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New Graduates: What Employers Are Looking For

what employers are looking for

Last week, we discussed the importance of having creativity in the workplace. Watching my Wolff Center for Entrepreneurship students walk across the stage was a bittersweet moment. However, I remembered something important. Most of those students will be fine because they have what potential employers are looking for.

2017’s Highest-Demanded Jobs

I’m sure there are a lot of highly-demanded positions in other industries such as the medical field and education. In conjunction with Indeed and Glassdoor, I’ve found that these occupations are also some of the most demanded in business for 2017:

Data Scientist

For those of you who don’t know what a data scientist is, a data scientist is an analytical data expert that gathers data and assists with business decisions. According to Indeed, the data scientist salary averages from $110,000 to $130,000, depending on the region you work in. This occupation continues to grow, and is projected to reach a 15% growth rate next year.

Office Manager

Long-gone are the days where office managers only handled administrative tasks. Recently I was talking with my associates, and they all told me similar things. “If it wasn’t for my office manager, I wouldn’t have come up with the idea for XYZ!” Office managers contribute to more than simple tasks, and as a result, they earn more as well.

Web Development and Design

Even though the digital age was introduced over 30 years ago (doesn’t that make you feel old!), one of the most interesting parts of the internet is how it evolves. As we discussed last week, the algorithms within major websites like Google is ever-changing. This means that jobs are also changing, growing, and expanding.

Designers are also getting more advanced. I used to think photoshop was a big deal, but now there are occupations such as UX (user experience) designers. In Houston alone, the median base pay is around $75,000. That’s not bad for a starting salary.

Internet Security

This also goes into web development, but may be more company-centric than website development-centric. The internet is not the only thing growing in intelligence. More people are finding ways to steal important pieces of information such as credit cards, passwords, and addresses. It’s a constant battle with the hackers versus security – the bad versus the good. At least one good thing comes from the many hackers in the world… jobs!

What are your Strengths?

From a graduate’s point of view, you have to reflect upon your own strengths and how to apply them in your new company. What makes you stand out from the rest? What can you bring to the table?

Conversely, as a business, what are your strengths? What makes you stand out in a crowd?

Teaching Skills versus Teaching Talent

what employers are looking for

In teaching at The Wolff Center for Entrepreneurship, I learned a few things myself. One of those things is that you can teach skills, but not talent.

The difference between talent and skills is this – a skill is the ability to do something well; an expertise. A talent is a natural aptitude or skill. If someone is learning how to write blogs, or draft up email campaigns, that person is learning a skill. However, how that person adapts, grows, and the aptitude at which the skill is being learned determines the talent that the person has.

How do you know what to look for in a new hire? Download our free Star Quality whitepaper to find out!

Can everyone have the same talent?

Unfortunately, not. In fact, they shouldn’t. Imagine having an office where everyone has the same talent in one skill set but not the rest. That would hurt productivity and make things in the office kind of boring, don’t you think?

To sum it all up, having multiple talents – a star-quality team – is ideal for your company. That’s what the hiring process is for.

What to Watch Out For

To all of the employers out there, there are some common issues that everyone should watch for when dealing with those new employees

Starting off with a Weak Hire

All of these problems can be avoided with a simple solution – find the right hire for your company by investing time looking for that person. If you rush to find someone to fill a slot, chances are you won’t have that person for very long (or maybe you’ll wish they were gone). And if that’s how you’ve been hiring your employees, chances are the last person left or was let go because of that same reason.

Don’t Lose your Temper!

So you’ve got a new hire, and your trainer comes into your office complaining about his lack of drive. First of all, don’t worry! Don’t lose your patience when dealing with a new hire. Like I mentioned earlier, that person can learn the skills you need to get the job done. Help them harness their natural talents and productivity will follow.

Employee Turnover

According to Compensation Force, employee turnover rate in the United States was 17.8% in 2016 and is expected to grow to 18-20% in 2017. Hopefully, you’re investing time and thinking long-term when it comes to your new hires. Again, this can all be solved by having a sound hiring process.

Hiring the Perfect Team

what employers are looking forHow do you know if someone has the “star quality” for your star quality team? It’s all in the process. If you find yourself constantly hiring and firing, it may be time to re-evaluate your hiring practices.

These are a few questions I tell my clients to ask themselves, beginning with does your potential hire…

  • Have the desire to solve problems?
  • Make wise decisions?
  • Have the ability to juggle multiple priorities?
  • Prove that he/she has good written and oral communication skills?

If you answered all of these questions “yes”, then you’re halfway there. Now you have to ask yourself the most important question… “Will this person thrive in this company for years to come?” Hiring is more than filling a spot. It’s providing opportunities with the intention to grow your employees.

