Kristy J. OHara
Terresolve Technologies Ltd. announced that Larry Rigdon, founder and former CEO of the Rigdon Marine Corp., has joined the company’s board of directors.
Rigdon founded the Houston-based Rigdon Marine Corp. in 2002 and served as its CEO and chairman until retiring from the company in 2008. While at the helm of the corporation, Rigdon raised the capital to fund more than 20 vessels and employed more than 300 people. Prior to being sold in 2008, Rigdon Marine saw annual revenue of nearly $100 million.
Denver L. Brooker joined Vocon’s Cleveland office as a studio director.
Brooker comes to Vocon with 23 years in the architecture and design industries. As a studio director, Brooker will provide direction and leadership to design team members, including senior architects and designers, for major projects.
He will manage the development of proposals and oversee project coordination while working with high-profile clients, consultants and vendors.
Victoria Kressler joined Medical Mutual of Ohio as manager of advertising and online marketing. In addition to the company’s advertising and online marketing projects, Kressler will also be responsible for all direct mail and sponsorship relationships.
She comes to Medical Mutual with 17 years of experience in marketing communications. She spent the last seven years with Liggett Stashower.
Wells Fargo Advisors designated Michael Bornhorst, first vice president — investments, as a member of the firm’s “Premier Advisors Program,” which reflects his achievement of professional success through a consistent commitment to client service. The premier adviser program represents the best of the best of advisers at Wells Fargo Advisors.
Bornhorst has been a financial adviser with Wells Fargo Advisors for three years and has 18 years experience in the brokerage industry. He has a bachelor’s degree in finance and real estate from the University of Cincinnati.
New England Financial announced that Thomas Gallagher and Michael Rea have recently earned New England Financial Masters level recognition — a high honor given to a select set of New England Financial top producers, specifically those who exemplify the highest standards of personal integrity, professionalism and customer service across the company.
Gallagher is a graduate of the University of South Carolina and Rea is a graduate of The Ohio State University.
Please send your executive-level promotions to email@example.com.
In April, Ari Maron, partner with the family-owned real estate development, construction and management company MRN Ltd., spoke at the Smart Business Power Players luncheon about how his company is playing a role in the revitalization of Cleveland and the challenges in doing so. One of the biggest hurdles is the large exodus from the city as a whole, but despite that, the downtown region has actually seen a 49 percent population increase.
Maron says that without people, you don’t create a neighborhood, just a destination and that Cleveland needs certain types of people to move into the city for it to change.
“We want creative people,” he says. “We want entrepreneurial people. We want smart people. If you look globally, the role of cities is to compete for those people.”
You attract people by creating an appealing place to not just visit but to live and work. One of the company’s biggest projects was the East 4th Street area of downtown, which today is referred to as the “the jewel of Cleveland’s entertainment district” by The New York Times. Creating this gem came with challenges though, including buying out 250 different property owners over the course of several years to gain site control of the whole street and getting a bank on board when they were buying out only portions of buildings at a time, but believing that eventually they’d get the whole building. He also had to attract unique, local restaurants and stores to the area because people in the suburbs had no reason to come downtown to go to a Gap or Applebee’s when they could go to the same places closer to their homes.
“Obstacles and opportunities are two sides of the same coin,” he says.
Through patience, persistence and creativity, the area today looks quite different — restaurants, entertainment venues and people everywhere, many of which are inhabitants of the 322 apartments there now as well.
“East 4th is really two different things,” Maron says. “It’s a destination if you live in the suburbs … but it’s also a place where people live. Ultimately, that was the vision. Could you take these old buildings and could you create a neighborhood there? …We’re starting to see the vision morph into a neighborhood.”
How to reach: East Fourth Neighborhood, (216) 589-1111 or www.east4thstreet.com
When David Lingafelter became president of Moen Inc. in late 2006, the flow of prosperous times had been replaced by a plug of economic uncertainty.
Moen’s business is faucets, sinks and accessories, and it’s significantly dependent on the U.S. new construction market, which started declining in October 2006 and rapidly continued downward throughout 2007. That was hard, but then the global financial crisis hit, too.
“Just when we thought, ‘OK, is this thing going to bottom out,’ the rest of the world takes a dump,” Lingafelter says. “Everything else just goes in the swirling uncertainty. Consumers back even further away, so a business that was many, many years of record sales, year after year, you have this transition. That’s been the toughest challenge.”
Add to that, this entire decline was happening as Lingafelter was taking over his new role as president.
“The normal thing of going from a product manager to a president has its own challenges, but those are manageable compared to a business environment in one of your core markets in one of your core segments declining 70 percent,” he says. … “Most people say, ‘Wow — good timing.’”
While it was challenging, it wasn’t all hopeless. The company was strong in other areas, and he recognized that, as well.
“We’re a billion dollars,” Lingafelter says. “We have a highly recognized consumer brand, and we have a good team. So it wasn’t, ‘Oh my gosh — let’s start over.’ It was, ‘OK, what’s changed, what is changing, what does the trajectory look like, and what does that mean to us?’”
What that meant was sticking to what had gotten the company where it was — good strategic planning and accountability.
“It’s not that we’ve done it differently because of that, but it’s just more important, and what we’ve done throughout the year is we’ve had to iterate more,” he says.
Moen’s approach to planning involves aligning the leadership team, diverging and converging, prioritizing initiatives and then measuring. Sticking to this process, even in the challenging times of the past few years, has helped Moen continue to build its $1 billion brand.
“We’re still bullish on our growth in China and with the retail markets — it continues to grow as consumers look for that value in do-it-yourself,” he says. “It’s good. It’s not double-digit growth, but we’re positive. We’re positive on our growth opportunities in places, but we’re not out there spending way ahead of the growth, so we’re continuing to be cautiously optimistic.”
Align your team
Before you can do any game-planning, your leadership team has to understand what’s guiding the process.
“First and foremost, your leadership team is aligned,” Lingafelter says. “If your leadership team is not aligned, then they’re coming in with different headsets. They’re coming in with different glasses on.”
This is the time to look at your vision, mission and strategic initiative pillars to understand why you’re in business and what the purpose of your organization is. Keeping these elements at the forefront of each executive team member’s mind will ensure that your team stays on the same page.
“If everybody says, ‘OK, yes, we understand our vision, yes, we understand our mission, yes, we understand our goal, [and] yes, we believe in our strategic initiative pillars,’ then you get better alignment,” he says. “Then you have a balanced discussion. It’s still not easy, but having those guideposts to help you through the decision process, I think, is key.”
