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Funding for consulting in Jobs Act

Sunday, March 18th, 2012

Did you know? There is still funding for consulting through the Jobs Act of 2010.

If you are a growing business with 7 or more full-time employees, and you find that help from a consultant could get you past a particular hurdle, you may qualify for funding for consulting through the Jobs Act.

Recently, Profit Point was engaged by the Small Business Development Center (SBDC) of Northwest New Jersey to do a strategic financial review for a client, using a grant from the Jobs Act. In this review, we analyzed the financials of the business and gave the client a 10-page report with our findings and recommendations. We met with the client to talk about our findings, and laid out a plan of where they should focus their efforts first. After implementing some of our plan, the client reported that margins were up significantly over last year.

In addition to financial consulting, the SBDCs offer a variety of consulting, classes and strategic counseling for established businesses looking to grow. And, you can’t beat the price—nearly everything is free; classes are a nominal fee.

As for the Jobs Act, what did it do?

Signed in September 2010, the Small Business Jobs Act, is one of the most significant small business legislations in over a decade. The law provided up to $50MM in grants to the Small Business Development centers (SBDCs) for counseling and training. Other critical resources were made available to help small businesses continue to drive economic recovery and create jobs. The new law extends the successful SBA-enhanced loan provisions while offering billions more in lending support, and tax cuts. More information can be found here or contact us for more information.

Posted in Business Model, Cost Cutting, Increase revenue, Uncategorized | No Comments »

The empty spot on your bench

Wednesday, May 25th, 2011

Ask any business owner if they ever have enough money or enough people to get the job done and their answer is probably a guffaw and a resounding “NO!”

When you ask them who they need (in a perfect world) you’ll hear they need sales people, operations people and line workers. Rarely do they say they need a Chief Financial Officer (CFO.)

Ask any business owner that has left their accountants’ office during tax time still puzzled on why they owe so much to Uncle Sam or how they could have made so much on paper but don’t see it in the bank. Many accountants can’t answer these questions. A CFO can.

If you are worried about looking foolish in front of a CFO, or are embarrassed that you don’t have a grasp on your numbers, don’t be. You aren’t alone.

If you have a handle on your financials but still find yourself with questions about product line or customer profitability, whether you should pay back your loan or take the money and use it to grow, or why you never seem to have enough cash, you should consult your CFO.

If you believe your CFO is strictly a glorified bean counter, you have found the wrong person for the job. If you think that a CFO is really short for CF-”no”, that is, someone who will shoot down all your plans or ideas, you’ve found the wrong person.

If you are looking for someone to help you map out your growth, “run the numbers” and provide you options backed by analysis, and you naturally turn to your CFO, you know you have the right member on the team.

But most businesses don’t have that team member in place. There is an empty, yet critical, spot on their bench. It comes down to one change in mindset on the part of the business owner:

Hiring a CFO isn’t an expense, it’s a growth strategy.

A CFO can provide you with the best springboard for growth: information.

Information can be in the form of financial analysis and trends or forward-looking projections. It can be a scenario analysis (“if I do X, then my profit could be Y”) or a post-mortem (“why did this job run over budget?”) A CFO with good business sense can take your operational and financial data to give you a picture of the effectiveness of your daily operations. That’s pretty powerful stuff.

So, you can muddle along and find out what works through gut instincts or trial and error. You can hire another sales person or line worker and you can grow in increments. Or you can fill that empty spot on your bench with a CFO, even on a part-time or consulting basis, and grow exponentially. You just need to change your mindset.

Posted in Accounting/Bookkeeping, Business Model, Cash Flow, Cost Cutting, Financial Policies & Procedures, Forecasting, Increase revenue, Labor, Planning, Pricing, Recession Busters | 1 Comment »

Looking beyond your Giant Clients

Tuesday, March 8th, 2011

If you’re like most companies, at some point you’ve had a large customer that’s made up a majority of your income. We refer to them as giant clients. You know the ones– they send you a steady stream of orders, followed up with big fat checks. In the back of your head you know you’ve got all your eggs in one basket. And someday that basket is going to tip over. It’s hard to think about that when you are so consumed in the day-to-day delivery and service.

And then the basket tips over and all the egg spill out. If your primary clients were concentrated in the financial services industry anytime in the past few years, you know what I mean.

