Tuesday, November 12, 2019

Mujeres millennials: ¿cómo pueden tomar mejores decisiones financieras?

Foto de Bruce Mars / Pexels

Source: https://tinyurl.com/shls42z

No solo se trata de mejoras educativas y de oportunidades. Uno de los más grandes desafíos de nuestra región es involucrar más a mujeres millennial en decisiones financieras socialmente responsables.

Sea que hablemos de mujeres o de millennials en general, ambos grupos tienen los índices más altos de interés por realizar inversiones de manera socialmente responsable. Sin embargo, contra lo que pudiera pensarse, es posible que en este rubro ninguno de estos grupos sea considerado tomador de decisiones. Aún así, los números demuestran que 70% de mujeres están interesadas en realizar inversiones de impacto, y muchos informes muestran que las mujeres dicen de manera categórica que quieren un retorno tanto financiero como social de sus inversiones.

Si nos enfocamos en mujeres jóvenes, los datos de Morgan Stanley muestran que el 86% de millennials (definidos en términos generales como aquellos que nacieron entre los años 80 y 2000) están interesados en inversiones socialmente responsables. Sin embargo, al observar la intersección entre estas dos poblaciones, encontramos que las mujeres de la generación del milenio tienen menos probabilidades de tomar decisiones de inversión por sí mismas en comparación con las generaciones anteriores. De hecho, el 61% de las mujeres milenarias encuestadas por UBS dejan las decisiones de inversión a sus esposos, más que cualquier otra generación reciente.

El enigma millennial

¿Por qué las mujeres millennial, más educadas, más exitosas y con un criterio más abierto que nunca, están dejando las decisiones importantes sobre el dinero a otra persona? ¿Por qué las mujeres más jóvenes están perpetuando el status quo en lugar de transformarlo? ¿Acaso los datos de América Latina y el Caribe respaldan estos datos de UBS sobre mujeres millennial con tendencias similares, o es solo un fenómeno de Estados Unidos y Europa?

Las mujeres millennial que no toman sus propias decisiones de inversión son importantes por tres razones económicas principales:

  • Es probable que estén perdiendo oportunidades para apoyar vehículos de inversión de impacto. Cuando entregan sus decisiones financieras a sus esposos, es posible que las mujeres no inviertan con firmeza en los problemas locales o globales que les interesan, ya sea atención médica, educación, conversación, microfinanzas, igualdad de género, agricultura sostenible, desarrollo comunitario y demás. Si las mujeres no están al volante de sus inversiones, es posible que un cambio social significativo no se dé por completo.
  • Es posible que no maximicen su propia creación de riqueza ni creen un plan realista para su futuro. Los eventos y situaciones de la vida de muchas mujeres introducen barreras para crear riqueza. Una brecha salarial del 26% en la región, la interrupción de las carreras y el trabajo flexible también pueden tener un impacto perjudicial en la creación de riqueza de las mujeres, y sus estrategias de inversión se benefician al tomar en cuenta estos factores. En promedio, las mujeres tienden a vivir más que los hombres en América Latina y el Caribe por 6,3 años, y esto hace que sus necesidades de planificación de la riqueza a menudo deban abarcar un horizonte temporal más prolongado. Estas mujeres se beneficiarían de estrategias de inversión que reflejen estas realidades.
  • Se acerca una transferencia masiva de riqueza, y las mujeres latinas deben estar preparadas. A nivel mundial, las mujeres heredarán US$ 28,7 billones en riqueza intergeneracional en los próximos 40 años. Sabemos que las mujeres millennials se sienten cómodas invirtiendo en otras mujeres de manera filantrópica, pero la pregunta es: ¿cómo hacer la transición de su zona de confort filantrópica a la inversión?
Entonces, ¿cómo aumentamos el conocimiento, la confianza y la cantidad de inversionistas millennials activas en la región de ALC y los guiamos a opciones de inversión socialmente responsables?

La hoja de ruta para el empoderamiento financiero
  • Ofrezcamos mejores consejos financieros y más personalizados, idealmente de asesoras financieras altamente capacitadas (¡y también de hombres!) en ALC, que refuercen que tanto el impacto social como el rendimiento son posibles en las inversiones. Un buen asesoramiento financiero puede ayudar a las mujeres a superar algunos de sus desafíos de riqueza, reforzar su confianza financiera y evaluar mejor el riesgo. Jacki Zehner, de Women Moving Millions, señala que las mujeres responden particularmente bien a un enfoque personalizado del asesoramiento financiero centrado en el fomento de la confianza.
  • Crear centros de entrenamiento para mujeres que inviertan en ALC alrededor de las redes existentes de mujeres. Debemos crear modelos de construcción de comunidades basados en relaciones que saquen a las mujeres de un formato de “enseñanza” y para fomentar el diálogo entre ellas. Estos grupos pueden ayudar a las mujeres millennial a aprender de sus pares sobre cómo se convirtieron en inversionistas.
  • Alinear productos con potenciales inversionistas mujeres. Hay un número creciente de fondos mutuos y fondos de inversión que están democratizando el acceso a inversiones de impacto y con enfoque de género, aunque la oferta en ALC aún es limitada. Se puede aprender mucho de la accesibilidad de estos vehículos líquidos, con tarifas relativamente bajas y mínimos bajos, como rampas de acceso para millones de inversionistas (hombres y mujeres) que apoyan la equidad de género a nivel mundial.
  • Ayudar a los inversionistas a dar el salto de productos individuales a carteras. Cada vez hay más carteras de enfoques de género más diversificadas para abordar la violencia de género, la falta de representación crónica de las mujeres en el liderazgo y las necesidades de atención médica de las mujeres.
  • Aumentar la investigación de las distintas necesidades y opiniones de mujeres millennials en ALC para ayudar a guiar la creación de vehículos y estrategias de inversión para desarrollar inversionistas en la región. Los datos son increíblemente escasos en ALC sobre el tema y los administradores de activos, los bancos de desarrollo, los asesores financieros y las mujeres inversionistas –entre otros– podrían tener un papel más activo en la recopilación de estos datos para avanzar en este campo.

    Las mujeres de la generación del milenio son actores clave en la conversación sobre inversión con enfoque de género (GLI) que ahora está entrando a ALC. Para obtener más información sobre los desafíos y oportunidades que presenta GLI en ALC, consulte el documento recientemente publicado por BID Invest, “Inversión con un enfoque de género: Cómo las finanzas pueden acelerar la igualdad de género para América Latina y el Caribe”, un informe pionero en su tipo que destaca esta tendencia creciente en la región.

Adriana en complicidad. Entrevista a Soledad Tanner # 7

En esta entrevista con Adriana Calhoon hablamos acerca de la labor a favor de la comunidad de la organización "Women on the Move". Además contestamos las siguientes preguntas que le ayudarán a mejorar su negocio:

¿Como administrar su negocio en un escenario de una posible recesión? ¿Como manejar la contabilidad de su empresa? ¿Cuales son las medidas de emergencia que hay que tomar en una recesión? entre otros temas.

Contrate un experto para que lo asesore y así incremente la utilidad de su negocio. Soledad Tanner Consulting le da estrategias para que su negocio este al 100%. Escuche la entrevista por tips y contactemos al: (832) 998 2136 o a Soledad@SoledadTanner.com. Para mas información: www.soledadtanner.com

Mas acerca de Adriana Calhoon - AC Media TV: http://acmediatv.com/

Sunday, November 10, 2019

The Trillion-Dollar Opportunity in Supporting Female Entrepreneurs


Source: https://tinyurl.com/y368dq8l

There is much discussion and debate about how to support female entrepreneurs — and rightly so. Currently, women-led businesses are less likely to survive, despite evidence that their startups are often highly successful. New analysis by Boston Consulting Group (BCG) shows that if women and men around the world participated equally as entrepreneurs, global GDP could ultimately rise by approximately 3% to 6%, boosting the global economy by $2.5 trillion to $5 trillion.

