Financial Mastery for Business Growth

June 3, 2016

Financial Mastery for Business Growth
Step #1- Set Your Sights on Financial Mastery

One observation that has continually struck me over my twenty-five year career advising businesspeople is how often financial management, let alone mastery, is overlooked and avoided.

Successful business leaders embrace financial management as much as they do engineering, marketing, and sales. Yet many otherwise excellent business managers leave finance to others without retaining their own leadership and creativity in the matter. Business powerhouses are built on firm financial management and proactive relations with capital providers, so that fleeting opportunities can be seized in the moment.

The approach outlined in this series has delivered significantly greater access to capital for 95% of the clients that have engaged us over the last twenty-five years. Given the critical importance of finance in capital-intensive industries, there is much to be gained by setting your sights on business financial mastery.

When we say business financial mastery we mean knowing every aspect of your company’s revenues, expenses, assets, and liabilities, and how they show up in your bookkeeping, financial statements, and presentations. This knowledge becomes the basis for efficiently evaluating and responding to urgent opportunities.

It is one thing to trust your passive investment funds to the capable oversight of a stockbroker or mutual fund manager. It is a wholly different matter to defer to staff, accountants, or bankers when it comes to your business financial life.

Our intention at Strategic Rail Finance is to illuminate business financial mastery as an executive management skill that pays big dividends when attained.

We work with many businesspeople who fervently attend to management responsibilities such as sales and project management while deferring to others when it comes to bookkeeping, financial statements, company presentations, bank relations, and ultimately to their access to capital for growth. Instead of investing ongoing attention to capital access, they focus on finance at the 11th hour when their back is against the wall or they need capital for a pregnant opportunity. This management style forfeits control to lenders and usually results in less than ideal structure, terms, and overall access to capital.

An important question for business leaders is; what do we want to master ourselves and what do we want to trust others to do for us. Delegating to others is fine if you have the executive insight to know the role of finance in reaching your business goals and can then interact powerfully with those to whom you have delegated.

Like any skill, there are methods and approaches to attainment. Our 10-step “Financial Management for Growing Your Business” Series is a roadmap of the path for attaining this mastery. Each week we will follow this initial communication with the next step on the path.

Before we continue, you can ask and answer for yourself: Is business financial mastery something you want to develop?

Step #2- Establish Complete Control of Your Finances

In our clients’ tightest financial times we build a month-by-month and sometimes week-by-week cash flow spreadsheet of every dollar coming in and out of their business. This “Company Management Tool” provides the missing rudder for stabilizing relations with vendors, lenders, customers, and employees.

On the other hand, when your company is on an even keel, not in stress mode, financial control makes for smart decision-making and lots more profit.

This control is rare among businesspeople for no good reason except that it hasn’t been taught in business schools or by our mentors. This is why the first three steps of our series, “Financial Mastery for Business Growth” are Step 1) Financial Mastery, Step 2) Financial Control, and Step 3) Financial Integrity. These three steps will take you and your business to new heights of success, profitability, and ease.

Too many business people needlessly fret over the uncertainty of not being in control of their finances when control, no matter in growth or turnaround mode, could be at their fingertips. 

We invented our Strategic Rail Finance “Company Management Tool” because QuickBooks-type bookkeeping systems and financial statements are inadequate for proactively managing a business. They provide historical and comparative data in hindsight only. Even otherwise useful business projections typically built around an annual, long-range planning framework do not allow adjustments as actual results occur, so they are relatively useless as a management tool.

You can create your own “company management tool” by building an excel spreadsheet with columns for each month (or weeks in tight times) with rows that capture each and every cash outlay and all income. The starting point is your current checking account balance. What matters in running a company effectively is how much cash is in the checking account now and at any point in the future as bills are paid and revenues are collected. Then you clearly know how much will be available for catching up on payables, investing in business growth, or distributing to shareholders.

Banks, lenders, and investors fawn over our clients because they don’t see this level of business control elsewhere. They can see where the repayment will come from. They trust us, and trust attracts capital. See our Case Studies.   

Having your own “company management tool” is as valuable as the dashboard on your vehicle. Once you have this spreadsheet in hand, you will have every activity and relationship displayed in one document. It becomes the discussion outline for conducting strategic conversations with your team and for orchestrating the day-to-day operational decisions that mostly all circle around money. With the hands on the steering wheel of your company, you can plan, negotiate, and commit with certainty that you can meet your goals and your obligations.

Our next edition will cover Financial Integrity—the power of making promises you know you can keep, keeping the promises you make, and communicating when you can’t.

Let us know if you would like to discuss your opportunities and how we can help you attract all the capital you want.


Strategic Rail