What kind of boss will you be – a manager or a leader?

Conclusion

In conclusion, getting hired for a new job has a process, and hiring a new person is also a process. Why waste time (and money) hiring and firing people? With enough patience, you might just find that perfect person (if you’re hiring), or job (if you’re looking) that fits the talents and skillset you need.

Are you wasting time hiring and firing people? That’s a lot of paperwork! Check out our free 5 guiding principals for recruiting a star-quality team now!

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Creatives in the Workplace: Are you the Machine or the Inventor?

creatives in the workplaceHere in Texas, graduation is approaching. It makes you wonder… How do those potential candidates stand out in a crowd if thousands of them are competing for the same job position? Believe it or not, you were in that same situation once. If you identify with the older generation, how did you land the job you have now?

Simple Answer: You were most likely one of the creatives in the workplace.

2017’s Most Wanted Creative Skills

One of the major problems with school is that they teach material from five, maybe even ten (sometimes even more) years ago. However, it’s partially not their fault. New skills are being explored, developed, and desired every day. Some textbooks just can’t keep up.

Here are a couple of my personal favorite creative skills that some businesses are looking for:

Design

By “design,” I don’t mean the typical architect who draws with a bow compass and ruler and submits by the end of the week. Adobe Illustrator, Lightroom, and Photoshop are no longer highly paid skills because there are so many businesses who use them, and people who have the skill. Since 2015, development with User Experience/User Interface (UX/UI) has become more precise. Who knows, maybe that will be the next Adobe suite in terms of conventional skills…

Designers are also faster than before. If we compare a web page from ten years ago to the ones we see today, designing a web page used to take months. Now, it only takes a few hours. This increase in productivity opened the door for other improvements with technology and design, and will continue to do so with more improvements in the industry.

Writing

Demand is increasing for digital marketers, search engine optimization (SEO), and copywriting for company websites – I’m guilty of this myself! Like many skills, writing is considered a constant demand and ever-evolving skill. Employees don’t often have the time or patience to write 1,000+ words a day.

Writing has become so evolved that there is an algorithm, maybe even a customizable process. Writers put thoughts and feelings out there for users and customers, which is something no artificial intelligence will ever be designed to do.

Everyone has their own special skill… how do you know which is the best system for your company? Download our free guide, How to be a Wingman, to be the best wingman to your CEO.

Benefits of Having Creatives in the Workplace

These are all attractive skills to have in 2017, but the demand is high and the skills are constantly creatives in the workplacechanging. Additionally, creativity doesn’t always translate to advanced skills like coding and UX/UI. According to dictionary.com, Creativity is “the ability to transcend traditional ideas, rules, patterns, relationships, or the like, and to create meaningful new ideas.” Creativity can and should be in every team member, and here’s why…

Creativity = Flexibility

It is common to have a standard procedure and policy when implementing new ideas for a company. One of the benefits of having creatives in the workplace is that they figure out new ways to do a project, but still maintain the company policy. Doing the same tasks the same way becomes discouraging and mundane, and having a fresh opinion can keep even routine tasks interesting.

Flexibility = Growth

Having employees to provide a “fresh” opinion not only keeps tasks interesting, but helps the company grow. It is often difficult to see what needs to be improved when you’ve worked somewhere for a long time. Bending the company norms, but just enough to stay within company procedures, effects change within a company. Depending on your company culture, this is great news. However, not every company sees it that way…

Disadvantages of Having Creatives in the Workplace

When you’ve established a company culture for more than 10 years, having a young mind spouting change might rub the “old factory” workers the wrong way. If creatives and millennials are both seeking creative job positions, you’d assume it’s a good thing that millennials are inclining more towards creativity and innovation. In most ways, it is. In others, well… Here are a couple of reasons why having creatives in the workplace might actually slow your progress down:

Creatives don’t always enjoy Repetition

creatives in the workplaceAs a professor in an Entrepreneurship Program, I hear the same thing. “Corporate is bad,” and “I refuse to be a cog in a machine!” are only a couple of phrases I’ve heard. Young creatives are less attracted to a traditional company culture because of the repetitive and mundane tasks that these businesses often have. Toeing the company line seems restrictive for the creative thinker, which is why having creatives in the workplace is becoming rarer, and more creative people tend to quit their jobs within two years. The best cure for this is to allow those creative minds to bend the policy a little, (and maybe show us Baby Boomers and Gen X-ers a thing or two).