If your team isn’t aligned already, Lingafelter says you have to recognize it’s not going to happen quickly.
“You can’t do it in a [single] meeting,” he says. “It’s not like we’re going to set the vision from 9 to 10. It’s not a completely evergreen process because you don’t want to change it all the time, but I think you have to have a disciplined process of understanding your marketplace, understanding your opportunities, understanding who you are and have enough vision to say, ‘Here’s the direction that we want to go,’ and that process you need to have as much fact-based information as you can.”
At Moen, the company’s three main strategic initiatives are growth, business improvement and organizational excellence, so anything the company as a whole does has to support one of those initiatives. Then that cascades down to each business unit level, and anything that unit proposes must also support one of those three initiatives.
“We use the same language as it moves through the organization,” he says. “Common language makes communication a heck of a lot easier.”
If you can start with these commonalities, the entire process of prioritization and planning is going to be a lot easier.
“It must start with leadership alignment,” he says. “If you don’t have that, you don’t have a prayer because everybody will communicate differently. It’s OK to have a different style, but your fundamental message has to be around those strategic guideposts and those initiatives.”
Diverge and converge
Once you’re aligned with what your vision and mission are, then you have to lead your team through a process of diverging — brainstorming — and converging — bringing everyone back together again to decide what’s most important.
“The diverge and converge can happen at the team level, the group level or the corporate level,” Lingafelter says. “The process is the same — it’s exactly the same — if you boil it down.”
Often you’ll have to facilitate this process yourself because it’s not something that comes naturally to many team members.
“Allow them to diverge on the facts, and then you converge on to your strategy,” he says. … “[It’s a] process that says, ‘OK, this is what we’re going to do. We’re going to talk about our marketplace, and we’re going to get information on our marketplace — let’s all get on the same page. Let’s talk about the company. What are we good at? What are our strengths? What are those things that we think are our competitive advantage and how do those marry up with the marketplace?’”
The amount of people that you involve in this process depends on the size of your business.
“It’s tough to do on your own, but I would say, no matter what, get multiple heads in there to help you at least with the assessment because a lot of times, different views get you to a different place,” Lingafelter says.
For Moen, this happens across the organization at the business unit level.
For example, if one business unit says they want to grow with new construction plumbers, they may start by brainstorming what they know about them. What are the facts? What are the trends they’re seeing? What do they think the future state as it relates to that specific area looks like?
“This is not days and days,” he says. “It’s let’s spend a few hours talking about this, and then you get to the next session, and someone facilitates and says, ‘Let’s take off our headsets and let it run.’”
Sometimes, you need to do some pre-work to these sessions. In those cases, Lingafelter says unit managers may ask their team to brainstorm on their own and come to the table with their top 10 things that they think are challenges with new construction plumbers.
From there, the diverging has to end, and the converging begins.
“Then you do simple things like, ‘Let’s prioritize all these ideas. What do you think? Let’s bring it in a little tighter,’” he says. “It’s not rocket science. You just need to facilitate through the process.”
From there, that business unit will come to the corporate level with, say, its top three things they want to do because they feel those are the priorities as it relates to new construction plumbers. That unit would then take those three items to the corporate level and talk about not just the ideas but what they think they can return on each item and how much each will cost.
“They’ve gone through diverge, converge and this is what they’re recommending they can do,” he says. “It’s not hard, but it’s a process — you have to have a discipline.”
By doing this within each business unit, it helps the corporate level not get bogged down in initiatives that aren’t very important and focus on what will be most beneficial.
“We’ve done this long enough, and our people are seasoned enough to know that wish lists aren’t going to fly,” he says. “The more confusion that they create, the less likely they are to get their initiatives communicated.”
After every unit brings its top initiatives, from there, the leadership team has to prioritize which initiatives out of all of those most-important ideas to focus on.
“When you’re talking about strategic tradeoffs you’re not diverging anymore,” Lingafelter says. “You’re trying to converge on the decision.”
At this point, every business unit has identified what its most important priorities are, but now you have to take it a step further.
“It’s not like we have a bunch of initiatives — ‘Oh, some of these aren’t so important,’” he says. “No, we neck it down to the most important initiatives. So you say, ‘OK, now we’re going to neck it down to only the most important, and you have to make prioritization discussions.”
The vision, mission and strategic initiatives drive those discussions and help identify where tradeoffs will be. This process starts with discussion to identify the facts.
“You try to get everything on the table — have the conversation about tradeoffs,” he says. “Listen to the downside. Otherwise, if we don’t do this, here’s the implication, and you have to vet both of those because a lot of times, the premise on the upside is probably higher than it actually is, and the scenario downside is probably lower than it actually is, so as leaders, you have to try to manage the message or manage the communication a bit. It’s probably not that bad, and it’s probably not that good.”
First, he looks at what the costs are for each initiative. It’s important to look at total costs — operational, finance, IT, human resources, etc. — not just what’s on the surface, and include any of those in the total cost. Then you have to look at what the returns on those investments are.
“A lot of it comes back to getting results,” he says. “If you say, ‘Look, is this in a shorter-term strategy, where it’s within the calendar year? Is it a longer-term strategy? Is it further out than that? Is it changing our positioning?’ You look at how long it takes for that to pay off, and we make calls that way.”
You also have to look at what your company’s strategic initiatives are that everyone was aligned to.
“A vision and strategic initiatives don’t just tell you what to do — they tell you what not to do,” Lingafelter says. “When you’re making tradeoffs without having guideposts, you can naturally steer off course. You have to have leaders that say, ‘OK, wait a minute, let’s remember — what’s our strategic initiative? What’s our focus? How is this relevant?’”
For example, at Moen, Asia is a growth market for the business, so they’ll make investments there, even if they could get a higher payback somewhere else. Sometimes that means cutting one business unit’s budget to fund that other initiative. Someone may get upset and ask why his or her budget is getting cut when three of his or her projects have a higher return than what the company is doing in Asia. But Lingafelter explains to people that the company will still fund that Asia initiative because its strategic guidepost says it wants to grow internationally and diversify from U.S. new construction.
“You come back to those guideposts,” he says. “You come back to those decisions. You know why? Because everybody had the same glasses on when you elected that process. It may not have been exactly the way they thought, but everybody needs to be aligned so you can have rational versus emotional discussions.
“This is not a perfect science. It doesn’t come without stress. It doesn’t come without discussion. Compromise can be dirty sometimes, but you can end up in a better place. I believe that. Taking your marbles and going home because you’re not getting everything doesn’t work.”
