Profit vs. Positive Cash Flow

CaseInterview.com

They’re obsessively concerned that their sales growth will be too low to generate enough cash to pay the bills. However, if you truly understand accounting and the relationship between the cash flow statement versus the profit and loss statement, it is totally possible to go bankrupt by growing too fast. When revenue is collected, that’s called positive cash flow. In every McKinsey engagement, there’s a moment when the senior client says to us, “Hmm.

What a Business Financial Statement Can Tell You About the Health of Your Business

Tom Spencer

Bills come in, sales go out, you have your day-to-day goals and you watch the curvy line of profit and loss make its inexorable progress throughout the financial year. Business Strategy balance sheet business planning cash flow statement financial statements income statementWhen you run your own small business, it can be difficult to keep an objective distance from what you do.

Managing a Sales Funnel for Your Consulting Business

The Clever Consultant

Create and managing a sales funnel. We spoke to our friend Brian Sullivan, Vice President of Global Accounts at Sandler Training , who offered us this advice: View Your Sales Funnel as a Live Tool. Your sales funnel is a living entity that needs regular attention. To make it easy, make sure you have a simple vehicle in place that enables you to collect details about prospects and where exactly they are in your sales funnel.

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5 Sales Negotiation Traps to Avoid at All Costs

LSA Global

Sales Negotiation Traps that Make the Difference between Success and Failure. Sales negotiation traps can trip you up. Five Sales Negotiation Traps to Avoid. You should never enter a sales negotiation without a clear idea of what would be the best outcome for both parties.

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How to avoid a sales slump after a busy period

MBO Partners

Most merchants know that busy sales periods like the holiday season or promotional periods are often followed by a sales slump. Without proper planning, this can mean lots of excess stock on the shelves, poor cash flow, and a myriad of other consequences. Insights & Analysis Productivity

Asset Management – Valuation (Part 2 of 4)

Tom Spencer

There are a couple of reasons for this: Asset managers can see cash flow and earnings fluctuate wildly with markets. For very good periods of performance that management feels may not continue, they may choose to park cash opportunistically or repurchase shares.

Case Math

Tom Spencer

Net Present Value: The NPV of an investment is the present value of the series of expected future cash flows generated by the investment minus the cost of the initial investment. Perpetuity: A perpetuity is a constant stream of identical cash flows with no end.

Don’t Drive (Your Business) Over the Curb

Martinka Consulting

It’s tough managing 50 people instead of 15 or handling cash flow at a level beyond what the line of credit allows for. You can’t look at the write-up of any business for sale without seeing the word potential. Flat sales (and therefore decreasing profits) narrow the road. Owners travel a road every day and their road has curbs. The wider the road the better.

Martinka Consulting - Untitled Article

Martinka Consulting

A December 2, 2016 Wall Street Journal article was titled, “ Car Sales Roll Along; Aided by Discounts.*” The gist of the article was sales are up over the same month a year earlier and the average discount was 11%, versus 9.4% He knew cash flow. Or should we say he knew short-term cash flow. He watched his cash flow like a hawk.

Need Clients Now? 5 Strategies to Quickly Get More Consulting Clients

Consulting Matters

However, there will be times when you have to feel the cash flow pressure and need to find clients.right now! If you want to achieve sustainable success as a consultant - ideally you want to create a marketing system to ensure you have a consistently full pipeline of right-fit clients.

Business Book Review: Boston Consulting Group On Strategy

Management Consulted

The focus here is completely on cash flows and not projections. Though this perspective was first written in 1988, it is a good historical record as it shows the link between time utilization and sales. Cash Flow of a Product – It’s an excellent study on rules of cash flow if you’d like to know more on the performance of products and the effect it has on sales at each stage in production.

Does Your Brand Inspire Customer Devotion?

Joellyn Sargent

You see, most revenue-focused executives worry about sales first. Satisfied customers become advocates and evangelists, working like an advance team to sell your products and services before your sales team even knows a buyer is looking. It’s Nice to Be Liked.

Need Clients Now? 5 Strategies to Quickly Get More Consulting Clients

Consulting Matters

However, there will be times when you have to feel the cash flow pressure and need to find clients.right now! If you want to achieve sustainable success as a consultant - ideally you want to create a marketing system to ensure you have a consistently full pipeline of right-fit clients.

Economies of Scope - Tom Spencer consulting blog

Tom Spencer

Sales – Selling products is easier when salesmen can provide customers with a range of value options, as well as upsell and cross promote … “Would you like fries with that?”. More stable cash flows are attractive for three reasons. About. Book Shop. Archive. Definitions.

CFO Branding 101

Free Agent CFO

You’re spending far too much time talking about fixing cash flow problems (remember, that’s typically a symptom of a far bigger problem). When you believe several acquisitions are the key to stellar sales growth.

