Follow the Money

Years ago, a friend was asked how he ended up with a million-dollar business.  The reply:

“Start with two million!”

Seriously, the financial aspects of your business are so critical to your success of your company.  While they aren’t the only aspect of the business to keep an eye on or be concerned with, they are critical.

Just ask Michael Visentine.  Michael is New Paradigm Advisors resident financial expert.

“From the time you do your first market analysis to setting up your books to making payroll the first time, you really can’t ever know enough about your company’s finances,” Michael said.

Michael should know.  He’s been a financial analyst, strategic planner and COO for several significant businesses.  He’s worked in the telecommunications, printing and food service industries.

“The biggest mistake most small business owners make is trying to do it yourself,” Michael continued. “Some things are just better left to those skilled in the craft.”

If you aren’t trained in bookkeeping, you can easily overlook entries and not understand tax deductions.  You could get your company–and yourself– in big trouble. And you might not set the whole system up right in the first place.

“Those two issues are probably the first things to consider right up there with mixing personal and business spending.  That’s a common problem with many family-owned businesses.

Then there is not backing up your data.

“Not having an adequate IT system and having it archive thing for you can lead to bigger issues,” Michael said.

Your financial systems are key to understanding your business as well as serving as the underpinnings of the company.

For more information on how to set up your company’s financial systems or have your current system evaluated, give us a call.  Not calling might add up to the wrong answer.

 

*photos courtesy of rawpixel on Upsplash

 

Smartest Person in the Room

Back in my design construction career, it was always important that you had a really smart and fully engaged team.

I guess that applies to all careers, doesn’t it?

Well, it’s especially important in technical fields where a lot of times the designed or engineered solution doesn’t quite fit the actual field condition. If you’ve ever been involved in any type of construction or remodel, you know what I’m referring to. The main solution to this is to involve really qualified and experienced professionals. And the key element is “experienced.” The more times they’ve been there, done that, and seen that, the better your project is going to be.

One of the key characteristics of the best experienced people is their ability to say, “I don’t know.” Or “I’ve never seen that before.” Or something along those lines. The worst ones try to wing it and go out of their way to not admit their ignorance or appear to be all knowing when in fact, they are just as ignorant of the situation as everyone else. At this point, I’m trusting that you’re already saying, “Dave, this applies to every field and endeavor.”

You’re right, it does.

I don’t know about you, but I’ve discovered that the person who always wants to be the smartest one in the room, is not always the wisest or the one I want to look to for the final answer. My rule has always been that old axiom, “if you ever find yourself being the smartest person in the room, then you’re in the wrong room.” Applying this to everyone in the room makes me appreciative but wary of the person who always feels and acts as if they have all the answers.

Trusting that you’re not this person, but you have to deal with this person, what do you do when they try and dominate every meeting with their expansive knowledge? It’s a standard problem that every leader has to deal with. The best answer is to always be working toward engaging everyone in a meeting. Even the most introverted or quiet ones. Fact is, many times, they are the ones with the answers – or better still the best questions.  But you’re going to have to draw it out of them with engaging questions of your own.

I wish I could tell you the perfect answer to dealing with the smartest person but I still haven’t found the perfect answer (to anything for that matter.) I can tell you what I have used that has at least relieved the situation to a degree:

  1. Always allow the person his or her opportunity to contribute (You’ll not be able to avoid this so dive in and accept the fact.).
  2. Once it appears that they are going to attempt to answer every question or make the first response, say something like, “Thanks for your input, let’s hear from someone else” (And here you might request input from someone specific – maybe even that quiet person that seems to never say anything.).
  3. Continue following this process throughout the meeting. You may never fully quiet the smartest person, but you can sure indicate to the rest of the participants that you are determined to get and value their input.
  4. Finally, if necessary, have a private discussion with the individual and ask them to help you draw out input from everyone else by not being so quick with their responses.

