Leading with Questions: Why Socratic Questioning Can Change Your Business For the Better

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Perhaps you’ve heard the term “Socratic Questioning” before, or even the “Socratic Method.” We’re revisiting the term today as a business value driver where the right questions can lead to critical thinking that helps a company spot its opportunities for growth.

The concept itself is therefore about digging deeper into your company and brand’s strengths and weaknesses, asking the open-ended questions that can identify helpful gaps and find solutions for each. In that same breath, these solutions will strengthen the financial health of your business— the ultimate bottom line.

What does Socratic Questioning look like?

The questions this method asks were, as meant per the philosopher Socrates, to discover underlying ideas and truths that only come out when probed or provoked.

In business, we can ask these questions to our management teams, our finance team, our stakeholders and our customers to understand just how well the business is performing and what could be done better. Below are some thought-starters to get the ball rolling. Feel free to interchange certain terms for your use:

For stakeholders:

  • What are your thoughts on our current business plans?
  • Would love to hear more of what you have to say about this matter?
  • What are some solutions you’d like to employ to combat this issue?
  • In your opinion, what are some potential disadvantages to our new idea?
  • Are we prepared with crisis plans?
  • How do you feel our latest developments align with your strategic goals for the company?
  • From your past experience, what does “success” look like for this project and what are some key performance indicators we can follow?
  • What would need to happen from our end in order for you to feel comfortable with this project? 
  • What is your feedback on our latest development? What ways can we be better next time?

For internal teams:

  • In what areas do you feel the team is succeeding?
  • Where do you see room for improvement?
  • What factors are best contributing to your performance level?
  • What responsibilities do you find most challenging, and why?
  • In what ways do you feel the team can be more productive? What steps can get us there?
  • If there was one thing you could ask the company, what would it be and why? 
  • What has been the most rewarding part of your work?
  • Where do you see yourself in 5 years?
  • Are there any barriers you can think of that are impeding us from meeting our brand vision?
  • What are some ways we can help keep the team engaged and motivated?
  • How would you describe our corporate culture?

For customers:

  • What do you look for in a company and what values do you have as a customer?
  • What brought you to us and what would help keep your business?
  • What are some positives you can share about your experience with us and where can we improve?
  • What other features, products, or services would you be interested in as a consumer?
  • What did you think of the price tag for our product or service? What would you need to see improved if we were to increase it?
  • What, in your opinion, is “too expensive” for this type of service?
  • Would you recommend us to others? Why or why not?
  • How do you feel about the marketing or advertising for our company? Anything you would change?

Focusing on Growth and Financial Health

In the world of business, asking the right questions can stimulate critical thinking and problem-solving and can be a powerful tool for businesses looking to improve their strategies. By asking questions that challenge assumptions and encourage deeper analysis, businesses can gain new insights and identify opportunities for growth.

In general, Socratic questions can be broken down into clarification questions (“could you explain further? why or why not…?”), assumption questions (“what is an example of… ? What are some ways…?”) and probing questions (“in your opinion, how would you…? What did you think of..?”).

No matter the question, the goal for a business using the Socratic method is to establish a footing in understanding the financial gaps and opportunities the brand is facing.

With stakeholders, it’s important to understand just how to keep them happy and in line with the business perspective. With internal teams, the questions are meant to keep employees inspired and feel part of the future of the brand. With customers, it’s best to see just what can be done to retain them and what can be done to attract the new. When all three groups are kept appraised of, the brand can continuously grow and develop.

This is where a financial analyst, consultant or CFO comes in.

The answers to these questions will help reveal exactly what your business is doing well and what can be done better. A financial and business expert will consider the stakeholder opinion, identify what areas of your business are missing an opportunity, what does the competition charge and offer in comparison and where can we cut costs and listen to employee ideas for improved productivity.

Your fractional CFO can also help you decide which ideas, pitches or strategic direction is able to be expanded upon. For example, if an employee is suggesting to hire more talent to benefit the team, your CFO can help you see if the action is indeed feasible and within your budget. If customers unanimously agree services can charge more if a certain feature is added, you can work together on a business plan to enact those decisions and initiate a price increase.

AE Tucker is Here to Help

AETucker Consulting can help you ask the right questions to achieve the best results. We help your company address the correct audiences, analyze their answers for the most fruitful solutions and see what gaps we can close to help your business thrive. If you’re ready to ask some questions, please reach out at: Andrew@AETuckerconsulting.com or call 704-651-2216.

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Create, Monitor, and Stick to a Company Budget: Achieving Financial Stability

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As a business owner, it’s important to plan for financial success in the year ahead. One key step in this process is the disciplined approach to working on an annual business budget.  It may seem like an obvious year end ritual; however, many business owners neglect this crucial step. Don’t let that be you!

Companies that regularly create and stick to a budget are more likely to be financially fit and meet their financial goals. A budget allows you to plan, identify areas where expenses can be cut, and ensure that you have enough cash flow to cover your expenses. When you assess where your business stands today, then develop budgets, financial models, tax strategies, and cash flow forecasts, you can be ready for any strong economic headwinds and adjust your sails accordingly as you pursue your business goals.  

Budgeting Best Practices: How to Start

As you begin to create your business budget for 2024, it’s important to set clear revenue goals. This will help you determine how much money you need to generate in order to cover expenses and achieve your desired profits. To set your revenue goals, consider factors such as market trends, past performance, and industry benchmarks. It’s also important to be realistic and set goals that are challenging yet achievable. By setting clear revenue goals, you can create a more accurate and effective budget for your business in 2024.

Use Past Data

Creating a solid business budget requires a thorough and honest review of your 2023 budget and actuals. This will help you identify areas where you may need to adjust your spending or revenue expectations for the upcoming year. Additionally, consider any changes in the market or economy that may impact your business, and factor these into your budget planning.