So how do we support female entrepreneurs? The focus is often on improving access to credit (financial capital) or providing training to help women build new skills (human capital) — two areas critical for improving the success of women-led businesses. However, another key factor in the success of these businesses tends to be overlooked: access to networks.

Working with public, private, and social sector clients around the world, we have seen first-hand how potent such networks can be. And we have also come to understand that these supportive mechanisms are in short supply.

The good news is that action in all sectors can address this gap.

The Gender Gap in Entrepreneurship

To better understand the entrepreneurial gender gap we analyzed 2014-2016 data from the Global Entrepreneurship Monitor (GEM), breaking down entrepreneurship and business sustainability rates by gender and across 100 countries. Among the findings:

  • Across all six global regions, the percentage of working-age men who start a new business exceeds the corresponding percentage of working-age women who do by roughly 4 to 6 percentage points.
  • Four countries — Vietnam, Mexico, Indonesia, and the Philippines — have managed to buck the global norm; more women than men launched new businesses in these countries in 2016.
  • In 50 of the 100 countries studied, the gender gap in founding startups (the percent of men versus women who start a new business) narrowed from 2014 through 2016, with the biggest gains occurring in Turkey, South Korea, and Slovakia.
  • In 40 countries, however — most notably in Switzerland, Uruguay, and South Africa — the gender startup gap is widening.

Although the gender gap in startup activity is fairly consistent across most countries, the gap in long-term business success varies more widely. In all regions except North America, women-led companies have lower sustainability levels than companies led by men. In the Middle East and North Africa, for example, women’s businesses are about 50% as likely as men’s to remain in operation 3.5 years after creation, while in Latin America, the women’s businesses are 82% as likely.

Drivers of the Gender Gap

Our research indicates that there are many reasons for these deficits, including differences in access to financial support. According to a BCG analysis of 2018 data from MassChallenge, a US-based global network of accelerators, investments in companies founded or cofounded by women averaged $935,000, which is less than half the average of $2.1 million invested in companies founded by male entrepreneurs. This disparity exists despite the fact that startups founded and cofounded by women actually performed better over time, generating 10% higher cumulative revenue over a five-year period: $730,000 for women compared with $662,000 for men.

This funding challenge is well documented, but our work also identified another, underappreciated challenge — women’s relatively limited access to “social capital” in the form of robust support networks.

Again and again we find that networks are a critical factor for small business success. In low- and middle-income countries, for example, we studied how knowing at least one other entrepreneur (a proxy for entrepreneurial networks) impacted women-led businesses. We found that stronger and broader networks are linked to smaller gender gaps in business sustainability and improved access to a variety of funding sources. Research by other groups, including the Asia Foundation, has found that peer-to-peer networks encourage women to set higher aspirations for their businesses, plan for growth, and embrace innovation.

Building a Better Network


Large corporations can play a big role in cultivating networks. In many parts of the world, women-led small businesses are a significant element in global supply chains, whether as distributors, retailers, or suppliers. Companies can foster networks that help those female entrepreneurs gain insight and advice on everything from how to finance their operations to how to manage inventory. Consumer-packaged goods, for example, can partner with non-profits, trade associations, or local chambers of commerce, to bring together women who run small shops that distribute the company’s products.

Supporting women-led businesses in this way is good business. If they do it well, companies can build a more diverse and reliable supply chain. BCG research has found this is one of many opportunities that companies have to advance societal goals while boosting returns for shareholders.

All organizations that support female entrepreneurs — including companies, international donor groups and governments — can magnify their impact by creating and building out networks for women. In our experience, the best networks are built on the principles of intent, inclusion, and interaction:

Intent: From the start, a network must have a clearly defined purpose. Networks should be much more than a glorified Rolodex. What can women gain by joining the network? Will they get access to human and financial capital, as well as social capital? How can the network help women achieve tangible business goals? Endeavor, for example, has a clear mission with its mentor and investor network to select and mentor high-impact entrepreneurs from around the world and accelerate the growth of their ventures, providing business advice and better access to financial capital. (Full disclosure: BCG has supported, and continues to partner with, Endeavor.)

Inclusion: Next, choose participants carefully. The best networks have a highly dedicated founder, whether that is an individual, an NGO, a corporation, or another organization with a long-term interest and presence in the community. They also have an active membership, and a diverse membership base, including a mix of new entrepreneurs and more established business owners, ideally with varied cultural backgrounds. To drive engagement and commitment, network founders can consider charging membership fees, instituting mandatory attendance requirements, and requiring interviews or references for new members.

Interaction: Structure the network to facilitate both formal and informal interactions. Formal training has its place, but informal, peer-to-peer interactions are crucial to building trust and ensuring that the network stays relevant over time. Online platforms can be critical to success in this area. Nigeria’s Cherie Blair Foundation for Women, for example, has formal mentoring programs, but it also encourages informal relationships, idea exchanges, and collaboration through its online forum which members and alumni can access on demand, whenever they have an internet connection.

It is no exaggeration to say that female entrepreneurs have the power to change the world. Closing the gender gap in entrepreneurship and fueling the growth of women-owned enterprises will unleash new ideas, services, and products into markets around the world. In order for that to happen, we need to ensure women have access to all forms of capital, particularly social capital in the form of powerful networks.

Shalini Unnikrishnan is the Global Lead for Societal Impact in the Consumer and Social Impact practices at Boston Consulting Group.


Roy Hanna is a principal at Boston Consulting Group’s Philadelphia office and is an expert on large-scale change and social impact.

Saturday, November 9, 2019

What is the Leadership Style of the Future CFO?




Driving innovation and improving business outcomes

As the role CFO evolves to strategic business partner their leadership style has to adjust to accommodate the quick pace of innovation, unsettled global markets, heightened competition and other disruptive factors.

To effectively lead, the future CFO need to balance their finance duties with a need for innovation and agility, as they are actively involved in ensuring better business outcomes and developing new revenue streams. “Today’s CFOs are partnering with other members of the C-suite in driving business strategy, so a CFO with a strong accounting or controlling background is no longer enough, you need strong business acumen with greater focus on people” said Anthony Coletta, CFO of SAP North America.

John Gimpert, National Programming Chair & Chicago Regional Director at The CFO Leadership Council, concurred, noting that “high intellect and strong functional skills are no longer sufficient.” The organization’s CFO leadership framework includes enhancing their ability to lead themselves and others, knowing the organization and delivering performance. Attributes essential to delivering performance encompass being diligent about driving results, setting priorities effectively, possessing an open, problem-solving mindset, and adopting an innovative and adaptive approach to change.
The Skills Modern Finance Leaders Need

The future CFO needs to be a thought leader who fosters an open and collaborative culture to build next-generation practices. “That means empowering the team and giving them more control over the day-to-day finance operations,” Coletta said.

To succeed in their new leadership roles, senior finance executives need to be adept at interacting with people inside and outside of their organization. “There is a huge shift in how the CFO spends their time,” Coletta said. The new brand of finance leader must position themselves as an ambassador of innovation by having an open dialog with sales, marketing, IT and other stakeholders.

The future CFO will be an architect of growth and value creation, according to Coletta. “Finance has an impact at every step of the value chain which requires building bridges across the organization and across various finance functions.”

