Tag Archive for 'CEO'

11 financial fundamentals every small business CEO must know

Regardless of the size of the business, ultimate responsibility for success lies with the CEO. If you’re a small business owner, that’s you. And the most critical CEO tasks that result in success or failure lie in the knowledge and practice of financial management fundamentals.

Statistics show that over half of small businesses fail within the first four years. Clearly that mortality could be significantly reduced if, before a business opened, the founder/CEO was required to pass a course that teaches business financial fundamentals and how to operate a business with them.

If you could use a little help in this area, allow me to identify some of the key elements that would be part of the curriculum of such a course.

-  CEOs shouldn’t do their own accounting, but successful ones learn how to manage with regular (at least quarterly) financial statements (balance sheet and profit-and-loss) that an internal and/or external accountant produced.

-  Successful CEOs know what their gross profit margin needs to be and what it is.

-  Smart CEOs track monthly sales-to-expense ratios in order to know when to adjust spending.

-  Savvy CEOs monitor inventory levels against projected sales, receivables and cash.

-  Real CEOs know how to calculate Accounts Receivable days and Accounts Payable days, understand the relationship between the two, and the impact of that relationship on cash.

-  Disciplined CEOs develop a capitalization strategy that blends retained earnings with short and long-term capital sources, like bank debt.

-  Capable CEOs identify the critical financial indicators and ratios that are revealed on the balance sheet and its relationship with the profit-and-loss statement.

-  Surviving CEOs believe and prepare for the cruel irony of how sales growth becomes dangerous when not properly funded, indeed, that you can succeed yourself out of business.

-  When a business isn’t profitable, professional CEOs identify the top impediments to profitability and deal with them quickly, decisively, and without emotion.

-  Perennially successful CEOs delegate many things well, but they stay close to the company’s cash picture from tomorrow to the next 12 months.

And finally, arguably the most important financial management CEO discipline:

-  Understand and monitor the relationship between Blasingame’s Three Clocks of Small Business: The Expense Clock, the Sales Clock and the Cash Clock.

If you already own a small business and cold sweat is popping out on your forehead right now that should motivate you to kick your financial education into high gear and become an expert on these fundamentals.

If you haven’t started your business yet, don’t until you can pass this course.

Write this on a rock … The ultimate responsibility for your business’s financial performance belongs to the CEO - that’s you.

To listen to Jim talk more about the 11 financial fundamentals for CEOs, click on one of the links below:

6 financial fundamentals every small business owner must know

5 of the 11 most important small business financial fundamentals

Three fundamentals of small business capitalization

The first sentence in the job description of every CEO should be, “Get the capital your company needs.”

Webster defines business capital as, “any asset, tangible or intangible, that is held for long-term investment.” Capital blended with operating cash flows becomes the financial fuel your company’s engine uses to operate with and fund growth.

•  Investment Capital — from you or someone else.

•  Borrowed Funds — for most small businesses, from a bank loan.

Additional capital is required just to STAY in business beyond what was necessary to START the business. And the stay-in-business capital is much more than the get-in-business capital. Success begets growth and growth eats capital like Cookie Monster eats chocolate chip cookies. So without a capitalization plan you can grow yourself out of business.

Here are three capital allocation guidelines.

1. Don’t use operating cash to purchase assets.

2. Don’t borrow money for operating expenses.

3. Funding growth with borrowed money is okay, if you have a plan to convert growth funding from debt to retained earnings.

Retained Earnings

As the CEO or your business, it’s your job to acquire, manage, allocate and maximize all sources of capital.


Jim Blasingame is the author of the new book,”The Age of the Customer: Prepare for the Moment of Relevance.

Three fundamentals of small business capitalization

The first sentence in the job description of every CEO should be, “Get the capital your company needs.”

Webster defines business capital as, “any asset, tangible or intangible, that is held for long-term investment.” Capital blended with operating cash flows becomes the financial fuel your company’s engine uses to operate with and fund growth.

•  Investment Capital — from you or someone else.

•  Borrowed Funds — for most small businesses, from a bank loan.

Additional capital is required just to STAY in business beyond what was necessary to START the business. And the stay-in-business capital is much more than the get-in-business capital. Success begets growth and growth eats capital like Cookie Monster eats chocolate chip cookies. So without a capitalization plan you can grow yourself out of business.

Here are three capital allocation guidelines. Don’t use operating cash to purchase assets. Don’t borrow money for operating expenses. Funding growth with borrowed money is okay, if you have a plan to convert growth funding from debt to retained earnings.

Retained Earnings

As the CEO or your business, it’s your job to acquire, manage, allocate and maximize all sources of capital.


Jim Blasingame is the author of the new book,”The Age of the Customer: Prepare for the Moment of Relevance.

The CEO Question: Where is my company going?

In my last column I stated that every business, including small ones, have assignments that can only be performed by the Chief Executive Officer (CEO). Plus I revealed:

  1. CEO strategic responsibilities are not optional.
  2. Small business CEOs have to periodically transport themselves from the operating trenches to a 30,000 foot strategic orbit.
  3. The CEO’s three Big Pictures: Where have we been? Where are we now? Where are we going?

The third Big Picture is the sole domain of the CEO, and that’s what we’re going to cover now. A handy way to find answers to “Where are we going?” is to apply what I call the Big Four Factors: Bricks, Clicks, People, and Capital.

BRICKS
Location and space is considered over a span of years: one, three, five, twenty, etc. What will your operation need to look like in five years? How long will your current location serve you? Will the physical space align with your strategy? What infrastructure and equipment will you need in one year, or five?