Target Expenses

With economic uncertainty, skyrocketing costs, and supply shortages, it’s more important than ever to identify your fixed and variable costs. Fixed costs are expenses that remain the same regardless of your business’s level of production, such as rent, payroll and insurance. Variable costs, on the other hand, fluctuate based on production, such as materials and labor. By accurately identifying these costs, you can create a budget that allows for growth and profit.

Inflation is driving up the cost of goods and services. Additionally, salaries and payroll expenses are likely to increase over time, so it’s important to factor these into your budget as well. To ensure that your budget is accurate and effective, consider using historical financial data and consulting with industry experts. By carefully considering these factors and taking a collaborative approach, you can create a budget that sets your business up for success.

Monitor Cash Flow

The cash flow statement is an important tool used in the budgeting process.  Your cash flow statement provides valuable insights into the movement of money in and out of your business. By analyzing the cash flow statement from the previous year, you can identify patterns and trends in your business’s finances.  The cash flow statement can also help to identify the months when your business has higher cash inflows and outflows, allowing you to plan accordingly.

Reduce Debt

A key step in the budget planning stage is assessing company debt. This will give you a better understanding of your financial situation and help you make informed decisions when it comes to allocating funds. Understanding your debt obligations is key to making decisions regarding investments, expenses, and revenue projections. By taking a thorough look at your company’s debt, you can identify areas where you can reduce costs, negotiate better terms with lenders, and optimize your cash flow.

Assessing your company’s debt will also give you a better understanding of your company’s financial health. You’ll be able to see how much of your revenue is going towards debt payments, and whether your debt load is sustainable in the long term.

Plan for Investments

Capital expenditures are expenses that are used to acquire or upgrade physical assets such as machinery, equipment, or property. These expenses are essential to keep your business competitive and efficient. By planning for capital expenditures in advance, you can ensure that you have the necessary funds available when you need them. This will help you avoid unexpected surprises and ensure that your business is well-prepared to succeed in the long run.

Additionally, planning for capital expenditures can help businesses to avoid unexpected expenses and prevent disruptions to their operations.  It’s important during the budget process to allocate generously towards capital expenditures, especially if your goal in 2024 is to scale the business.

Reduce Tax Burdens

As you prepare your business budget for the upcoming year, it is crucial to consider the impact of taxes on your financial planning. Neglecting tax obligations can lead to unexpected expenses, penalties, and even legal issues. By accounting for taxes into your budgeting process, you can ensure that your business stays compliant with tax regulations while maintaining financial stability. This involves analyzing your income, expenses, and deductions to estimate your tax liability and setting aside funds for tax payments. By doing so, you can avoid last-minute scrambling and gain peace of mind knowing that your business is financially prepared for tax season.

Build Resilience During Emergencies

Every business owner knows that emergencies can happen at any time. Losing a major client, facing a recession, or needing to replace equipment and technology can all take a toll on your finances. That’s why it’s crucial to plan for contingencies when preparing your annual budget. Experts suggest setting aside 10% of your annual revenue as a good benchmark to help weather difficult times, but also ensure the long-term success of your business.

Be Transparent

As a company leader, you understand the importance of creating and sticking to a budget. However, ensuring that your entire team follows the budget can be a challenge. Be transparent about the company’s financial goals and challenges. Make sure everyone is aware of the budget and understands the consequences of not sticking to it. Ensure that the budget is achievable and realistic. Set clear targets and milestones and communicate them to your team.  Keep track of expenses and check in regularly with your team to ensure that they are meeting their budget goals. Use reporting tools to create transparency and hold everyone accountable. Don’t forget to also celebrate when your team meets or exceeds their budget goals.

Leverage Fractional CFO Leadership

Budgeting is a crucial task that requires a lot of time, effort, and expertise. Planning and sticking to a budget is essential for the financial health and vitality of your business. However, creating an accurate and effective budget can be a daunting task, and mistakes can be costly. That’s why seeking professional advice when creating your company’s annual budget is highly recommended.

Fractional leadership can provide valuable insights and assistance in creating a budget that is tailored to your business’s specific needs and goals.

AETucker Consulting works with business 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. 

Contact me to learn more about how we can help your business thrive.

 Andrew@AETuckerconsulting.com

 704-651-2216

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It’s Time for Your Mid-Year Business Financial Check Up

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As we are deep in the month of June, it’s important for business owners to take stock of their operations and prepare for the next six months of 2023.  

Conducting a mid-year business check-up is essential for ensuring the success and growth of your company.  This process involves reviewing your financial statements, analyzing your marketing strategies, assessing your employees’ performances, examining your goals and objectives, and determining if you need to make any adjustments to your budget or pricing strategies.

A typical mid-year review breakdown involves looking at all aspects of your business including: 

  • Financial Health: Are you meeting your financial goals?  How well are you performing against your budget (you do have a budget, right?)  How are your ratios and KPI’s vs. expected results? Dedicate the needed time to evaluate your cash flow and what areas of your business you’re spending too much on.  Your financial health at mid-year can foreshadow what’s to come so it’s crucial to resolve any financial issues.
  • Employee Wellbeing: How long has it been since you talked with your employees?  Is employee attrition/turnover high?  When was the last time an employee survey or evaluation was conducted?  Are you taking proper measures to make your team feel heard?  Do you need to re-evaluate your team structure?
  • Sales & Marketing Efficiency: What audiences could you be reaching that you haven’t yet?  Has revenue met your expectations?  How can you increase your ROI on your marketing expenses?  Are sales numbers growing, declining, or hitting a plateau?
  • Logistics and Operations: Are your products/services being delivered timely and accurately?  Have your margins changed/costs increased (i.e., service & installation costs)?  Have quality or customer satisfaction changed?  When did you last look at your suppliers?  Are they still good partners with your business?

This year, these points are more important than ever.  From global economic shifts to escalating inflation to higher payrolls and customer demands, 2023 has had its own set of unique challenges.  In result, business owners and CEOs like you are adjusting your pricing models and overall strategies to combat what continues to be a difficult economic landscape.

