Independence Day Top 10: Sparking Growth In Your Business

Business owners are always facing new challenges. For our Independence Day edition, we are counting down our top 10 actions you can take to significantly improve your operation and finances.

Join is to learn how you can create your own fireworks in your company and finish the 2nd half of the year on a strong note.

[00:00:00.00] - Alice

Hello. Welcome to Books in the Biz, a podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Veltre. Dan is the CEO of Envision Development International, and he works with leaders to increase sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast. Hello, and Welcome to Books in the Biz. We are back for another exciting session. Rich, how are you doing today?

[00:00:50.02] - Dan Paulson

I'm doing all right. It's a little cooler today, so thumbs up.

[00:00:53.28] - Rich Veltre

All right. I wanted to keep all 10 digits intact for this holiday season. So we're doing fake fireworks on our screen, and we are talking about the 10 things you can do in your business to create a different level of spark. So you still have 10 digits left after July fourth. Does that sound good to you? Sounds good to me. Did you buy a bunch of You've done fireworks that are going to blow up the sky tomorrow when the fourth hits? No.

[00:01:20.18] - Dan Paulson

I have never been a firework guy. My mother never let me play with fireworks when I was a kid, so it never happened.

[00:01:29.22] - Rich Veltre

Oh, you poor guy. We played with fireworks probably way too much, and I am lucky to have my eyes and all my attachments where they belong. So needless to say, I've grown up, I've gotten wiser, and we aren't doing that anymore. But anyway, back to our discussion today, we're going to talk a little bit about some of the... And we started this off with asking each other questions, right? So we looked at what we're doing with the 20 questions thing and said, well, what are some key things that maybe we can talk about that If we do have some listeners today, they can take away and start implementing in their business? Because I think you pointed this out. We're now in quarter three, so we're halfway through the year. We're now past halfway through the year. If you haven't implemented stuff, now is a good time to start if you want to hit your targets, your KPIs for the end of the year. So I figured we just throw something together here. Are you ready to go?

[00:02:25.24] - Dan Paulson

Absolutely. Let's wing it. All right.

[00:02:28.07] - Rich Veltre

Let's wing it. Why not? Here we go. All right. So the 10 things to spark your business. Let's do number 10. I believe this one is yours or is this one mine? This one's mine. Okay. I alternated every other one, and we did this a couple of days ago, so forgive me if I'm playing this for myself. But anyway, number 10, prepare for succession even if you are not ready to exit. You and I have had several discussions about this. We even did a succession webinar. I think it was back at the end of April, first part of May, where we were telling people this very thing, succession happens sometimes not by choice, but by, I'll call it, accident. Something happens in your life, and all of a sudden, you're not prepared for it. Or you are preparing for it, but because you haven't taken these steps early enough on, you don't actually get the benefit at the sale. We have Paul Curtis on a couple of times. He's an M&A guy, and he talks about it's upwards of a year to two years to actually sell your business. So for example, if anyone's listening to this thinking, Well, I'm halfway through the year, I'm going to sell my business in December, and you haven't put steps in place or don't have a buyer lined up, it's going to be very difficult to get that to happen.

[00:03:56.03] - Rich Veltre

Rich, is there anything you want to add to that?

[00:03:58.16] - Dan Paulson

I think that preparing Trying for succession can be a long term plan, too. It's one of those things that if you're trying to do it in that short of a time frame, you might be able to do it, but the value is not going to be what you expect it to be. And so I think if you're not ready to exit, you should be looking at, how do I put myself in a position that I would be ready to exit if I have to leave faster? So to a certain extent, it really comes down to getting your numbers in order, and and be able to hit those numbers. So that's where the preparation really, probably in my eyes, should be most important.

[00:04:38.27] - Rich Veltre

Yeah, I related this to somebody else. A plan is a plan. It is an event. Where really we should look at succession as a process. It's an ongoing system that there is continuity required in order to get the outcomes you want. So good point there. This one is definitely yours. So I'll turn it over to you.