It’s important as the leader that you properly facilitate this process so everyone has the opportunity to share what their priorities are and why they think they’re important.
“You try to facilitate consensus and communication because I have very skilled, very smart and very capable people, and you don’t want to disenfranchise them in the process,” he says. “You don’t want people taking their marbles and going home, so you continue to go back to, why is it important? Is it a growth initiative? Is it a business improvement initiative? Cost, quality, service, new products? Is it organizational development?”
You also don’t have all the time in the world to have these conversations and make these decisions. At Moen, they’re constrained by when they have to provide guidance to the parent company, Fortune Brands. It’s important to communicate those time constraints as well so people understand when the stopping point is.
“There are hard stops,” he says. “This is the decision time frame. This is when we need feedback. This is the discussion we’re going to have. This is the prioritization discussion we’re going to have, and we have to stick to those timelines.”
Lastly, you have to look at your budget and what, of all your ideas, is feasible within it. Fortune Brands has a performance expectation for Moen to get results, so he can’t get caught up in something that is risky or too expensive.
“It isn’t a wish list, but it’s a heck of a lot more than we can afford,” Lingafelter says. “It’s prioritized because it’s a strategic initiative that we’ve talked about. There’s never enough funding. This is no different than any other business. The government can print money — we can’t, so we have to control the budget.”
Once you’ve heard all of the initiatives and looked at the facts, then it’s time to make the important decisions of what to focus on and communicate that to your team.
“You try to listen and then repeat back, ‘OK, this is what I’ve heard. I think these are the tradeoffs, and I recommend this is how we go forward,’” he says. “Are there times a leader just has to say, ‘We’re going north?’ Absolutely.”
Taking this approach to prioritization is also helpful when last-minute opportunities arise long after you’ve done your planning.
“That gives you things on deck, too,” he says. “You can say, ‘We have a few extra dollars, where do we go?’ It’s not, ‘Oh my god!’ We can say, these are the three things on deck, and let’s go fund them.’”
Once you choose your top initiatives, then you have to make sure that people focus on them and follow through.
“Every initiative has the ability to track it,” Lingafelter says. … “Each initiative rolls back, at the end of the day, to growth, business improvement or organizational development.”
For example, a metric in organizational development could be that every employee has an individual development plan. A way to measure that is to say that every employee will have an IDP by March 1.
“That’s a metric,” he says. “That means you have to spend one-on-one time, you have to establish an IDP, log an IDP — those kinds of metrics have to be tied to your initiative.”
It’s critical to take the time to put in some sort of way to measure each initiative.
“If you’re not disciplined with prioritization and establishment of initiatives and tying a metric to it, then it will be tough to track,” he says. “Are you executing and exceeding or excelling in your initiative? You have to just be disciplined to say, ‘OK, here’s the initiative, what’s the metric — how are you going to measure it? What’s the cadence? Again, it sounds simple, but everybody has to have that same headset of process of here’s how I want to present my initiatives.”
At Moen, a new three-year strategic plan is completed every year. That plan is put in a binder or spiral bound, and each initiative is given its own page that outlines the key action, the things they’re going to do to reach it and the timing.
Then, when Lingafelter meets with the person in charge of that particular initiative once or twice a quarter, he asks how they’re doing with it in regards to both progress and timing. Each initiative is coded with green if it’s on track, yellow if it’s a little behind and red if it’s falling behind or being killed. If it’s red, then he discusses the reasons — did they have enough resources? Is the situation different than they originally thought? Have business conditions changed? Or did you just miss it?
“As long as you don’t have too many, then you move on,” he says.
Each initiative will have a plan not just for that current year but also for each year in that three-year plan.
“They’re much more detailed than the next year — a little less detailed the next year and a little less detailed the following year,” he says.
As the company moves through its strategic plan for that year and prepares the next three-year plan, because metrics are such a crucial part of measuring progress, Lingafelter can adjust numbers up or down as needed so that the next plan is likely to be achieved. For example, in the fourth quarter of 2008, numbers got worse, so he adjusted the numbers for 2009 to reflect that.
“It’s generally one of two things — most recent performance and trend lines,” he says. “We look at how we did last month, how is the quarter going and how does the future forecast look. We do a lot of modeling, so we look at what’s happening in the market and we say the trajectory looks like it’s going to be up, flat or down, and we make adjustments based on that. We use a rearview mirror on performance and we use the windshield on forecasting and trend lines so we have that dialogue all the time.”
While this is a lot of work and requires a lot of give, take and communication, Lingafelter recognizes that this process is why Moen and his 3,000 employees are still doing well despite its largest market being down.
“When your culture is built around this kind of teamwork, it helps,” he says. “Leadership’s job is to continue to facilitate that and continue to lead. I think our organization has done a heck of a job through the adjustments that we’ve had to go through.”
How to reach: Moen Inc., (440) 962-2000 or www.moen.com
Brown, CEO of the American Heart Association Inc., wants to see the cardiovascular health of all Americans improve by 20 percent while also reducing deaths from heart disease and stroke by 25 percent by 2020.
“Having a bold goal, the entire organization rallies around is one way that we’ve been able to really propel the organization and grow our revenue as well as grow our mission impact because everyone is focused on the same end point and on the same strategy to achieve the end point,” Brown says.
But getting nearly 2,700 employees focused on improvement involves more than just setting a goal. She has to actively engage them in the business and challenge them to help her find better ways of doing business.
“The day you think you’re the best as you can be is a bad day for any organization because that’s the beginning of a downfall,” she says. “There’s always ways that things can be improved or reinvented, so setting that culturally as the expectation that we can always improve, we always want to do better, there’s always new and better and different ways to improve the work that we’re doing — that creates an environment where people are willing to be open about what works and what doesn’t work.”
Create a think-tank group
One of the most important things Brown did to engage employees on improvement was to create a CEO think-tank to help her find new ideas for the business. She pulled in many of the brightest people in her organization from the areas of science, marketing, communication and business.
“Think about who the best and brightest minds are who are willing to be open and that will have significant expertise to contribute to your business goals, and make it informal,” she says. “Don’t create another bureaucracy. Make it that they are truly a think-tank providing advice and guidance and thinking. Bring them together and pose some of your most important business questions, and listen to what these experts have to say.”
She says that before you start this process with those people, you have to communicate what your expectations are for the group.
“Level-set expectations at the beginning that this is an informal group of advisers versus this is a formal committee or group that will have decision-making authority,” Brown says.
When she has these meetings, they typically last about six hours for in-person meetings and about two hours for conference-call meetings. With long meetings, you’ll need to keep people focused during this time.