The 6 Point Business Mid-Year Assessment

Financial Health:

A financial health assessment should be done more than bi-annually.  Naturally, the mid-point of the year is a great time to help you identify any areas of concern and make necessary adjustments to ensure you meet your financial goals for the year.  Review your financial statements by analyzing the balance sheet, income statement, and, especially, cash flow statement to assess your business’s financial position.  Look for trends in revenue and expenses and identify any areas where results are not what you expected.

Your cash flow statement is a crucial tool for understanding how money flows in and out of your business.  Use this statement to identify any cash flow gaps and determine whether you have enough cash on hand to meet your short-term obligations.  Compare your actual financial results to your budget for the year. Identify any areas where you may be overspending or underspending and adjust your budget accordingly.  Review your outstanding debt and determine whether it’s manageable given your current cash flow and revenue.  Consider refinancing or consolidating your debt if it’s becoming a burden on your business.  Finally, look for opportunities to improve profitability by identifying areas where you can increase revenue or cut costs to improve your business’s profitability.  Have you considered renegotiating contracts, finding new suppliers, or developing new products or services?  This is the perfect time of year to assess all opportunities.

Inflationary Strategies:

Prices on almost everything have gone up.  Have you been adjusting your pricing accordingly?  Are you taking note of the pricing changes whether it be with your supplier, your deliveries, your sourcing, or cost of production?  Have you thought about creating long-term contracts with vendors, suppliers, or shippers so that the pricing isn’t impacted as much by inflation?  Are your customers staying loyal through your higher prices and are you being transparent with them through the process?

When you do have to raise prices make sure you communicate with your clients your rationale and that they have many other reasons to stay with you and are not motivated to price shop.

Employee Performance:

Mid-year employee reviews are a great opportunity to assess an employee’s performance, acknowledge their achievements, and identify areas where they can improve.  To make the most out of these reviews, it’s important to consider several factors.

Do you have clear expectations for the review process and have procedures to review their job responsibilities and performance goals?  Take this opportunity to review job descriptions and any goals or objectives set at the beginning of the year.  Discuss any progress they have made towards these goals, identify areas where they can improve, provide constructive feedback, and acknowledge their hard work and contributions.  Send out an employee survey to collect feedback and ideas so you can improve the workplace culture.  Good lines of communication will yield rewards.

Customer Satisfaction Measurement:

A mid-year review is a great time to measure customer service performance. When considering how to assess customer service at your company, you will quickly realize that there are quite a few different factors that you could measure. It might also become apparent that focusing on just one area at a time will leave major blind spots.

What is your customer retention rate?  Do you know if your customers are completely satisfied with your service, products, quality, and prices?  Do they see the value you offer, or could they easily be swayed to go to a competitor?  Customer surveys are an ideal tool to get honest, constructive input that you can quickly implement resolution strategies and reach out to customers to further build the relationship.

Marketing ROI:

A mid-year review of your marketing campaigns and programs can help identify what is working well and what needs improvement, enabling the company to make data-driven decisions and adjust strategies for the remainder of the year.  

Start by reviewing your original marketing objectives for the year and assess how well you have achieved them so far.  Are you on track?  If not, identify the areas that need improvement and prioritize them.  Analyze your performance metrics such as website traffic, conversion rates, social media engagement, and lead generation.  Identify which channels are performing well and which ones need improvement. Use this data to optimize your marketing strategies for the remaining months so you can be prudent with your marketing dollars, investing in the best marketing vehicles that will improve your brand awareness and lead generation.

Resource Allocation:

Meet with your Fractional CFO to review cash flows, your allocated funds, and your budget.  Where is your money coming from?  Where is your money going? What department spends the most and why?  Are there certain activities and expenses that aren’t adding value, or a product you sell that doesn’t meet your profitability and margin benchmarks?  Have you invested in programs, machines, equipment, etc. that can drive revenue in the long run?

There are many touch points in building a great business, so taking the time to truly be real and honest about your company’s performance in these key areas can impact the next six months and beyond.

Here at AETucker Consulting, we can help you get there!  Contact me, Andrew Tucker, for help with your mid-year financial check-up. 

I can guide you through an effective midyear assessment and provide action plans to keep you on course. I can be reached by e-mail at andrew@aetuckerconsulting.com or schedule a call on my calendar here -> .

I look forward to starting a conversation with you.

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Cash Flow Management Advice for Your Business

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Today, there are more than 30 million privately held businesses in the U.S. However, two out of every three new businesses will shut down during the first 10 years.  Why? A recent study by U.S. Bank drilled down and discovered that 82% of the time, poor cash flow management or poor understanding of cash flow contributes to the failure of a small business.

Healthy cash flow isn’t simply earning more than you spend, nor is it about sitting on a pile of cash. It’s about ensuring your organization has sufficient cash flow to capitalize on new opportunities such as making investments in your company’s technology or infrastructure, hiring new talent, or expanding operations.  It is also about having cash reserves to weather a crisis or economic downturn that negatively impacts your business.

Managing cash flow effectively will ensure you have the cash inflow you need to pay your employees, vendors, and other suppliers so you can get your products and services to your customers on time.

Proper cash flow management is a key strategy that every business owner must master for long-term financial success. First, let’s get a handle on just what is meant by the term cash flow. 

Generally speaking, it can be separated into two categories: cash inflow and cash outflow.  Cash inflow refers to the amount of money that is coming into your business and is being generated when you sell your products or services. Cash outflow, as the name suggests, is the money going out of your business. Regular expenses and debt payments would fall under the cash outflow category.

As a strategic business advisor and fractional CFO, I help implement and improve the cash flow management process for my clients.  In this article, I share cash flow management advice that will strengthen your business and protect you from unexpected financial emergencies.

