Super Bowl Management Quality

Super Bowl Management Quality

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They should have seen it coming.

Didn’t some pundit declare something like a 99.9% chance of a Falcons victory with about 8 minutes left in the game? Somebody please clarify if that was actually the case.

A rather pompous thought that I kept to myself while watching Super Bowl LI, after Atlanta took a 28-3 lead, was “Brady’s just smiling at the bigger point differential that he’ll get to cover on his way to a win.” In hindsight, that comment would have been brilliant…had I actually said it.

They should have seen it coming.

Yes, it is easy to prognosticate in hindsight, but that’s not the point here. What did it take, what did the New England Patriots do to win another championship, aside from setting 24 new Super Bowl records and tying 7 others?

  1. People
    Bill Belichick has been the head coach of the New England Patriots for 17 seasons. He is in the top 5 winningest coaches in NFL history.
    Tom Brady has virtually cemented his place as the NFL’s greatest quarterback of all time. Based on the last 17 years of performance, he was a steal in the 2000 NFL draft, going in the 6th round (199th)
    The rest of the team contains very few “superstars,” yet when their superstar QB was suspended for 4 games to start this season, the team went 3-1.
  2. Management
    This starts at the top with vision. In the five seasons before Robert Kraft bought the franchise in 1994, the team was 19-61 (a .238 winning percentage). In 1994, the team made the playoffs, and did so 4 of the first 5 years under Kraft’s ownership.
    Management’s plan clearly put great emphasis on people. Since Kraft took ownership, the team has only had 3 head coaches, with Belichick, the current head coach, being in place for 17 of 24 seasons of Kraft ownership. The team is part of a privately owned family enterprise.
  3. System
    What words could you come up with to describe the system that has propelled, and maintained, team success for so many years, including the greatest comeback in Super Bowl history? Many had felt that the game was over at half-time: no team has ever come back to win the Super Bowl from more than 10 points down, Atlanta was dominating both sides of the ball (offence and defense,) and New England was making mistakes (turnovers, dropped passes, missed kicks.) Yet, the Patriots found a way to win. They had a system, and stuck to it, never giving up, never quitting. It would have been easy to deviate from their system in the face of such adversity; it would have been easy to lose motivation under what was deemed to be an insurmountable deficit.

The New England Patriots are by all accounts a highly successful business. How does your business compare? Can you reach top decile?
People: do you have the right people in the right place? It does not matter if they are family members or not, evaluate everyone, even yourself.
Management: does your management team have a vision and a strategy to achieve results that would put you in the top 10% of comparable businesses?
System: have you developed systems that are proven to work year in and year out, providing you with dependable efficiency and results? Or is every year a new roll of the dice?

Management has a vision, they put the right people in place, and everyone executes the system.

To Plan for Prosperity

Set yourself up for success. Model your business, and your approach to business, after other successful enterprises. We may not be New England Patriots fans because we envy their consistent competitiveness and success, similar to how we may not be oozing with adoration for the most successful farms in our area, but doesn’t that make them a great model to follow?

For the record, I’m not a Patriots fan, I am (at best) a casual NFL fan. I was actually hoping Atlanta would win Super Bowl LI (for no specific reason,) but I’m not disappointed with the outcome; it makes for some great storylines and it forces everyone to admit some admiration for an enterprise with the success rate of the New England Patriots.

Your 2017 Plan

Your 2017 Plan

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If it’s not done yet, you’re already behind.

They say to be a successful chess player, one must always be thinking 3 or more moves ahead, each with one or more alternatives on how your opponent will respond. The same can be said for business. Successful business owners are already thinking about 2020 and 2023, with a big picture vision of 2027 (that’s three, five, and ten years out.) They know that the decisions made today will affect their circumstances not only next year, but beyond.

This is a difficult focus to maintain when trying to get through the day to day challenges while under fire. Weather, break-downs, employee or family bickering can all make your days’s best plans worthless is a blink. And when days roll into weeks, weeks into months, and months into years, it is easy to not have the time (or not take the time?) to plan because we’re just trying to survive the daily onslaught, and maybe find time for an evening or weekend off…possibly even a short holiday in summer.

The most common objection to planning that I’ve heard over the years goes something like this: “Things change so much and so often that any plan is worthless in a month, or less!” That is an example of the mindset that I won’t work with (I’ve just given a hint at how I vet any prospective business engagement.)

