Free Business Health Checklist

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The strength and financial health of your business depends on whether you have a tight grip on your finances. Make sure you carefully manage:

  • expenses and bills – pay quickly to ensure goodwill
  • invoices – chase all late payers
  • Cash flow– ensure you have a health flow of cash and reserve cash
  • taxes – file your returns and pay on time, every time.

Take a moment to review this check-up check list. Once complete, if you have questions, need guidance or a sounding boards for some tough decisions, reach out today.

Andrew Tucker, CPA, CGMA, MBA l Owner, AETucker Consulting, 704.651.2216 l andrew@aetuckerconsulting.coml www.aetuckerconsulting.com

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Ready for your Mid-year Review?

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Well, it’s that time of year for business owners to consider doing a Mid-Year review and what a year it’s been!  I don’t know how or if your business has been affected by COVID-19, but many businesses have been significantly impacted.

What is a Mid-year review?

According to John McAdam in his article in Wharton Magazine, the purpose of the mid-year business review is to monitor business performance, create solutions to make more money, and provide guidance for leadership via communication with, and for, your team.

For those of us who more or less academically inclined, it’s time to stop and catch your breath long enough and take an objective look at your business – how was the first half of the year and how do you expect the second half of the year to be? A mini Strategic Planning session, if you will.

A Mid-year review involves looking at all aspects of your business including:

  • Financial results – How did they compare against budget? How are your ratios and KPI’s vs. expected results? Most importantly, how is you Cash Flow?
  • HR – When was the last employee survey taken? Are your employees working well together? Is turnover at an acceptable level?
  • Sales & marketing – Has revenue met your expectations? Have you identified why variances exist? Is your revenue mix in line with your goals or should you make some modifications to your marketing efforts to focus on higher ROI products/services?
  • Operations – Are your products/services being delivered timely? Have your margins changed/costs increased (i.e. service & installation costs)? Have quality or customer satisfaction changed?

Lisa Wood from New Sprout Media asked the quintessential question in her blog – Are you on track?

You have goals, right? How well are you doing relative to your goals? I can’t think of a better way to frame the reason to do a Mid-year review.

According to John McAdam in his article in Wharton Magazine, a Mid-year review includes the following:

  • Evaluate performance
  • Reallocate resources to better achieve goals.
  • Make more money than you would have otherwise.
  • Take stronger corrective actions than you would have without a mid-year review.
  • Provide leadership for your team—too much silence taxes milestone goals.
  • Offer focus for your team.

John points out that taking time to do this is essential and, I would add, one of the most rewarding and enlightening strategic exercises you can do for your company.

Daniel Dreher points out in his article that you can achieve better focus and reap the following benefits:

  • Reviewing now provides more time to implement changes.
  • You can act while other businesses are procrastinating.
  • You probably have a good idea of how the year is going.
  • A review offers an opportunity to re-grip the reins.
  • Nothing good comes from waiting for more numbers.
  • Opportunities may exist now that will disappear later.
  • There’s no better time to re-energize employees.

Daniel adds that this exercise will help you focus and put your company in a better position going forward hopefully with no more pandemics to deal with.

One critical line of questions I’ll add is don’t forget the What, Who, Where, When, Why and How questions.

All businesses need to plan for contingencies, but I don’t think any of us could have possible planned for COVID-19 and the disruptive force it has turned out to be.

As with any exercise in planning, make sure you plan the discussion/meeting upfront and allow sufficient time and input to have a great result. Contact me, Andrew Tucker, for help with this process or other aspects of your business. I can be reached by e-mail at andrew@aetuckerconsulting.com or by phone at 704/651-2216.

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The Measuring Stick of Revenue & Loyalty: Net Promoter Score

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In the early 2000s, Frederick Reichheld, a Bain & Company Fellow, was on a quest to determine if there were indicators beyond “customer satisfaction” surveys to indicate customer loyalty, engagement, and probable future sales. These customer loyalty insights were coined, Net Promoter Score® (NPS).  NPS is a customer loyalty and satisfaction measurement taken from asking customers the ultimate question: “How likely is it that you would recommend Company X to a friend or colleague?”  Today, many organizations consider it the gold standard to not only assess the customer experience, but to predict business growth by quantifying loyalty.

Why is NPS So Important?

Imagine the shock of spending most of your time ‘chasing your tail’ due to customers, suppliers and employees that aren’t as committed to your company and loyal to your brand as you thought?  You can measure almost anything using the NPS metric. In addition to understanding the overall NPS for your organization, you can track scores for everything from individual products, services, stores, web pages, or employee retention.  NPS can help your company understand your target market better and see how they respond to your product or service, social media campaigns, and customer service agents. The goal is to gain loyal customers who become brand evangelists instead of consumers.

How to Implement Net Promoter Score Metrics?

To calculate the NPS comes from the golden question: “On a scale of 0 to 10, how likely is it that you would recommend our organization to a friend or colleague?”

Based on the number a customer chooses, they’re classified into one of the following categories: “Detractors,” “Passives,” and “Promoters.” 

Breakdown Scores

  • 0 – 6: Detractors
  • 7 – 8: Passives
  • 9-10: Promoters

First, ask the question (how likely are you to recommend) and gather the data. This can be compiled via phone surveys, web surveys, in-person surveys, kiosks, cards at checkout or even QR codes.

