Hello, everyone.
I'm Geni Whitehouse,
here to talk with you
about creating a new
roadmap for your business.
Let's get started.
So when we talk about a new
roadmap for your business, what
we're talking about,
really, is leadership.
And when we're in times of
uncertainty, and rapid change,
and a whole set of
new rules that we're
trying to comply with, what
really matters is leadership.
We're trying to achieve
business results
in the midst of a
little bit of chaos,
and so what we need to
be is certain about what
it is we're doing,
why we're doing it,
and how to lead teams so that
they are engaged and follow us.
And one of the things that
we have to do, I think,
that's critically
important for us
is to step back and
remember why it is
that we started this business.
Because that's going to
be the core guiding light
that keeps you and your
teams moving forward
in a positive direction.
So I'm going to walk you
through some of the things
that you can do in order
to re-engage yourself,
to re-inspire yourself, and
then to apply that inspiration
to your teams.
So I'm a CPA.
I work in Napa Valley
with a CPA firm focused
on wineries part of
the time, and then
I also have a remote
bookkeeping business
built around QuickBooks
Online that I
started with the partner.
And I'm also a speaker, and
writer, and educator out
in the world to really
try to break down
barriers to understanding
financial concepts.
I What I hear-- and I've
been a CPA since the '80s.
I started out with
Deloitte, and then did tax,
and did a bunch of
different things
before finding my way into
high-tech and then back
to consulting with
wineries here in Napa.
So the number one question
that we get from owners is,
why don't my team, my
staff, my employees--
whatever you want to call them--
make decisions the
same way that I would?
They always want to
say, why can't they
be entrepreneurial like I am?
Why can't they decide
things the way that I would?
You take a moment when somebody
asks you that question,
and you immediately say
back to that owner, well,
do they have the same
information that you do?
Have you educated them on how
you arrive at the decisions
that you reach?
And most of the time, the owner
will go, hmm, I guess not.
Maybe I should start
sharing more information
with those teams.
That's kind of the point.
If we want people to follow your
lead and decide things the way
that you would-- especially now
when we have distributed teams.
All of our people are
back in their homes,
in most cases, working
with clients and customers,
and having to make
decisions without you
standing there, or without
you in the next room over
or something.
So it's more important
than ever that they
are fully and completely
engaged with you
and agree with the direction
that you would take,
and that they are empowered
to make decisions,
the way that you would like
them to make decisions.
But that's going to
require some commitment
and effort on your part.
So if you want to drive
those things forward,
we have to engage with them both
at the level of their heart--
and I know that's
touchy-feely, but it's
the emotional commitment we
need from them to really bring
their best selves to work.
We need their minds to
be engaged and active,
and we need them to
use their hands to make
things happen for our business.
And so we're going
to talk about how
we go about doing that as
leaders in an environment
like the world in which
we find ourselves.
So the first place we're going
to start is with the heart.
I need an emotional
connection to those teams.
I need a connection between
them and the customers
that they're dealing
with, between them
and the work that they do.
And if I don't get
that, I'm not going
to have a fully-engaged
member of my team,
and they're not going to deliver
services or provide products
in the way that I
would want them to.
And so it's up to us to
change their connection
to our business.
And so this is one of the quotes
that, to me, appeals to what
we're going through right now.
And this author is
a Brazilian author
who's written a number
of inspirational sort
of thought-provoking
novels and stories.
And one of them
is The Alchemist.
There are a bunch
of other books.
He seems to produce a new
book about every other week.
But this is a quote that I
think applies to our time.
"We drown, not by
falling into the river,
but by staying submerged in it."
If we can just float to
the top of some of this
and ride that river, maybe
it will carry us in a better
direction eventually.
But right now, we've
just hit this water,
and we don't know what to do.
And so we're trying to
survive some of the panic
that we might feel
at the beginning.
And this happens
to us as owners.
We know there was this immediate
cliff that we jumped off
into the unknown, And
W we were responsible,
not only for
ourselves, but for all
of these other people who jumped
in with us at the same time.
And so it's difficult.
So really, it's like here's
the dark river that's there,
and our goal is to get our
teams and ourselves safely
to the other side where
business success might happen.
But right now, our teams are
standing here bewildered,
frightened, and scared on
the other side of the bank,
and we're asking them either
to jump in and just go for it,
or to try to swim
to the other side.
And we haven't given
them, really, a life raft.
And yet, we expect them to
make this journey with us.
So it is our job as leaders to
make them feel safe in plunging
into the unknown along with us.
And so our leadership role
as leaders in normal times--
whatever normal is--
it's our job to instill
confidence in our teams,
to make them feel
safe, to offer them
a secure environment
in which to work,
to offer them
direction and guidance,
and to, hopefully, inspire
those folks so that we
can get them to come out
from under that blanket where
they're cowering in fear,
and actually step forth
into the world and do great
things for us, for our clients
or our customers.
But we still have to be human.
We have to tap into
our own humanness
and show that we
have empathy, that we
can motivate and
empower those people,
and that we can continue
to educate them.
The people who are
suffering the most right
now are the people
who don't have
jobs, who don't know what the
future holds for them, who
don't wake up with
a purpose day-to-day
and don't have a sense of why
they matter and what they want.
And by giving people
jobs, we're actually
helping them avoid
that situation.
We're giving them a reason
to be, a reason to wake up,
something to accomplish.
And so the more we can empower
them to embrace that and do
that, the more successful
we're going to be as a company,
but also, as humans,
the more empowered
we're going to make
people feel in our world.
But I encourage
you at this point
to not try to
micromanage people,
because that is a demotivating
way to approach leadership.
So we want to give them
high-level direction
without dictating every
single detail of what we
want them to do during our day.
