More Golf Analogies for Entrepreneurs

As I play and watch golf, I am constantly amazed by the analogies between golf and business.

On a macro level, course management is extremely important to professional golfers. Days before a tournament, pro golfers and their caddies study a course, especially a new one, to evaluate the layout, the challenges, the distances and so on. Entrepreneurs should be doing the same things – evaluating the market, understanding the layout, their own SWOT analysis and how it fits in the market landscape and so on. Preparing ahead of time is a contributor to success.

Playing from behind and winning, or being in the lead and finishing first in golf requires unique strategies by pro golfers. It is fascinating to watch these plans unfold as someone like Tiger is playing on the final day. Similarly in business, Entrepreneurs need to develop unique strategies for either playing from behind in the competitive marketplace or constantly maintaining the lead.

Golf and business – lots in common!

Ravi Patel

www.patelCFOservices.com

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Consequences of Overdependence

The current administration is providing valuable lessons for Entrepreneurs.

If you extend a hand for funds or if someone forcibly “helps” you, be very, very leery. You never know what strings will be pulled later to affect your ability to run your business.

Current admistration behavior shows that money comes with huge costs – loss of independence and micromanagement.

Entrepreneurs seeking funds from lenders or equity sources should carefully evaluate the terms and conditions prior to commitment. More important, prepare and analyze “what if” options in the event of default. Are you willing to live with the consequences?

Ravi Patel

www.patelCFOservices.com

Analyzing the Cash Flow Cycle

When is the last time you have analyzed the cash flow cycle in your business?

Understanding the cash flow cycle is crucial to working capital and cash management. It is important to determine when cash is generated and spent in the business and the duration of the cycle. What are the bottlenecks and what can you do to speed up the cycle?

Entrepreneurs interested in improving cash flow in their businesses need to first analyze the cash flow cycle.

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

Ravi Patel

www.patelCFOservices.com

Replicating Business Models and Processes

Entrepreneurs can achieve growth by replicating their successful business models to new markets. The success of famous franchises has been based on utilizing this growth principle. McDonald’s, Pizza Hut, Starbucks are just some examples of this approach.

In order to  replicate the business model, it is essential to standardize the business processes used in the model, perfect them, and then implement them in new locations. Efficient processes in all areas of business – financial, operations, marketing, human resources, and so on form the formula for successful replication and thereby growth.

Entrepreneurs desiring to grow their businesses may want to consider this approach.

Ravi Patel

www.patelCFOservices.com

Are you Managing your Open Workers Comp Cases?

Workers Comp insurance is quite a significant cost of doing business. Premiums keep on increasing, but you can do something about managing such costs.

Entrepreneurs should review all open workers comp cases and manage their favorable closure. Meeting with your broker and insurance carrier periodically and examining the status of each open case and developing a plan to get the employee back to work should be of prime importance. Mitigating or reducing the reserves established by the insurance carrier for open cases should be actively negotiated.

Open Workers Comp cases should be managed proactively. However, the best course of action is to establish an effective safety program and ensuring compliance with policies and procedures.

Ravi Patel

www.patelCFOservices.com

Days Payables Outstanding (DPO)

Similar to Days Sales Outstanding (DSO), a useful measurement for payables management is Days Payable Outstanding (DPO).

DPO is an indicator of how long the company is taking to pay its trade creditors. It is usually calculated by dividing Accounts Payable by Cost of Sales and multiplying it by the number of days. It can be tracked monthly or quarterly.

Entrepreneurs interested in cash management might want to supplement the DSO metric with DPO. Tracking these metrics reflects how well working capital components are being managed.

Ravi Patel

www.patelCFOservices.com

Adding Value to Business Processes

I have previously emphasized examining your business processes with a view to continuously improving them. This exercise makes your processes more efficient increasing productivity.

However, if your business process does not add value, how good is it? Having an efficient process is not useful for only its efficiency; the process should add value to your business operations and ultimately the bottom line of your company.

Entrepreneurs should instill in their company culture a philosophy of examining every process and task from a perspective of adding value and being efficient at it.

Ravi Patel

www.patelCFOservices.com

Segregation of Duties

An important internal control for companies is proper and adequate segregation of duties in key risk areas.

When Entrepreneurs start out, there are fewer people in their organizations and proper segregation of duties is difficult. Entrepreneurs exercise greater oversight over all areas of the company to ensure internal control.

As their businesses grow, Entrepreneurs cannot and should not have too much oversight, but need to develop effective organizations with adequate internal controls with proper segregation of duties

All key business processes need to be examined to review that no individual performs multiple duties such that there is a potential for malfeasance. Duties should be properly segregated to avoid such situations.

For assistance in establishing effective internal controls, please contact us at Patel CFO Services (www.patelCFOservices.com).

Ravi Patel

www.patelCFOservices.com

Audited Financials

As Entrepreneurs grow their businesses, accurate financials become quite important. Not only are timely financials required for monitoring performance and the financial health of the company, but also are necessary for external parties. An audit reveals the strength of your internal controls and accuracy of your statements.

As capital needs grow, Entrepreneurs need to reach out to bankers and equity and debt sources to raise funds. Having “audited” financials if often a requirement. If Entrepreneurs are contemplating any M&A or exit strategy, audited financials for at least three years are mandatory.

Entrepreneurs might want to think about having their financials audited if they do not have already done so. Choosing the right firm to audit your financial statements is equally important.

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

Ravi Patel

www.patelCFOservices.com

Is Your Time at the Office Effective?

Entrepreneurs often spend too much time at the office. But, is your time at the office spent effectively?

“Working” long hours at the office may definitely send a signal to your employees and show leadership by example. However, if your time is being spent in administrative tasks and being distracted by trivial things, it might not be the best use of your time.

If you have a capable management team in place, you might want to consider taking some time and spending it away from the office planning to “Do the Right Things.”

That might be more effective in the long term!

Ravi Patel

www.patelCFOservices.com