Leadership | Innovation & Growth | Congratulations to 2 North Bay Leaders

This week, two North Bay organizations deserve a round of applause!Amy's Kitchen opens an on-site health care clinicFirst, congratulations to Amy's kitchen for its innovative approach to employee health care. They recently opened a primary health care clinic at their Santa Rosa production facility.[pullquote]From time to time, we offer a round…

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Read more about the article Business Finance | The Big River | Chapter 2 – No Cash? Can we borrow what we need?
The Big River series is a 12 part installment about a company desperately seeking cash to fuel their growth and the struggles they face trying to find it.

Business Finance | The Big River | Chapter 2 – No Cash? Can we borrow what we need?

The  Big River series
The Big River series is a 12 part installment about a company desperately seeking cash to fuel their growth and the struggles they face trying to find it.

 

What happens if we run out of cash?

“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.

John 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.

First, we need to review our short term cash needs

“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, which you can see in Figure 1 – Borrowing Availability, below. (more…)

Continue ReadingBusiness Finance | The Big River | Chapter 2 – No Cash? Can we borrow what we need?
Read more about the article Business Finance | The Big River | Chapter 1 – We’re Making Money. Why Are We Broke?
The Big River series is a 12 part installment about a company desperately seeking cash to fuel their growth and the struggles they face trying to find it.

Business Finance | The Big River | Chapter 1 – We’re Making Money. Why Are We Broke?

The Big River series
The Big River series is a 12 part installment about a company desperately seeking cash to fuel their growth and the struggles they face trying to find it.

“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. (more…)

Continue ReadingBusiness Finance | The Big River | Chapter 1 – We’re Making Money. Why Are We Broke?

Business Finance | Why you should read Warren Buffett’s Letter

A Weekly Business Finance series for Non-Finance Executives!

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Read Warren Buffett’s Letter to Berkshire Hathaway Shareholders

So, why not  jump into the deep end right now by reading Business Finance is about much more than finance

I’ve said before that leaders don’t have the luxury of confining their interests to just a few things

(more…)

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Flush the recession Kool-Aid! Create your own demand!

“Teach a parrot the terms ‘supply and demand’ and you’ve got an economist.”

~ 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.”

The law of supply and demand still rules

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.

Even for tickets to a free concert?

Supply and demand drove markets long before economists appeared … and its jarring prevalence is unavoidable. One of my favorite examples is (more…)

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Warning: Speed may not be good for our health!

“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.” (more…)

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Small Businesses – Stop Worshiping Them?

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.”

[pullquote]Who says tax rates don’t matter to job creation?[/pullquote]

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 (more…)

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Small Business Finance Bill passes – So What?

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.

[pullquote]Are you uncertain about what uncertainty we’re certain about?[/pullquote]

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, (more…)

Continue ReadingSmall Business Finance Bill passes – So What?