The basket tipping over may be the result of any number of factors: the economy, a change of leadership, a buyer changes companies, new regulations or any number of factors. But when it happens, it could be devastating for you and your company.

So before that day comes, it’s a good idea to start diversifying your portfolio of customers—adding more and possibly in different industries. Easier said than done, right? You’ll need to get creative and take another view of your service or product.

Here are a couple ways you can think creatively:

Repurpose. Maybe you’ve developed a proprietary workflow, streamlined your processes or aggregated enough information to put together a database that is worthwhile. Can you use it for a different application? Who outside your current target market might find those one or two pieces useful?

Resell. Maybe there is a large competitor in your market that provides similar products or service to yours. Maybe they want access to the niche that you serve but can’t with their infrastructure and costs. Re-selling your product to them may give you greater access to your market and economies of scale.

Rebundle. Maybe you have a specific market you sell to, say large companies, however your product or service may benefit consumers or smaller businesses. Can you pare back some of your offerings to serve clients with smaller budgets? Maybe they don’t need all the bells and whistles you offer now, and while you might get a lower “ring” per sale you might find them quite profitable.

Reframe. Take a look at your product or service and look at it really objectively. Break down each step in providing your service or in your manufacturing process. What other markets might benefit from what you sell? Think about Cirque D’ Soliel– they took “circus” to a whole new and different level.

Serving giant clients can be a love-hate relationship. You love the steady cash flow they provide but you hate what will happen to you and your company when they leave.

No one wants to think about the cutbacks that would happen if the giant clients decreased their orders from you. The best way to protect yourself for that day—and it is inevitable– is to be prepared. Diversify your client base.

Posted in Business Model, Increase revenue | No Comments »

Why Mix Matters

Wednesday, February 9th, 2011

Have you ever wondered why you may be selling more and more but aren’t making any more money? You may have a problem with your mix.

Just as too much of one ingredient can ruin a recipe, mix can make the difference between profitability and losses, a cash crunch and money in your pocket. It requires a bit of number crunching, but it is well worth evaluating your costs to this level of detail.

Mix is a factor of what you sell, who you sell it to and ultimately how you get into your customer’s hands. Finding the right balance can lead to greater profitability.

Here’s a breakdown of the three.

Customer Mix Imagine you are a manufacturer of widgets. You may sell the same widget to many customers. Some customers are high-maintenance and require expedited shipping, others order small quantities sporadically leading to a distribution head-ache. Others have integrated their demand planning with your company so you can manufacture to their demand.

Each of these customers cost-to-serve is different and the pros and cons of all their special circumstances should be weighed with what they contribute to your bottom line.

Product Mix As a widget maker you sell Basic widgets for $1 and Deluxe widgets for $2. Deluxe Widgets cost more to make relative to their selling price, i.e. they have a lower profit margin.

While you may be enticed to try to sell more Deluxe widgets because they can bring in higher sales, look what happens to your bottom line if you sell the same amount in dollars of both types:

Imagine what would happen to your profitability if you decided to sell more Deluxe without understanding this? You’d be scratching your head wondering– “I’m selling more but I why don’t I see it on my bottom line?”

Channel Mix. What you sell is important, but how it gets to the customer can make a difference too. Think of the many ways a widget can be sold. It may be sold directly via an online store, through a distributor, or directly to a retailer. In each scenario, the same exact widget is winding up in the hands of the consumer but how much profit ends up in your pocket may be very different.

What can you do once you understand your mix? You can actually increase your profitability by strategically choosing which channels to sell in, what you sell and whom you sell it to.

You can make better pricing decisions when you come across a high-maintenance customer and you can identify if there are ways to reduce costs of your lower margin products.

You may even find you have to eliminate a product line, fire a customer or stop selling through a channel.

In other words, you may need to adjust the “recipe” of your mix to yield the best returns.

Posted in Business Model, Cost Cutting, Pricing, Recession Busters | No Comments »

“Keel it up!”

Tuesday, January 18th, 2011

Crew Team

I used to row on the crew team in college. For those of you who know me, at 5’2″ I’m not exactly the typical long and lanky rower-type. Despite my lack of height we did pretty well for a bunch of novices—and even won some regional races.

But that’s beside the point.

The boats we raced had either 4 or 8 people in it and each person had one oar. When we weren’t rowing, the oars were kept flat on the water so the boat wouldn’t tip over.