Start with Consistent Financial Reporting

Your financial reporting and models should include a Balance Sheet, Income Statement (with projections), and Cash Flow Statement. These key financial tools should be monitored faithfully every month.  The income statement solely will not uncover weaknesses in your company cash flow. Sure, a company may show a profit on the Income Statement, but without healthy cash flow, it cannot survive.  After all, you pay your employees, bills, taxes and yourself from cash flow, not profits.

The most effective way to track your company’s cash flow is through a Cash Flow Statement. It enables you to get an overall view of money that has come in and gone out of your business’s bank account, and basically to understand your company’s cash position (whether it is positive or negative) every month. The first section of the cash flow statement is cash flow from Operations, which includes transactions from all operational business activities.  Cash flow from Investing activities is the result of investments made in the business (think long term and fixed assets such as equipment and vehicles).  Cash flow from Financing provides an overview of cash used from debt and equity.  Below is a snapshot of a sample cash flow statement or report:

Figure 2: QuickBooks provides a Statement of Cash Flows report.

Create a Cash Flow Forecast

Cash flow forecasting involves estimating your future sales, expenses and investing activities (again think equipment and vehicles). Not only does a cash flow forecast help give you advanced notice of any problems that you may encounter in the future, but it also makes sure that you have the cash on-hand needed to fend off unexpected situations. It puts you in a better position to capitalize on opportunities and helps your business continue to scale and evolve over time.

These negative and positive cash flow swings don’t have to catch you off-guard because chances are there’s a pattern. If you perform a cash flow analysis, where you study your business history to identify trends, you can spot cash flow swings ahead of time and start preparing earlier.

Determine Your Borrowing Needs

By far, one of the most important ways to make sure you have a handle on your cash flow situation is to gain as much insight as possible into the money that you’re borrowing – and why.  Most businesses need to take out loans for the needed capital for starting their business and operations and for further growth and expansion. However, pay careful attention to borrowing too much or borrowing from sources that are too expensive. If you have too many loans with a high-interest rate, you may be paying more each month than that money is actually bringing into your business. If you start to miss a payment or two, those interest rates could increase even further – causing you to take on additional debt just to stay afloat.

Maintain Cash Reserves

Cash reserves are important because they can help you protect your businesses by providing cash flow in the event that unexpected expenses arise or revenue drops. An emergency fund can help you cover expenses without having to get a loan or stacking up credit card debt. Additionally, having significant cash reserves provides a company the ability to make a large purchase— whether it be new equipment or real estate.

Monitor Your Receivables

Managing your accounts receivable to maximize cash flow is a critical aspect of operating your business successfully. By monitoring your accounts receivable, you can address an issue immediately if a payment is late. Sometimes it may be a simple oversight by your customer.  It could also indicate a recurring trend; in which case you might need to decide on applying stricter credit terms or ending the business relationship altogether.

Some strategies to collect quickly on invoices include immediately sending your invoice after services or product is delivered. In addition, most accounts payable departments tend to make payments on weekly or biweekly intervals.  The more time you give your customer to make their payment increases the likelihood your cash flow will remain steady.

Consider your terms.  Credit terms are generally set as due upon receipt or due in a number of days, such as net 15 or net 30. You may need to consider specific factors about each customer; primarily, payment history. Giving your customer longer credit terms may positively affect the relationship but could negatively impact your cash flow. 

Think about this – do you want to become a “bank” for your customers?

Improve Your Inventory Management

If you sell a product, your cash flow cycle depends on your inventory. You spend the cash you have to buy your inventory and that inventory turns back into cash when it sells. Consequently, your cash flow can easily be reduced by poor inventory management. Specifically, issues with stocking your supply and customer orders can lead to fewer sales which hurts your cash flow. Instead of buying more of what doesn’t sell, get rid of it—even if you need to sell it at a discount. This is where an inventory management software is beneficial.  Meticulously track and manage your inventory flow, and you’ll have a firm grasp on your cash flow. There are many strategies you can take to manage inventory to boost cash flow. A business advisor can point you to some effective solutions and software.

Request an Upfront Deposit  

Especially when you’re working with new customers, consider getting an upfront deposit before you begin to work on a  project. That helps with your cash flow and also reduces the risk of miscommunication (discussing pricing and costs upfront will make sure both you and your client are on the same page.) Last but not least, deposits tend to scare away bad clients — the kind who would only hurt your cash flow in the long run anyway.

Consider Leasing Instead of Buying

Business owners can often avoid the large up-front costs of new equipment and other capital expenditure by renting instead. Leasing equipment for a fixed monthly fee will allow you to make smaller payments that don’t eat into your cash reserves.

Remember to consider the costs of repairs and maintenance of equipment the business owns when weighing up the benefits of leasing vs buying. Many commercial lease agreements include servicing, so if you’re spending a lot on technicians’ fees, leasing may be a better option.

Keep Out-of-Control Expenses at Bay

Ballooning expenses are one of the main reasons why company’s face cash flow struggles. Take a look at all the business services you’re paying for and stop the ones that aren’t absolutely necessary, at least temporarily. Review every line of your Profit & Loss Report and assess high expenses, what you can cut and how you can negotiate better pricing with suppliers.

In general, look for opportunities to reduce your operating costs as much as you can, at least for a little while. It can certainly help ward off any impending disaster and allow you to get back on your feet through a series of strategic financial moves in the days and weeks to come.

Work With a Financial Professional

Another one of the most common cash flow problems that business owners deal with in particular involves attempting to handle all aspects of this part of their business on their own. A financial professional with deep business experience that you trust not only will they be able to help you come up with an effective cash flow management strategy, but they can also put together essential documents like a cash flow statement and cash flow forecast data as well. The former paints a vivid picture of where you stand today, while the latter helps you see what you will achieve if you stay on the current trajectory.

