Core Competencies for Optimized Cash Flow

The ability to optimize cash flow is a priceless asset to any business, especially for those looking to grow. But optimization depends on building a cash management culture where every team member can contribute.

Cash flow optimization is a relatively simple concept. To be successful, a business must generate more cash than it expends. However, the details of optimization are more complicated than that, and any small business owner knows that it’s much easier said than done. Expenses continue to build, and cash-consuming day-to-day tasks take up valuable resources that could be spent on growing the business.

It’s not just the responsibility of the person in charge. To implement an effective cash-flow system, the entire team needs to be aware of the best strategies to increase available resources and profits. This is especially challenging when not all team members are particularly financially savvy, so systems must be put in place to keep the culture focused on optimization.

Below are some core competencies for optimized cash flow, and they apply to each level of the business—not just its leaders.

Setting up quality reporting and analysis

When fostering a cash management culture within your business, your team needs a reporting tool that’s both accessible to everyone and can generate useful reports on cash-flow data. This information is crucial for allowing you to forecast the future in any reliable way.

As a report from Deloitte suggests, your cash flow reporting system should involve connecting your income and cash-flow statements to metrics on your balance sheet, including things like days inventory on-hand or days payables outstanding. Also, evaluate payments for debts and other expenses and include everything in your reporting method so that you have a full picture.

One model to implement is known as financial planning and analysis (FP&A), which is used by businesses to provide visibility into where the company has been, where it is currently, and where things are headed. FP&A asks: What patterns exist with both incoming and outgoing assets and receivables? How can these factors become aligned with working capital? What trouble spots currently exist, including things like late payments?

Once all of these factors have been identified, it’s crucial to continue to monitor these baseline metrics to see what changes. The data analysis will then lead to more successful actions and decision-making to optimize cash flow.

Making sure your payment terms are aligned

One big problem that many entrepreneurs face is allowing vendors or creditors to receive payments within different periods than the customers who are paying the business. For example, vendors receive payment within 30 days, while clients are paying you within 45. This can create problems with cash flow because you can run out of funds to pay your bills on time.

Create a company policy that all payables and receivables are aligned in their payment terms. It will save a lot of headaches for your team and the effort of tracking down funds.

Checking around for the lowest prices

A great way to engage team members in cash-flow planning and problem-solving is to assign someone with expertise about vendors and suppliers in a given industry to find lower-cost suppliers. While the quality of services should be a top priority, it’s possible and likely that you’re not getting the best deal out there, and changing suppliers may not impact quality.

Lowering expenses is an effective strategy to improve cash flow, so start by brainstorming areas where you could save money, however small.

Not relying on snail mail

Another way to optimize cash flow is to stop using snail mail to send your invoices. Many electronic tools allow you to send and receive funds, speeding up the entire billing process substantially. There are also vendor management platforms you and your team could use that offer vendor portals, where invoices are uploaded, and electronic transactions are managed. Sometimes these systems are automated, meaning transactions can happen much faster, if not instantly.

Aligning your funding and expenses

Every business has both short-term and long-term expenses. But each of these need to be aligned with actual sources of funding (both short- and long-term), so that the two match and you can ensure that the cash needed to handle obligations is accessible.

Part of managing a small business is making sure that cash flow is optimized, leading to sustainability and long-term growth. These core competencies will help you and the entire team stay aligned on how to improve cash flow now and long into the future.

When you need assistance implementing procedures and systems to grow your business, the team at Provident CPA & Business Advisors can help. We also assist with tax minimization strategies and deploy the Entrepreneurial Operating System (EOS) for any industry or business model. The EOS helps align teams under a straightforward, achievable vision. Contact us today to get started.

The Fine Art of Constructive Criticism in the Workplace

When you’re expanding your business, there will be lots of growing pains along the way. Diplomacy is a key factor in a successful team-management strategy.

It’s never fun delivering criticism to your employees. But there are many times when it’s a necessary part of running a business. Entrepreneurs and business owners must harness the art of constructive criticism to manage a successful team. This means you’re not being aggressive, condescending, or controlling when offering guidance and feedback to employees.

These strategies will help you approach the team with diplomacy and a level head while getting the right points across.

Be straightforward

All too often, managers beat around the bush with passive-aggressive communication tactics. It’s much more useful to everyone involved when you can communicate a constructive criticism in a detailed, straightforward fashion. This way, the employee doesn’t leave the conversation confused about what they’re supposed to change or what you think of their performance. It also means you should talk about the specific ways the behavior can be reversed, making your expectations for the next steps clear.

Try asking questions to make sure they fully understand the review, especially if the issue is something that they weren’t aware of before you talked.

