make Your Company And Career More Dynamic by Shira Levine. In the article, Shira quotes James Marshall Reilly who says:

“We’re lucky, because these days, our skills are more transferable. ‘Advances in technology have facilitated easy access to self-education and idea exploration,’ he says. That makes it easier to take information we’ve previously learned and apply it to other ideas, concepts, industries and businesses. ‘These iterations allow the individual to grow intellectually rather than stagnate in one position,’ says Reilly. ‘They also allow for the influx of new ideas to established fields as people move around and infuse new lines of thinking into conventional and often rigid spaces.'”

The Reilly article equates our current society status to the Renaissance period, when there was an explosion of ideas in society leading to leaps in the area of art, science, literature, etc. If he is right, then everyone reading this article, no matter what you profession, has the opportunity to be a part of it.

For example, if you are a singer/songwriter, are you just trying to match the path of those before you, like acquire a recording contract? Or how about a small/medium sized business? Are you evaluating every new technology in light of how you can change your company?

Looking at our CPA practice, we have done just that. Many companies cannot afford comptrollers and an accounting staff due to the economy. What we have devised systems that provide accounting, tax, bookkeeping, and access to any of our financial affiliates. We have leveraged the current paperless and remote access technology, among other things, to provide this service.

The skill transfer also surfaces from our entertainment industry experience. As business managers, we sometimes deal with all financial aspect of entertainer’s lives. We have transferred that skill to our small business clients if needed.

You don’t have to be an actor to transfer skills. The pallet of gifts are there for you to use. You just have to grab the brush and execute a strategy.

EXIMBANK, A CPA Perspective: Small Can Be Global with a Little Help From Your Government Friends

Around 1993, as a CPA I played a pinnacle role in trying to bring 100,000 jobs to Los Angeles. I worked with four non-CPA partners, Chemical Bank, the Dept of Commerce, the Dept of Labor, and Senator Barbara Boxer to use the Export-Import Bank of the United States (EXIMBANK)to insure foreign movie presale contracts. We didn’t prevail.

However, as a CPA, what I learned was EXIMBANK is a great partner to a small business aspires to go global. Their site says, “Global Access for Small Business is a top priority of Ex-Im Bank. This initiative is dedicated to dramatically increasing the number of small businesses exporting goods and services to maintain and create U.S. jobs.”

As a strategists and CPAs, we involve ourselves on various levels of business. One option we suggest for manufacturers in increasing their top line is EXIMBANK. They are a US agency that insures foreign receivables. A small business in turn secures a business loan with the insurance policy removing risk from the bank. If the foreign customer doesn’t pay, EXIMBANK pays off the bank loan.

In 2010, more than 700 small businesses used EXIMBANK to sell their products overseas. By 2015, EXIMBANK aims to approve at least $30 billion in small business transactions.

CPA financial statements really don’t tell a small business owners very much about strategizing. So, we look beyond the horizons and advise small business where they can prosper. In addition, as CPAs we have an obligation to help create jobs with our strategies. EXIMBANK reaches both of these objectives.

What is the Difference Between a Business Plan and a Strategic Plan?

Business plans are very familiar to me. I receive calls from time to time to design one for individuals who have potential investors. In doing so, I try to incorporate some form of a strategic plan in the product because new entrepreneurs rarely think on that level.

Business plans and strategic plans are different though. Take Johnson and Smith’s book 60 Minute Strategic Plan for instance. They state that, “a business plan is [used] to evaluate teh viability of a business…Business plans keep the company on its rails as it relates to key tactical financial and operational ratios…In a word, a business plan explains the ‘what.’

Johnson and Smith contrast strategic plans as “requiring leadership and inventive thinking and assume higher risks, leading to higher rewards. The strategic plan is an internal leadership tool used to plan a course of action to address unanticipated problems or opportunities…” In other words, it explains the “why and how.”

Bill Birnbaum, author of Strategic Thinking distinguishes the two types as strategic thinking and tactical thinking. I would have to side with his distinction between a strategic plan and business plan. The strategic plan is used to help you decide what to do, and the business plan (or company budget forecast) is used to decide how to do it.

If you are a small business owner, or an entertainer, the concept is the same. Strategic thinking will make you focus on the needs of your customer, how your product benefits your customer, and the reason why a customer would want to buy your service. Or as Birnbaum states it, “In thinking strategically, you’ll be concerned with doing the right things, rather than doing things right.”

Let’s take an entertainer for instance. I am meeting next week with a recording artist who wants to stand out. What we will not look at in the recording industry is what is being done now. The reason why is that why duplicate things that are working in an industry that is moving a break-neck speed, or duplicate business models that are not working? No, instead, we will be exploring her talents not only in the recording industry, but other industies with the vision of producing a specific message about who she is.

