Your business’s most valuable resource isn’t the tools or equipment you’ve purchased over the years. It’s your employees. These talented individuals are responsible for pushing your business to new heights and with creating innovations that allow you to grow. Without a strong human resources team, though, you may not be able to get the most out of your employees. Your HR department needs to be one of the most effective in the business. If it’s not there yet, how can you build it up? One way of improving your HR team is to look at its responsibilities. If you understand what your HR team should be doing, you can determine if they are meeting these responsibilities. If they are not, you can work with them to develop processes that do. Recruitment and Retention Your HR department is likely responsible for a large portion of the hiring process. This includes advertising available positions, attracting qualified candidates, screening those applicants to create a short list, and then interviewing these candidates. It also may involve establishing relationships and working with recruiting firms. While parts of this process do require the HR team to work closely with the supervisor the new employee will work under, much of the work is shouldered by HR. That includes guiding the new employee through the hiring process and onboarding.Retention is another task in which HR can be instrumental. Once a smart, talented employee is brought in, how do you keep them? There are numerous ways to do so, but there are also some misguided ideas here, too. Your HR team, especially the HR leader, needs to know the most effective retention methods. This is not to say these responsibilities fall solely (or even mostly) with HR but HR has a responsibility to help the business and its leaders put in place elements leading to high retention. Relations and Business Culture Your HR team is responsible for fostering the strong relationship between you as an employer and your employees. Much of this connection can be driven by the company culture. Creating culture needs to be a very conscious process and there are concrete measures that can be taken to create it. It’s HR’s job to help build the company culture. While they are not responsible for determining what the culture is, they are key stewards in helping build and nurture it. Safety HR should assist in providing safety training courses and materials as needed. Often, this is the responsibility of each department, but HR should reinforce and supplement that training. They are also tasked with keeping reports of training, workplace injuries and fatalities and reporting them to the correct federal authorities. Even more important that the mechanics of safety is building a culture of safety. Safety is not just driven by periodic training. To truly be successful in terms of safety a company needs to ingrain safety into its very being and culture. Community Outreach and Social Consciousness HR is tasked with providing support to departments or employees who participate in philanthropic activities, including:
This community outreach also includes monitoring and influencing how the company is viewed socially. Many consumers/customers are now very conscious of how companies spend their money, how they affect the environment, and what they stand for morally. This can have a much larger impact on profits than many realize until it’s too late. HR can play a key role in advancing this element of the company. Professional Development One key factor in employee retention is providing employees with a path to advancement. That often requires employees to learn new skills and knowledge through professional development. These courses may focus on learning skills or new technology, or they may focus on leadership and communication. HR should put in place plans for employees to develop themselves in order to advance professionally. This includes understanding the different needs of the groups of employees in the company. Each group (i.e. baby boomers, Gen X, millennials, …) may have a slightly different view on how this should occur. Benefits and Compensation Your HR team, in conjunction with the business leaders, will handle employee compensation and benefits. This includes researching what compensation and benefits are offered by competitors and adjusting the company’s compensation structure when necessary. Benefits include a vast array of things today including — insurance plans, employee assistance programs, education assistance, wellness programs, affinity programs and more. Being plugged into the most compelling benefits can make a big difference in terms of attracting and retaining the best employees and the culture which is built. HR Expectations In today’s business world, HR teams have to be self-starters and take ownership of their responsibilities. Executives no longer hand down directives for HR teams on a regular basis. Instead, HR management has to develop their strategic plan, metrics, and evaluating tools to show executives that they are meeting the business’s needs and addressing strategic business priorities. Consider Outsourcing Certain HR Functions As you can see, HR has a full plate of responsibilities in order to be truly excellent and strategic. However, as a small to mid-sized business, you do not have to be and probably cannot achieve excellence in every area. Have you considered outsourcing some of your HR needs? While it may not be possible to outsource everything, there are many HR tasks that can be outsourced in order to achieve high levels of performance in each key area of HR management. Lauber Business Partners can handle this type of outsourcing. They can provide fractional, interim and project employees, including executives, for businesses that don’t need to or cannot hire someone full-time but are in need of assistance for specific functions/priorities.