Be conversational

Being straightforward and honest doesn’t mean you have to be belittling or even stern. Show employees that you’re going to hold them accountable while approaching the conversation with a positive attitude. Depending on the issue at hand, try being more conversational instead of setting up a very serious discussion (unless the problem is, of course, very serious).

Relay positives first

It’s always a good idea to start a feedback conversation with the positives. This lets the employee know that you appreciate their work and that they are bringing a lot of value to the workplace and company. Then, get into the things that could have been done better.

Even if the meeting is solely to address the criticism, it’s still a good idea to start out positive. Otherwise, the employee may feel attacked and less motivated to improve.

Give feedback in private

Never embarrass employees when providing constructive criticism. Avoid giving any negative feedback in front of other team members, unless the comment is meant for the team as a whole. Your point will be missed when you embarrass someone, leaving them feeling resentful, angry, and ashamed.

Constructive criticism means you’re delivering your message in a positive way that will actually help the team member improve and do things differently next time. Meet privately, so you both feel more comfortable sharing how you really feel.

Focus on the facts and the issue at hand

Make your constructive criticism applicable to the individual, without it being about the individual personally. Why is this task or behavior important for this employee’s specific job duties or even career goals? What role does this person play at the company that you can relate to the criticism? Stick to the facts about the problem.

Focus on the issue at hand, and not the employee’s personality traits or habits. Make it about the business and the person’s professional performance, instead of calling out someone’s personal shortcomings.

Avoid punishments

We’re all adults. Unless something majorly inappropriate has happened, avoid punishing employees when they make a mistake. Often, constructive criticism will address a problem that the worker doesn’t even know exists, so it’s unlikely to be a recurring problem. Unless an employee has overstepped again and again or clearly had questionable motives, treat your team members like capable adults.

Be willing to keep the discussion going

Some employees won’t take criticism well. It’s just part of having a team of diverse individuals with different professional priorities. If you sense that a conversation is going down a negative or hostile path, or you can tell that the person is becoming upset or uncomfortable, table the discussion—for now. Check back in when the dust has settled to assess questions or concerns or finish the conversation you started.

Don’t continue to push employees until they become angry or frustrated with the conversation. Doing so will make the criticism much less effective.

When you need help aligning your team with your vision or creating a successful business model, get in contact with our team at Provident CPA & Business Advisors. We use the Entrepreneurial Operating System (EOS) model to help you work through the six key components of any business: vision, people, data, issues, processes, and traction. We also help with growth and profit-improvement strategies designed to enable long-term business success.

Why Map the Client Journey?

Consumers aren’t required to know what it’s like to run your company. But your company needs to know what it’s like to be your customer.

As a business owner, you’re tasked with not only creating a profitable model and ensuring efficiency, but also creating a meaningful and satisfying experience for your customers. Your business wouldn’t exist without them, so these considerations should be top priorities when planning and strategizing.

Mapping the client journey (aka customer journey) is a must for any business. Doing so helps you understand their perspective and how they may view your business, each step of the way. Without understanding what it’s like to be your customers, you’ll never be able to reach them effectively and in meaningful ways.

Why map the client journey?

The ability to walk in your customers’ shoes gives you visibility into their motivations, decision-making tactics, and behaviors. You already know why you started your business and the value your products and services offer. But customers won’t know right away—it’s your job to show them.

Even if your product is the best on the market, there are many factors along the customer journey that will impact whether or not they engage with you or make a purchase. According to a report from PWC, one in three consumers will walk away from a brand they love after having just one bad experience. And 73 percent of consumers say that the customer experience is an important factor when deciding whether to make a purchase.

This is why it’s crucial to view your business from the client’s perspective. What kind of experiences, thoughts, and feelings do they have when engaging with your brand? What surprises them or frustrates them?

You need to understand the full experience of being a customer to make more meaningful connections, which will ultimately strengthen your business.

Client journey map: Where to begin

Your client journey map starts by clearly defining each point of interaction between you and the customer. This helps you shift the focus from your products and services to how customers will actually be engaged, and what they will experience along the way. These phases of interactions can then be paired with what the customer feels, thinks, and experiences during each stage.

The client journey map will look different for every business. Factors that impact your map include things like whether you’re online or have a storefront, and your industry, target audience, location, and more. But the customer journey map must start tracking from the initial point of contact through engagement and action, and into nurturing the long-term relationship. Each point of contact with the client must be evaluated.

An example of a client journey map could be the following:

  1. Introduction to the brand (walking by the store, seeing an ad). How did they hear about you?
  2. Initial communication and connection (visits the store or website, calls you). How did the first point of contact take place?
  3. Bringing in the new client (onboarding to your company, teaching the process). Is it clear to the client how the process will work?
  4. Planning and checking in (coming up with the strategy and executing it). Are you catering planning to each specific customer? Are you following up and checking in regularly to ensure satisfaction?
  5. Ongoing communication and support (continued outreach, availability, feedback requests). Are you thanking customers and continuing to give them offers and information? Are you supporting them after their purchase?

