As an entrepreneur or small business owner, you have an incredible amount of domain knowledge and experience in the industry you serve. You are a fabulous artist, the most sought after graphic designer, an incredible professional organizer, so on and so forth. But, you may not have a lot of experience in managing the finances of your growing business. You know how to send invoices, pay bills and review your bank account, but do you know how the business is actually performing? Do you know how to int
erpret those fancy reports that your accounting software is producing for you? Which ones should you even be looking at in the first place?
We are here to help! In this post, we’ll briefly explain how to review the marquee of all financial reports, the income statement. Also referred to as a profit and loss statement or the P&L, the income statement will provide you with a breakdown of how you made your money, how much money you spent and how much is left over.
The following advice is based on the P&L formatting that I recommend my clients use. You can access a template version of that format here. When reviewing an income statement, you want to review the following things:
Ensure that all expenses are categorized correctly. Pay close attention to miscellaneous and re-categorize any expenses that are categorized as Miscellaneous.
Ensure that no big sales or expenses are missing. Is that new deal you closed at the end of the month captured? Is the office rent included?
Utilizing the % of revenue columns, look at the detail of into your top 5 expenses. Think critically about those top categories and evaluate whether that is bringing the most value to your business – change vendors or purchasing strategies accordingly.
Utilizing the % of revenue columns, review top 5 income and expenses accounts where monthly % and YTD % differences are the greatest – Again, think critically about why these differences may be appearing and what to do about it.
Review Gross Profit (income – cost of goods sold) – you should know what your industry standard gross profit metrics are, and shoot to beat it or at least match it
Review Net Income (Income – all expenses) – do you have positive net income? are you on track for the year or not?
Compare your budget to actual numbers – look at the differences between budget to actual and analyze the top 5 biggest differences.
Many customers are overwhelmed by this list – it is a lot to look at on your already busy schedule. But, rest assured by taking this approach and reviewing their income statements on a regular basis, I’ve seen customers make more sales and save hundreds of thousands of dollars. Download our income statement template
today and give us a call if you need help!
One of the areas that I work on with clients is setting up operations systems. Why is this task important to so many businesses and nonprofits?
As your organization grows, you will hire more employees, bring on more clients, and talk with more prospects. These things will being to happen at a faster and faster rate. Your time will begin to stretch thinner and thinner. But you still want all these things to be done perfectly and exactly as you would do them! How do you make that happen? One approach is to work more hours, but who wants to do that? The other approach is to set up operations systems.
Systems are a set of rules that govern structure and/or behavior.
Setting up operations systems or processes for your business will allow you to extend your reach without having to physically do the tasks yourself. They will allow you to train your employees the same way every time, ensure your employees complete their responsibilities exactly as you would, and ensure that your brand is appropriately represented with vendors, clients and prospects.
And when I say employees – I mean you! You should also be completing your tasks according to a system. Marketing, talking to prospects, or providing your product or service to your clients should all be documented and easily repeatable. Setting up operations systems for yourself will lead to time savings. It will also allow you to measure your performance, tweak your processes and lead to greater results in your business.
Operations systems can range from the very simple to the extremely complex – from setting up a system to manage your own email box, to setting up a complicated software system to manage all the data of your business.
Contact us today to see how we can help you add systems your business.
Today we are celebrating Pi Day at the Mandrier Group. We are celebrating with Pi t-shirts, books about Pi, Pi math problems and of course, pie!
As a math and computer science major, I am excited to see people get involved in holidays that celebrate the world of mathematics. In this case I’m sure it has a lot to do with the inclusion of pie in Pi day, but nevertheless, I’ll take it!
Pi is such an interesting concept – just think about it – every circle in the world can be defined by π = C/d. And the even though every circle can be measured with Pi, Pi is an irrational number with infinite number of digits and with no repeating pattern. The juxtaposition of the ability to measure every perfect circle while not being able to be truly defined itself is fascinating to me. Just one of the many reasons that I became a math major, I suppose!
Enjoy Pi day today, do a few math problems for fun and don’t eat too much pie!