And I know it's difficult
when we can't see them sitting
at their desks all
day long, and we
don't know what they're doing.
But there are ways for us to
monitor, measure, motivate,
and drive behaviors forward
that doesn't require
us to be micromanagers
and actually shut down
the creative energy that we need
our teams to apply to the work
that they do.
Now is the time
for us as leaders
to really return to the basics.
We have to think
about whatever reason
it was that inspired us
to start our business
in the first place, and
then we need to share that.
We need to make that
emotional commitment,
that heart-centric
thing that drove
us to put up with the pain and
suffering of driving forward
in whatever business
we've built,
and let our employees really tap
into that emotional investment.
And that's when
we're going to start
getting people who are
excited about doing the work
that we're asking them to do.
So the why comes originally from
Simon Sinek, who did a TED talk
and also wrote a book
called "Start with Why."
It's been around for
a while, but I'm still
amazed that so many
organizations have not
defined that why or articulated
it clearly for their employees.
And for us, for my
CPA firm, the why
is one of the guiding
aspects of our business.
It helps us decide
who we hire and what
we do when it comes
to providing services
at no charge for our
customers and clients.
And so it's a critical
gauge for everything
that we decide in terms of how
we operate our own business.
And it's one of things
that we teach our clients--
and these are mostly
wineries, as I said before.
And we help them
articulate it so
that it's a guiding principle
for their teams as well.
So if I want them to
make decisions the way
I would as a leader,
then they need
to understand my why so that
they can then align with that
when it comes to a decision.
So if a customer asks
them to do something,
and they don't know what
the right answer is,
they can go to
that why statement,
and line up with that, and
then make a decision that,
hopefully, falls in
line with the way
you as a leader might
make the same decision.
So that why is that guiding
principle, that stake that you
put in the ground, that
anybody can refer back
to if they ever come
up with a question
that they can't answer.
And even if you've
already defined your why
for a pre-COVID
world, you might want
to revisit that
and see if you've
had to pivot what
mattered in your business
or your direction, and
see if your why needs
to be modified based on
what you're doing now
in a different environment than
the one in which you created it
before.
So either way, check in to
see what is still holding true
that you haven't lost in that
river that you jumped into.
Get your teams online
if you have a why
or if you're thinking
about creating one,
and have them share
stories, the stories of when
they felt the most proud to
be part of your organization.
It's one of the things
about my experience
during COVID and being
involved in the CPA firm
that I work for that's
really given me a really
positive connection to my firm.
How leaders behave in a crisis
really gives you insight
into what matters to them.
And our firm stepped
up and did some things
that I was very proud of.
We offered just
free information.
We were out there publishing
content by the minute
and helping our
winery clients try
to make sense of some of
the federal regulations that
were coming out, even though
we didn't have all the answers.
So my firm, I was the person
writing all this content,
and they empowered me to do
whatever I could at no charge
to anybody, just to
get information out
in the hands of
people who needed it.
And those are the kind of things
that really test leadership
and test your why.
Our why says we want to
elevate the wine industry.
And if that's what
we really believe,
then now is the time for us
to really live that as a firm.
And fortunately, leadership
embraced that fully.
Even though we're trying to
figure out-- all of our clients
are impacted by this-- what it's
going to do for us as a firm
and for our own teams,
but they made the decision
that now is the time
for us to really live
the why in a big way.
So that's what we do.
And so that's what I
encourage you to do as well.
So this idea, that
you have your teams
share their stories,
their COVID stories,
and they become part
of your vernacular,
and they become part of your
history as an organization,
and capture those
stories, and then
celebrate the things that you
were able to do that line up
with that why.
This comes from a book called
Find Your Why that was written
by Simon Sinek-- again, the
author of the original book--
along with some
members of his team.
And it really helps you figure
out how to define that why
by gathering your teams and
asking different questions.
So if you're struggling to
really clarify what that is,
I encourage you to go
check out that book.
The Start With Why book,
the original whole concept
is a relatively simple
concept, a little harder
to turn into a real
story that captures
the emotional aspect
of what it is you're
trying to do in the world
by forming this business.
And the answer,
by the way, to why
did you start in this business
is never, to make a profit.
That is an ancillary
benefit, hopefully,
of some passion that
drives you to do this.
So make those stories from COVID
part of that hero's journey.
They're part of
that battle story
that tends to guide and gel the
teams that you bring together
and that survive an
experience like this.
So hearts are first.
We need the
emotional connection.
We need the commitment there.
We need to capture the stories.
We need to make sure that
the team members that we have
on board are aligned around
the values that we think
are important, that
are part of that why.
So now, this is a time--
and I think of COVID
as a pressure cooker.
We've put everybody in a sort
of high-pressure situation,
and what happens during a
high-pressure environment
or experience like this is that
the heroes rise to the top,
and the duds drop to the bottom.
So we can really separate
the people who are flexible,
who are committed, who care,
who really step up in a crisis,
and the people who totally
fail during a crisis--
people who are set in
their ways, who are rigid,
who are unhappy, who are
grumpy, who aren't caring enough
to work through what happens,
who won't do whatever
is needed to succeed.
Those are people who
drop to the bottom.
And we're seeing people weed
out the wheat from the chaff,
as it were, as a result of
what's happening in COVID.
It is also a time, by the
way, that we not only vet
the successful team
members, but we also
see the tools that are
supporting us and working
for us.
We see the vendors and
suppliers that step up.
We see the relationships that
work and those that don't.
It becomes very clear to us
what we need to stop doing
and what we need to do
more of as we go forward.
So there's a real
opportunity in the midst
of this sort of
pressure-cooker environment
to really look closely at what
aspects of your entire business
environment are working
for you and what things you
need to get rid of
and look for a better
solution in the long term.
