Spend Time on Doing the Right Things for Entrepreneurial Success

Are you spending your valuable time doing the right things for entrepreneurial success?

“Due to lack of internal controls, documented processes, and no reconciliation function between two disparate systems, we inadvertently spent almost $1 million of our members’ fees for no reason,” said Rob Roberts of San Antonio Board of Realtors.  

“It took us hours to collect time and process our payroll every two weeks, and then another several hours to upload the Excel spreadsheet into QuickBooks and create all the appropriate journal entries,” said Cindy Hawkins of Little Engine Homecare.  

These are the stories we hear every day from local businesses that are struggling to manage operations while growing.  

When I built my company in Mexico, I was hyper-focused on client acquisition and retention.  I immediately off-loaded the accounting responsibilities to a local CPA firm and our in-house controller.  I worked closely with both so that I could track our bank balances.

I also used four essential documents to inform my situational awareness about my company:

1. Weekly and monthly profit and loss statements
2. Weekly and monthly cash flow statements
3. Budget and cash flow forecast for 13 weeks into the future
4. Weekly key performance indicator reports

Once I had those necessary tools, I was able to go back to focusing on what I do best, which is client acquisition and retention.  

All of us like to do what comes naturally to us, what we have the most faith and confidence in doing. Many small entrepreneurs excel at customer service.

For all the other “stuff” business owners like me don’t like to manage, we need to have a quick way to measure it, see if there’s a need to intervene, and if not, go back to doing what we all do best. 

It’s about spending your valuable time focused on the critical activities needed for your entrepreneurial success.

However, some entrepreneurs don’t have the financial education to understand how vital these tools are in making day-to-day operational decisions.  These reports let me determine whether I was able to afford to host a client event, and if so, what could I spend.  They helped me to understand how much I can afford to spend on marketing.  They also helped me know how busy my consultants were and if they were billing 60% of their time or 110% of their time.

I used those reports to forecast and plan for future hires. If we were going to be short on cash, I knew it a couple of months in advance. I could get more aggressive on my collection activities or delay a couple of accounts payable payments to hoard enough cash to cover the future shortfall. 

Exerting precision in my management decisions, coupled with an aggressive growth plan, helped us scale rapidly and build a multi-million-dollar business in a few short years.  When we later sold to private equity, the “cleanliness” of our financial records helped us get top dollar in that deal, too.  

A key influencer of entrepreneurial success is having the right trusted advisors. At a minimum, business owners looking to scale company growth should have:

• A tax accountant to help with entity structuring to minimize both business and personal tax liability
• An auditor to ensure adequate internal controls and clean financials
• A financial planner to work with you on long-term family planning
• A banker(s) you work with regularly to assist with speeding up your cash conversion cycle
• Lawyers who are experienced in your business sector to protect your intellectual property
• Insurance brokers who provide cost-effective solutions as your business grows enough to leverage other plans, and
• Technology partners to ensure you are leveraging technology effectively

As a business owner, it’s about going beyond your comfortable space and learning a little bit about a lot of different things.  You don’t need to be an expert in everything, and you never will be, but you do need to know “enough” and what questions to ask.  

Our goal as business owners is always to be efficient because that means we are running a profitable business.  Staying hyper-focused on efficiency means you will spend your time doing what it takes to be successful as an entrepreneur.

Timothy D. Christ and his team at Express Information Systems provide accounting software and ERP systems expertise for many small- and medium-sized businesses in San Antonio over 30 years. Christ recently published Outgrowing QuickBooks: Engineering Real Profit (ERP) in Companies with $10 Million-$50 Million Annual Revenue to share what he has learned from helping clients scale their growth.

The featured image is of two entrepreneurs at a whiteboard. Photo credit: Kaleidico on Unsplash.