One area where modern CFOs are leading is talent acquisition to foster the next generation of leaders. “I spend a good portion of my time mentoring and encouraging members of the finance team and ensuring that we hire or promote the right people,” Coletta noted. A successful finance team will include people with different backgrounds and demographics, but also a diversity of viewpoints.

Going forward, CFOs will also interact more frequently with those outside of the organization to understand and improve their connection to the finance function and the business overall. “I spend way more time with partners and customers in order to improve those relationships and understand their business imperatives and how finance can better serve their needs with innovative solutions,” Coletta said.

Coletta offers this advice as CFOs shift leadership styles:
  • Focus on the culture, not solely on optimizing processes
  • Understand the broader technology trends and how to translate into core business
  • Continuously invest in learning / people’s development
  • Be an agent of the change you want to see
Click here for more information about the future leadership style of the CFO.

Author: Anthony Coletta

As chief financial officer (CFO) for SAP North America, Anthony Coletta is steering the business in a territory that spans the United States and Canada, fostering operational excellence and overall financial health of the region. His role extends to driving the cloud business in SAP’s largest market and leading strategic initiatives as part of Global Finance leadership team

Tuesday, October 29, 2019

Women on the move (Soledad Tanner)

Amazing video presented this morning at the “2019 Women on the Move” award ceremony Luncheon at the Hilton Americas Houston. It was truly an incredible honor to be among such an accomplished group of “dangerous women”. Video filmed by Lisa Malosky and Don Friedell of Lisa Malosky Productions.

Thank you, Graciela Saenz, for nominating me, Cathy Maris for your heartfelt letter of recommendation and Dr. Cindy Childress to supporting me with your talented ghost-writing skills. To all that were there to celebrate this special moment with me: Dr. Dorothy Caram, Helen Cavazos, Graciela Saenz, Lenora Sorola Pohlman, Sandra Smith-Cooper, Angelica Noyola, Angelica Vasquez, Arcy Munoz, and of course my Gabriel Lopez & mi mother Yolanda Cedeno that flew from Ecuador to be here today. 

Congratulations to all the 2019 Women on the Move and Rising Star: Brenda Hellyer, Jennifer Kirk, Jenny Dial Creech, Charlene Jackson, Pamela Anne Quiroz, Kathryn McNeil, Rhonda Smith, Rebeca Aizpuru Huddle, Paula McCann Harris, and our Rising Star: Victoria Chen.

 Thank you to all the people that worked tireless to make this a reality: Paula Mendoza, Ileana Trevino, Carrie Potter, Sheila Manning, Sara Wise, Frances Castaneda Dyess, Nory Angel, Wendy Dawson, Dr. Melanie Johnson, Beatriz Garza, Liz Cloud, Caroline “Baker” Hurley, Debi Wallace - Barfield Photography and the support team from Possible mission: Ana Fernandez & Sylvia Perez

Soledad Tanner, MIB

Cómo hacer que tu negocio sobreviva una crisis económica


Source: https://www.entrepreneur.com/article/283072

Sobrevivir a tiempos difíciles requiere de mucha fortaleza, pero más importante, necesita de habilidad y precisión. Aquí hay algunos consejos te ayudarán a enfrentar las "vacas flacas".

Toby Nwazor
CONTRIBUTOR
CEO, Millionaire Writers Agency

Se dice que un buen marino no es aquel que sabe navegar las aguas calmas, sino el que sabe sortear los mares más turbulentos. Esto es tan cierto en la vida como en los negocios. Un emprendedor es alguien que organiza, maneja y asume riesgos en un negocio. Pero, ¿cómo puede sobrevivir un emprendedor en una economía mundial tan variable? ¿Debe apretar las riendas, cerrar la cartera o debe hacer lo necesario y correr riesgos? Y si debe correr riesgos, ¿de qué tipo deben ser? ¿Cuándo es demasiado? 

1. Involucra a tu equipo en el proceso

¿Has escuchado que la miseria se tolera mejor cuando no estás solo? Si una persona debe cargar con el peso de una economía en crisis en solitario, es más probable que se desespere y renuncie.

Pídele a tu equipo que te ayude a ver en qué pueden recortar gastos y qué ahorros pueden hacer en tu operación diaria. Involucrar a tus empleados es crucial. Necesitan estar muy motivados para entender que es tiempo de hacer algunos sacrificios. Muchas veces estarán contentos de ayudar y ser parte del proceso. 

2. Corta todos los gastos pequeños y algunos de los grandes

A veces lo primero que se te ocurre en tiempos de crisis es bajar salarios y despedir personal, pero a veces cambios pequeños sumados pueden hacer una gran diferencia. Por eso el punto anterior es tan importante.

¿Cuáles son los gastos pequeños que tiene tu negocio? Siempre hay costos que tu empresa puede reducir para mantenerse a flote. Puede ser la cuenta de luz o papelería en la oficina. Un manejo eficiente de tus instalaciones puede ayudarte mucho.

Por ejemplo, ahorrarás mucho si usas el aire acondicionado con sabiduría y cuidas tu equipo limpiando los filtros con regularidad. 

3. No cortes el presupuesto de marketing
Una de las razones por las que no debes reducir lo que inviertes en mercadeo es porque en tiempos de crisis es lo que todo mundo hace, incluyendo tu competencia. De hecho, te recomiendo que aumentes solo un poco lo que gastas en publicidad durante los tiempos difíciles. Esto es porque necesitas mantenerte competitivo y visible para seguir a flote a largo plazo.

Por ejemplo, puede que tengas que invertir para mejorar tu sitio web, lo que es un gasto razonable para mantener tu operación efectiva.

¡Cuando hay pocos clientes en el mercado, debes pelar muy duro para mantener a los que ya tienes! Además, si tus competidores dejan de anunciarse, tu inversión será mucho más satisfactoria, pues en un mercado menos ocupado es más fácil que te noten. Es muy posible que el marketing sea una de las claves para sobrevivir una recesión. 

4. Invierte más, diversifica tu producto y tu base de clientes


Hay oportunidades que surgen en momentos de crisis económicas, solo debes saber en dónde buscar. Las recesiones son a veces los mejores momentos para correr la clase de riesgos que te hacen un emprendedor de éxito.

Puede ser el momento de expandir tu portafolio de negocios e invertir en áreas que presentan oportunidad. ¿Por qué? Las crisis no duran para siempre. Una vez que las cosas mejoren te dará gusto haber comprado cuando las demás personas vendían.

Más allá de eso, busca manera de adaptar o incrementar el encanto de tus productos. De esta manera, no solo estarás manteniendo y creciendo tu negocio, podrías estarte adaptando a mercados más atractivos. 

5. Ofrece un servicio a clientes de lujo

La última cosa que quieres que te pase durante las crisis es perder clientes. Tus consumidores son la sangre de tu negocio durante una crisis económica y debes pelear para mantenerlo. Este es el momento de volverte una estrella del manejo de las peticiones y entregas de tus usuarios. Es el tiempo de ser flexible y confiable. 

6. Invierte en los recursos correctos

En una recesión necesitas toda la ayuda que puedas obtener e invertir en la tecnología adecuada puede ayudar a tu equipo a trabajar de manera más eficiente y satisfacer a tus clientes de manera más rápida. Incluso puedes reducir gastos si eres uno de esos emprendedores que utilice apps para mejorar tu productividad.

En conclusión, recuerda lo que dijo Robert Schuller: “Los tiempos duros no son para siempre, pero las personas fuertes sí”. Estos tips te ayudarán mucho a mantenerte firme en momentos de crisis.

Friday, October 25, 2019

Quiz: Do you have what it takes to be your own boss?