So we have that
emotional commitment.
We've got the hearts engaged.
And then those, who we can't
get emotionally connected,
this might be the time for
you to send them on their way.
Maybe you don't have the
right people on your team,
that you've suffered with people
who were low contributors,
and now you don't have
the patience to do it,
because you can't afford to
have anybody on your team
that's not a
maximum contributor.
And then, the why
becomes, again,
that guiding light for who you
hire and who you don't hire.
And then, how you
treat people should
be in support of what you say
matters for you as an owner.
So when we go to
the mind engagement,
we have to shift from
just defining that why.
So the why sets
the high-level goal
for the organization in total.
The why gives us that
emotional starting point.
And then we have
to take that why,
and then we have to
leverage it into what we do
and how we do it.
And it's part of
the golden ratio
that Simon Sinek talks about.
But the why is where the leader
defines what we're doing.
The why comes from that
leadership intention
about what he was trying to
do for building a business.
Now, the leader
creates it, and then
what you do, if you're a
wise leader, is you say,
here's what I think
this business is about.
And then you get your teams to
come back and check in and say,
give me some examples
of how we live this why?
Because I don't want it to
be a plaque on the wall.
I mean, there's nothing
worse than having
a vision and a mission statement
that you put on your wall,
and it says, we value
people more than anything.
And then that's on the
wall, and then the company
goes through and fires
everybody on the staff,
or lays everybody
off at the first sign
of any kind of a cash crunch.
So you know we value people more
than anything and then layoffs
when the vision,
the mission, the why
is a completely
disconnected concept
from what we demonstrate in real
life, you've got a big problem.
So we want to have
a why statement.
The leader says, this
is why I did this.
And then you want
to ask the teams,
how does this transition
from concept to action?
So tell me examples
of where you see this
why coming to life in
your day-to-day work.
And that's where you make
sure that they're really
connected to this, that it's
not just a pie in the sky
great big idea that doesn't
mean anything to anybody.
And then you have them weigh
in on what we do that supports
that why, and then talk about
how we go about building it.
So the process involves the
why first, and then the what,
and then how.
And so the why is the
critical component
that's going to
help us construct
a raft that will take us
all across that river we're
trying to cross.
So if we go about--
we do the why as leaders.
But if we go about
telling people what to do
and how they should be
doing it, as I said before,
that's demoralizing.
That's taking power away.
So what we want to do is agree
on the what, and what works
and what doesn't, and
then set an intention
and a clear vision
about what it is we're
trying to accomplish
across different areas
of the business.
And you'll see that I built
the grid rows and columns.
And to me, that looks
like a paper raft
that we're building for us to
get carried across that river.
So we want our teams
to align around the why
and be educated enough so
they can understand what we're
trying to do and, again,
how they can support us
in getting things accomplished.
So I'm going to share
a tool with you.
And I told you that I work in a
wine industry-focused CPA firm.
And we are trained, as a firm,
in an advisory methodology
from a company
called Mentor Plus.
So they taught me.
And I ran into this
company back in the 2000s.
And I've been speaking
about it, and I've
been implementing these tools
with wineries since about 2007.
And this tool is part
of the methodology
that we were trained
in, and I'm using it
by permission from the
Mentor Plus organization.
And it's really pretty simple.
It's a SWOT analysis,
but there are
aspects of this
that, to me, are very
different from the
traditional SWOT analysis.
And the first thing is this
bottom right-hand corner,
the why.
We have this why
question that we
have to answer that's going
to dictate everything else
that we decide for
this organization.
So we have to answer that first.
That's, again, the
heart and soul of what
we're trying to
accomplish as a business.
And then we look across,
and this is SCOPE.
And the dollar sign is the
"s" in SCOPE for Financial.
And then Customers, Operations,
People, and End in mind.
So this is SCOPE,
methodology, and we
look across the five
areas of the business
in order to really drive
a complete result that
is in support of this why.
So I look at the financial
aspects, the customer aspects,
the operational
aspects, the people.
And then, the end in
mind, which is really,
what are we trying to
do with this business?
So for example,
when I ask people--
and this has to do with
both exit strategy,
and end in mind, and the why.
They all come together
here in this bottom corner.
But if I'm trying to grow
a business to sell it,
I have a very different
set of requirements
from someone who is
trying to grow a business
to leave as a legacy.
They're trying to pass it
on to the next generations.
So very different
aspect of everything
that we do in that
business, based
on what this end in mind for
this business is defined to be.
And so sometimes,
the end in mind
might be, sell the business.
And you may not want
that to be something
that you tell everybody,
because we're going to--
I have a short-term
focus; I want
to sell this thing in
five years or whatever.
And you may or may not want
that to be clear to everybody.
But you also have to
articulate the emotional why.
And in the wine
industry, it's usually
we value the nature
of the land that we
are privileged to work on.
We want to share the
fruits of our labor
with our friends and family.
We think hospitality is
important and valuable.
And so we want to
contribute to celebrations
by producing great wine that can
be shared for great occasions.
I mean, something like that.
That's not very articulate,
but I mean, that's the idea.
There's usually a
connection to the Earth.
There's some
experience somebody had
in their life
early on where they
had an amazing
glass of wine that
was part of an experience
that was memorable.
And so those people
come back 20 years later
and want to have a winery, and
want to share those experiences
with other folks.
And so there's a very
emotional connection
to coming and doing a winery.
And there's a similar connection
to just about everybody
who's ever started a business,
at least when they started.
Now, sometimes they
might lose sight of that.
But we want to
capture that story.
That's the motivational
aspect of what we want
to put together for our team.
So we define that.
