Danny Windsor, B2B CFO®

I recently attended an American Heart Association event in Nashville where one of the keynote speakers was the honorable Bill Haslam, Governor of the State of Tennessee.  While discussing the state of Tennessee and the health of its citizens as compared to other states, Governor Haslam discussed two important points that are absolutely vital for every business owner to practice.

1. Define reality using metrics.  By metrics he simply meant a standard of measurement.  In other words, when measured accurately, what do the statistics and numbers tell about the health of Tennessee’s citizens.  Governor Haslam emphasized that before any problem concerning the health of Tennessee’s citizens can be solved or improved, decision makers have to know that an actual problem exists and the extent of the problem.  Then and only then can plans be made to correct the situation.
2. Once reality is defined, do something about it quickly.  Knowing a problem exists and delaying corrective action usually will result in very little progress.  As Napoleon Hill and W. Clement Stone said in their classic book, Success Through A Positive Mental Attitude, “Do It Now!”  Do it now is the secret of getting things done!

As a business owner, you should be continually defining reality by using metrics that tell you in clear terms the health status of your company.  You should then be using what the metrics tell you to take corrective action in areas of weakness or continued emphasis in areas of strength.  I can tell you from experience, business owners who take this seriously succeed and those who ignore these two principals often fail.  Take Governor Haslam’s advice and strengthen your business.

When we think about value we usually think about it in terms of worth or importance to us.  This can have different connotations depending on what area of life we have in mind.  For example, on a personal note, quality time spent with my family is of the utmost value to me.  In business, helping my clients’ companies achieve the highest level of success possible is very high on my list of values.  As you can see things of value take on different meanings and priorities with different people depending on what’s important to them.

There is something, however, of real value that every business needs.  In fact, it is so valuable that the survivability of the business can hinge on whether this item of value is used consistently.  It is simple but absolutely critical.  Here it is:

• The consistent review by management of timely and accurate financial statements.

Here is what the above statement means.  Every month, at a minimum, by the 15^th at the very latest, the previous month’s Profit/Loss Statement, Balance Sheet, and Cash Flow Statement should be reviewed, analyzed, and understood thoroughly.  There are many good reasons for doing this but the most valuable reason is so corrective action can be taken immediately to begin to strengthen the areas of weakness in the business that is revealed in the financial statements.  Many companies have woefully underperformed or failed because they have neglected this step.  This is a simple but critical task every business, regardless of its size, can do at a minimum.  Business owners, make sure that people within your company are assigned this responsibility or get outside help if necessary.

Again, something of real value, the consistent monthly review of timely and accurate financial statements.

A tremendously valuable company that garners the attention of buyers in the marketplace, and is apt to receive multiple offers of purchase, doesn’t just happen due to good luck or fortune.  Behind every company of value stands years of preparation.  Preparation is the key to winning.  Bobby Knight, one of the greatest basketball coaches of all time said, “The will to succeed is important, but what’s more important is the will to prepare.”  Brian Tracy, a great motivational speaker and leading expert on success in business, has stated that there is no such word as overpreparation.  In discussing effective speaking, Tracy says that 90% of an effective speech is determined by how well the speaker has prepared.

Likewise, preparation is the key to a valuable company and a successful exit.  There are five key areas that business owners must continuously focus on as they prepare their company for an exit at the highest possible value.

1. Ensure that key financial statements are prepared timely and accurately.  Good, clean financial statements open the door to prospective buyers by giving them a clear insight at a company’s financial status.  This creates a level of confidence into the company’s true condition and sets it apart from the competition.
2. Build a customer base that is loyal, increasing, and diversified.  A prospective buyer wants to know that customers are fiercely loyal to the company because of the company’s excellent service and value.  By diversified, I mean that the business is not dependent on any one customer for survival, but that the customer base is adequate to withstand the loss of one or more.
3. Manage the company within the parameter at all times that Cash Is King.  Strong positive cash flow is at the very top of a prospective buyer’s investigation.  The more cash generated the higher the value and the greater likelihood of multiple offers.  Be sure that cash flow is measured, projected, and controlled with a solid financial infrastructure.
4. Run the company with the understanding that people are the most valuable asset.  Continually evaluate people and ensure that key people are competent and treat the company as their own.  Make sure all reward and incentive systems reward competence and loyalty.
5. Finally, but most importantly, lead at all times with integrity.  Potentials buyers can quickly determine if they are dealing with a credible leader.  Their confidence soars in a company when they know they are dealing with a person of integrity, because they can trust what they are purchasing to be what it claims to be.