[00:05:00.05] - Dan Paulson

Be sure to get those financial answers you asked for. Yeah, I think that it's very important at this point, halfway through the year, looking at the next six months, Understand what's actually happening in the business. If you don't know or if you're thinking about it from a... I'm on this 50,000-foot level, like this level kick right now, saying that 50,000 feet right now is probably a little bit too high. I think people need to realize with all the changes going on, they really need to be focused a little bit lower, a little bit more in the weeds. You still want to be the CEO. You still want to be in charge of your business. But I think ask the questions Ask the questions of what's going on with the company. Ask the questions. And if you haven't gotten those answers yet, find out how you get them. Let's get them back in your hand. Because getting them in Q4 or in December, not good enough.

[00:05:59.16] - Rich Veltre

Not good Well, and here's something we're going to actually talk about more next week. I am finding more and more accountants not providing standard financial information on a routine basis. Now, with my clients, one of the requirements is each month you get your PnLs, you get your balance seats, and we review those at some point halfway through the month. More and more, I'm running into situations where accountants are not providing that, either because they don't have enough people not able or they're just choosing not to, which to me is a foolish mistake. But again, we'll talk more about that next week. All right, number eight, use financial data as a leadership tool, not just a report card. And this is something, again, you and I have talked about, so I'm treading in your territory a little bit. But for me, on the operations side, financial data supports the actions we're taking and the systems we're implementing or it tells us a different story and that we need to make changes. I tell people there's forward-looking data, and then there's rear-ward-looking data, and I know you've used similar phrases about that. In order for us to look forward and to set data based on that, we have to really look at that financial and say, are we tracking the right direction?

[00:07:24.20] - Rich Veltre

If not, how can we pivot or make changes now, not wait till the end of the year when everything is where we're looking, we realized we made mistakes, and now we're going into the new year, and we're having to take those corrective actions. Because in my case, in operations, the longer you wait on something that's not working right, the more ingrained it gets, and that makes it even harder to change when you need to make those changes happen. What's your thoughts on that?

[00:07:49.21] - Dan Paulson

No, I totally agree. I mean, your business, depending on the size, I talk sometimes about how hard it is on a very skinny street to try to turn around an 18-wheeler. An 18-wheeler takes some time and some planning to actually get it turned around. And that doesn't make it any different for your business, whether you're a million dollar business or a 50 million dollar business. Things don't happen on a dime. You can't turn on a dime. And proactive and reactive are the way that I always say it, too. That's right. So be proactive, get the financial data, use it to show people this is what we need to get to and why. And it's not just a browbeat. It's a planning tool.

[00:08:38.29] - Rich Veltre

Yeah. Yeah. One of the ways I work is leading indicators versus lagging indicators. So there are, again, the forward thinking data is the leading indicators. What are we doing that should produce X outcome? The lagging indicators is now where you throw back that rear view mirror and say, okay, we did these things. Did that produce the result we want? So, yeah, spot on right there. So back to you. Your favorite discussion, taxes.

[00:09:08.20] - Dan Paulson

Tax estimates. Don't wait for the surprise. So I had a conversation the other day with someone who was paying an accountant to give them a report every month. And then when it came time to get to the taxes, they were making quarterly estimates. They got to the end of the year and the accountant said, oh, you owe $30,000.

[00:09:27.17] - Rich Veltre

Yeah. There's a surprise you don't I was making quarterly estimates.

[00:09:31.27] - Dan Paulson

Why do I owe 30,000 dollars? And the accountant didn't tell them. And then a little while later, the accountant calls and says, oh, yeah, we were wrong. It's not $30,000. It's 37,000.

[00:09:40.06] - Rich Veltre

Oh, gosh.

[00:09:41.01] - Dan Paulson

So nobody likes those surprises. So if you if you don't know where you stand on your tax estimates, even if you have an idea that here's my tax rate every year, it's very consistent. So my income is this and my tax rate is this. This is what I'm going to need to have. I'd be happy if you could tell me those numbers. So if that's telling me that you got that, you're getting good information. If you don't have those, this is where I think you need to pay attention to this slide and say, I don't like surprises. I'm going to go figure out my taxes.