The Bottom Line

Healthy cash flow is the result of operations that run efficiently and smoothly. While implementing some or all of the above steps should help you increase your business’s cash flow, you’ll also want to make sure you’re making the right decisions regarding your marketing, customer service, product or service development, and new customer acquisition.

If your business is experiencing cash flow problems or you want to talk over budgeting or other cash flow tips, reach out AETucker Consulting for a consultation.  A growing business needs accurate and timely record-keeping and reporting. But if your needs have grown beyond basic bookkeeping and you need financial insights, accounting management, KPI tracking, and analysis, it’s time to hire a professional.  AETucker Consulting is here to help!

Please contact me via email at Andrew@aetuckerconsulting.com and check out my website www.aetuckerconsulting.com.

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Quick Guide to Adjusting Your Business Budget to Inflation

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How-To-Guide: Business Budgeting During Inflation

As we roll into December, business owners are focused on ending 2022 strong and preparing for an even greater 2023.  Included in the year-end planning objectives is the desire to hit growth targets, improve the availability of capital resources, and control expenses for the coming year.

Naturally in a high-inflation environment, budgets are being examined based on potential concerns for higher spending on the supply chain, payroll, and benefits, meaning there’s less money to go around for other critical projects and investments.  Budgeting and planning season is a daunting task.  Many clients come to me with the same concerns: where do I start and how do I stick to a budget – especially with future inflation, a potential recession, and continued supply chain disruption?

Budgeting from Every Angle

What’s the best approach for your business?  Top-down or bottom-up budgeting?

Depending on the size of your organization and if you have various departments heads, each of these different approaches to budgeting may work best.

Top-down budgeting refers to a type of budget allocation where executive leadership and senior management set high-level budgets based on company goals for the year.  Once approved, management “pushes down” the budget to the management teams, who communicate and monitor the budgets with their teams.

Bottom-up budgeting is the opposite of top-down budgeting, the CEO or Business Owner drafts plans based on their strategic needs and goals, then present it up to their managers.  Each department needs to identify their goals — and what it costs to achieve their goals.

Once you’ve identified the best approach to map out anticipated spending for the coming year, following these steps will ensure you stick to a budget and avoid surprises:

  1. Frequently monitor the numbers.
    You can’t know your numbers – and you need to know your numbers!  Since we are living in an inflationary environment, it’s important to keep a close eye on the critical numbers that can help monitor climbing expenses and how that is having a negative ripple effect on other critical numbers that include:

    These key numbers include:
    Cash Flow
    Profit and Loss
    Sales
    Price/Selling Point(s)
    Gross Margin including by product line and by customer
    Net income
    Total Inventory

Stay on top of your numbers.

2. Calculate Your Return on Investment
Business owners can use return on investment as a measuring stick for their company’s profitability.  The amount of money spent vs. the expected financial return should be a focus of performance management.  The data collected from your ROI tracks what efforts you are investing company funds in are performing best.

If you determine you are wasting money on an expense, rethink your strategy as something needs to change.  Many types of ROI can help you make important businesses budgeting decisions such as: purchasing new equipment, hiring new employees, investing in marketing, or expanding into a new geographic location. Practically every business decision requires knowledge of ROI.  Simply divide the gains from your investment by your investment’s cost and you have your answer as a percentage or ratio.

3. Track Your Sales Cycle:
There are a number of factors to consider:

How long does it take to move prospects through your sales pipeline?  The answer depends on how many steps are in your sales cycle, how complex your product is, and the cost of your offering.

What are the projected sales for the budget period?  If you overestimate, it will cause you problems in the future.

What are the direct costs of sales (i.e. costs of materials, components or subcontractors to make the product/provide the service)?

What are the fixed costs?

What are the overhead costs?

The length of time it takes to convert leads to sales needs to be factored into your budget.  Using your sales and expenditure forecasts, you can prepare projected profits for the next 12 months and beyond.  This will enable you to analyze your margins and other key ratios such as your return on investment.

4. Overestimate expenses.
By overestimating monthly expenses, businesses can account for the possibility of variable unexpected expenses.  A suggestion: take your total expenses, then add at least 5% to cover the unexpected financial surprise.  Most businesses can categorize their expenses in three areas (see below).  By analyzing spending history, you can estimate your monthly expenses in each category.

  • Fixed expected expenses: Expenses that come at regular intervals (weekly, monthly, annually, etc.) and don’t vary are called “fixed.”  Examples can include building rent, insurance premiums, equipment leases and payroll.
  • Variable expected expenses: Expenses that come at regular intervals but can vary are called “variable.”  Examples can include utilities, phone bills, employee training, bonuses, donations.
  • Variable unexpected expenses: Otherwise known as “emergency expenses,” this category is the most likely to trip up even the best budget plans.  For example, no one plans for a major piece of equipment to fail or their biggest client to jump ship.

    5. Improve Cash Reserves and “Emergency Funds”.
    In business, rainy day funds or retained earnings are cash supplies that are kept on hand to enable your business to continue operating in lean times or in an emergency.  Many businesses during the pandemic did not have more than three months cash reserves and failed to stay afloat.

These funds allow your business to keep providing services while making payroll, paying bills, and purchasing supplies, and they allow the Owner to sustain the family’s income. The emergency fund provides immediate access to funds during critical times.  Insurance may cover loss, property damage and other repairs, but processing claims can take weeks or months, putting a sledgehammer through your profitability and productivity.  Budgeting for the emergency fund while keep you in business if a crisis should strike.

6. Avoid Deviating from the Budget.
By making and following a budget, you can better control costs, avoid overspending, and plan to meet financial goals.

It is important that you compare actual results vs. the budget and investigate any significant differences and the causes.  Failure to properly use your budget can seriously impact your bottom line, and even jeopardize the success of your business.  Tracking your expenses is one of the key factors in making your budget work for you.  Over time your budget will allow you to track revenue, expenses, and cash flow.  A budget provides a guide to cut unnecessary spending, allocate revenue to other areas of the business, prepare for busy seasons and slowdowns, plan for required purchases, and secure funding from financial institutions.

