While the challenges brought on by the pandemic were and are different across organizations, one thing remains consistent for every organization: strong leadership will be required to guide us into a post-pandemic business world.
Being a broad and buzzworthy topic, leadership advice can often get bogged down with redundant details and an overload of proposed tasks. Rather than listing out potentially arbitrary business leadership tips, we’ve prioritized 4 areas specific to leading your organization out of the pandemic as we return to some sense of normalcy. 1 . Embrace Flexibility One of the biggest lessons of the pandemic is just how crucial it is for your organization to remain flexible and be able to pivot due to unforeseen circumstances. The pandemic forced businesses across the country into dire decision making, from difficult employee cuts to severing office leases and potentially closing their doors. These circumstances have also shown us that flexibility is more important than ever. This may mean supporting your employees’ needs to work differently if your business allows for it. Properly supporting remote work takes an investment in the tools and protocols that will promote efficiency while retaining company culture and collaboration. Remote work comes with its fair share of pros and cons, ranging from saving costs to missing out on in-person collaboration that can’t be fully replicated through virtual tools, according to Fortune. While some companies have opted for relegating some of their staff to remote work or even hiring international remote teams, you may find a hybrid work model to be an ideal solution that allows for remote flexibility while retaining some of the benefits of in-person work. Keeping a pulse on your employees’ preferences and productivity will allow you to evolve most effectively. Every team functions differently, so finding the right balance between remote work capabilities and in-office collaboration is key. 2 . Prioritize Mental Health According to Forbes, a CDC survey from 2020 found over 40% of respondents indicating conditions such as depression and anxiety. While mental illnesses are nothing new, our growing knowledge and sensitivity to them certainly is. And the pandemic has only further exposed these underlying conditions in much of the American workforce. Leading your organization out of the pandemic will require sensitivity to your employees’ mental health needs that have likely been exacerbated by the pandemic and quarantine conditions. In addition to reviewing your work flexibility as mentioned above, you’ll want to revisit your benefits and resources for employees including:
Addressing and accounting for mental health goes beyond added benefits and well into establishing a work culture of openness and acceptance. Leadership must set a tone in the work environment that encourages employees to attend to their mental health wellbeing. Employees will be more likely to take advantage of the resources and offerings in a work culture that rewards taking care of oneself. 3 . Promote Transparency Uncertainty has been the theme of the pandemic and likely a word you’re tired of seeing. However, we’ve never seen this level of uncertainty, especially with regard to business operations across all industries. When moving forward into the post-pandemic world with your team, it will be of utmost importance to keep everyone aligned and informed. Decisions and directions may be up in the air, and proper communication will go far in retaining talent and ensuring high morale. Remaining transparent is one of the 6 Small Business Management Tips we’ve discussed before, and for good reason. Encouraging your team members to come to management and leadership with problems can lead to quicker solutions and more proactive decisions. Providing clarity with effective internal communication is foundational in maintaining a workplace culture built on trust. 4. Leverage External Resources to Drive Better Performance You may be moving into the post-pandemic world with a much different organization than that with which you entered it. Roles may be combined, duties may be shared, talent may be difficult to find and leadership voids may need to be addressed. This is a challenging environment in which to operate and it can seem overwhelming at times. We’ve discussed how Fractional Leadership is a predicted business trend of 2021. The benefits of fractional leadership are numerous, especially in times of uncertainty and change. You can supplement your team’s needs with highly-skilled cost effective fractional resources, far greater than you might be able to afford as a full-time resource. These resources can be accessed in accounting & finance, human resources or operations. Trying to ramp your operation back up to accommodate growth or find a new key leader can be extremely challenging today. Being able to access talent on demand, attract new talent and develop the talent you have is crucial to your organization's future success. Often turning to a firm like Lauber can help you accomplish this much more quickly and effectively than trying to do it all yourself. We are dedicated to providing critical talent and developing talent for organizations to help them be successful. Providing Services to Small and Mid-Size Businesses Since 1986 Lauber Business Partners provides services tailored to small and mid-size organizations. We’ve been consulting with organizations like yours since 1986, and our services include: Human Resources Finance & Accounting Coaching Executive Search Nonprofit Management Growth Planning Recovery & Rebuild Services Recruitment Process Insourcing Contact us today at 414-273-8060 or info@lauber-partners.com to see how Lauber Business Partners can help your small business grow and succeed.
