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Vol. 47: Building a Business: Hey, I’m profitable; so why don’t I have cash?

The North Bay Business Journal, a publication of the New York Times, is a weekly business newspaper which covers the North Bay area of San Francisco – from the Golden Gate bridge north, including the Wine Country of Sonoma and Napa counties.

This page provides the Print-Friendly Version of the article, as published.

Any related materials or articles referenced in the column, or otherwise applicable, will also be referenced below:

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Article published -Monday, August 3, 2009

Building a Business: Hey, I’m profitable; so why don’t I have cash?

By Lary Kirchenbauer

Businesses must focus on inventory, accounts receivables to get answer

“Only when the tide goes out do you discover who’s been swimming naked.” — Warren Buffett

Victory … Defeat. Won … Lost. Revenues … Expenses. These are well-understood concepts among business executives. Profits … Cash? Oops, sorry. That may be the biggest conundrum among business leaders: If I’m making all these profits, why don’t I have more cash? My company generated $500,000 in profits this year, and we have only $10,000 in cash. We can’t pay bonuses or contribute to benefit plans without cash – where did it all go? (more…)

Work Share program avoids layoffs

In our CEO Round Table meetings, we have discussed on several occasions the Work Sharing Unemployment Insurance program available through the California Economic Development Dept., which provides a temporary and practical alternative to layoffs. In short, the program allows for the payment of benefits to individuals whose wages and hours…

Cut Costs or Invest in Growth?

The Wall St. Journal reports today on growing tension at venture-backed companies over whether to save money to reduce risk or invest to take advantage of new opportunities. You can never gain enough perspective on this issue, which represents one of the most pervasive struggles faced by growing businesses, and…

Short Term Solution – Long Term Problem?

The Wall Street Journal recently published further anecdotal evidence of the mixed messages that companies are receiving ... and giving ... about the expected upturn. While some 25% of companies reportedly expect more layoffs, about the same percentage think further layoffs are unlikely. Many companies continue to look to salary…

Furloughs vs. Layoffs?

I have written frequently about personnel decisions and offered various references on the relative value of furloughs and layoffs. The WSJ today published another article on this subject that compares and contrasts these valuable tools.

Business Finance | Have you met the Scavenger’s Daughter?

Impressing your bank less important than being able to hit targets

The Scavenger’s Daughter? Might be the name of a lost Dickens novel … or an indulgent misnomer for a the infamous rack that not only stretched but crushed its victims during the reign of King Henry VIII.
Thumbscrews, pilliwinks, breaks and the tormento de toca were other methods used to punish those that broke their “covenant” with the King.
Fortunately, those punishments are relegated to history’s ash heap … at least I’m pretty sure that banks aren’t using any of these default provisions.

Compliance with financial covenants

Compliance with financial covenants, however, has never been more important. Today, banks have an arsenal of covenant choices that are used as an early warning system to alert participants to potential problems that may jeopardize their financial well-being.
It’s important to recall that covenants are based upon (more…)

Straight Talk. All the Time . . . for Entrepreneurs

We're proud of the "Straight Talk. All the Time" mantra on this site. Jason Calacanis of Maholo.com and founder of Silicon Alley Reporter stays close to that line in his recent newsletter that BW republished. It describes his brutal experiences with the dot.com implosion and offers the hard cold facts…

How to manage layoffs

CFO Magazine recently published an article about “How to Talk about Layoffs“. It includes some valuable anecdotes about layoff processes that don’t work.
Here are several key themes that bear repeating:

No amount of employee communication is too much. Most business leaders assume employees know much more about strategy or financial challenges than they do. Head off greater problems by keeping everyone informed about what you’re doing and what you’re thinking. (more…)

Vol. 36: How to deal with your bank

The North Bay Business Journal, a publication of the New York Times, is a weekly business newspaper which covers the North Bay area of San Francisco – from the Golden Gate bridge north, including the Wine Country of Sonoma and Napa counties.

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Article published – February 23, 2009

BUILDING A BUSINESS: Ideas for your business you can take to the bank

“Money is better than poverty if only for financial reasons.” – Woody Allen

I’ve received a lot of questions lately about banking issues and the “rules of the road” for dealing with your bank in a troubled economy. All of us are facing an economy that I refer to as the “Double V” – an insidious environment comprised of big volatility and little visibility. These twin engines will predominate for the foreseeable future.

This week’s column will start with Banking 101 as we make our way toward more subtle concepts. Unquestionably, this process is more artful than scientific, and while there are mechanical tasks and financial metrics that apply, managing your banking relationship requires both judgment and discretion.

• No Surprises. It’s no surprise that “No Surprises” is at the top of the list. (more…)