5 New Year’s Resolutions for Your Business in 2012, Part 5

My final New Year’s Resolution is one that can span both 2011 and 2012, as you no doubt have a lot of planning to do.

Engage your team in short- and long-term planning, and don’t be afraid to innovate.

The corollary to the first New Years Resolution we discussed – ensuring continuity – is engaging in short- and long-term planning. Start thinking 3, 6 and 12 months out for short term planning and 2, 3 and 5 years out for longer term planning.

Though it may seem like the final week of the year is a bad time to start doing your planning for the coming year, no time is a bad time to plan if you haven’t done any planning yet.

This is also your last week to do any quick tax planning that may help you for the coming year. Are there any big purchases you’re going to have to make in the next 30 days that you could make now to enhance your tax situation? Talk to your accountant and financial planner if you haven’t already. Make sure they know what you’re doing, where you’re headed and what your goals are. It’s the only way they can help you plan.

To make sure you know where you and your business are going as you enter the New Year, consider sitting down to a series of meetings with your key team members. If you won’t have time for that before the New Year, then take any break time you get to sit down and think through what you want and where you’re trying to take your business.

Start by figuring out what your goals are.

Is your goal this coming year increased revenue? By what percentage? Would you rather figure out how to increase profits without worrying about revenue? Perhaps there are a few KPIs in your business that could stand improvement? Maybe you’re just looking to survive. Do you want to acquire a competitor this year or make your company enticing in a buy-out?

Whatever your goals, you have to know them in order to do your planning. Map them out over the course of the year and start considering how you’re going to achieve them. Who’s involved? Sales, marketing, fulfillment, accounting? All of the above or none of them? As you consider who’s involved and how you want to achieve your goals, you should be starting to see a sketch of your plan for the coming months and year. Is what you’re developing in line with your even longer term goals?

Consider your plan and then start presenting it to your team members. Though business is not a democracy and you do not need to ask for others’ permission (pending you’re the CEO or key manager – and this exercise can work for managers as well as CEOs), it will behoove you and your business if you get buy in from key stakeholders and team members. That gets them on board, aligned and motivated. Ask for their help, input and concerns. This will help you plan even better.

Once you’ve set up your plan, consider reviewing it with your budgetary committee to make sure that you won’t hit any unfortunate pitfalls along the way. One tool I consider very helpful in short- and long-term planing is the whiteboard. Consider employing one along the way.

Don’t just enter the New Year blind. Resolve to plan with your team and make this year a calculated and successful one.

Good luck!

Giving Back During Tough Economic Times, Part 5

Giving away your services pro bono – pending you’re in a service based profession like law or consulting – can be a particularly unsettling thought. You may fear that giving away your services devalues them, and I can absolutely appreciate you not wanting to do that. I also understand that your time is valuable – after all, you charge for it, and maybe even an arm and a leg – and there just aren’t enough hours in the day to start giving a chunk of them away for free.

I get that. Really I do. I am, after all, in the service industry. But fear not.

How and Why I Do It

As a turnaround manager, I bill by the hour, but you better believe that I give a ton of those hours away for free. Now, I’m not saying that I just don’t bill certain clients out of the goodness of my heart. However, I did recently use my skills to help guide a community center that is near to my heart through some challenging fiscal times (made even worse by the general economic climate), and I perform similar functions for the religious institution with which I affiliate.

These are both organizations that I donate to fiscally anyway, but I realized that I didn’t need them using my dollars to hire someone who does what I do, and not as well at that. I could give them my time pro bono, which is what they needed most anyways.

Pro Bono in the Service Industry

For some professions, doing pro bono work is easier than for others. For instance, it can be particularly easy if you’re a lawyer or accountant. Just ask your priest, minister, rabbi or imam (if you attend a religious institution) if you can be helpful with any paperwork or forms. Issues arise all the time that could use someone with a knowledgable eye to review a document or contract – and much better to do it yourself for free, knowing what it costs and how much time it takes, than for the institution to hire an outsider.