We also think about our exit
strategy-- so why we exist,
and then what we're trying to
do with this business in terms
of where we're
trying to take it--
for sale, for legacy, for just
a lifestyle business, whatever
it is.
We wanted to find that in some
sense, at least for ourselves.
And then we can
decide what of that
gets shared with our teams.
But then, once we
define that, then we
want to go and think about our
alignment with our end in mind.
So if I'm trying to
build a family legacy,
then I'm going to
think about, well,
have I done a good job about
getting family members involved
in the business?
And if I haven't,
then that's something
that I'm going to put down here
in the "could do better" row.
So I'm going to look at
what works across each
of these areas of the
business, what's not working,
and then we're going to define
the ideal outcome across each
of these areas of my business.
And this is where we're
going to engage our teams,
and then we're going to have
a platform for launching
everything else that
we do going forward.
So this end in mind
component, depending
on what you're trying
to do, see if you're
doing things that
align with that or not,
and then fill in this
little grid with what works
and what doesn't work.
OK, then we want to look across
these areas in the business
at, ideally, what we want to
see for each of these areas.
We want to see the
financial goal.
What are we trying
to accomplish?
What do we want this thing to
look like that supports our why
from a financial aspect?
So do I want to have
positive operating cash flow?
Do I want to have consistent
revenue growth year after year?
Do I want to grow
long-term equity?
What kind of financial
goal do I want
to establish for the
business, and then how can I
capture that for the team?
So we're going to fill that
in as our ideal outcome
on the financial side.
We're going to do the same
thing for customers, operations,
and people.
Now, we use this in multiple
ways, this simple tool
in multiple ways.
We do it in team meetings.
So in a pre-COVID
environment, we
decide what we want to focus
on and what we're going to do.
And this becomes an aspect
of the budget and planning
process.
We define the why.
We reiterate, this
is why we do this.
These are the things we're
trying to accomplish.
Here's what we want
to see, ideally,
across these areas
of the business.
And then we have everybody
complete their own sheet
about what they
think, as a business,
we do well from a financial
side, from the customer side,
from the operations people.
End in mind is the
owner's domain here.
This is where you
fill in your stuff.
But the rest of this--
have those team members say,
what would they think is
an ideal outcome for the
financial part of the business,
for the customer
side of the business,
for the operations of people?
And then you can come
together and compile
everybody's perspectives,
and then check them
against each other, and, again,
check back against this why.
So you see how this why is such
a critical aspect of everything
else that you do.
And in fact, for me, if I have
a client come in and ask me
for any kind of typical
accounting service--
and our firm does this.
We use this document in all
of our prospective customer--
we call them "customers"
in our world--
meetings to set
the stage for what
our client or prospective
client might need from us.
And so we'll say, OK,
you need a budget.
And what am I budgeting for?
What kind of business?
Why are we doing this business?
Why are we a winery?
Why aren't we a shoe store?
If you wanted to make a
profit, you would do anything
but start a winery,
because it's very hard
and a very long,
capital-intensive process
to get to profit and positive
cash flow in this industry.
So there's got to be
something else that makes you
want to be in this industry.
So we start with
that conversation.
We fill out in this
grid-- we interview them
by using this grid and
write in information.
And then, we know better
what it is they need
and where we can best
work with them to do it.
So if I'm trying
to do a budget, I
don't know what matters to
you, if I don't know why you're
doing what you're
doing, then I'm
going to tell you to fire all
the marketing people, right?
Or get the cheapest
labor that you can,
or cut costs at every possible
avenue in the business.
That's an accountant's
view on everything, right?
But if you tell me you
want to create a luxury
experience for everybody
who comes to your winery,
and I'm telling you to cut
costs, we're not in alignment.
So I've got to know what you
want before I can assist you
in measuring things,
and lining your team,
and doing all of that.
So this is a critical
aspect of everything
that we do when
working with clients,
and it's something you
can do for yourself
inside your own business.
Walk through this.
Get your team in agreement.
Have them complete
this for your business
and you might want to
do this same document
in a pre-COVID way,
complete before COVID,
and then complete it again
and say, what changed
based on the COVID environment?
What worked during COVID, and
what didn't work during COVID?
And then, what might
we shift as a result?
Because, again, things are
going to float to the top
that were really
amazing and great,
and the bad stuff is going
to become very, very visible
and apparent to
everybody on the team.
This is a time where, anybody
who's on desktop applications,
they're going to see
the limitations of that.
Everybody who's on
QuickBooks Online
is going to be
celebrating the fact
that we have that on
the cloud and we can all
access the information without
any effort on other people's
part.
So these cloud
environments are becoming--
there's a lot less hesitation
than there used to be.
Any last vestiges of resistance
to moving to the cloud
are, I think, very
quickly evaporating.
So here's how the
process works again.
We need to set the why
at the leadership level.
We need to determine the
what with the team involved.
And then, the how part of this,
how we do whatever it is we're
trying to do, has to go
down a level to not just
the team, and the
leaders on the teams,
but the people at
the front lines.
So again in my world
I have a retail aspect
of the wine or the tasting
room where you're actually
selling wine directly
to consumers,
direct-to-consumer channel.
And so those people at the
bar, pouring the wine for you
to taste, are the people
I need to get engaged
in how we're going to do what it
is we're trying to accomplish.
So I want their input.
I don't want to just keep
this in the ivory tower
and eliminate the people
who are in the best position
to know what's happening.
This is one of the concepts
that comes out of the Kaizen
approach, the
Japanese production
processes that you,
I know, heard about.
And one of the revolutionary
things that they did
is go to the lowest
level of work,
the contact with
the final result,
and ask those people
for their perspective.
Don't go to the MBAs
in the back room
who are doing the analytics.