Squirrels are More Common

Another disadvantage to having creative people in the workplace is that they are often strongly opinionated and visionary. Consider our recent blog: “That Squirrel will Kill You!”. Having new opinions and visions for a company should always be accepted and heard, no matter how crazy or different they may be. However, creative people have a lot of ideas, and often move on to the next idea too quickly to make them reality. The downside is, some projects need to be completed before your company can afford another one. Constantly creating can be detrimental if no one is actually productive in a project, and everyone always works on something new.

Conclusion

Having creative people in the workplace can be tricky – there is definitely a gray area and many contradictions. In my opinion, having a creative mind definitely separates someone in a crowd of applicants. The difficult part is how to incorporate those creative thinkers in an environment that isn’t very creative. Let’s face it – companies need those creative people just as much, if not more, than they need the status quo. So ask yourself, are you the cog in the machine that conducts the same processes every time, or the inventor? It’s up to you to decide.

Don’t forget… the CFO is the CEO’s wingman, and it’s not a mundane job. Learn how to think like a creative with this free tool!

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Don’t get caught swimming naked!

Has anyone ever warned you, “don’t get caught swimming naked”? It may sound strange, but it’s a reference to Warren Buffet’s famous quote “Only when the tide goes out do you discover who’s been swimming naked”. As a financial leader, it is your responsibility to know when the tide is going out so that you can prepare not to be caught swimming naked. Here’s your warning..

The tide is getting ready to go out and may reveal some troubling things in your business as a result of the Fed (the Federal Reserve System – the United States’ central banking system) adjusting its interest rates. This has huge consequences for not only businesses in America but also companies that do business with America.

Background on US Interest Rates

don't get caught swimming nakedTo protect the US from falling into another Great Depression after the 08-09 housing market crash, interest rates were lowered to encourage borrowing for both companies and individuals. This has resulted in interest rates being at an all time low AND a flood of money in the marketplace.

The Fed lowered the short term interest rates from 0.25pt from 3-4pt in the wake of the housing market crash. They issued money through bonds to the marketplace for mortgages. Consequentially, this dropped the long-term interest rate.

The Fed: Interest Rates are Going Up

The Federal Reserve has given notice as of March 15, 2017, that the interest rates will be increasing over the next few years (estimated 5 years). There’s already been some movement over the past couple of months. Janet L. Yellen, the Fed’s Chairman, plans to slowly adjust the interest rates so that it will have the time to react to President Trump’s infrastructure spending and tax cuts.

The goal of the Fed is to raise the short-term rate without exceeding the long term rate. This act of leveling the interest rates is to essentially balance their financial statements and get it back to a normal level.

The Financial Times released an analysis on what is happening and how it’s going to impact us. One of the things noted is that the interest rates will increase slowly and cautiously. This may seem like a great idea, and it is, especially when considering any fiscal policy that President Trump rolls out in the next 3.5 years.

But what exactly does the incremental increase of interest rates mean for your company?

What does that mean for your company?

This slow increase of interest rates could be catastrophic for companies that neglect to prepare now. The tide is going out – meaning in a couple of years, there won’t be any cushion to break your fall.

One of the biggest responsibilities I have as the leader of The Strategic CFO is to network with business leaders around the city of Houston. When I discover events or adjustments that will impact the financial leader’s role, I start asking questions. As of late, my question has been… How is the increase of interest rates going to impact your company?

That’s a loaded question. What I’m finding out is even more interesting: nobody is really paying attention to what’s going on. They have their nose so close to their business that they aren’t really looking at the bigger issue in the room. Don’t get caught swimming naked!

Private Equity Firms

 

Over the past few years, the oil and gas industry has been hurting (especially in Houston). Thankfully, this crisis hasn’t been nearly as bad as the oil and gas crisis in the 1980s overall. However, the reason why companies that would have gone under 40 years ago have survived is because of the substantial amount of private equity money being pumped into these companies. With low interest rates, there’s naturally more money in the economy that can be invested into companies in troubled times.

Barrel of Water

Picture the economy as a barrel of water where money is the water. Right now, the barrel is full of water sloshing around. This is a really unique position. However, the Fed is going to start draining the water incrementally. People aren’t really focused on it because all they see is that there is still water in the barrel.

BUT what happens when people look up in 5 years to find that the interest rates have increased from 2% to more normal levels of 7-8%? Right now, the economy is in a period where if you can fog a mirror, you can get money. But not for long…

How does that change the role of a financial leader?

Over the past 15 years, corporations of all sizes have taken advantage of these low interest rates and have potentially even changed their business model entirely. I have to warn you… Money is getting tighter.