Preparation in the above five areas will result in a company of high value.

A word that used to be heard often, especially relating to sports, is the word poise.  Particularly in pressure situations an individual performing for a team may have been described as “keeping his or her poise, “with the result being a victory for their team.  Poise in a leader is crucial for winning.  Exactly what is meant when we talk about an individual possessing poise?  John Wooden, the late great basketball coach of the UCLA Bruins had this to say about poise.

“I define poise as being true to oneself, not getting rattled, thrown off, or unbalanced regardless of the circumstances or situation.  Poise means holding fast to your beliefs and acting in accordance with them, regardless of how bad or good the situation may be.  Poise means avoiding pose or pretense, comparing yourself to others, and acting like someone you’re not.  Poise means having a brave heart in all circumstances.  The competitive environment increasingly challenges your composure and equanimity as the stakes increase and the challenges to you and your organization mount.  Few characteristics are more valuable to a leader than Poise, especially when he or she is under pressure.  And that’s what leaders are paid to do, perform under pressure (Wooden, 2005, p.51, 52).”

Coach Wooden also said that poise is not acquired but rather poise acquires you.  It is a quality near the top of coach Wooden’s Pyramid Of Success.  You can read about how it acquires you by reading his excellent book, Wooden On Leadership, as he describes his Pyramid.

*Wooden, John,  Wooden On Leadership

I have had the privilege through a local senior level networking group of getting to know Kevin Wax of Wax Family Printing (www.waxfamilyprinting.com).  Kevin is a person of integrity,  a genuine leader,  and a marvelous example for the people at his company and to those who know him.  I recently interviewed Kevin and I believe you will gain great value from his answers.

• The tough economic times have been hard on printing companies.  Can you tell me how your company has survived and continues to thrive in this environment?

Many printing companies have not been able to adjust to new technology and emerging global competitors. We’ve focused on helping our customers communicate. Our mission statement says that we will help our customers communicated correctly from concept to completion. You will notice that the word “printing” is not in that statement. That’s because we recognize that our real mission is to help our clients get the word out to their own people, their prospects and customers about what they are working hard to accomplish.

• What is unique about Wax Family Printing?

We are a business printer. As a small business ourselves, we instinctively know the challenges that most businesses face. We’ve been around since dad started the company in 1966, so we’ve been blessed with the good favor of our customers for many years. Unlike many printers, we design, we print, and we mail. By combining these three phases in to one seamless transition, we can save our clients time and money and frustration. We also offer website design, so all of your graphic needs can be met at one place.

• I know you are very focused on your goals.  What are the importance of goals and planning in achieving your business objectives?

I constantly set, make and reset goals. It’s a daily process with me. On the daily side, I’m concerned with making an accurate To-Do list and then actually doing the list. On the weekly aspect of goal setting, I work with two of my sons and our sales rep to help them make their goals. On the monthly part of goal setting, I make it a habit to set at least six accomplishments that I need to complete to keep my life in balance and my company working hard to help our customers. Someone said that if you fail to plan, you plan to fail. Goal setting is how I plan. General Patton said that a good plan executed violently today is better than a perfect plan put into action next week. Our bias should be towards action; my dad printed 100,000’s of small Get it Done TODAY cards when he was still working with us here at the shop. He despised procrastination and really created the culture of the company for success. A sense of urgency in keeping our promises and accomplishing our goals is so important!

• How can Wax Family Printing help a business owner achieve their goals?

Can’t see the forest for all the trees? We can help you reset and reorganize your priorities as they pertain to visual communications. We help customers with internal communications to their people. We help customers identify and communicate to prospects that fit a profitable profile. We also help our customers retain good profitable customers. These types of communication help our customers cut through the haze of day to day operations and focus on what’s most important.

• You take great pride in the people on your team.  Can you tell me something about your people and how they assist your company in reaching it potential?

The team at Wax Family is amazing. Our Production Manager of 15 years recently went in to the ministry full time. His older brother had been serving as his assistant for the last three years. He stepped right in and we haven’t missed a beat. Our sales rep, Jeff Carlton, started with us January 2, 1998 and he’s still going strong. He’s well known in the community and does a great job representing us. We are a very tight group and work well together. We’re blessed to be able to serve our customers together each step of the way.

