Tag Archives | change

How to Make Dramatic Changes in Business

How to Make Dramatic Changes in Business

Recently, we had a coaching participant mention to us how her company was wanting to make a huge change in their business that would ultimately destroy the current business.

This happens more often that you would think…

The owner or founder of the company wants to make a shift, a change, but the leadership did not full think through what that would actually look like.

In our coaching participant’s case, her company had been around for a long time. They were known widely for their innovation. They were also a non-profit. The founder wanted to convert the company into a for-profit entity.

That change would change EVERYTHING.

In fact, it would be an entirely different company.

In this week’s blog, we look at how to make dramatic changes in business while avoiding catastrophe and how to reinvent your company.

Change requires a strong leader. Learn how to be a more effective leader here.

How to Make Dramatic Changes in Business

When a company makes dramatic changes in their organization, it’s important to ensure the change will be sustainable and has the benefits outweigh the risks. This starts with questions like…

How can we better develop our product/service to provide more value to our customer?

What organizational changes can we make to reduce overhead and increase productivity?

Is our current company structure the best structure for accomplishing our mission?

Do we need to totally reinvent ourselves just to survive?

In our first example, changing the organization from a non-profit to a for-profit would only stuff the founder’s pockets; however, upon further conversations with their Finance Director, we came to the conclusion that that organizational structure change would change everythingmarketing, branding, funding, employees, legal aspects, and accounting. It would cost more to make that dramatic change than to stay the same. They would most likely loose their funding, their employees, and their entire culture.  They apparently were making a change for the wrong reasons.

Driving Radical Change • McKinsey

In a McKinsey article called Driving Radical Change, they outline how to make dramatic changes in business. It first starts with the aspiration – the goal for the change. Then, the leadership for the change needs to be addressed. Who is doing what? What are the priorities? The next two steps include articulating actionable steps for employees to act on and the direct impact they have on the change. This stage is what really fuels the change. Leadership needs to engage and energize their employees during change (change is scary for most people). Read more about making radical change here.

How to Make Dramatic Changes in Business

Why Make Dramatic Changes in Business

So, why make dramatic changes in business? Sometimes, it just needs to happen. Businesses can get stuck in a “rut” where they continue to practice the way that they have always done without evaluating the changing environment or their team. If your company has not made a change (or at least evaluated current practices) in a decade, then it’s time to look at whether radical change is necessary.

Reasons to change include but are not limited to the following:

  • It’s just not working
  • Competition is growing and taking business away
  • There are legal restrictions
  • The market is shifting
  • Technology shift (this is probably the most common in the last decade)
  • New opportunities identified
  • Customers demand something else

Changes could include the following:

Sustaining Business After Big Changes

So many businesses have made changes due to technology advancements, competition, etc. Barnes & Noble has been through numerous CEOs because they did not continue to press on with their Nook and e-commerce platform. Netflix went through a period of declined stock prices as they pressed on to be a primarily online-streaming platform. Sustaining business after big changes can be difficult, but it all comes down to the leadership. Forbes contributor, Erika Anderson, says, “When CEOs and their teams fail to fully commit to change, change fails.” The entire company needs to commit to making this change successful. If one link in the chain is weak, then the whole project will fall.

Here are a few more notables:

  • Amazon started as an online book sales company; it is now a large distribution and logistics company
  • Western Union started as a telegraph company, then it grew to one of the largest money transfer companies in the world
  • Nokia started selling rubber boots; it is now is a major cell phone manufacturer
  • Shell (the major oil company) started in a small store in England importing and selling shells

There is a great quote that I saw in an article from MONEY… “A successful company is like a giant great white shark. In its prime, it chews up the competition, but if it dares to sit still for too long, it dies.”

Your CEO needs a strong leader – especially a strong financial leader. Learn our 7 Habits of Highly Effective CFOs and become the strong leader your CEO needs.

Supporting Change as the Financial Leader

Change is uncomfortable for everyone because there is uncertainty about the results.

Accounting type people are often prone to being the no-sayers during change… It’s too expensive, too risky, and too advantageous.