[00:10:15.01] - Rich Veltre

Yeah. And you got to figure that most small businesses are one good client away from completely upending their tax estimates. And I'd say small to medium-sized clients. So if you get a big account in and all All of a sudden that significantly increases your gross revenue, surprise, if you are adjusting for that, you could be ending up where you're paying significant amount more by the end of that year. All right, back to me. Turned chaos into consistency with documented systems. So I've really been harping on this a lot lately because more and more, I am seeing situations where companies have either long term employees or they have perceived systems that have never been written down. And typically what I find is these are systems that's not handled by everyone in the organization. They're handled by one, maybe two people that have been there 15, 20, 30, 40 years. And now you're getting into a situation where you're looking at retirement, they're looking at retirement. Okay, if they're going to leave, what happens to those systems? Because I don't know about Rich, but any job I've been in for more than a couple of years, even if there is documented systems, there's changes based on technology or whatever comes along.

[00:11:39.22] - Rich Veltre

And there's a lot of what I call institutional knowledge that's built up in an individual, and that's never written down. So you take that person out of the equation, and while you might have some basic understanding of how to do that task, the nuance that goes on isn't documented. So if you haven't taken the time every couple of years to review your if you do have them documented or write them down, if you don't, it's going to be extremely costly. And again, if we look at it from, you're ready to retire, you're looking to sell your business, you want to maximize the value, if those systems aren't clearly documented, especially if you have a lot of people that are about the same age as you that are also thinking about leaving, that's going to be a huge impact on what that equity value for that company is.

[00:12:26.19] - Dan Paulson

I think that's the other thing that when we started this and I was talking about not really being able to tell people to stay at the 50,000-foot level. I think it goes along with the fact with all the news out there right now about everybody implementing AI, which Everybody's using AI for things that probably aren't AI.

[00:12:48.04] - Rich Veltre

Exactly.

[00:12:50.01] - Dan Paulson

But you can't implement AI just by saying, Hey, I'm going to snap my fingers and I'm going to implement AI. You're implementing AI to take over a particular task. If you don't have your systems documented, how do you know what you're putting AI in to fix that task or take over that task? You may be 100 % right to put AI in, but you need to know where, and you need to be able to show that it's working. You need to be able to prove the investment makes sense. So I think that's a piece of why not only should you have it written down, you need to have it written down. And that way, you can track what you're actually changing and how it's going to change for the better. So You can get something out of it. Don't add AI just because everybody else is. Add AI because it's going to make you more money. That's why we do this. That's why we do these things.

[00:13:39.14] - Rich Veltre

Yeah. I'm glad you actually brought up the AI thing, because I do believe there are a lot of companies adding AI to their workflow. Ai will give you an answer no matter what. And that answer can even look pretty good, pretty plausible. But if you haven't documented the systems and you have nothing to backtrack or compare it to, it could be a big, big It's a big mistake that could be costly over time. Number five.

[00:14:04.27] - Dan Paulson

Number five, monitor your KPIs. Know the story they're telling you. Even if you only have a couple, even if you're only looking at a couple of things that are telling you a specific thing. I happen to really like DSO, which is day sales outstanding. That tells you when you finish a project and you bill it, how fast do you actually turn it into cash? So on on an average, this KPI will actually calculate and tell you whether or not what's your number of days that you can expect to get your cash. And I'm using this just as an example, okay? If I was looking at a business the other day, and I could see that she was pretty good, 15 days. But the model is that people are supposed to be paying you up front. If they're paying you up front and paying you on the first of the month, It should be zero.

[00:15:01.27] - Rich Veltre

Correct.

[00:15:02.08] - Dan Paulson

So 15 sounds fabulous, except for the fact that if your contracts are telling you that you should be getting paid in advance of the month starting, then it should be zero, and you're losing 15 days. So it tells you that the company is doing something different than you expect. So my expectation here is, if you haven't been monitoring your KPIs, if you're not looking at the trend, because if people stop paying And you, that number will go up. It will gradually go up. So it's not always, hey, calculated once every six months. No, calculate the trend. So KPIs are very important. They can tell you a completely different story of what's going on in your business. And Hopefully what's happening is if you're tracking them regularly. It'll tell you before something's becoming a bigger problem.

