Running a Business Isn’t a Hands-Off Operation

If you want to be successful as an entrepreneur and a small business owner, you need to know two things: 1) How to use Excel; and 2) How to plunge a toilet. Both are metaphors. Excel is about understanding how all the parts in your business come together and then purposely using that information to make responsible decisions. It means being able to play out lots of scenarios and what if’s so that you are utilizing your resources in the most profitable way. Plunging a toilet is doing whatever it takes to get the job done – even if the work is not pleasant and even if it gets your hands dirty in the process. It doesn’t matter what type of business you are running. If you want your efforts to be successful over the long haul, then these rules are practically unavoidable. I know this is something not everyone may like to hear or even agree with. From time to time, I have conversations with people in corporate jobs who tell me they are thinking of starting and running a small business. When I bring up these two points, I get responses like: “I don’t need to know Excel, I have a controller for that,” and “If the toilet is clogged, I’ll just call a plumber.” Occasionally, our clients adopt a similar attitude when we begin our work together. They may be hard workers, smart people passionately committed to their businesses. But when it comes to things like record keeping, financial reporting, risk analysis, and inventory management, they instinctively shy away. Some bury their heads in the sand...

The Cost of Poor Financials

I’ve worked with many farmers and food business owners over the years who come to me feeling stuck. Sometimes these people wonder why they are making a profit but are always strapped for cash. Others tell me they are drowning under quarterly losses or that the bank won’t give them the financing they need to operate. The problem is many of these people aren’t focused on the financial side of their business, so they can’t see what they can do to the fix the situation. Good financials are good for your business, and good for you. Not investing enough in good record keeping, financial reporting, and inventory management, receivable and payables management means you will not have all the information you need to run and grow your business. It can lead to expensive mistakes, too. I know a lot of business owners who were not able to seize an important growth opportunity or who turned to overly expensive financing because they were lacking basic financial information about their business. If your financial systems and reporting are incomplete and disorganized it will end up costing your business. Here are five big costs of poor financials: You have no clear direction. Having poor financials is like driving in the dark without headlights—chances are you won’t get to where you wanted to go. There is no real road map, and you may have little idea as to what you even want to accomplish along the way. Financial management and day-to-day operational management go together. When you start making business decisions with little regard to the financial consequences- when you don’t see the...

Six Months in the Meat Business: A Field of Dreams

By Rebecca Frimmer When I first saw the RFP (request for proposals) from Southern Tier West Regional Planning and Development Board (STW RPDB) back in October, I knew this was a project for me. It was the perfect blend of field research and business analysis to keep things interesting, and offer a unique perspective on an epidemic industry problem in a specific geographic region. I also felt compelled to get involved with this project because it connected me with a family legacy – my grandmother’s five brothers were all involved in the meat processing business, running two plants in the Williamsport area until they retired over a decade ago. I felt that this family history would help me to remain fair-handed, and not necessarily bias the results of our research in the direction of the farmers’ favors, which would be easy for a farmer advocate to do. One of the most difficult tasks when conducting research to develop recommendations is to remain even and unbiased; and avoid leading your research subjects in any certain direction. STW RPDB was looking for assistance in assessing the state of the local meat processing industry from the perspective of “values-based livestock” farmers. So this meant smaller farms that were raising species on pasture, and may use marketing terms like “grass-fed”, “pasture-raised”, “organic”, or “humanely-raised”. What we were looking to discover was whether or not the region was truly pressed against its capacity for throughput, and what we could do to ensure the capacity was there for the future of these small to medium sized farms. A lot of local farmers were complaining about...

Meet Shannon Gallagher

I joined KTC in March as their first dedicated Operations Manager. My job is to take all of the things floating around Jen and Ted’s heads, draw them out, assess needs, then create processes and procedures to fulfill those needs. And believe it or not, I love it (this is usually when Jen rolls her eyes at me in utter disbelief). As I quickly discovered, however, this is no small undertaking. I spend my days perfecting the art of contract writing, creating SOPs, attempting to crack the codes behind Ted’s one-word emails (this may be surprising to those of you who know how wonderfully “wordy” Ted is in person:), and researching ways to remove the clutter from my teammates’ plates so they can focus on the most important part – our...

