But mention finance and you break out in a cold sweat.  You have a fear of finance heights.  You hold yourself back.

You may say, “That is not me.”  Yet you just might be doing it without even knowing it.

Here are some ways it shows up:

1. You hold back on spending money.  You sit on the marketing program.  You stall on product development.  You wait to hire that new person.  These make perfect sense to spend money on, but you just cannot pull the trigger.

2. You do not sign that bank loan.

3. You decide not to go ahead with the equity investment.  You rationalize your behavior.  You say it was too low a valuation, when really you are just afraid to give up some control.

4. You keep a tight leash on the money.  You do not let go and give your key people some breathing room to spend the dough.

Jon Paul

The Business Eye Doctor & Corporate Financial Expert

Providing Business Clarity & Financial Resources

• Set guidelines and stick to them.  Make it clear to your people.  Do not reimburse when they go astray or you in effect set a new guideline.
• Follow them yourself.  Nothing hits home like a good example from the top.
• Get the help of an expert.  A good travel agent might save you money.  There are firms that specialize in going over your T&E costs and suggesting ways to cut expenses.
• See what you can simplify.  You might move to per diem reimbursement for out of town meals and cut out a lot of paperwork.
• Consider the value of your people’s time.  Balance that against saving some money on airfare.
• Keep up on ways technology could eliminate having to travel for a meeting.  A conference call, webcast or video conference might do the job instead.
• Insist on documentation you need for IRS purposes.  Get guidance from your accountant or tax advisor.  Insist on documentation or hold back payment.  Remember this includes local vehicle use as well.
• Make the reimbursement process simple and quick.  In this electronic world, things can move a lot faster than the old paper days.

It can feel like a vacation to your people.  They spend on things they would not normally.  Or they may treat it as a cost of doing business.   They are sacrificing by being out of town.  So why not splurge a little as a reward?   You may agree.  You may want to treat people well on the road so they make the trips that they should.  But it could go overboard.

There may be good intentions to travel inexpensively.  But it may not be done well.  You could think you are being tight but could be spending more than you need to without realizing it.

Your people may also be traveling when it is not needed.  Technology is changing the landscape and may allow you to have face to face interactions without hitting the road.

You could cost yourself money in other ways too.  You could lose out on tax deductions without proper deductions.  You could also be wasting a lot of time for your people and accounting with cumbersome reimbursement processes.

• Decide if corporate credit cards are really necessary or could be cut back.  Have people put things on their own credit cards and submit the expenses.  When it is not as automatic like on a corporate credit card, some expenses may just go away.  If cash flow is an issue, consider modest cash advances.  Make the reimbursement process simple and quick.
• If you still need to use credit cards, separate out the business from the personal.  Have a separate credit card for business only.  Avoid running personal costs through.  Shut that door.  It also greatly simplifies things for accounting.  One of the most unpleasant tasks accounting can have is going through credit card statements and having to separate out personal versus business expenses.  It is a great waste of time, drains their energy and is very messy.  It also opens up questions for taxes that the IRS might challenge in an audit.
• Decide if some things should really go through accounts payable and paid by check rather than by credit card.  Sure, it may be nice to rack up the airline miles, but you may be paying a real hidden cost.  It could make those free airline tickets more expensive than first class travel.
• Have accounting keep on top of credit card charges.  Do not wait for the credit card statements.  Have them download data from the online statements.  Do it weekly or more often if there is enough volume.  Get the information processed more frequently than monthly.

But then there are the credit cards.  They do not follow the same controls.  Money gets spent in different ways.  Approvals are different and may be more lax.  The expenses hit later.  You may not see them until up to a month if you still rely on paper statements.  You may not get the documentation you should for some credit card purchases.

Personal expenses can slip in too.  It may be under the dollar radar.

You as the owner may be the culprit.  You may choose to run things through.  You may be more generous on your spending than you are for your people.  It can set a tone that people pick up on.

• Bring in the right people at the right level in the right numbers at the right time.  Know your biases.  Realize where you know less and might be prone to over or under hire.  Get feedback from your advisors or other outside experts about areas you are not sure about.  Your CPA, for example, could help you understand when to bring in a controller or CFO.  Check with owners at other companies.  Get feedback from peer groups.
• Use part-time leaders to bridge your growth.  Rather than going from nothing for a long time to eventually hiring an HR director, use an outside HR firm.  Get the benefits of their knowledge without having to pay for it full time.
• Invest in training your other operating people just as you do for your people on the line.  Keep tabs on what you spend on training.  You may find it is very low.  Ask yourself, is that really what you need to spend to keep your people on top?
• Anticipate ahead what new positions you will need as you grow.  What skills will be needed?  Do you have anybody in-house who could move up?  Where might she fall short?  What could you do ahead of time to build up those skills?  A common area is people skills.  People start in their careers as good technicians.  They learn their craft.  However, to move up, they need to learn how to work well with and lead people.  A strong accountant may need supervisory training in order to step up to become a controller.
• Understand how powerful benefits can be.  When you first start, your benefits will be limited.  As you grow, revisit your benefits.  Plan ahead for what you may be able to add when.  What might you add in two years or five years?  If you have not took a hard look at your benefits, get outside views from benefit firms or fellow owners in your peer group.
• Look at how your company operates.  Does it make it easy or hard for people to succeed?  Is it too chaotic and needs some structure as you have grown?  Or have you gone too far, with so much structure that it makes it hard for people to do anything?
• What feedback do people get on their performance?  It should not wait for performance reviews.  How well do your leaders give feedback to their people?  How well do you give feedback to your leaders?  What do you do to know how your people are doing?
• Keep tabs on your total personnel costs.  You need a supplement to your financials to show this as a separate schedule.  Get the whole picture so you can watch for this creeping up on you.