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Accounting is a critical function of virtually every organization – from businesses to non-profits, governments, and civic organizations – all rely on the accounting process to measure financial health and performance and make informed decisions. Within the broader practice of accounting, there are specific areas of focus. In this post, we will examine the primary branches of accounting, the applications of each, and the value they provide to various businesses and entities. What is accounting? While accounting is a term familiar to most people, many are still unclear what exactly the process entails. Before delving into the different categories or branches of accounting, it is important to first establish a basic definition of the practice. The Business Dictionary defines accounting as “a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information.” Accounting helps organizations determine their profits, losses and cash flow during a defined timeframe, as well as determining the value of the organization’s assets, liabilities and equity at a point in time. Specific accounting functions include:
Financial accounting Perhaps the most standard form of accounting, financial accounting, presents a business or other entity’s assets, liabilities, equity, revenue and expenses via balance sheets and income and cash flow statements. Organizations typically employ a bookkeeper or staff of accountants to perform this function who utilize generally accepted accounting principles (GAAPs) as a guide in preparing and representing financial information. Managerial accounting Managerial accounting is essentially the expansion and interpretation of information for the purpose of informing and directing management operations. Managerial accounting focuses on things such as margin analysis, productivity measurement, product costing, variance analysis, trend analysis, forecasting and capital budgeting, among others. This information is often used in an organization’s goal-setting process, performance monitoring and trouble shooting. It is common to establish key performance indicators (KPIs) from various managerial accounting measures. This work is typically performed by staff accountants, management accountants and financial analysts. Tax accountingTo determine taxable income and tax liability, organizations rely on tax accounting. Accurate and effective tax accounting will help ensure that companies and other organizations comply with IRS regulations and avoid fines and penalties. This method also includes tax planning, through which organizations seek to reduce the amount of taxes they pay by being strategic in how transactions are structured. This work is typically performed by accountants with specialized training in taxation and, in some instances tax lawyers. The bottom line: value Accounting is an invaluable function within every organization, allowing for improved communication, more sound decision making, proactive planning and projections around profit and losses. The foundation of accounting is information – accurate and actionable financial information. With this information, organizations can effectively plan for and navigate both financial challenges and opportunities. Business know-how in accounting and beyond Lauber Business Partners is the go-to firm that small and mid-sized organizations turn to for help in solving their business challenges and achieving their goals. Our seasoned team of leaders and fractional CFOs offers deep expertise in financial management, human resources and talent acquisition.
Contact us today to learn more about how Lauber Business Partners can deliver value to your business. Business sustainability is often defined as managing the triple bottom line—where businesses attend to their financial, social, and environmental risks (sometimes referred to as people, profits, and planet). Today, sustainability is an issue faced by businesses of all sizes, as embracing sustainable practices leads to better corporate culture, happier employees and customers, and greater long-term profitability and brand proposition. While Human Resource Management teams are less likely to be involved in the creation of sustainable programs, they could play a quintessential role in the implementation of an effective, sustainable strategy. In this article, we will discuss why and how sustainability applies to HR, and conversely, how HR responsibilities and leadership can influence sustainability and corporate strategies. Sustainability—What is it, and Why is it so Important? Sustainability is increasing a company’s profitability by managing both the risks and opportunities of the economy, environment and social climate. Unfortunately, it appears that many leaders see sustainability as something “nice-to-do” rather than a “need-to-do,” despite their claim to prioritize it. Thus, sustainability in the work environment lacks leadership; there is not enough motivation for profit-driven executives to continually alter and conform businesses to sustainable practices. Sustainability affects every area of business, from how your employees see their workplace and feel about what they’re doing to what customers think and how they relate to you. Today, people care about what goes on behind closed doors; does this company genuinely care about people and the environment, or solely profit? Customers want to interact with a business that they feel is making a positive impact, and employees want to work for a company where they feel they are contributing to the greater good. That’s why sustainability is so intertwined with a company’s success. When it comes down to it, sustainability is a people issue. It’s all about what people are expecting from your business, and whether or not you prove to hold it central to your organization. Thus, sustainability is very much connected with HR, even though HR doesn’t necessarily need to “own” it. Human Resources must be woven into the fabric in developing a case for business sustainability, creating the organization’s culture and leading it to sustainable efforts. How Will Sustainability Affect the HR Profession? Sustainability is already changing the business climate—HR will play a more central role in it. Employee desires are changing; workers want to be somewhere that is purpose-driven and values sustainable practices. Sustainability can be embedded into recruitment, branding, engagement, training, and leadership, and HR professionals are the ones who need to implement and carry out those sustainable practices. How Might HR Influence Sustainability? There are a few ways that HR can be central to sustainability implementation and follow-through, such as:
Sustainable practices change how customers and employees view a company. Leveraging sustainability in company initiatives to engage, inspire, and connect employees can bring tremendous benefits in attracting employees with aligning values, increasing job satisfaction and retention, and appealing to and preparing for younger employees. Especially for the millennial generation, a sustainable business is an appealing business. The generation as a whole is looking to support organizations that do good, which impacts whom they go to for service and whom they look to for work. As HR permeates every section of a business and every person involved, they are the perfect fit for implementing and managing sustainability. Strong Human Resource support is among the most critical needs for businesses and organizations. For help evaluating your sustainability, contact the experts at Lauber Business Partners. One vital part of a company is its corporate finance function. These employees are responsible for raising capital, allocating it, and providing a strong foundation for a corporation to grow and expand. Without an experienced professional devising robust corporate finance strategies and determining the best way to allocate capital, these companies will have a difficult time advancing. Here is a look at the role corporate finance plays in a business and how it can maximize a business’s profits in both the short-term and the long-term. What Is Corporate Finance?Before understanding why corporate finance is important, it’s necessary to understand what it is. It differs from a company’s accounting in that it’s focused on capital allocation rather than on reporting a company’s historical performance. Often, particularly in smaller businesses, a corporate finance professional is a part of a company’s accounting team, but they are charged with evaluating investment opportunities and deploying capital. Accounting focuses on recording payments and income and reporting those financial transactions to management. Accounting oversees the business’s cash flow, general ledger, collections, and reports. The accounting team looks at what makes the business profitable, manages its debt, and makes the appropriate tax payments. They are subject to Generally Accepted Accounting Principles (GAAP) and regulations to report on the overall financial health of a company. Corporate finance, on the other hand, is less compliance oriented. Instead, it looks at how the company’s capital should be allocated and employed to maximize profits. It looks at capital structure and how capital allocation can be used to improve the company’s overall value. It’s also concerned with planning for how investors can exit the business and how they will be rewarded for their initial investment. The Chief Financial Officer is the executive who is normally in charge of both corporate finance and accounting. The CFO, along with other company leaders, creates the financial objectives and goals of the company. Generally, the CFO has employees who focus on specific tasks, including accounting, financial analysis, and budgeting. They also devise approaches to handling financial difficulties, including a lack of investment funds or the danger of running out of operating capital. Corporate finance focuses on the allocation of capital in conjunction with the risks associated with doing so. Capital investments are typically one-time, large purchases such as constructing a new building, purchasing a large fleet of vehicles or acquiring a new business. The finance professional has to decide if shareholders should receive dividends for their investments, if the business should seek additional investment (and in what form), and if its businesses are earning a return commensurate with its risk profile. Corporate finance professionals frequently speak in terms of return on investment, internal rate of return, net present value and cost of capital. Raising CapitalThe corporate finance team and the company’s CFO are responsible for raising capital to fund its business needs. This means that they need to research which investments are going to help grow the company and which aren’t. Making the wrong investments can lead to poor and even fatal results. Much of this process involves a delicate balancing act of raising money and investing it while still being in the black overall. Companies often take on extra debt during times of expansion, and the CFO has to make certain the business will be able to pay back this debt in the coming years. They also look at ways of raising money, including selling shares and borrowing money. Capital InvestmentsOnce capital is raised, the corporate finance team is charged with determining, along with management, where it’s invested. This includes determining how to invest in fixed and working capital. Fixed capital funds are used to purchase equipment, real estate, and tools. Working capital, on the other hand, is the money a company needs to have on hand to operate. This includes the money needed to pay employees, purchase inventory, and operate its day-to-day operations. A Key Part of a BusinessA business’s corporate finance team is one of the vital parts of any business. It provides key information used to make financial choices, grow the business, and keep the company stable. At times, however, an external point of view and expertise is needed. That’s where Lauber Business Partners come in. If you are trying to grow your business or are in distress Lauber Business Partners is here to help you evaluate your financial choices, many of which are driven by understanding your return relative to your investment. Please reach out to us at (414) 273 – 8060 or via e-mail at info@lauber-partners.com.
Human resources professionals have a more significant role in businesses than recruiting talent and handling internal activities, such as payroll. They are instrumental in creating and maintaining the culture of a workplace, and, in that way, they shape the code of ethics that a business follows. Maintaining a definite code of ethics is appropriate for both employees and customers, and it creates goodwill on all sides.