Just consider the many ways your skill set could contribute and where. The help and time mean much more to the institution than to you. And if you’re an accountant worried about helping with taxes during your busy season, encourage the institution to hand its books over in early January so that you can get it out of the way right away. Rather than devalue your services, if word spread that you were helping pro bono, it would probably generate more paying clients than it would create potential ones that want your services for free.

If you’re still concerned about doing pro bono work for the reflection it casts on the value of your time, make official criteria for the kinds of people and businesses you help for free, ensuring that whomever you help could truly never afford you otherwise and that they are really in need by some set of standards you establish.

Giving Back in Retail

And what if you’re not in a service industry, but you do retail?

If you sell goods or own a business, consider donating a portion of the proceeds bought by members of your congregation or community back to the community’s schools or church/synagogue/mosque. Create some kind of buyer’s card that can be used and monitored, and then every month or year, donate a portion of the proceeds of what the members have bought to their institution. I know that the Kroger near me always donated a portion of our bill to my kids’ school, and I know of a local yogurt shop that has three rival high schools signed up with proceeds going to their football teams.

You can do this with multiple institutions at the same time (there are programs that allow you to create and track spending), and as a bonus it makes for great publicity. Surely the institution will publicize to its members what you’re doing because it will want people to shop with you. I know those high schoolers buy a lot of yogurt.

Are there other good ways you know of or try to give back based on your industry?

De Nile – A River in Egypt or a CEO’s Final Resting Place?

As managing partner of GGG and the Turnaround Authority, I get the pleasure of providing guest posts by our other partners. The following post is by our newest Partner, Vic Taglia.

In my post a few weeks ago about how to treat your bankers, creditors and vendors, I advocated telling the truth. As important as it is to tell all of these people the truth, it is even more important to tell yourself the truth.

I recently came across a company whose bankers have expressed some discomfort in their situation (no names here obviously). The loan balance has declined, and the bank wants to continue to reduce its exposure. In recent memory, the company has not satisfied its debt service coverage covenants, but the loan document has been extended on a short term basis. Since the principal owner describes his industry as “declining” the only growth will be through consolidation. Moreover, the company has exhausted its balance sheet reserves, even to the extent of taking some tax positions that will improve its book equity, but cost it millions of dollars in CASH over the next several years.

See the warning signs?

  1. Declining industry
  2. Nervous bank
  3. Bad operating performance
  4. No focus on Cash, which we all know is king

The principal owner/CEO stated that he had made some significant spending cuts, and that this year will be better than last. His projections show a slight decline in revenue with increasing EBITDA, but still not enough to cover its interest expense.

When I looked through the financial statements I noticed that payroll in some operating areas had indeed fallen by about the amount revenues had fallen, but payroll in the sales and executive departments had increased. I also noticed a monthly payment for a luxury sports car’s financing company that matched the make in the CEO’s reserved parking spot. The CEO said he had a new, more expensive model on order for summer delivery. The CEO said everything was fine; he had his business under control, and he had a wonderful, long-term relationship with his lender, even though his new loan officer needed some more time to understand his business.

I contend that the CEO is in denial about the true state of his business. As my favorite coffee mug is fond of saying, “De Nile is Not Just a River in Egypt.”

Without significant changes in his mindset and the business’s operations, the bank will continue to ratchet down its exposure. There will be fewer operating accommodations, more reporting requirements, more onerous covenants and certainly no financing for acquisitions. He will be the acquiree, not the acquirer. It’s quite likely that he will find himself out of the business and out of a job within 18 months.

While it is important to maintain a positive attitude for your family, employees, vendors and creditors – after all, hope is extremely important – it is also important to face your reality, especially when the chips are down.

You can talk to your trusted advisors — lawyer, accountant, even a banker — to share your concerns and fears and more importantly to chart a course of action to rehabilitate your business. But when your advisors can’t help, call us, and face the harsh reality rather than board De Nial River Boat Cruise to self-destruction.