Opportunity costs – Selecting the right software tool will boost your sales, productivity and reduce costs. The wrong software will not deliver on those results, causing you to lose out on all those money making opportunities.
Business continuity – Implementing a software tool will take time. There could be downtime in your business operations while you make the investment in the tool and implement. You don’t want to have to pay this price more than once.
Unused licenses or services – Sales people are awesome at what they do and their goal is to sell you the vision of where your organization is going. Typically that means they will upsell you in the next pricing discount or add on services. Make sure that you really need those additional licenses now and that the estimate to get there is realistic.
Decrease in customer satisfaction – If the software helps you deliver your goods and services, and it doesn’t deliver on your requirements, the customers will notice a decrease in your performance. Your reputation could take a hit that may not be recoverable.
Re-implementation – this could be one of the worst and is a sum of all the issues listed above! You’ve conducted a software evaluation or software trade study, selected a tool, spent money on the licenses and implementation and tons of time on the roll-out for you and your users. You’ve spent time having the team work in the tool only to find out months down the road that it isn’t going to work. Your career takes a hit and the organization has to go out and do it all over again!
Software can extend the capabilities of humans beyond our imagination. Implementing the right software tool can significantly change the bottom line of an organization. So can implementing the wrong one. By following this six step process to conduct a structured software evaluation or software trade study, you too can select the right software tool to revolutionize your business.
Determine what you need. In project management, we call this the requirements gathering phase. Essentially, this is the wishlist for the features and functions that your new software tool will offer. I have an Excel template that I use to ensure that I’m documenting all the wishlist items. Be sure to consider what you expect from the vendor company as well. Your wishlist should then be categorized into must have and nice to have. This categorization will help during your down select process during the software evaluation or software trade study.
Survey the market. Search, search, search. Wikipedia, Google, Find the Best, Forrester, and trade publications like CIO.com are some of my favorite sources to find the top software products for a particular application. Asking your colleagues or LinkedIn groups is another good way to crowd source recommendations. At this stage, you want to have a pretty large list, depending on what you are looking for in this software evaluation or software trade study, between 5 and 10.
Review each vendor at a high level and update your wishlist again. As you start reviewing the different vendors, you may identify new wishlist items that you didn’t even know were possible! Start to rate the vendors against the wishlist. I usually use a simple rating scale of 0-does not have; 5 – partially delivered; 10 – fully delivered. If you see that a vendor just isn’t going to cut it, don’t worry about completing the entire wishlist – save your time and move on!
Down select to three vendors. You’ll pick the top 3 vendors based on the scoring done in the previous step of the software trade study. You could get fancy and create a weighted scoring model, but generally, I add up the must haves as one score and the nice to haves as another score, and compare them independently and then together to select my final three. Knowing the must have score is important, as you could inadvertently pick a tool that only has nice to haves.
Talk to your top three vendors extensively. This is where the true “study” comes to play in a software evaluation or software trade study. Get a live demonstration, specific total cost of ownership pricing and speak with at least 2 customer references. Search for their online reviews. Once you see one vendor rising to the top, ask if you can test drive the software. You probably won’t have time to do this with all vendors, and it isn’t fair to the lower scoring vendors to waste their time or yours.
Select the software, negotiate a contract, implement and roll out. Sounds easy, right?
Conducting a software evaluation or software trade study can be time consuming, but selecting the wrong one is more costly and time consuming. Executing a structured software evaluation or software trade study like the one outlined above will ensure you’ve conducted your due diligence and made the right choice. The Mandrier Group has extensive experience in conducting software trade studies – contact us today to see how we can help you or signup for your free software evaluation process diagram!
I was recently talking with a friend about outsourcing a project for her small business and how she didn’t think it was feasible for her because of the added expense. I think many entrepreneurs struggle with this concept, so I wanted to share a few quick thoughts on how to find the room in your budget to make the investment in your business. Here are the top five types of tasks that will bring you a return on investment if you choose to outsource:
The task is repetitive in nature and can easily be passed off to someone else. These are mostly administrative – posting blog posts to a website, updating plugins, and entering bills into the accounting system. The tasks are the same each time. Generally they don’t take a lot of your time on an individual basis, but when you add them all together, it can take up to 20% or more of your day. This time is an opportunity cost at the expense of growing your business. Outsource!
