“Financial Adrenaline” is a term we love around here because it reflects our commitment to help you turbocharge your business with practical tips and techniques to improve free cash flow, the lifeblood of business. As a further extension of our Financial Adrenaline program, we’re going to share a new Business Finance Tidbit every Wednesday specifically for those business executives who don’t have a finance background. Our current Big River series started with We’re Making Money. Why are we broke? … then No Cash? Can we borrow what we need? and What if our loan collateral doesn’t cut it? Last week, we talked about the need for outside investors.
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“All intelligent investing is value investing — acquiring more than you are paying for. You must value the business in order to value the stock.”
~ Charlie Munger
John Wilson, CEO of Ace Business Stuff, spent the last few weeks preparing for his meeting with Lary Blogger. He called a few days ago to follow up on his recent conversation with his attorney, Frank Lee Documents, when they spoke about investors, DilutionA reduction in earning per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities and ValuationThe process of determining the current worth of a company. An analyst valuing a company may look at the company's management, the composition of its capital structure, prospect of future earnings, and market value of assets. Judging the contributions of a company's management would be more subjective, while calculating intrinsic value based on future earnings would be an objective technique..
“Hi, Lary. I appreciate your coming by to meet in person to talk further about some of the issues we discussed a few weeks ago. Can we talk about valuation first, since that seems to be the foundation for conversations with prospective investors?
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“Financial Adrenaline” is a term we love around here because it reflects our commitment to help you turbocharge your business with practical tips and techniques to improve free cash flow, the lifeblood of business. As a further extension of our Financial Adrenaline program, we’re going to share a new Business Finance Tidbit every Wednesday specifically for those business executives who don’t have a finance background. Last week we began our 12 part Big River series so you can pick up the story there.
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“Creditors have better memories than debtors.”
Benjamin Franklin
John, are you ready for our meeting? We said yesterday that we were going to meet to go over our financial projections and review a possible bank proposal.”
“I’ll be right there, Tom,” John Wilson, company CEO said to his controller. He reflected on their conversation last week about the Company’s expected negative cash flow and the need to borrow from their bank, most of which resulted from giving extended terms to their customers. John learned his lesson and wanted to avoid borrowing, but Tom had been pretty explicit about the need.
“John, I’ve gone over our short term cash needs again,” Tom said after they gathered in the conference room and were looking at some numbers on the overhead projector. “I’ve created a simple example on the screen with all the numbers shown in thousands.
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“Financial Adrenaline” is a term we love around here because it reflects our commitment to help you turbocharge your business with practical tips and techniques to improve free cash flow, the lifeblood of business. Every Wednesday, we’re sharing a new Business Finance Tidbit specifically for those business executives who don’t have a finance background. You’ll get a head start by reading Warren Buffett’s letter to shareholders this year, and his comments about depreciation.
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“The importance of knowing accounting can not be underestimated, it’s the language of business. If you don’t know it, it’s like being in a foreign country without knowing the language.”
Warren E. Buffett, CEO of Berkshire Hathaway, Inc.
“We’re broke,” Tom mumbled to himself. Tom Sampson is the controller of Ace Business Stuff and was reviewing his latest calculations about their cash flow.
“What do you mean, we’re broke?” Tom looked up sheepishly to see John Wilson standing in his doorway. He fingered his collar and turned to address the company’s CEO. “We can’t be broke because business has never been better,” John said.
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“Financial Adrenaline” is a term we love around here because it reflects our commitment to help you turbocharge your business with practical tips and techniques to improve free cash flow, the lifeblood of business. As a further extension of our Financial Adrenaline program, we’re going to share a new Business Finance Tip every Wednesday specifically for those business executives who don’t have a finance background.
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In most fields of endeavor, the more we learn, the more we realize how much we have to learn. It’s certainly no different in the world of business finance, so for non-finance executives, it’s never easy to know where to start.
So, why not jump into the deep end right now by reading Warren Buffett’s Letter to Berkshire Hathaway shareholders for 2010. The publication of Berkshire Hathaway’s annual report is closely watched in the national media, as well as in homes and offices across the country … and for good reason.
I’ve said before that leaders don’t have the luxury of confining their interests to just a few things.
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Every Thursday, I’m sharing a new Personal Productivity Tip to help you get more done. Each Productivity Tip is a remarkably simple tool or concept that can be quickly implemented to make a real difference in your personal productivity. When you apply many of them together, they’ll make a big difference in improving productivity, achieving accountability and staying focused on the things that matter the most in your life.
You may want to check out some of the posts in this Productivity series, including the the value of checklists; the importance of getting rid of the crappy stuff; the nightmare of the cluttered mind; and the 4 Do-or-Die Principles to Drive your Personal Productivity System.
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Last week, we dusted off the S.M.A.R.T acronym as a reminder that we need to create Specific, Measurable, Agreed Upon, Realistic and Trackable objectives if we want to create a business culture with accountability as its centerpiece. There is simply no shortcut or substitute for the genuine productivity that results when we SET CLEAR EXPECTATIONS.
Today, we’re going to dust off another “oldie but goodie” but one that many of you may have never encountered. I learned it from some old consulting hands and while it’s often used in a formal chart of “who’s supposed to be doing what,” it’s a valuable accountability tool to evaluate the roles and responsibilities of individuals involved in any kind of team effort or project.