FREE Webinar Series

KTC Webinar Series: Finding Cash in Your Business, Just by Using Your Balance Sheet DATE: June 1, 2015 TIME: 4:00 PM EDT Presented by Ted LeBow REGISTER HERE KTC Webinar Series: Setting Up QuickBooks. How to Build Your Chart of Accounts to Tell You HOW You Make a Profit DATE: June 08, 2015 TIME: 4:00 PM EDT Presented by Ted LeBow REGISTER HERE KTC Webinar Series: Creating an On-Farm Events Program to Drive Sales and Traffic to Your Farm DATE: June 15, 2015 TIME: 4:00 PM EDT Presented by Jennifer Brodsky REGISTER HERE KTC Webinar Series: Demystifying Social Media Marketing DATE: June 22, 2015 TIME: 4:00 PM EDT Presented by Rebecca Frimmer REGISTER HERE            Kitchen Table Consultants webinar series sponsored by Chester County Economic Development Council This program is presented in collaboration with Penn State Extension and is funded in part by a grant from AgConnect, an initiative of the Chester County Economic Development Council, through a grant from the PA Department of Community and Economic...

I was wrong…. tax accountants can be your friend.

Last week I went to an on-farm seminar on taxes. We sat outside, in front of a barn on the ground and listened to a tax accountant talk about farms and taxes. There were about 30 people there. I have always been a bit skeptical about tax accountants providing much value beyond just filing taxes. My conversation with clients usually goes something like this: What is the primary financial goal of you as a business owner? To maximize profits, right? What is the primary goal of your tax accountant? To minimize taxes; how do you minimize taxes, you minimize profits, right? Oops, we’re already at odds. Not to mention that most accountants are TAX accountants, not business accountants. Many clients simply assume that by having their accountant look over their financials and doing their taxes that they’re getting financial oversight, review, support (insert a word here for feeling better that someone with experience and knowledge of your business is making sure you’re on track). Here is the problem: Tax accountants want you to structure your financials in a way that makes it easy for them to file your taxes…. I’ve read literally hundreds of companies financials and looked over their tax forms; they are two VERY different sets of documents. One tells a story to the owner (or it’s not really telling us anything) and the other is set up to tell a story to the IRS… you tell me which you’d rather read. By the very nature of the tax accountant’s primary role of reducing your taxes, they are not pre-disposed to look at understanding how your business...

We’re making a profit but where the heck is the cash?

– A Detective Story I started working with a 200+ acre multi-generational farm a few years ago. After reviewing their income statement they asked me why they were making a “profit” but didn’t have any money in their bank account—it didn’t make sense to them. So we started a systematic approach to figuring out what was going on. Detective Work – looking for trends and issues in the income statement. We exported the income statement, by quarter, for the last 2 years into excel. We looked at Cost of Goods Sold as a percentage of sales, where there quarters that were particularly high low—could we explain the variability? We reviewed general expenses to determine if there were any abnormally high or low expenses. By reviewing multiple quarters next to each other we could see trends in many areas, but nothing that told us there was something out of the ordinary. We did determine that there was little consistency in the manner in which expenses were recorded, and how sales and costs related to each other, but it clearly showed they had a 12-month profit of nearly $150,000 – but where was the cash? Sleuthing To Solve the Mystery – looking for trends and issues in the balance sheet. Again, we exported the balance sheet, by quarter, into excel for the last 2 years. We reviewed inventory, accounts receivable, assets (equipment), accounts payable, and debts (liabilities) and here is what we found: Inventory wasn’t changing at all. Account Receivable was up. Assets were up by nearly $400,000 from just 12 months earlier. Accounts Payable was up a lot, too. Debts...

“Strive not to be a success, but rather to be of value.”

– Albert Einstein