“Always have an agenda for the meeting for the things that are most important for the organization,” she says.
She provides a quick overview of each piece of the agenda or the background of the status of the item at the beginning of the meeting, and she always uses strategic discussion questions during the meetings.
“It can be deadly to have a random discussion that takes you nowhere, so by having strategic discussion questions framed in advance, the discussion is more focused, and the feedback is as valuable as possible,” she says.
Brown’s think-tank came up with more than 100 ideas to sift through. When you’re trying to narrow ideas down, it’s important everybody is on the same page.
“Upfront, before you start the selection, make sure that you have agreed upon the criteria that you will use to focus on ideas, because if not, people then will lobby for their favorite idea,” she says. “If you have objective criteria upfront — say, must reach the maximum number of people possible or must generate the maximum number of revenue possible or whatever the criteria area — and you work through a facilitated process to narrow down the list, the likelihood of success is better. People will not focus on their pet project but rather on the things that can truly make the biggest difference.”
And like most communication efforts in business, Brown says you have to continue to reinforce this while you go through the selection process.
“It’s all in how you set up the discussion,” she says. “Say that often — ‘We all come to the table with our passions and the things we think are so important, but we need to really be objective because we only have the capacity to do so many things at a time, so let’s figure out the things that could have the highest return and focus there.’ It’s all in setting the tone of the dialogue.”
With expectations clearly set, she then had to start knocking ideas off of the 100-item list. Start with the obvious.
“Some of them were outside the realm of the competencies of the organization, so they were easy to come off of the list,” Brown says. “We then looked at what might have the biggest impact toward our mission and biggest possibilities for revenue, and that’s how we prioritized our ideas.”
For a new initiative, it can be a challenge to place a number on what you think it can return, but you have to try. Brown looked at the market potential, the product they would be creating and what the possible maximum impact could be. Then she looked out over a five- or 10-year span of full implementation, and they discussed how they could ramp up that business line and what the growth and net revenue associated with it could be. She says that until the business plan is actually created, these are just rough numbers.
With that approach, Brown and her team narrowed the list down to 11 ideas. Some of those were quick wins and easy to implement, and others would take longer. She’s currently building business plans for five of those ideas that the organization will move forward with.
“Have a process where you’re constantly challenging yourself,” she says. “Is what we’re doing good enough today in light of the world we live in, and if not, what do we need to do to modify our approach, our products, our services to be as relevant as possible?”
In addition to the think-tank, another way Brown engages employees to improve the business is through an employee engagement survey.
The survey is conducted at the same time each year, and every employee has the opportunity to participate. It was created by the Gallup organization and has 12 questions, and if every employee answered 5 on every question, you would have a fully engaged work force.
The organization started doing this about seven years ago and has created benchmarks specific to the American Heart Association.
“We looked over a period of three to four years,” Brown says. “Where were we getting the highest level of engaged employees, and what were those pieces of our organization doing, and how could we share that information with others?
“Take the time to have someone in your organization analyze by department or function where you’re doing best and hold up those successes for others to learn from.”
After the surveys are administered, Brown says you have to communicate the results to your employees. Within the next quarter, employees learn what the surveys revealed. Doing it within a quarter gives you time to analyze the results, but at the same time, it’s still fresh in their heads.
“Make sure to share the results,” she says. “Employee engagement surveys shouldn’t be something that you do, and the CEO and the management looks at it and never tells the employees as a whole how did we do.”
It’s not a time to try to cover up anything they said either.
“Be very open about the results, open about the places employees feel really good about and open about the places that employees think that things can be improved,” Brown says. “That way people know that this is an open forum, that their feedback is valued and that some action is going to be taken based on the feedback that is provided.”
It’s important to also show a plan for how you’re going to work on the things they brought up. This isn’t always easy to create, but it’s the effort that speaks loudly to employees.
“Some things are easily fixable, and other things take culture change, so it’s hard to give an exact [timeline], but showing that there is a plan and how management takes the feedback seriously is the most important thing, and engaging and enrolling the employees to make the changes is important, too,” she says.
She emphasizes during these sessions is that engagement is a two-way street and the dynamics of the organization are not such that managers can fix everything.
“A lot of things in organizations have to do with how employees communicate to each other or having employees feel comfortable raising issues on a day-to-day basis with managers — not waiting for a once-a-year employee engagement survey for those things to be discussed,” she says. “It’s making sure that the environment is such that this is something we’re going to work on together — not, ‘This is management’s problem to fix.’”
When you get these results back, you need to decide what to act on and what to hold off on.
“Leaders who are engaged in what’s happening in their organization, it’s likely intuitive to them the things that really matter and the things that might be important,” Brown says.
But being in tune isn’t just your job — it’s also that of your leadership team. Each leader has to ask questions and listen to people he or she doesn’t normally talk to.
“It’s such an obvious way that all of us work in organization that we each have our leadership teams that we work closely with, and those are the people we hear from most and we ask questions of most,” she says. “But it’s being deliberate about moving outside of that — going to people who are directly implementing your work or mission every day on the front line and getting their feedback is really important. Make that investment of time because that’s some of the most important time that can be spent.”
When you’re in touch with your organization, you can better decide what initiatives to focus on. Regardless of what you choose, take the time to communicate not only what you implement but also why you can’t implement some suggestions. Doing so is important to employee buy-in for anything you’re trying to achieve as an organization.
“Having employees and volunteers fully engaged and fully enrolled in what’s going on in the organization is the most critical factor for success for my business day-in and day-out,” Brown says. “Even if I can’t or choose not to act on every single suggestion that’s received, making sure people know their feedback is valued and that we’ve heard them but we’re making a different decision for X, Y and Z reason, people get that. They understand that.”
By engaging employees this way, it not only has helped improve the organization, but Brown has also seen a direct impact on the $628 million organization.
“The results of the survey have helped because, first of all, our employees know we care about what they think every single day,” Brown says. “Secondly, because the survey gauges the level of engagement of the employees, we’ve been able to tie employee engagement to lower turnover and to higher productivity, and that’s helped the organization.”
How to reach: American Heart Association Inc., (800) 242-8721 or www.heart.org
The Brown FileBorn: Port Huron, Mich.
Education: Bachelor’s degree in marketing and communications, Central Michigan University
What was your first job, and what did you learn from it that still applies today?
Scooping ice cream at Stroh’s Ice Cream Parlor when I was 15 years old. [I learned] hard work and the importance of customer service — the customer is first.
As a child, what did you want to be when you grew up?