An organization’s culture can be the strongest predictor of how much money it will make because a company with a good business culture is able to consistently retain employees and satisfy customers. Practicing good ethics is a vital part of conducting good business, and this simple fact is being emphasized more and more as companies realize its benefits . There are four ingredients which serve to make up an ethical workplace: compliance, fairness, trust, and an ethical self-concept. Most companies fall into one of three different workplace models: compliant ethical, positive ethical, and virtuous ethical. Compliant ethical businesses promote the minimum ethical standards which are required by law, and their sense of responsibility toward ethical conduct is limited to what the law specifically requires. Positive ethical businesses attempt to go beyond the bare minimum and actively seek to promote a positive workplace culture whenever possible. Virtuous Ethical Businesses make justice, and social responsibility their priority, and they make a point of holding themselves to the highest possible ethical standards. Also, each of these models implement the four ingredients of an ethical workplace in different ways. Compliance consists of the norms, values, and ethical expectations an organization sets. These may be backed directly by laws, or they can be an expression of a business founders’ moral preferences. They must be expressed, however, in terms that employees can understand and use within their daily activities. It should be made visible how compliance standards safeguard the company’s mission and benefit employees so that employees will be directly motivated to follow them. Merely doing the bare minimum in terms of compliance will not motivate employees, and this could, in fact, contribute to the creation of less ethical workplace culture. Fairness involves the perceived justice of the policies and practices that affect employees and their work. When employees feel that they are being treated fairly, and when customers feel that a company’s policies are just, trust in the company can be built over time. This trust is built through the way in which decisions are made, how information is shared, and how people interact with the company, among other things. Respecting customers and employees is essential in terms of building an ethical workplace and taking the time necessary to demonstrate that respect is beneficial to everyone involved. Trust, specifically motive-based trust, is based upon the assessment employees make about the ethical character of people they interact with at work. These individuals can be coworkers, bosses, or customers. To maintain trust, people must actively work to foster it. They should be willing to listen to criticism, to admit and take responsibility for ethical mistakes, and to take corrective action when necessary. Managers and leaders should also be good role models for other employees by demonstrating principles that encourage trust because the positive effect of trust translates throughout all of a company’s functions and various undertakings. Success can be measured by the degree to which employees make the ethical values of the organization part of their own daily lives within the company. Organizations should promote the idea of internalizing the company’s positive moral values. Each company has different ways of doing this yet encouraging ethics can be as simple as giving employees easy ways to remember the values they should promote. This can be achieved using abbreviations or acronyms that help employees remember concepts, specific goals that they are expected to reach, or anything that brings together people’s aspirations and the various aspects of their work. With all this in mind, human resources professionals should seek to foster a balance between the ethos, or ethical climate of an organization, and the ethics that the company wishes to promote. These two things should, ideally, always go hand-in-hand, and, consequently, they should also have a reciprocal relationship. The ethos of a company results from the ethical behaviors of its people. Ethos and ethical behavior should reinforce one another within a workplace culture. Human resources professionals, therefore, should strive to help ensure that everyone in a company feels valued, as well as mediate disputes in a way that is consistent with the company’s positive values. These professionals should guard and champion the company’s ethics. They must protect people from inappropriate conduct in order to help their workplace flourish. They should make sure that people’s rights are respected, as well as that they are treated with dignity and fairness, in addition to ensuring that all employees have ample opportunities to contribute to the accomplishments of the organization. Over time, the standard for company ethics is shifting from a mostly compliance-based approach to one that includes the enhancement of a company’s culture. Human resources professionals realize that a company’s most significant resource is its people and holding a high ethical standard for the sake of those people is key to effective leadership, both inside and outside the company. At a time when many people don’t consistently trust companies to do the right thing, showcasing positive ethics is the best way for a company to enrich itself and provide security to its customers. It all starts with human resources, but it doesn’t end there, and sustaining an ethical culture within an organization is an ongoing process. Lauber Business Partners can assist you in defining your code of ethics, designing policies and programs to help employees live the ethical values of the organization, and