Archive for the Business Intelligence Category
WikiCFO defines a flash report as “a periodic snapshot of key financial and operational data.” It’s another name for a financial dashboard. As a Contract CFO I teach my clients that a flash report measuring the right metrics is essential to a successful business.
How to Create a Flash Report
Often business owners and CEOs agonize over what to include in the flash report. It’s quite simple…the answers to the questions you ask over and over. Those answers are what determines what the correct key metrics are for you.
All flash reports should update you on:
- Liquidity:
- How much cash you have on hand.
- What you owe to vendors.
- Productiviy:
- How many widgets your plant has produced.
- How many hours your employees have worked that are billable.
- Profitability:
- Which products are selling and the gross profit they earn.
- Which employees are working efficiently (i.e. are they doing the work within budget hours or less) and at what billable rate.
All business owners have certain financial or operating data that is meaningful to them and them alone. It’s fine to include these metrics. Just make sure the overall flash report is useful to many.
Purpose & Frequency of Reviewing Flash Reports
Flash reports are the early warning indicators of a business. They tell you what’s working, what’s going better than expected and what you need to look at pronto! To be meaningful it is necessary to review several weeks in a row and look for developing trends.
It’s just as important to understand why operating performance is better than expected as to understand why it’s worse than expected. You can’t repeat the positive if you don’t understand why it happened.
While I recommend weekly flash reports, if certain metrics are only meaningful monthly then make the report for the last week of the month an expanded version.
All the CEOs I have supported gave me the information I needed to assemble the appropriate flash report within a week of our working together. Is your accounting staff listening to your questions?
I love color. So when I discovered an Inc. article recently about how CEOs were determining their personality by taking a 60 second color personality test I was intrigued. Want to know more, visit Careerbuilder.com and take the Color Career Counselor.
Does this sound like you? You and a close friend have decided to go into business together. After all you get along so well what could possibly go wrong? What is the worst thing that could happen?
Many things could happen not the least of which is the friendship dissolves and one of you takes legal action against the other. Here are 7 tips of what to consider or do before you go into business with friends.
- Think long and hard about the potential loss of the friendship. Can you weather losing the friendship. Is a successful business worth this price?
- Strengths & Weaknesses Analysis: Each of you needs to create a list of what you’re good at, what you like to do, what you aren’t good at and what you hate to do. Then compare to determine where there are gaps.
- Develop a list of critical tasks, activities and functions you will need accomplished in the business.
- Divide up the responsibilities using the lists you developed under #’s 2 & 3. Make sure you equally distribute what people don’t like to do and give people the responsibilities they are good at. Anything left unassigned represents where you will need outside help.
- Develop an exit strategy. Today, before the business has a value, discuss and establish how a founding owner will be bought out. This is often referred to as a Buy/Sell Agreement. This needs to be done while cooler heads prevail and there is no emergency situation.
- Establish how the owners will be paid. How and when will money be withdrawn from the business by an owner. What constitutes a legitimate expense or cost that triggers reimbursement. It needs to be equitable and not allow any one owner to put the business in jeopardy.
- Create a “Business Prenuptial” which is a written document that sets out the what, where, when and how of your ownership with your friend. It is the culmination of the considerations under Tips #3-6. Anything that is ambiguous is an opportunity for disagreement and adverse consequences so resolve them now. Include a provision for when you will review and update the information.
In the course of completing these tasks don’t be surprised to find out you are better as friends than you could be as joint owners.
What additional tips would you suggest?