When making dramatic changes in your business, it’s important for the financial leader to support the change.

If a certain change will dramatically impact cash flow and profitability, then work with your CEO to figure out what you can do.

Do not just say “no”.

The CEO needs a trusted advisor, a confidant, someone who they can rely on for a more financially sound way of doing something.  In my experience, change has usually been good and for the right reason. To learn other ways to be more effective in your role as the financial leader (and to become a trusted advisor), click here to access our most popular whitepaper – the 7 Habits of Highly Effective CFOs.

Dramatic Changes in Business

Dramatic Changes in Business

Share this:
0

Spot a Zombie Company

Last week, I talked with several lenders, investors, and entrepreneurs. One of the topics that kept coming up was their client’s problems wasn’t cash – even though their clients tried to convince them of it. While cash was an issue that needed to be addressed, the problem instead lies in the leadership. A few weeks ago, we discussed how zombie employees are destroying your company. But those zombie employees have developed a zombie culture! Here’s how to spot a zombie company and identify if you are one of them.

spot a zombie companyHow to Spot a Zombie Company

In any type of therapy group, the first step to recovery is admitting that you have a problem. Identification is crucial if you want to change. Therefore, we are walking through how to spot a zombie company. As it is so prevalent in our business society, it’s becoming more and more difficult to disguise.

Stay ahead of the curve and download our 3 Most Powerful Tools for free! Don’t sit back and watch your company spiral into a zombie company

#1 Status… And You Know It

Have you ever seen a company that boast it’s #1 and everyone around knows it? These companies get to the top, become prideful, and then eventually, they are overrun by zombie employees. If every single person in your company says the exact same thing, then you’re in big trouble. In order to be successful, you need people to go against the grain. That’s how innovation happens.

Enron, for example, was Fortune Magazine’s “America’s Most Innovative Company.” But nearing the collapse of their empire, innovation came to a halt as the executives became more greedy and created a culture of secrecy. They knew they were #1. So, the executives challenged anyone trying to innovate or make changes to the company. Both employers and employees lost sight of the mission and vision of their company. As a result, both parties caused (or would have caused) the death of the company.

“Do you know what it takes to make an ethical decision in the face of a group of people who are willing to go the other direction? It’s one of the most single vulnerable acts of our lives.” – Brené Brown

spot a zombie company

Happy Go Lucky

Happy go lucky is a term that means that people are cheerfully willing to have no concern for the future. Many can easily identify the difference between authentic happiness and fabricated happiness. The later wreaks of inauthenticity and feels gross. When a company culture is always happy, it may be an indicator that it’s a zombie company. In this case, you may find that both employees and employers are:

  • Ignorant of anything bad going on
  • Blindly doing their jobs
  • Hiding something from others
  • Shutting down any negative statement or critique
  • Saying positive things all the time

There’s a huge difference between a company that everyone loves working for and a company where everyone is happy. You cannot expect your employees to be happy every single day. Life happens. So if it seems like life isn’t happening at a company, then it could mean bad news.

They Don’t Change

Zombie companies simply don’t change or allow for change to happen. Because they are so laser-focused on their vision and mission, they neglect the changing world around them. Technology is changed every single day. What worked a month ago may not work today. Remember Borders? It was a popular bookstore. But while Barnes & Noble and Amazon were taking advantage of new technology (Nook, Kindle, etc.) and building an e-commerce platform, Borders did not at first. By the time they did start to change, it was already too late. While there were many other financial issues that needed to be addressed in Borders for it to survive, the key is that zombie companies don’t want to change.

Look around in your community. It’s relatively easy to spot a zombie company as the demand for change is becoming increasingly prevalent. Many leaders get overwhelmed by change, so they simply stop changing. But they are also killing their company. As the financial leader of your company, you must be willing to allow change and create change in your company.

spot a zombie company

They Know Everything

Zombie companies are comprised of “know-it-alls.” Whether it be the employers or the employees, they think they have everything under control, know everything, and don’t want to learn. What do your customers want? If the response is “we know everything already”, start running. Truth is… You don’t know your customers. They are changing every single day. Like I said before, technology is changing constantly. As a result, your customers are too. Businesses aren’t in business without your customers. So you need to be talking with your customers daily.