A plan is not a binding document; it is more like a road map that you’ve built yourself.

Like a map:

  • your preferred path to your destination is clear;
  • your options, should you need to detour from your preferred path, are laid out;
  • what lies beyond your destination is illustrated for your consideration.

Unlike a map:

  • you’re not taking someone else’s word for what lies ahead because you build your own route.
  • you have the power to create your own alternative options, not just accept what is already there;
  • you can rewrite your plan if it isn’t working well; good luck trying to rewrite a map.

Understand that the total package of planning for your business is actually 4 parts: Strategic (what), Tactical (how), Operational (execution), and Financial (results & growth). Don’t let this scare you! To form a habit of planning, one does not need to complete all 4 tiers. Start with what you know (for most farmers, that is “operations.”) While you likely have your entire operations requirements in your head, putting it on paper and sharing with your team is highly likely to reduce inefficiencies and frustration this spring.

To Plan for Prosperity

Choose your destination (goals.)
Set your course (strategy.)
Decide who is driving, who is support, etc. Provide your team with the training and resources they need to do their job (tactical.)
Execute, but have preparations in place for the unexpected (operational.)
Be informed on how each alternative action will affect your results and growth potential (financial.)

There’s truth in the old saying, “If you don’t know where you’re going, how will you know when you get there?”

accounting

Accounting

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It’s nearing that time of year when you’ll be paying a visit to your accountant. Whether you are delivering a comprehensive report for final vetting and tax preparation, or a shoe box for “the works,” there are a number of questions and specific reporting attributes for which you should be asking your accountant. Of course, there are important actions you are responsible for as well. Here are three of the most important aspects to make a priority this year on your path to prosperity:

Inventory

Record your annual inventory accurately. This is important when reconciling your production and your sales to calculate your operating income. One of my more recent clients hadn’t implemented clear tactics for recording year-end inventory at the end of their 2015 crop year. Now, as we review past years, we are challenged to understand why they show an operating loss that year. There are anomalies in many income and expense categories when trended year over year. I challenged the accountant to explain, but since the accountant does not perform any type of “checks and balances,” only a compilation of client provided information, my clients are now facing the obtrusive task of reconciling each and every invoice & slip to see if there was a recording error. While you may be wondering, “What’s the big deal” the fact of the matter is that this “not a big deal” contributes to a reported $300,000 loss which is putting the banker at some discomfort. Would it still be “not a big deal” if the operating credit limit gets slashed because the financial reporting doesn’t support the existing borrowing limit? Is this as simple as an incorrect inventory figure provided by the farmer to the accountant because of slack or sloppy “estimates” of what’s in the bin?

Reporting

Readers of this weekly commentary have heard enough of my ranting about accrual adjustments and their importance to evaluating your business year over year. So let’s bypass the stated obvious and look down another path: what are you not seeing in your financial statement that would be beneficial for management purposes? I am a proponent of “more is better” when it comes to information (we can always discard what is not necessary much easier than trying to make decisions with vague information by yearning for what is not there.) As an example of a basic start, I support breaking the single line item of “Repairs & Maintenance” into two separate lines: one for equipment, the other for buildings. If you, as management, are trying to discern the subtleties of your various costs, would it be helpful to have this separation made?
There are many other suggestions that could be offered, but in the end, it’s your report so ask for what you want.

Depreciation

Hebert twitter depreciationIt continues to be the scourge of farmers to this day: income tax. It then is no wonder that farmers love depreciation. It’s a non-cash expense that reduces taxable income! But Kristjan Hebert tweeted a very valid concern that all farmers should think about. Depreciation is hidden…from sight. It is not hidden from the government, and the government has ways of collecting if you don’t manage your accumulated depreciation.
Accountants inherently assume that all farmers want to maximize depreciation expense to reduce taxable income, so rarely will your accountant initiate a depreciation conversation with you. This does not mean that if your accountant does not initiate the conversation that there is nothing to discuss! Talk to your accountant about your capital asset “depreciation pools.” Share your capital expenditure (CapEx) plan. Set the appropriate rate of depreciation that is in your best tax planning interests (HINT: you don’t have to take the maximum just because you can.)