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Mind chatter defines the barrage of thoughts we face each day. Some of these thoughts can serve us, some can sabotage us. Where we choose to focus our attention has significant implications for both performance and happiness. Positive Intelligence: Fitness for the Mind The capacity to respond to work/life pressures with a positive rather than negative mindset requires a Mental Fitness Routine, much like a physical fitness routine, to heighten Positive Intelligence (PQ). PQ measures the percentage of time that your brain is working positively (serving you) versus negatively (sabotaging you). PQ is based on groundbreaking research by Shirzad Chamine, Stanford Lecturer and author of New York Times Bestseller, Positive Intelligence. His work integrates Positive Psychology, Neuroscience, Cognitive Psychology and Performance Science to help individuals and teams achieve their full potential and achieve the following outcomes:
Many of us have experienced amazing insights by participating in various professional development opportunities in the past. We may feel energized and motivated to implement changes immediately, and most of us struggle with how to go about making those changes actually happen. The challenge, as Chamine points out, lies in the fact that it takes 20% insight and 80% practice to achieve sustainable change. See our webinar below. Lauber Professional Coaching Services With a Lauber Coaching Engagement, participants can Expect to look up from their day-to-day responsibilities and reflect on their performance in a confidential, non-judgmental environment. More than a series of open-ended questions, the Coach will bring skills of reflective inquiry and challenging feedback - based on current research about sustaining desired change.
At Lauber Business Partners, we understand what it takes to deliver exceptional Coaching services that will significantly impact your bottom line. If you want to learn more about how your organization could benefit from Lauber Coaching, please contact us by email info@lauber-partners.com or by phone 414-273-8060. Additional Resources Unravelling the Confusion Around the Word...Coaching Alignment and Succession Within a Family Business 2020 was an unprecedented year for the world, and no business industry of any type could escape its impacts. 2021 almost feels just as uncertain, but we see glimpses of normalcy on the horizon. As we approach the end of Q1, certain themes and trends are projected to take hold. In an article published by Recruiting Daily, President of WorkSmart Systems, Inc. Matt Thomas laid out six predictions for what would become HR trends in 2021. One of these six predictions was the growing need for fractional executive leadership. What is Fractional Leadership?A fractional executive’s role is to fulfill their management duties while on a flexible or part-time basis. This can range from a few days a week to a monthly basis, as needed by the organization. While the position may not be full time, the experience and decision-making of a traditional executive is still required for success. Depending on the situation of the organization, a fractional executive will have specific, timely priorities, often targeting key performance indicators (KPIs). Serving as an ongoing member of the management team, a fractional executive provides a hands-on approach to move the business forward, both financially and organizationally. Ideally, this position should free up other team members to focus on the areas in which they provide maximum respective value. Recommended reading, ‘4 Reasons to Consider an Outsourced CFO.’ What are the Benefits of Fractional HR Leadership for Small-Midsize Organizations? Fractional HR leadership tends to best benefit small to midsize organizations who require talented professionals to help them grow but who’s resources may be limited by either budget or staff capacity. Coupling this situation with an experienced fractional executive who understands the business, an organization can lean on the knowledge and guidance of a traditional executive leader while remaining within budget. A fractional HR Executive gets you:
As Summer Crenshaw, CEO of TalentNow, stated in the article, “The company gets the expertise of execs with less cost and helps prevent burnout for the executive grinding through the same problems daily. This trend that was accelerated by the pandemic will continue moving forward and begin trickling down throughout the company.” As we near the end of Q1, there is no better time to engage a fractional executive to propel your organization forward. Lauber Fractional HR SolutionsLauber specializes in providing leadership and guidance for small to midsize organizations amid stages of growth and change. Engaging with a Lauber fractional executive means tapping into our experience and proficiency in complex decision making. Our fractional executives are experienced in the core HR principles and practices. We’re not here to tell you what to do but to lead through action. We understand what it takes to help small to midsize organizations reach their goals.
