Category Archives: Business Development

The Number One Way to Influence Others

Have you ever been in a situation where you felt that a sales person really understood your needs?

I once made a large purchase with no regrets. In fact, the sales person made me feel great about handing over lots of my hard-earned money.

What was the key to this sales person’s success? Why do I want to work with him again?

I walked away feeling that I had been understood. He was able to get inside of my head, figure out my needs, and deliver a set of complex services that satisfied me.

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The Power of Simplifying

I was recently talking with a professional who was trying to sell me a service. She showed me how it could potentially save us a modest sum of money.

The main thought I came away with was, “Will this make life easier for me? Will it increase or decrease the workload and burdens that I have to bear?”

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Are You More Persuaded by What You See or What You Hear?

We all know the expression, “I’ll believe it when I see it.”

However, I used to operate on the assumption that verbal communication (the specific content of words and speech) was often more impacting than nonverbal. In other words, I thought, “I’ll believe it when I hear it.”

I now have a better understanding that we believe what we see, as the saying goes. There are good reasons to say “I believe what I see” rather than “I believe what I hear.”

A recent life experience helped “open my eyes” to this. I was sitting next to a friend who happens to share the same first name as mine. Another person in the room looked at him and said his name.

If that person had looked at me, I would have expressed that the person said my name. If that person had looked at neither of us, we would have simply been confused. However, what happened next did make us both confused.

Instead of looking at my friend, saying his first name, and letting us assume (correctly) that he was referring to my friend rather than me; this person tried to specify the person to whom he was referring by mentioning the last name.

The problem is that he used my last name on accident.

He was looking at my friend, but he used my last name to specify which one of us he was addressing.

At that instant I knew he was referring to my friend and that he simply slipped on the last name. Simple mistakes like that happen to the best of them, especially when someone has a lot on his mind.

The lesson I learned was that I believed what I saw. I did not believe what I heard. I actively doubted it. Sure, I was confused for a brief moment until the person cleared up the misunderstanding and we all simply smiled about it and moved on. But even in the midst of the confusion, my mind believed the sincerity of that person’s nonverbal communication — his expression and his eye contact with my friend.

Take notice of your nonverbal communication. Others are noticing, whether consciously or subconsciously. People believe what they see more than what they hear. We have all heard this demonstrated by various theories and studies of communication. My experience is just one example.

You will be a more effective communicator if you make your nonverbal messages consistent with your verbal. We often think the most about the words we will use in communication, but we should spend as much time on the tone we will set through body language and nonverbal cues.

Be Considerate and Acknowledge Those Who Help You

A friend once gave me a gift card to a restaurant that he knew my wife and I enjoyed. This unexpected gesture meant a lot to me. He was acknowledging my help in referring some clients to his accounting practice.

I would still refer clients to him absent the gift card because I think he’s a competent professional who can serve his clients well. However, his kindness will help keep him toward the top of my list.

Doing “the right thing” and helping others in relationships isn’t always a quid pro quo proposition. Even in business contexts, we should often give, give, and give — even when we’re unsure when and if we will receive anything in return.

Don’t be like a narcissist for whom relationships with others are strictly utilitarian tools to get benefits for yourself.

On the flip side, if someone does help you, be sure to acknowledge this like my friend did.

Experienced executive search professional John Touey gives some gems of advice on networking and relationship maintenance: Stay in touch, be a source of information, provide referrals, and consider being a client for your contacts with relevant expertise. Don’t be one he describes as “that guy.”

““That guy” only reaches out when he’s lost his job. He’s eager to meet; he’s looking for referrals; he wants my knowledge of the market. He also seems to forget I exist the moment he finds his next job. I have a few of these in my network, but there is one who stands out. He’s a CFO who has been in transition three times over the last 15 years, and those are the only periods when he showed any interest in having a dialogue. In each case, we met, I helped and he landed, after which he didn’t return my calls or emails. He just landed again in the past few months, and the silence is deafening.”

Have you ever been guilty of this? I am afraid I have done so, and I am reminded that I need to reach out to friends and contacts in my network — even right now when I’m not actively needing their help.

Maybe I will contact one of them at just the right time when they need help from me. Maybe I will give them a helpful piece of info that can be useful for their profession.

Touey says, “My feeling is that if you put enough good things out in the world, good things will come back to you, often from unexpected sources. I don’t keep a scorecard when I help someone out. But I have to tell you, when I make a referral that leads to an employment opportunity, it’s annoying when I don’t get an acknowledgement of that fact. I’m not asking for business or a fruit basket. A simple “thank you” would suffice.”

