Archive for November 2009
Anthony Tjan in a recent post on his blog Upstarts and Titans discussed the CEO Memo to the Board that his firm requires of each of their portfolio companies. I thought this was a brilliant suggestion and one that should be adopted by all CEOs with advisory boards.
The purpose of the CEO Memo is to share with the board the top priorities for the upcoming year and the lessons learned for the past year. Accordingly “it sets the big picture and creates an incredibly powerful mechanism for alignment between boards and CEOs.”
To summarize Tjan’s recommended approach to the CEO Memo:
- The top priorities for the coming year should be no more than four to five and no new priorities can be added until one is completed.
- The first priority is almost always: “Achieve the financial plan.”
- Priorities 2-5 should reflect the “top strategic initiatives” for the coming year.
- Use the CEO Memo as a “recurring framework for update discussions and board meetings.”
- Share with the Board and employees “what the most important lessons were of the past year and what they mean for the company going forward.”
By doing this exercise each member of the board and the CEO should be able to articulate at anytime: “What the top three priorities are for the company in the upcoming year.”
What will you include in your CEO Memo this year?
Look for the Advisory Board Kit, A Comprehensive Guide to Establishing an Advisory Board, to be published in December. Please check the site in the coming weeks for order and related teleclass information.
It’s a chilling statistic: 65% of people in “trusted” positions will commit some type of occupational fraud.
I was reminded of this recently when a small business owner shared their business was the victim of an embezzlement. It was only caught when the business owner noticed a suspicious e-mail. This is when most business owners institute the internal controls they haven’t had time to implement.
Given it’s the holiday season and the economy has left many cash strapped fraud can increase. Here are steps you can implement to prevent fraud:
- Separate accounting and financial control responsibilities, this means the person sending out the bills should not reconcile the bank statement.
- The CEO/business owner might do a surprise review of the bank statement before it has been opened.
- Require all disbursements, i.e. checks and electronic, to have two signatures of approval and the signatures should be manual not a stamp.
- Conduct background checks on employees including criminal checks where the position has access to company funds.
- Create a process to make it easy for employees to come forward with information on what might be suspicious activities.
- Document procedures and annually audit the procedures to see how well they are being followed.
- Engage accounting and other professionals to help institute appropriate policies and procedures that protect the company and the employees.
- Press criminal charges. Fraud is a criminal act yet many business owners fail to press charges. They are embarrassed to admit it happened to them…so the criminal moves on to their next victim company to do it all over again.
Several years ago while serving as the contract CFO of a non-profit I instituted a very specific form and procedure for moving funds. While I did not have signatory authority (by choice), it was still possible for me to move funds. This left the organization and me exposed. I created the form which required the executive director’s signature and notification of the treasurer so the funds transfers were transparent. I was protecting the institution and myself.
It’s six weeks to the end of the year. What should you be working on? Here are a few thoughts:
- Taxes: Have you tallied your third quarter numbers and delivered them to your tax accountant? Have you projected your fourth quarter results? If not you risk missing the tax breaks the stimulus plan granted.
- Budgets: While 2010 maybe equally as rocky as 2009, it’s no excuse not to budget. I would recommend you implement a scenario-plan type budget approach: worst, best and somewhere in the middle.
- Technology planning: Take an inventory of where you are in terms of staying up to date with the current technology. If you put off 2009 expenditures because of the economy, identify what needs to be updated first when cash frees up. Plan to stay moderately competitive with what’s available today. For a few ideas on technology upgrades, see the Wall Street Journal article “Three Best Ways to Reduce Tech Costs“.
- Marketing Plan: How will you reach your customers next year? What aspects of social media will your company adopt? In the often slow time between Thanksgiving and New Years try to attend the free or inexpensive seminars offered on social media. Use this new knowledge to write a killer marketing plan you can launch on January 2nd!
With six weeks to year-end it’s time to focus on 2010.