Money is Getting Tighter

For those later in their careers, this is just another cycle. But as a professor for the Wolff Center for Entrepreneurship, money getting tighter has a real impact on my students who are just starting their careers. With money increasing its value and decreasing its quantity, the time to start preparing is NOW.

How to Prepare for Increased Interest Rates

First, identify if you rely on low interest rates as well as the areas of your business that rely on low interest rates.

Once you identify those areas in your business, it time to start assessing and anticipating the worst-case scenario for your company. Download our External Analysis whitepaper to start charting the external factors that impact your company. When you’ve made a list of those potential outcomes with your current business model, it’s time to start prioritizing what needs to be adjusted.

I can’t say for certain how high the interest rates are going to go or how it’s going to impact your company, but I do know that the tide is going out. Soon, we’ll find out who is too over-leveraged, had business models predicated on low interest rates. Have you started preparing for this?

Should you pay down debt?

YES. The reason why is that when interest rates increase, payments increase. Pay your debt down as quickly as possible before you feel the pinch.

Should you raise your prices?

It depends… A better question might be: can you raise your prices? If you are in a competitive industry where there is no option to raise prices, then that’s not possible. You’ll have to find cash elsewhere to respond to increased interest rates.

Frog in a Boiling Pot

Ever try to cook a frog?  If you throw it in a pot of boiling water, it will just jump out.  But if you put it in the pot and slowly increase the temperature of the water, the frog won’t notice the temperature change until it’s too late. We’ve become accustomed to cheap money, but we can’t afford not to react to the slow increase in temperature that the Fed is planning with interest rates. The result could be disastrous.

Conclusion – Don’t Get Caught Swimming Naked

There’s change in the wind. If you haven’t reacted yet, this is your warning. The tide is going out and you don’t want to get caught swimming naked. Download the External Analysis whitepaper to gain an advantage over competitors starting your preparation to respond to the increase of interest rates.

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Don’t put all your eggs into one basket!

don't put all your eggs into one basketEaster was just this past weekend. One of the common traditions of Easter is an Easter Egg Hunt where plastic eggs with candy (or if you’re lucky, money) are hidden for the kids to find and put in their Easter Basket. When I was a boy, I was greedy and piled too many eggs into my basket. All of them fell out as a result of being too full.

We’ve all heard of the saying, “Don’t put all your eggs into one basket.” This saying can be applied to many things, not just your personal choices. In business, you should never put all your eggs in one basket. Eggs ultimately means trust. Don’t place all of your trust into the same vendors, employees, customers, or investments because one day, the world might come crashing down on you with no cushion to fall on.

In this week’s blog, I will explain a few tips about how to prevent putting all your eggs into one basket from my own personal experience.

Signs That Your “Perfect” Customers Might Not Be So Perfect

During the lifetime of your business, you’ve probably gained a few repeat customers (or at least I hope you have!). The sad truth is that these customers aren’t married to you. They don’t have any personal or legal attachment to you or your company. As a financial leader, you have to understand what (and who) is best for your business. Here are a few indications that those “perfect” customers might not be so “perfect”…

They’re Demanding

What do your contracts look like? If you have customers who have great deals, but always demand more, you should pay close attention. How do those customers treat the employees in your company? If they are rude, condescending, or constantly complaining, maybe you should rethink this customer relationship.

“But Jim, they give us a lot of money!” This is where you have to weigh your options and take a look at your financials. In some cases, it may be a better investment to fire your customers. If you don’t, you may be looking at hundreds, or even thousands, of dollars lost.

Would you rather pay for the consequences now, or a year from now when the expenses add up?

They Won’t Renew the Contract

don't put all your eggs into one basketThe customers who are only with you for a short period of time are the ones who were only in it for the deals, not the loyalty. How did you obtain this customer? Did they jump to your company because of a short promotion or sale?

We experience this in our business. Oftentimes, we will promote a “flash sale”, where our SCFO Lab is only $1 for the first month. What we’ve noticed is that a large amount of those customers obtained from the flash sale have unsubscribed after the first month. This shows that only a percentage of lab members find so much value that they continue their subscription for multiple month. However, this isn’t always a negative observation. Our value-adding customers utilize our products, and those are the customers worth investing your time and money in.

(Sound familiar? Pay attention to what’s happening in your company. Check out our Internal Analysis now!)

They’re Checking Out Other Companies

Customer relationships should be built on trust, not on a whim. Chances are, if you spent little-to-no time attracting a customer, that customer will easily leave you for another company for the same reason. Customers often play hard-to-keep by threatening to go to another company, or using their products alongside with yours.

If you notice these kinds of patterns in your customers, it’s time to change your priorities.

