How Do I Assess My Financial Situation?

Nov 27, 2020

Walt: Hello again, everybody. This is Walt and Darrick, we are coaches and strategists with Denver Business Coach. We’ve been answering questions presented to us by our clients who are looking for guidance in certain areas and discussing how we would handle them to give, business owners, a sense of what it’s like to work one on one with a business coach. So if you would like professional guidance in any of these areas, please hunt us down. That’s what we’re here for.

Walt: Today, we have a question from a wholesale distributor up in Westminster and the question is related to his financial situation. He says, “My company has established a solid reputation in the market and we’re generating strong leads and consistent sales volumes. I’ve hired some good staff members, but I feel like I’m doing too much myself. I have ongoing concerns about cash flow, but I don’t know how to assess my financial situation. Things seem to be going well, but I’m worried that I’m missing something.”

Walt: Darrick, I don’t know about you, but that’s a question or concern I see from a lot of clients who, maybe started a business because they were an expert in something, but it wasn’t financial analysis, but they know it’s important. So that’s what we try to come into play. Do you see that?

Derrick: Yeah, all the time, I mean, I guess, first of all, congratulations on a strong lead generation, strong sales volume, being able to hire strong team members. All of those things are challenging and difficult, so getting over those hurdles is great. The cash flow piece is essential. I mean, that’s the lifeblood of a small business, that’s the oxygen you breathe. So making sure you have a good handle on it is critical.

Derrick: Putting in place a good financial structure so that you can see a dashboard every single day, and you can understand what your cash position is every day, and know where you’re at, and then start doing accurate projections is essential. And so utilizing tools, and we have a bunch of templates and tools that we use for that. A lot of different places have different things.

Derrick: Those types of things are critical and they’re not that hard to understand Walt. I feel like we’ve put these in place for a lot of our clients. And even though they may seem intimidating at first, once they have a chance to live with them for a while, they usually feel pretty comfortable.

Walt: And that’s the goal, Darrick, I emphasize with my clients that the goal is not to make them an expert in financial analysis and get paralyzed by the numbers. It’s really about listening to the data and seeing what it’s telling you about your business health. And the way we do that simply starts with a couple of financial statements and look for trends and outliers.

Walt: Rather than studying each number. We look for exceptions and things that may give them the most information in the shortest amount of time. And by doing that, it’s something they can become comfortable with and look at month after month, without needing to spend a lot of money with their CPA. However, I do recommend that each business owner has a good relationship with their CPA and with their banker so that when there are questions or issues that come up, they’ve got professionals that they can rely on. But we as a business coach can help guide them through some of the early confusion that comes with financial analysis.

Derrick: Absolutely, having that CPA or if you’re going to have a bookkeeper, make sure you have a CPA that works you work with on your tax situation, the banker, they are great at explaining things if you find one that you can really trust and depend on. And I’ve had so many clients that feel like they’re number phobic, that first thing they say to me is “I’m not good with numbers, I’m not good with numbers, I just know how to do my business”. And I’m like, it’s not that scary.

Derrick: And sometimes it’s as simple as to your point, Walt, about looking at the trends and the outliers. Sometimes it’s as simple as putting some graphs into the numbers to kind of paint the picture for somebody a little bit. So as opposed to trying to look at a series of different numbers, you put some graphs, and all of a sudden it becomes very apparent the direction and the trends and it makes the analysis that much easier. And so, utilizing the tools in the way that fits you, not feeling like you have to morph into some financial analyst is really, something that I always like to help my clients with, but it’s not that hard to do.

Walt: Yeah, and you’re painting the picture of graphics that tell a story is a good one, and that’s going back to your dashboard comment earlier. Key performance indicators or KPIs are just tools that, like a dashboard of your car, tell you the important specific things you need to know at any given moment in your business. And we help you create those. And again, they’re tailored to your business and the issues that you’re facing. So the tools we have are flexible enough to adapt to your circumstances.

Walt: So really, that’s a key part of what we do with this kind of question. And I think that the last piece that I think of about this when the owner said it was his needs to delegate more, he also needs to make sure he’s spending time on the business. And when we work together in the time that we spend every week with our clients, this is a time for them to focus on things they wouldn’t normally focus on. And going through some financial statements is certainly one of those tasks that we can help with.

Derrick: Yeah, no question about it. And especially with the team as part of this, making sure that they’re spending a good amount of time on how to develop that team and keep them growing so that they stay engaged and they stay focused on the right things that the owner decides to measure through the KPIs and the different tools that we talked about.

Derrick: And so, yeah, this is the kind of approach we take when we do one on one coaching with Denver Business Coach. So if you feel like this is the kind of thing that would be helpful for you, or if you just even have a question that you want us to address on one of these sessions, go ahead and reach out to us. Our information’s on the screen there. And we’ll see you next time you Coach’s Corner.

Walt: Thanks, we look forward to working with you.