If you have any questions regarding our Fractional HR or any of our other quality Lauber services, please do not hesitate to contact us today. Additional Resources Benefits & Value of Outsourcing HR Strategic Growth Planning for Small-Midsize Businesses [CASE STUDY] Organizational Leadership Challenges Whether it's a start-up struggling to scale quickly or an established small to mid-sized business with a long history, every organization can benefit from growth planning. Determining how to grow is often difficult to define unless you’ve got a well thought-out plan and an experienced team to lean on for insight. Here we provide a framework for identifying growth opportunities for your business and an execution system that helps ensure you perform against your plan.
Why Is Growth Planning Necessary?
Lauber Business Partners’ Growth Planning & Execution System Our 4-step process provides an effective execution system to conduct monthly reviews, adjust to new circumstances, measure progress and ensure accountability. When you partner with our team, you receive access to an experienced executive to facilitate this process from start to finish. 1. Understand - annual
2. Envision - annual
3. Plan - annual
4. Perform & Execute - monthly
Your Local Resource with a Proven Track Record of Success Lauber Business Partners and its experienced professionals have a proven track record of successful strategic growth planning implementation in Wisconsin. We’ve helped numerous small to mid-size businesses evaluate their growth needs and put into action the best plan of getting them to that next phase. Contact us today at 414-273-8060 or info@lauber-partners.com to learn how Lauber Business Partners can help your small-midsize organization grow and succeed. Additional Resources for Small to Mid-sized Businesses As it is with many things, we’ve come to know the meaning of coaching from our own perspective. If we drill down to the origin of the word, according to Merriam-Webster.com, the earliest use of the term, coach, referred to a four-wheeled horse-drawn carriage in the 15 th century and was later used to describe an educational tutor in the 18 th century.
It seems obvious in both cases, that the purpose of a coach is to assist with “transporting” someone from where they are to where they want/need to be. When we stop to consider how many different possibilities there are in how that assistance might be given…. it’s no wonder we’re confused! The WHAT of coaching provides assistance with reaching a destination/goal. The HOW of coaching takes multiple forms, refers to many types of professions (athletic coach, life coach, business strategy coach, wellness coach, executive coach, trainer/mentor coach, and so on), requires specific knowledge/competencies, and begins with a varied understanding about the process itself. Therefore, the commonality of coaching can be found in the WHAT while much of the confusion rests in the HOW. Communicating a clear focus and expectations at the start will help to minimize confusion. LAUBER COACHING is focused on:
What to Expect With a Lauber Coaching Engagement, participants can Expect to look up from their day-to-day responsibilities and reflect on their performance in a confidential, non-judgmental environment. More than a series of open-ended questions, the Coach will bring skills of reflective inquiry and challenging feedback - based on current research about sustaining desired change. And, while many participants have had prior experience with assessments, the Coach creates significant value by integrating in-depth assessment insights with practical steps for professional growth. Finally, when it’s clear that the participant would benefit, the Coach will share relevant knowledge or expertise as an alternative course of action, not as specific advice or a directive. While we may not have eliminated all confusion around the word coaching, we hope that we’ve clearly highlighted HOW we go about Lauber Coaching. At Lauber Business Partners, we understand what it takes to deliver exceptional Coaching services that will significantly impact your bottom line. If you want to learn more about how your organization could benefit from Lauber Coaching, please contact us by email info@lauber-partners.com or by phone 414-273-8060. As a company grows, it reaches important talent benchmarks where you need to break apart combined roles and put it place the specific expertise to take the company to its next level. HR in a growing company is normally one of these combined roles but as the needs of the company to build and develop its human talent grow, it is critical to bring in the expertise of an HR professional to put in place the proper structures and processes to facilitate this growth. Laying the groundwork for an HR role requires four steps: determining needs, defining roles, bringing in the right HR resource and setting expectations.