From the data received you can categorize customers into the breakdowns: promoters, passives and detractors. Using the data from the previous two steps, do the following calculation:

Step 1 – NPS = % of Promoters – % of Detractors

Step 2 – NPS = 55% – 35%

Step 3 – NPS = 20%

Find benchmarks through your industry association, your survey provider or do your own survey of your competitors to see how you measure and compare to your competition.  If someone is unhappy with your services or products it’s critical to respond quickly to make sure you show empathy and can resolve and capitalize on any complaints.

Dig deeper and determine why customers are in each bucket. This will probably require further segmentation by age, sex, demographics, and customer type. You will discover over time, there is a correlation between a positive NPS score and the lifetime value of a customer.  Using the NPS metric to constantly guide both strategic and tactical decisions is a long-term tool to ensure profitable growth for your organization. If the customer’s score is low, then we as business owners must assess whether the problem lies in the experience or in expectations set during the sales process.

How Do You Measure?

How well is your business doing in the eyes of your customer? How do you know? What are you doing with that information?  If you wish to speed up the process, there are several NPS tools and surveys to consider implementing within your organization. LINK

We are all familiar with the concept of what we regularly measure and focus on tends to improve. Now more than ever is the time to focus on your customer’s loyalty.  Ask customers how you can help—and how you can provide an even better customer experience. What you do today, the empathy in the messages you send to your customers: that will be what they remember when we move into a post-coronavirus world.

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How Does a CFO Create Financial Success for Companies?

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When you think about your business in five years from now, what do you see?  What do you see in ten years or even next year?

  • Is your revenue growth and profitability on track to take your company to your next milestone?  
  • Are you forecasting and achieving the results you really want?
  • What are your growth goals and how will you fund them?

If you find yourself facing uncertainty to some of these questions – you are not alone.

All businesses can benefit from a guide – an advisor providing higher level financial and operational advice that you may not be getting from your current staff or tax preparer.  A fractional or outsourced CFO has seen similar issues you face in other businesses.  They walk alongside you, helping you navigate the road ahead so you can maximize opportunities and reduce risk along the way.  Even if you don’t feel you need nor can afford a full-time CFO, that guidance exists by outsourcing your financial leadership role.  If you’re unsure how a fractional CFO can help your company, consider these five ways a CFO can provide immediate value and results.

Improving Profitability
People, processes and technology all link to the ability of a company to be profitable. A CFO will identify Key Performance Indicators and benchmarks; and build methods to track and report them consistently so you can better track and then improve profitability. By analyzing your employee productivity, monitoring redundant tasks, controlling costs, maximizing technological functionality and initiating profitable pricing strategies, you can see improvements to the bottom line.

Managing Cash Flow
A CFO will put an effective cash management system in place. By managing the cash cycle, the company improves collections, pricing, and terms; all adding to increased liquidity. This includes managing capital, debt obligations, and ensures the ability to invest in new projects. A CFO can create a solid forecast, so you avoid being blindsided by the cash flow problems that accompany rapid growth. Cash flow projections prepared by the CFO provide a means for the management of cash, which is the lifeblood of a company.

Providing a Sounding Board for Decision-Making
An experienced and effective CFO brings financial insights and leadership to help the company maximize profits by increasing cash flow.  By using financial data and insights, the CFO will provide clarity on where to best make investments, expand the business, roll out new products and/or service offerings— all essential to maximize growth potential. A CFO can provide objective and expert financial advice while building clarity around goals and action-plans to forecast and meet those financial goals.

Funding Growth
An outsourced CFO usually has developed and maintains strong relationships with lenders.  This is advantageous for business owners seeking to obtain a loan to fund growth or extend a line of credit. A CFO brings knowledge of how to build your business lending profile by educating you about factors that banks consider when seeking a loan.  With the knowledge of different lending options, a CFO can help you compare all options and expand your banking relationships to prepare and secure the right financing needed to help you grow your business.

Mitigating & Managing Risk
Risk-taking is a key part of the growth of any business.  But not understanding the risks your company faces can bring your company to its knees. CFOs, given their expanded role in establishing and executing strategy, have become well positioned to help ensure that a company’s risks are identified, assessed, managed, and integrated into the corporate strategy.  A CFO has a keen understanding of the scope of risks that the organization faces by identifying the risks and classifying them by risk type (financial, compliance, debt, liquidity, operational and security risk.) A CFO will evaluate each of the risks, creating estimates of the probability of an occurrence for each as well as an assessment of risk impact. They can provide your organization with processes and procedures for reporting of risk exposures that can act as early warning signals.

Your Trusted CFO
There comes a time for many companies when you need financial advice and services over and above what you are getting from your staff.  AETucker Consulting serves owners and management of small to midsize privately held companies to develop and implement strategy, improve cash flows, increase company value and provide successful business transitions when the time comes. 

Where are you in your business journey? 

Let’s start the conversation today on ways I can provide strategic financial guidance and help your business grow.  Let’s schedule a discussion that convenient for you. Schedule–>

Andrew Tucker, CPA, CGMA, MBA

AETuckerConsulting, LLC,
704-651-2216
Andrew@aetuckerconsulting.com

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