Monthly Archives: November 2011

Book Report #4 – Poke the Box

I was on such a roll, posting these so frequently…oh well. I actually did read Delivering Happiness in between Godin books but I took a ton of notes on that book. I need to edit them down before posting the review. It was a great book though.

Poke the Box is a short, quick read – only 84 pages long. I read it over several lunches, but it could easily be devoured in one sitting. The book is described as “a manifesto about starting”. But the biggest message for me was accepting that failure is okay, even desired.

I think the reason that hit home is we are taught failure is bad – our parents, teachers, coaches beat us over the head with it. Conformity is preferred and our society has been designed around that. Godin links this back to the industrial age, when factory work was common and people were essentially cogs in “the machine”. As I’ve discussed before – we are no longer a manufacturing economy, we are a knowledge economy, but our support systems have been slow to catch up.

I dog-eared several pages in the book. Here are some of my favorites:

  • When you ask someone “what do you do here”, almost no one says “I start stuff.” Godin asks then, where does innovation come from? (page 9)
  • On Mediocrity – people love to point out businesses (or government) that do a poor job, but Godin writes “we almost never look at merely mediocre products and wonder why they aren’t great….the upside for you (and the challenge) is to find the energy and the will to challenge the mediocre.” (p. 22)
  • On starting useful projects – “The fact that it doesn’t work every time  should give you confidence, because it means you’re doing something that frightens others.” (p. 28)
  • On Excellence (& Tom Peters) – “Excellence isn’t about working extra hard to do what you’re told. It’s about taking the initiative to do work you decide is worth doing.” (p. 34)
  • On Boundaries – basically how we can easily list all the things we are not allowed to do, but when asked to provide an “allowed” list, it becomes much harder. (p. 37)
  • “The Joy of Wrong” – story of the first Starbucks and how even though it looked nothing like current Starbucks, that first iteration ultimately led to what exists today. (p. 41)
  • “The person that fails the most usually wins” – self-explanatory but a good reminder I should be failing more often. (p. 52)
  • “10,000 hours, hard work, and an overnight success” – the story of the band Hollerado and how they didn’t wait for a label to sign them, but went out and innovated – figuring out a way to make a living they can be proud of. Probably my favorite story in the book. (p.57-59)
  • “I wonder if there is a moral obligation to start….You must make a difference or you squander the opportunity.” (p. 64) Very powerful.

Godin always gives us something to think about. And more importantly encourages and challenges us to go out and share and put into action the ideas and concepts he so graciously shares. I strongly encourage you to read this book if you haven’t already.

Giving Thanks

This year (and every) I am very thankful for my customers who let me into their lives, trust me with their information and allow me to work beside them to achieve their business goals.

I am so thankful I found my community and am excited to see where the future takes all of us. We are innovating was some think is a boring profession and showing the world what a CPA should be.

Of course I am thankful for my family. They celebrate the good days, lift me up on bad ones and are there to support me as I strive to do the best I can and hopefully make them proud.

Happy Thanksgiving.

What is cash flow?

While reading this excellent article about a guy teaching his son some early business lessons using a soda machine, I got to thinking. No, I wasn’t thinking I should buy my son Adam a soda machine (he’s only 4).

I thought about small business owners and how crucial cash flow is to them. Wikipedia defines cash flow as “the movement of money into or out of a business, project or financial product”. From experience, I also know that many make the mistake of equating profit with cash flow. While related, the two are different. I’ve heard several times “I’m making money on these jobs/sales, but we never seem to have any money.”

For example, Wal-Mart is known for their killer distribution system. They can get products from vendor to warehouse to store shelves so fast, I would guess they might actually sell a lot of the product before they even have to pay their vendors. That is basically the dream scenario when it comes to cash flow -  collect the sales revenue before you even have to pay for the cost of that revenue.

But not every company has that power. Take a contractor for example. Due to the nature of the business, they are usually paid some money up front and the balance at the end of the project (perhaps some in the middle if there are multiple steps in the job). Assuming the contractor prices the job to make a profit, his cash flow is still less than ideal, since he will probably incur all the costs of the job – materials, labor, permits, etc. before being paid in full.

So how does he handle this? There are 3 types of cash flow in a business and each of those can certainly help:

  1. Cash flows from operations – this is cash generated (or used) from normal business activities – selling, collecting accounts receivable, paying accounts payable, etc. In the case of our contractor, he could use cash from previous jobs to foot the costs of the current jobs and so on. In my opinion, this is the best way to run a business.
  2. Cash flows from investing – this includes cash generated (used) from things like selling (buying) equipment. Usually selling equipment to meet operational costs is not a good idea, since you will probably need that equipment later on.
  3. Cash flows from financing – this covers cash generated by issuing stock or taking on debt or used by paying dividends, repurchasing stock or paying down debt. Many companies have a line of credit with a lender that can help bridge the gap temporarily. However if it is overused it can lead to trouble.

There are several ways within each of these three types that business owners can manage their cash flow. Next time you sit down and look at your books, don’t stop at your profit & loss  (income statement), take a look at your cash flow statement too. It is a good tool to help understand the total picture. Or why even a profitable company may be struggling with cash.

How is your company managing cash? What strategies have you used to improve your cash flow? I’d love your input, either in a comment below or via email.

Thanks for reading.

 

The Value of Community

My original title for this post was “you’re not weird…you just haven’t found your community yet”. But I thought that was too long.

After traveling to Greenville, SC last weekend for the THRIVEal Firm of the Future Symposium, I can finally say I’ve found my community.  From the moment I met Scott & Carl at the airport, to the moment I thanked Jason and flew home I felt welcomed and inspired by everyone around me. This from 40+ people I had only “met” online or talked to on the phone.

(This post isn’t going to rehash everything we learned during the Symposium, frankly I haven’t digested it all yet. And others do a much better job of explaining things.)

This is about my journey, starting about a year ago. Around that time something started to bug me about my profession. I thought we as CPAs we capable of so much more than simply producing a tax return or financial statement or “selling our time”. I started poking around the internet and found a few folks doing just that – giving their clients awesome service and actually innovating this profession!

Looking back, I’m not even sure exactly when or how I came about finding THRIVEal – it is almost like someone dropped it in my lap and said “here Kevin, you need to see this”.

From there, the group grew and we started to congregate on LinkedIn and share information. When Jason announced he was bringing Ron Baker & Ed Kless to Greenville to speak, I knew I had to go. I had read Ron’s book Firm of the Future and it just made sense.

Now I know what Simon Sinek talks about in his post about weirdos. We are the “left-siders”. Sometimes it is lonely, but we know our work must be done. We will support and counsel each other as we drive change.