Not long ago I received a Twitter message asking “Justin, what happens in a typical quarterly business planning meeting?” Today I’m giving you a little insight into just such a meeting I had recently.
While I can’t go into tons of detail due to confidentiality issues, I can tell you about a meeting I had with one of my clients – a first-generation business owner.
After reviewing his most recent personal financial statements, along with his P&L and balance sheet, I made few recommendations to him. Here is the first: 1. Quit spending money. 2. Quit spending money. 3. Quit spending money!
Now, I say that tongue-in-cheek. However, he did not realize just how much he was spending during his day-to-day operations. I flat out told him “Hey. Look you’re spending too much. I need you to reach certain benchmarks in your business in the next little bit. And if you can, then here’s the ROI for your business for this year.”
Another recommendation I made during this meeting is that he stop contributing to retirement at the moment. His business needed to build up its cash reserves. While I do believe every business owner should pay themselves first (using retirement accounts) it is harmful when the business is not financially secure. Any little hiccup can cause the business to flounder and potentially push years of progress out the window.
I was also seeing some stagnation between his front office and back office. “We have to unclog the dam.” Here in East Tennessee, we have streams and rivers where beavers live. They will cut down trees along the bank dropping them into the water. The trees will float downstream eventually clogging up the river and creating a pond where the beavers then build themselves at home. This is exactly what was happening in this particular case. The front office (where the sales and customer service takes place) and the back office (where the product is created, service and distributed) were not in sync. This needed to be corrected.
Believe or not I could easily see this issue in the numbers and I pointed out the problem. We then we spent about 20-30 minutes talking about what exactly the issue was and how he could fix it with all the quantified data.
The meeting ended with him focused on working toward the objectives we outlined for him to accomplish. We made plans to touch base again the next month to check on his progress. At that point, we will then have a different set of objectives for the next quarter or a month or whatever it ends up being.
So there you have it… an idea of what we discuss in a typical quarterly business planning meeting. If you have ever wondered what exactly someone like me does, a CERTIFIED FINANCIAL PLANNER™ who specializes in business issues, now you know. We essentially work on the business. We identify financial components that need attention and fix them; almost taking on the role of Chief Financial Officer for the client.
If you have any follow-up questions on how your business can be helped let me know.