Create a similar map that’s specific to your business, and each touchpoint that your clients are likely to go through.

While creating your map, customer experience points to consider include:

  • Motivation. What’s driving the customer’s choices at each stage?
  • Preferences. How do they prefer to interact with the brand?
  • Engagement. What are they most interested in throughout the journey? What questions do they have?
  • Emotion and behavior. How does a message make a customer feel, causing them to act one way or another? How do feelings and emotions drive customers to behave?
  • Roadblocks. What’s getting in the way of a customer’s ability to get what they want?

Gathering and analyzing information

Your customer journey map could take the form of an actual map, a graph, or a chart. For instance, you could have a row for each stage at the top of a table, and the client-experience considerations listed above on the left-hand side. You can then track each experience consideration during each phase.

You’ll need to harness a range of tools and techniques to gather this information, including online analytics that track trends and behavior on social media platforms, email campaigns, and your website. You’ll also need to ask your customers about their experience at each stage. This requires using a feedback tool, like a survey or a popup question, to gauge their satisfaction at different stages of the journey.

Take the customer journey yourself. Approach each stage as if you know nothing about the brand or product. What strikes you as welcoming or frustrating? What changes could you make to be more engaging? How do the messages make you feel?

Creating a customer journey map is an excellent step toward better engaging clients and improving the customer experience. But this is just one part of strategizing for growth. At Provident CPA & Business Advisors, our professionals are ready to help you create a growth and profit improvement plan that aligns all aspects of your business. Get in touch with our team to learn more.

How to Define Your Company’s Core Values

Today’s businesses must be clear about who they are, what they believe in, and how their business model proves it. This starts with defining core values.

For long-term growth and sustainability, your business needs to have a clearly defined vision that’s shared across the company. And it should be accessible and consistent to the outside world. This is only possible when teams are aligned on the business’s core values and integrate them into every aspect of operations.

Your business model should also prove that your core values drive actions and decision-making. Learn what core values look like, how to discover and define them, and how to put them into action.

What are core values?

Your company’s core values should be derived from the reasons you started the business in the first place. What drives the passion and purpose behind your products or services?

Core values define the way your employees approach their work, the way teams interact, and overall company culture. Core values back up your company’s vision and mission, showing individuals within the organization as well as the outside world, what matters most to the business. For example, the quality of products and services is usually related to core values, so that if something isn’t reaching the set standard, it shouldn’t be offered or should be reworked.

Company values should include the philosophies and principles that—at their essence—govern every decision. And they should align with all messages that are sent out to the public, whether on your website, on social media platforms, or in advertising campaigns. Perhaps more important is the ability of a business to interact with its customers in ways that only reflect its core values.

Steps to defining your business’s core values

So, where do you start? It’s a process to discover your core values, and they shouldn’t just be arbitrarily set in one brainstorming session. Instead of coming up with core values and then trying to fit the company into them, it’s better to do it the other way around. This ensures that your values are authentic and are centered around why the company exists.

To begin this process, ask yourself why you started the company. What was most important to you about your products and services? What’s your story? What need were you aiming to fill in the market? What do customers get from you that they can’t get elsewhere? These questions will help you nail down the fundamental purpose, which leads to well-defined values.

Then, start asking team members who have been around the longest, or show the strongest commitment to the company. What do they feel are the core values of the business? What drives them to support the mission of the business? What are they passionate about at work?

Common company values are often related to the company’s integrity and responsibility, its specific services, relations with the community, commitment and dedication, diversity, and similar considerations.

These questions and business soul-searching tactics will help you create a solid identity for the organization—one that can be clearly defined and followed in decision-making, customer interactions, marketing, and company culture.

How to put them into action

It’s important to ensure that core values drive action and decision-making. Remember that these values are both internal and external and, unlike business strategy, are fixed and typically don’t change over time. This helps ensure that all aspects of the business are aligned and working toward the same goals.

Core values should be apparent in hiring and retention strategies, benefits offerings, client communication, advertising, and brand awareness. On your business’s website, clearly define what your core values are. This is not something you want to be mysterious about. Put it all out there, and come back to these values throughout your content and communications.

Incorporate them into the onboarding of new team members, interviews, emails, meetings, development, training, employee and customer feedback, and more. With new projects, discuss the company’s values—how does this project align with what you’re all about?

Defining core values and incorporating them into your every business practice keeps teams aligned and the brand message consistent. When you work with Provident CPA & Business Advisors, our professionals use the Entrepreneurial Operating System (EOS) model to help you define and clarify your core values, as well as a range of other elements to help you grow.

Contact us to learn more about our growth and profit improvement services.