How to Obtain More Customers

So you’ve fired your customers… But you need more revenue to cover that cost. How do you obtain more customers to cover the loss? There are four primary ways that you can retain your current customer base and expand it:

  1. Allocate resources to broaden base
  2. Beef up the legal agreements and contracts
  3. Sign Non-Competes
  4. Create a back up plan

Allocate Resources to Broaden Your Customer Base

First, you should take a look at your financials – specifically marketing, advertising, and sales. How much are you allocating? When ramping up your customer base, you need to allocate more funds to marketing, advertising, and sales. This is to not only attract but also manage future customers.

Ask the questions when adapting your strategy… What are their main concerns? What can you do to help them, so that they may refer you?

Spice Up Your Contracts & Vendor Agreements

Trust only goes so far when it comes to customers. Legally, you can’t just trust someone to stay with you for another 2 years. Your contracts will ensure your customer involvement, and eliminates gray area.

In your contract, you should focus on the obligations that you and the other party should fulfill. This means the number of payments you should receive per annum, when you will see those payments, what you are allowed to change, what the customers are responsible for, etc. Basically, you won’t have 100% liability.

Non-Compete, Non-Compete, Non-Compete!

don't put all your eggs into one basketWe’ve been spending a lot of time on customer loyalty, but now let’s look at employee loyalty. Loyalty and trust are two very important attributes in the hiring process. Let’s say you’ve spent years with a customer, but the main point of contact was a salesman. Without a non-compete, it will be very difficult to retain a customer if that salesman/employee started his own similar business. Non-competes provide security for your company and your clients.

(Disclaimer: Non-compete Agreements must adhere to state and national employment regulations, and a labor law attorney should be consulted to verify conditions. You should consider Non-compete Agreements for employees, clients, shareholders, suppliers, and partners. Oftentimes, the buyer will require the seller to sign one as well.)

Always Have a Back-up Plan

Finally, have a back-up plan. Back-up plans ensure that your customers will pay you fully for your services. As mentioned in last week’s blog, credit cards are beneficial to the company because it ensures your cash.

Another good rule of thumb is to have a plan to constantly bring in customers. Sure, you don’t have to allocate all of your resources in a last-minute attempt to attract customers. You should, however, always keep watch for your financials and what might affect them.

Conclusion

In conclusion, don’t put all your eggs into one basket. You don’t really know who you can trust in terms of customers, employees, and vendors. For customers, you aren’t sure whether or not they will be back next year unless you have a legal engagement.

What you can do is make sure they have a useful experience. With vendors, you need to make sure that you get your money’s worth. Contracts are especially convenient when establishing who does what in the relationship. For the security of your company, employees should sign non-competes (another contract). As a financial leader, make wise decisions to take care of your business. In the end of the day, you are the person to reap the consequences. Download the Internal Analysis whitepaper to take a deeper look at how the issues discussed above are impacting your business. Take care of your business.

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Taking Credit Cards for Business: Good or Bad?

taking credit cards for businessPeople, myself included, are generally more hesitant with taking credit cards for business on anything major… and I don’t blame them! There’s typically a 2% charge on sales. However, if you use your credit cards the correct way, it may be worth considering. To save you time and risk, here’s a few things that we learned from using a credit card in a business, and maybe you can, too.

Benefits of Taking Credit Cards

Why are credit cards useful in your company? Credit cards serve several purposes. At The Strategic CFO, we only cut a few checks per month due to the power of credit cards. Our accounting is automated, we experience a boost in productivity, and depending on your business, you might even free up enough liquidity to take advantage of discounts on payables.

Experience a Boost in Productivity

Daily sales outstanding (DSO) is a calculation used by a company to estimate their average collection period. The higher the DSO, the more problematic for a company because your liquidity is tied up in receivables. For example, let’s say you’re a plumber and your average DSO is 45 days. By accepting credit cards as payment, you could potentially reduce your average DSO from 45 days to 15 days… maybe less than that! An extra 30 days’ worth of liquidity can drastically improve a company. If a company averages sales of $2,000 a day, that’s almost $60,000 in your pocket earlier than it would have been! So what will you do with that extra cash? Now, you can pay off bills, invest the money, or take advantage of discounts on payables.

Take discounts on your payables

Certain vendors provide a discount on payables if you pay early. 2/10 net 30 is a popular discount given on payables. Specifically, you can get a 2 percent discount for a payment to a vendor in 10 days, or pay the full amount in 30 days with no discount. This reflects well on your supplier-consumer relationship, because the sooner you have your cash, the sooner they have their cash.

