Having a great relationship with your material vendors and subcontractors is critical, especially as your business transitions and grows over time. Making sure they are paid on time is an important part of maintaining those relationships. So we want to show you how to manage your cash flow using our Profit First Cash Management System (PFCMS). Direct Materials: When implementing Profit First , it is important to distinguish between materials used to produce your customer products or projects, and non-direct materials used more generally in your business. We treat the two differently for very important reasons. Direct materials expense always follows the volume…

    Did you know we can kill two birds with one stone? Well, I’m about to tell you how!! One of THE biggest challenges facing small/medium businesses (SMB’s) centers around tactical cash flow management and achieving strategic objectives. How can you balance short term cash management with long term strategy? We do have a solution for that. It’s called our Profit First Cash Management System (PFCMS). When our clients (and us, too because we use this system in our business) employ Profit First, we can manage short term cash requirements, and at the same time, store cash to meet long term strategic goals. How do…

  What are you waiting for? For those of you not yet familiar with our Profit First Cash Management System (PFCMS), it gives you the opportunity of taking charge of your cash and profitability.  We use Profit First in our practice, and many of our clients use it as well. It works amazingly great… If you’re not yet using it, call us to get more info. It involves setting up several bank accounts where your revenue is apportioned into on a consistent basis in order to make certain that you have the right amount of cash, in the right place, at the right time. When…

Wait What? Am I telling you that you need more than one bank account? Yes, I am!! Remember how our grandparents did finances? The paycheck got cashed, and the money came home and was put into separate envelopes: Rent, Food, Clothing, etc. Well, this same idea can be employed in your business. We help our clients set this up into what we call our Profit First Cash Management System (PFCMS). As money comes in, it gets allocated to various business accounts. The point is to have the right amount of cash in the right place, at the right time. In the basic system…

    Did you see the article about bank financing? If not, go back and read it, please. Ok, are you back now? Great!! Let’s talk turkey (which is appropriate to do since we recently celebrated Thanksgiving). Dealing with banks can be challenging. It seems like they are always willing to lend us money when we don’t need it. And that’s why it’s important to have a good relationship with a commercial lender. So when you need it, you already know each other. But what if you could become your very own lender? Is that even possible, or am I delusional? No, it’s really possible in…

Great question!! And it can be a complex one too… There are two considerations that must be factored in: 1. What are you worth as an employee of your company?  If you needed to hire someone to do all the work you do, how much would you have to pay them? I’m certain it would not be minimum wage, right? You provide much more value than that.  But this is an important question to consider. You deserve to get paid the same or more than you would pay an outside person to do your work. We call that economic compensation. 2. How do I optimize…

The famous economist Milton Friedman once once made this observation. This article is all about understanding how to make your business system function more effectively from a cash management point of view. There is no way we can make a pencil. Why? Well silly, think of all the skills needed between wood working, making the eraser, the lead, paint, lettering, the metal part holding the eraser. So you see, even though a lead pencil is a rather simple instrument, we can’t make one on our own. We need all the materials and equipment to do it. Your business is no different.  When looking…

  If you’re involved with our Profit First Cash Management System (PFCMS) you’ll recognize why we are asking this question.  PFCMS is intended to make sure you have the right amount of cash, in the right place, at the right time. When it comes time to make tax payments, it feels GREAT to know you’re already covered by having the cash ready. The Best Way To Eat an Elephant!! What’s the best way to eat an elephant? Most people think it’s best done a bite at a time. And that’s why we have you set up a separate bank account to collect tax. We…

Software Subscriptions (SAAS products) are a major expense for many (if not most) business owners.  And it’s no longer just one or two subscriptions - most businesses now have 10 or more active software subscriptions. And prices can be really expensive - I’ve got one that costs us around $1000 a month! Most offer different pricing and payment plans, and many offer the choice between monthly payments and annual payments.  There can be considerable savings by paying the subscription annually instead of monthly.  But not all savings are really worth it. Here are my top 10 tips to managing your SAAS subscriptions. Know…

  It’s ok, you can be totally honest with me. And I will be honest with you, too.  Most business owners hardly ever look at their financials. There are several reasons for that: The financials are not very accurate It’s difficult to read the financials because they are so messy looking It’s difficult to understand how those financial results ended up on the financials The info on the financials is too old to be useful How in the world can you implement our Profit First Cash Management System (PFCMS) without accurate financials? Answer: It’s almost impossible.  Let’s look at your financials one by one. You good with that? Let’s…

  It all depends on which world you’re in…   What’s that you say? That doesn’t make sense to you? Well, it might if you think about it a little. When we experience cash shortages, our behavior changes, and sometimes it’s not always for the better. Let me introduce you to two different worlds: The Cost World The Throughput World In the Cost World, we are very focused on costs. We look at every single expense and try to reduce it. That’s not a bad thing unless it affects the Throughput World. In the Throughput World, we are paying attention to the speed/pace of the business, and amount of…

Have you ever thought about this? When your business grows, cash can become strained. Why is that? Great question. That shows your interest is piqued!!   The answer is actually quite simple. When your business grows you need additional working capital. Think about that for a moment. When you hire additional employees, expand your inventory to accommodate more sales, buy additional technology or add licenses. Hey, it all adds up!! So now what do you do? Hmmm… All these things require additional funding. And more revenue doesn’t always provide enough cash flow to fund it when needed.  First and foremost, it’s not like birthday…

Did I just get your attention? I’m very glad I did!! So by now you’re asking how in the world can I make such a bold claim. I can absolutely guarantee it. How? By implementing our “Profit First Cash Management System (PFCMS)". Have you heard of Profit First? Our friend (yes, he’s our friend) Mike Michalowicz wrote a book a few years ago called “Profit First.” I first became acquainted with Mike at a conference several years ago. I was so enthralled with his presentation that I immediately bought and read his book. Then I called up his office to see what…