Tag Archives: Financial Planning

Learn from Giants



Future Thoughtful Entrepreneur

Right out of college I went to work for GE and spent the next seventeen years there, learning what life in the world of business/industrial marketing/strategic business planning was all about. It was an exciting time for me, and a somewhat different business world than exists today. I grew a lot during those GE years, and learned a great deal about the world of big business and a little bit about myself. When I opted to leave GE for an opportunity to become a part-owner of a small manufacturing company, I doubted whether I would ever again be surrounded by so many capable people. Twelve years later we sold that company, and I became a full-time coach for owners of small businesses, a profession in which I remain involved.

As a small business coach, I preach the value of peer advice, having learned that a small business owner values the advice of another business owner above all other sources of business information or advice.

Back to GE. Those of us paying attention have witnessed this business icon stumble. As a result, the company’s stock has been the worst-performing in the Dow Jones Industrial average for more than a year. Many are asking, “What in the world went wrong at GE?” I won’t take your time here to repeat the details of this saga since they can easily be found in various business media. Rather, I believe there are powerful lessons here for any CEO of any size company, and I want to share them.

First, you need to be brutally honest with yourself regarding your numbers. The financial performance of any company, as portrayed by periodic numbers reporting, contains both positive and negative messages. As the owner, you know what’s really going on behind your numbers, and you need to face the negatives, the warnings, the hidden truths, as well as the confidence-building interpretation designed to cause majestic music to swell in your mind, or your employees’ minds, or your lenders’ minds.

Second, while continuously on the lookout for new opportunities, maintain an objective decision framework to guide you – and stick with it! Avoid becoming emotionally involved when deciding whether to commit company assets in pursuit of a new adventure.

Finally, discipline yourself to do contingency thinking, if not full-scale contingency planning, to prepare your mind for abrupt changes in the business, changes such as the loss of a major account, the resignation of a key manager, or the unexpected interruption of your operations due to a natural disaster.

There are significant differences between leading a giant organization and leading a small business. However, the successes and failures experienced by huge companies sometimes offer universal reminders of key basics of private enterprise.


What if your car came without a dashboard?

Great CEOs have  identified their Key Performance Indicators and track them relentlessly.Are you a better driver because you can easily determine how fast you’re traveling, how much fuel remains, and what time it is? Are you more likely to safely reach your destination because you can readily see the compass direction of travel and because you’re immediately alerted to a loss of oil pressure or tire pressure?  Does the dashboard improve your overall ability to travel efficiently and effectively?  Would you be upset if the auto manufacturers decided to reduce the cost of their vehicles by eliminating all the instrumentation and alarm lights?

Now consider your business dashboard. Have you identified and do you regularly review your key business performance indicators (KPIs)?  Here’s why every CEO should:

  • Identifying your KPIs forces prioritization of data.  The total data available can be overwhelming and you have to keep your eyes on the road.
  • The correct KPIs provide a regular monitor of business historical performance, as well as the outlook for the short-term future. They enable you to stay on track.
  • The habit of routinely reviewing your dashboard (KPIs) creates a powerful sense of having your “arms around your business”, regardless of how well or how poorly the business is currently doing.
  • Your dashboard provides a jump start for when you need to:
    • Create a long range business plan
    • Create a marketing plan
    • Apply for a bank loan
    • Discuss the business with a potential investor
    • Interview a candidate for a key position
  • As a habit, your review of your KPIs is an excellent accountability tool for you personally as well as for your entire business.

You wouldn’t drive your car without a dashboard. Is it any less dangerous to drive your company without one?

The CEO’s Planning Omissions

It’s been my experience that many CEO’s either omit or give short shrift to three major parts of their annual business plan.  The first is how they wrestle through Critical Success Factors. These links between the upfront analytical sections of your plan and the downstream implementation sections provide a solid reality check against your objectives. They also force you to consider all reasonable alternative strategies for achieving your major objectives. Continue reading

Planning – Necessary or a Waste of Time?

CEO planning includes strategic thinking and tools for recording those thoughts

Record your strategic thoughts.

To plan, or not to plan – Most CEOs openly admit to the value of planning, regardless of the level of effort they put into it. Those who do not see value in planning have their reasons: The creative entrepreneur finds the structure of planning simply too restrictive.  Or, the world simply moves too fast. Any plan is immediately obsolete.

Whether these are rationalizations or heartfelt beliefs, I beg to differ.  Continue reading

3 Things I Learned Today

To their own detriment, CEOs often fail to set aside time for informational seminars and networking.

“Thinking with the (Business) Stars 9/26/2012

This morning I participated in a two-hour event for business owners who came together for a briefing in 3 diverse, high-impact areas: HR Litigation Landmines; a practical approach to Social Media; and what experience teaches about Business Exit Strategies.  I learned:

1-Never ever write a recommendation for a past employee.

2-If you want to attract younger customers in any business, you have to have and creatively utilize a company Facebook page.

3-If your exit strategy includes you financing part or all of the selling price, odds are you will end up back in your business long after you planned to be gone. Continue reading

Constant Connection

Cell phone can hinder CEO productivity.

Cute, but distracting

Near the start of a recent peer advisory board meeting, the CEO to my right was noticeably jittery.  I asked him if everything was OK, and he explained that he had decided to leave his cell phone in the car for the morning.  He believed it would be a good idea to get away from it for several hours to devote his full attention to the meeting, but he was definitely showing some physical signs of withdrawal. Continue reading

Your Accountant Connection

CEO relies on management accounting discipline more than tax accounting discipline

CEO Language

It’s that time of year again.  A number of my clients are ready to fire their accountant and find a new one.  Why is this a recurring event?

I’m not an accountant, but my experience tells me there are two reasons.  First, accountants speak a slightly different language than most business owners.  They speak Tax Accounting.  When it comes to the numbers, most of us speak Managerial Accounting or some other financial dialect.

Second, the business owner often fails to make his or her expectations of the accountant clear.  As a result, they do not receive the accountant’s commitment to meet those expectations (or, if they do and it’s received verbally, there is still no real understanding).

Here is a short checklist of questions to review with any firm proposing to be your accountant: Continue reading