They’re a Good Source of Funding

It is recommended that you use a credit card when you need less than $50,000 and you cannot get a bank loan. One of the biggest benefits of having a credit card is that it is a flexible source of funding. You can buy as little or as much as you need, but only have to pay back a small amount monthly. Used responsibly, it can help establish your business’s credit as well making that next loan a little easier to get.

Dell

One of the best examples of how accepting credit cards can be a game-changer is Dell Computers. Back in 1984, when computer sales were gradually taking credit cards in businesspicking up pace, Michael Dell operated a computer-building business in his dorm room. He was funded $1,000, but how was he supposed to fund the rest? He strategically used the credit card cash to cover the expenses. Dell would take orders over the phone, gather the credit card information from the clients, and then make the computers. As a result, his cash conversion cycle was negative! This is one of many success stories for businesses who use credit cards as a source of funding.

This is one of many ways you can increase and optimize your cash flow. Read the rest in our free guide: 25 Ways to Improve Cash Flow!

Consequences of Credit Card Usage

So we’ve highlighted the benefits of taking credit cards, but be wary. Credit cards are still not universally accepted due to a few reasons. Not all businesses can take credit cards; in fact, some might have to pay more fees than others to even accept them. Here are just a few more reasons why people should be careful when taking credit cards for business…

Businesses Need to Have Reasonable Gross Profit

Let’s say the bulk of your sales are via credit card. If you want to stay in business, your gross profit must be substantial enough to cover the credit card fees. In this case, certain industries should not accept credit cards.

General Contract Work

Contract work such as painters, plumbers, and music teachers make only 3-5% of gross profit. Taking 2% of sales with credit would be too much. That would mean waiting on the customer to receive majority of gross profit. This can affect every other aspect of your business… especially overhead.

Real Estate

Another example of an industry where credit cards don’t make sense is real estate. There tends to be a 10% net operating income within the industry. If you’re generating 10% net operating income, it will hurt your business to have 2% credit sales. Taking a 2% hit would cut the investment down by 20%, which is why you sometimes can’t pay large sums (like rent) with credit cards.

Credit card tactics aren’t the only way to improve cash flow. Check out 24 other ways with this whitepaper!

 

Some properties do accept credit cards, but those tend to be the higher-end properties. Like suppliers, the landlords usually pair the early payments with benefits like points or discount on rent.

Where’s My Money?

taking credit cards for businessAnd of course… waiting for customers to pay, and depending on the customers’ credit terms, is an issue with accepting credit cards. Credit cards come with all sorts of issues technologically that are out of your control. If credit cards are canceled or stolen, that ultimately affects your automation system. Make sure you have a system in place when accepting a customer’s card, whether it be a contract or a secondary source of funding from the customer. Always be prepared for something to go sideways.

Conclusion

In conclusion, accepting credit cards in a business (no matter how big or small it is) is a risk. Then again, what new business decision doesn’t come with a risk? Like most decisions, it’s just a matter of preparation, research, and credibility. There are many contingencies associated with credit cards such as customer responsibility, and making sure your company generates enough gross profit. Conversely, there are benefits of taking credit cards such as discounts on your payables and a boost in productivity. Make sure to do your research, and be prepared for change.

Prepare yourself for change. Read our 25 Ways to Improve Cash Flow whitepaper and watch the company gradually grow with each step!

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Idea Management in Companies – “That Squirrel Will Kill You!”

idea managementFifteen years ago, I had a dog named Killer. Killer was really cute – a Yorkshire terrier – and was about 15 years old. Killer hated squirrels with a passion. One day, he saw a squirrel across the street and took off after him. Before we could catch him, he was hit by a car and passed away.

I apologize for the sad story, and I know that probably wasn’t something you expected to read from The Strategic CFO. The purpose of this story is to tell you that there are “squirrels” in your business that will kill you, too. Idea management in companies is more difficult than you think. In our company, we have a saying. Whenever someone shares a new idea that is irrelevant to our current projects, we call out “Squirrel!”. We do this to do two things: identify that it is in fact a squirrel and refocus our attention so that we don’t get distracted from our current projects. We don’t spend all of our money doing every new idea that we think of. This may even be an issue in your own company. Let’s explore why…

Why “Squirrels” Will Kill You

Squirrels are tangible, worth pursuing, and bring value. But what you may not know is that those new ideas may hurt you more than they help you more often than not.

Leaders are Innovative & Ambitious

Let’s say you’re in a room full of executives and business leaders, pursuing a project that you’ve worked on for months. Suddenly, one of your colleagues brings up the problem with the vending machine. The vending machine problem has nothing to do with your project. Another colleague chimes in and agrees with your other colleague about the vending machine. Now you’re all talking about the vending machine, and the initial project is pushed again… another 2 months.