I have seen this to be true from my experience. Give, give, and give. It’s the right thing to do. And be sure that your kindness will be rewarded in due time.

Which of your professional contacts can you reach out to today, unexpectedly, with helpful information? Look out for situations to provide knowledge and referrals to your friends. Everyone appreciates this, and you will reap what you sow in your relationships.

How an Accountant can Add Value Beyond Number Crunching

Recently I was describing the job of an accountant to a friend. I explained that many people view accountants as “bean counters” or “number crunchers.” Tracking transactions and reporting on a company’s financial condition are certainly important aspects of an accountant’s job. However, accountants have many more opportunities to add value.

To illustrate, consider a situation involving a hypothetical Acme Co. transacting business with Supplier Co.:

  • Supplier Co. typically purchases any raw materials needed to fulfill orders and then converts them into finished goods. However, due to unique economic factors, Acme agrees to pay for raw materials to be delivered to Supplier. In essence, Acme’s payment (though not directly to Supplier but to a company that supplies Supplier) functions as a type of “deposit” or “prepayment.” Acme fronts some of the expense of the goods prior to taking ownership of them.
  • In turn, Supplier is to convert the raw materials into finished goods and deliver them to Acme.
  • As part of the arrangement, Supplier has agreed to reduce its selling price per unit (which originally included the cost of the raw materials) in order to compensate for Acme having paid for the materials up front.
  • Suppose that Supplier encounters problems producing the finished goods. Perhaps some of the raw materials were defective or wasted. For whatever reason, Supplier delivers fewer units than Acme’s original order. 
  • This presents several challenges for Acme. First, Acme must determine how much it recouped of the cost of raw materials and how much it expended but did not recoup due to the shortage. Second, Acme must clearly detail to Supplier how the shortfall of units delivered hindered Acme from recovering its costs for the raw materials. If Acme paid for enough raw materials to produce 1,000 widgets but only 800 were delivered, Acme missed out on recovering 200 widgets worth of costs.

Enter the accounting and finance group. By staying alert to the ramifications of the short shipment — i.e., the failure to recover the cost of the raw materials that were paid to produce 1,000 rather than 800 widgets — the accountants can prepare analysis to detail the effects of the shortfall. The accountants can also work to negotiate with Supplier to provide a credit on a future order or to send payment to help Acme recover the shortfall.

Assuming Supplier values Acme’s ongoing business and wants to avoid legal problems, a clear and detailed analysis by Acme’s finance and accounting group could help Acme recover the “lost” funds.

I was once involved in a circumstance very similar to this. It was very rewarding to see the fruit of my efforts when the business I worked for received a payment from its supplier due to the shortage of units shipped.

Note that I would advise, whenever possible, avoiding prepayments and deposits or paying for supplies up front. However, sometimes these commercial arrangements are difficult to avoid depending on the nature of the industry and a host of other factors. When a company gets into a situation like Acme’s, the accountants need to exercise “situational awareness” and understand the ramifications for the business. The accountants can create value by driving the process of analyzing the shortfall and helping to negotiate for recouping funds from the supplier.

Recovering funds that rightfully belong to the business and avoiding wasteful spending can add value in much the same way as making sales and bringing in revenue for the business. This goes beyond traditional “bookkeeping” or financial analysis and reporting. The key is to exercise good stewardship and fulfill fiduciary obligations by treating the business’ money as if it were your own.

Seven Practical Ways to Gain Confidence

I wrote previously that a finance professional should always be confident. This is certainly enhanced when you are prepared. I had a few job interviews early in my career for which I was not adequately prepared, and this showed in my level of confidence. I did not get a second interview in those scenarios.

My success has always been enhanced when I have been confident. Here are seven insights drawn from Kent Sayre about increasing your confidence:

  • “What’s the worst thing that can happen?” Step back from your stressful situation and have a dose of reality. Compared to what you might gain if you successfully navigate through a stressful situation, the worst case scenario might not be so bad after all. Do your very best, and if you can’t control a particular variable, there is no sense stressing about it.
  • Vividly (i.e., using the five senses) imagine yourself achieving success in doing something for the first time. Consider a past situation in which you were successful, and relate your new experience to your past success.
  • Copy a confident person. Talk with confident people and be around them. Try to carry yourself in the same way.
  • Consider what you would be thinking, saying, and doing “as-if” you were confident. Act confident, and develop these patterns of thinking, speaking, and acting into habits.
  • Maintain a proper perspective. Ponder how important the situation you are facing will be to you when you are on your deathbed. You may not worry so much when you consider the big picture and understand that your current situation isn’t as important, long-term, as it presently seems to be.
  • You will fail to achieve anything 100% of the times that you don’t try. Believe that you can get help from others, and then ask. This might or might not work, but you won’t know unless you try.
  • Your internal voice might nag you with negative thoughts and feelings. Think of this voice as a clown’s voice or Mickey Mouse’s voice. Laugh at it, move on, and conquer your fears.