A couple years ago, news spread eventually but it took time to spread. Now, news spreads like wildfire and at times, it can be very overwhelming. Platforms like Facebook, Twitter, online news sources (NY Times, Wall Street Journal, etc.) force feed you content every second of the day. While you may know a lot of things, you don’t know everything. But zombie company’s think they know everything. And that’s a problem.

Challenge each of your team members to question everything you do and why you do it. Call up your customers. Learn how to improve productivity or improve cash flow. Innovate you finance, operations, and sales departments.

Is Your Company a Zombie Company?

The biggest question of the hour… Is your company a zombie company? Have we described you in the above paragraphs? We have good news… You have identified that you have a problem. And there’s a solution to reverse the effects of being overwhelmed by zombies.

Be a Financial Leader

The best way is to be an effective financial leader. At The Strategic CFO, we pride ourselves in developing financial leadership in our clients as we consult with them and coach them. Like we said before, some companies think they have a cash problem or inventory problem or economic problem… But in reality, it starts with the leadership. A fish rots from the head down, so therefore, you as the financial leader need to be a more effective leader, improve profitability, and improve cash flow.

Improve Profitability

You have set your prices, have your costs, and out comes profit. But to not slip back into old habits, you need to think of profitability improvement strategies. Click here to access one of our 3 Best Tools includes our Pricing for Profit Inspection Guide. Improve profitability by shaping your prices (and economics) to result in profits.

Improve Cash Flow

We say it frequently because it’s true… Cash is king. As a leader, you need to have your finger on cash at all times. The worst thing (and unfortunately, a common issue) is that the executive team expects cash to be there because they made their sales mark. But if someone is not watching it, it could end badly. Click here to download our 25 Ways to Improve Cash Flow whitepaper, along with our other 2 most powerful tools, to learn about cash flow improvement strategies.

Be a More Effective Leader

Zombie companies lack effective leadership. You can create success through financial leadership. That’s what we as a company lives and breathes everyday. Be a more effective leader and access our 3 best tools to start growing your company.

spot a zombie company

Strategic CFO Lab Member Extra

Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

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

Click here to learn more about SCFO Labs

spot a zombie company

Share this:
0

A Tale of Two Bank Accounts

technology substitutes bank accounts

Do you ever have those thoughts that haunt you in the middle of the night? Well, for me, it was 2 AM one night and I thought to myself, “Why on earth do I have two bank accounts?!”

As time passes and technology progresses, the need for multiple bank accounts seems irrelevant. Think about it – you have twice, maybe three times the burden of maintaining, tracking, and paying for multiple  accounts. There are many reasons someone would want to, so let me share mine with you.

Reasons for Having a Separate Payroll Account

Security

Assuming you hand out physical checks to your employees, having a separate payroll account can keep employees from having access to your operating bank account number.  Since most payroll accounts are only funded at the time of a payroll run, the company’s dollar exposure to theft is limited.

Separate accounts for payroll and accounts payable enhances internal controls and enables the company to choose which individuals within the company have access to the bank accounts.  The person processing A/P checks might not be the person you want having access to your payroll account.

Hacking is also a major issue, especially in finance. Many people believe that a second bank account will make sure payment is available only when needed. In case of a frozen bank account, lost credit cards, or stolen identity, a separate bank account is a good fallback.

Organizing Tasks

If you have many employees and many vendors, reconciling one account with all transactions can be messy.  Having separate accounts for payroll and operating expenses can streamline the reconciliation process.

When you have a separate payroll account, it also makes easier to locate lost, stolen or forged payroll checks.

Having trouble figuring out how to become a better financial leader? Take your business to the next level with our 3 most powerful tools!

Our Thoughts…

A business may have good reasons for separate bank accounts, but here are a couple of reasons why you might reconsider.

