A financial advisor once told me, “I don’t work with a client unless we begin by creating a financial plan.” To me, this makes perfect sense. No amount of industry expertise, no cutting-edge financial instrument, and no clever tax dodge is going to deliver desired results unless it is put in the service of a clear, well-considered objective. (After all, it’s no coincidence Stephen Covey’s Habit #2 from the Seven Habits of Highly Effective People is “Begin with the end in mind.”)
Of course, the universal entreaty, “I want to be rich!” isn’t enough. Heck, we all want to be rich. Knowing this, a good financial strategist first considers the client’s means, health, lifestyle, risk tolerance, and, yes, his/her personal definition of exactly what “rich” entails. Does the client want to retire early or continue working until no longer physically able? Do they want to leave a large chunk of money to their children or arrange to spend every last dime before shuffling off to the Great Beyond? Does the client want to buy a private island or simply pay off their home mortgage?
Only after these factors are known and a strategy developed can the real work of financial planning begin. To this end, my team at BlueprintCFO, in working with mostly privately held middle market businesses, won’t collaborate with any company unless we begin by creating what we call a “Profitability Roadmap.” Analogous in some ways to the traditional “financial plan,” it goes much deeper and is more complex.
How so? Our Profitability Roadmap involves virtually every aspect of a business, including the following:
- The business model
- Value proposition
- Organizational structure
- Employee compensation
- Capital investments and expenditures
- Sales and marketing activities
- Accounting
- Tax planning
Our Profitability Roadmap dovetails nicely with our company philosophy, which is to always look forward, as evidenced by the recent Forbes profile of us entitled, When The Economy Reopens, Let’s Create Our Best Future Yet. Ultimately, we want to create a strategic “blueprint” from which you can build a future for your business that is solid, secure, and capable of strong, steady growth.
Now, let’s discuss what this looks like in practice. After a series of thorough interviews with corporate stakeholders, including the management team, other employees, customers, shareholders, major suppliers, and even potential new clients, we lay out a clear vision of your company’s short-term (months), median-term (years), and long-term (decades) goals. This exercise inevitably leads to introspective discussions, including a series of back-and-forths resulting in a three-to-five-year vision. We also cover critical initiatives about how to get to this vision everyone can agree with and get behind.
From this vantage point we synthesize the Profitability Roadmap. Unlike traditional roadmaps plotting routes in mere two dimensions, ours takes us into virtually every aspect of a company’s activities, with a particular emphasis on three areas most vital to long-term profitability:
1. Customer Acquisition, Growth, and Retention.
This involves taking a hard look at where a company’s advertising dollars are being spent, how marketing is being managed, and how customers, once acquired, are being serviced. We’ve all heard it’s five times more expensive to acquire a new client than it is to serve an existing one, so we make sure investments made in customer acquisition are protected by an equally aggressive approach to customer service and retention.
2. Operations.
This involves not only providing A-level customer service (see above), but refining development, manufacturing and distribution/delivery with a constant eye on profitability. (More about this in a moment.)
3. Money Management and Shareholder Value.
This covers everything from capital acquisition to cashflow management, accounting, and cost control.
As so many small-to-medium-sized businesses ($5M-$50M in annual sales) are founded and run by entrepreneurs, the profitability imperative is still often a tough sell. People with “vision” tend to focus on the work and on the product, believing the old adage that if you “build a better mousetrap, the world will be a path to your door.”
Yet, without profits, a business cannot survive, let alone thrive. And as Michael Michalowicz, author of the book Profit First notes, profits are not necessarily the outcome of a good idea or even back-breaking effort. “Profit is not an event, it’s a habit,” he writes, noting that “Small, repetitive, continuous actions, chained together, build momentous momentum.” In addition, Henry Ford once said, “The business of a business is making a profit.” Unfortunately, this is sometimes a far-away concept, even for a hard-charging entrepreneur.
At BlueprintCFO, we create profitability roadmaps to ensure those small, repetitive actions, chained together, do occur, and are performed in the service of a clear, articulated cause. The result: profits provide the means for growth and better lives for company employees and customers alike.
If greater, more dependable profits are on your mind, it’s time to talk to us. You’ll soon learn we are a lot more than a traditional accounting firm. Our focus is on the future, not the past, and we’re skilled in helping aggressive entrepreneurs make sure their dreams succeed. For more information on how to create your biggest future ever, email me at jim@blueprintcfo.com or visit www.BlueprintCFO.com to learn more about our fractional CFO services.