I especially appreciated the tip about considering best and worst case scenarios. Sometimes we can stress over vague fears and lose our confidence. If we can quantify what we are concerned about, we can find ways to accept, avoid, reduce, or share risks. If we are unable to quantify our fears, we have no need to be afraid. Instead, we can focus on the positive benefits from success and leave behind vague, general dread.

Poetry and Art for the CFO: Twelve Elements

Are you left or right brained? Analytical or emotional? A number cruncher or a poet?

Although it might run counter to our initial assumptions, CFOs are expected to go “beyond the numbers” and manage key aspects of the business as a whole. We have seen the importance of understanding technology and operations, among other factors not directly related to number crunching.

Very critical is the CFO’s role in dealing effectively with people and relationships. A CFO needs to be approachable. To become CFO material, a finance professional needs to develop habits of ambiguity tolerance, composure, empathy, energy, humility, and confidence.

On that note, the international accounting and finance firm Deloitte has published a poetic and artistic description of the CFO’s twelve elements, which encapsulates the expansive requirements and responsibilities of the CFO’s job:

“As CFOs grow in stature and importance, they keep coming back to the same issues that form their agenda. The elements of the CFO Agenda represent a powerful framework for one of the toughest jobs on earth. Year after year, quarter after quarter, they endure.”

Here are the twelve elements and my summation of the messages:

  • Truth – Be real. Know the true story and tell it.
  • Growth – Plant and water. Make choices and commitments to move plans forward.
  • Relationships – Work together. Manage relationships up and down, inside and out.
  • Decisions – Root your insights in numbers. Don’t manage solely based on your gut.
  • Capital – Manage business investments. Determine timing, amounts, and allocations.
  • Disruption – Be discerning as technologies, industries, and markets constantly change.
  • Crisis – Manage risks. Be ready to respond to various sorts of threats.
  • Infrastructure – Be an enabler. Invest in tech, talent, systems, and solutions.
  • Transactions – Research deals with the right criteria, calmly, thoroughly, and rationally.
  • Transitions – Change is constant. Build your skills and reputation in the midst of it.
  • The Street – Have give and take on forecasts. Be vigilant to represent the company well.
  • Me – Provide solutions. Navigate through complexity to make things happen.

Don’t take my word for it. Take a look at the presentation for yourself. Reflect on the messages. Do you agree or disagree with each of the elements and how they’re presented? How can you apply these insights in your work as you develop your career?

What is Your Employee Retention Strategy?

Any accountant will tell you that employee costs are some of the most significant routine expenditures that companies make. Payroll has a big impact on cash flow and the bottom line, but so do employer payroll taxes, state unemployment insurance, workers compensation insurance, retirement and health benefits, vacation, and so forth.

Although it costs a lot to hire and retain employees, don’t underestimate the costs when they leave. Either existing employees have to pick up the slack, which can cause stress and resentment when not accompanied by a pay increase (as is often the case), or new employees have to be hired and trained. This takes time, interrupts progress, and in the process of training, a new employee can make mistakes that cost the company money.

Talent is a key constraint for a growing business. Companies cannot grow without the right people on the team. A senior management team that is serious about growth and strategy makes sure to effectively manage the risk of employee turnover. When management has a well-defined vision for company growth and can articulate the potential long-term upside that employees have in the business — coupled with nearer-term incentives — the organization can be positioned well to attract and retain good talent.

Last year the Journal of Accountancy provided a summary of a WorldatWork survey. Among other findings, 65% of respondents said senior managers were concerned about retention. Even as opinions of the economy continue to be mixed, it seems that employees have felt more confident exploring options for “greener pastures” in the marketplace.

The survey found that employees leave for more money, better promotional opportunities, more equitable pay in line with market rates and in recognition of personal contributions, less stressful workloads, more work-life balance, better leadership, and more training and development opportunities.

The strategies employers use are not surprising when one considers the basic desires of workers, namely money and freedom: “Companies that have retention programs tend to keep key talent by offering above-average pay and benefits such as flexible scheduling, the survey showed.” Also, the survey showed that managers are careful to communicate future opportunities with key employees.