1. Electronic Payroll Processing

In the old days, you only put enough in payroll to prevent fraud, make the bank reconciliation easier, and limit authority. You can do this all electronically now. There are apps and websites available to help with payroll. Additionally, they include fraud prevention and aid with taxes. The need for a separate bank account with manual tracking is obsolete, because technology has your back!

2. Apps to Deal with Operating Expenses

technology substitutes bank accountsYour operating account generally handles customer deposits and vendor payments. Businesses
may also use this separate account to pay for other overhead expenses such as sales dinners, store purchases, etc.

But again, technology has simplified this process. I attended a conference a couple of months ago, and one of the vendors focused on automating day-to-day transactions within companies. Many vendors offer auto-draft and many customers pay via ACH.

Accounting software such as Quickbooks interfaces directly with your credit card account allowing you to automatically upload, code and approve transactions in minutes rather than the hours it took just a few short years ago.

There are many more reasons to have multiple bank accounts, but many more reasons not to. For every new bank account created, there are hundreds of apps and websites to serve the same purpose.

Embracing Change

Speaking of change, you should reconsider the way you’re doing things since times are changing. Are your business habits the best practice? I’m 60 years old. There, I said it. Yet I work with young entrepreneurs every year. Why am I 60 years old and thinking like a baby entrepreneur? Because I made the conscious decision to adapt and change. You can, too.

“That’s cute, but don’t tell anyone about it.”

Ever heard of Kodak, and how it failed? Kodak is a perfect example of how missing your technology window might destroy you in the long run. In 1975, Steve Sasson invented the first digital camera. However, management replied, “That’s cute, but don’t tell anyone about it” (via The New York Times). Not long after, Sony came out with the first digital camera to be sold.

What might have happened, if Kodak actually supported the new digital movement? Could they have avoided bankruptcy and held onto their status as an industry leader? They might have been the company to look to for more technologies, but instead, the management of Kodak was in denial. We can all learn from this, and trust technology to handle some of our business.

Don’t be a Luddite

In my experience, many financial leaders are late adopters of technology. If there is a new and easier way to implement a task, the financial leaders are the last to get on board. Imagine how that trickles down throughout the business – the managers are the last to implement the change, the employees, and then the customers. Pretty soon, you’ll be irrelevant compared to the competition. How do we stay relevant in our industries? By adapting to change.

As we explained in our blog, “Are you a Luddite?” technology is not stealing jobs, it is creating new roles. Technology can eliminate the need for multiple bank accounts and make things easier for you. Don’t make things more complicated for your business than you need to!

Conclusion

The technology movement is a hot button topic – even when discussing multiple bank accounts. This is because there are so many technologies for so many purposes.

Depending on your business, you may need to open another bank account. Whether you have another location, or if you have a separate entity under your business, you may consider this option. However, you’ll be paying extra bank fees, manually tracking double the account activity, and reconciling twice as many accounts. Your business should grow, not the number of accounts you have to fund it.

Take a chance, make a change. Download our 3 most powerful tools and help advance your business! 

technology substitutes bank accounts

Strategic CFO Lab Member Extra

Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

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

Click here to learn more about SCFO Labs

technology substitutes bank accounts

Share this:
1

The Impact of Brexit

Two months ago, Great Britain voted to leave the European Union (EU).  One of the most frequent questions asked was “What does this mean for me and my company?”  While Brexit hasn’t actually happened quite yet, the past two months has given us time to see the impact of Brexit on local economies and world economies as well as assess all the changes that have occurred since the vote.

brexit-referendum-uk-1468255112FBbBrexit

“Brexit” is the term used as a nickname to Great Britain’s exit from the EU. Some speculate that the entire process of Brexiting will take up to 10 years and will need 10,000 people in order to make it happen (The Guardian).

Should you still care about Brexit? Brexit is just an example of an external factor that can have a huge impact on your company. By completing an external analysis, for example, you’ll be better able to assess all likely outcomes and react accordingly.

Change Happens – Impact of Brexit

It’s simplistic to expect that dramatic changes will occur in a single day, but we can expect things to change in 2 months time. And it’s true that lot of adjustments have been made since the referendum.