We Tracked Every Dollar 235 U.S. Households Spent for a Year, and Found Widespread Financial Vulnerability

Harvard Business

The lack of access to stable, predictable cash flows is the hard-to-see source of much of today’s economic insecurity. Financial Diaries (USFD), an unprecedented study to collect detailed cash flow data for U.S. We logged all transactions, whether they occurred digitally or in cash, above the table or below, in money or in kind. But this close-up look at cash flows suggests new routes to helping families.

Breaking Down Case Interview Frameworks – M&A (Mergers and Acquisitions)

Management Consulted

All acquirers will want to increase cash flow, but the length of their investment in the company will differ, depending on the type. They will often just want to rapidly decrease costs and increase top-line revenues and profits with cash injections. If your client wants to integrate the target, is there potential for synergy, either by piggybacking one company’s strong areas onto the others to increase sales or by reducing operating costs?

Which MBAs Make More: Consultants or Small-Business Owners?

Harvard Business

So, we begin by assuming that the traditional path offers cash compensation equal to the average starting salary. (It The chart below shows that over the first 10 years of employment, the cash compensation from the traditional job dominates. In this example, the annual cash flow is $1.5

Earnings Cheating Season: Is Your Favorite Company Cooking the Books?

MishTalk

In other words, there may be more to the recent flash-crash than just one weak retail sales datum a deeper malaise surrounding weak profits may be driving events. Is there a growing divergence between net income and operating cash-flow?

There’s No Wrinkle in Time for the Time-based CFO

Free Agent CFO

Sales go up 11-12 percent annually. And cash flow? Free cash flow is predictable and also tracks consistently with earnings. Each time I read an article telling me to focus more and more on the future, I just roll my eyes.

Bank of Japan Seeks to End Stimulus, Currency Market in Disbelief

MishTalk

The stimulus is a centerpiece of Prime Minister Shinzo Abe''s campaign to end two decades of deflation and fitful growth, and BOJ Governor Haruhiko Kuroda has vowed to keep cheap cash flowing until his 2 percent inflation target is in plain sight.

Strong Economy – Strong Buy-Sell Market

Martinka Consulting

Record number of small business sales in 2018! PriceWaterhouseCoopers – Two-thirds of companies with sales of $5,000,000 to $50,000,000 will change hands in the next 10 years (2011). Magazine – 65-75% of small companies in the US – some 10 million – likely hang up a “for sale” sign in the next 10 years (2015). Cash flow is king (they don’t require full collateralization, but will take as much as they can). This as per bizbuysell.com.

Organizing for growth

Seth Godin Blog

First, there''s a cash flow issue. New jobs mean more need for paint and materials, but he has to lay out his own cash to pay for it. No cash, no time, no joy. He could require a down payment on every job, an amount calculated to cover all of his cash costs.

Chinese Malls Hit With Low Traffic, Rising Vacancies, Plunging Rent, Massive Overcapacity

MishTalk

Rising vacancy rates and plummeting rents are increasingly common in Chinese malls and department stores, despite official data showing a sharp rebound in retail sales that helped the world's second-largest economy beat expectations in the third quarter. Less foot traffic means cash flow of mall owners and developers are getting squeezed - a potential hazard for an economy growing at its slowest pace in decades.

Housing Starts in China Plunge 25%; Did China's Property Bubble Finally Burst?

MishTalk

Retail sales also grew more slowly than expected in April, and the furniture market stalled as fewer families moved into new homes. As the property slowdown has kicked in, housing starts, completions and sales have turned markedly lower, especially outside the principal cities.

When your project isn’t making money

Seth Godin Blog

It might be that you’re losing money on every sale. Are you aware of work in process, cash flow and cycle times? You may have created an organization that’s profitable at a much bigger (or smaller size) but the mismatch between your overhead (all that rent, all those people, all of those services you pay for) and your total sales is way off. Which means that each and every item you sell, every service you perform, costs you money.

Business Valuation Lessons From ESOPs

Martinka Consulting

In the Discounted Future Cash Flow method profits are projected (same as the first issue) and discounted back to a present value. Using comparable sales of much larger firms will distort the value. I’ve been working with a client company on the implementation of an ESOP (Employee Stock Ownership Plan). In an ESOP, a qualified plan, the plan buys the stock of the firm from the owners with vested employees now the owners, en masse.

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Another Obama Clean Energy Fiasco, Potentially Involving Largest Bankruptcy in Spanish History; Appeal of Clean Energy

MishTalk

Abengoa had no problem in getting Citi to lead a €100 million (£70million) share sale in July to raise funds for the group at a price of €2.80 Furthermore, days after the Citi-led share sale, Abengoa revealed it was seeking to raise €650 million of capital and dispose of €500 million of assets. It also alerted the market that its free cash flow for the year would be as much as €800 million lower than previously forecast.