Source: https://tinyurl.com/yxmax82b

Written by: Maxym Martineau October 24, 2019

This post was originally published on May 15, 2018, and was updated on Oct. 24, 2019.

At one point or another, we’ve probably all dreamed about being our own boss. You know, calling the shots instead of following orders, or being the innovator behind the next big idea.

No matter what pushes you to abandon your current nine-to-five — whether it be the sixth coffee run of the day or simply lack of fulfillment in your current role — it might be time to seriously contemplate if you’ve got what it takes to be your own boss.

But becoming your own boss doesn’t mean leading an easy work life — you’re still accountable for, you know, work. And yes, while you might be able to accomplish some of this from the comfort of your pajamas while sipping a latte, there are a number of things you’ll need to consider before making the leap into entrepreneurship.

If you’ve ever laid awake at night, wondering whether or not you have what it takes to be your own boss, then we’ve got just the quiz for you.

Answer these 10 questions to see if you’re ready mentally, financially and emotionally to be your own boss. Then, keep reading to see how we can help you turn your dreams into a reality.

Do you have what it takes to be your own boss?

So, what did you find out? Are you ready to make the big leap, still a little uncertain, or maybe a tad too unprepared? Let’s talk about a few key considerations to make sure you’ve got all your ducks in a row before you say goodbye to your day job.
Workload expectations


If you think stepping out to be your own boss means sleeping in until 10 a.m., taking a leisurely, two-hour lunch at noon, and cutting out by 4 p.m., you might be underestimating the workload that comes with managing your own business. Like, really underestimating.

Just because you don’t have a boss anymore doesn’t mean you don’t have to answer to someone — whether that be you or your new clients.

Yes, there’s a certain level of glamor associated with working in your PJs. And certainly if you can, go for it. But also expect to pull some late nights, weekends and odd shifts that are totally outside of the nine-to-five norm. In all reality, there’s a good chance you’ll end up working more as you bring your startup to fruition.

Being your own boss means working more for your passions. And then crashing hard at the end of the day and starting all over again the next morning. PJs and coffee a must.

The boss mentality

Photo: perzonseo / CC BY

Part of becoming your own boss means you get to set the direction. You’re in charge of the innovation, the ideas, the risk taking. Even with all the careful planning in the world, there’s no possible way to foresee every roadblock or sudden shift in direction.

Taking initiative, adapting to change, accepting risks — these are all key components of being an entrepreneur. If any of these things scare you or cause hair-pulling stress, then you might want to rethink your desire to be your own boss.

Now, I’m not saying you have to be calm and collected 24/7. There are bound to be things that stress you out (otherwise, you’re a robot, which is cool). It’s all about how you manage those sudden changes and pick yourself up to keep your idea alive and thriving.

Business planning


Having an idea is only the beginning. Even though your froyo food truck might seem like the best thing since sliced bread, quitting before you even look into the details — like, I dunno, actually buying a food truck, understanding taxes and licenses, startup costs, etc. — is a dangerous decision.

Any business, no matter the size, needs a good business plan.


What kind of business are you going to run? Have you done your market research? Do you know who your target customers will be? What about your legal setup? Marketing? What kind of brand personality are you going to have? And of course, what about the all-important financial factor? Speaking of …

Finances, both personal and biz

When you consider that many businesses fail because they started out with too little in the funding department, it’s easy to see why finances play a big role in your business’s success.

While you don’t need to use personal funds to start your new business, though it might be a good idea, taking a look at how you spend your hard-earned dollars is a good indicator for determining whether or not you’re ready to be your own boss:
  • Just how frugal are you?
  • Do you prefer night outs to padding your bank accounts?
  • Are you aware of how your dollars are spent?
  • Do you use a budget planner or tracker?
  • Do you have enough funds to survive for a while without making a profit?
What kind of trend emerges when you answer these questions? If you’re quick to spend a buck, aren’t exactly sure where your cash is going, and don’t use a budget, then you’ll want to remedy these habits — stat. When it comes to running your own business, understanding where and how your money flows is imperative to success.

Related: Resources for funding a business

As far as actually securing your startup capital goes, you have a number of options:
Self-funding. Maybe you’ve been saving over the years. That’s great!
Investors. Many turn to family and friends with a new business opportunity, but you could also widen your search to incorporate angel investors or form strategic partnerships.
Loans. The Small Business Administration is a great place to start, but there are plenty of loan options to consider.
Crowdfunding. There are a number of crowdfunding platforms to consider, and you just might get the extra dough you need to get started.

Whether you stick to the traditional SMB loan or look at other non-traditional alternatives, funding is an important consideration. If you want to be your own boss, you’ll have to plan for cash flow. You can’t expect to make a buck overnight.

In conclusion


There’s a lot that comes with starting a business, and the key is not to get overwhelmed by the mountain of tasks associated with following your passion.

Take it one day at a time.


Create a checklist and mark off items as you go (because let’s be real, crossing off to-dos is empowering). Start with a name and secure all your social handles, because even if you’re not ready to post or spread the word just yet, protecting your brand is key.

So what are you waiting for? Get out there and be your own boss!

Image by: Oliver Cole on Unsplash

Tuesday, October 8, 2019

Stopping travel and expense 'leakage' before it becomes a big loss


AUTHOR
Robert Freedman@RobertFreedman

Employees typically submit $10,150 a year in reimbursements. Make sure your T&E policy provides tools for reining in unnecessary expenses.


If you haven't reviewed your travel and expense (T&E) policy recently, make doing so a priority because the cost of "leakage" to your company is likely greater than you think, T&E consultant Oren Geshuri said last week in a CFO.com webinar.

As much as 12% of a typical company's operational costs — about $10,150 per employee per year — are T&E related, and about 5% of that is lost to fraud, said Geshuri, director of technology and media services at the Lyndon Group.

It takes companies between 18 and 24 months to detect fraud, and by the time they do, the loss averages about $26,000.


Even separate from fraud, T&E leakage can be costly. About 6% of T&E annually, or about $60,000 for every $1 million in expenses, is out of compliance in some way, often because of duplicated out-of-pocket employee expenses. The typical duplicate reimbursement is about $50.

There are other risks if your T&E policy isn't well thought through: You can end up paying for costs your company doesn't want to pay for, like spousal travel, or losing money when employees keep airline or other travel credits they earn while working.

Review your policy


Geshuri recommends you review your policy once a year, for a number of reasons. One, it gives you a chance to learn what's working and what’s not​ from employees who travel a lot. Is it easy to understand? Is it easy to submit reimbursement requests? Do the policies make sense?

"Once a year, bring in some of your power users, your road warriors, and sit them down and have a conversation," Geshuri said. "How did we do this year? Where were your pain points?"

Geshuri also recommends you use a corporate card program, if you're not already. "There's a common misconception that giving corporate cards out actually loses control or replaces control, but it's quite the opposite," he said. "It’s very well known now that [it] actually helps you funnel spend."

Using a corporate card helps you integrate T&E data, validate costs, and exercise tighter controls, Geshuri said.

Policy essentials

When you sit down to rewrite your policy, make sure it covers the following:

  • Business travel. How far in advance do you want employees to make a reservation? Do you let them book first class if, for example, they need the leg room? If they get a credit, do they keep it or does it go back to the company? Should you pay for TSA pre-check? Have you set a policy on using Airbnb, Lyft, Uber and other app-based options?
  • Corporate cards. Spell out your rules of card use. For new employees, have a probation period during which they're subject to a lower limit.
  • Contingency planning. Think through what you want employees to do when emergencies or other unforeseen events arise while they're traveling for work. What should you require them to do if you alert them to an emergency they might not be aware of when they reach their destination?
  • Personal issues. How do you treat travel when an employee's spouse or partner accompanies them, or when they add personal travel to their work travel?