I wanted to be a broadcast journalist. It was funny, when I went to school, I gained a huge interest in debate and communications, and then I realized that the opportunities for me would be broader if I focused on broad business and marketing.
What’s the best advice you’ve ever received, and who gave you that advice?
Listen with an open mind. [That’s from] an early mentor of mine in one of my first professional jobs.
What’s your favorite board game and why?
My favorite board game is Monopoly. And why is it Monopoly? It’s probably Monopoly because I love to focus on generating revenue and raising money.
If you weren’t doing your current job, what would you do?
I think I would love to some day teach at a university in a business school, because I love to interact with people who are eager about their future and interested in learning, and I would like to be a part of that.
“Life is in session.”
The Jennifer Aniston quote from “The Switch” resonated with Gail Warrior when she saw the movie last year.
“It’s such a simple quote, but when you break it down, life is in session 24 hours a day, seven days a week,” Warrior says. “There are no timeouts or redos or breaks. You can’t say, ‘Give me a different life.’ The life that you’re given is the one that you have to live. It’s up to you how you’re going to live that life.”
In that same way, as president and CEO of Warrior Group Inc., a provider of premier construction services, she uses that quote to move her business and her employees forward, having grown the organization from $14.9 million in revenue in 2006 to $124 million in 2009.
Smart Business spoke with Warrior about how she pushes her employees to be better.
How do you help employees reach their full potential?
Be willing to first listen to what it is people want from their individual life and then find a way to gently push them or nudge them in the necessary or right direction. Oftentimes, there may be things that I may not want to do from a business perspective, but after listening to my executive team, they say, ‘We really need to go down this path.’ I say, ‘OK, you’re right.’
A lot of times we have our minds made up about how things should go in one direction. Sometimes it can take an act of Congress to convince somebody to make a different decision. In creating leaders in Warrior Group, it requires a lot of patience and a (willingness) to listen and being able to nudge people in a certain direction.
How do you nudge them in that direction without telling them?
Ask questions. ‘Do you feel like this is the direction you need to go in?’ and ‘Tell me why.’ Get their feedback. ‘Why did you make the decision you made? Is there another decision or avenue you could have done in this particular situation?’ and let them start thinking about that versus saying, ‘You know you should have done this — why did you do it like this?’
If you do it that way, then immediately the other person will go into defense mode. Then, at that point, they’re not interested and don’t want to hear anything you have to say because you just discounted them. But if you ask questions and get clarification and more information, then ask another question and say, ‘Is there another opportunity?’ and have a discussion about that, then that creates a learning situation.
How do you get people to want to reach their full potential?
One of the things we’re very good at is hiring 9s and 10s in the organization, and a lot of times, people are afraid of hiring 9s and 10s because they feel they may outshine them.
We always look for the cream of the crop and the top-notch people. When you see organizations where that doesn’t happen, you see organizations that people want to make excuses and processes are broken internally, and there’s just not a good flow of communication internally and sometimes externally. People that are 9s and 10s are people that come into work, and they are excited about what they do, they have a passion for what they do, and they have a passion for life and the impact they can make.
Let’s say, for example, you are a marketing director, and you’re looking for a marketing assistant and you find someone that has a skill set that’s a higher skill set than yours, and you’re the director. You feel like, ‘Well, if I hire this person, I don’t want them to show me up.’ The real mindset should be, ‘I need to hire this person because not only will they help the organization grow, but they have skills and tools that I can learn from individually and I can grow, as well.’
Sometimes people are afraid to do that. That just comes with knowing who you are individually and being comfortable with yourself and what your talents are and not being afraid to hire someone who has some stronger talent. If that was the case, I never would have ended up in construction.
How to reach: Warrior Group Inc., (866) 927-4787 or www.warrior-group.net
When Jeffrey Bowman stepped into the president and CEO role at Crawford & Co., he knew it wasn’t just the top leader that was changing — the organization was going to need to, as well.
“I use the term ‘acting with a sense of urgency,’” he says. “It was changing the speed to be a global organization and being able to demonstrate that we were a global organization with global clients. … Crawford is actually 70 years old this year as an organization, so a lot of organizations around the 60- to 65-year mark really get themselves to where they have to go through some cultural changes.”
One of the things he saw that needed to change was how the company shared its plans with employees. Typically, plans weren’t shared at all with those working at the insurance company. When nobody knew the plan, people tended to not care what other areas of the organization were doing, so silos had been built across the business.
“We had silos in our organization between various divisions,” he says. “We weren’t sharing best practices around the globe in either management information or technology. We had a very siloed effect around what we were doing around that. We didn’t have a head office that was really dictating to our overseas operations exactly how we expected them to behave as a public company and as a large organization.”
To get the organization acting more as one, he knew he would need to come up with a good plan and hold people accountable. His hope was that in doing these two things, Crawford would start to act more cohesively and become better positioned for the future.
“It’s a journey, and your strategy helps you lay that journey out because you can never change a culture immediately,” Bowman says. “You have to work at cultural changes, and you have to work at the messaging in organizations.”
Create a plan
The first thing Bowman had to do to get the company operating more cohesively was create a strategic plan.
“It’s like a journey — you have to have a point you want to get to,” he says.
Start with what the basics of your organization are — why you exist and finding a way to support that.
“It was really a case of bringing it to a focus of, ‘That is where we start — our mission, vision and value proposition are critical to the organization,’” he says. “Then your strategy comes out of that. … It becomes the focal point of what you do. It’s how you send your messages out. Your vision has to dictate how you behave.”
Bowman looked at many different facets of the company in creating a plan, including talent management, products, financials, dealings with clients and company culture for employees.
“You have to have different parts in the strategic plan,” he says.
As you identify the things that you want as part of your plan, you have to be open to changing it based on what other people say, regardless of whether that person is a clerk or a senior person.
“You have to outline those issues which are important, and what you want to do is make sure you can talk to anybody in the organization about it,” Bowman says. … “They have to have an understanding of what you’re trying to do.”
Bowman and his team created the strategy for Crawford within his first 100 days. They also mapped out what they called the storyboard, which was a breakdown of what they were trying to create in their overall strategy.
“Do you know all of the constituent chapters within the storyboard?” Bowman says. “Does it match the strategic goals we’ve set from the group point of view? Don’t overengineer it. Make sure the execution over a one-year or three-year goal is possible. It’s like MapQuesting something — you start somewhere, and you have an end-direction of where you want to get to. Your vision becomes your destination.”
Another key to creating your plan and map for getting there is to make sure you clearly define what you’re saying you want to do.