1. Determine the Needs of Your Organization What will help establish a successful HR function for your business? It seems like a straightforward question, but the reality is there are many factors that contribute to the growth and success of an HR role. Size, industry and work culture are just some of the variables that can determine the kind of HR solution that is best for you. According to a Lucidchart HR Strategy, assessing capacity is the first step to mapping out your HR vision. Is there any current staff who have the talent to focus on your organization’s talent growth? What are the fiscal and organizational limitations for your future hiring efforts? An HR solution is different for each organization, and defining the proper roles needed will be impossible without first looking inward and assessing your capabilities and requirements. 2. Define HR Roles After determining the short-term and long-term HR needs of your business, you should define the role of HR in your organization. Consider the specific responsibilities that will be best suited for an HR leader. From identifying and retaining talent to training and reinforcing company culture—creating a role from scratch is challenging, but if you build a strategic roadmap and structure of what your HR function will look like, you’re half-way there. Read, ‘7 Responsibilities of Human Resource Management.’ Common responsibilities of an HR leader:
3. Hiring the Right HR Person Recruiting an HR manager aligned with the company’s vision is crucial. They should have the expertise and keen knowledge for running an efficient HR department. Ask yourself these questions:
Future growth and scalability must be top of mind when defining the structure and roles of your HR department. Understand that you may not have all the desired positions filled right away when developing this function, so have a flexible plan in place for responsibilities to be divided up among your hires as appropriate. It’s perfectly acceptable to start with one HR hire and scale slowly to mirror workload. ' 4. Set Expectations Small-midsize businesses may require more hands-on leadership due to bandwidth and the work required for establishing a new HR department. It is important that expectations are set early on by leadership and then clearly communicated to the new hire. Your new HR leader will also need to establish goals and clearly understand the key performance metrics important to leadership for measuring the success of your organization. For example, employee turnover rate and workforce utilization rates are metrics that will give leadership a clear understanding of overall organizational performance. Be sure to set up 30, 60 and 90-day touch points with the new hire to enable feedback and the ability for course correction if needed. Alternative Options to an In-House HR Department The simple fact is that your small-midsize organization may not have the resources to implement a fully functioning HR department. Understand that you still have options to address critical HR needs for your business through outsourcing your HR function. Lauber Business Partners’ HR Services provides a flexible solution that brings an experienced professional to your business who has previously successfully built and managed the solution you are seeking. We are a team of HR experts with experience in virtually every facet of HR who provide practical solutions targeted at small and mid-sized organizations tailored to your unique needs. We can help you both build the structure and processes that you need and then serve in a fractional, hands-on role to help manage the activities required to make it work for your company. Contact us today at 414-273-8060 or info@lauber-partners.com to learn how Lauber Business Partners can help your small-midsize organization grow and succeed. Additional HR Resources for Small-Midsize Businesses Interim financial results are intended to give business owners and managers an ongoing picture of operating conditions. But there are common reporting mistakes that can distort that picture – mistakes that can lead to unpleasant surprises at the close of a company’s fiscal year. Here are 11 common mistakes we have seen include: 1. Not properly recording depreciation
Depreciation is properly recorded as a monthly non-cash expense. This includes depreciation related to assets acquired during the year. Failure to do so will inflate perceived profits on the income statement. 2. Failure to record assets purchased with a loan Failure to record assets when they are acquired is another mistake that can lead to reconciliation problems at year’s end. An example of this would be the purchase of a company car with a down payment. If only the down payment is recorded, the missing loan payable could lead to embarrassment when the bank analyzes your financial statements. 3. Improperly recording asset purchases as expense or the maintenance expense as a fixed asset addition Consider establishing a minimum capitalization policy, say $500, expensing all asset purchases below that amount. 4. Not splitting debt principle and interest into appropriate categories Payments on the principle should be recorded as a reduction in the liability while payments of the interest are an expense. 5. Not recognizing bad debts Bad debts are a reality for nearly every business. In accounting, they are considered an expense. How you record a bad debt affects the ability to write it off in accordance with IRS regulations. Waiting until year end to record write-offs distorts the interim financial picture and can lead to bad decisions. 