I create goals for every company with whom I am privileged to work.  These goals are specific and are aligned with the business owner’s goals, as I bring financial clarity to them.   However; I have a set of more generic goals for all of my clients that remain the same and never change.  Allow me to share these with you.

• To assist the company in achieving and maintaining positive cash flow.
• To maintain a profit margin that improves from year to year and meets or exceeds industry standards.
• To make each company less dependent on debt or to become debt free.
• To help each company achieve such a solid financial base and working capital position that if additional financing is sought for research or market development, it can be attained quickly and easily.
• To enable the company owner to lead and grow the company and not be concerned with administrative trivia and financial infrastructure weaknesses.
• Finally, to help the company be constantly market ready so that maximum value can be received by the business owner when they exit.

B2B CFO NAMED IN PRESTIGIOUS INC. 5000 LIST
184% Growth Earns B2B CFO Spot in the 2010 List of Fastest Growing Companies in America

Phoenix, Ariz. August 24, 2010 — B2B CFO, nation’s largest provider of CFO services to small businesses, has been named to the prestigious Inc. 5000 list of fastest growing companies in America.

Now in its 29th year, Inc. Magazine’s annual ranking judges US-based and privately held companies by their revenue growth. This year’s list was ranked on the percentage in revenue increase from 2006-2009. B2B CFO’s growth earned 84th place in its industry.

“There are approximately 27 million small businesses in the U.S. today,” said Jerry L. Mills, founder and chief executive officer of B2B CFO, “It is a huge honor to be among the fastest growing and the most successful businesses in the country. Our firm has experienced tremendous growth over the past few years and we are on track to continue expanding. I am especially grateful to all of the firm’s dedicated Partners who continue to advocate our services around the nation.”

In a personalized letter congratulating B2B CFO on this accomplishment, Jane Berenston, editor-in-chief of Inc. Magazine’s wrote “Congratulations: your company, B2B CFO, has made the 2010 list of the fastest growing private companies in America. This achievement puts you in rarefied company, especially if you consider that over 27 million businesses are registered in the USA. The elite group you’ve now joined has, over the years, included companies such as Microsoft, Timberland, Visa, Intuit, Jamba Juice, Oracle, and Zappos.com. I look forward to congratulating you in person in Washington, D.C.”

B2B CFO’s growth is reflected in numerous awards this year. The company was also recently named in ACE Corporate Growth Awards, which recognized the most successful and fastest growing companies in Arizona.
In August 2010, B2B CFO has grown to 170 Partners across 39 states, representing 5,000 years of cumulative experience. Each Partner is a seasoned financial executive who serves as CFO to growing businesses on as-needed basis. Approximately 80% of the Partners have a background that includes senior executive positions at the Big Four, and all of the Partners have held high level executive finance positions in various industries in corporate America. Together, B2B CFO Partners work with more than 500 businesses in the nation with combined annual sales of more than $3 Billion.

Jerry L. Mills and many of the B2B CFO Partners regularly dedicate time to educate business owners on financial matters. Mills is a frequent speaker and contributor and has been featured on many national media networks including FOX Business, Fortune Small Business, Smart Money and many others. Mills is also the author of The Danger Zone – Lost in the Growth Transition, and Avoiding The Danger Zone – Business Illusions, both business non-fiction books that help entrepreneurs understand and build a strong financial strategy.

“We look forward to participating in the Inc. 500|5000 conference in Washington, DC this fall,” added Mills. “Along with my colleagues, I look forward to the October 2nd awards ceremony and to meeting the entrepreneurs that created the other 5000 fastest growing companies in America.”

About Inc. Magazine

Founded in 1979 and acquired in 2005 by Mansueto Ventures LLC, Inc. is the only major business magazine dedicated exclusively to owners and managers of growing private companies that delivers real solutions for todays innovative company builders. Inc. provides hands-on tools and market-tested strategies for managing people, finances, sales, marketing, and technology.