Sometimes while we were sitting on the water getting instructions from our coach or waiting for our turn to line up in a race, the boat would start tipping, ever so slightly, so that we were all sitting kind of sideways a bit. It wasn’t a precarious tip—think of a slight “lean” to one side. Because our minds were elsewhere, we would unconsciously adjust our weight in our seats to compensate so we wouldn’t fall out.

It wasn’t until the coxswain (the person who steers the boat and gives instructions) would yell, “keel it up!” we’d snap to attention and make ever-so-slight adjustments to our oars so that the boat would sit evenly on the water. After the boat was keeled up we all realized how uncomfortable we were being off-keel.

So what’s this got to do with business?

If you’ve ever had a gut feeling that there was something wrong with your business, but you couldn’t put your finger on it or you that you have a nagging feeling that something is brewing with your market, your business may be off-keel.

It could be that sales are growing but you aren’t seeing that money in your bank account. Or your customers aren’t buying from you after their first purchase. You may be “leaning” in your business and you don’t even realize it.

The critical thing with getting back on keel is to make minor adjustments. If, when the coxswain commanded to “keel it up” one side of rowers slapped their oars in the water, the boat most certainly would have tipped over, tumbling all of us into the river.

In business, sometimes it is minor adjustments that make everything balance out.

Maybe a look at costs over time will help to identify where profit is leaking. Or a quick customer survey may help you tweak your marketing message to fulfill an unmet need. Little adjustments can have a big impact.

So take a look in your business and address what you need to get keeled up. Once you do, you’ll realize how good it is to be back in balance.

Posted in Business Model, Cost Cutting, Increase revenue | No Comments »

How well have you figured out the 4Ms of business?

Sunday, January 9th, 2011

For any business to be successful, they need to have a good plan looking at the 4Ms of business:

Money. Do you have enough money so that your business is paying its own bills? Or does the owner or investors need to sink their funds into the business to keep it afloat? If you are a startup this is OK and expected—there is a lot of investment required before you make your first sale and beyond. However, for established businesses this may be a warning sign of that one of the other “Ms” isn’t working.
Manpower. Do you have the right number of people doing the right amount of work? Payroll is typically one of the largest expenses for businesses, but we are often amazed how often businesses get this wrong. Too many high-paid people doing low-level work. Inefficiencies and dead wood. Star employees with untapped talent. As Jim Collins says in his book Good to Great, “get the right people on the bus, the wrong people off the bus, and the right people in the right seats.” Get the Manpower equation right and watch your business grow.
Marketing. Fancy brochures? Great. Website with Flash? Wonderful. Nobody buying what you are selling? That’s a problem. Beyond the fancy collateral, how often have you stopped to find out why customers buy from you? What is the value you bring to your customers and how much are they willing to pay for it? Have you defined who is your ideal client and how will you reach them?
Making it Happen. This is your operating plan. Can you deliver what you said you can and how much will it cost to do so? Will there be enough cash to pay the bills? If not, go back to #1 and repeat. Unfulfilled customer orders, bad customer service, poor quality all can drive a customer away. Great customer service is wonderful, but if it costs you more to deliver your product or service than the price you charge that can lead to serious problems.

The rule for the 4Ms is review, revise and repeat. As you kick off the new year, how are you planning for the 4Ms?

Posted in Business Model, Cash Flow, Labor, Planning, Pricing | 2 Comments »

Webinar: “Three #s That Drive Your Business”

Tuesday, June 23rd, 2009

If you want to use your numbers to help you manage your business but don’t have the time to pour over pages of reports to figure it which ones to use– this seminar is for you. We’ve come up with three simple numbers that drive every business’ money-making engine. These numbers are easy to find and will help you diagnose nearly all business trouble spots and head off problems before they start. The best part is you don’t have to be an accounting whiz to figure it all out. Click on our flyer for more information, and our money-back guarantee.

“The Three Numbers That Drive Your Business”

Thursday, July 9, 2009

12noon-1:30PM (Eastern)

Cost: $49.00

Location: Webinar

Click here to register

Posted in Business Model, Cash Flow, Cost Cutting, Planning, Pricing, Recession Busters | No Comments »

What’s your Plan B?

Monday, May 11th, 2009

Inc. Magazine had a great interview with Jack Stack, CEO of SRC Holdings and author of the book The Great Game of Business. SRC Holdings is managing well even in this environment—chalk it up to Stack’s constant paranoia and always having a Plan B.

