What's your financial cadence?

Business owners have a typical financial review process that goes something like this:

1. Bookkeeper or CPA sends financial statements
2. Owner stashes financials in a drawer/folder
3. Those financials are never touched

Financial statement analysis is the primary tool ...

Taking the quarterly view

It's not too late to review 2024 annual financial statements. In fact, most public companies are still reporting Q4 and full year results.

Like other business owners, I have a strong preference for monthly financial statements; but, with yearend in full swing, it felt lik...

Getting things done

The basic steps for getting things done could be summed up as:

1. List all things that need to be done
2. Rank or prioritize those things
3. Decide what to do and when
4. Start working

I'm always looking for new ways to compartmentalize work and life. Lately, I've been using a simp...

Models

To run a successful business, you need 3 essential models:

1. Business model — what you do
2. Profit model — how you make money
3. Revenue model — how you charge for it

Sounds simple and you probably have a sense for these in your head.

If you're managing a large team, trying to grow, or cli...

If I were to "drop in" on your business today, could you tell me how things are going this week?

Most business owners don't have a formal tool or process for monitoring early warning signs (both good warnings and bad warnings). These "tools" go by many names: KPIs, scorecard, dashboard, balanced sc...

Big Picture Thinking

Can you give a quick and straightforward answer to questions like:

• What are you working on this week/month/year?
• What is your business model or profit model?
• What are your goals for the next 2-3 years?

If you’re anything like most business owners I know (myself included...

We're wrapping up a 3-part series (here's part I and part II) on capital allocation – the effective use of profits and cash flow – with a concept called Return on Invested Capital (ROIC). [Sometimes just called return on capital or ROC.]

First, a quick reminder of our balance sheet – we buy or buil...

Sources & uses of cash

This is Part 2 of a series on capital allocation. A quick recap from last week: We defined the 3 uses of profits as capital allocation. They are:

1. Buy more assets (with the intention of growing sales)
2. Pay off debt and other liabilities
3. Pay dividends to owners

Where we ...

With Labor Day promotions behind us, it feels like a good time to talk about the financial impact from discounts, promotions, and marketing campaigns on your business.

It goes something like this:

1. We want to get rid of slow-moving inventory, how about a 30% off sale?
2. Sign up for our email newsl...

Use visuals to spot trends and patterns

There are only 3 ways to convey information:

1. Words
2. Pictures
3. Numbers

If we rank them from easiest-to-hardest-to-understand, then it probably goes: 1) pictures, 2) words, 3) numbers. So why are we exclusively using numbers to understand our financial po...

What are unit economics?

Today we'll cover a topic near-and-dear to every business owner – unit economics – we love thinking about how much we make on every sale!

What are Unit Economics?

Don't be fooled by the fancy term... unit economics are simply the profits you earn on a per-unit, or per-ser...

We've covered working capital a few times in the past...

• 101 – What is working capital​
• 201 – Working capital drivers​
• 301 – Optimizing & analyzing working capital​

But today we're covering probably the all-time most useful ratio when it comes to managing working capital... the Cash Conversi...

Installing a Financial Operating System

We're big fans (and users) of Gino Wickman's EOS (Entrepreneurial Operating System), which outlines a useful framework for business management. I'd highly recommend if you're in need of a basic structure for meetings, people management, and setting a company ...

Let's study turnarounds

You might see this title and scratch your head, wondering why you'd want to read about turnarounds or business failures.

It turns out there are incredibly valuable nuggets of wisdom in these stories.