“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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~ 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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The holidays are just around the corner, and we’re still trying to figure out how we’re going to get it all done. So, instead of asking you to work at something – anything – I’ve decided to give you a gift of holiday music. Elmo did it, so did Ren & Stimpy, Winnie the Pooh, Shrek, the Muppets … so with animated competition like this, what can go wrong with my first effort at song-writing?
Yeah, I know, don’t quit your day job. So, feel free to sing along to the tune of the 12 Days of Christmas. Key of D Sharp, please.
All together now:
The first thing in business that’s such a pain to me … is the never-ending stinking eee-mail.
The second thing in business that’s such a pain to me … stuff a-cumm-u-lating … and the never-ending stinking eee-mail.
The third thing in business that’s such a pain to me … meetings, meetings, meetings … stuff a-cumm-u-lating … and the never-ending stinking eee-mail.
The fourth thing in business that’s such a pain to me …
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Yes, the holidays are here and already the list of things to do continues to grow – completing the annual budget, planning parties, visiting with friends, figuring out what to get who for when … and so it goes. Yet, my spirit remains strong, so I’ve prepared a menu of 12 holiday treats that I hope will slide down like Amaretto eggnog in front of a winter fire.
I’ve even scoured some of my earlier columns to find the most delectable morsels. So, here’s a smorgasbord of lessons learned – a few appetizers, a choice of entrees, a little dessert – from executives of both extraordinary capability and numbing incompetence — that should grace your executive table.
1. It’s never about you. It’s always about them. Customers, employees, suppliers … family, friends, colleagues. Be clear about it and thrive. Get it backwards? Fail.
2. If you don’t think you’ll ever have a management succession problem, you already have one.
3. Build your compensation plan based on performance. Period.
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“Speed, for lack of a better term, is good”.
That’s not quite what Gordon Gekko said in the original Wall Street movie, but it’s close enough for our purposes.
So, who’s complaining about the super-fastest fiber-cable ever? Nobody that I know of, but here’s what caught my attention. It isn’t just the extraordinary speed extolled in Forbes’s recent article, Wall Street’s Speed War. Sure, it cost about $300 million to bury a one-inch underground cable over the 825 mile distance between New York and Chicago. Yes, it’s been done in stealth mode so no one would find out and build one even faster, and yes, it’s about to go live.
Big deal? Apparently so … but here’s the thing. The only reason this cable got built was … grab your abacus … to save 3 MILLISECONDS off the previous route for such cable traffic. That’s equal to THREE 1/1000 OF A SECOND!
What for? Here’s a few of the effusive remarks that Forbes quoted: ‘That’s close to an eternity in automated trading” … or “Anybody pinging both markets has to be on this line, or they’re dead.”
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Doesn’t a lot of this jawboning about job creation make your brain explode?
I’ve never read articles by Rex Nutting before, who writes for MarketWatch on the WSJ Digital network … but a banker friend of mine referred me to his “Time to stop worshiping small businesses” article.
I’m not sure where Rex gets his information but his conclusions about the limited job creation value of small businesses is generally unsupported. After arguing, in Clintonesqe fashion about “it depends on how small the definition of small is”, he goes on to claim that while “small businesses do create a lot of jobs, but they also destroy a lot.” Citing a Census Bureau study, he claims that “once they pass their first birthday, small companies, on average, lose more jobs than they create. Many fail within years.”
A recent study by the Ewing Kaufman Foundation reported an entirely different result, concluding that “80% of the jobs created in the first year are still here after 5 years.” There’s not enough detail available to comprehensively compare these disparate reports, but to debunk the value of SMB job creation requires a little more factual support from Nutting.
He also claims that tax rates don’t matter
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Do you often wonder how this country gets along with the Pollyanna views inside the Beltway, mostly comprised of those who have never had to meet a payroll? The Senate passed the Small Business finance bill last week as a few Republicans crossed the aisle to provide the needed votes. The House is expected to quickly pass this version. More later … but ….
So What? It’s a $30B bill so it sounds like a lot of money … but so did the TARP $750B number when it was announced … and it’s still a long way from fully invested. The NYT claims it will help “credit-starved businesses” … says who? Read Uncertainty is killing business – NOT credit in which I review why credit availability is NOT what’s killing small business. If you’re uncertain about what uncertainty we’re certain about … read the WSJ verbatim quote to be reminded of the painful litany of the economic and regulatory quicksand on the road to recovery.
Sure, there may be qualified businesses struggling to get credit. It is tougher out there, the underwriting standards are less flexible … but will the economy recover when credit is extended to small and middle-market businesses? No,
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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.
Not only do you get honesty and integrity from Lary but you also get creativity, maturity and deep business acumen. Lary is the diamond in the rough for middle market companies in need of corporate advisory services and transaction services.
Kelly O. Kay, Partner, Center for Corporate Innovation