If you’ve discovered another process, I’d like to hear from you. For sure, I’m not the smartest person on this subject.

Blessings!

Dave

They didn’t tell me anything new, but…

Sometimes the answer is right in front of us we just need to talk it through or have it told us in language we understand—and may have heard before.

Sound familiar?

So it was with Michael Smith at MD Engineering.  He had a successful, growing company, but something was missing.  And it was really in front of him all along.

“The New Paradigm Advisors (NPA) team came in and really spent time with us,” Michael recounted. “The things they told us we had heard before just not in that order or with the emphasis they gave it.”

New Paradigm Advisors is a business consulting firm that helps determine a company’s value by helping shape it.  NPA came in to help Michael shape his company at a time when it needed shaping.

“One thing I was missing was an advisory team,” he continued. “As a privately held single partnership, I didn’t necessarily have any collaborators.  The New Paradigm team helped me select and shape an executive team.”

Subsequently, Michael put together a team that help guide decisions important to the company’s present and future.  This team includes:

  • Michael, the CEO
  • The company controller
  • An industry visionary from within the company
  • A next-generation employee

This team is anything but a collection of “yes” people. Quite the contrary, Michael says.

“Anything is open for discussion to allow the smartest and most clear decision to be made. They all are allowed to push back.”

This one innovation has gotten the company excited again.

New Paradigm Advisors is a value-assessment and consulting firm based in Dallas, Texas.

Just What Do I Want?

Many of us in business are working hard to shape and grow our business.  We’ve built up this thing we call a company and hope to see it through to…to what?

Just what do you want?  Is it “how much?” Or is it a legacy?

These are the questions Bruce Bernbaum asked himself not long ago.  Bruce is a co-founder and partner in Bernbaum-Magadini Architects in Dallas.  At his age and where he is in his career, Bruce has some decisions to make.  But where to start?

“The New Paradigm Advisors team gave me this Value Builder’s ‘quiz’ that allowed me to assess my business,” Bruce recounted. “And it caused me to stop and think long and hard about the value of our company.”

New Paradigm Advisors (NPA) is a business consulting firm that helps determine a company’s value.  Dave Sykes of NPA met with Bruce informally to ask some critical questions.  It was the Value Builder’s Assessment that really got Bruce’s attention, particularly with one question.

“When I got the score back I had a zero on one point,” Bruce recounted. “’That can’t be,’ I thought.  But it was enough to stimulate a discussion with Dave to help me set some goals.

Between the assessment and the ongoing discussion, Bruce has used his time with the New Paradigm team to be better at planning and forecasting.

“The team got me working on my business rather than in it.”

New Paradigm Advisors is a value-assessment and consulting firm based in Dallas, Texas.

The bulls are firmly in control, but the bears are making a ruckus: will we be ready when things change?

Our economy has given us some great rewards in the last few years. North Texas has experienced phenomenal growth for several years now:

  • Many large companies have moved here.
  • For every one of them, 10 or more supporting businesses have moved here too.
  • And don’t forget the housing market plus all the infrastructure to support all the new arrivals.

It’s not just been a bull market, but a roaring bull market and it looks to still have some healthy life still ahead.

On a broader basis, stock market volatility has returned:

  • We have had several years of consistent upward movement.
  • Investors seem to have reached that point where they are expecting a correction and get a little jittery.
  • The market drops quickly on news and then rebounds as bulls continue to buy the dip.

The overall market is still positive.

However…

While there is really no reason for concern just yet, there is something lurking that we should all pay attention to carefully.

That something is interest rates.

  • The Fed is signaling more short-term interest increases on top of the ones they have already put in place.
  • They will also be selling debt sitting on their balance sheet into the market.

All of this will affect borrowing costs.  Not just for our own businesses but for our primary customers and their customers.

Let’s take an example.

North Texas is in a building boom.

Those buildings (projects) have a timeline to completion which could run a few years.