[00:15:51.26] - Rich Veltre

Yeah, exactly. And I've actually walked through that exercise with a couple of clients. And one client, their DSO was closer to it's 90 days to 120 days out. And they're expecting to get paid when they complete certain tasks or a certain project. And if they're thinking that's the way it's going to work, they're already upside down because they're spending money they don't have And then they're acting as the bank for their client to get paid. And to me, that's the most frustrating thing, especially when you're a small to medium-sized business that counts on getting paid. I think most people, they might say zero, but I even say zero, but I typically calculate within 30 days is acceptable. So as long as I'm staying within that 30 day window, but understand that, because once you get beyond that, okay, something's wrong, you need to fix it. All right, number four, build a leadership culture We're not a leadership team. Actually, I just spent earlier today writing up for a conference, this very thing is talking about leadership culture versus having just bodies in seats or doing tasks. And I find a lot of people think, well, I put a bunch of people together, I give them a task or give them an expected outcome, and magically, those people are going to work effectively together.

[00:17:12.01] - Rich Veltre

And that really doesn't happen. This is why When I talk with companies, I talk a lot about values. I don't talk about vision as much as I talk about values, because to me, values guide what you will do, what you won't do, and how you will do it in order to get the results that you want. And when you look at a lot of teams, they're just bodies thrown together that might have specific skills. Some might even go as far as saying, well, we're putting these people in the room because they each possess a different level of knowledge. Well, great. How do they work together? How do you explain that? People have different needs, different wants, different personalities. You've got to manage all that all the way through, because if you don't, you end up with a situation where there's a lot of chaos and conflict, and it takes a while to figure that stuff out. Now, if you got a project project, for example, that you're putting a team together that's going to be six months to a year, you don't want them to spend three to four months just to figure out how they're going to play nice in the sandbox together before they actually get any work done.

[00:18:11.28] - Rich Veltre

You really want to try and address that within the first four for weeks, because there's always those phases within a team that take time to form. And if you're not prepared to do that, it can be really costly, really expensive, and really slow down any improvements that you're trying to Nothing to add to that, Rich. You're nodding your head, so I'm assuming you're not agreeing.

[00:18:36.15] - Dan Paulson

I'm just totally agreeing. Totally agreeing. I'm a little less of a leadership expert than you are. Sure. So I lean on what you're telling me. And I'm sitting there going, yes.

[00:18:50.21] - Rich Veltre

Well, we've all been in teams that haven't worked, and we all know what that's like, and you want to avoid that, especially if it takes a while. So I'll turn you over to something that you are an expert in, and I'll follow along. Number three.

[00:19:03.02] - Dan Paulson

Number three, compare your financials to previous year, make changes if necessary. Who's not a small business that looks and says, I just want to do better than last year? I mean, if that's your first thought, great. But here's the question, how are you doing? Did you actually, are you beating it halfway through the year? Take a look. How did you do versus last year? It's only the third of July, and I'm already looking at my clients that I can see their financials. I'm looking and saying, well, how did this happen? Or what's going on here? And basically, my biggest comparison is to last year. Are we beating last year? And then If we're not, why? And I'm looking at specific lines, because you can start to see really quickly, what's the issue? I have some clients that are in real estate. And the question becomes, what's the operational part that goes along with this? If our revenues are down, is it because the general market has changed? Is it because that we can see that the number of closings we had is different? So these are the types of things that you can do that is pretty easy.

[00:20:18.00] - Dan Paulson

It's pretty quick, especially if you're keeping your numbers up, as we talked about before. If you're keeping your numbers up on a regular basis, it should be relatively easy to just say, how am I doing year to date versus last year?