The same goes for small business. If you want to be an industry leader, you must distinguish your strategic plan from your business plan. Using Jim Collin’s phrase, you will never achieve your “Big Hairy Audacious Goal” (BHAG) if you are 1) duplicating what others have done in your industry, or 2) just doing an annual budget. The annual budget is contained in the Annual Operating Plan (OAP) which must move an organization towards teh BHAG.

If you want to move your career and/or business beyond your competitors, you must start thinking strategically by implementing and executing a strategic plan. If you are one who only focuses on the future business plan or budget by looking in the past, you will be on operating on a financial treadmill. You may seem like you are moving forward, but all you will be doing is spinning your wheels.

Business Opportunities: Gas Stations Making Their Own Music

Back in the 1960s, it wasn’t unusual to find four gas stations at an intersection in Los Angeles. These were full service stations who would fill your tank, wash your windshield, and check your oil. You would also just hand them your money (not credit card) from your open window to pay. These stations would try so many ways to attract customers and build a niche market in their neighborhoods.

Union 76 (currently Unocal) distinguished itself by creating a relationship with the former Brooklyn Dodgers. Union 76 would give away many different types of Los Angeles Dodger’s baseball memorabilia when you purchased a certain amount of gas. One such item was a flexible 45 rpm record of a Dodger player interview. Vin Skully would interview a Dodger player like Sandy Kofax. Union 76 had found a niche market with Dodger fans–forget about the gasoline.

Jon Ostrow’s article, How To Conquer Your Musical Niche reminded me of Union 76’s niche serving with automobile/Dodger fans. He laid out a number of items that a band should consider:

Demographic (age, gender location)
Similar / influential artists (remember to start locally, then branch out to the regional, national and global scale)
What are the influential promotional outlets?
Where do the fans exist online?
What blogs do they read?
How do they find out about new music?
Are they into fashion? If so, what brands?
What are their favorite hobbies?

At first glance, you may think this pertains to only musicians. But, look again. Here is the list converted to a 1965 Union 76 strategy:

Demographic (age, gender location)–Are they near a freeway that can lead to Dodger Stadium? Are they male?

Similar / influential artists (remember to start locally, then branch out to the regional, national and global scale)–Unocal may have start in certain neighborhoods and branch out.
What are the influential promotional outlets? Use Dodger radio to advertise Union 76 items.
Where do the fans exist online? What radio stations do Dodger fans listen to?
What blogs do they read? Advertise in the Sports Page of the Los Angeles Herald Examiner.
How do they find out about new music? Who do auto owners learn to about gas? Mechanics? Make sure each station has one.
Are they into fashion? If so, what brands? Sell Dodger hats at the stations.
What are their favorite hobbies? Unocal hit the head of the nail with Dodger fans.

Each business or band can use similar questions in nailing their niche market. The Blue Ocean Strategy is a strategy concept that can help you in searching for it.

The Prowess of Small Business Job Creation

I have spent almost my whole career owning or working for a small business. My family has a long entreprenuerial history in many different trades and businesses, from restaurants to contractors. Most of these businesses, though were in the service sector. But what about manufacturing?

You hear it all of the time, especially in California, that manufacturing is leaving the United States. But, according to Small Business Labs, “Over the next five years, a U.S. manufacturing renaissance in home appliances, car parts, and other sectors could accelerate—boosting output by $100 billion and adding 2 million to 3 million jobs.”

We heard all of layoffs by big corporations, but the driving factor is really small business. “So, if GE and other large corporations aren’t big players in job creation, who produces all the new jobs in America? The answer is small business.

These businesses do everything, including building most of the houses constructed in America. Small business employs 67 percent of the private-sector workforce and pays out 44 percent of the private payroll. As the population grows, small firms provide the bulk of the new jobs needed. For many, small business provides their first experience in the world of work.” (Dunkelgerg, philly.com, July 4, 2011)

What this means is that growth is in the wind for small businesses and labor will be a major factor, especially for manufacturing. Small business is defined by the SBA as one that has fewer than 500 employees. For an owner, this means the following:

As stated in previous articles, don’t build the business around you. Train others to perform your duties allowing you to supervise and grow your business. This especially applies to the manufacturing sector.
Don’t be afraid to hire people that have skills in other industries. You may have to spend a little more time training them, but they can bring a new perspective to your industry. “Outsider’s eyes” should be welcomed.
Incorporate increased employment into your strategy instead of the knee-jerk reaction of downsizing. Sometimes you have to downsize, but reinventing you business may not only save jobs, but create new ones.

Small businesses, whether in the manufacturing sector, or service sector should never cave into current economic hysteria. A level head with good strategy and tactics will usually be the better mindset.

Where Do We Go From Here? Strategic Planning In the Fog

The yellow bus lights glowed in the dark as my only beacon. I couldn’t see 20 feet in front of me on Highway 99 in the central California valley, but we had to get to Lake Huntington. The four cars packed with my companions followed my lead. At last, I saw the exit. Moving off the highway onto a dark farm road, my concern peaked. Where were the street signs behind the foggy shrouds? At last I stopped at an intersection and was able to see a sign, but only after I stood in the middle of a dark intersection looking almost straight up.