Lots of different companies provide goods and services to these projects: companies like general contractors, architects, engineering firms, electrical, plumbing and construction contractors, material suppliers, and related trades and suppliers.

These companies employ a lot of people who buy goods and services from other businesses.  Many business sectors benefit.

All projects rely on financing.

Companies in this supply chain use leverage (debt) too.  Increases in interest rates which is the cost of debt translates to less funds available for other purposes.

As interest rates rise the number of projects will likely decrease because the economics won’t work as well.  Some projects already scheduled could be delayed or scrapped. With fewer projects in the mix there will be greater competition for the remainder creating downward pressure on the price of services as well as a build-up in inventories.

Those with higher debt service and the least free cash flow will begin cutting costs, delaying payments, laying off employees or filing the big “B.”

Then the ripple effect begins.

There will fewer people to buy certain types of goods and services causing a slowdown in other business sectors.  We all know the process.

Today everyone’s boat is floating high with the tide.  It’s easy to make money.  The real test of leadership is being prepared for adversity–that “what if” you don’t really want to think about – and how you perform when it comes.  The cycles of 2000-2001, 2007-2009 and 2011 and the precursors are repeatable (I can go much further back but that’s giving away age).

We are enjoying the good times, will we be prepared when that changes? :

  • Can you reduce debt and what you think your borrowing needs are or will be?
  • Can you improve your accounts receivable collection time with your top customers by even a few days?
  • Do you have the right customers or should you amp up marketing?
  • Do you have the right people and processes in place inside your company and as partners?

We can get away with much while things are good.  It seems it is also a good time to fine tune.  What do you think? Sure would like to hear your views.

Jay

Do You Need It “Fixed” or Do You Want It “Changed”?

Are you at that inflection point that you need to break out of your current business doldrums? Then our challenge to you is:

Are you ready to accomplish real change, or do you simply want to keep fixing things?

Let’s say you have a leak in your kitchen sink and you want it fixed quickly because it could be causing damage. What if, on the other hand, you wanted to improve its usability and functionality, you chose to completely remodel your kitchen?

Fixing the sink merely puts things back where they were so you can continue doing what you’ve always done.

Remodeling your kitchen improves the comfort of your house, its value, and your enjoyment of it.

That’s the big difference between fixing and changing.

The first issue requires a qualified individual, like a plumber. A plumber is going to come out with his trusty tools, spend a couple of hours fixing the problem using his “best trade practices” and then hand you a bill. Voila, you’ve got a fixed sink. Everything’s back to the way it was. Quick and relatively pain free.

Remodeling the kitchen, though, is a whole different ball game. It will not be done with one phone call. Again, you start with a specialist, like an architect or designer, to determine what you want to achieve. They help define the look, the work flow, the appliances, colors, textures, the lighting.  And, oh, what’s the new sink like? Then, after all that planning, your next call is to another specialist, like a general contractor, who brings in all of the trades (and all of their tools) and transforms your tired old kitchen into a completely new and exciting environment, ready to meet your dreams for the future. That transformation took a team.

So, when we ask you: do you want it fixed or changed – we are pushing you on this significant issue.

Do you want just the quick fix, then carry on as you always have? Or are you ready to change your company into what you’ve been dreaming about?

Do you want a business fixer? Or do you want a whole team that’s going to take your company blazing into the future with change?

It’s going to take some changes. You ready?

Dave

The Simplest Customer Service Trick in the Book

I really don’t mean to over simplify this, but customer service is really simple. And the number one trick is the one so many of us overlook.

It’s returning a phone call.

To restate it, always take your customer’s incoming phone call.  If you can’t, then always return it as soon as possible.

We are constantly interviewing our clients’ customers and vendors as part of our services. This gives us an unpolished view of our client so that we can get the most street-level picture of how the market views our client. Good, bad, or indifferent; warts or beauty marks.  Every blemish.