To Plan for Prosperity

The financial statements created by your accountant is a package of some of the most critical management tools you need to make informed decisions. You not only have the right, but the obligation to create a report that is useful and meaningful to your management needs (and your accountant, as a strategic business partner, is more than willing to work with you…if you ask.)
1. You bear the responsibility for recording and reporting your inventory accurately.
2. Ask your accountant to create reports that are useful to you based on how you want to evaluate your business (within acceptable accounting practices, or course.)
3. Have a strategic discussion with your accountant about depreciation (HINT: it helps to have a strategy to discuss.)

It’s your business. Be accountable for it.

control-word-cloud

Control

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Happy New Year! My wish for your 2017, as I’ve extended to everyone regularly so far, is “peace and prosperity.” That may have been fortuitous as this, the first weekly commentary of 2017, carries a new name: Pragmatic Prosperity™.
Prosperity is not only my hope for the entire agriculture industry, it is my goal for every business I work with. Pragmatic describes the advice, strategy, and solutions we bring to each engagement. We are very excited about this evolution in our branding.

 

How do you employ control in your business? Is it over operations, people, cash flow? Those are quite broad descriptors, and when it comes to people, please recognize the difference between control and influence.

Here are the top areas to control in 2017 to achieve greater prosperity.

  1. Cash
    Working capital, especially cash, is a critical component of any successful business. Over the life of this weekly blog, you’ve read my constant rant about improving working capital. More and more important, the piece of working capital that needs focus, will be cash. A big part of working capital is inventory, but in a time when it is all too common for inventory to fall subject to grading issues, delivery glitches, etc, farms need the stability that comes from increased cash on hand.Expenses and debts unabashedly punish your cash. What are you doing to protect it?
  2. Marketing
    Even though we’ve had (generally) another banner year on the crop side, we have to give credit to the insulation from the commodity slide that we’ve enjoyed thanks to our slumping Canadian Dollar. Should the dollar strengthen, we’ll feel more of the pinch that our American neighbors are living with today. How would your cash flow look if you had to manage today’s expenses with 2010 prices?
    Far too many farms rely only on forward contracts. The reasons for it, I won’t speculate. Many tools and advisors exist to help you control your marketing (versus letting your marketing control you.)  When you’ve got full control over operating expenses (Point #3 below…keep reading) your marketing opportunities become more clear. This allows you to confidently price profitably.
  3. Operating Costs
    When we make more, we spend more (despite a contrarian strategy discussed here on May 17, 2016 – Spending Less is More Valuable than Earning More.) As farm incomes rose, so did farm expenses; what used to be “nice to have but could live without” has now become “must have” (in mindset anyway.) If we are to compare 2017 expenses to 2010 income (as suggested above,) why not look at 2010 expenses too? How have operating costs changed in your business over the last 7 years (2010 to 2016 inclusive)?

To Plan for Prosperity

You’ll note that the first item listed, cash, is at the top for a reason. However, if you start at the bottom, you’ll see how it is connected, how it flows and will get you to the results you desire, the results you may not think are achievable…but most certainly are.

Start with 3, it will have great impact on 2, which will lead to strength in 1. Control them all as you would control your equipment.
Make sense?
3…2…1…GO!

 

change

Critical State – Unwilling to Change or Adapt

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As we prepare to close out 2016, let’s look at change. No, not the coins in your pocket; no, not swapping your attire.

We change

  • when we see value (Eg. switching to minimum tillage practices.)
  • when we are forced (Eg. a health scare.)
  • when the pain of staying the same is greater than the pain of changing (this is hard to quantify because there is comfort in the familiarity, not matter how painful.)

change-venn

Value:
Change to achieve value is easy. We see benefit to doing something different, and we implement change. Although, this is incredibly difficult to define, and can be as diverse as each individual person’s opinion of “value.”

Forced:
Sometimes we get feedback from our doctor, or our banker, that is bleak, stark, or harsh. If we do not change X, we are certain to face Y. If Y is scary, unimaginable, or intolerable, the change to X is usually made pretty quick.

Pain:
Pain is subjective. And it has been found that pain tolerance can be surprisingly high if it means avoiding change.

Look back at 2016, and few years prior to that as well, and consider what drove the change(s) you made:
PAIN isn’t what drove you to acquire a new pickup. Neither was it FORCED. So what was the VALUE?
Was there FORCE or VALUE that led to a plan to improve working capital?
Was it VALUE or PAIN that led to having hired help on the farm?

Determining the factors that brought about the change(s) you are evaluating is a worthy, albeit difficult, exercise. Once we understand what it is that motivates us to change, not generally but specifically, we can use that understanding, that knowledge, to make better decisions.