7. Plan Ahead and Constantly Scrutinize.

Budgeting takes time and usually requires a few iterations.  Depending on the size of your business and your goals, budgeting can take anywhere from a few days to several weeks.  While creating a static budget can act as a guideline and serve as a basis for your budget vs. actual comparison, a dynamic budget adjusts to the changes in our economy, especially with high inflation, supply chain challenges, and labor costs, serving as a good ongoing forecasting tool.  Budgets should be updated regularly and monitored throughout the year to adapt to the changing needs of the business.

8. Seek professional advice and guidance.

Building a realistic budget is an effective way to help keep your business profitable.  It might be difficult at first by being realistic and strategic about your budget and tracking the actual results against the budget will help your business stay healthy and successful in the long run.

Even with all the right tools in hand, there are still best practices to keep in mind when producing your  budget.  Follow these tips to ensure your team is well-informed and better equipped to achieve company goals.  Professional guidance can help you set and keep clear objectives.  A CFO and business advisor can help you set your budget around your company goals.  An outside perspective can help you see overlooked possible expenses you will need to allocate to achieve your projected budget. If you need help building your company’s budget or want to ensure you’ve built a budget that fits your goals and your unique situation, contact AETucker Consulting for help.

As a fractional CFO, I help owners, management and board members solve financial and operational challenges by providing unique and customized guidance.

To learn more about how I can help your business create a solid budget or implement strategies to improve your financial wellness, please contact me via email at Andrew@aetuckerconsulting.com and check out my website www.aetuckerconsulting.com.

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Reclaim Your Time: Understanding Parkinson’s Law

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As a business owner, do you frequently become frustrated from feeling there just aren’t enough hours in the day to manage and run your business? Have you noticed a tendency for projects to use up all the time that is allotted for the project, even if it could have been completed in half the time? Whether it’s as simple as running a report for your accountant or embarking on a new project for a client, how long it will take you to do it depends on how much time you have.

That tendency for work to expand is the meaning behind Parkinson’s Law. Parkinson’s Law is the old adage that work expands to fill the time allotted for its completion. It suggests that when given a task, we think of how much time is available to complete the task instead of how much time we actually need. The term was first coined by Cyril Northcote Parkinson in a humorous essay he wrote for “The Economist” in 1955.

Let’s suggest you give yourself a week to complete a two-hour task, then the task will increase in complexity and become more daunting – filling that extra time with more work, tension, and stress.  Companies with many employees can see how this can impact your teams that adjust their pace to the work available. If there is less work, they will work more slowly -either because they don’t have the pressure to perform, or because they are putting too much emphasis on the details in the initial phase of performing a task. However, business owners need to keep a close eye on this in your business, as it can sabotage efficiency and growth.


Aside from tasks and projects becoming increasingly complex, procrastination is another component to Parkinson’s Law. Knowing that we have a set amount of time to do something can encourage the task being left to the very last minute – and our delays in getting started mean the time required for that task expands further.

So, how can business owners truly work smarter, not harder? The key thing to remember when accounting for Parkinson’s Law is that when choosing how much time or other resources to dedicate to a task, you need to balance the right amount of time needed while not sacrificing quality over time saved.

Here are some ideas that are worth exploring and then measuring their effects on your productivity:

Prioritize your tasks

You might have an enormous to-do list, with many items and clear deadlines. Start the productive process off by identifying what are your most important tasks. Establish priorities as to what is urgent, or what is really important to yourself or your team at the time. Break these tasks into smaller more digestible tasks that can be managed effectively and set moderate deadlines for each. This way you are setting yourself up for success to achieve realistic tasks with achievable deadlines. 

Work faster, not harder
Parkinson’s Law reminds us that you can combine reasonable time and work estimates with a little optimism, and aim for getting deadlines just right. You might think overestimating timelines gives you the leeway you need if something out of our control derails the project or time needed, but it could end up wasting resources without adding quality to your end product.

Set time limits

To account for Parkinson’s Law, before scheduling a task or getting started on it, you should first determine and allocate how much time it should realistically take to complete it, without compromising performance. Try setting artificial deadlines, which limit either the amount of time that can be dedicated to the task or the point in time by which this task should be completed such as by next Friday or the end of October. Identify the few critical tasks that contribute most to income and schedule them with short and clear deadlines.  Use Parkinson’s Law as a framework when organizing your weekly calendar and defend your time by sticking to a productive schedule using the time limits you set for yourself.

Avoid distractions
There are so many time-wasting activities business owners need to be aware of. I recently read that CEOs spend 72 percent of their time in meetings and 24 percent of their time reading emails and social feeds.  When implementing Parkinson’s Law, consider these time drainers.  Sure, we all need to attend meetings and read our emails, but be very protective of your time doing each.  By avoiding distractions, we can eliminate waste and frustration and create a working environment of engagement and productivity.

Communicate realistic targets
This important step helps leaders define parameters that specific projects need to fit within, which is a surefire way to catch work expansion as it’s happening, rather than after it’s already sabotaged your timeline. During your project kickoff, you and your staff should agree upfront about what is in and out of the scope for the project.  For example, let’s say you are rebranding your website that absolutely needs to be finished and launched before the first day of a major convention.  Meeting that target deadline means that no new features and out of the initial scope functionality should be thrown in at the last minute.  Communicate all expectations and project scope upfront as a team.

Protect your time

Time is a precious commodity and as a business owner, chances are you’re constantly racing against the clock.  See how you can use Parkinson’s Law to increase your productivity, employee engagement and overall happiness to get more done, quickly, while achieving goals. If you should need guidance on tackling those important tasks or a sounding board to discuss those difficult and sometimes sensitive decisions, AE Tucker Consulting is dedicated to helping business owners successfully pursue their goals in life and in business.  Schedule a consultation today!