measuring adoption of these values. We can also help select the right tools to ensure candidates are evaluated against the organization’s ethical values. Owning a small business isn’t easy. From the myriad challenges unique to start-up entrepreneurs and other Small and Medium-sized Enterprises (SMEs), few are more pressing than financial struggles. One of the most common, and stressful, financial concerns is cash flow management. In this article, we will evaluate a few major contributors to cash flow troubles, and highlight other leading financial challenges that many small businesses owners face today, with regard to financial statements, pricing management, and systems and processes. Cash flow— Why is it Important?Even if a small business’s forecast for the upcoming quarter appears to be profitable, it means nothing if they don’t have sufficient funds on-hand to pay monthly suppliers or meet the next week’s payroll. Cash flow is about timing; the cycle of cash-in and cash-out needs to be well balanced in order to avoid unexpected crises. Positive cash inflow is the lifeblood for small businesses; cash sources from customer payments, capital infusions, or investment interest will recycle back to fund operating expenses that keep your business running, such as employees, raw materials, and rent. While high positive cash flow opens doors to business growth and new investments (hiring new employees or opening another location), negative cash flow, where more money is going out than coming in, can be fatal to small business success. Contributors to Cash Flow StrugglesThree common sources that facilitate cash flow problems for SMEs are described below: Poor Planning – For seasonal businesses, it’s important to project your annual, fixed expenses, as well as compose a forecast for variable expenses. By analyzing past business patterns and anticipating potential shortfalls during slow periods, a business can focus on a target sum to accumulate during its better times to use when times are leaner. It’s also vital to establish/ensure you have a stable banking relationship and an appropriate line of credit. Good credit and a reliable bank can help ensure there’s adequate cash during slow periods, and thus protect your business from a cash flow crisis. As you build your business, another form of “credit” that can be invaluable in difficult times is strong client relationships. By establishing a loyal client base, a business can occasionally request and receive advance payments; this funding can help buffer your business in slower inflow periods. Poor Credit and Collections Practices— Don’t jump at every opportunity for new clients or work without setting up the proper systems to evaluate credit and collect payments. Without a formalized credit and collections process, the likelihood of inadequate, inaccurate, or outdated information increases substantially; all of which can lead to delayed, even unpaid, customer accounts receivable. It’s best to establish your rules for credit and collections in advance, whether that involves obtaining a deposit, specifying a pay window, or processes for following up on delinquent accounts. Challenges in Projecting Expenses— A financial projection can be simply defined as a forecast of future revenues (and cash collections) and expenses (and cash expenditures). Successful companies typically develop both short and mid-term projections; using internal data/past history and external market factors to better predict and control their financial condition for the future. While many factors go into creating a financial projection, including sales, payment patterns, expense levels (fixed and variable), and capital investments, small business owners often struggle with projecting their expenses early on, accounting for variations in expenses, and determining what the immediate needs of the company are. The simple fix is a basic accounting system; it can help the process by allowing you to generate reports based on past income and expenses for more accurate projections of cash flow and sales. While this is obvious to some, many small business owners do not have financial expertise. Other Financial ChallengesUnfortunately, problems aren’t limited to cash flow. Lack of accurate (or any) financial statements, for example, is a malady that plagues many small businesses. Companies often neglect their financial reporting duties, either never reviewing them or not taking the time to account for them accurately enough to be useful and meaningful. Additionally, poor pricing and money management can damage organizations quickly, and lack of standardized processes for a business can cause chaos and inefficiency.
Some financial challenges appear despite doing everything right, excellent planning, thorough documentation and effective systems. Catastrophic change and unforeseen expenses can affect any business. Expenses can arise from government levies or economic fluctuations, as well as the loss of key executives or natural disasters. A successful business plan needs to include contingencies to be able to access cash when unanticipated circumstances arise. Financial challenges are undoubtedly common in small businesses, but that doesn’t mean you have to experience the consequences of all of them. Give your company a thorough examination to see where the pitfalls of your business plan and cash flow management are. Set money aside or arrange for credit facilities for unexpected circumstances and take a look at your past financial records to most accurately prepare for your future. Strong financial systems are the key to strong companies. Lauber Business Partners can help you manage your financial situation and help you prepare