If you have been planning for the last three years, this story should sound like your attempt to plan strategically. Hugh Courtney’s Strategy under uncertainty lends us a flare in such dismal times. He offers a four-level framework for determining the level of uncertainty surrounding strategic decisions and for tailoring strategy to the uncertainty:

Level one: A clear enough future: Courtney states that managers can use the usual strategy tools in a clearer future as this. However, I see that medium and small businesses do not know what those tools are. The biggest private producers of jobs in this country, small business, usually work in a strategy void. Thus their decisions and plans are usually uninformed and a product of crises management even in the best of times.

Level two: Alternative futures: Outcomes are clear by hard to predict. Take the Ford Edsel, for example. The car seemed like a good strategy with a ready market, but it went the way of the do-do bird. This is where probability analysis can come in according to Courtney. For small businesses, look at the downside to each alternative. Is one downside greater? You may want to go the other way.

Level three: A range of futures:Taking Courtney’s cue, small businesses must limit their strategic options. Don’t take the shotgun approach and consider ten different strategies, for example, because you can. Your brain will explode, not a pretty site. Again, focus on the downside of your options.

Level four: True ambiguity: This option happens in an economic free-fall, or at least a controlled fall. More than ever, I recommend small business to take a Blue Ocean Strategy viewpoint and focus on the needs of your clients. Eliminate those attributes that your industry is providing clients that they can live with, e.g., meals on a commuter flight. You can take this approach for any other above levels, but at this level, it is usually a matter of survival. The wrong decision could land you in bankruptcy very quickly.

If You Are Reading This, You’ve Proved My Point

Last January, I again participated on the planning committee for the 2011 Entertainment Industry Conference for CPAs and attorneys. We agreed on most of the usual topics to be presented at the conference. Then, I suggested social networking. The idea was written on the board.

Fifteen minutes later, a respectible CPA turned to me and said, “Rick, I know social networking is a sexy topic, but I doubt it is what our attendees are looking for. They won’t come away with anything.” I nodded my head and thought to myself: Thank you. You just gave me an extra 12 months to blow my competition out of the water using social networking and SEO.

Skeptical? 5 Key Social Media Findings That Affect Your Business by Glen Stansberry lists some new findings:

1. Americans spend most of their time online on social network and blogs–If you are reading this blog, you have contributed to the 23% statistic that more time is used reading blogs and social networks than checking emails. You may have also found me because of what I have been doing for over a year. Writing

2. Seventy percent of active online adult social networkers shop online–Sell where your buyers live, online. We are all going there. Have a bigger presence than your competition.

3. Fifty-three percent of active adult social networkers follow a brand(only 32 percent follow a celebrity)–Adults follow brands across social networks.

4. Sixty percent of social media users create reviews of products or services–When was the last time you reviewed a book on Amazon, or rated a restaurant on Opentable? You are contributing the movement. If your business is not on there, then you are behind the curve.

5. The number of mobile Internet users is up 47 percent from last year–I have actually trashed a rude restaurant that made us wait an hour beyond their seating estimate. We were outside with our 85 year old father-in-law on Father’s Day in the dark. My bad review went into Yelp before I reached my car in the parking lot.

If you are resisting the social network, SEO revolution, you are risking the well-being of your business. But, before you jump in, do some research and learn. There are consultants that can help you. Then, create a strategy and stick to its implimentation. Your online presence will not increase overnight, but the constant creation of content will get you noticed.

Small Business Promotion Using Social Media–How We Did It

I couldn’t believe it. Well, actually I could, but I didn’t want to. Gregg Towsley of WSI Quality Solutions sat down with me me 18 months ago and showed me that my business’s social profile was dead. In other words, if you typed in industry key words, we didn’t even show up on ANY page.

I came across What Drives Small Business Social Media Engagement? by Dan Schawbel. He cited a study by Roost which offered advice to small business owners who want to create brand awareness, customer, acquisition, and customer services.

Using only Facebook and Twitter, the study suggested the following:

Publishing photos: The study suggested photos of employees, products, and functions. I remember when I first put up our web page, our most valuable search term was my assistant Maddy Curley. She was an actress that had (and has) some success on television and film. People googled her after seeing her on a TV episode and came up with her picture on our personnel page.
Ask Questions:Start a discussion by asking questions. You see this a lot on LinkedIn. I feel that providing information along with questions is a better strategy. What do you think?
Share Quotes:There are way too many twitter sites and blogs quoting wise people. I don’t like to. I find it is far more interesting to coin my own phrases that display my expertise. You don’t convince others of you knowledge and wisdom by using someone else’s brain. (You can quote that).

The main activity that got our firm on the front Google page ahead of CPA firms much larger than us is our content and consistency. To be successful, you must give to the business community. We provide advice and steps to individual businesses that can help them in managing their finances.