Ask The Experts Chia-Li Chien: Guide CEO Financial Decision
by Chia-Li Chien | May 23, 2012
|Questions From||Karen on Fri, Mar 2, 2012 at 1:15 PM|
|In business since||1995|
|Industry||Government Service Business|
|Average Annual Revenue||$1.2 MM|
|Question:||"We don't have a treasurer/CFO who can guide our bookkeeper and president/CEO with financial decisions. We attempt to increase business revenue however with limited cash in business. What should we do?"|
|Answer From||Chia-Li Chien on Sun, Mar 4, 2012 11:05 AM|
Karen, Congrats on been the top 5% of small businesses in US. With a slow economy specially doing business with government. It often comes with challenges in long cycle of cash coming into your business. No matter how proactive you are working with these government agencies sometimes you just don't know when your next revenue is coming.
In addition to these important monthly financial performance reporting and forecasting. You want to focus on Mission Critical Activities (MCA) that will increase the value of your business. There are:
MCA_A Increase recast EBITDA
MCA_B Reduce Risk
MCA_C Employ additional high yield capital
None of above is a quick fix to your cash flow nor revenue. For the long run, you want to take time to really look into your overall business model. By intentionally focus on the monthly monitoring and mission critical activities to increase your business value.
|Recommended Actions||You have couple of options:
1) Do it yourself - go take financial classes at AMA or nearby college or university.
2) You can always check with your CPA firm who provides the accounting or bookkeeping service for you. They might have simiar service, if they do be sure to ask for "bundle" discount.
3) Contract a part-time CFO. In my business, we provide 8 to 16 CFO hours a month for business between $1 to $3 MM in annual revenue. The above monthly routine monitoring will greatly enhance your profitability, business value and keep you on top of the game.
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About Chia-Li Chien
Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY!” She is chief strategist of Value Growth Institute dedicated to creating business value that transforms your world. Chia-Li is also a Midas Advisor to MidasNation, a community dedicated to helping private business owners increase the value of their firms. She is the award-winning author of Show Me The Money and faculty member of American Management Association. Her blog and newsletter was named a top small business resource by the New York Times “You’re the Boss” blog. To book Chia-Li for a workshop, keynote, or strategy session click here or http://vgi168.com/bookjolly. To book Chia-Li for consultation click here or http://vgi168.com/counsel.