"Fantastic Mr. Fox" Offers Fantastic Business Advice

Have you read “Fantastic Mr. Fox” by Roald Dahl, author of other beloved classics such as “Charlie and the Chocolate Factory” and “James and the Giant Peach”? Did you happen to see the movie this weekend? I had the distinct pleasure of doing both with my family over this Thanksgiving holiday. While devout “read the book first” advocates will likely disagree, I highly recommend both the book and the movie in no particular order.

While there are great lessons to be gleaned from “Fantastic Mr. Fox”, I will be careful not to divulge too much of the storyline. Suffice it to say, Mr. Fox takes chances, even enlisting the help of friends and family. Then, he finds himself in a less than desirable situation. In his case, you might even say he’s got his back against the wall.

Now you may not be in that dire of straits, but if you are like most of us, you are likely experiencing challenges such as decreased sales, tighter lending requirements, slimmer margins, and the list can go on. As you are thinking about your business for the upcoming year, I would suggest taking some tips from the charming Mr. Fox.

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  Go to the drawing board.
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  Think outside the box.
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  Develop your plan.
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  Delegate.
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  Let everyone do what they do best.
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  And most importantly, DIG!

Developing a Cash Flow Forecast

Cash Flow is an essential factor in the ongoing health of a business. Knowing how to maintain cash flow is essential to sustaining a successful business. But what exactly is cash flow? The 3 key components are:

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  Funds on hand at the beginning of any period
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  Funds received and spent during an ensuing period
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  Funds remaining at the end of that period

Keep in mind that cash is not profit. Profit is the difference between the total amount of money your business earns and all of its costs, usually assessed over a year or other trading period. Cash, on the other hand, is the amount of money you have on hand to pay debts. You can be showing a good profit and still not have enough cash to cover an immediate debt. Income and expenditure cash flows rarely coincide yet you must always be in a position to meet your scheduled payments. Cash flow management is basically about speeding up your inflows and slowing down your outflows. To achieve this requires planning, also known as a Cash Flow Forecast. The key elements of a Cash Flow Forecast are:

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  Receipts
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  Payments
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  Excess of receipts over payments
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  Opening bank balance
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  Closing bank balance

A Cash Flow Forecast will assist you with working capital management to meet your cash needs as well as applying for new financing. To learn more about creating a forecast for your business, visit http://www.simonsbitzer.com/ or call 782.3070 for details.

Ask Not What You Can Do For Your Accountant...

For many business owners, tax time represents the beginning and end of their contact with an accountant each year. Other owners have discovered that their accountant can offer much more. A good accountant is aware of the wider economic, legal and financial environment affecting their client’s business, as well as being acquainted with its key drivers of revenues and costs. These businesses make extensive use of their accountant as an advisor whose knowledge they can call on for counsel and recommendations to help them grow their business. Seeking specific business advice from an accountant can save you time and help to make their business more profitable.
A modern accounting practice is able to offer a range of assistance over and above recording transactions and generating financial statements and compliance documents. These days an accountant can be a primary resource for a wide range of advice.

Tax planning:
Preparing financials for tax purposes should be just the first stage of managing the tax obligations of a business. A number of other business decisions through the year will have tax implications, and advice on how to structure these issues can limit the tax liability involved. The key to minimizing overall tax liability is to seek advice on the tax implications of major day-to-day operational decisions as they arise.
Business Advisory:
The financial statements an accountant creates have more use than as just tax documents. Using a number of key performance ratios to analyze the figures in them can reveal a great deal of information about how different parts of the business are performing, or underperforming. They can point out pending problems in areas such as cash flow and inventory. Financial statements only tell where the business has been. Ratio analysis can convert financial data into actionable business intelligence to help the business go somewhere. An accountant can take that one step further and offer specific solutions to specific operational problems — fraud proofing the business, risk management, lease versus buy decisions, managing inventory, depreciating equipment, pricing, and even marketing.
Personal finance advice:
A business owner’s personal finances are integrally linked to their business finances. To manage them best they need to be managed together. An accountant can advise on how to structure business and tax commitments. They can investigate different methods of valuing the business as well as help you create a succession plan that will ensure trouble-free transfer of management when the time comes.

Using an accountant as a trusted business advisor provides the owner with an opportunity to lift their head from the grind of daily operations, look at the bigger picture and get an independent assessment of their situation. Consider the value of receiving real, balanced evidence and practical advice to point out the pros and cons of any proposed strategy — before implementation makes it an irreversible commitment. A business owner who is not using their accountant for more than just tax preparation is missing out on a great opportunity to access sound business advice.

Inter-related Tips For Managing Through The Economy

Business owners and managers have probably never faced such a period of change as we have seen this year and continue to see even today. Change carries risk, but where there is risk there is also opportunity.

There are three principal areas that management must focus on to survive and prosper in this period of change.

• Revise your valuable formula-that competitive element that generates profit and sustainable success for the business.
• Modify operations-change the way the business works to adapt quickly to the environment.
• Manage for cash-while the storm is (still) blowing, prioritize cash even over profit and investment.

These are inter-related and ignoring any one of these while focusing on the others will be detrimental to the long term success of your business.

2 Tips For Managing Through the Economy

So, the recession is over. Feeling better? If your business is not yet growing and if sales are still shrinking, you may need to change the way you manage your business. For those who seek out and find the profit-building strategies that work in any economy, not just a prosperous one, success is almost guaranteed.

Not everyone's business has slowed in this economy. Many grew their profits by 50 to 100 percent or more last year, and you can do the same. If you're a solution seeker instead of an excuse maker, here are two simple steps you can take to keep your business on track and make next year your most profitable:

1. Stay Confident
The biggest mistake you can make is to lose confidence in your products and your services.
Starting to doubt your unique competitive advantage and your ability to improve your marketing could kill your business. You will lose the race before it starts.

Like an animal smells fear, your customers will notice your hesitancy and they may buy from a competitor who appears confident of success. You could potentially lose even more business.

2. Focus on Your Valuable Formula
Obviously you are doing business in a very different economic climate than you were a few years or even a few months ago. The strategies that may have helped you stay afloat in the past may not work today.

To succeed in this economy, your business needs to be more focused and specialized. Big companies who sell a bit of everything might close their doors, but we see this happening to small businesses as well. Generally, companies that try to provide too many products or services are struggling. Their prospects can't figure out at what they excel.

On the other hand, businesses that target a specific service or product are holding their own. We are hearing that business is steady and, in some cases, growing! Learn more about how to identify your valuable formula and the other key elements to surviving in recessions.