Why a Code of Conduct Strengthens Your Organization
Have you established a written Code of Conduct in your organization? O ur prescriptions for acceptable behavior are too vague. Get started now to spell it out more clearly to…
Leadership Lessons | Are you only a legend in your own mind?
What Does It Take to be a Great Leader?
Nothing in life travels in a neat formation accompanied by bugles and cavalry. A lot of it shows up filthy and unkempt, prominent in the mess we’ve made around our foxhole. These lessons are typically the offspring of hubris, naivete and ignorance … or from overlooking the land mines hidden beneath our feet.
Every Tuesday, we’ll share valuable and practical leadership tips and tools to help you BE a better leader so you can BECOME a better leader. Remember … you won’t BECOME a better leader until you start BEING a better leader … implementing NOW the changes necessary to adopt the proven strategies of successful leaders. You might start by building on the communication matrix and making sure you’re defending the castle to get done what only you can do. Make some time so you’re thinking past today.
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It’s Almost Midnight. Do you know where your cash is?
Okay, I admit it, I’m cheating a little this week … but I’ve got a few good reasons. Well, I’m calling them reasons anyway.
For one, I’m working hard to get ready for our Cash Flow Workshop, “It’s Almost Midnight. Do You Know Where Your Cash Is?” scheduled for May 25th. If you live in the San Francisco bay area, are not a financial executive and want to advance your business finance knowledge, our workshop is tailored for you.
Every successful business executive needs a solid grounding in the principles of cash flow … (more…)
The Big River series is a 12 part installment about a company desperately seeking cash to fuel their growth and the struggles they face trying to find it.
Business Finance | The Big River | Chapter 4 – What happens if we need an outside investor?
John Wilson, CEO of Ace Business Stuff, was thinking about several of the issues that he discussed earlier that day with his controller, Tom Sampson, and what Tom told him:
“Giving our customers an additional 30 days to pay, relaxing collections and neglecting the sale of inventory already on hand, isn’t a very sound strategy.”
Instinctively, he knew that Tom was right and that whatever bank loan they could obtain, it wouldn’t be enough.
What if bank financing isn’t enough?
Ted Deepockets, his long-time friend, had periodically needled John about the pros and cons of outside investors. He always seemed like he’d be interested in investing if the opportunity was presented. (more…)
The Big River series is a 12 part installment about a company desperately seeking cash to fuel their growth and the struggles they face trying to find it.
Business Finance | The Big River | Chapter 3 – What if our loan collateral doesn’t cut it?
Tom Sampson, the controller for Ace Business Stuff, was in his office considering how to explain to John Wilson, the Company’s CEO, the issues related to the Company’s borrowing capacity and the weaknesses in the Company’s Balance Sheet.
Tom pulled together several schedules for his meeting with his CEO that afternoon, but was still struggling with how to get across some of the subtleties that he knew John would want to understand.
Tom knew that his CEO was absolutely committed to the Company’s success, although he became very frustrated when his convictions about future performance collided with the bank’s concerns about current performance.
What factors will the bank consider?
Tom knew that the bank considered many factors when judging an asset-based loan.
Having enough collateral to support the Company’s borrowing request was only part of it.
How do they measure the strength of the collateral?
One key ingredient is the quality of the collateral. (more…)
Business Finance | Warren Buffett | Should We Depreciate Our People?
A Weekly Business Finance series for Non-Finance Executives!
“Financial Adrenaline” is a term we love around here because it reflects our commitment to help you turbocharge your business with practical tips and techniques to improve free cash flow, the lifeblood of business. As a further extension of our Financial Adrenaline program, we’re going to share a new Business Finance Tidbit every Wednesday specifically for those business executives who don’t have a finance background.
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Depreciation = Cash? Why do we care?
We’ve kinda been on a Warren Buffett tear lately, and last week I encouraged you to read his recent 2010 Annual Report to Berkshire Hathaway shareholders.
I want to plant another seed this week about an often misunderstood concept: DEPRECIATIONIn accounting, an expense recorded to allocate a tangible asset's cost over its useful life. Because depreciation is a non-cash expense, it increases free cash flow while decreasing reported earning. It is used in accounting to try to match the expense of an asset to the income that the asset helps the company earn. For example, if a company buys a piece of equipment for $1 million and expects it to have a useful life of 10 years, it will be depreciated over 10 years. Every accounting year, the company will expense $100,000 (assuming straight-line depreciation), which will be matched with the money that the equipment helps to make each year.. (You can see the definition by placing your cursor over the term.)
How is Depreciation Relevant to EBITDA?
Today, let’s just think about it in terms of EBITDA. In Does EBITDA Bury Its Own Dead?, I wrote about the perils of treating EBITDA as a placeholder for cash flow, and Buffett couldn’t agree more.
In his Annual Letter to Shareholders, 2002, Buffet describes (more…)
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