Direct Questions

What is the most common theme for the changes you’ve made in your life and in your business: value, force, or pain?

Significant changes are easier to evaluate. How do you determine what leads to small changes: value, force, or pain?

How has the fear of change cost you, personally, financially, or otherwise?

From the Home Quarter

Charles Darwin is often credited for saying, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”
Danny Klinefelter is quoted as saying, “The future will always belong to those who see the possibilities before they become obvious.”
Kim Gerencser is quoted as saying,”(Business) cycles will hurt some, but offer opportunity for others. The difference between who suffers and who prospers is who’s ready.”

Change, like 2017, is coming whether you’re ready for it or not. Buckle up!

2016 year end review

Reviewing 2016

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We often get so focused on process that we fail to stop to take a look back now and again. If you feel like you’ll never reach your goal of <fill in the blank>, take some time for review to see how far you’ve actually come.

Where were things one year ago? If you were like most, you were highly optimistic about the potential of 2016. While durum was still troubled by fusarium, there was tremendous, widespread excitement to climb abroad the lentil train! After an usually warm and dry winter, from one of the strongest El Ninos ever recorded, the concerns of a potential late and wet start to seeding were quickly cast aside.

The way 2015 started out (with multiple late spring frosts) you might have been cautiously optimistic about the 2016 crop, even though it looked like it was setting up for a repeat of the 2013 record yield. Diligent pesticide applications meant to protect this potential boomer of a crop may have worked well, unless we’re talking about chickpeas and durum. The rain didn’t allow for the desired warm dry autumn, and the 2016 harvest literally became a marathon. While I haven’t done any calculations, I’d be placing my money on an approximate 70-75 day average harvest duration in 2016.

Yields were all over the map, and this has again kept many income statements looking tight. There were far too many discouraging sides to crop rotations everywhere, and many of those farmers who tore up their long term crop plans to chase big returns are feeling a little sore. Fertilizer prices dropped in the summer and stayed low most of the fall, allowing those farms that have strong working capital to buy their 2016 fertilizer cheaper than they have in recent memory. Saskatchewan reelected its government; Manitoba voted in a new one. And we found ourselves gobsmacked by goings on leading up to the US election.

And so, in looking back over 2016 we want to focus on progress, innovations, shortcomings, and of course, lessons learned over the last 12 months.

Direct Questions

What progress did you make on your long term goals? Short term goals?

What innovations did you employ this year?

How have you evaluated results to determine their success or failure?

From the Home Quarter

There was a pointed competitive advantage described in the article above; did you pick it out? In a business that produces commodities, you need to create every advantage possible to give your business the best opportunity for sustained profitability.

Where did your business fall short of expectations in 2016? Where did it exceed? What did you learn from it, and what will you do different?

Does this sound familiar? I wrote something very similar a year ago. One year later, it still applies.

agex-conf

Musings from the AgEx (Agricultural Excellence) Conference

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For those of you who are regular readers of this commentary, you know full well how I feel about farm shows in general and what it takes to draw crowds. Every major farm show on the prairies is so heavily focused on production, when we are already some of the best, if not THE best producers, in the world. Where we are lacking (generally speaking) is on the management and financial side of the business.

That is why I am such a fan of the Agricultural Excellence (AgEx) Conference. It is 2+ days dedicated exclusively to management. No presentations on crops, weeds, fertilizers or equipment; although, had there been, we would likely have seen 4-5 times the number of attendees. Overheard during networking at AgEx:”Want to get 1,000 farmers in the room? Show them some new equipment, give them a hat and a hotdog…that’s how!” If that rhetoric has more than a grain of truth, it sustains my railing on on the problem we have in the industry.

The title of this year’s AgEx was “Plan and Prosper: Set the Course for Farm Success.” This isn’t a typical preach from the podium event; the format included live debate, panel discussions, bear-pit sessions, and a choice of six concurrent workshops. If you couldn’t attend in person, it was broadcast via webinar.

Here are some of the very high level points made at the conference:

  • As a producer, you sell into a global community. Understand how that affects you (and that means deeper than simple “supply and demand.”)
  • If you expect to remain relevant in an ever changing industry, you must face change with confidence not fight it with vengeance.
  • There is still a large gap to bridge between the generations who farm together.
  • There is a TON of great information, resources, and advice available to you as a producer. All you have to do is ask!

