Financial Boot Camp: Basic Business Training for CEOs
11/15/2006
by Jennifer McGuiggan, writer and editor, owner of The Word Cellar

“How is it possible to be making $3 million and be going bankrupt?” asks Deborah Moses, Executive Director of PowerLink (www.powerlink.org), a Pittsburgh-based non-profit that grants one-year advisory panels to women-owned businesses.

The answer, says Moses, lies in the financial statements. Through PowerLink’s work with local business owners, Moses observed that many CEOs were running successful companies and bringing in significant revenues, without really understanding how to read, analyze, and use their financial statements.

PowerLink responded by establishing a Financial Boot Camp. The goal of the day-long course is to make participants better CEOs by enabling them to fully utilize their financial statements. Many of the participants are recipients of PowerLink advisory panels. They attend the Boot Camp as an opportunity to gain greater familiarity with financial statements, as well as a way to make their panel experience richer.

Women-owned businesses that receive a one-year PowerLink advisory panel benefit from the expertise of other business owners, CEOs, COOs, and industry specialists. The panels, which usually consist of three to seven advisors, give recipient CEOs a new perspective on strategy, profitability, operations, capital, sales, and other issues critical to success.

Vicki Gass, President of J&J Fire Protection Company, Inc. in Butler County is a current PowerLink business. Gass attended PowerLink’s fifth Financial Boot Camp, held this past August. She says that while she knew the basics of a financial statement, the course enabled her “to use it more effectively. It definitely took me to another level.”

The course is broken into two sessions. The morning is a sort of Accounting 101, says Moses. Dan Miller, CPA, Markovitz Dugan & Associates (www.markovitz-dugan.com) presented this session in August, covering things like cash flow statements, balance statements, and the basic elements of accounting.

The afternoon session delves into how to use that accounting knowledge to run a business. Moses identifies four key practices, all based on using the financial statement, that CEOs need to use to make good business decisions.

1.  Budgeting: In order to look at the future of your business, says Moses, you “need a roadmap to run your company.” Having a realistic budget in place also gives you a baseline to monitor your company’s performance.

2.  Benchmarking: Moses explains that business owners can use financial data to compare their companies with the competition.

3.  Ratio analysis: A ratio analysis tells you how your business is doing at any point in time relative to cash and debt, says Moses. It can answer questions such as: Do I have enough cash? Is my debt too high?

4.  Break-even analysis: Knowing when you break even and when you start to turn a profit enables you to make a wide range of decisions, such as when you can afford to hire more staff.

Sue Parker and Debbie Ferlic, CEO and COO of PS2Engage, LLC (http://www.ps2engage.com), covered these four key areas during the afternoon session. In their work with small business owners and entrepreneurs, Parker and Ferlic focus on three key areas of business success: personnel growth, strategic planning, and sales performance.

Parker and Ferlic received a PowerLink panel in1996 when they had another company together. Since then, they’ve been active with PowerLink as a way to give back to other business owners. Parker points out that while the business climate has definitely changed in the past several years, making profitability more difficult, the challenges still “come down to the basics.” She says that the biggest financial hurdle for small business owners is strategic planning. “CEOs, in particular small business CEOs, have so many responsibilities, from sales to marketing,” she says. “You have to spend time in the CEO role – looking at the strategic planning and financial statements. You must take the time to do that every day.”

During the interactive Boot Camp sessions, participants examined a case study of a real business in Philadelphia, in which the owner had revenues of $3 million and discovered that she wasn’t making any money. Participants, whose business revenues have ranged from $100,000 to $7 million, can learn a valuable lesson from that, says Moses. “If you don’t have the financials down, you’re dead,” she says. “You have to know your financials. You have to.”

Moses knows that financial topics don’t have the “glitz and glamour of sales and marketing.” But, says, “The numbers tell the story.” Participants are encouraged to take what they learn back to their businesses and practice it.

Gass is planning to make a big change as a result of attending the Boot Camp. In its 24 years of business, and even with $1.6 million in revenue and 19 employees, J&J Fire Protection has never had a budget, Gass says. But the Boot Camp showed her how to use historical data from financial statements to create one.

Parker says that going through the Financial Boot Camp enables business owners to talk to their PowerLink panels in the “same language” and thus get better advice. Gass agrees. One of her first goals for her PowerLink year is to select a new CPA. She says that attending the Boot Camp has enabled her to ask the right questions and focus on the important issues when interviewing CPAs and talking to her panel.

“The session was very well worth the time and effort,” Gass says. “The presentations were well done. They really fell over themselves to give us as much as they could. They really went the extra mile to help out.”

About the Author: Jennifer McGuiggan is a freelance writer and editor, and owner of The Word Cellar (www.thewordcellar.com). She writes for a variety of publications and clients, including businesses, entrepreneurs, and non-profits.

SBA Recovery Lending Extended Through May
Administrator Mills presses for longer-term extension for successful programs

"Bridge" Loans Now Available Through SBA
The SBA is now accepting loans for a temporary new program called America’s Recovery Capital. “ARC” loans of up to $35,000 are designed to provide a “bridge” for viable small businesses with immediate financial hardship – to keep their doors open until they get back on track.

Holding on Price in a Down Economy
Discounting on price is not a sales strategy. It's an impulsive move made by desperate salespeople. In a tough economy, customers think and expect everything is going to be discounted. Because of this, salespeople feel it necessary to oblige the customer to close the deal. Unfortunately, however, this leads to a downward spiral, much like an addiction to an illegal drug. Once a discount is offered to one customer, it becomes easier and easier to offer it to another one. Before they know it, the discount is being offered to everyone. Like a drug, the "fix" is in the additional sales the salesperson is able to gain. However, just like with the addictive drug, there is a "withdrawal." Sales come at a reduced or a very reduced margin. To make matters worse, the discount ends up altering the attitude of the customer who now believes the real value of the product or service they bought is the reduced price and not the full one.

ATHENAPowerlink's Impact Immediate For Recent Graduate
ATHENAPowerLink®’s impact on expanding profitability for women through the use of professional advisory panels has been significant for several years.

Deanna Tucci Schmitt, is one of three recent graduates from Fayette, Greene, Washington and Westmoreland counties who can attest to the value of her year-long mentoring.