In short, senior management can either define and implement an effective retention strategy, or it can let others in the marketplace demonstrate a superior ability to hire away good talent. Some very effective methods of retention can be low-cost, such as giving employees a sense of empowerment and ownership. Rather than just paying more money, partner with employees in tangible ways to help them advance with the business and make progress with their career goals.

In addition, while employees will always want more money, there might be ways to implement flexible scheduling to help them feel like they have more freedom and ownership of their work and schedule. Rather than micro-managing their work and schedule with an iron fist, treat them like grownups and expect them to act as such; the results can be remarkable.

Lessons from a CFO: Operations, Technology, and Innovation

With the rise of technology and the rapid pace of change in the world, the role of the CFO is clearly being transformed. The traditional “sweet spots” for top finance executives are broadening beyond accounting and finance toward operations, technology, and innovation.

Lon Searle, CFO of YESCO which makes custom electric signs, provided some glimpses into his role in a recently published Forbes interview. Here is a summary of some of his points:

  • CFOs are becoming more focused on operations and supporting every department of the organization through financial analysis: “In manufacturing, the CFO has to get out on the shop floor and understand the operations and the product the company is making; he or she has to move the ball down the field in a way that provides value to the company.”
  • Understanding and working with information technology is an important part of the CFO’s role: “The CFO position is gaining a systems focus – it works with IT and financial analysis that can help every department.”
  • CFOs can serve as coaches for the finance staff as well as other functions in the organization: “I help train the financial staff, train the sales staff to lease to our customers, and even train our franchisees to help with financial decisions and funding decisions.”
  • Understanding international business is increasingly important for CFOs: “I also get involved in global shipping and interactions – getting letters of credit for our customers to ship products all over the world and deciding whether to hedge the currency risk in transactions. We’re a global company but not that large, so to be involved in that is surprising to me, given my career path. But it’s really a global economy now, and almost any CFO should be involved in those decisions and that research. It’s interesting and challenging, too.”
  • CFOs can help drive innovation in the organization: “CFOs can be a driving influence, spreading ideas throughout the company, helping employees cross-fertilize and see things from a different perspective. It’s a great position to be in. It’s unfortunate that some financial officers just see themselves as keepers of the books and not champions of innovation.”

Operations, technology, and innovation are broad categories for a financial professional to have on the radar, in addition to developing coaching skills and international acumen. The path toward the CFO role includes gaining professional knowledge and experience in these areas. These are helpful ideas to consider in mapping out a career development plan.

Five Reasons to Implement Written Policies and Procedures

As with putting goals in writing and getting agreements in writing, successful organizations follow the best practice of documenting policies and procedures in writing. Here are five reasons to put time and effort into documenting policies and procedures:

  • As with writing down goals and agreements, the process of documenting policies and procedures forces senior management to step back and carefully think about how they run their business. Rather than spending days “putting out fires” that are often created by having no formal standards, management can work toward smoother operations by documenting policies and procedures for every area of the business that requires judgment and discretion or involves risk.
  • New hires will quickly get up to speed on how management runs the organization. To be sure, documenting policies and procedures takes some thought and effort on the front-end. However, in today’s world of high employee turnover, the initial new hire training process will be more effective when supervisors have a standard approach to bringing employees up to speed.
  • Employees will appreciate knowing what is expected of them and what they can expect from management. No one appreciates rule-makers who “make it up as they go along.” Take time to systematically document clear answers to implicit questions that every employee asks. Never assume that employee assumptions — absent clear and documented guidance — about organizational policies and procedures will align with management’s intentions.
  • Employees, investors, customers, vendors, regulators, and other stakeholders will have the perception that the company is well-managed by people who care.
  • Implementing consistent and predictable processes will facilitate company growth. Putting out fires all day long is not a scalable management style; the organization can only grow so far until one of the fires gets big enough to finally burn it down. Enhance scalability by standardizing processes, policies, and procedures. The constantly changing marketplace provides more than enough uncertainty for every senior manager that I know. Consistent policies and procedures provide a welcomed oasis of stability and predictability in today’s business world. This is often more than a luxury; it is a requirement for growth and survival as the organization adapts to external challenges.

I once heard a senior-level manager communicate his preference for leaving policies and procedures unwritten so as to avoid legal ramifications in case the organization diverged from them. This is a good strategy for managers who are unwilling to put thought and care into formulating good policies and procedures and maintaining effective enforcement mechanisms. However, it is a bad policy for an organization that plans to significantly scale operations over time. There are plenty of reasons why large organizations take time and exercise care to document and communicate their expectations for consistent, reliable operations and behaviors within formal, written policies and procedures. Finance professionals can contribute needed professional judgment toward every area of the policy-making process.