Administrative guidelines. Do you want receipts included for expenses under $75? That's the threshold set by the IRS. How soon after travel do you expect reimbursements to be submitted?


Reduce ambiguity

When revising your policy, make sure it includes or addresses these essential elements: a statement of purpose, company expectations and policy compliance, areas of ambiguity and key subject areas. These subject areas include travel, travel-related expenses, accommodations, and food and entertainment.

Also, make sure to check the language you're using. Geshuri recommends you keep the language simple, written at about a fifth-grade reading level, to reduce the risk employees don't understand it. "Don't let a lawyer write this," he said. "It should be a cross functional effort: HR, procurement" and other executives.

Be careful to use the same language in your policy that you use in your expense reporting system, Geshuri said. If your reporting system categorizes employee meals in 10 ways, use those same 10 categories in your policy.


"You can't manage your bottom line if you don't know where your money is going," he said. "Employee initiated spend you can’t see until after it's spent." That makes a strong T&E
policy the only way to govern this big part of your operating costs before you incur them.

Deepak Chopra: Your bad money habits could be hurting your health

Source: https://tinyurl.com/y6tvhzgg


 

Why financial wellness is important to your health, according to Deepak Chopra

If you’re worrying about money, you’re not alone. Finances are often cited as the No. 1 cause of stress.

Yet, that anxiety may be doing more than keeping you up at night. It is also likely affecting your overall well-being.

“If you’re stressed about your finances, of course that’s going to cause your blood pressure to go up and put you at risk for so many diseases,” said health and wellness guru Deepak Chopra, co-founder of The Chopra Center for Wellbeing and founder of The Chopra Foundation.

A number of illnesses — such as migraines, digestive problems and heart disease — have been associated with stress.

People who are financially secure spend money on experiences, not necessarily on products.

The good news is that there are things you can do — both with your finances and to get your stress under control, according to Chopra, a New York Times best-selling author whose books include “Perfect Health” and his latest, “Metahuman: Unleashing Your Infinite Potential.”
Live within your means

Americans owe more than $4 trillion in consumer debt as of July 2019, according to the Federal Reserve.

The use of credit cards is also rising among young adults — 52% of those in their 20s now have credit cards, compared to 41% in 2012, data from the New York Fed show.

However, to be financially well, you should live within your means, Chopra said.

Those who are financially secure “usually don’t spend money that they haven’t earned, to buy things that they don’t need, to impress people that they don’t like,” he said.




Save money

While every financial expert advises saving money, including for emergencies and retirement, it may be easier said than done.

In fact, 28% of Americans have no emergency savings, a July survey from personal financial website Bankrate.com found.

When it comes to retirement, 26% of non-retirees say they have nothing saved, according to the Fed.

However, saving is crucial to your financial health.

“I have also seen in my life that in cultures where people save 10% of their monthly salary and put it in reasonably low-risk investments, in the long term they do much better,” Chopra said.

Protect yourself

Financial security is more than just money in the bank or in investments. It also means protecting yourself with insurance in case you are disabled or get sick, Chopra said.

You may get health insurance through your employer or you can purchase it through the health-care exchanges made available through the Affordable Care Act.

Disability insurance is also important: One in 4 adults will become disabled at some point before they reach retirement age, according to the Social Security Administration. There are both short- and long-term plans, which may also be offered through your employer.

If you are buying any insurance on your own, be sure to do your homework and shop around for the best plans that work for you.

Spend on experiences

Being financially healthy doesn’t mean you can’t spend money.

However, Chopra suggests laying out cash on things like restaurants and vacations, rather than on physical objects.

“People who are financially secure spend money on experiences, not necessarily on products … particularly experiences that enhance your social well-being and physical well-being,” he said.

Meditate

The best way to address your stress is to meditate, according to Chopra.

It decreases blood pressure, hypertension and insomnia — as well as reduces the production of stress hormones, like adrenaline and cortisol, he notes.


Deepak Chopra leads a meditation in Telluride, Colorado.
Courtesy: Deepak Chopra

Chopra has also advised to stop multitasking. Instead, focus on one thing at a time.

If you find you are starting to go down the stress rabbit hole, then stop what you are doing, take a few deep breaths, observe the sensations in your body and smile, and then proceed with awareness and compassion, he wrote on The Chopra Center website.

Increase joy

By increasing your joy, you’ll be less likely to get caught up in any of the ups and downs of the stock market, Chopra said.

To do that, there are a few things in particular you should focus on: pay attention to people, show appreciation and tell others you care about them.

“That’s the fastest way to be happy — to make other people happy,” he said.

Wednesday, October 2, 2019

New report charts economic impact of Hispanic Americans


The total economic output of Latinos in the United States was $2.3 trillion in 2017, up from $2.1 trillion, according to a new report. Sol Trujillo of Latino Donor Collaborative joins Morning Joe to discuss.

Friday, September 20, 2019

CFOs operating more like chief strategy officers, study finds


AUTHOR Jane Thier@thier_jane


Dive Brief:

1) Finance leaders are becoming more concerned about security, data and internal customers, consulting firm Protiviti found in its annual Finance Trends Survey released last week.

2) More than 70% of CFOs and VPs of finance named “strategic planning” as one of their highest priority areas in which they wanted to improve their capabilities, highlighting the need for these finance leaders to focus on strategic matters as much as day-to-day finance and transactional matters, Protiviti found.

3) The survey involved 817 CFOs and finance executives of public and private companies, with 58% of those companies generating revenue over $1 billion.

Dive Insight:


“CFOs can’t just focus on data analytics instead of their previous duties," Chris Wright, a Protiviti managing director and global leader of the firm’s Business Performance Improvement practice, told CFO Dive. "They must add them together, [even if that means finding] ways to automate some of the older responsibilities.

"These new CFO duties shouldn’t be [to the detriment of the finance team], they’re opportunities for the CFO staff to sharpen their own skills," Wright said. "They make the CFO a better boss and the finance team a better place to be, and that can have larger applications for retention and morale.”

Across the board, finance professionals prioritize data security and internal customer service: 84% of CFOs and VPs of finance and 77% of other finance professionals ranked security and data privacy as top priorities.

“A data breach — whether related to financial or non-financial data — can have severe financial and reputational ramifications and as cyber risks increase, finance leaders must adequately budget, allocate resources and prioritize company-wide security and data protection measures,” Wright said in the survey report.

Data is increasingly informing strategic decision-making within organizations, the study said. As a result, CFOs' internal customers — typically other executives within the organization — are increasingly requesting that the finance function “provide real-time information with specific insights, metrics and enhanced data analytics about the organization’s financial and operational performance,” the report said.

Nearly 80% of CFOs and VPs of finance, and 70% of other finance professionals, cited enhanced data analytics as a priority for the finance function to improve knowledge and capabilities. Meeting the changing demands and expectations of internal customers is also a top area driving finance workforce increases.

Twenty-eight percent of CFOs and finance VPs plan to downsize their workforce in the next year due to new efficiencies achieved through robotic process automation (RPA) implementation. “We think RPA integration is related to the growing duties of the CFO,” Wright told CFO Dive. “If you automate, you have more time. [These developments] must be framed in context of budget.”

Wright encourages finance leaders to think of RPA as an opportunity to outsource menial tasks, rather than vital jobs, “because [with RPA], your job then gets elevated to do more important things,” Wright said.