Get to the people at the
front lines and ask them,
how can we take a minute
out of this process?
Or, how can we make
the customer experience
better when it comes
to this shopping cart?
Or whatever it is, those are
the people with the answers,
not the people sitting
back in the office
with the spreadsheets.
We have different answers
to other questions.
So now we have a little
bit of a roadmap.
We've gotten this sort of grid.
We've got people to understand
how the pieces come together.
So now we're ready to
do the fun part, right?
Pass out the financial
statements to the teams
and tell them to
go make more money.
Is that going to work for you?
If you pass out
financial statements
to the people in your
organization-- and I'm
talking about not
just the line workers,
but I'm talking about leaders.
You get your directors around
the table, your leadership
table, get them at
the table, and you
pass out financial statements
and ask them to do something
about them, they're not going
to have the foggiest idea how
those financial statements
impact what they do day-to-day.
They're going to know that
the number is good or bad.
They're going to look
at the bottom line
on the profit and loss
statement, just like you do.
They're going to
know it's not good
but they're not going to
have the foggiest idea what
to do about improving it.
They're not going to understand
anything else on that document.
If you show them
a balance sheet,
they're going to have even
less of a clue about what
that has to do with
anything in real life.
For most people, even
many business owners
and many leaders who
have never had training
in financial statement
information what
we provide as accountants
to those people is Greek.
And that's what
this says in Greek.
"It is Greek to me."
You pass out gobbledegook
that they don't understand
and expect them to, then,
change their behaviors based
on that information.
If you want those
kind of results,
you need to train and
educate your teams in what
financial information means.
So we have a service we
deliver for our clients called
financial fluency.
And that's a very
specific title.
Again, it comes
from the training
we've had in advisory services.
But that is much more powerful
than financial literacy.
Financial literacy means
you can read and write it.
Financial fluency mean
it's embedded in your brain
and you can actually apply it
to decisions that you make.
That's what we want
with our teams.
They don't need
to be bookkeepers,
but we need them to
understand and think
through the implications
of different decisions
that they make so that
they can understand
the connection to the financial
outcomes of the business.
So I have a couple
of tools for you.
One is a
publicly-available document
that I created on a site
called slideshare.net.
And the links will be provided
to you in the dialogue,
in the chat area, so
that you can get that.
But slideshare.net, and it
is now owned by LinkedIn,
so it's connected to the
LinkedIn site as well.
And I have a little slideshow.
You just click through
it on your own time.
There's no audio.
And it just explains
financial statements
at a very basic level.
And I created this one
Saturday night-- that's, yes,
I have no life--
because I was so worried about
people not getting this stuff,
not understanding just the
core financial statements.
And so I created it one
Saturday night, put it up there.
There are 100,000
downloads of this thing.
I mean, it's an apple tree,
and it's kind of goofy.
And accountants do
graphics in weird ways.
But it addresses a need.
100,000 people
have downloaded it.
That tells me there are
a ton of people out there
who don't know how to read
a financial statement,
and don't understand
it, and are not
in a position in a
meeting, when you sit down
with your team of
leaders, and you say,
we need to improve
assets, we need
to reduce our fixed
assets, they're not
in a position to raise
their hand and go,
what's a fixed asset?
What's an asset?
What's a balance sheet?
They're not going to do that.
They're supposed to
know somehow, magically,
over the course of their
development in business.
Nobody ever sits them down
and explains this stuff.
So if you want them to relate
to the financial results,
you've got to educate them
about what this means.
And this is a tool
for you again.
It's free.
You can download the slides.
You can show it
on the Slideshare
and just watch it on the cloud.
You can send a link to people
and let them just run through
it, and they don't have
to disclose the fact
that they don't know it.
Just make it
available to the team.
This is another book.
Again, this is how accountants
do ugly covers for their books.
This book cover is like a ledger
sheet turned into a cover.
But it is the best
book I've found
to explain core
financial concepts
in an easy-to-digest,
easily-understood way.
It's called Managing
by the Numbers.
It's by Chuck Kremer.
It's old; it's an old book.
It's got a case study.
It talks about a business.
And the first four
chapters really
will get you from
zero to understanding,
at least conceptually, what
financial statements are all
about.
So I would pass
these out to teams.
I think this is
critical, a base level
of understanding for
anybody working in business.
Make it available.
Do a book club on it.
Get your teams trained.
Because that's the
only way they're
going to be able to follow you
down the financial trajectory
that you're expecting
them to follow.
So that's how we
lay the foundation.
So when we're training teams,
we come in and do that.
We either send them these
books-- and I'm part of--
I do training, a
financial concept training
class for winery people
who are on the sales
side of the business.
So I teach financial concepts
to non-financial people
in wineries.
And it's an eight-hour class,
and I walk them through it.
We have that book
go to everybody
in advance of the class.
They read it, and then they
come in with, at least,
a vocabulary that
I can work from.
And then we show them how
to connect what they do
to the financial information.
So look for that,
train those folks,
and then they will be
much better advocates
for what you're trying to do.
So here's a tool
that is designed
to get leadership in alignment
about what we need to focus on
from a financial perspective.
So this is a product
called Fathom.
It's a cloud-based application.
I'm going to bring
it up live here.
And you should be seeing that.
It's Fathom.
It's one screen out of many.
So Fathom is an online
cloud application.
It integrates directly with
QuickBooks Online and also
QuickBooks Desktop.
You can also import financial
data from a spreadsheet
if you're on a
different application.
You can also bring
in non-financial data
and build your own custom KPIs,
key performance indicators.
But what I like best about
this tool is this one screen,
and you see, there are a
list of menu items here.
There is a Goalseek
screen that you
access inside the
application that
allows you to look at
your financial goals
and then connect those goals
with actions that you can
take to improve your results.