6. Inventory valuation issues For companies that sell products, proper inventory valuation is important to provide a clear ongoing financial picture. This includes ensuring burden rates reflect current costs. Many companies base their cost of goods sold on the value of inventory remaining at the end of a period. If that inventory is not properly valued, a false picture can emerge. The situation can have a big impact on profits when inventory is valued based on a physical count at the end of the year. 7. Improper recording of project payments made in advance of delivery Long-term projects can present accounting problems when customer down payments are received but not properly recorded. If for example, a company requires one-third down before a project is launched, that payment should be recorded as a liability. The money can be moved into an income account as the work is actually accomplished to give a proper matching of revenue and expense. 8. Improper cutoff of revenue and expense figures at the end of a month It’s not uncommon for a company to record revenue for a product or service but not record all the costs. For example, costs still to come related to a completed contract. Revenue and expenses need to be properly matched at the end of the month to avoid misleading financial reports. Keep an eye on accounts payable processing, making sure that all items are properly recorded prior to closing an interim period. To ensure timely financial statements, estimates are OK for invoices that have not been received at the cutoff date. 9. Failure to accrue for once-a-year expenses like property insurance, officer life insurance, real estate and personal property taxes, etc It’s not uncommon for a company to record revenue for a product or service but not record all the costs. For example, costs still to come related to a completed contract. Revenue and expenses need to be properly matched at the end of the month to avoid misleading financial reports. Keep an eye on accounts payable processing, making sure that all items are properly recorded prior to closing an interim period. To ensure timely financial statements, estimates are OK for invoices that have not been received at the cutoff date. 10. Not accruing for bonuses, commissions, profit sharing and retirement plan contributions The cost of bonuses, commissions, profit sharing, retirement plan contributions and similar payments should be evaluated throughout the year and not solely at the end of the year. Ideally, such payments should be recorded on an accrual basis since, in effect, they are earned throughout the year. 11. Investigating only negative variances If results are too good to be true, they probably are. Investigate both positive and negative variations. NEED HELP? ASK THOSE WITH EXPERIENCE For many, the most challenging step in financial management is knowing where to start. For others, it’s merely maintaining the course. Small business owners’ financial decisions will impact the entire company and the people that are part of it; so it’s important to have the proper financial management systems in place to provide information to inform management when making key strategic and operating decisions. Contact Lauber Business Partners for help in guiding you through every step of the process and ensure that the financial decisions you’re making are best for both your business’s present and its future. Small businesses face unique financial challenges. Though no one understands your company’s goals better than you do, it's okay to lean on reputable consultants for industry best-practices and general advice. Here are six small business management tips that apply to all operations. Get the Right Team & DelegateYour small business needs your leadership. Keeping your head out of the weeds is crucial to operating and growing a successful small business. One of the best ways to accomplish this is by surrounding yourself with the right team members that handle the day-to-day so you can focus on higher level issues -- things like new business development, strategy, and other operations. Read more: ‘5 Tips for Building the Best Team for Your Growing Business.’ With team members who understand your goals, you can begin to strategically offload smaller projects. This is why clear communication is so key to executing strategic delegation; make sure your team members understand what is expected of them—specific deliverables, timeframe and purpose. Consider implementing a low-cost project management software to streamline tasks and hold employees accountable. Keep day-to-day tasks moving while you focus on steering the organization. Stay NimbleWhether you plan to expand operations over the next few years or not, a small business plan is advantageous by allowing you to remain nimble and pivot when necessary. The business world has changed exponentially over the last few years, with the introduction of new technologies and remote & hybrid work opportunities around the globe. While sustainability should always be prioritized, keep in mind that an open and communicative workplace culture will nurture creativity and innovation. Be open to new ideas, tools and opportunities; your new differentiator or avenue may be one brainstorm away. Unforeseen problems and opportunities will come your way no matter what, so try to avoid tunnel vision and embrace the change to promote growth. Remain TransparentOperating a small business relies on trust between you and your employees -- and transparency is a huge part of it. Keeping an open door and consistent dialogue with your team will keep everyone in the know as well as encourage employees to come to you with problems and ideas as they arise. Depending on your workplace culture, subjects ranging from financial health, expansion or staffing issues may be things to address directly rather than wait for rumors and