“This is a peer-to-peer report, CFOs to CFOs, their own view of their own responsibilities,” Wright said. “CFOs should understand that this is not a lofty view of an aspiration created by visionaries. It’s a reality-based view of what can happen, because there are companies that are doing it.”

Monday, September 16, 2019

Lesson learned: 'Watch your balance sheet like a hawk,' CFO says


Source: 
https://tinyurl.com/y3hsl86z

Amplify Credit Union's CFO John Orton argues your income statement won't give you the heads-up you need when sales drop and debt service obligations start to mount.

In the aftermath of the September 11 attacks, John Orton's fast-growing business took a nose-dive.

He was part owner of a private equity-backed company that was going around the country acquiring antique malls and using increased sales to service its expanding debt load. But consumer interest in antiques, a discretionary purchase that tends to do well when people are feeling upbeat and confident, waned in the uncertain and fearful environment that followed the attacks and pushed his company into bankruptcy.

But Orton, the long-time CFO of Amplify Credit Union in Austin, Texas, learned a lesson from his earlier company’s struggles. That lesson has helped him be a better finance executive, he believes.


“We thought we were on a trajectory for an IPO at some point when roll-ups were a little more in vogue,” he said in a CFO Thought Leader podcast last week. “Aside from the national tragedy, we saw in the months after 9/11 our sales fall by half. We had leases going up. We had debt payments due on our mergers. So, it put our business into a tailspin. The world went from rose-colored glasses to a chapter 11 filing within four years.”

His mistake, Orton said, was his focus on the income statement almost to the exclusion of everything else. What he should have been focusing on just as much was the balance sheet, because that would have alerted him to trouble down the road in the event of a fall in sales.

“We were very focused on delivering income, and EBITDA, and sales growth, and consummating mergers to keep our venture capital partners happy, grow the business, and try to get bought out or go to an IPO,” he said.

“So, the way we looked at the balance sheet was an afterthought. What snuck up on us was, as we were going past 2001 and into 2002 and 2003, we had a lot of debt service coming due on acquisitions that we’d done in the years prior, and so that, plus a 12% yield to our VC investors, really created a situation where we had a high fixed-cost business.”

Orton said that, had he been more forward-looking, he would have seen his debt service doubling and tripling over the following few years and that was unsustainable in all but the most optimistic scenarios.

“You have to watch your balance sheet like a hawk, and not just your current commitments,” he said. “If I had been more forward-looking, I would have seen in 2002 and 2003 that my debt service was going to double or triple. I think we were under the illusion that, as the business continued to grow and succeed, all the debt service would be taken care of by sales growth, and when that didn’t materialize ... wow, we were upside-down in a hurry.”

Orton said the company emerged from Chapter 11 bankruptcy protection in a relatively good position, in part because of the company's decision to be open about all aspects of the process. “It took about nine months to get through that,” Orton said. “Only about 20% of companies that enter Chapter 11 successfully exit. I actually went around to our different sites, put on roadshows with our employees and key customers right after the filing, and provided monthly updates to them. I think that open line of communication kept a lot of key customers from leaving.”


Early lesson in accountability


Orton credited his appreciation for openness to two negative experiences he had when he first started out in business in the early 1980s. In an early job out of college, at Arthur Andersen, where he worked as a COBOL computer coder, his manager was so frustrated with his performance he threw a book at him and walked out. “It was about 11:30 at night and we were the last two people there,” he said.

In his next job, this time working in the finance department, the company, saddled with a massive inventory problem, instituted widespread layoffs in a heavy-handed way that left a sour taste in employees’ mouths. “No notice, no severance, no nothing,” he said. “It made me realize you can be successful in business without being a jerk.”

Orton says he tries to make openness a characteristic of everything he does and he thinks it’s been a major part of any success he’s had over the years.

At Amplify, when Orton came on board, around 2006, the company had about $300 million in assets. Today, it’s at $1 billion, making it one of the larger credit unions in the country.

During that time, the company has shifted, as most financial institutions have, from a bricks-and-mortar focus to an online and mobile focus.

“It’s been a very digital-first approach for us,” he said. “Boring banks and credit unions by necessity are having to become much more technically oriented.”

He said he works with Salesforce on its CMS, a company called Fiserv on its core banking applications, and a company called Q2 on its mobile applications — this last one a must to stay relevant to millennials. “You can check your deposit balances, your loan application, and you can even do a loan application on a mobile device and we can push notices to you if your account balances get below a certain level,” he said.

Amplify had some 90 applications tied to its core system when he started and now the goal is to whittle that down to about 30 so it’s more manageable, better integrated, and easier for everyone to learn.

“We used to take more of a best-of-breed approach no matter what the application was but then you end up with IT systems that are pretty unwieldy,” he said. “That is a lot of vendors to manage, a lot of training for new employees. We decided that, an application that meets 80% to 90% of need, but maybe slightly short of best-in-breed, but integrates better, is just a better long-term solution for us, easier to manage, probably lower cost, and hopefully, since it’s integrated, easier to use for our customers.”

His role in this process has been to review and negotiate contracts with the vendors, and then track whether the technology is having the results the executive team wanted.

“I’m known as the accountability guy that looks back at ROIs on investments and says, ‘Well, did we achieve the customer growth that we expected to see? Did we see the loan or deposit growth? The increase in service offerings? The number of products per household?' So, I’m the guy who follows behind these investment projects to make sure we’re getting the results we expected, and if not, I want to know where we got off track and what we can do to deliver the investment returns we were expecting.”

The company is hoping the technology will enable it to keep competing even as its competition changes. In addition to other credit unions and community banks, it’s competing against newer online players, like Ally and Marcus.

“A lot of our customers are looking at our rates and looking at those [online players] and in some cases saying, ‘Can you match what I can get at Ally for this two-year CD?’” he said. 


A role for RPA

Going forward, robotic process automation (RPA) is expected to play an increasing role in his company. He’s using it to automate repetitive accounting and finance tasks.

“In the accounting world, we’ve all done reconciliation at some point in our careers and it’s a pretty mundane, low value-add task,” he said, “but you can now — and we’re doing this at Amplify — deploy software that will take sets of numbers and look for commonalities and reconcile the deviations and then at the end of the process, if they can’t perfectly reconcile the account, it’ll spit out the open items to be reconciled, and then you can add human value at the end. So, I see a lot of potential for us.”

The next deployment for RPA will be in loan application processing. “We can have software scan loan apps and summarize information and be given an initial recommendation on a loan,” he said. “And then we would have a loan officer look at that, and if everything looks good, check the box, and the loan is approved for funding. So I think in our industry and certainly others, RPA is going to play an increasing role and to me that’s exciting.”

One bit of advice Orton had for young finance executives is to get out of their comfort zone and get training in communications, including public speaking, because as much as finance skills are important, so is being able to tell the story of the company, because that’s what builds trust.

“As finance people, we tend to be introverted, but it’s important to be good communicators,” he said.

Saturday, September 14, 2019

30 Simple Ways to Increase Your Profits





Which of these 30 simple ideas to increase your bottom-line profits can you apply right now?

By David FinkelAuthor, 'The Freedom Formula: How to Succeed in Business Without Sacrificing Your Family, Health, or Life


When you give lots of keynotes or public talks to business owner and entrepreneurial groups like I do you get hit with the same questions over and over.

One of the most common questions I get is, "How do I increase my profitability?"

It's a great question. Here in one list are 30 simple strategies to increase your profits and profit margin. I've already "field tested" these ideas in my work with my company's business coaching clients over the past decade. They work, if you put them into practice.


Here we go...