“You can wordsmith sentences that become ambiguous,” Bowman says. “What you have to do is create a series of effectively executable plans that are then absolutely easily translated.”
For example, you might say something such as, “We’re going to increase sales around the world,” which is a very wide open statement.
“Increase is a good word,” Bowman says. “Sales is a good word. Around the world? What does that mean? It has to be more defined than that. What’s the marketplace? What is the product we want to grow? That’s where a lot of strategies have to be planned in the sessions that you do prior to laying those strategic plans out.”
Once they had set a three-year plan, he put it up on Crawford’s website, which may not seem like a significant thing to do, but for this company, it was.
“The strategic plan was a very interesting part of it because No. 1, the company had never really communicated with its employees what the strategic plan was,” Bowman says. “We created that within the first 12 weeks, and then we put it on our website, so not only did our clients see what the strategy was, our employees did, our investors did, our bankers did and anyone else did — and our competitors did, and I think that was a very good thing.”
Even in having finished creating it, he knew he would have to continue to refer back to this plan and storyboard as he moved the organization forward.
“A strategy document is a living document,” he says. “Events change, and you have to change an organization to implement the goals.”
Once he had an overall plan in place, Bowman then had to create goals that would both advance the organization but were also achievable so he could hold people accountable to meeting them.
“The biggest issue is taking it and translating it into executable goals,” he says. “It’s a very simple process with a strategic plan. You make people accountable for the results that come out of it. That’s by spending a lot of time understanding the benchmarks that we talked about and making sure that it’s a sensible plan, and it’s not an academic exercise. There are a lot of strategic plans that are more academic than they are practical. We’re looking for accountability. We’re looking for results. If you have a script and a way you’re working, then people are much more inclined to follow that journey.”
One of the things that Bowman and his team spent a lot of time doing was dissecting the number of goals that were achievable.
“You can put down lists and lists of goals — you’re not going to achieve all of them,” he says.
They look at which goals are most important, and they make that distinction by looking at them as they relate to the vision and mission.
“You then link that to the goals you’re trying to achieve,” he says.
There had to be consistency in terms of strategy, financials and the objectives that they were trying to achieve.
Another element of this process was Bowman had each country leader prepare an initial budget and objectives, and those went up to regional reviews. After that, they went to the head office, and he and his team would go through those to make sure there’s a link between what the company is trying to do at a corporate level and what’s going on in those regions and make sure they eliminated duplications around the world.
For example, as part of the efforts to eliminate the technology silos, Bowman appointed a global chief information officer for the first time in the group’s history. Previously, there had been an IT director in the United Kingdom, United States and Asia-Pacific. Before this, they may have only talked once a year and were each doing their own thing. By creating one head position, it would eliminate those duplicate efforts and put the whole company on the same IT strategic road map.
Bowman also made sure to hold people accountable to meeting goals. Just as the board of directors rates his performance each time he announces the quarterly results, he needed to do the same for his people.
“Make sure people understand what they’re accountable for,” Bowman says. “They do things that they understand much easier than things that they don’t understand.”
The key to doing this effectively is using data to help you determine what’s best for them to focus on.
“The world we live in, you get swallowed up in the amount of data you’ve got,” he says. “You have to cut through and say, ‘What is the important data that you’re going to measure people on?’”
He says you have to decide what’s important and track that. Crawford creates a lot of dashboards and produces a lot of analytical information to make sure it’s using its assets in the best way.
Bowman also uses financial incentives to make sure people stay on track. He put a compensation program in place for senior management, which went a long way in the organization. In this plan, 20 percent is based on the group, 60 percent is based on their division and 20 percent is based on their personal performance. By dividing their incentive up in this way, it causes them to look beyond themselves. As a result, he sees more cross-selling among divisions.
“It effectively brings in an approach where people are interested in what’s going on in other divisions,” he says.
Aside from silos breaking down, Bowman has seen other clear changes in Crawford over the past three years.
“Nobody gets frightened about strategic planning,” he says. “People understand what they’re accountable for. It enables us to do more detailed return on investment calculations, understand areas that we need to manage better and where we need more urgency.”
Crawford did struggle as many of its clients suffered through the recession — one whole unit depends on workers’ compensation claims, and with 9 million people relying on unemployment benefits, that area certainly took a hit. But despite those challenges, it has gotten through well. While revenue went up and down during the recession, total revenue has grown overall from $1.05 billion in 2007 the year before Bowman took over to $1.11 billion last year. As the organization looks forward, it will continue to tweak its strategic planning to ensure it stays on track and doesn’t get stuck in the past.
“The thing about a strategic plan is it’s a living document,” he says. “You’re always looking at accountability and making it better. It’s a mindset.”
How to reach: Crawford & Co., (800) 241-2541 or www.crawfordandcompany.com
The Bowman file
What was your first job as a kid, and what did you learn from it that still applies?
I worked in my father’s engineering company handling payroll. I was 15. It wasn’t a huge company. I played soccer and that was one of my passions. [I learned to] work hard and keep your nose clean.
As a child, what did you want to be when you grew up?
Professional soccer player. I nearly got there. That was still my passion.
What’s the best advice you’ve ever received?
I’ve had quite a lot of mentors — I have a father who was an engineer and things were very straightforward, as most engineers are. There’s a logical approach to it. His advice to me was make sure you understand and communicate with people in the right way.
During my business life, before I got into the insurance industry, I worked in a couple of different industries. I worked in the record industry. … My age comes out here. ‘Saturday Night Fever’ and ‘Grease’ — I was involved in those, managing the distribution of the records. I had a boss at that time who was a northerner from the United Kingdom who was probably the most frightening individual I’ve ever worked for, but he was the most direct, he was the most honest, and he told it to you exactly as it was. What I think a lot of people don’t like these days is they don’t like being told the truth, and this guy managed me with a steel fist in the organization and taught me attention to detail, and that was a really big thing from my point of view. That stayed with me. Read it properly. Understand it before you say something.
When Mark Leuenberger was considering integrating GPS technology into part of Cox Enterprises Inc.’s 13,000-vehicle fleet a few years ago, he was looking at it from a customer service improvement standpoint. But in doing so, he discovered a way for the fleet to be more environmentally friendly, as well.
“As part of collecting that data, we monitored idle time, and that’s really where it came up, and we had a real opportunity to reduce our carbon output and create a fairly large green initiative with that,” says Leuenberger, assistant vice president of supply chain services and fleet management.