David Cameron resigned from his position after the vote came in, vacating the leadership role he filled for 6 years. This resignation is similar to presidential elections or any other change in office due to the different agendas, perspectives, and goals.

The new Prime Minister, Theresa May has already created 2 entirely new governmental departments (or ministries): the Department for Exiting the European Union and the Department for International Trade. Although these ministries are still sorting out the details, we can assume that immigration of labor and trade will be impacted (positively or negatively).

As a financial leader, you must act as the wingman to your CEO and look at the horizon for things like this. What do you see that could potentially help or hinder your company?

If you need help completing an External Analysis to avoid the impact of harmful changes (or take advantage of opportunities), click here to access your free guide.

Where Does Everything Stand Now?

During any time of uncertainty, businesses are bound to be cautious (particularly in the Business-to-Consumer arena). As an entrepreneur, I consistently try to stay ahead of the curve in knowing what’s about to happen. An easy tool to use is called PEST Analysis; this tool allows you to take a broad scope of political, economic, socio-cultural, and technological factors that influence your company, customers, or vendors.

Politically

New Prime Minister Theresa May has some major hurdles to overcome due to the Brexit decision. As the first person to actually organize Britain’s exit from the EU, all bets are on the table as to how she is going to react. Earlier, we talked about how May created 2 new governmental departments. Think about what this is going to impact.

TaxesSomeone has to pay for this to happen, and it’s probably going to be the taxpayers – citizens and businesses.

Labor: People are necessary for operations to run smoothly.

Trade: Restriction on trade might hinder companies from conducting business in or with Great Britain.

impact of brexitEconomically

BBC reported that unlike expectations leading up to the referendum vote, retail sales haven’t seen a major downturn. In August, Great Britain experienced their second upturn in retail sales since Brexit. Moreover, credit card sales were higher in July than the previous 6 months.

Consumers and businesses alike are remaining cautious and conservative in their spending habits, but they are continuing to spend.

Interest rates and the value of currency decreased dramatically, which has a major impact on businesses (particularly with international business).

businessman-1071758_960_720

With the value of the pound having been decreased since Brexit, manufacturers are seeing an increased cost of importing. This could be due to interest, trade regulations, and tax laws.

Socio-culturally

The impact of Brexit hasn’t given rise to many socio-cultural changes in the past 2 months other than the obvious – change in consumer purchasing behavior.

Technologically

Brexit may not have a direct impact of advancement or regulatory changes for technology, but the impact of Brexit may adjust the landscape of how companies optimize technology.

Companies may find that telecommuting and telecommunication are solutions to avoid predicted labor restrictions. Another option would be to adjust manufacturing processes to reduce the weight of product for shipping.

How Can I Prepare for These Types of Environmental Factors?

It’s important to understand that external environmental factors are going to impact business confidence, causing uncertainty in businesses and consumers. Similar to Brexit, presidential elections and other events can cause businesses to freeze up.

But how do you know if your company is going to be impacted by external events if you haven’t given it thought?  Take a look at your consumers.  Where do you even start to prepare for these types of environmental factors?

impact of brexitDo Your Research

Nowadays, people are tied to their smart phones, tablets, and computers due to the integration of technology into culture, the workplace, and daily life. Information is readily available, so don’t get left behind like the luddites. Your friend Google is a great resource that you can use to do your research.

Doing research of environmental factors that have the potential to impact your company could save you a lot of time or money in the future.

Perform a SWOT Analysis

Performing a SWOT analysis is an important step in preparing for uncertainty. It’s an analysis of your company’s strengths, weaknesses, opportunities, and threats.

Create an External Analysis

An external analysis looks at the opportunities and strengths of a company. This is necessary in order to know what could impact you.

This might be a good time to revisit the notion of the economic dam

 It’s only when the tide goes out that you learn who has been swimming naked. – Warren Buffett

Your external analysis will bring to light factors that may hit you immediately or collide with your company later down the road. By estimating where you are in the river in relation to the dam, you’ll be able to combat uncertainty.

