More Advice From Jerry Lynch

By Jerry Lynch

The San Diego Metro

Joe and his partner have been in business for 7 years. Over the past year they have had many iss


ues that have snowballed to really affect the business.

In any small business, there are three critical issues. The quality of the product (Newspaper), the quality of the people, and the cash flow. If anything affects any of these critical areas, it will have an impact on the other two, which is what is happening here. I see a lack of “Systems” so that everything is being done like it is the first time. If they want to be able to continue with their business they will need to focus on a few critical issues.

Joe- is getting his own way. If he wants to be a business owner he has to stop thinking like a hard working employee and start thinking like a business owner. If you have to do something once, do it yourself. If you have to do it 100 times, develop a process that you can give to someone else, so you can do what you do best. Here are a few point sin this area
Joe told me that if he was selling full time (and they pay a 25% commission) , he would anticipate his income at $200k. This would be $800k of revenue for the company and is about 10 times the anticipated businesses income this year! Many business problems are minimized with money coming in.

You still should not do certain tasks, even if you can “I can do it better’ (Joe referring to his bookkeeper). Why take time away from sales on something that a good bookkeeper can do for about $40 per hour! You need to focus on the best use of your skill sets and just hire a better bookkeeper.

If Joe focused more on what he does best, it will have a greater impact then if he can do lesser tasks better then his employees.

People - They need to hire better. Hiring a bad employee not only costs you money, it costs you time, effects the other employees, and effects your customers. It is like importing cancer. Here are some of the issues:

No formal hiring/ interview process
No listing of skill sets needed
No profiling for positions
“Hope that it works out” …”need to fill a seat” is not a good reason to invest in an employee.

Banks - They need to find a bank that is more in line with their business needs and is not always saying no. I would suggest that they try to package everything to get better service and pricing Know the bank VP…by first name and have their direct number
Package your banking, credit cards, business loans and possibly a boat loan (their only real asset)

Fees - Review in advance and develop ways around that….credit lines, phone calls, etc.

Cash - Need more. They are having trouble paying the rent, paying their bills, and they are living currently on a boat, $27,000 in outstanding receivables- there should be a process that when a customer hits a certain timeframe without paying, first a call goes out and then it goes to collections YTD income is running at 50% of last year. We need sales!

The bad decisions that they are making are compounding due to a lack of money (hiring people and “hoping for the best”) because they need someone in a territory. Always think long term in making decisions as it will save you a ton of long term money and aggravation.
Either they need to get a loan from a bank or they need to get a loan on the boat. You can not run a business without cash

Bookeeper - They have had 3 bookkeepers with disappointing results so far. Again, I think that there needs to be a hiring process used for employees as well as for vendors. I would suggest that Joe goes to the Quickbooks website and look for a “Pro Advisor” in his area. You can pick them by industry and they have go through a certification process that makes them reasonably competent.

Often in business we feel that we are judged by our weakness which is simply not true. We are judged by the strengths and value we bring to the table. You should not focus on areas that you are weak, but rather hire someone in that area to do that for you who has that capacity as one of their core strengths. Better results, less aggravation, and it saves money.

I think that the business has a good chance of making it. Joe and his partner need to make better decisions, develop better processes, and think more like business owners and the results will speak for themselves.

Jerry Lynch CFP CLU ChFC
JFL Consulting