Advisor insights from the field

Archive for July, 2010

Nothing New

Wednesday, July 21st, 2010 by Troy Schrock

During the 1930s, 1940s, and early 1950s, my grandpa and his brother built and exited a number of different business ventures.  They began by helping their dad with his cattle business and launched into a full-scale dairy operation.  (I have a photo circa 1930s of a delivery van with “Schrock Dairy” and “Natural Milk & Cream” written in fancy lettering across the sides and back.)  From there, they launched a full-scale apple orchard business.  Then, with the full-gut commitment unique to entrepreneurs, they tore down all of their orchards and started a hybrid seed corn growing business.  They later added a fertilizer (anhydrous ammonia) business with multiple plants and distribution facilities across Illinois, Indiana, and Ohio.  This business was eventually sold to Standard Oil of Indiana.  (I guess anhydrous ammonia was the rage those days.)

Today, we are more than a half-century removed from these entrepreneurs, so naturally, we have different business concerns than they did, right?  My dad was recently reading through their correspondence and found two consistent themes:

  1. Get the right people in the right positions.
  2. Cash flow!   Cash, Cash, Cash.  It was never far from their minds.

OK, so maybe business really isn’t much different today!  The key issues facing entrepreneurs 75 years ago are the same for entrepreneurs today, and they will still be the same 75 years from now.

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(Real) Renewable Energy for Your Business

Thursday, July 8th, 2010 by Troy Schrock

Renewable energy is the rage these days.  It reminds me of the 1970s energy crisis.  At that time, my parents installed a large solar collector in our side yard which connected to our central air HVAC system.  It operated for many years, but it was eventually scrapped.  My dad tells me it never paid for itself; it was a bad investment (even after the tax credit)!

Unfortunately, many of today’s proposed renewable energy solutions may end up facing the same end as that old solar collector – the scrap yard.  Your business, however, has a legitimate source of renewable energy.  Do you know what that is?

It is cash flow from operations.

Cash flow from operations is simply the cash flow generated by your basic business operations.  This could be from manufacturing and selling a product, delivering a service, or buying products and merchandising them somehow.  If you can do this at a profit, the operating margin provides operating cash flow – a legitimate self-sustaining (renewable) source of cash for your business.

Does Your Business Need Better Financial Visibility and Control?

Thursday, July 8th, 2010 by Troy Schrock

Welcome to the new ActionCFO blog, a collection of insights from certified ActionCFO advisors related to increasing financial visibility and control in midsize businesses. 

The need for strategic financial management is not unique to our struggling economy.  It’s necessary for businesses to thrive in good times and bad.  Unfortunately, many companies do not do it well.  Some recognize this, hire a controller or CFO, and assume that it’s being done better.  But is it?  How can you know?

Are you nervous about seeing financial statements each month?  Are your financial statements routinely late?  Have you ever been blind-sided by a cash shortage?  Do you know what’s on the financial horizon for your company?  These are the things that make business owners nervous, but they don’t have to cause worry for you.  The disciplines of financial visibility and control are easy to learn, and frankly, not that difficult (or expensive) to manage. 

As CFO advisors, we enjoy helping companies perform better in this important area.  That’s why we’ve created this blog – to share thoughts and insights with you as they arise in our work.  Whether you’re a business owner, a CFO advisor, or just someone who wants to better understand the disciplines of financial visibility and control, we hope you find value in our entries. 

And please be free with your questions and comments.  We are learning, too!