He saw that many of the drivers were idle more than they were driving, so they implemented GPS technology into 5,000 vehicles that sends alerts when the vehicle has idled too long and shuts it down. This encourages employees to finish paperwork up in the home instead of in the vehicle. They also implemented a new routing system that leads the trucks on tighter routes, which reduces the mileage and the amount of time the vehicles are on the road.
“Telling your techs where to go next and how to get there really has an impact on our green initiatives,” he says.
As a result of these initiatives, the drivers were able to reduce idle periods by as much as 84 percent, depending on the market. The new routing system reduced mileage by about 15 percent. On top of these reductions, Cox was able to reduce its fuel consumption about 8 percent, and it has reduced the overall fleet size by about 400 vehicles over the past few years, because not as many were needed anymore as a result of the efficiencies created.
One of the biggest things he says you have to keep in mind when rolling out new green initiatives is communication.
“Start communicating long before you implement the initiative,” Leuenberger says. “Prepare people for its coming and the why component of that communication is extremely important. You definitely want to lay out that this is going to be advantageous to you.”
For Cox employees, the changes gave them the ability to perform more work, which meant more money in their pockets. Additionally, it was simply the right thing to do.
While these are great reasons to make the changes, he says it also comes down to costs.
“It has a positive impact on vehicle repair costs and vehicle wear and tear,” Leuenberger says. “All that behavioral changing, all that doesn’t just save us the amount of fuel we burn. It has impacts in all these different areas, so you really want to communicate all the different areas of the job or the company where it has a positive impact.”
He says if you want to make green changes, you have to look at what the cost and return is.
“The biggest challenge is financial,” Leuenberger says. “You’re obviously not going to put in big components that have a negative impact.”
Another big key to implementing a greener fleet also comes down to leading by example. Cox has one of the largest executive fleets in the country with more than 600 vehicles and quite a few more on a cash allowance for driving their own vehicle. All of the cars in the company fleet must meet a minimum of 27 miles per gallon.
He says, “The company cars that are driven by everybody from our chairman all the way down to direct levels are fuel-efficient vehicles.”
How to reach: Cox Enterprises Inc., www.coxenterprises.com
Find a plan that fits you
By Mark Scott
You can make a difference in the environment even if your business does not have a fleet of thousands of vehicles taking the road each day. That’s the message from Jason Mathers, project manager for the Environmental Defense Fund. The nonprofit organization helps businesses find solutions to environmental challenges.
“Anything an employee is doing for the company on behalf of the company, the emissions associated with that are part of the environmental footprint,” Mathers says. “Just because you’re not able to easily track something doesn’t mean it doesn’t exist.”
Figure out what impact your company does have in terms of the number of vehicles you put on the road and how much they are used. Encourage your employees to be better drivers by not speeding, idling or hauling unnecessary weight in their vehicles.
“You’re talking about vehicle efficiency and routing, driver behavior and all these things that have a very significant return on investment,” Mathers says.
If you do have fleets, look at the vehicles you have and whether a more fuel-efficient model could do the same job.
“If you can take a modest step over your entire fleet, that can add up to a significant impact,” Mathers says.
How to reach: Environmental Defense Fund, (617) 406-1806 or www.edf.org/greenfleet
“Sometimes spending some money with your accountant to sit down and examine aspects of your business produces some large returns because sometimes there are some things that are happening that have gone for many years and the owner can’t see it because he or she is not objective,” says Mike Dubin, Philadelphia office managing partner for McGladrey & Pullen LLP.
Building a strong relationship requires ongoing communication and interaction.
“They have to have a relationship beyond just the business meeting,” says Don Misheff, Northeast Ohio managing partner for Ernst & Young LLP. “The presence of the informal relationship and informal interaction enhances the ability to have a working relationship beyond merely a formal relationship.”
Misheff says your accountant has to have a thorough understanding of your company’s culture and long-term business strategy. Sharing as much as you can about these helps enhance their ability to serve you.
Another way to build your relationship with your accountant is to approach tax planning as a year-round process instead of a once-a-year necessity.
“Tax planning is important throughout the year, and too many times, we don’t get to tax planning until the end of the year or we don’t get any at all,” says Donny Woods, president of the National Society of Accountants.
He says they look to the accountant to pull off some kind of miracle, and Steve Christian, managing director of Kreischer Miller in Philadelphia, agrees. He says he prefers having monthly conversations with clients, but at the very least, tax planning should start in the fall.
“That’s when all the planning and taking advantage of opportunities takes place,” Christian says. “After you get past the first of the year, when you get into the preparation phase, really all you’re doing is keeping score because any actions you had to take were during the previous year.”
Meeting with your accountant throughout the year to share projections and goals can help the two of you game plan to maximize opportunities and minimize taxes.
“Coming full circle, minimizing taxes enhances cash flow,” Christian says.
How to reach: Ernst & Young LLP, www.ey.com; Kreischer Miller, (215) 441-4600 or kmco.com; McGladrey & Pullen LLP, (215) 641-8600 or mcgladrey.com; National Society of Accountants, (800) 966-6679 or www.nsacct.org
As the world slowly moves out of the great recession, banks are starting to lend more, but they’re still cautious. The best way to ensure the financing your business needs is to work with your accountant to make your organization more attractive to lenders, which starts with good business planning.
“All organizations should have a business plan — their road map of what they’re going to be doing in the future, especially a new business or an immature business,” says Carol Scott, vice president of business, industry and government for the American Institute of Certified Public Accountants.
Having a plan is critical to convincing someone to loan you money, whether it’s a bank or a venture capitalist.
“If you’re looking for financing, you have to make the business case that, ‘I have a good plan for running this business, and I have a good plan for repaying you,’” Scott says.
Planning also makes you look more put-together. Steve Christian, the managing director of Kreischer Miller in Philadelphia, says lenders don’t like surprises.
“Know your needs in advance,” Christian says. “Don’t call your lender a week before you need something, because it’s just evidence that you’re not the greatest planner in the world.”
Christian says to also be upfront with your accountant and lender about both the good and bad in your business.
“A lot of owners aren’t engaged in communicating bad information to the lenders for fear of the unknown, but actually it increases your credibility with the lender,” Christian says.
In addition to planning, demonstrating control is critical for impressing lenders, according to Mike Dubin, Philadelphia office managing partner for McGladrey & Pullen LLP.
“The last thing a banker wants to see is that the stewards of the business — and that could be the president, owner, CFO or COO — don’t have control and don’t have understanding,” Dubin says. “The minute there is a suspicion that there is a lack of control or lack of understanding what’s going on or a lack of full knowledge to exactly what’s taking place in the business, that’s the first thing that will turn off the banker.”