On a recent assignment I had an unexpected and unsolicited opportunity to interview a client’s customer. I was having lunch with an associate when he informed me that he was a customer of my client. He bragged on the quality of the work and the level of expertise that everyone there showed. But – and this was a big “but” to him–they were horrible at returning phone calls. After inquiring why that stood out so much for him, he explained his reasoning.

First, a little background: they, both my client and my associate, are in a project-focused businesses where time lines and benchmarks are critical. That means there needs to be constant back-and-forth communication about progress and status of various elements of a project.

My associate, while glowing in his compliments about my client as to his abilities, he was extremely frustrated to the point of considering discontinuing any future work because he just simply didn’t hear back from him when he called. Note that he didn’t say “he got bad service or production or bad results.” He just didn’t get timely information. And many times all it would have taken would have been a call back to say, “I’m still working on it, everything is going ok, but I don’t have any changes to report.”

Simple, right? Well, if it’s so simple, why do I find this to be a common complaint? I haven’t done any real scientific or serious analysis on this, but my practical experience informs me that this is really prevalent across all businesses.

Let me just leave you with this challenge. Return your phone calls, even when you have nothing to report. If you don’t have time for a full conversation, then send an email saying you got the phone call, there’s nothing new to report, and you’ll be calling back shortly–and then do just that.

Hey, this stuff really is simple!  Remember that old line about “90 percent of success is showing up?” This is a variation on “showing up.”

Blessings!

Dave

Singles or Home Runs?

We’re coming up on Major League Baseball Opening Day. Spring time in America! You just can’t beat it!

There’s probably nothing more exciting in all of sports than to see a grand slam home run. The bases are loaded and the batter knocks it into the second level of the left field bleachers. There’s just something about that event that makes the rest of the game almost fade away. You’ll remember that play probably long after you’ve even forgotten the final score of the game.

So what?

Way back in an earlier life, I had the privilege and challenge of working with a company as the vice president and general manager of their computer distribution division. This was early in the computer business and all of us in the market were pushing and shoving and trying to differentiate ourselves. I was fortunate enough to work with a well-funded parent company, so we had the wherewithal to do some creative things–so, we did. Of course, we  were also competing many times with equally well-funded companies and that meant they were doing some of their own creative campaigns.

After trying several different programs, succeeding at some and failing at others, the president of the company challenged me with a baseball analogy (lesson?) that I’ve been applying ever since.

After a particularly costly marketing plan that did not achieve much, he said: “Dave, you’re really good at swinging for the fences with some of your campaigns, but I’d be much more pleased if you’d just give me consistent singles and doubles.”

He went on to say: “If you do that, we’ll make consistent progress and get more growth while the other guys waste their time and effort on their home run attempts.”

It’s a lesson I’ve never forgotten, even though it’s still in me to want to swing for the outfield bleachers.

As we work with clients, we challenge them to define their ideal client and that then leads to developing a more defined “go-to-market” strategy to best reach those ideal clients. While we’re not marketing experts, we are “go-to-market” experts. Meaning, that we take the “singles and doubles” approach to getting new business and keeping it. No fancy “home run” efforts. Just good old fashioned approach to improving batting averages by doing the right things consistently and repeatedly. This has proven over and over again to result in healthy growth without major investment in unproven marketing or sales efforts. Just the basics of getting a hit most of the time you step in the batter’s box. Which, by the way, happens every day.

So, when you go into work tomorrow, hit consistent singles and doubles. Forget expecting your team to hit home runs. Make sure everyone is doing the basics.

  • Call your prospects
  • Return phone calls
  • Be honest
  • Be consistent
  • Be dependable
  • Be reliable
  • Be responsible

Be the best batter – that’s the one who consistently gets a hit – not the one who occasionally hits a home run. That will grow your reputation and your business more than any other strategy.

Be blessed out there!

Dave

Sharpen Your Tools

Last week I was reminiscing about my youth and my Dad’s woodworking shop. With your forbearance, I’d like to take you down one more nostalgic trail.