That squirrel just killed your chances of successfully finishing that initial project.

If you’re an entrepreneur or a business leader, creativity is in your blood. You can’t help but think of new ways to grow your business, or fix small problems when they turn up. At the same time, squirrels distract you from your goals. “Chasing squirrels” is especially dangerous for entrepreneurs and businesses that have been operating for less than 5 years. Try to focus on what’s really important. Remember…. if you’re always chasing squirrels, you’ll never get down the street. This is where new idea management in companies comes into play.

Take the 40,000 foot level view when looking at projects! There are more squirrels than can be caught. Download our free 7 Habits of Highly Effective CFOs and learn how to take your financial leadership to the next level!

Most Ideas are Worth Pursuing… One Day

Just because you have a main project doesn’t mean you can’t have ideas. If you have a useful idea, but it may not be related to what you’re currently working on, write them down! Writing down your ideas is more than a list; it’s a goal that you can one day pursue (and maybe should pursue).

idea managementHow to Manage the “Squirrels”

Managing new ideas in companies should always be organized with a path in mind. How do you address squirrels so that they don’t kill your organization, you, and/or your momentum?

The action plan is the best idea management tool.

What is an Action Plan?

Our biggest recommendation is to make an action plan for your company. An action plan is a tool to manage the tasks to be achieved within a certain period of time. This tool isn’t solely for the leaders of a company to watch their employees. The action plan serves as a communication tool between ownership and staff, which then ensures accountability within a company.

Idea Management in Companies with Action Plans

Many of my clients, and my own employees, can attest to The Strategic CFO action plan tool (can be found in the SCFO Lab). When managing the “squirrels” in your company, your efforts shouldn’t stop at merely having a tool. What makes it effective is how you use it. Here’s how we all learned how to use an action plan effectively:

  • List your tasks. It’s okay to brainstorm and unleash your ideas. In fact, we highly recommend you do this. But you can let the ideas flow out in a constructive manner that will prevent you from derailing off the tracks. List out any ideas, from small to big; from things you want to accomplish today, to milestones you want to accomplish by 2019. The sky’s the limit!… as long as the ideas are realistic and attainable.
  • Assign and prioritize this task. Now is the time to organize your ideas. Which tasks are easily attainable? Which tasks serve a purpose? Which tasks align with other tasks? And finally, who will complete these tasks? are all questions you should be asking yourself when completing this step. Color code, write notes, create labels… do what you need to do to organize your thoughts. As you do this, also try to map out how you’re going to accomplish a goal (because some goals need sub goals in order to accomplish them).
  • Update progress and priorities. Oftentimes, plans don’t always happen like you had originally expected. It’s normal to move around certain tasks to make room for more pressing ones. Just make sure that you don’t move them around too much… It might end up being a “squirrel.” It’s always a good idea to update your progress as well. When you complete a task, mark it as finished and don’t delete it.
  • Leave what you have already accomplished. Leaving the completed tasks is crucial because the management needs to review progress trends, and quite honestly, it also boosts morale within the company. If you constantly remove the accomplishments, it will feel like your company has gotten nowhere. On the other hand, if you leave your completed tasks, you can see what works and what doesn’t work. You’ll also see how fast certain tasks are completed, and the work habits of your staff and yourself.

idea managementConclusion

Constant ideas can help your company, but they can also hurt your company. Having an action plan for your company is important not only for your staff, but for yourself. Action plans, or ideas with a plan in mind, organize the company’s thoughts and ideas in a more manageable and realistic fashion. Ask yourself: Are these ideas helpful right now? Will they be helpful in a couple of years? If you answered “no” to the first question, the ideas are squirrels. If they’re not helpful ever… then those are just bad ideas. Take care of your company, or else it might end up like Killer.

To learn more financial leadership skills like managing your company’s ideas, download the free 7 Habits of Highly Effective CFOs. Find out how you can become a more valuable financial leader.

idea management

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How to Get a Loan When Banks Aren’t Lending

how to get a loan when banks aren't lending

You need capital, but you’re having trouble securing the financing you need.  So how to get a loan when banks aren’t lending?

This situation reminds me of the famous NBC Television show, “The Office”, the hilarious documentary-style show that comments on the life of a standard corporate office. If you haven’t seen the show, I’d definitely recommend it.