• You may under invest in some areas.  You do not see the benefits so you keep it too lean.
• You may overcompensate and over hire.  You might have too many people, too much talent or overpay.  An owner with a $2 million company has a CFO that costs nearly $200,000 with benefits.  That is nearly 10% of revenues and overkill.
• You may miss out on using good outside part-time or interim help to manage your growth.  You are not large enough to bring in a full time person.  So you go without.  The area suffers.  One common area is human resources.  You may not realize about good part-time HR leadership firms.  You end up being out of compliance in many HR areas and do not even realize it.
• You are not aware of the skills needed.  You are familiar with your people and stick with what you know.  You promote them based on their good work and loyalty.  Your intentions are good.  However, you just put them in over their head.  They want to do well for you and give it a shot.  It can either blow up and the person leaves.  Or you end up living with mediocrity.
• You may under train.  You may have great programs to teach people how to make your products or service your customers.  But people in other areas get little training.  It is baptism by fire.  There is no or little training budget.
• You inadvertently do other things that make it hard for people to be successful.  There could be too much chaos.  People turn into firefighters not leaders.  They learn to lay low and duck rather than step out.  On the other hand, you may have too much structure.  It becomes too hard to get things done.
• You miss out on ways to motivate people.  You may be a great leader and do the right soft things.  However, your benefits may lag behind.  You may lose people or miss out on hiring great talent.
• Your people do not get any regular feedback on how they are doing.  They may only hear about the problems and not when they do things well.  Time slips away.  They may get an annual performance review.  They may be surprised by their reviews, instead of knowing all along how they were doing.
• You may not be aware of your total personnel costs.  Your financials may report costs well by department.  However, you may lack a supplemental report that shows how much you spend on personnel.  You do not see it in total, so these costs can creep on you without you knowing it.

• Factor in all the additional costs.  It is much more than just the real estate costs.  What does it mean in lost time for your people?  How will it affect your time?  What added communication costs will you incur?
• What departments would you move?  What departments do they interface with?  How will that be affected?  What impact will that have on performance?  Is there another department you could move that would not be so dramatically affected?
• How will the move affect your execution?  What is likely to not get down or take more time to do?  What will you have to do to counteract this?
• What if you were to break your lease early and move to a larger space?  How would that benefit you?  How would that compare against the additional real estate and moving costs? 
• If it still makes sense to open up a second office in town, even after factoring in all the additional costs, what can you do to counterbalance the negative side effects?  How will you keep people in touch and on the same page?  How will you make sure that things get done that need to be done?

A second location may still be the right move.  Think ahead about what you are getting into.   Otherwise, it could cost you dearly.  People could take much longer to do things.  You could end up executing poorly and performing poorly.  Plan ahead so it does not end up that way.

Budgeting can be a very powerful, yet underutilized tool. 

• You may not have any budget at all.  You just operate month after month.  You may get lucky, but you may not do as well as you could.  Or problems start, but you do not see them until they get very large.
• You budget your company but not from the owner perspective.  You have a net income target but not an owner compensation target.  You could hit your company income number, but fall short on your return.  Money gets spent elsewhere before it gets to you.
• You have a budget but do not use it.  It sits on the shelf.  It does not get integrated into your financial reporting.  You lose sight of how you are doing.
• You have one, but it is top down.  You own the budget, but nobody else does.  Your team is not operating on the same page.
• Budgeting is a long, laborious process.  Your people spend more time on it than they should.  It drains the energy out of your key people.
• It becomes a game.  Money goes to the best politician and not necessarily where it should go to. 
• It turns into a self-fulfilling prophesy.  People use it to protect turf during the year.  They go out and spend money because they have it in their budget, even when circumstances changed.  It is the use or lose it syndrome.  If they do not spend it, they will not have it for next year.  You end up spending money you did not need to.
• Budgets stay fixed for the whole year, rather than re-forecasting when a big change takes place.  Your people aim for the wrong, outdated target.
• Budgets are fixed only, even though some costs vary with sales.  If sales are down, you could overspend and still look good against budget when you should not be.  If sales are up, you could be punishing people for spending when they needed to for the higher sales.

• Keep them up to date on their operating costs.  You do not have to share the whole financials with them, but certainly let them see their department costs.
• Have them budget their numbers each year.  Add this into the reporting package.  Hold them accountable for what they planned and make it easy for them to see how they do.  Make the variances visible to them and you.  They may take action on it even before you see the need.
• Give them reasonable room.  Decide what they have discretion to spend on and what needs to come up to you for approval. 
• Celebrate and reward their successes as well.

You, your family and your investors may own all the stock.  Yet you will have something better to own if you let your people have psychological ownership of their areas.