CLICKS
This is internal and external technology. Internal is hardware, software, networking and connectivity required to both buy and sell efficiently and productively. External is the technology you ask customers to use in order to do business with you. This timeline is shorter than BRICKS; usually months or a year or two.

PEOPLE
The line between consideration for PEOPLE and CLICKS is becoming increasingly blurred. What will the company need humans to do in one, three, or five years? How many people and what kind of talent will you need? What kind of technology and training will team members need to meet these requirements? How will technology adoption impact the organization chart? Which jobs require employees and which could be filled by an outsource contract?

The second part of PEOPLE is customers. What will your customer profile look like in one, three, or five years? What will be their expectations? What do you have to do to meet those expectations with relevance, not just competiveness?

CAPITAL
How will you fund the future? What financial management systems and standards will you need? What combination of retained earnings, debt, and investment will produce a successful capitalization strategy?

Only someone filling the role of CEO can ask and find answer these strategic questions. Who’s asking these questions in your business?

This will be on the test: CEO duties are not optional?

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Check out more of Jim’s great content HERE!

Take this week’s poll HERE!

Watch Jim’s videos HERE!

Who’s doing the CEO’s job in your small business?

Every business has assignments that must be performed by the Chief Executive Officer, a.k.a CEO. Not the founder, owner, or manager; the CEO.

But in a small business, assuming the duties of a CEO is often difficult. It’s not difficult for a small business owner to assume the role of general manager. But it’s another matter to get that same person to realize CEO duties are different from management tasks required to open the doors and serve customers today.

A CEO’s job is to make sure the business’s doors are still being opened next year and the year after. It requires committing time, energy, and assets to the strategic duties of a CEO. Let’s look at the three focal points of the job of CEO.

Where have we been?
A business’s history is like the tap root of a tree, anchoring against marketplace winds while delivering nutrients to green shoots of opportunities. While successes are celebrated by all, past mistakes are valuable only to those who plan the future. Successful CEOs use history to inform, not restrict them.

Where are we now?
Yes, managers know where the business is now, but only from the perspective of inside their four walls. A CEO’s status quo perspective is best viewed from 30,000 feet, which is to say, outside the four walls.

These two focal points are the curriculum and obstacle courses of CEO boot camp. And since they include information also known to a manager, it’s understandable for an owner/manager to believe that they’re constantly doing the job of the CEO. But adding the next focal point to the CEO’s assignment separates managers from strategists, pros from amateurs, and ultimately, success from that other thing.

Where are we going?
This is the advanced course, where small business owners who desire more than mere success—repeatable, sustainable success—learn and practice the elite work of a professional CEO. But these tasks are the most difficult for a small business CEO to accomplish because they should not be performed in proximity to the operational trenches.

Finding the answers to “Where are we going?” is the CEO heavy lifting. It requires exchanging a manager’s blue collar hat for a CEO’s white collar hat. It means being intentional, disciplined, and committed to allocating time and resources to the job of a real CEO.

I’m going to devote my next column to the details of “Where are we going,” which will include what the future holds for the Big Four Factors considered by every CEO: bricks, clicks, people and capital. Stay tuned.

Being a small business CEO is not easy, but it’s also not optional.

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Be sure to listen to my latest segments from The Small Business Advocate Show® where I talk more in-depth about being the CEO of your small business.

Social media strategy and the small business CEO

The conflict between you and the social media CEO

You are a CEO, but are you doing the job

The hardest job in the marketplace is the Chief Executive Officer of a small business.

So how could it be harder to be the CEO of Excel Supply, LLC, than the CEO of Exxon? Let’s look at the definition.

Investopedia says a CEO is, “The highest ranking executive in a company whose main responsibilities include developing and implementing high-level strategies, making major decisions and managing overall operations and resources.”

For every element of that definition, Exxon’s CEO has a cadre of presidents reporting to him about how they’re managing battalions of VPs, brigades of managers and armies of employees. Exxon’s CEO manages that handful of presidents who bring him performance updates.

The CEO of Excel may have managers reporting to her, but she’s never more than one degree of separation from the work, and likely the alpha member of any given task, especially things like capitalization, cash flow, business development, etc.

There is one thing that sets all CEOs apart from every other position and it’s the first item in the definition: high-level strategy. A CEO’s primary job, which can be supported but never delegated, is to determine the long-term direction of the company. Every business, large or small, must have someone doing this CEO job, whether they use the title or not.

Big business CEOs spend very little time managing and most of their time working on strategy and future direction. Conversely, and unfortunately, most small business CEOs spend too much time managing and too little on executive thinking.

Recently in our online poll, we defined a CEO and asked small business owners: “How difficult is it to budget CEO time away from managing?” Here’s what we learned.

Only 3% said they had “…found a way to balance management and CEO duties,” and 8% allowed they were “…inconsistent but getting better at it.” Over half of our sample said they “…can’t focus on CEO tasks for putting out fires,” while one third rejected our premise with, “I’m a small business owner, not a CEO.”

Here’s a practical way for small business owners to increase their CEO activity: As often as possible – at least once a year – fire yourself from jobs someone else can do and promote yourself to jobs only you can do. This will push you toward more executive thinking and behavior and put you on a natural path toward performing all the tasks of a CEO, including charting the long-term course for your small business.

Every business needs someone doing the work of a CEO – that’s you!

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Recently on my radio program, The Small Business Advocate Show, I talked about becoming a better CEO for your company. Click on the link below to hear what I had to say. I’m also interested in what you think, so please leave a comment.

Commit to the resolution of becoming a better CEO

Check out more of Jim’s great content HERE!

Take this week’s poll HERE!

Watch Jim’s videos HERE!




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