The task requires expertise or equipment that you don’t possess and don’t have the time or money to acquire. I recently had a logo developed for my brand. I have no experience in this area, nor do I have the software tools at my disposal to do it right. I tried some online logo development sites, but the results just didn’t feel right or designed for me. So, I outsourced and I love the final product!
Your time could be better spent on higher value tasks. Let’s say you are an amazing copy writer – you’ve built a business writing copy for other people and you are very good at it. Every hour you spend writing copy, you make $100. Or, every hour you spend on business development is the chance to make another $1,000 on your next project. Every hour you spend paying bills is $100 minimum lost opportunity. Outsourcing allows you to focus on building your business – the return on investment is clear.
You just plain don’t like the task! Chances are, if you don’t like the task or you dread doing it, you won’t be putting your best foot forward. You will rush, make mistakes, all which lead to more work down the road. Outsourcing will help you enjoy your business life more and free up your time for that ever so important strategic thinking which leads to more revenue.
Your key employee is out for a temporary period of time. I was recently talking with a colleague who will be going on maternity leave soon. She was worried about how her company would cope without her there to provide top-notch customer service, solve problems, and continue to move the business forward. I suggested outsourcing as a solution – interim executives and interim managers are a key resource for businesses faced with a temporary absence of key employees or temporary projects that require a skill set not currently available on staff and not needed in the long term. The short term investment will ensure that your business does not remain stagnant during the period of absence.
There are many more reasons to outsource, there are books and classes on this topic, so these are just a few ideas on how to justify it. Small businesses need to consider the return on investment they would receive if they were able to make the choice to outsource. Finding room in the budget for one more thing is never easy, but if you commit to spending the amount of time you save on revenue generating activities instead, your investment will pay for itself.
All businesses need to keep track of the money coming in and the money going out. We all want to know how we are performing with the most up to date information. We often pay skilled accountants or bookeepers lots of money to keep this information up to date. Many times, these individuals are too bogged down in the day-to-day transactions to make improvements in their processes. Or perhaps they don’t have the technical skills or the desire to make the change.
As managers of businesses where the goal is to make or preserve money, we don’t want to spend more on non-revenue generating activities than we have to. That just doesn’t make sense! But who can you rely on to make these changes if not your trusty bookkeeper? And how to do you, busy entrepreneur, know where to begin to identify areas for time savings?
If your answer to any of these questions below is NO, call us today for a free consultation!
Are you using recurring journal entries for recurring transactions?
Is your accounting system linked up to your bank and credit card accounts?
Are you using Excel as effectively as you can?
Does your accounting system provide you reports at a click of a button or is someone doing that manually?
Are you spending too much on payroll?
The Mandrier Group has experience reducing costs of back-office operations. Our engagements will pay for themselves in the efficiency that we deliver. We work with your team to ensure they understand the need for the change and are comfortable executing it. Stop spending too much on accounting today!
According to Wikipedia, Project management is the discipline of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria. Yikes – so formal! So how can something so formal translate into fun, energizing and beautiful events?
Project managers are trained professionals in the art of managing timelines, budgets, resources and risks. They study these different areas and learn inputs, outputs and techniques for managing all these moving parts to the successful conclusion of the project. They are creative problem solvers by nature, excellent leaders, and skilled at balancing constraints.
Project managers are always looking ahead into the future – remember that event vision, timeline and budget that you created at the beginning of your event planning process? We project managers pour over that collateral. It becomes our compass to ensure that your event is successful.
We also identify these things called milestones – points in time in the planning process. Identification and management to these milestones ensure that you are planning at a smooth, organized pace and not running around while guests are pulling up. Event planning is a marathon, not a sprint.
Using our formal training, project managers will deliver you a smooth, successful event. We will take the stress out of the pre-event crunch. We’ll make sure you are prepared for any situation that may arise. And, if you are working with the Mandrier Group, we’ll make sure that we have a lot of fun too!