So I can choose any of these
different financial metrics
that matter to me
and my business.
And most of my clients are
worried about cash flow,
especially now.
Operating cash flow is
a key financial result
they want to drive up.
And in my example, I
have a fake winery here
that's got a negative 650,000
in operating cash flow.
And their goal is to achieve
125,000 of positive operating
cash flow.
So what this screen does--
and again, there's dashboards.
There's metrics.
There's KPIs.
It's all pulling from your
QuickBooks accounting,
your QuickBooks
Online or Desktop.
And it's bringing
out all the metrics
and putting it together in a
way that an owner can relate to.
So this is a tool for you to
see what's really going on,
and then to determine
what the drivers are
of your financial issue that
you're trying to address.
And so what's fabulous about
this, from my perspective,
is the ability to
see what you improve
and how they impact cash flow.
So our inclination is the
first most sensitive metric
that we need to focus on is the
price of what we're selling,
whether that's a
service or a product.
And it's telling me that that's
the most sensitive metric.
So it shows me, if I
move the needle here,
that I'm increasing
the cash flow.
And then, maybe, I want to
fire some folks-- which,
that's what the accountants
all want us to do--
or cut some costs.
Now, from my
experience, most of us
have cut a lot of the chaff
out out of our costs already.
The fixed expenses
are a difficult one
to take much more out of, but if
we can do a small change here,
then we can improve our result.
So if you're the
leader, and you have
this connected to your
QuickBooks Online--
and by the way, if you have
QuickBooks Online Advanced,
you get this license free
as part of your subscription
to QuickBooks Online.
So you have your own license.
You go in and do this.
You can work with your
external accountant,
if you have one,
who's empowered to--
who understands how to walk
you through this scenario.
But what you do is bring
this up with your team.
Get your leaders in
the room and say,
we've got to have more
operating cash flow,
because that's where the money
comes from to pay you folks.
So we all want to agree
that this is important.
We can fix price-- you
get the sales team.
You guys in sales, what can we
do to raise our average price
across all of our sales?
And then they're going
to have some ideas.
And you say, OK, is this
something we should focus on?
And how much of an increase
do you think we can achieve?
And let's get a
commitment from you guys.
OK, I think I can
achieve about 4 and 1/2%,
2.83% increase in
price on average.
And then you're going
to write that down.
So you can print this
screen out when you finish.
And this is going to be the
marching orders for departments
in your company.
And then they can
take these back
and try to work on activities
that support these goals.
This model also shows a weird
thing that you might be going,
this tells me to reduce the
volume of what I'm selling.
Now, the way this
model works is that it
assumes that these
drivers are going
to stay in the same
ratio with each other.
So what it tells me is, based
on my current sales experience,
and my collection
experience for those sales,
and my payables
related to those sales,
and the inventory days it's
taken me to sell this much,
if I continue to keep
all of these ratios
in the same
relationship, I should
be selling less, not more.
Because the more I sell
with these other aspects
of my business, the less
cash I'm going to generate.
So that's really telling me that
I've got to fix some stuff down
here, that I've got some balance
sheet problems that are going
to impact my cash flow, and so
I can't continue to sell more
at the wrong ratios.
I need to sell less or
fix the ratios that are
the core underlying problem.
And in this case, a
lot of the problem
is related to my ability
to collect what I sell.
And you see how big
of an impact I have.
Plus, I'm paying faster than
I'm getting paid by my customer,
so I'm going to pay everybody
but my accountant slower.
And that's going to
give me more cash flow.
And then, I've got to get rid
of a bunch of this inventory
that I'm carrying.
And you see how I'm
now showing myself
as the owner and my
teams what the impact can
be of changes in
some of the behaviors
that we've been following.
So again, I'm going to
have this conversation.
I'm going to say Sally,
you're on my team.
You're in charge of sales.
What can we do on the
price side of the equation?
And I'm going to bring
in my accountants
to say, what fixed
expenses can we modify?
Where can we cut some more
costs out of our expense side?
And then, I'm going to get
some of the other folks.
I'm going to get the sales team.
I'm going to get the
creditor team to say,
what's happening
with receivable days?
How come it's taking us longer
to collect than it should?
I'm going to talk to
the purchasing agents,
go, what can we do to extend
some of the payment terms
on the vendor side?
Can we renegotiate contracts?
And then I'm going
to go, we've got
to get rid of some
inventory, and what
are our ideas to do that?
So print this out, and this
is now the marching orders
that we have now divided.
We're going to sign
owners to do these things.
And now we've got
alignment around
the high-level financial goals.
And then we're going
to ratchet that down
to individual actions
in our next steps.
OK, so that's FathomHQ.
That's the website.
Go check that out.
If you don't have
[QuickBooks] Online Advance,
I think the subscription
is around $49
a month for a single company.
You can invite other
people into your model.
You can build really
cool custom reports.
There's a whole bunch
of really neat stuff
that you can do in this tool.
You can also create your
own metrics and KPIs,
and then you can monitor
results and success over time.
So it's a great investment,
a really nice way
to convert boring, black
and white numbers to cool,
colorful, interactive graphics
that really enlighten people
in a way that a printed report,
in my opinion, never does.
OK, so now we've done that.
We have alignment of the team.
And now we're going to go
back to the line workers
and say, OK, guys go
sell a million dollars
of additional revenue.
And how is that going to fly?
Well, you're going a huh, what?
What are you talking about?
You're going to get a
dog-in-the-headlights look from
your teams.
They don't know what to do.
You still haven't-- you've
said, we need a million dollars
of additional revenue, maybe,
but they don't know what to do
next.
So what we need to do now
is to break down the steps
into individual
actions and measures.