1) Increase pricing. Bar none this is the easiest answer for many small companies, especially those who have been in business for a while. Most businesses set their prices when their business was first launched, and since they were so hungry for business, they set pricing levels low. Over time, the business likely only made nominal increases to pricing every few years, but rarely did the owner ever sit down and fundamentally rethink his or her pricing model. If it's been over a year, time to look at it again.

2) Redesign workflows and systems for greater efficiency. Cut steps, reorder processes, reengineering physical workspaces, etc.

3) Eliminate tasks and activities that don't add value to the company or customer. Every dollar you save by eliminating the cost of things that don't add value to your company or to your customer drops directly to your bottom line.

4) Give your team a clearer picture on ways they can contribute to profitability. Every team member is an agent to increase profitability. Empower them to be part of this search for ways to increase profitability.

5) Regularly review your administrative and operational staff levels closely. Most service and administrative departments can be cut by 1 in 4 with no impact on quality of work. Many can handle 1 in 3 cut with no significant negative impact.

6) Look for ways to increase value to clients and customers
. This will help you shorten your sales cycle, increase your closing rate, lengthen your client retention, and perhaps, increase pricing.

7) Increase the dollar value of every purchase transaction with your clients. Think up-sell, cross-sell, and resell... Ask, "How can I get each customer transaction to be for a larger dollar amount?"

8) Beware the steep cost of attrition. Customer retention is a strategic expense if spent wisely. How can you increase your customer retention?

9) Feed your winners; starve your losers. This includes with your marketing activities, your sales force, your general staff, your company initiatives, your reporting, etc. So cut your losers, and feed a portion of the saved time and money into your winners. This will greatly boost your profitability.

10) Feed your winning sales people more leads (even if that means you starve your lower performing sales people of leads.) Audit the "$ value per company generated lead given to a sales person." This is not a time to be "fair", but to be strategic. Be transparent about this and let it be a spark to help Fred learn how to increase his own dollar value per company lead given to him.

11) Renegotiate with your landlord. You'll never get what you don't ask for. Create clear options for other space you could lease and have a heart to heart with your landlord about reducing your lease rate. Even if they say no you can always give them a fallback request to give you an option to extend your lease without an increase in rent.

12)Focus your best efforts, talent, and attention on selling your most profitable products, services, customers, niches, or channels. 

13) Strategically map out a pathway to upgrade your top 10-20 percent of clients to "red carpet" or "highest value" offerings.
They want this service, will value this service, and will pay for this service.

14) Look for ways to bundle products and or services so that you increase the average ticket price of every sale. 

15) Sell your product or service in larger purchase sizes.
This could mean that rather than sell a 10 hour package of time you sell in 20 or 50 hour sizes. Think about this as selling a bigger box of your product or service.

16) Strategically consider giving pricing or other incentives to make the purchase and use of your product or service in larger unit sizes compelling. 

17) Strategically map out systems to help your customer consume your product or service faster so that they get more value and hence repurchase more frequently. Look for ways to educate them on the ideal use of your product or service.

18) Make buying from your easy and simple. Reduce barriers to entry. Reduce frustrations or hurdles to re-purchase.

19)Shift a cost from a fixed to a variable expense to give yourself greater flexibility. This is a way to protect your cash flow. It is extremely important for unproven tactics and strategies. For example, pay per sale versus a guaranteed amount for an outside sales person.

20) Shift a cost from a variable to a fixed where the value is proven. Make this shift only when you can negotiate a substantial price savings by doing so.

21) Consistently look for ways to lower your fixed overhead.
Scrutinize your base expenses to eliminate non-strategic expenses that just don't add value to the company or to the customer.

22) Stabilize your production systems so that you can reduce need to stock as much inventory and raw materials which are a drag on your cash flow and on your gross profit margins. 

23) Consider buying "off-the-shelf" versus designing or developing a tool (e.g. software, machine, etc.) from scratch. Unless you are in the business of designing exactly those types of tools you'll almost always find your estimates of the cost to build from scratch are hundreds of percent too low. Plus, you won't have the install base to update that tool, for example with later software releases, at a cost anywhere as close to a third party company who can amortize these ongoing waves of new versions over a much larger user base.

24) Negotiate hard. Take the time to plan out your negotiation strategically. Create competition for your dollars. Create a list of concessions you want, with extras for you to trade off. Research the market to better understand the best deal you can expect. Even hire an experienced negotiator to help you make the purchase on the best price and terms you can. If the asset you're buying for your business is large enough, the ROI on your negotiation work can be immense.

25) Specifically -- negotiate and get competitive pricing on your merchant accounts. This one tactic will likely yield an extra .25-.5 percent to your bottom line with very little effort. (Think of what this means. If you have a 15 percent operating profit margin, an .25-.5 percent increase to your dollars of profit is the equivalent to selling 1.67-3.33 percent more. What does this really mean? If you have $10 million in annual sales with a 15 percent operating profit margin, then a .5 percent decrease in your merchant account fees adds the same profit to your bottom line as selling an additional $330,000! Not bad for what will likely take your controller 10-15 hours of her time to negotiate.)

26) Beware "hidden" R & D costs for pet projects and bright shiny opportunities that don't match up with your company's strategic plan. 

27) R & D is not just a tech or pharmaceutical company line item.
If you work on new ways to create a product or service that you will one day, "down the road" sell to the market, YOU have R & D. Be strategic about where you invest your company's dollars.

28) Get clear on all the costs of inventory: cost of capital; storage; insurance; etc. This will help you make informed stocking levels.

29) Consider selling off or writing off old inventory. Why pay to store stuff you really don't have a use for. Free up the space and cash tied up in that old inventory. Sell it; donate it; scrape it.

30) Set optimal inventory levels and stick to them.
Constantly be on the lookout for ways to safely reduce your inventory levels.



There you have 30 simple ways to increase your business's profitability.

Friday, September 13, 2019

5 signs you're about to run out of cash



Source: https://tinyurl.com/yybbcv5u

Cash is surprisingly hard to track, and knowing when it's about to run out is harder if you don't know the warning signs.

Given how important managing cash is to companies, it’s surprisingly hard to get visibility into one's cash position, and also to know when a cash crunch is looming, a treasury consultant said in a webinar on Tuesday.

Particularly for companies with operations in multiple states or countries, just getting a handle on your cash balance isn’t easy because of time and other constraints, Kenneth Fick, director of strategy and transformation for MorganFranklin Consulting, said in the CFO.com webinar.


A surprising number of companies don’t use any kind of treasury management system (TMS) to manage their cash, which means the treasurer or a finance analyst has to manually log into each bank portal, access the accounts, and download a CVS or other type of file to input data into a consolidating master spreadsheet, typically in Excel, to come up with the company’s position, a process that can eat up a lot of time and also introduce manual keying errors.

“Simply knowing what cash you have at the beginning of the day generally can take anywhere from two to six hours, so you’re spending half your day on a Monday, Tuesday or Wednesday just trying to figure out what cash you have,” he said.

One company he’s working with hasn’t been able to get any visibility into the cash it has through a subsidiary in India, creating what he calls a cash “black hole” in its corporate-level accounting. “They know [the accounts] exist,” he said. “What cash is there? Can it be repatriated? Is it just sitting in a non-interest-bearing account? They just can’t access it.”

That company's black-hole situation is unique. For more everyday situations, Fick recommended using a treasury management system because it gives you a way to consolidate your accounts into a single application. Most of the systems are on SaaS-based platforms.

“What they do is minimize these efficiency challenges and provide connectivity directly to the banks,” he said.
Signs point to problems

Fick walked through five early warning signs your cash flow is in trouble.

1. Not having a quarterly cash forecast
Companies that haven’t created a model for forecasting cash that's separate from the other modeling your financial planning and analysis (FP&A) team does are setting themselves up for problems, he said.