[00:20:29.17] - Rich Veltre

You know Yeah, I think this is a stressor to one of the earlier points that you made, which is getting routine financial information. Getting that information once a month is really impactful. And I know there's a lot of small businesses, especially, but I even see medium-sized companies that I start with as clients, that the last time they looked at a financial statement was December the previous year. And that was the only time they looked at it. And they did some basic comparisons that adjusted for their strategy to the upcoming year. And then the same process happens all over again. Twelve months go by and then it's like, flip a coin, did we make it or didn't we? Well, that defeats the purpose of looking at that financial information, because if you don't understand those numbers and aren't reviewing those regularly, it's going to prevent you from that opportunity to do better than the previous year. All right, now, number two, back on to me. Reclaim your role as an owner. Stop doing everyone else's job. I will repeat Stop doing everyone else's job. I actually just had a conversation with another consultant that's working with a client of mine, and she's doing some optimization work.

[00:21:38.29] - Rich Veltre

And she was asking me questions about what I observed from my end. And one of the things I observed was that person tends to take on the ownership of every task that everyone else is doing. Everything has to go through that person's hands. Everything has to be touched. Every decision has to be made. Everything. Which means that person can't do the jobs that they should be doing in their role as a leader. And everyone else is also waiting because they can't do their jobs until they get approval from that leader. And some of you might think this is unique. I will tell you this is probably the most common problem I see in small to medium-sized businesses, is when you get to that owner executive level, there is a certain degree of satisfaction or comfort that comes to that person that they have control over everything in their organization. They're control freaks. That's probably how they got in the position they were in the first place. The negative side of it is the extreme frustration they have that they have people to do those jobs, but they're not doing those jobs because they're waiting for that owner to give the blessing or approval or their own input before anything can happen.

[00:22:54.17] - Rich Veltre

And this happens time and time again. This is the biggest efficiency issue I see in most companies next to not having processes documented. And that's where I see that most companies really struggle with this because, again, there's a dopamine hit for the owner that, hey, somebody's asking me a question. They value my input, and I can give that blessing. The negative side, though, is when you're not there, and let's say for some God awful reason, you can't be there. We went into that a couple of episodes ago. You're gone for a month, and you can't answer your phone or email or anything, and you need your people to do their job and they can't do it, what happens then? Does everything grind to a halt? In most cases, in that short period of time, they're going to fumble their way through it. But then here's what I hear from the owners when they come back is, well, I left for a week, I left for a month. I then had to spend the next double the amount of time fixing all the problems that created. So having this in process where you are focused on your role as an owner, as a leader, versus doing the task, is going to be absolutely critical.

[00:24:06.01] - Dan Paulson

Yeah, I remember being in one job that had, there were 11 employees, and I was at their office, and the owner had to be overseas for an extended period of time. And you would ask people, what's going on? And they'd be like, I'm held up. What do you need to be, to get past that? And they said, well, I need to hear Joe. Everybody had to hear from Joe. There were 11 people. I think all of them said, we're waiting for Joe. So why do you have 11 people, if Joe is the only one?

[00:24:40.22] - Rich Veltre

Exactly.

[00:24:42.22] - Dan Paulson

So I think just to throw it in there, I mean, if you're seeing situations like that, then the thing I think you have to just keep remembering is that old statement that people have always used that get yourself to be working on your business, not in your business. And I think that just adds to So if you are in that position, get yourself to the point of working on it, not in it.

[00:25:06.18] - Rich Veltre

Exactly. Exactly. Well, that leads us to number one. And this is back to you, Rich.

[00:25:11.20] - Dan Paulson

Back to me. Compare your financials to budget. So here's my first question. Do you have a budget? So plenty of companies that I've talked to, they don't have one. Well, let's add a little bit to that. You may have one, but it might be in your head. Put it on paper. Yeah. Put it on paper, put it down so that next month, you can't say, my head changed, and the numbers are different. It doesn't help you. If you started out the year saying, I need to make X dollars, how are you doing against the, I need to make X dollars? Okay, are you 50 % of the way there? Are you not? But that's because of a big project. These are answers that are acceptable, but you need to know them. You need to know that that's what's happening, that I'm working on a big project that's going to hit in November. So right now, I'm only this much, but that one's going to get me to the end. So for me, I look at it and say, compare yourself to your budget now. And the report I always love that I try to get every accountant to do if they plan in some way, is actual to budget, where you actually put your six months of actuals, and then you propel out the budget for the rest of the year.

