Tuesday, October 19, 2010

Where are all my accounting tweeps?

I've been experimenting with twitter for a few weeks now and I'm beginning to come to a conclusion.  Accountants don't tweet.  Well not many of them at least.   Or if they are out there, they are disguising themselves as marketing enthusiasts or gadget geeks and hiding their true identity.  Or is it that they are hidden in cyberspace between the volumes of marketing enthusiasts and gadget geeks like needles in a haystack? Mmm.. potentially, but I don't think so.  #Accounting gets me nothing but job ads and students complaining about falling asleep in class.

So - what is with this?  Is tweeting not practical enough for accountants?  Are they shy?   Do they think there will be no interest in their tweets?  Or do they frankly think they'll have no interest in the tweets of others? 

Management accountants (aka 'finance' folks) should be intrigued by the potential of social media for the companies with which they work.  The cost-effective alternative of digital media versus traditional media should spark interest with even the most conservative of our clan.   I believe Twitter gets dismissed by many social media virgins because they think it's only purpose is for the self-absorbed to tell the world that they are going to the bathroom, or to the store, or that they have a book to sell.   But, as a new convert, I say don't knock it til you've tried it.

Why should you sign up?  Here are three great reasons for those in Accounting and Finance to jump on board with twitter:

1.  You can get loads of free advice.  Twitter is loaded with lists and tips for business success.  And even the best of us can stand to learn a thing or two.

2.  You can skim through large volumes.  With the 140 character limit, you can quickly review news feeds and be selective with your time, choosing to click only on links of interest.

3.  You can build a social community of like-minded souls, promoting and sharing in common interests, and gathering first dibs on new trends in business.  Plus, you can never have too many friends.

Take the twitter challenge.  Set the calculator down, close the books and tweet. #accountantsrus

Follow me @iSunsun.

Wednesday, October 13, 2010

KISS is the new GAAP.

Is it just me or has the world gotten too darn complicated for it's own good?    Nothing is as it seems any more.  Even at the supermarket it's a constant battle to keep up with the latest experts' advice.  Do we want butter or margarine or oil?  Is there really such thing as good fat?    Is "all natural" okay or do we need "organic" or does it need to say "certified organic"?   Shouldn't "enriched" wheat be better for you by definition?

Complexity is everywhere, including the smallest of businesses.  

Education seems to be bringing me home to a place of increased simplicity.  The more I learn about the many technicalities in my field of mathematical science (my preferred term to 'accounting'), the simpler my strategic solutions are becoming, and I'm wondering why everybody else can't see it.  Sure, there was a time when I can recall the thrill of weaving transactions through a tax loop hole to gain an extra few points during year end, or the rush of re-positioning the wording in a sales contract to allow it to trigger a profitable quarter.  What was the opportunity cost of such short-sighted gains?

I dream a dream where we all move to a more simple business world.  Spend less on lawyers and accountants, and more on marketing and selling.  Less time on policies and procedures,  and more time on research and development.  Less effort managing outsourced production and more effort understanding your customer needs.    Business success requires balance, and collectively I think we have lost it entirely.  

Looking for help to simplify?  

Ask the head of your internal accounting team to get on board.  They have great insight into all the complexities of your business and are in a great position to influence a better tomorrow.  They should find the challenge a refreshing change from today.   Challenge them to bring you creative solutions to refocus resources on better value added activities - and if you get nothing back you really should wonder why. 

Tuesday, October 12, 2010

A CFO's guide to profit (and weightloss)

Why is it diets don't work?  With billions of dollars of revenue being generated annually via weight loss plans, and quite likely just as many pounds being lost each year- why is it that we're still fat?   We intellectually know that we can't continuously eat lavishly and exercise sparingly without accruing some consequences, but yet we still always manage to refind those glorious 10 pounds that we'd proudly managed to drop the previous quarter.

Those lucky ones that have won the battle of the bulge for life have done so through disciplined eating and execution.  Planning meals and actually eating them (and only them) is the simple not-so-secret concept that separates the winners and losers (which in this case would be the winners - confusing?)  Those who are successful long-term have learned to navigate around the challenges that present themselves from time to time when life manages to keep things from going exactly according to plan.  (Cake celebrations at the office sound familiar?)

I think maintaining profitability and adequate cashflow is basically as simple as maintaining a healthy weight.  It's both easy and impossible for most of us.   Only about half (made up stat) of new businesses actually start with a solid business plan.  Of those, only about half (again, made up) actually use that plan to guide their behavior and influence budgets.  And of those, again about half (you guessed it, totally made up again) are going to actually spend in accordance with it.    Even with made up stats, we're likely down to ~10% (yes - out of thin air).

Obviously I'm over simplifying a complex business issue - or am I?   You are paying your accounting team good money to manage profitability for your business, and they have processes that require approvals and checks and balances, right?  Don't go believing anyone but you is responsible for your business success.   Think about it - even a personal chef hired to provide you with meals containing just the right amount of calories can't guarentee weight-maintenance, because at the end of the day it's up to you to choose what you eat.  (Don't believe me? Ask Oprah.)

As a small business CFO,  I'm certainly not intending to dimish the power of management accounting to influence business success. But I also believe small business success is so influened by CEO behavior that it comes down to leadership willingness to own the plan  - not getting distracted by spending tempations, nor get overzealous with spending cuts.   Those CEOs with the discpline will win.

Sunday, October 10, 2010

Have you passed the acid test lately?

Attn: Small Business Entrepreneurs.  
When was the last time you truly looked at your balance sheet?
In many small, privately held businesses the words ‘profit’ and ‘cash’ are used daily, but the balance sheet tends to be the forgotten cousin of the financial statements.  Small business owners ask about the balance sheet so little that their accounting teams  can easily neglect analyzing it for long periods of time.  The problem is that when your business runs into a cashflow crisis, the balance sheet is a critical component to successfully securing loans.

To avoid the fallout of learning too late that your balance sheet doesn’t support another lease or loan, ask your head of accounting to give you a report on your balance sheet. Even if you think you already know, it can’t hurt to clarify for certainty.  All you have to do is ask your head of accounting these three simple questions:

1. How does our balance sheet look today? 

2. How does our balance sheet compare to others in our industry (competitors)?

3. What are 3 best things we can do to improve our balance sheet?

These three simple questions will get your team focused on providing you with constructive feedback and recommendations that will benefit your business.