In one of the episodes, the antagonist and regional manager, Michael Scott, has worked at Dunder Mifflin Paper Company for over 19 years and quits (spoiler alert!). He decides to start his own paper company with almost no capital, along with two other employees in the office who also quit. Slowly, he takes clients away from Dunder Mifflin and grows in revenues. As a result of his sudden growth in clients, he buys a van and wakes up at 3 in the morning to distribute the paper in the area.

After consulting with an accountant, he finds out that he has to declare bankruptcy because he was growing the business too fast, and that the revenues would not cover the growth of the business. They required wages, rent, and variable costs associated with manufacturing and distributing the paper. Because of the digital age, the demand for paper wasn’t so hot either.

What happens when we grow ourselves out of business? Michael’s problem was simple: he had no outside investors, and zero loans from the bank. Therefore, he had no money to cover the fast expansion. Sound familiar? In this article, we will discuss how to get a loan from the bank when they aren’t lending.

Don’t lose track of your company’s metrics. For advice on how to identify your KPIs and how to track them, access our free KPI Discovery Cheatsheet!

Bank Lending Cycle: A Recap

Last week, we discussed the bank lending cycle and why banks may tighten their lending. There are two reasons why that might happen…

Loans and the Economy

If the economy is undergoing or overcoming a financial crisis, banks tend to lend less. During this time, businesses might have to look elsewhere for financial assistance.

Conversely, if the economy is booming and the lending environment becomes less risky, banks might lend more. These periods are characterized by lower interest rates and better terms.

But what happens when things are looking up? It’s easier to obtain a loan because of the economy, but with all the capital in the marketplace, an economic bubble builds. After a while, that bubble will burst and we’ll find ourselves in a financial crisis again.

 The Environment affects the Economy

The economy may affect the environment, but the events in the environment also affect the economy. We used the housing market crisis in 2007 as an example. Imagine walking into your job the next day, without reading or watching the news, expecting to make a sale. Yikes! You have to know your environment to make good investment decisions.

How to Appeal to Bankers

We discussed the cyclical nature of bank lending and how to understand the industry. Now, we will analyze how to best appeal to the bankers. Regardless of the economy, the banker still has to evaluate how risky the investment is. What is the best way to appeal to bankers? Preparing a package of these five things will get you there:

1. Know your economics.

Preparing at least three years of business financial statements and one or two years of financial projections goes a long way. In addition, you should also list out how you will use the loan. By preparing a projection of financial statements, this should be easy.

2. Build sound business credit.

Knowing where you stand with your credit is useful. If there are any inaccuracies, you can correct them without having the bank check and deny you a loan. If you have lower credit than you had originally hoped, maybe you can hold off on applying for a loan until you are ready.

3. Provide documentation of personal loans.

Providing documentation of personal loans is equivalent to providing evidence and saying, “I am worthy of your loan!” Personal loans, business loans… they both demonstrate that you owe someone money, and showing the history of your loan relationships indicates the type of relationship you might have with the bank.

4. Prepare questions.

In a way, preparing a package for the bank should answer all the questions they might have. This includes “how much money do you need,” “how long might you need this loan,” “what will you use it for,” etc.

5. Log prior experience.

This is less about numbers and more about character. Logging your experience in companies, vendor relationships, lender relationships, and references shows more than how much money you have or will have. It shows the commitment and effort of a borrower.

Other sources of Loans

Don’t put all your eggs into one basket. Have a backup plan just in case banks really aren’t willing to loan anything to your company. Smaller businesses are less likely to obtain a large loan from a bank if they are less than 10 years old.

SBA Loans

SBA is the Small Business Administration. They provide loans if you’re starting up a new company, or even if you just want to expand your business. Basic 7(a), Certified Development Company (CDC) 504, and the Microloan program are examples of the loan programs they provide.

Personal Loans

It may not seem much, but $20 from your family members adds up. Using your savings and other means of personal loans, you can finance yourself through startup costs. Just make sure not to forget about your payments, or run your credit too high!

Conclusion

In conclusion, banks won’t loan to just anyone… and sometimes that’s not your fault. Sometimes, it’s just bad timing. What happens in your environment isn’t up to you, but it is your responsibility to stay updated on those facts. Creating a package for your business will increase the likelihood that you’ll get a loan because you’ll be making the bank’s life easier. Rather than them scrambling to find your information, you can simply lay it out for them. And if all else fails, banks are not the only source of loans. With a bit of ingenuity, you can get there.

Save your time and prepare for the future now. Know your numbers and where your company is the weakest. The best way to start doing that is to download our KPI Discovery Cheatsheet today!

how to get a loan when banks aren't lending

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to create a dashboard to measure productivity, profitability, and liquidity of your company.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

how to get a loan when banks aren't lending

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