[00:26:26.07] - Dan Paulson

How does it look? So if you follow your original plan with the results that you have so far, do you hit budget at the end of the year? I don't necessarily care so much whether or not you're 51 %, 49 %. It doesn't matter. How are you going to do for the rest of the year if you get to the end? So if you take six months actual and six months budget, how does it look?

[00:26:49.09] - Rich Veltre

Yeah. And I would say this is probably more true for the medium-sized companies. I think the small companies don't typically tend to budget. But medium-sized companies that do budget, they budget at the beginning of the year, they never look at it till the end of the year. So it's back to, again, consistent review of financials. If the only time you review that budget is in December, what can you correct? There's nothing you can correct. Why do you even do the budget then anyway? What's it telling you? It's selling you nothing. So make sure that if you are doing a budget, well, first of all, you should be doing a budget. And if you're doing a budget, just like financials, this is why we get them each month. We want to do a comparison. And I like what you said about you do a budget versus actual comparison, which your accountant should be able to prepare for you. So I thought that was a pretty good list there, Rich, and I thought your five were excellent on that. That leads to something else that we're working on. So I'll pull this up here because this is something we've been talking about a little bit on our different social channels recently.

[00:27:52.08] - Rich Veltre

We've implemented something called 20 Questions. And with that 20 Questions, we're looking to speak to business owners of to medium-sized companies, and we want 30 to 45 minutes of your time. We will ask you in 20 questions or less, basic things about finance and operations of your business. And we are going to come back to you with a free report to tell you what are the things we observe that we believe you can improve on that are either blind spots, roadblocks, or other obstacles that are preventing you from reaching the goals that you want. We will then help prioritize it, and if possible, we will tie it to either a monetary value or a quantifiable value on the efficiency side on if you make these changes, this is how it will benefit you. At that point, you can choose to use that however you will. You can choose to work on it on your own or by all means, we are happy to talk to you further and either go into more detail to find out where the root causes of those problems really are or help you figure out how to solve that with our skills and with our talent and also with our our associates that we're bringing on for XCXO.

[00:29:03.04] - Rich Veltre

You got anything you want to add to that, Rich?

[00:29:05.17] - Dan Paulson

No, I think that's absolutely 100 % accurate. I mean, really, sometimes 20 questions and you might actually pinpoint something that really brings a lot of value. So I think the 20 Questions is a great program. I think more and more people should be signing up for it. And like we've said, we're willing to do it. We're willing to lend the expertise and see if it's something that really works. So I'm really excited about doing it.

[00:29:34.13] - Rich Veltre

Yeah. And the key to stress on this is it is literally no risk. You're not paying anything out of pocket for it. We might look at your business and go, wow, you are doing a great job, in which case we just validated that. We may also look at your business and we might find some things that you either weren't aware of or you were aware of, but you didn't know the impact to. So I do really encourage business owners, if this is something that is important to you, if you are looking at doing better, please take the time to talk to us. Again, 30 to 45 minutes of your time. You're going to get a brief report explaining the priorities and what we would fix and ultimately what you need to do, what that outcome is going to be if you actually tackle those obstacles and start working on them, how much it could improve your business. So I agree with you. I think it's a great opportunity that people should take advantage of. That said, that wraps up our show for this July fourth edition. Rich, have a great July fourth. I know you're not going to blow off your fingers because you don't like fireworks.

[00:30:34.23] - Rich Veltre

So go out, eat prots and hot dogs and hamburgers and apple pie and Chevrolet and all that fun stuff.

[00:30:42.05] - Dan Paulson

Sounds good. Same to you.

[00:30:43.20] - Rich Veltre

All right. We'll talk to you later. Bob, take us out.

[00:30:47.03] - Bob

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