Dubin suggests setting up Sarbanes-Oxley-type controls for your organization, even if you’re private. For example, having segregation of duties decreases the likelihood of fraud in the business, and lenders notice those things.
“What makes lenders feel good is making sure that the control environment works properly, and accountants certainly have the skill set to be able to help owners do that,” Dubin says.
Another way to increase your chances of getting funding approval is to have accurate, professional financial statements.
“What turns off a banker immediately is when there’s a company that has internal financial statements that appear to be not professionally produced or appear to not be correct or may not be complete,” Dubin says.
This is where a reputable accounting firm can help you look more attractive to lenders.
“Dealing with the right accounting firm adds credibility to the financial statements and to ‘the ask’ — whatever it is you’re asking for,” Christian says. “It’s incredibly important to engage a reputable, well-respected accounting firm because they can assist in better terms, better conditions, and it adds credibility.”
Donny Woods, president of the National Society of Accountants, agrees but says, like with approaching lenders, to give your accountant a few weeks’ notice to prepare financial statements.
“You can’t just walk in and say, ‘We need these financial statements tomorrow,’” he says. “We have clients who will do that and think all we have to do is push a button and print report, and it’s just not quite that easy. … When you are doing financial statements, you don’t need to be rushed. You need to be able to have time to consult with the client to make sure that the information you are including is correct and there’s some analysis that has to be done, and it can be time consuming.”
Beyond these things, your history is important when it comes to getting financing, as well.
“They need to watch their cash flow and make sure they pay their bills on time,” Woods says. “They need to have a good payment track record. Those are the things that lending institutions are looking at.”
Scott says you also have to demonstrate the strength of your customers to lenders if you want to get financing.
“You have to have strong customers to have a strong business,” she says. “You could sell product all day long, but if your customers that are buying the product are not in a good position, you’re not going to collect your money.”
How to reach: American Institute of Certified Public Accountants, (888) 777-7077 or www.aicpa.org; Kreischer Miller, (215) 441-4600 or www.kmco.com; McGladrey & Pullen LLP, (215) 641-8600 or www.mcgladrey.com; National Society of Accountants, (800) 966-6679 or www.nsacct.org
“When you’re looking for cash flow management, you’re trying to control the things that take up your money, which would be accounts receivable, accounts payable and inventory,” says Carol Scott, vice president of business, industry and government for the American Institute of Certified Public Accountants.
It may seem like a basic business concept, but Donny Woods, president of the National Society of Accountants, says you’d be surprised how many people don’t take business basics seriously.
“A lot of folks spend money, but they don’t pay attention to their financial statements, or they don’t pay any attention to their cash flow analysis they should be getting on a daily basis,” he says. “They just spend money. Unfortunately, then when they get to the accounting, we find that they’re in real trouble.”
To avoid getting your business into a situation like that, start by creating a financial plan.
“Good planning is the best thing you can do for any cash management policy — knowing what your bills are, having a budget, having a forecast and planning things out to know where you are at any point in time is very important,” Scott says.
With your accounts receivable, it’s important to process invoices daily — the sooner you get the invoice in the mail, the quicker it’s in your clients’ hands and the faster you receive your money. Aggressively pursue past-due accounts, and if you don’t have a credit policy or collection policy in place, work with your accountant to create these.
“[The] squeaky wheel gets paid, so having a very aggressive pursuit at past-due accounts is important,” Scott says.
When it comes to your accounts payable, you want to hold on to your money as long as you can. Scott suggests negotiating favorable terms with your vendors.
“If you can negotiate terms like ‘30 days after receipt of goods,’ it’s more advantageous than ‘30 days from shipment day,’” she says. “Looking at what you can negotiate with your vendors is good.”
Another key to good cash flow management is monitoring your inventory levels. She says it’s important to find a balance so you’re in a just-in-time mode.
“You don’t want much of it, because it sits on your shelf and doesn’t earn you money, but you don’t want to have too little of it because you don’t want to lose sales,” Scott says.
When it comes to cash flow, you also have to keep great records.
“A lot of people write checks and give you nothing but the name of the payer or payee and the amount, and they don’t give you any information about that check,” Woods says. He says you can never give your accountant too much information.
“They should be keeping not only a good check register, but they should be keeping receipts, and a lot of clients don’t do that,” Woods says. “Particularly, smaller clients view the check as the ultimate record. That is not the ultimate record. The ultimate record is the receipt. That is the proof. That is the information about what took place in the transaction.”
Beyond just keeping track of your receipts, Woods says you have to makes notes about what those receipts are part of in the bigger picture.
“Those receipts are not self-explanatory,” he says. “If I get a utility receipt, I know what that is, but how about if I get a receipt from someone for supplies? Maybe all it says is supplies or it’s a service of some kind, and it’s not readily identifiable on the receipt what kind of service is.”
He says this is particularly problematic when it comes to companies using consultants, contractors or freelancers. Companies may submit receipts for these services, but he needs far more information, such as is that person incorporated or not? That determines whether or not he issues a 1099 form to them at the end of the year.
“Those are the kinds of things I have to educate the client about so that we can make sure that they comply with all the federal regulations and state regulations,” Woods says.
While creating a better cash flow comes down to a lot of internal practices, Scott says it’s also important to watch external factors and plan for how it could affect you internally.
“You have to do alternative scenario planning,” she says. “What happens if this happens? What happens if that happens? Staying on top of what’s going on in the economy in general is very important because there are unforeseen things that could happen.”
For example, right now energy is very expensive, and that will ultimately affect your cost of goods because your vendors will have higher shipping charges, so staying on top of the economic outlook is crucial. The AICPA provides a quarterly economic outlook survey that can help you with that.
As you look at all these different factors, it’s important to not try to figure it all out on your own. Instead, use your accountant as a resource to help you navigate these waters.
“They should be asking what are the best practices in various companies that their accountants see as far as days in receivable, collectability, inventory management, those types of things — what are best practices that they can follow?” says Don Misheff, Northeast Ohio managing partner for Ernst & Young LLP.
He says it’s not necessarily a daily discussion you should be having, but the experts agree that it’s not a once-a-year conversation either. Depending on the size of your organization, it could range from monthly to quarterly to even semiannually. By having these conversations and seeking out expert help, you can improve your cash flow and, ultimately, your business’s overall strength.
“Cash flow is the lifeblood of any company,” Misheff says. … “Cash flow and cash management — the companies that do it great survive tough times. During a recession, you see the good ones strengthening their balance sheet with cash reserves and managing debt levels.”