In our shop we had a lot of tools and, as you can imagine, most of them had to have sharp edges. None were sharper than our chisels. While all the saw blades and planers, and router bits and drill bits had to be sharp, none required the sharpness of the chisel and the hand plane. The reason was simple: these were hand tools and, generally, the last tool to touch the wood. So they had to be sharp enough to do the job without a lot of force and they couldn’t leave any extraneous marks.

To this day, when I do any woodworking, there is nothing more satisfying, I’d even say spiritual, than using a sharp chisel or plane across a beautiful piece of wood. As the tool cuts there is a clean shaving and a sweet sound as that shaving comes off the wood. This can only happen with an extremely sharp and perfectly honed tool. And we learned how to do that in Dad’s shop. The interesting thing about our shop, though, was we broke a cardinal rule of most woodworkers: we kept all the chisels in a drawer – with no edge protection. Those of you who relate to this personally just went “ouch!”

But before you discount everything else, hear me out.

We learned how to properly sharpen tools through a series of finer and finer grit stones and then through a stropping process that created super sharp edges. This however was not a one time procedure. Every time we pulled a chisel out to use, we examined the blade and stropped it and made sure it was ready for use. We never assumed that it was ready “right out of the drawer.” So, while we were careless in one sense for keeping them all in a drawer, we were always testing the blades before they were used.

What’s the point? Well I’m glad you asked – that is, if you haven’t already come to it on your own.

You can’t do a job worthy of true craftsmanship, if you don’t, first of all, use the right tool. And second of all: make sure it’s sharp enough to use.

So today’s question is: When was the last time you read a business book? When was the last time you studied up on or sought advice on a problem that was troubling you at work? Not to become the expert, but to become knowledgeable enough to identify and analyze a challenge to determine the best way to tackle it. Do your people follow your example of always studying and learning more about their craft?

If you’re not sharpening your chisels to the sharpest edge, you’re not doing a true artisan’s job. You’re not doing the best you can do. Take the time to do that. Set, and be, the example so you’ll have a company full of sharp chisels ready to do their best.

Blessings,

Dave

Are You Making Plans for Next Year?

We’re talking here about your annual business planning session. The annual “how are we doing, where have we been and where are we going from here” meeting. However, if you’re looking to do the more significant strategic planning meeting, your list is going to be significantly different and will incorporate far different elements.

Here’s a brief checklist of the basic things to get done to make the most of your planning:

  1. Establish the objectives and purpose of your planning session. Include plans for all of the major business areas in your company:
    • Sales
    • Marketing
    • HR and personnel
    • Finances
    • Operations (systems and processes)
  1. Gather all the data needed to evaluate each of the above. Delegate this to the department heads when and where possible. It is important that your leadership team participate in this exercise. They (and you) will need the last 3 to 5 years of data and any comparative year to date info that has been tracked for the current year.
  2. Formulate the guidelines of the exercise to challenge your team and let them know what they are working toward.
  3. Set expectations for the new year. This will be the time to tell your team and get them all going in the direction you want. Ten percent growth year over year? Five new major clients?Five percent EBITDA growth?  You get the idea. You’re the leader.  You are the only one with a blank page. Everyone else will be working from your outline.
  4. Draft an agenda and determine how much time this planning time is going to take. One day? Two days? Delegate the planning of the program including location, food and other details.
  5. Schedule the meeting.  Put it on the calendar as soon as possible so everyone has ample time to clear everything else off their calendar. This should be a “no miss” meeting.

One final, but important, note: invite as many people as possible to participate and contribute to this, even if they are not going to be in the actual meeting. You want engagement and the best way to get it is to engage them first. If you’re a business of “one” you can still engage your closest adviser or mentor.

Good luck with your planning. If you need help in this early stage, the actual planning session or in the execution of the plan, I’m here for you. Call or text me. I’d be honored to help. Your success is my success.

Dave