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To SWOT or to SOAR?

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Weighing Which Analysis Works Best for Your Business
Evaluating your business is just as important as running one. Whether it be increasing or decreasing sales, employee turnover, customer engagement online, etc., the signs of a healthy business must always be monitored in order to keep up your space in the marketplace.

Better yet, you want to sustain that space— and thrive in it. That’s where the SWOT and SOAR analyses come in.

What is SWOT?

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The first two deal with the internal environment of a business while the latter two deal with the outside factors a business can face. The strengths and opportunities are known to be the positives a business can evaluate themselves on and the weaknesses and threats are those that harm a business in meeting their brand’s overall mission, vision and goals.

Strengths: What strengths of your business beat competitors?

Weaknesses: What parts of your business keep you from beating competitors or hinder profits?

Opportunities: What opportunities are out there to help grow your business?

Threats: What threats exist that can hurt your business?

Questions that can help build a SWOT analysis include:

  • What do we consider our assets?
  • How do we stand out as a business?
  • What keeps our business sustainable?
  • What has kept our customers loyal?
  • How do competing companies do better than us?
  • Do we have a high turnover rate of employees?
  • What industry trends are happening that the business can take advantage of?
  • Are we up to date on our competitors?
  • Do we have crisis communications plans prepared?

What is SOAR?

SOAR, on the other hand, is all about focusing on strengths and opportunities— and other positive, affirming values of a business. SOAR is about the Strengths, Opportunities, Aspirations and Results of a business and its goals. With SOAR, a business takes a laser focused on analyzing what strengths can build their aspirations and what results can be achieved through certain opportunities.

Strengths: What have been your business’s greatest achievements?

Opportunities: What markets or target audiences can your business capitalize on?

Aspirations: What are your mission, vision and goals for the business?

Results: What is the best way to measure the results of your meeting the business’s mission, vision and goals?

Questions that can help build a SOAR analysis include:

  • What strengths does our business have and how can we expand upon them?
  • How can we use our strengths to achieve better results?
  • What makes the business unique?
  • What partnerships can we look into to help elevate our business in the community or market?
  • What do we want the business to be known for?
  • What is the industry we are in passionate about and how can we help contribute?
  • What are some ways we can track results?

Major Differences Between SWOT and SOAR

The major differences between SWOT and SOAR is that SWOT is about assessing and analyzing a business’s competitive edge in the market, while SOAR is all about enhancing the mission and future vision of a business as a whole.

Essential to note, most businesses have been using SWOT for decades now. It’s a household term for evaluating how a business is improving their performance, taking the time to monitor its present situation.

SOAR has recently been introduced and is gaining popularity especially with smaller businesses who are still developing their brand given that SOAR focuses primarily on the future. When you are a fairly small or young company, it’s more common that you want to build towards the long-term before you are able to have all the information you need to assess a present quarter’s results.  At AE Tucker Consulting, we highly encourage business owns to have that growth-mindset and to focus on those big hairy, audacious goals that is deliberately achieved through SOAR.

Another important difference to note is that SWOT is about assessing a business through the scope of its competition; the questions zero in on keeping the business in the best place possible at all times. SOAR, on the other hand, is less about competition and more about collaboration. Its questions allow a business and its teams think about how to work together and propel the business forward.

In this way, where SWOT is based on tactics, strategies and data, SOAR is all about being vision-oriented and focusing on a business’s teams’ unity to pave the path forward.

When to SWOT and When to SOAR

Each business should use SWOT and SOAR at different points in time. If you are a well-established business, it’s smart to perform routine SWOT analyses that help show what’s working and what isn’t. It’s especially important to perform a SWOT if new competitors have entered the business, you see your profits and sales have stagnated or are going down, or if you are seeing that employee culture is changing.

If you are a fairly new business, recently merged or were acquired by another business, are going to rebrand or want to boost employee morale, a SOAR analysis is your tool. You will be able to have teams work together to feel they have a stake in the future of the company and can clearly see where it’s going. Most importantly, SOAR emphasizes and manifests the future that the company wants— and therefore works on the building blocks so it gets there.

Ensuring the Analyses are Done Right

To ensure that each analysis within your business is done smoothly and effectively, it’s best to work with a trusted advisor or consultant— and that’s where AE Tucker Consulting comes in.

Whether you’d prefer a guide, consultant, advisor or part-time CFO, AE Tucker Consulting can work with owners and management of small to midsize privately held companies to help you develop and implement SWOT and SOAR analyses that get the job done.

Optimize your company value, your profits and your company culture— with our help, you’ll be SWOTting and SOARing through each quarter the way your business deserves!

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How to Successfully Plan, Budget and Thrive in 2022

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A new year is officially upon us and with that comes the perfect time for any business owner to assess and evaluate their company—and goals. New chapters can sometimes introduce new opportunities as well as new threats. That’s why business planning and smart fiscal budgeting disciplines are key. Traditionally, business strategic planning takes place once a year, and attempts to set a business strategy for an extended period. Of course, the pandemic taught business owners that in a volatile business environment it’s extremely unlikely that a plan that is only updated once per year is sufficient to guide every strategic decision that CEOs will need to make over the next twelve months.  When you assess where your business stands today, then develop budgets, financial models, tax strategies, and cash flow forecasts, you can be ready for any roadblocks and adjust as you pursue your goals.   An effective business planning process should aim to help your leadership team understand the company’s strengths, weaknesses, opportunities and threats. Simple steps to planning include:

1. Assess your 2022 goals. Where do you want to go and why.
2. Review your market analysis/industry analysis. Where has your industry been, how has it changed, forecast for where it’s heading.
3. Preform a competitive analysis to determine who and what you’re competing against for customers and market share. 
4. Detail a 12 month sales and marketing plan to understand how you’ll reach your audience and your projections for why your specific sales and marketing strategies will ensure you’ll meet your 2022 goals.
5. Assess financial information data including sales forecasts, anticipated expenses; budget for expenses, cash flow analysis, and profit and loss from the last twelve months.
6. Outline what results the organization is committing to deliver in terms of goals and objectives. 
7. Create a road map of how and when the results are going to be delivered. Who is responsible for each portion of the plan and how will you measure, monitor and pivot if plans and goals need to change.