for when problems arise. Lauber is an experienced partner to many small and mid-sized organizations and is committed to collaborating with you with honesty, integrity, and professionalism. If you want to secure your financial situation, don’t hesitate to contact Lauber for help. One of the worst things that can happen to your business is to be consistently short staffed. Whether you’re facing the “Perfect Labor Storm,” fighting high employee turnover rates or can’t afford to fill vacant positions immediately, a hiring backlog can reduce business productivity and put more stress on your current team of employees. Most business owners under a staffing shortage assume the problem is the role itself. Unsure where to make improvements, they consider the starting pay, job duties, and reasons why previous employees may have left. Often, however, the issue lies in the recruitment process, as well as how the job is marketed to potential candidates. By taking the time to evaluate your recruitment process and address any issues you may find, you are not just helping to fill one vacant position, but also finding a solution that could streamline your entire hiring process and increase employee retention and satisfaction in the future. What Effect Does Being Understaffed Have on Your Employees?When your team is understaffed, responsibilities and stressors can snowball throughout your entire business. Other employees must step up and handle tasks that previously weren’t usually their priority. While some companies may have the funding to hire a temporary employee, that’s not always an option, let alone a long-term solution. If the money just isn’t there, or the open position requires a particular skill set or is highly technical in nature, it can be challenging, costly, and inefficient to find someone to fill in temporarily. With one empty position, the extra workload probably isn’t a hindrance to daily business activities. Everyone else can pitch in, splitting up the open job’s duties without taking on too much extra work. When you have several empty positions, however, the number of additional tasks each employee has to take on starts translating into multiple individuals needing to work additional hours to get everything done. To juggle responsibilities, your employees might stay late, work through lunch and breaks, or sacrifice personal time. Others might claim, “that’s not my job”, and office morale will begin to slide. Fatigue is likely to set in when employees have to work under these conditions. This leads to increased burnout, higher accident rates and more of them leave. Why not find a similar job, with similar benefits, but less work? Ultimately, a dissatisfied, unmanaged employee mentality can create even more vacancy within your company. As this cycle often starts to repeat, leading to issues such as being so understaffed you can’t open your store or meet deadlines. The first step to resolving these issues is to re-evaluate your recruiting process. How A Business Partner Can Benefit YouRevamping your recruitment process can seem like a daunting task — and while outsourcing your recruitment process to an RPO may seem like an effective, hands-off solution, business partners can offer a more holistic, collaborative alternative to a single-service third party. You’ve hear the adage saying: “Give a man a fish, he eats for a day. Teach him to fish, and he eats for a lifetime.” The guidance, insight, and coaching skills of experienced business partners will not only supplement your recruitment process, but further teach you how and where to make strategic improvements. Many companies try to revamp their processes through their HR team. For smaller HR departments, adding recruitment strategies to their laundry list of responsibilities can be reversely unproductive. Further, while HR teams are innately a part of the recruitment process, this closeness may result in the oversight significant problems and makes being sufficiently objective more difficult. With a business partner, you get an experienced team with years of experience regarding how to recruit candidates. Whether or not you have an HR department, business partners evaluate processes and tailor solutions that best fit a company’s needs; they can teach you how to find candidates who best align with your requirements, goals, values, and current employee platform. Making use of a business partner isn’t a way of eliminating your HR department. Instead, it’s a way to supplement it so that HR staff members don’t get overworked. What do the members of a third party business team do for you?
These are just some of the primary tasks an third party business partner can take on for you. Because every business’s hiring and recruitment needs are different, these teams will tailor solutions with each client to increase the efficiency of their recruitment process, align business and cultural values with prospective candidates, and ultimately increase a company’s retention rate and employee satisfaction. In the end, your company will become more efficient at hiring new candidates and better able to attract and retain high-quality employees. Don’t Let a Stressful Situation Go on Too LongEven if you only have only a few open positions, it’s not wise to make other employees stressed doing extra work. That will only lead to additional employees leaving and the morale of your office declining. If you’ve had issues for hiring good candidates in the past, it may be time to try partnering with a third party business solution. Having your recruitment process evaluated by professionals can help you improve the quality and quantity of potential candidates. Contact Lauber Business Partners today for more information.
