Finance 101 for Non-Financial Managers

Entrepreneurs grow businesses by holding key executives accountatble for both operational and financial performance and rewarding accomplishments.

But have you trained your non-financial managers in key financial concepts? How are they trained in the use of financial tools to manage their areas of responsibility? Do they understand the elements of an Income Statement?

If Entrepreneurs hold members of their management team accountable for financial performance, it behooves them to arrange financial education and training for their non-financial executives. Are you doing that?

Ravi Patel

www.patelCFOservices.com

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Measuring Employee Performance

In an earlier post I suggest the use of Pay for Performance

A fundamental aspect of using Pay for Performance is measuring performance. How do you measure the performance of your employees? Do you have objective and SMART metrics? In the event you use some type of metrics to measure performance, you need to evaluate if they are appropriate for Pay for Performance. If not, you might need to refine them.

If you do not utilize objective measures to gauge employee performance, your evaluation of an employee’s performance  is not comprehensive. Entrepreneurs might want to re-think the performance measurement and evaluation process in their company before thinking about Pay for Performance.

If we can assist you, please contact us at Patel CFO Services at www.patelCFOservices.com

Ravi Patel

www.patelCFOservices.com

Using a Mastermind Group

The concept of the Mastermind Group was formally introduced by Napoleon Hill in the early 1900’s. In his timeless classic, “Think And Grow Rich” he wrote about the Mastermind principle.

“The coordination of knowledge and effort of two or more people, who work toward a definite purpose, in the spirit of harmony.” He continued, “No two minds ever come together without thereby creating a third, invisible intangible force, which may be likened to a third mind.”

Entrepreneurs can use the concept of a Mastermind Group as a worthy resource as they grow their businesses. A well-appointed Mastermind Group can also act as a valuable Board of Advisers for Entrepreneurs.

Mastermind Groups are becoming a powerful social and a management concept. Entreprenurs should take advantage.

For more information, please contact Patel CFO Services at www.patelCFOservices.com

Ravi Patel

www.patelCFOservices.com

Entrepreneurs – Be Prepared

Boy Scouts used a motto – “Be Prepared.” The idea was to teach the scouts to always be prepared for any situation.

Entrepreneurs can adopt that motto in their businesses.

Develop a philosophy to always be prepared for foreseen and, hopefully, some unknown situations. Does your organization wait until absolutely necessary to prepare for financial year-end, tax returns, regulatory or customer audits, quarterly returns, and so on?

If so, you are not prepared. Being prepared for these situations allows you to analyze problems beforehand and fix them ahead of the deadlines. There is less stress on company personnel and of course the Entrepreneur.

Implement a system of preparing for known events ahead of time so you are prepared. Having that type of discipline may allow you to also be ready for unforeseen situations.

Ravi Patel

www.patelCFOservices.com

Risk Analysis and Management

Have you taken the time to analyze your business from a risk point of view? What are the areas that pose the highest risk to your company? How do you manage or mitigate such risks?

Entrepreneurs should take time periodically to critically examine the various risks that affect your operations. There should be a formal process to analyze and prioritize each risk category and develop plans to mitigate or eliminate such risks.

While such analysis takes time away from your normal business responsibilites, it creates a critical area for failure in the event you do not manage such major risks.

Entrepreneurs – Do the Right Things!

If we can assist you, please contact us at Patel CFO Services (www.patelCFOservices.com).

Ravi Patel

www.patelCFOservices.com

A Golfing Analogy for Entrepreneurs

Being somewhat of a golf enthusiast, I am taking the liberty of applying golfing analogy to Entrepreneurs intending to grow their businesses.

As you get ready to play a round of golf, you must check your golf bag to ensure that you have 14 clubs and they are the right combination for your game. Similarly, Entrepreneurs must verify that all the tools and resources needed to grow their specific businesses – such as the right people; a solid management team; correct product/service and market strategy; efficient business processes; financial capability; appropriate infrastructure are all in place and ready to go.

The driver is normally the first club off the tee. It is also the most difficult to master. Same in business. The vision  (or driver) for the business is of ultimate importance for an Entrepreneur. Similar to a golf driver, it is often the most difficult to create and work with. But once, you know how to use it, the driver gets you in the middle of the fairway ready for the next shot. If an Entrepreneur can develop the correct vision for his/her organization, it allows the company to  be in a great position to take the next steps for growth.

The long irons are also difficult for most amateurs to hit consistently. Constant practice and refinement of the swing helps the golfer play these irons confidently. The long term business plans for the company are also diffcult to prepare given the uncertain economy and three to five year time frame. With time and repeated learning cycles, the Entreprenuer can learn to refine the long-term planning process for better road maps for growth.

The medium and short irons are the golfer’s bread and butter.  These irons, if played well, allow the golfer to reach the green with consistent accuracy. Successful Entrepreneurs need to master the preparation of the annual operating plans and budgeting process to make sure that their companies can deliver consistent results and meet established objectives (reaching the green).

The wedges not only help the golfer get close to the pin, but also allow recovery from the sand or rough. In business, Entrepreneurs who have developed crisis management plans and recovery tools most often turn challenges into successes. The short game is what separates the so-so golfers from the great ones. Entrepreneurs with management teams that can develop and execute pinpoint action plans never fail to deliver.

The putter is where golf matches are won and lost. Look at Tiger Woods. I rest my case! Perfecting the short and long putts and avoiding three-putts saves the golfer valuable strokes in improving their score. The Entrepreneur, with the management team, needs to develop and implement business processes that continually improve to produce consistent results. Avoiding mistakes (three-putts or more) and delivering quality results most efficiently and cost-effectively (two putts or less) will definitely improve you financial performance (score).

Although golf is considered a pastime and waste of natural resources and time, there are a lot of valuable learning lessons for Entrepreneurs, not to mention the enjoyment and camaraderie that it affords.

Keep your eyes focused on the ball, whichever one you are looking at  – in golfing or business!

Ravi Patel

www.patelCFOservices.com

Crisis Management Planning

Crisis events never happen at an opportune time. They always happen when we are the least prepared.

It behooves Entrepreneurs to think ahead and develop with their management team a Crisis Management Plan. Such a plan should anticipate events that could result in a crisis or crises; develop alternate scenarios to respond to such situations; designate key personnel to manage different options; and conduct training and practice sessions to rehearse potential responsive actions.

While hindsight is often accurate, it is  ususally too late. A little foresight can mean the difference between success and failure.

Ravi Patel

www.patelCFOservices.com

Understanding Your Revenue Model

Entrepreneurs, do you fully understand your Revenue Model? What generates revenues in your business? What are the key variables that affect your model?

Understanding your revenue model completely and analyzing the key drivers is critical for your growth and success.

Have you ever performed sensitivity analyses on the key variables to see how they affect your revenue model? What could you do to control the variables and affect the outcomes?

For more information, please contact us at Patel CFO Services (http://www.patelCFOservices.com)

Ravi Patel

http://www.patelCFOservices.com

Pay for Performance

Paying for performance is quite in vogue now. Many Entrepreneurs are embracing this compensation philosophy. Have you done so?

The traditional mode of initially compensating people based on their skill level, experience and knowledge and then merit adjustments based on annual performance evaluation is becoming obsolete.

Instead, the enlightened approach is to establish appropriate metrics and then compensating employees based on performance. There are various combinations to create an appropriate program for your company and method of operations. The benefit of a Pay for Performance philosophy is that it holds employees accountable for performance and rewards superior achievement.

If you have not explored this approach, you might want to do so.

Please contact Patel CFO Services (www.patelCFOservices.com)  for more information.

Ravi Patel

www.patelCFOservices.com