Improving the financial literacy of your leadership team can provide significant benefits to your small business, including better decision-making, improved financial performance, and increased strategic alignment. Here are 20 ways to increase the financial acumen of your organization: Provide financial education: Provide your leadership team with financial education resources such as articles, videos, webinars, or […]
It has certainly been an interesting time to be a in a business leadership position these last few years. Every time you thought you had something figured out a new challenge arose. It was hard enough dealing with COVID-19 then we had to deal with a broken employer-employee model. In addition, economic conditions have been […]
Courage still matters in business and in life. Many of us avoid the difficult decisions or talk ourselves out of taking risks. We strive for comfort where only pain and discomfort exists. It’s better to bet on yourself and your business and accept the consequences then to live in someone else’s shadow or become another fish in the pond of mediocrity.
Leadership isn’t easy or everyone could do it. Some talented people make it look easy, but we often don’t see all the hard work that goes on behind the scenes to make it look this way. Most leaders struggle at some point and have to learn some difficult lessons along the way. Experience can be the best teacher if you are open to learning. I’ve observed the following 25 ways (in no particular order) that leaders tend to get themselves in trouble:
No matter how far out the tide goes, all waves come crashing back to shore. The same is true with business cycles. We have experienced a particularly good period in business over the past decade or so. After experiencing a difficult recession, our economy roared back to life. Many of us have not only regained […]
As we wind down another year, I thought it would be useful to share some best practices I have observed over the years by leaders who tend to end every year on a high note:
Here are a few basic truths abut business to help ensure your success: It all starts with simple math. The formula is pretty straightforward: Revenue – Expenses = Profit. You need to sell enough of something and price it properly so that it exceeds your costs of doing business. Knowingly taking work at a loss […]
How an organization makes decisions greatly affects whether or not it will have sustained levels of success. Any company can get lucky every once in awhile, but relying on ad hoc judgments is not a good strategy. One of the most important things a leader does is make decisions. He/she must also create a culture that knows how to make sound judgments without relying too much on any one individual. In essence, you want to foster an environment where you, your management team, and other key employees use decision making filters to increase the likelihood of making the right choices.
Business ownership has never been for the faint of heart. On-going change and adaptability is part of the success equation. Even when things go well there are problems you will have to navigate. As you grow, your company and you should be prepared to experience many if not all of the following issues:
Being wise and responsible does not mean avoiding risk altogether. In fact, it requires embracing risk, the right risks at the right time with the required investment in resources.
…the ultimate goal of any business should be to have high quality employees who are focused on providing value-added services to a loyal and growing client base in an efficient and profitable manner.
Targeting the right prospects requires thought and effort. Every business needs to know when to say no. It’s easy to say yes (or at least we think it is). Bad or mediocre clients lead to bad or medicore outcomes – it is that simple. The math doesn’t get better on its own. You need to have the expectation of a reasonable return on investment and manage to certain margin thresholds. There should also be some sense of operational synergy and a belief that you can deliver what’s expected within the expected time frame.
Every company should be run profitably. A portion of this profit should then be saved for future emergencies or needs. This should become the standard approach to managing your organization’s finances.
…if you prune a tree too much it will die. It also requires proper fertilization and conditions conducive to growth. The same thing outcome invariably happens to companies.
I am worried that many of our leaders have become way too tactical and reactive these days. Instead of seeing the big picture they are getting mired in the details and forging ahead with actions that will have less than optimal impact on the problems/challenges they are trying to address. Actions should never drive strategy. Strategy should drive action. There are also rarely simple solutions to complicated issues. Sometimes you need to step back and actually think through what you are doing before you do it (especially in times of crisis).
There is a great benefit to working with a wide variety of clients for a number of years. You start to recognize patterns; seeing what works and what gets organizations in trouble.
I often get asked for a checklist of management improvement ideas. While the following list isn’t exhaustive, I believe it is a good start for anyone who would like to audit their existing business situation:
We’ve all heard the saying that “…you shouldn’t put all your eggs in one basket.” The same thing could be said about betting everything on one major product/service line or depending too much on a small group of clients. Just as diversification is essential to managing financial investment risk, business leaders need to hedge their bets and manage their financial vulnerabilities.
The more people who are knowledgeable about the basic metrics of the business, the more people you have who will be able to make a connection between their work and the actual outcomes of the company. As long as you are a reasonably fair employer, they will take pride in the organization when things are going well and pitch in when you need them to make the extra effort.
It’s amazing how many people can’t do basic math when it comes to their business or their lives. Revenues minus expenses equals profit. Profit only becomes cash once it is collected.