Cash flow forecasting. Those three words strike fear into the hearts of many business owners. Why? As we discussed in a previous post, many small business owners simply do not manage their cash inflows and outflows well over time. Couple this challenge with the fact that many businesses inefficiently forecast when faced with expenditures, loans, or a fluctuating market, and you have a recipe for trouble. Fortunately, cash flow forecasting is formulaic and does not have to be painful. In this post, we’ll examine some best practices to help ensure your cash flow remains positive. Determine Peak NeedsFor cash flow forecasting, your financial adviser should be on speed dial. A financial adviser can identify the hills and valleys of production, predict potential surpluses or shortages, and therefore plan accordingly to keep your business running smoothly. You should also seek out a trusted advisor to help you understand your net working capital as a percent of sales. With this knowledge, you can quickly estimate capital requirements related to new contracts, expanding customers, and changing business levels. Leave No Stone UnturnedAccount for everything. Efficient, accurate cash flow forecasting requires access to, and consideration of, all overhead – both recurring and non-recurring. Be sure to account for labor, raw material and energy, as well as non-recurring expenses such as legal fees and tax preparation costs. Additionally be sure to account for non income statement expenses such as loan payments, capital equipment replacements, prepaid expenses and deposits. It is imperative to anticipate every future cash outflow and incoming payment, as well as the timing of payables and account receivables. Identify Barriers And Plan Your SolutionsA significant barrier to cash flow management is ineffective invoicing, which in turn, can delay payments. Be it incorrect information, delaying invoices, or permitting late payments, poor invoicing practices lead to inconsistent delayed cash flow and ultimately harm a company’s operation. Aside from offering payment reminders or incentives, timely invoicing is an easy technique to practice to help rebuild cash flow. Many companies also provide a variety of payment services to streamline the billing process. From apps to online/e-commerce solutions and pay-by-phone systems, digital payment processes can help improve cash flow. Inadequate resource management is a challenge shared by companies today. If not managed properly, expenses and overhead can have an adverse effect on cash flow. Examples of poor resource management include unnecessarily repetitive processes, redundant systems and machinery, rework, unwise investments, and excess office space. Business disputes can also be detrimental, and leave businesses hamstrung and scrambling if proactive measures have not been taken to manage risk. By following best practices, ensuring your policies, business forms, contracts, and governing documents are appropriate for your business environment, and consulting regularly with legal counsel, you may be able to avoid costly business disputes and maintain a solid defense. The Bottom LineCash flow forecasting should be a primary component of any business plan. Because it requires a thorough, proactive, and thoughtful approach, using the tips outlined above will lead to improved cash flow management.
Contact Lauber Business Partners today if you’re interested in learning more about effective cash flow forecasting or need help implementing such strategies into your organization. We have the expertise to transform your operation and help you establish sustainable cash management systems. While having a business plan is vital to starting a new venture and creating a strategic vision is necessary for success, few business owners think about creating a talent plan for their human resources department. An HR talent plan, however, is just as vital as a business plan. This plan allows you to prepare your team to fulfill your vision and execute your business plan. It helps you with employee onboarding process development, prepares you for turnover, and outlines a process for hiring. Without an HR talent plan, your managers may not hire the best employees or be ready when employees leave. This can lead to disruptions, especially if a high-level executive decides to leave the company unexpectedly. With an HR plan in place, you’ll be ready for this situation and others. Since most businesses don’t have an HR talent plan, many don’t know how to go about creating one. Here are four steps that will assist you in preparing your plan: Step 1: Assess Your TeamIf you already have a business but do not have an HR talent plan, the first step is to do an HR assessment. Look at the team you have and identify each employee’s skills, abilities, and knowledge. What do they bring to their position? Which of those skills and talents are necessary to the job? Which talents do they bring that allow them to work beyond their regular duties? Some employers take these extra talents for granted until that employee leaves. Understanding an employee’s potential, beyond his or her current role, is key to the talent plan. This assessment should be performed at all levels of the business from the newest hire to the CEO. Step 2: Look at SuccessionIf a critical manager, supervisor, or executive leaves, it can be very disruptive to the company. Entire departments may suddenly be leaderless, which can lead to a drop in profits and productivity. A succession plan will reduce these disruptions by creating a clear path forward. When a vital employee leaves, you will know which of your employees have the knowledge and skills needed to immediately step up into the vacant position. This will ensure that there’s a seamless transition should the need arise. Having a succession plan doesn’t mean a business never looks outside the company for new talent. The company should always be evaluating its internal talent against the outside market. There will be instances where there may be no likely internal successor. This is one of the key reasons to conduct succession planning. By understanding these gaps early on, one has the chance to develop an internal successor or, when hiring for other positions, look for someone that could be a successor for a gap in the organization. Step 3. Have an Employee Development PlanEmployees turn to HR for some different services. HR support in the employee development process is vital for those employees who want to grow and move beyond their current position. By putting together a development plan, you can offer employees a clear path to learning new skills and moving forward in their careers. Employees need to play a key role in developing this plan. While supervisors and HR personnel may have their own goals and ideas about how employees can move forward, it’s the employees themselves who will implement this plan. They should have a seat at the table during its development. Step 4: Have a Plan for the FutureWhile a succession plan will ensure that your business doesn’t see a disruption when a critical employee leaves, it doesn’t necessarily touch on how you can increase your human resources when your company needs to grow—including your HR department. Eventually, you will need to bring in more professionals to continue growing as a business. Your hiring plan should look at what positions you need to create, which ones need to be filled first, and which potential employees will fit those positions the best. Once you’ve done this, you’ll be able to see if any of your current employees should be promoted or if it’s time to bring in outside talent. This is also an area where you can look at bringing in contractors or outsourcing some of your functions. Fractional HR teams, for example, may offer you the skills you need during the awkward period where you’ve grown beyond what your current team can do but aren’t yet ready to create a new position. Regularly Review Your PlanHR planning isn’t something you do once—like all of your strategies—it needs to be regularly reviewed and updated as necessary. If you’re not sure how to get started with your HR talent plan, you can get assistance from Lauber Business Partners.