Inc. Magazine’s 29th annual Inc. 5000 ranking of the fastest-growing private companies in the country is available online at www.inc.com/inc5000/list

ABOUT B2B CFO
Headquartered in Phoenix, Ariz., the firm was founded in 1987 by Jerry L. Mills. B2B CFO is the nation’s largest CFO firm serving entrepreneurial, growth and mid-market companies with revenue under $75 million. The firm’s partners have an average of 25 years of experience and each individual partner is a senior level executive with a broad range of expertise. Please visit online at www.b2bcfo.com

I love having options. By options I mean the power or right to choose: freedom of choice.  Business owners need options, and I place a high priority in assisting them in having as many options as possible.  The absolute best way for entrepreneurs to have options is to have an abundant cash balance at all times.  With a large cash balance the options are many and here are a few:

• Leave the cash alone
• Reward your key people with a bonus
• Pay down or eliminate debt
• Get an above normal discount by paying suppliers
  early
• Invest in much needed equipment or other long
  term assets
• Enhance and develop marketing and advertising
  areas
• Invest in research and development
• Open up new markets and territories
• Contribute to your favorite charity
• Did I say leave the cash alone?
• Etc., etc.

I believe you get the picture.  Having options gives a business owner freedom and this results in:

• Less stress
• Peace of mind
• A valuable company

Cash=options.  Put the controls in place and do what you have to do to establish a solid cash position. I highly recommend the following books to assist in having more cash.

• THE DANGER ZONE by Jerry Mills
• E Myth MASTERY by Michael Gerber

Are you, as a business owner, managing profitability?  Why do I ask? Jonathan Byrnes in his book, ISLANDS OF PROFIT IN A SEA OF RED INK, made the following statement.  “In my research and work with companies in a wide range of industries, I have found that 30 to 40 percent of each company’s business-by any measure (accounts, products, transactions)-is unprofitable” (Byrnes, 2010, p.15).  Think about what this means for your company and its potential.  According to Byrnes the overall profit improvement opportunity for your business may exceed 30 percent (Byrnes, 2010, p.16).  Finding that extra 30 percent can have an enormous impact on the market value of your business and its attractiveness to outside buyers that can enable you to have very successful exit when the time is right.

The starting point to finding this extra profit according to Byrnes is to effectively manage profitability through three key elements (Byrnes, 2010, p.19).

1. Profit mapping-Analyzing profits by account and product.
2. Profit levers-Finding these can change bad accounts into good accounts.
3. Profit management process-Prioritizing the opportunities and appointing someone to take the lead.  Byrnes suggests naming a person the Chief Profitability Officer and he recommends this be the CFO (Byrnes, 2010, p.79).  Of course many small to mid size businesses cannot afford a CFO but can hire a part-time CFO to assist in managing this process.

I highly recommend his book to any business owner that wishes to dramatically increase his company’s profits.

*Byrnes, Jonathan L.S., ISLANDS OF PROFIT IN A SEA OF RED INK

Jerry Mills in his book, Avoiding The Danger Zone, tells how Gordon Segal, the founder and CEO of Crate and Barrel made the following statement that was documented in
INC. Magazine.

“Getting distracted is the biggest problem entrepreneur’s face” (INC. Magazine, July 2007, 80).

Please let that statement sink in.  According to Webster distract means “to draw or direct or divert (as one’s attention) to a different object or in different directions at the same time.”  In my work with various entrepreneurs, I totally agree with Mr. Segal.  If the CEO is overcome with distractions, the company’s growth has a much greater chance of coming to a screeching halt.  More importantly, a downward spiral can result in profits and cash.  Distractions are
the result of a lack of focus by the CEO on the strategic areas of the business.  These are the areas that allow the CEO to be the visionary, leader, idea generator, and catalyst for future change (Mills, 2007, p.29).  In other words, when distracted, the owner is not thinking about the strategic direction of the business, the goals that need to be accomplished, and the action plans necessary to reach the goals.  Distractions truly are the biggest problems entrepreneurs face.

The following steps can go a long way in helping the business owner eliminate distractions.

1. Think through, create, and put into writing a strategic plan for the business.
2. Do whatever it takes to assemble and keep the right people on the team that will help achieve the plan.
3. Work with outside experienced professionals (such as a part time CFO or CMO).  These trusted business advisors can assist a business owner in creating financial and goal clarity in order to increase cash, profitability, sales and successful exit strategies (Mills, 2007, p.193).

* INC. Magazine, July 2007

* Mills, Jerry L., Avoiding The Danger Zone