How Incentives for Long-Term Management Backfire

Harvard Business

Two obvious pieces of evidence: The use of earnings for share buybacks that cost more than they’re worth, and dividend increases that divert cash from long-term investment. The diversion of cash from investment slowed long-term strategic success.

Forget Startups – Buy a Business

Martinka Consulting

Richard but in a sales system and culture, which attracted customers and high-quality employees. You trade your capital for immediate cash flow, i.e. you get a paycheck on payday just like everybody else. Fast Company recently had an article titled, “ Forget Startups Just Buy a Small Business from a Retiring Entrepreneur.”

Time to Short the US Dollar? Go Long Commodities?

MishTalk

Bunds will not be able to follow the re-pricing of Fed (away from early 2015 hike) and growth in the US (It’s not the weather) as Q2 gets revised back down to 2.25-2.50% and geo-political risk and lag of global earnings for S&P-500 companies reduces margin and cash-flow.

Quick Tips for Consulting to Small Organizations | Consulting and.

Consulting and Organizational Management

Don’t be afraid to look at the “business” or “hard” data, at least to understand the cash situation of the organization. Get help to do that if you aren’t comfortable with cash flows. Library. Translate This. Home. Share » Connect » Blog: Consulting and Organizational Development. Library Blogs Home. This Blogs Home. Guest Writer Submissions. Policies. To Subscribe to a Blog. About. Feedback.

Unrealistic Expectations

Martinka Consulting

I’m seeing more and more owners of small businesses ($3-10 million or so in sales) thinking their company is going to be priced the same as a $50-100 million firm. In the last few weeks owners (of companies doing $3-10 million in sales. I expect to sell my business for 6X total cash flow (profit or EBITDA plus owner salary). A firm with volatile sales, low earnings and an owner who thinks he should get one times revenue.

The Challenges GM Is Facing, and the Reasoning Behind Its Plant Closures

Harvard Business

Car sales in the U.S. But car sales are now probably past a cyclical peak, not only in the U.S. Alistair Berg/Getty Images.

The Debate on Corporate Tax Reform Just Started for Real

Harvard Business

The Brady-Ryan plan is based on a “destination-based cash flow tax” (DBCFT) that is also mistakenly labeled a “border-adjustment tax” and has five critical features: A reduced rate, down to 20%. But it uses corporate cash flows to do it, rather than the way the VAT works around the world: through the so-called credit invoice method , where businesses are taxed on sales but deduct taxes paid on inputs.

Unrealistic Expectations – Part II – Gotcha!

Martinka Consulting

And this applies to any type of deal, not just the sale of a business, where terms influence the price. The seller got a higher price so she was more motivated to do a deal, the buyer has improved cash flow to grow the business and improve operations, and isn’t that what it’s all about. What happens when interest rates are higher, the supply of businesses-for-sale increases, and pricing gets back to “normal?” (And

Severe Weather Threatens Businesses. It’s Time to Measure and Disclose the Risks

Harvard Business

When weather conditions are on average adverse over days, weeks, or entire seasons, shortfalls in sales cause reduced cash flows and can lead to financial distress and business failure. last year triggered shortfalls in sales, store closures, and job cuts. This boils down to writing a relationship between a financial variable (sales, volume, profits or margins) and a weather index (temperature, precipitation, wind speed, etc. Photo by Annie Spratt.

Subscription Business Models Are Great for Some Businesses and Terrible for Others

Harvard Business

In the transactional economy, the most important measures are new customer acquisition and sales. For sales, the moment of transaction is the start, not the finish line. Today it seems like everyone is rushing to join the digital membership economy.

What GE’s Board Could Have Done Differently

Harvard Business

Since Immelt’s departure, GE’s stock is down another 30%, as its new CEO, John Flannery, has struggled to cope with the cash flow drain from years of problematic acquisitions, divestitures, and buybacks. In one set of violations, GE had effected December “sales” of locomotives to unnamed financial partners, who left most of the ownership risks with GE. HBR Staff/YASUYOSHI CHIBA/Getty Images.

AAA – Not to the Rescue

Martinka Consulting

When it comes time to sell however, they want to demonstrate that the business has more cash flow than the tax returns (and financial statements) show. Similarly, I once saw a deal where it was stated that if the buyer reduced the sales staffs’ commissions from 10% to 8% this adjustment would create more profit. If the only way a buy-sell deal can be made to work is because of AAA, it’s probably not worth doing. AAA stands for: Adjustments. Assumptions. Add-backs.