Creating a Budget to Match Your Planning  

If there’s anything the pandemic has taught us it’s that curveballs can hit your business at any given time and it’s crucial to have safety nets, emergency funds and savings set up that give your company a life jacket in the storm.

In addition, budgeting just makes perfect sense to be financially prepared as to how the future of your business’s finances will look. It requires examining what happened last month, what happened three months ago and what this month last year looked like — then using that information to make wise financial decisions for the months and years ahead.

Carve out plenty of time to work through your business budget.  You will need to have access to important financial information to help.

Estimated revenue:  This is the amount you expect to make from the sale of goods or services. It’s all of the cash you bring in.

Profit:  Profit is what you take home after deducting your expenses from your revenue. Here you’ll plan out how much profit you plan to make based on your projected revenue, expenses, and cost of goods sold. If the difference between revenue and expenses is not on par, you need to rethink your cost of goods sold and consider raising prices.

Putting “Pen to Paper”

The best way to truly plan your budget is working with a CFO or financial advisor/consultant on adding the above calculations onto a spreadsheet where you also have prepared other foreseen costs.

These costs can include your personal plans for retirement, investments your company needs to make technology or marketing-wise, the status of your working capital reserves or the need for a lump sum of money to grow your business. Moreover, this is where you prepare your “safety” fund; stability comes from these prepared safety nets!

Your financial go-to should then work with you to plan for the profit you’ll need to generate the sufficient cash flow to maintain all these factors and budgets. This will then lead to preparing the number of sales your product or service will need to undergo to meet this net income.

Listen to the Numbers

At the end of the day, data doesn’t lie— numbers ultimately tell you the big picture. If they’re not adding up, it’s time to take the proactive steps and cut back on the projects, the talent or expenses you can live without. If your departments are spending too much, work with their leads to see how to cut the right corners.

Again, work with your financial support team or advisor on what exactly can be cut this year— exactly how much can you tweak your gross margin?

You’re Not Alone

As a CEO or business-owner, you don’t have to figure out your 2022 business planning and budgeting on your own. We mention throughout this piece the pivotal role your financial department plays— they, after all, are the number interpreters.

If you need a guide, consultant, advisor or part-time CFO, look no further than AETucker Consulting. We work with business 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. 



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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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7 Tips to Build and Maintain Your Business Budget: Part 2

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If you have reviewed the first few important steps when it comes to creating and maintaining a business budget in our first article, then you are ready for some more steps in the process in Part 2 of 7 Tips to Build and Maintain Your Business Budget

Using a budget is a key component in driving your company’s financial future, but many businesses wonder: Where to start or how to make their current budget even better.  My last post <link> shared tips on where to start by knowing which financial numbers to monitor and track daily, weekly and monthly. How do you ensure that you’re making sound business decisions based on ROI and your sales cycle? The rest of these tips will ensure you’ve created a budget that is realistic and is prepared for the challenges and opportunities that lie ahead.

4. Overestimate expenses. By overestimating monthly expenses, businesses can account for the possibility of variable unexpected expenses. A suggestion: take your total expenses, then add at least 5% to cover the unexpected financial surprise.  Most businesses can categorize their expenses in three areas (see below).   By analyzing spending history, you can estimate your monthly expenses in each category.

  • Fixed expected expenses: Expenses that come at regular intervals (weekly, monthly, annually, etc.) and don’t vary are called “fixed.” Examples can include building rent, insurance premiums, equipment leases and payroll.
  • Variable expected expenses: Expenses that come at regular intervals but can vary are called “variable.” Examples can include utilities, phone bills, employee training, bonuses, donations.
  • Variable unexpected expenses: Otherwise known as “emergency expenses,” this category is the most likely to trip up even the best budget plans. For example, no one plans for a major piece of equipment to fail or their biggest client to jump ship.

5. Plan for an emergency fund. In business, rainy day funds or retained earnings are cash supplies that are kept on hand to enable your business to continue operating in lean times or in an emergency. These funds allow your business to keep providing services while making payroll, paying bills, and purchasing supplies, and they allow the Owner to sustain the family’s income. The emergency fund provides immediate access to funds during critical times.  Insurance may cover loss, property damage and other repairs, but processing claims can take weeks or months, putting a sledgehammer through your profitability and productivity. Budgeting for the emergency fund while keep you afloat.

6. Use Your Budget.  By Making and following a budget, you can better control costs, avoid overspending, and plan to meet financial goals.

It is important that you compare actual results vs. the budget and investigate any significant differences and the causes.

Failure to properly use your budget can seriously impact your bottom line, and even jeopardize the success of your business. Tracking your expenses is one of the key factors in making your budget work for you. Over time your budget will allow you to track revenue, expenses, and cash flow, cut unnecessary spending, allocate revenue to other areas of the business, prepare for busy seasons and slowdowns, plan for required purchases, gauge the positive impact of budget changes, and secure funding from financial institutions.

7. Seek professional advice and guidance. Building a realistic budget is an effective way to help keep your business profitable.  It might be difficult at first but creating a good budget and tracking the actual results against the budget will help your business stay healthy and successful in the long run. 

If you need help building your company’s budget or want to ensure you’ve built a budget that fits your goals and your unique situation, contact AETucker Consulting for help.

As a CFO consultant, I help owners, management and board members solve financial and operational challenges by providing unique and customized guidance.

To learn more about how I can help your business, please contact Andrew@aetuckerconsulting.com www.aetuckerconsulting.com

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