misinformation to take hold. Navigating these sensitive topics appropriately can prevent costly employee turnover. Outsource When it Makes SenseFocus on what you know best. Operating a small business can take you to unexpected places, and sometimes those places come at the cost of operating outside your organization’s expertise. Don’t be afraid to bring in help when you are out of your area of expertise. Trying to do important things out of your expertise can result in costly mistakes. Additionally, these activities can distract you from focusing on things that can make your business more successful, like growing sales and developing new products and services. Whether you need a specialist, human resources team or finance & accounting services, proper outsourcing will keep your small business on track and you focused on larger goals. Goal Check OftenAs we mentioned, small businesses should pivot strategies when unforeseen roadblocks and challenges come up. It doesn’t happen overnight, but you may wake up to find your business has strayed far away from what you set out to be. Take the time to meet with leadership often to stay on track for meeting your goals. Having your goals top of mind will guide you when making important decisions that may alter your small business trajectory. Celebrate Your VictoriesAccording to US Labor Statistics, almost 50% of small businesses will close within five years of opening. So even just existing may be a victory for a particular small business. Running a business of any size is no small feat, and those milestones and victories, no matter the size, are important. Take time to celebrate these achievements and congratulate your team. Take time to reflect on the differentiating factors that contribute to your small business’ success. Providing Services to Small Businesses Since 1986Lauber Business Partners provides services tailored to small and mid-size organizations. We’ve been consulting with organizations like yours since 1986, and our services include:
Contact us today at 414-273-8060 or info@lauber-partners.com to see how Lauber Business Partners can help your small business grow and succeed. In a perfect world, your firm would find the best candidate and conduct the right executive search with ease. However, the reality is that the failure rate of executives at new firms is increasing. You know that making a hiring mistake without the right executive search firm can cost you time and your company direct and indirect costs. It’s a tough hiring market, but the process doesn’t have to be challenging to find the best candidate for your executive position.
What’s the solution? Choosing the right executive search firm. Here’s how you can do just that and reduce your hiring risk. What Are the Main Functions of an Executive Search Firm? When seeking out the right executive search firm, it’s important to first understand what these search firms provide for you and your company. Reputable executive search firms do the following:
Interested in learning more about flexible leadership options? Read, ‘4 Reasons to Consider an Outsourced CFO.’ Benefits of Using an Executive Search Firm Developing the right executive search for open positions is crucial, and the right executive search firm can save you time and potential losses by handling the search. Executive search firms serve as recruitment specialists and do all the behind-the-scenes work when it comes to hiring. Their approach is much more specialized and they work closely with clients to ensure they are recruiting only high-level and high-quality candidates with the skills and experience desired. The benefits of conducting an executive search with the right company are many: 1. The right executive search firm has access to a hidden network of high-performing professionals. Especially when companies have exhausted their list of network connections and referrals, calling in the right executive search firm to expand the list of potential candidates is beneficial. 2. When you do not have adequate in-house resources to conduct a high-level candidate search, the right executive search firm can save you time and money. These firms are highly skilled at reviewing resumes and CVs properly to identify whether candidates have the best skills and demeanor to lead within your organization. 3. It’s no secret that the implications of hiring the wrong person can significantly impact your organization, the overall morale and productivity. Leadership positions are too important to not invest in an executive search, especially when seeking C-suite positions. 4. It can be difficult to attract high-level candidates who bring diversity and knowledge to your company. With the right executive search firm, a skilled search team can help fill the knowledge gap and bring greater diversity into the top-level positions at your organization. 5. Experienced executive search firms thoroughly screen candidates to ensure that they have the drive and the skills to become long-term employees. Turnover is expensive, so putting more time and effort into an executive search can help improve retention and reduce that turnover. As a result, both your company and the chosen candidate can achieve long-term success. 6. Conducting an executive search discreetly is often a challenge when you are utilizing in-house resources. That’s why it’s critical that you choose an executive search firm that is reputable and can be trusted. Outsourcing high-level executive positions relieves you of workplace secrecy without giving up the trust and control. You get the opportunity to work with an impartial team who is aware of the qualities and skills you desire in a candidate. How Do Executive Search Firms Find the Right Candidate? While it is true that many executive search firms have an expansive database of qualified candidates, it is also true that finding the right candidate involves much more than scouring an existing network. The process of finding the best candidate and conducting an executive search involves:
Deep research is a necessity when conducting an executive search and that begins and ends with communicating thoroughly with clients to determine the qualities, skills and experience of the ideal candidate. What You Should Look for in an Executive Search Firm When you make the decision to partner with an executive search firm, selecting the right executive search firm may seem like a daunting task. Begin by creating a checklist of what you truly need from these experts. Consider these questions to narrow down your choices:
Another consideration when seeking the right executive search firm for your company is to determine which type of firm has a proven track record in your industry. Types of Search Firms Search firms are often classified as contingent or retained, with varying specializations. A search firm classified as contingent is only paid when a candidate is hired. In some cases, contingency firms can fill a position more quickly. Another type of search firm is one that is hired on a retained basis. For example, once you retain this type of search firm, you pay at the onset or at key points of each search, which usually results in a hire, although not always. Choosing the Right Executive Search Firm While it does take ample time to conduct a successful executive search, know that by choosing the right executive search firm, you will gain a return on your investment. At Lauber Business Partners, we understand what it takes to find, approach, and secure the right executive leaders to advance our client’s goals. If you have any questions regarding our executive search services or want to learn more about how your organization could benefit from a Lauber Business Partner, please contact us. The old business adage that “cash is king” seems more important than ever in this environment of significant economic disruption. While it’s always important to be in a good cash position, it’s more critical to understand the lifeblood of your business in these uncertain times. A 13-week cash forecast will help give you that understanding and put you in a more powerful position to make the most prudent business decisions. The forecast should be updated on a weekly basis, so you always have an informed outlook of the coming months. While a 13-week forecast is common and represents a reasonable time horizon, you can create a cash forecast for a different time period. The number of weeks you include is not as important as having a report that gives you a reasonably accurate picture of the road ahead. To begin you will need to identify expected cash inflows and outflows, as well as your beginning cash balance.Inflows normally include (allocate each of the inflows to the week when you expect the cash to be received): • Cash Sales • Accounts Receivables • Future Sales • Bank Loans • Rental Income • Any Other Source of Cash Outflows normally include: • Payroll • Payroll Taxes • Material and Inventory Purchases • Insurance • Operating Expenses • Note and Lease Payments • Fixed Asset Additions • Accounts Payable Other Significant Expenditures (including quarterly tax estimates and shareholder distributions). Items on the expense side are usually easy to identify and can be pulled from your monthly accounting records. Receivables are often less clear, and thus become the item in the forecast that is most challenging for a business to accurately project. A good approach to get a handle on these numbers is to create three categories.
Once you have projected when your receivable will be paid, you need to add in your projection of cash receipts from future sales. In some businesses, seasonal activity must be considered in the 13-week cash forecast. For example, a construction company may have rising payroll in the spring and the related collection of receivables several weeks later in mid-summer. Forecasting future sales should be done with the guidance of your sales management and then your cash receipt expectations can be applied to those sales forecasts. Why?The more challenging your cash position is, the more valuable this tool becomes. The insights from a 13-week cash forecast will not only help you better manage your business but also will be helpful when you need to communicate with your banker or other outsider. Let’s say you have a significant receipt due in Week 11, but your business will be in a difficult cash position prior to that. This tool gives you the ability to see what you might be able to shift on the schedule (on the receipt side or the expense side) to deal with the shortfalls. It also gives you the ability to proactively communicate your situation so that your creditors know what to expect. You will find proactive communications go a long way in gaining cooperation. Sample 13 Week Cash ForecastIt’s worth taking the time to establish the process. Once it’s set up, it’s just a matter of plugging in the current numbers. The report becomes even more powerful when you compare its estimates with actual inflows and outflows. With that actual data, you can adjust the report assumptions to increase accuracy. If you want a simple cash flow EXCEL model please e-mail Chris De Villers at cdevillers@lauber-partners.com . If you need help creating a cash forecast for your business or assistance with other financial matters, please reach out to us at info@lauber-partners.com. We have a team of experts that can help you immediately.
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