There is much work to do, both on your part as producers and business owners, but also on our part as advisors:

  • We (as an industry) need to collectively come to agreement on how to calculate major financial metrics, such as gross margin.
  • We (as advisors) need to create synergies with all of our clients’ other advisors so as to better service each client.
  • We (as advisors) must elevate and consistently deliver the message that success is defined by management…period.
  • We (as an industry) must support each other to provide a unified front against those who would rather we fail.

From the Home Quarter

It is not difficult to find yourself pumped up and motivated when leaving an event like AgEx. The quality of information and networking available is second to none. I rubbed shoulders with a National Director from one of the largest ag accounting firms in Canada, an international farm advisor, a former diplomat, among others…oh, and I now also have a tour guide on PEI in the form of a young potato farmer!

Excellence is within all of us if we choose to focus on it. If we let fear hold us back, our results will show it (and we shouldn’t be surprised.)

As I will continue to say, “Do what you do best, and get help for the rest.”

Over-Optimism (a.k.a “It Can’t Happen to Me”)

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Recently I’ve sensed great concern from some bankers regarding the effects on the cattle market because of this TB outbreak in Alberta. The effects are still not definitive but could prove devastating.
The fallout from this recent harvest in western Canada is still being measured. Creditors are in full disaster preparation mode so as not to be bombarded by voluminous delinquent payments over the next 5-6 months.

A valuable part of the work I do is to help clients make capital expenditure and credit decisions. After a number of difficult crop years from excess moisture, many farms have great concern over their financial stability and fully recognize that they have very little room for error. Pains are being taken to consider how every decision could affect the farm’s future profitability.

Many long term business decisions have been made on the premise of $12 canola and $8 wheat, or $2/lb weaned calves (as a kid, I sold my first calf for $0.80/lb.) Servicing debt on land and/or equipment payments during the high points of the cycle is easy, but as we’ve seen, the debt often outlives the business cycle.

Some farmers, especially those who are relatively new to farming, have never experienced tough financial times. They have no first hand experience of BSE or the 2004 frost; they know little outside of high yields, good quality and strong grain & cattle markets. Sadly, there are many who have first hand experience of those dramatic market influences yet have permitted themselves to have short memories.

I remember giving a presentation in 2013, in a community I won’t name so that I don’t shame them, where the audience was verbally angry with me for stating that we were a “global average crop, not a bumper crop but an average crop globally from $9 canola and $4 wheat.” They thought I was crazy because, in their opinion, canola had a new floor price and it was $12.

Regularly I am forwarded an article from some US agency (it varies week to week depending on who is forwarding it to me) that provides insight into the rapidly decreasing appetite for risk into grain farming from US lenders, or the sizable decline in land rent rates, and the reduction in land values. I often tweet these articles with the question, “Does anyone think this can’t happen here?”

I am encouraged by a shifting focus among farmers that centers more on ROI (Return On Investment) and less on size & scale. It bodes well with a saying (it’s not mine) that I like to lean on: Better is better before bigger is better.

Direct Questions

How do you view risk and its potential to affect business results when making business decisions?

Have you considered how a major market shock could affect your profitability, and if so, what have you done?

If your profitability will be sub-par in 2016, what adjustments are you planning to make for 2017 and onward?

From the Home Quarter

While no one can deny that “things are different now,” there is still much we can learn from history. Maybe the most important lesson from history is that major business-impacting events are very unpredictable. As such, maybe we should be more prepared for the predictable events so that the unpredictable ones aren’t such a major shock…

3-circle

3 Circle Model in Transition (Succession) Planning

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Twice in the course of a week, I was able to partake in a Canadian Association of Farm Advisors (CAFA) Succession Update following the 3 Circle Model http://johndavis.com/three-circle-model-of-the-family-business-system/
The three circles represent each of Ownership, Business, and Family: the critical components that hinder any business transition process. I was speaking in the business circle.

Working with family can be as incredibly rewarding as it can be incredibly challenging. The nature of living with those you work with, grew up with, and hang out with, leads itself to challenges just from being in such close continual contact. Throw in the communication challenges that every family must deal with, and it is truly amazing more family businesses don’t fail.

The illustration of the 3 Circle Model is a simple yet accurate depiction of why there can be challenges in family businesses. The root of the challenge, when tapping into the experience of experts who consult family businesses, is the relative inability of family members to separate the three circles. Issues that belong in the “business” circle often end up in the “family” circle; issues in the “ownership” circle often have heavy effects on the “business” circle; issues in the “family” circle usually ripple outward to affect both the “ownership” and “business” circles.