In short, it qualifies team members based on their expected level of contribution to a project. Different parties play different roles to get things done, and this tool provides a simple, effective and consistent way to achieve project accountability by evaluating who’s doing what.
By spending just a little time to establish these roles, you will once again, SET CLEAR EXPECTATIONS. It will also help your team members understand their roles and what’s expected of them in a particular project. Read on to learn about each of these four roles.
In short, the buck stops here. This team member has ultimate accountability for accomplishing the objective. Since “if you have two bosses, you have none”,
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‘Always ask why. Dig deeper. Get the facts.’ Avoid crowd mentality“Ask Why” was their motto. “Wheel Out,” “Fat Boy” “Death Star” and “Get Shorty” were some of the nicknames applied to their strategies. Confirmation letters of successful trades were addressed to names like “Mr. M. Yass and “Mr. M. Smart” … and I think you can parse the underlying contempt. “Rank & Yank” described their people performance system, “Pump and Dump” their trading strategy. About $70 billion of market value was destroyed, more than 20,000 employees lost their jobs and pension funds worth $3.2 billion were destroyed, more than two thirds of which belonged to retirees with little chance to rebuild.
I had always intended to watch “The Smartest Guys in the Room,” the 2005 movie based on a book by the same name from co-authors Peter Elking and Bethany McLean, but it got lost in the shuffle until last week. It chronicles the Enron cataclysm, whose meteoric ascent was violently terminated with its bankruptcy on Dec. 3, 2001.
It’s hard to believe this happened almost 10 years ago since to be “like Enron” still reverberates as an ignominious curse. It’s really more like a viral infection, though, because so many of the forces that drove its destruction have cleaved similar fissures in scandals from
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~ Thomas Carlyle
A lady walked into a neighborhood market one day and spoke loudly over the counter to the head butcher.
“Your prices these days are atrocious, Sal. Joe’s Deli across the street is selling your $10 chuck roast for only $5!”
“I know, Mrs. Haggle. I saw the sign. The thing is . . . Joe doesn’t have any chuck roast.”
So, the law of supply and demand rears its head again, some days a beautiful vision, other days an ugly hag. We’re surrounded by her mystique everywhere we go. Traffic is tied up because there are more cars than highway space. Starbuck’s is backed up because people want coffee faster than it can be made. There are no paper clips in the supply room but there’s plenty of fruitcake left in the kitchen.
Supply and demand drove markets long before economists appeared … and its jarring prevalence is unavoidable. One of my favorite examples is
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We knew that 2010 was a pretty “fowl” year didn’t we … but did you think that the price of a French hen would increase by 233%? Or that two turtle doves would now cost 78.6% more? That a lone partridge would go up 20%?
Not that there’s anything wrong with a basket of assorted swans, geese, French hens and turtle doves … I’d prefer a beef tenderloin myself … but who expected that in 2010, the ”Christmas Price Index”, which has closely tracked the Consumer Price Index (CPI) for most of its 27 years, would rise by 9.2%, the 2nd largest increase over that period (2nd only to a 16% jump in 2003), according to the NY Times report?
It’s PNC Wealth Management that has tracked the cost of the fanciful mix of gifts heralded in the classic carol “The 12 Days of Christmas” for more than a quarter century. This year, they’ve included a popup book on their web site about this index.
Of course, this basket of good is much narrower than the CPI, but there’s one other interesting “nugget” in here … namely that the price of “Five Golden Rings” is up 30% to $650 this year, although a lower increase than last year’s 43%. Should have bought a bunch of gold a few years ago, huh? (I’m such a great rear-view investor, it’s actually scary.)
BTW, if you want to give all of the gifts featured in the song … repeats included … it’s 364 gifts for a total of a mere $96,824, up 10.8% from last year. It only costs $23,439.28 for just the 1-12 gifts. Oh, that’s all? Feeling better already ….
At least there’s one piece of good news in here. If inflation rears it’s ugly head, we can put it on a plate and serve it for dinner!
Happy Holidays!
By now, it should be pretty clear that at Exkalibur, we believe in the value and power of business finance for middle market companies … and we know you can find it if you devote some time and attention to it. We’ve even designed a separate Financial Adrenaline blog feed to collect all of our published material so you can easily access all of it.
Then, to provide more graphic and visual insights about the principles of business finance, we’ve created a Financial Adrenaline video library … all of it free to everyone … to help you advance your own understanding of business finance principles.
Now, we’ve come up with an easy-to-understand postcard-style PDF to summarize the features and benefits of our Financial Advisory services using the proven tools of the Business Ferret™.
So, why not download our Financial Adrenaline postcard to keep as a handy summary of the features and benefits of these powerful business finance tools, and how they can help you help you integrate business finance into your everyday business decision making?
Welcome to Exkalibur. I’m Lary Kirchenbauer, President of Exkalibur Advisors, Inc. Please take advantage of our resources to help you build your business ... and let me know what more we can do to serve you.
Read my latest column from the NY Times affiliate, the North Bay Business Journal.
Lary has been a tremendous asset to our company. His experience and knowledge provides our young company with the type of financial and business guidance needed to facilitate our continued growth. In addition to Lary's efforts in raising capital for our company, he has assisted Multimedia Live in both extensive business planning, as well as continual ongoing monthly financial and strategy analysis of our business. I have found this to be an invaluable service.
Ken Burke, CEO, Multimedia Live, Inc.