And whatever we measure
is going to be managed.
So measures and management
are infinitely connected.
And so if you're going to
manage people on something,
you need to have
measures that are
visible and relevant to those
people who are doing the work.
And that's how we get
to the level of hands.
So we have the hearts engaged.
We've got the minds--
intellectually,
they understand the
financial connections.
But now we've got to turn those
understanding into actions.
We've got to get
those hands working
on behalf of whatever effort
we're trying to accomplish.
So that's where we go.
Again, we get our
teams together.
We break down the
actions that we're
going to focus on
into individual steps.
So if we were in that
goalseek, and we told our teams
that we needed them to increase
the average price of what we're
selling in order to achieve
that cash flow objective,
then we need to ask
them to tell us,
what can we do to
make this happen?
And get their input on it.
So I'm not saying, go
back to your cubicle
and increase average price.
I'm saying, OK, this
is the goal that's
a layer below what we're trying
to accomplish to achieve a cash
flow increase.
So let's all think
about the actions
we might take individually that
influence this average pricing.
And so if we think about it, the
channels that we're selling to,
again, we have, in our
world, wholesale and retail,
and we have very
different average prices
for those different channels.
So maybe we need
to look at the mix
between wholesale and
retail, and that would help
us elevate our average price.
So then you get somebody in
this discussion saying, hey,
think about what we can measure
related to a sales channel
change if that's
what we need to fix.
And then we might look at
product or service mix.
So I might have some
high-value products and then
some lower-value products.
And maybe we're selling too many
of the lower-value products,
and we may need to focus
more on those higher-value or
higher-price-point
products in order
to drive the overall
average price up.
Maybe we need to
revisit the package
size of what we're selling.
This, Haagen-Dazs
did this a while ago.
They kept the same
price, but then they
made the package smaller.
So then the consumer didn't
know the price went up,
but the price per ounce
was effectively increased.
So there's an average
price increase,
which was accomplished
by shrinking
the size of the product
that we're selling.
And you'll see that
on bottling sizes,
on different things
where we actually
reduced the ounces
that are provided,
but we keep the
sticker price the same.
And so we're able to raise
our average price per unit.
We need to look closely at
any discounts that we offer.
This is a big challenge
in the wine industry.
People who are selling
in retail might
decide to offer
discounts for people just
to move some more
product that day.
We may look at what our
policies around the discounts
that we provide on items
that we're selling.
And then we might consider
offers that we're making,
promotional offers where we're
bundling different things
together.
We might look at
different ways to raise
those effective
average prices as well.
So these items in gray
are the information
that we're getting
from our teams.
They're coming up
with these ideas.
And again, we are capturing this
on a wall in a room with them.
We're not making it a
tense kind of thing,
where were expecting them
to suddenly be magicians
and produce the answer.
But we want them to share
their opinions and inputs.
So give everybody a
Post-It note and say,
write down what you think
is an impact that might help
us increase our average price.
And then you capture
that on a wall,
and then you say, OK,
now, what do you think?
Which one of these things do
you think we should focus on?
And pick something.
OK, maybe we should come up
with some different offers
where we bundle things together
so we're not really showing
what the individual prices are.
And that might allow us
to effectively increase
the price of something
relative to something else.
And so if that's the
strategy we want to take,
then our next step
is to go, OK, what
should we count
that will help us
see if we're on
track for achieving
this additional offering
that we provide?
So that's the process of setting
the high level at the Fathom
level, and picking a driver
that we want to focus on,
and then drilling that
driver down into the things
that we can do that
influence that driver,
and then going from
that to measurements.
And now we've got
team engagement.
And then they set up what
they're going to count,
what they're going to
monitor and measure,
and then where the
rewards are going
to be applied based
on whatever activity
is being set by that team.
And so we have a
model that we use.
Again, this came
from my training
from Mentor Plus who
taught me everything
that I know that's good.
All the bad stuff came from me.
All the good stuff
that I know about how
to be a consultant in the
world came from my training
at Mentor Plus.
And this is a model.
And again, I'm in the wine
industry, so this is a sample.
Le Cou Rouge Winery
is our case study
that we use for all of
our CPA firms' training.
And we took the
drivers of revenue,
and we broke those
out for people
working in a tasting room.
So this is a retail
model, we call this.
And this is a tool called
the Profit Equation Planner.
Again, that's a tool that
came from Mentor Plus.
And so this was the first
time I understood the drivers,
the factors that we can leverage
to achieve a revenue result.
So there are two main aspects.
There's a volume driver,
and there's a price driver.
And then we break that
down for our teams
into these components.
So number of days open.
If I'm in a retail facility,
that impacts my sales.
And then, the average number of
visitors per day that show up.
And these are things that
we track in our winery.
So then we can look at
history, and then we
can look at what to change
for each of those aspects.
And there's a conversion
ratio, and then we
look at how many cases
each customer that buys
buys on it each time
they buy, and then
we have a whole
series of factors.
And then we look at
the price, and we
look at the mix
between the products,
in this case, because
we're only dealing
with the retail channel.
So one of the big things we
can do from a price perspective
is sell less of the
cheaper wine and more
of the more expensive wine.
And that will effectively
increase our average price.
So I'm going to show
you the live model
now, just so you can get a
sense of why this thing is
powerful for teams.
So this is an Excel
model, and what
happens is I'm
talking to the teams,
and I'm working through
different things.
And they might say that we
don't have enough people coming
into the winery.
And I say, OK, let's put five
more people in the winery
and see what that
does to revenue.
And when I do that,
the revenue changes
will show up down
below here when
I'm able to accomplish
an increase in revenue.
So I put the five more people,
I shove them into the building.
I've got five more sitting
in the building now.