“A lot of time your FP&A team models your balance sheet, P&L, and financial statement over 12, 18, and 24 months for planning, but they fail to take it the next step in regards to the cash component,” he said. “They don’t see [where cash is] at 13 weeks. There’s nothing magical about that. It’s just one quarter out, but it gives you that visibility in the short- to intermediate-term regarding

what will come in and go out based on your assumptions in your model.”

2. Not knowing your cash break-even point


The break-even point is the amount of cash you need on a monthly basis to meet your expenses based on your monthly revenue, and if you don’t have a handle on this, you risk coming up short at crucial times.

“If my revenue is $250,000, I know that, in order to make payroll and other expenses, generally, on average, I need about $150,000 to $180,000 in cash per month,” he said. “So, I know if it goes below that, I have to get it from somewhere: a line of credit, cash on hand, whatever. What if you’re a seasonal business? If you sell Christmas ornaments, you get a gigantic windfall in the fourth quarter and you’re cash-flow negative throughout the rest of the year. So you have to understand where that break-even point is.”

Fick said you should take it as an ominous sign if your company resorts to discounting just to get money in the door to meet your monthly expenses. “ A lot of times I’m seeing, ‘Well, I have all this accounts receivable, but I don’t have enough cash.’ If you’re starting to discount because of the cash impact to get revenue in the door, that’s a big warning sign.”

3. Use of long-term debt

There’s nothing inherently wrong with using long-term debt to cover short-term costs if it’s part of a plan for, say, ramping up operations quickly, but if there’s no strategy behind it, it’s a sign cash has become a problem, he said.

“If you’re seeing a company take out long-term debt just to meet short-term expenses, that’s a warning sign because short-term expenses can become long-term very quickly,” he said. “When you’re in that position, it’s best to cut costs than to borrow.”

4. Tax payment delays


No one likes to pay the IRS, but asking for delays because you don’t have the cash is a sign that you haven’t managed liquidity well, which will cost you more in the long run. “Especially for smaller businesses, the IRS will just beat you to death,” he said. 

5. Too-fast growth

Fick also said growing too fast can be a warning sign, because it can point to a misalignment between your accounts receivable and your accounts payable.

“So, you’re selling to Walmart or Target and they require you give them 90-day terms,” he said. “They’re the big players. If they say 90 days, it’s really 100 or 115 by the time they cut the check or run the automated clearing house (ACH) or whatever. What your vendors require of you are 30-day payments, and you have no power over them. So, you have to basically float that difference for 90 days. If you’re having trouble with that collection process, that is another big warning sign.”
Best practices

Fick suggested five best practices for effective management of your cash.

1. Communication

It’s imperative that finance executives communicate their forecasts accurately, because miscommunication can lead to decisions that don’t match what’s happening. The company “might borrow more that it needs to meet conditions that don’t materialize or they can leave funds unnecessarily idle, which I see very often, actually,” he said. "Communication is the best way to avoid a liquidity crisis. You always want to forecast [business] drivers, not the number. Effective communication is a best practice regardless of the [market] environment.” 

2. Cash flow vs. revenue

Cash flow and revenue both indicate your company's financial health, but revenue is about the effectiveness of sales and marketing, while cash flow is a function of liquidity or money management. Fick said cash flow can be negative, but revenue really can’t be unless there’s something very wrong with the company. To measure cash flow, don’t forget to include money that comes in through other channels separate from the sale of your core product or service.

“Companies obtain cash in a variety of ways outside their main business,” he said, including “interest, warranty fees, other fee income — even SaaS has a set-up fee — one-off projects for professional services like fixing things.”

3. Inflows vs. outflows

Fick said you should identify all sources of inflows and outflows and then work to maximize inflows while minimizing outflows, and to a large extent that means focusing on timing.

“If your customers are asking for 90 days and your vendors are asking for 30 and you have no power over your suppliers, that’s an issue,” he said. “You can use things like supply chain financing (SCF) to ask your vendors to give you longer terms. Maximize timing, extend your payment terms, understand your control of them.”

4. Scenario planning


Creating scenarios in the FP&A function is common, but it should be done for cash, too, he said.

“What scenarios do, especially for cash, is they provide a playbook for you. What ifs,” he said. “Having these ifs before they happen helps you think through and build that playbook, so if it does happen, you’re executing and not thinking.”

Tariffs provide a good example. “Tariffs affect the P&L but they also affect cash and future business.”

5. Variance analyses

Fick recommended you set tolerances for what you can accept when actuals come in at a variance from your projections. If you set a tolerance of, say, 5%, you're prepared to take action once you hit that difference from your projection.

“There might be customers who fail to pay,” he said. “Sales don’t materialize, you see unexpected expenses, you have to understand and analyze those in the short-, mid-, and long- term. Nothing is set in stone.”

Despite its importance, cash can be a challenge to manage. But by knowing some of the warning signs and following best practices, you can help protect your company from that gravest of all ills: not being able to meet your company costs because you’ve run out of money.

Wednesday, September 11, 2019

CFOs too busy to take on more despite expectations, survey finds




Dive Brief:

  • Almost 40% of CFOs say they're juggling too many tasks — 12 a day, on average — to worry about digitally transforming their operations or giving cybersecurity the attention it deserves, a survey released Monday found.
  • Cash flow management, data analysis, hiring and other traditional duties are among the biggest concerns of financial leaders, far more than implementing the latest tech or security innovations, the survey of 166 CFOs across 23 industries showed. The survey was conducted by NetSuite research affiliate Brainyard.
  • "We have to compartmentalize," Drew Cook, CFO of Pact, a fair-trade apparel company, told CFO Dive. "Whether we like it or not, we have to always be thinking about cash flow and the need for capital. Cybersecurity and [other digital priorities] keep us up at night, but these things aren't what drive long-term value."

Dive Insight:

The Brainyard survey found most CFOs — almost half — have not yet invested in cutting-edge technologies such as blockchain, artificial intelligence, cryptocurrency or the Internet of Things (IoS).

CFOs think their corporate culture isn't ready for these changes or they're not sure the investment, at this point, is worth it, the report said. They're also not sure their legacy systems can adapt to the newer technologies.

In contrast, most say their priorities over the next two years involve improving performance of their traditional duties. 55% say they want better and faster reporting, and 50% say they want to speed revenue growth. Only about one-third say implementing new technology is a priority.

Cybersecurity is also not a priority. Almost 55% of CFOs say their company has no full-time cybersecurity staff, and another 7% say they don't have staff but plan to change that soon.

Cook's company has basic protections in place, he told CFO Dive. But beyond that, he relies on third-party vendors.

"You have to get security right," he said. "Part of doing that is having dependable partners."

He said it's reassuring to work with a specialist who is able to keep up on the latest developments in cybersecurity in a way a CFO can't. "It helps knowing they're doing it with other companies across the country," he said. "It helps to ensure you're state of the art, cutting edge."

Cook said the trend of CFOs being asked to take on more tasks stems from a growing realization among CEOs and boards that the analytical approach finance people take to management is useful across the enterprise.

"Whether it's marketing or HR or legal, the analytical mindset can be beneficial across the board," he said. "So the CFO is being asked to play a larger role in the organization."

The downside of that, though, as the survey results show, is that CFOs are finding it hard to combine the new tasks with the old. But Cook said the solution is to work with third-party vendors, rather than to push the new tasks to the bottom of the pile — not just for security but for other functions.

"Outsourcing is one way to do more with fewer resources," he said. "We outsource a lot of things, including fulfillment. We're all being encouraged to do more with less."