We’re experts in the area of HR strategy and planning. If you’re ready to develop an HR talent plan, contact us today. You can reach us by phone at 414-273-8060 or by email at info@lauber-partners.com. Traditionally, all of a business’s executives are full-time employees of the company. However, in recent years, this trend has begun to change. While the CEO’s role hasn’t really changed, some of the other executive positions have begun to evolve. One option that has become increasingly popular among business owners, especially small business owners, is bringing in a fractional (less than full-time) CFO. These experts are outsourced and only work part-time for the company. However, they do bring the same knowledge and skills to the table that a full-time CFO would without the higher cost of a full-time CFO. By hiring a part-time CFO, a business can benefit in numerous ways. Here are four reasons why a business may want to outsource its CFO position: It’s a Way of Acquiring Expertise You Might Not Otherwise Have For most small businesses, the accounting department (if one even exists) is focused primarily on basic bookkeeping. However, that’s not the focus of accounting departments in larger businesses. Those departments and the CFO that supervise them are more focused on proactively guiding the business financially. They provide the CEO and other executives with financial information that helps them make decisions as well as an experienced partner with whom to discuss key business issues. Small businesses may not be able to attract or cannot afford a CFO with the knowledge and talent needed to do this. That’s where an outsourced CFO can be helpful. These experts can assist a business in making the transition from a tax-focused accounting department to one that plays a larger role in the decision-making process. Brings Broad Experience and Objectivity With a CFO providing financial guidance, a business is less likely to face some of the more common growing pains. Making use of a fractional CFO brings another point of view to the table. They typically have a broad base of experience and are very objective, so they may see opportunities for improvements or change that the CEO and others don’t see. This external point of view and deep experience is often the key to growing a business without running into difficulties. A CFO Is an Investment that Pays Off By investing in a fractional CFO, a business is investing in its future and current financial health. Many business owners consider a CFO a luxury that they simply cannot afford. Unfortunately, without a CFO to provide sound financial advice, the business may make costly mistakes. A CFO is there to help business owners make more informed decisions and avoid common pitfalls. By bringing in a fractional CFO, business owners can be proactive in their decisions. A business’s return on investment on a fractional CFO can be immeasurable. Finances are one of the most crucial parts of a business, yet many small business owners take on this chore themselves without any training. A CFO can take on this additional work, completing it more accurately and quickly than an overworked business owner. It also allows the owner and other management team members to focus on their respective areas of expertise. Avoid Expanding Your Team Too Quickly Businesses that follow the traditional growth model don’t bring in a CFO until the budget supports such a move. This means they don’t have access to the knowledge that a CFO provides during the crucial early growth periods. On the other hand, companies that do try to expand too quickly, often build an executive slate that’s too large for the company. This ends up being an ineffective use of resources. That’s where a part-time CFO can shine. There’s less cost to the business, yet the CEO can make use of the advice a trained expert can provide. Many fractional CFO services are also quite flexible. The business can bring in one of these professionals for more assistance during periods of growth, then reduce their level of service once the CFO isn’t needed as often. This ability to scale up and down with demand is very cost effective yet allows the business to get the expertise it requires. A Fractional CFO May be the Best Move With these major advantages and more, it’s clear that small businesses can benefit from bringing in a fractional CFO. With access to these experts, the business will be able to grow more quickly and with fewer problems than it would otherwise. Fractional CFO’s bring many skills to the table, and they do much more than simple accounting. Business owners would be wise to consider a fractional CFO, especially during a period of growth and change. If you’d like to learn more about fractional CFO services, you can contact Lauber Business Partners. We offer fractional CFO services that are affordable and provide your company with an experienced CFO. Our services are flexible, allowing you to scale up and down resource levels as required. You can find more information on our website. Feel free to contact us with any questions at 414-273-8060 or via an email at info@lauber-partners.com. |