And that hasn't done anything
to drive more revenue.
What I have to do is get
another person to buy.
And that could be a person
from the additional traffic
that I have, or it could just
be another of these 22 visitors
that I already have.
I need to get a higher
percentage of those visitors
buying each day.
So I'm going to
put a 1 in there,
and you see, my revenue
is now starting to climb.
So now I'm educating
those front line workers
about their individual impact
on my financial objectives
I'm trying to achieve.
And if I'm commissioning
those people in sales,
based on this revenue, they
see an immediate payback
from their efforts in
growing more sales.
So then, if that's not the
thing we want to work on,
maybe we want to get them to buy
more wine each time they buy,
and I've just got
an increase here
of a small percentage
that represents
an additional bottle.
So my standard was
4.62 bottles of wine,
and I'm going to increase it to
five bottles per customer who
buys.
And if I can do that, I'm
driving an additional $42,000
in revenue.
So this is the
kind of thing that
connects with my
team in a way that
changes the behavior that
they're bringing to bear
on the job I want them to do.
So now I'm not just
talking theory.
Now that person can see,
in the course of a day,
if they've been able to drive
more bottles per person who
buys than they were able
to do the day before.
They can see by 2:00
o'clock, on average,
how many bottles are we selling
per day to each person that
buys?
And we can track that all day.
And then, midday, if we're
not hitting our target,
we can really focus
on what we need
to do to get more bottles
sold to our customers.
So these are the kinds of things
that you, as leaders, need
to make available for your team
so that they know what you want
them to do, and they
can modify behaviors
before the profit and loss
statement is generated
at the end of the cycle.
We want to correct things
in the process of delivering
the activities that produce
the sales that we're
trying to drive up.
So this is just one
example of the kind of tool
that I think is critical
to driving team engagement
and making those
hands work in support
of the financial objectives
that you're trying to achieve.
Profit equation planner.
I'm happy to marry this sample.
And you can take what
we do for wineries
and modify it to fit
whatever the elements are
of your business.
There's a similar tab
for e-commerce scenarios
and for, in our
industry, we do something
called Wine Club that's very
weird and unique for the wine
industry.
But there are models
for that, too,
and I'd be happy to share that
with you if you are interested.
So those kinds of interactive
team engagement discussions
are what's going to bring
you to ultimate success
for your business
and your winery.
Or, even if you aren't a winery,
for whatever business you have.
So this is what the completed
grid might look like.
This is a sample, again,
from our Le Cou Rouge Winery
that we use in our
training at my CPA firm.
And you see their logo,
Brotemarkle, Davis, and Co.
in the heart of Napa Valley,
St. Helena, California.
And so we made a sample so
people could understand what
this grid process looks like.
And so we identified across the
five areas of the business--
the financial, the customers,
the operations, the people,
and the end in mind.
This is called a SCOPE grid.
That "s" is supposed
to be dollar sign.
That's the financial
side of the business.
We evaluated what worked.
We don't do the what
worked thing very often.
We are good at
describing all the stuff
that we don't do well down
here in this middle road, what
we don't do well.
We can write this
thing in all day,
especially us accounting types.
We know the bad stuff, but
we forget all the things
that we did right.
And so we need to fill
that in and capture it.
And then, again, this
ideal outcome, it's
where the rubber hits the road.
What do we want to
see in this thing?
And then we have the
alignment to the wine.
For our little old
winery, we have,
our why is we
believe in treating
every visitor to our
little old winery like kin.
You might say Southern
hospitality, like bacon fat,
is in our blood, because it is.
So it's all about
building an experience
that makes people coming to
the winery feel like family.
And if we know that's
our guiding force,
then we go back to everything
else that we do and go,
well, if that's what
we're trying to do,
the people decisions
we make need
to be to hire the best people.
And then, the
operational stuff we do,
we need to support processes
that make it easy for people
to buy from us, for
them to feel welcome
and for the billing thing
to not be a big pain.
And we want more customers.
We want to have more
retail customers.
We want to have
national loyalty so
that our customers feel like
they're part of our family.
We want to have
better engagement
with those customers.
So you see how this wide
definition over there,
as well as our end in mind, our
objective, our exit strategy,
is to build a family legacy.
So this is a long-term play that
we're trying to work on here.
And so that fills out
all the other attributes
that we worry about
for doing this grid.
So this is, again,
called the SCOPE grid.
And that first "s" is a
dollar sign for financial.
And that's the "s" in SCOPE.
And it's a simple grid.
You can do your own.
You can draw on a piece
of paper and do this.
But it's about what
we do right, where
we need to improve
some stuff, and what
these ideal outcomes
are across all
of these areas of the business.
And it's not just the financial
column that we need to work on.
It's all these other
things that lead
to the financial objectives
that we're trying
to create for our winery.
So use that too-- there's
a sample for you--
and really change the way that
you bring your teams together,
and achieving the business
results that you want.
So now we've got your hearts,
your minds, and your hands,
hopefully, working in concert.
We have your teams,
part of the solution.
Part of creating their
own measures and goals,
defining the what and how, and
you define the why for them
that helps them be in lockstep
and working together to achieve
the goals.
It's important that
you educate your teams,
that you empower
them, and, ultimately,
that you trust them to make
the right decisions, provided
you've given them
the right information
so that they can do that
the way that you would.
And once that is all
done, you have now
put together a raft that will
help guide you across the river
and successfully reach the other
side and be the great business
that you are capable of
being, no matter what goes on
with the world around you.
With that, I thank you for
your time and attention.
You can reach me at
geni@evananerd.com
or at geni@bdcocpa.com.
I look forward to
hearing from you.
I hope you had a
great experience,
and I thank you for
your time and attention.