Success in separating the circles can only be had if all family members are conscious and intentional in their effort to recognize the tendency to let issues bleed from one circle to another and proactively manage their behavior to not let it happen. This is easier said than done.

3-circle-with-a-twistI especially like this graphic that Jim Snyder, National Director, Agricultural Practice Development with BDO, used in his opening presentation to describe the 3 Circle Model. When you think about torque, a planetary is a tremendous bit of engineering (a nice plug for all you gearheads.) Separating the three circles in the model creates a strong business and stronger family. A family affected by the crossover of issues between the circles will be in a constant state of damage control.

Direct Questions

How do you separate the issues you deal with in your family business between three distinct circles: family, business, and ownership?

When you become aware of family issues affecting business, or ownership issues affecting family, etc, how do you stop, reset, and refocus to deal with the issue and not let it “creep?”

Family business is the backbone of our nation’s economy. Are you a “family business” or a “business family?”

From the Home Quarter

There is a distinction between a family business and a business family (please contact me to discuss further.) Neither is bad, but there is a difference in mindset and approach to family, business, and ownership. Knowing which type you fall into will help you understand the challenges to be managed as you eventually navigate through the 3 Circle Model of your future business transition. Because, whether you acknowledge it or not, one day your business will need to transition. You might as well be ready for it…

inadequate working capital

Critical State – Maintaining Inadequate Working Captial

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I’ve gone on record many times saying that I believe that the lack of adequate working capital at the farmgate presents the greatest single risk to the future of many farm businesses.

Working Capital is calculated by subtracting your current liabilities from your current assets.

wrkgcap-graphic

It is important to calculate working capital correctly, not only to satisfy the requirements of your creditors, but for your own management information as well. Overstating your working capital will give false confidence. Understating your working capital could cause you to unnecessarily inject capital into the business, or to miss out on taking advantage of business opportunities.

Maintaining inadequate working capital carries many risks, both direct and indirect, such as:

  1. Relying on operating credit and trade (supplier) credit.
    Heavy, or total, reliance on outside credit to provide access to the capital necessary to run your farm is as great a danger as a reckless crop rotation. There is no guarantee that these credit vehicles will continue to be available in the future as they were in the past. How will the crop get seeded next year if there is no working capital, and no operating credit, available?
  2. Using debt to pay debt.
    Many businesses have plead their case by illustrating that the debt payments were always made on time. What they failed to recognize was that the debt payments made were sourced from an operating line of credit, and therefore using debt to pay debt.
  3. Loss of profit potential.
    By leaning on outside credit, many farmers are forced to sell grain when they need cash to make payments, revolve credit lines, etc. instead of selling grain at a point of opportune profit. Selling grain when you have to instead of when you want to can mean the difference between profit and loss.

In regards to building and protecting working capital, here are just a few of the tactics I offer:

  1. Know your Unit Cost of Production.
    This goes beyond crop inputs. It includes ALL costs to run the farm from fuel, to insurance premiums, to paperclips for the office. Knowing UnitCOP allows you to clearly understand where your profit is made.
  2. Stretch loan and lease amortization periods.
    Interest rates are low, and recently there are hints that it might go lower yet. Stretching your payback period allows you to enjoy making lower payments. This is especially helpful in a year when cash flow & profitability will be tight. Accelerate payments in years when cash is abundant.
  3. Plan with Strategy; Discipline in Tactics.
    Far too often, we see businesses that operate without a plan by simply focusing year over year on operations (getting the work done) and as such, most decisions are made in reaction to a need or want. By building a clear & well-thought out plan, decisions become proactive when employing discipline through the execution of the plan. Deviating from the plan (IE. a great deal on a new pickup!) can jeopardize working capital and future profitability.

Direct Questions

How often do you calculate your working capital? (HINT: it should be monthly at a minimum)

What is your minimum level of working capital to have available? (HINT: it should be 50%-100% of your annual cash costs)

What is your strategy to increase and maintain adequate working capital?

From the Home Quarter

Inadequate working capital causes business owners and managers to make decisions they otherwise wouldn’t. It forces their hand. It takes away their control.
Abundant working capital creates opportunity, allows flexibility, and puts control of the business in the owner’s and/or manager’s hands.
Critical State can be only a breath away when working capital is inadequate.