Here’s how to develop a Plan B:

Be paranoid. Stack is constantly worrying about having too many eggs in one basket. Whether that is too many sales coming from one customer or planning for another 9/11 he and his team are constantly playing out worse case scenarios and developing contingency plans to deal with it.
Keep reinvesting in the future: 15% of SRC’s sales are dedicated to research and development. This allows them to rush new products to market and beat the competition because the product development was already well under way.
It’s all about creating jobs. Despite this downturn, SRC has only had to reduce a workweek for some of its employees but managed to place many of them in other divisions that needed the help. They take layoffs extremely seriously. According to Stack, “A layoff is a failure of management. But the people who usually pay for that failure are not the ones responsible for it.”
Focus on the 4 Ps: people, profits, positive cash flow, and positioning. If you are not using your people to help you reposition your company in this downturn, when everyone is just “standing around,” you are crazy.
Prepare for your contingent liabilities: Ensure that you have enough assets to sell or cash available for the future. In SRC’s case it was having the money to pay its employees when they wanted to cash out their stock, in private companies it could be buying out a partner, or settling a pending lawsuit. Beyond a rainy-day fund or emergency fund, having access to the cash is an important part of your plan B.

SRC’s success is a result of balancing his risk by diversifying his company into markets that are inversely related, and constantly educating and communicating the business’ numbers to his employees. When asked if his paranoia could be limiting growth because they could get “whacked” at any moment, Stack succinctly states: “I’d say you’re a fool if you know you’re going to get whacked and don’t do something about it.”

What is your Plan B in this economy?

Posted in Business Model, Forecasting, Planning, Recession Busters | No Comments »

Going with the flow—a lesson learned from dying Easter eggs

Thursday, April 9th, 2009

I spent a better part of Saturday afternoon dying Easter eggs with my two kids (ages 6 and 3) and my 85 year old grandmother who has Alzheimer’s. In spite of my best efforts to keep the proper assembly line going, there was no holding back two kids who couldn’t wait to get their hands on the eggs, or my grandmother who kept forgetting the eggs were in the dye.

Needless to say it was crazy…

Looking back, there were some lessons I re-learned that day:

Go with the flow. My assembly line wasn’t what we needed, what we needed was more like chaos management.
Sometimes you have to delegate. Luckily, my sister was my extra pair of hands when it came to making sure my 3 year old wasn’t spilling, eating the paint, or cracking the eggs, otherwise he would have consumed my full attention.
Let your creativity flow. I am a numbers person, and being creative with your numbers can be illegal (like Enron) or can get you into big trouble (like mortgage-backed securities.) But long after the kids were bored and off playing, I sat with my grandmother hand painting some eggs. I listened contently to her stories I must have heard a hundred times, and painted. I admit my mind was wandering as she talked but I forgot how nice it was to do something different and how long it had been since I picked up a brush. It actually gave me new energy to do more artistic projects like I used to when I “had more time.”

When it was all done, we had two dozen perfectly imperfect painted eggs, two beaming children proud of their masterpieces, one grandmother who was looking for more eggs to dye and one tired mom (that’s me.) I don’t think it gets better than that…

Posted in Business Model, Uncategorized | No Comments »

“Preparing for the Upswing”

Monday, November 3rd, 2008

“Preparing for the upswing.”

I read that somewhere and thought it was a fantastic saying, especially with all the doom and gloom of the business news today. Instead of ducking for cover and waiting for this financial storm to pass, we should be trying position ourselves for the future. Here’s how:

Clean house now-take a look at your costs and wring out the extraneous ones that are bogging you down

Look ahead-what will you need in 6 months, what will you need in 1 year, what will you need in 2 years? Think ahead and make sure that in your conservation efforts now you aren’t hurting your chances for growth in the future.

Think positive-while your competition may be ducking for cover, you should be out there in full force marketing your business as if there is no recession. While it may seem difficult to see past the immediate crisis think of what you your business will look like when these troubling times pass.

When things are good, we let loose a little bit. There is nothing like a recession to get people to review their personal spending habits-and the same goes for business. Review your expenses, cut back-office expenses before customer facing, and you’ll be better positioned, more streamlined, more apt to finding a way to improve margins in the future when the upturn does come.

Posted in Business Model, Cost Cutting, Forecasting, Pricing, Recession Busters | No Comments »

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