Create Action Plans

Write an action plan or a list of action items that need to be completed upon the occurrence of a particular external event.  This is one of the most important things in order to prepare for any scenario.

The more aware you are of what could impact your company, the better you are able to successfully pull through any situation.

impact of brexit

This emergence of the new CFO is changing the landscape of tomorrow’s financial leader. Financial leadership is no longer simply managing the finances, but rather steering the ship through smooth and choppy waters.

Act Early

One of the biggest mistakes companies make in troubled times is not acting early. Start today and download your free External Analysis whitepaper that guides you through overcoming obstacles and preparing how your company is going to react to external factors.

8

Connect with us on Facebook. Follow us on Twitter. Become a Strategic CFO insider

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

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

Click here to learn more about SCFO Labs


SCFO-Lab-Graphic

Share this:
0

CEOs Want a Wingman

wingmanAs part of my research on leadership for our Coaching Workshops, I met with several Houston-area entrepreneurs to determine what a CEO wants in a CFO.  One of the last people I met with made a comment that I felt summed up all the things the CEOs were looking for.  He said he was basically looking for a wingman.

CEOs Want a Wingman

What does it mean to be a wingman?

Wikipedia says this:

The wingman’s role is to add an element of mutual support to aerial combat. The presence of a wingman makes the flight both offensively and defensively more capable by increasing firepower and situational awareness, permitting the attack of enemies, and increasing the ability to employ more dynamic tactics.

So to paraphrase, the wingman’s job is to support the leader by helping to assess the situation, take out obstacles, and adapt to change which improves the ability to achieve goals and mitigate risk.

Assessing the Situation

CEOs want a CFO who help them determine the “lay of the land”.  Often, they do this by projecting financial needs, modeling new ideas or preparing “what if” scenarios.  They work within the organization to build relationships with other functional areas and determine what their needs and opportunities are.  They also represent the company externally to bankers and investors to determine what opportunities the company has for growth.  A CFO wingman helps bring clarity to the situation so that better decisions can be made.

Taking Out Obstacles

CEOs are excellent at developing new ideas. CFOs are excellent at identifying problems.  What some CFOs fail to realize, however, is that the CEO looks to them to provide solutions rather than to simply point out how things can go wrong.  A CFO wingman doesn’t shoot down each new idea, but looks to find a creative way to make the idea work in a financially sound way.

Adapting to Change

Most CFOs react to change by seeking to stabilize the environment.  Since most CEOs are great initiators of change, this can lead to frustration on both parts.  One way a CFO can avoid the frustration is to be a sounding board for new ideas.  If the CFO is part of the vetting process, he or she will not only be more likely to be on board with the new idea but will also be able to guide the creative process in a way that ensures a greater degree of success.  As a result, the CFO develops a better understanding of company goals and is more comfortable contributing their own ideas on how to grow the company.  A CFO wingman realizes that the best way to address change isn’t to fight it, but to adapt to it.

Achieving Goals

The goal for most CEOs is to grow the company profitably.  CFOs can help their organization reach this goal by cutting costs, improving productivity, and assisting in developing sound pricing strategies.  Since the CFO has control over most overhead costs, they usually are very skilled at cost cutting.  CFOs looking to improve productivity can often make the most impact by helping to determine what the companies key performance indicators are and developing reports to track these KPIs.

The area outside of most CFO’s comfort zone is pricing.  Often, prices are set with input from sales and operations without consideration of the company’s economic model.  The CFO can provide this vital information to ensure that the prices set will result in profitable sales.  A CFO wingman shares the leader’s vision and helps him or her achieve it.

What are some of the things you think a CFO wingman should do?

Download our free How to be a Wingman guide by clicking the link below. Take your career to the next level and step up into the trusted advisor role.

CEOs Want a Wingman

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

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

Click here to learn more about SCFO Labs

CEOs Want a Wingman

Learn how to become your CEO’s wingman with CFO Coaching.

Learn More

Share this:
0

LEARN THE ART OF THE CFO