small business Archives - TAB Corporate

Key Elements of a ‘Strategy Planning Day’

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Is the thought of the strategic planning process too daunting for you to consider? Many small business owners and CEOs are inclined to put this off, thinking that such planning requires extended time away from the workplace, a commitment of additional resources and the risk of falling behind with critical deadlines.

But while it’s true an in-depth strategy planning session may take several days, there are alternatives that make the planning process more feasible for busy executives and their teams.

One such option is what’s called a “strategy planning day”—a single, focused day (at a venue generally offsite) with a schedule of intensive activities that are designed to “generate ideas [and] be done in an environment that stimulates freedom of thought and involve the right people.”

The structure of a strategy planning day may vary, depending on your business needs and other circumstances. But certain elements should be included in order to get the most bang for your buck. These include:

A skilled facilitator. It’s tempting for the CEO or owner to lead a strategy discussion, but that’s not necessarily in the company’s best interests. An objective third-party, skilled in encouraging a free-ranging discussion (but not letting the discussion get out of hand), is generally more effective in getting people involved than a business leader with “skin in the game.”

A clear view of key objectives. A vague goal of “strategy” is unlikely to move the needle in terms of efficient business planning. As part of the preparation phase, it’s vital to outline specifically what goals you intend to achieve by the day’s end—be they new product ideas, ways to enhance customer service, a revamped approach to vendor relations, etc. Knowing the “why” behind the planning session helps everyone involved stay focused on the task at hand.

A request for outside-the-box ideas. At least a brief portion of the strategy planning day should be set aside for brainstorming that adheres to no prescribed limits. Encourage team members to toss out the “craziest” solutions they have for ongoing business problems. The goal is to uncover some kernel of an idea that might lead the way to a genuinely practical solution that’s so far eluded the best minds in your business.

A few constraints. At the same time, introducing some constraints into the strategy discussion may serve to overcome commonly held misperceptions. John Jantsch of Duct Tape Marketing notes that business leaders “sometimes can’t get past why something won’t work thoroughly enough to get behind any sort of unified plan.” Addressing these constraints, he says, “give everyone a common point to attack when trying to determine strategies that will help eliminate or overcome the hurdles.”

A SWOT analysis. Analyzing your company’s strengths, weaknesses, opportunities and threats is always a good idea. When you allocate a set period of time for SWOT analysis, it helps to frame a broader discussion of your company’s place in the marketplace, its standing with respect to competitors, current (and future) forces driving sales, and so on. A strong SWOT analysis also helps to set the baseline for future strategy day sessions.

A list of planned action steps. The end result of a strategy planning day is having concrete action steps to implement upon a return to “business as usual.” Each objective should come with its own list of proposed actions, including specific steps to overcome existing roadblocks to success. Assign action steps to a team or to individual team members, along with a schedule for getting things done. Keep interest alive by promoting the work of these teams and individuals with everyone in the organization.

Following your strategy planning day, it may be time to embark on a broader approach to strategic planning. TAB’s “Strategic Business Leadership” process is designed with small and mid-sized businesses in mind. We invite you to download our free white paper today and learn more about how strategic planning can help guide your business toward greater success.

 

6 Accounting Errors Every Entrepreneur Should Avoid

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Aside from those who specialize in accounting, let’s assume you didn’t go into business because of a love of ledgers and spreadsheets. Nevertheless, few elements of operating a business are as crucial to long-term success as maintaining accurate books and staying on top of financial matters. No matter how great your new business idea or model may be, a string of accounting errors can result in severe financial deficits, leading to employee lay-offs or, in a worst-case scenario, being audited and paying significant fines to the IRS.

So if the prospect of eliminating accounting errors from your business is a top priority, here are frequent (and often overlooked) mistakes you should avoid:

1. Not grasping the fundamentals. Some business owners, caught up in developing and promoting a great new product or service, fail to clearly understand the difference between cash flow and profit. As any accountant will tell you, they are not the same things.

Cash flow refers to the stream of money coming in and out of a company as a result of sales, investment, financial activities and related operations. Profit is what a business accrues from sales revenue after all expenses have been deducted.

Closely scrutinizing your financial statements every month is the best way to stay on the right side of this fundamental business proposition.

2. Trying to do everything yourself. Sooner or later, most business owners “get” that they’re not equipped to do everything themselves—especially attempting to venture into the complex world of accounting. Invoicing, payroll processing, accounts receivable, etc., are best left to an expert. Don’t attempt DIY accounting or you may live to regret it (see tip #6).

3. Mingling business and personal finances. In the rush of daily life, it’s easy to get your business and personal finances tangled up. Your business will likely suffer if money meant to fund operations is spent on the purchase of a new tennis racquet (and left unrecorded).

Also, as veteran entrepreneur John Rampton points out, the IRS doesn’t look kindly on such sloppy record keeping: “ … while the IRS can understand that a certain number of meals throughout a month might be business-related, those tickets to a concert or video games on the business credit card clearly do not.”

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4. Failing to record cash expenses. Speaking of expenses, how often do you make a point of recording cash expenditures? Unlike payments made by check, debit or credit cards, cash laid out for business expenses can easily get lost in the shuffle. Make a habit to automatically record cash expenses as soon as they’re made.

5. Neglecting to reconcile business accounts. It’s essential that the balance listed in your financial accounts is accurate and up-to-date, and that it matches the balance recorded in your bank account. If days, weeks or months go by, and you fall behind on reconciling customer payments, credit card statements, sales tax, business checking statements, receivables listings, etc., your books will be a real mess.

6. Being too shortsighted to hire an accounting professional. So what if your wife’s nephew took an accounting class in college? That doesn’t make him qualified to handle your books, no matter how much money you save hiring him rather than an accounting professional. Hiring a CPA or other expert ensures you’ve got a person on-board with a thorough understanding of tax laws, invoicing, payroll taxes and so on.

Just as important, is maintaining regular and clear-cut communications with your accountant, so he or she knows what’s going on at all times. This applies both to keeping accurate day-to-day records, as well as forecasting the future of your business. David Wechsler, Vice President of The Alternative Board Denver West advises business owners to “Use your financial professional wisely. You are not paying someone north of $75 per hour to do data entry; you are paying them for guidance, compliance, and peace of mind that your financial house is in order.

Take accounting seriously. You owe it to the long-term success of your business.