Financial Meeting Rhythm (#288)

Tom Bronson (3s): By listening to this podcast, you are already taking steps on the path of improving your business readiness. Nice work. Got a question? Well, we'd love to hear from you.

Submit your questions at Mastery Partners dot com and look for the Red Business owner hotline button. And as you think about today's episode, remember the decisions you make every day as a business owner are either building value in your company or quietly eroding it. So here's a question to take with you. What decision will you make tomorrow that builds value in your business?

Now go get it done. At Mastery Partners, we're the people that make companies more valuable and more transferable. Our guides help business owners build companies that's ready for whatever comes next. And if you want to see where your business stands, visit Mastery Partners dot com to learn more about the transition readiness assessment.

So until next time, keep maximizing business value. Kim Bentson (1m 12s): Welcome to the Maximize Business Value Podcast. I'm your host, Kat Herder and business owner, Kim Benson. I am learning here right alongside you.

So today's topic makes me uncomfortable in my own business. I'm curious to hear what some of you feel about it, but I do hear this from business owners all the time. I wish my team thought more like owners, and I know I've said it. I want my people to take initiative.

I want them making good decisions, accountability, ownership. But then there's another question that follows right behind it. Kim Bentson (1m 55s): How much should they actually know about the business? Should they see revenue, profit margins, cash flow?

How much is too much? And if I want my leadership team to take ownership of results, how transparent should I really be about the numbers? It's, it's kind of a quandary. And, and then also the flip side of that is, I kind of hold onto all of that.

So letting go feels uncomfortable. Yeah. Yeah. At Master Partners, we help business owners build companies that are more valuable and more transferable.

One of the biggest challenges we see is that all of the financial understanding often sits just with the owner. Kim Bentson (2m 41s): And so today we're gonna talk about why that matters. So let's bring in some help here. Joining me today is Dave Casey, certified partner at Mastery Partners.

Dave works with business owners every day, helping them build stronger leadership teams, businesses, and ultimately more transferable companies. Dave, welcome. Dave Casey (3m 1s): Hey, that's good to be back. Thank you.

Good. Kim Bentson (3m 4s): So this year we're bringing real questions from real business owners, honestly, the same kinds of questions I've asked myself, and then putting them in front of our certified partners to help all of us get clearer answers. And if you've got a question on your mind, you could submit it at Mastery Partners dot com. It may be featured in a future episode.

So hit that button to submit a question, and we'd love to tackle that here on the Maximize Business Value Podcast. So today's question came directly from a business owner, and it basically is, How often should I review financials with my team And Dean, that really sounds like a simple question, like, is it weekly, monthly, quarterly? Kim Bentson (3m 48s): But I think there's actually a bigger question hiding underneath it. And most earn aren't really talking about meeting F frequency, I don't think when they ask that question, they're asking kinda what I said in the intro of, how much should I share?

How much should my team know? How do I create that accountability to the numbers? And how do I build a business that isn't dependent on me interpreting every single metric? So, Dave, I I can you a lot of questions, but Dave Casey (4m 23s): Yeah.

Yeah. Thanks. Kim Bentson (4m 26s): Yeah. Dave Casey (4m 27s): Well, this is, yeah, this is kind of an, yeah, thank you.

This is kind of an age old deal. So we, I think anybody that has founded and grown a business quite often, you started out with just you and maybe, maybe one business partner. It might be your spouse, or it might be a, a friend, or it might be just, you know, strategically two people get together, found a business. Many times it's just the sole proprietor.

But, so you kind of get used to being the center of the universe and everything kind of going through you. And financials is always a touchy subject, right? So I've talked to business owners and they're like, you know, well, if I share my financials with the team, first of all, I'm, I'm worried about my competitors getting access to my financials. Dave Casey (5m 20s): 'cause we're in a small industry, everybody knows everybody.

You know, we hire people from certain companies, they hire people from us. And, you know, I hate, I, I don't want my financials out there on the street, essentially is one concern. The other one is if the company's doing good or bad, right? So, and it's, we're doing great.

I don't want everybody to know how great we're doing that our EBITDA went up by a hundred percent. 'cause everybody's gonna want a hundred percent pay raise, right? So, or my EBITDA is down. So now everybody's like, wow, should I be looking for a job?

It looks like we're losing money here. This isn't good. So there's always these things in the back of the mind, I think, for a business owner. Dave Casey (6m 3s): And it really gets down to, you know, how much, how much do I share with the team?

And yes, I want them to think like owners, but I'm the owner and I, I need to have all the data and I want them to accept responsibility, but I'm not really willing to share everything. Right? So, yeah, it's, it's a challenge. So, yeah, Kim Bentson (6m 31s): I mean, it breaks the question, should a business over owner even care whether their team understands the financials?

Like what's the, why does that even, Dave Casey (6m 38s): Yeah. You know, I wish, I wish we had David Brown here for this one. So one of our other certified Mastery Partners is David Brown. He exited very successfully a business analytics company a couple years ago, and then, and then now works with us on a, on a part-time basis.

And he, he faced that really directly because they used a business operating system called The Great Game of Business. And in fact, there's a, another podcast in this series that is a contrast between the Great Game of business and also EOS, which is yet another business operating system. Dave Casey (7m 21s): And one of the characteristics of the Great Game of business, it's based on what's called Open Books Management, that actually the books are open for the employees to see.

Right now, there's levels of openness, right? That it's not like a hundred percent of everything is open. Certainly we don't share people's compensation or anything like that back and forth. But what does allow is allows people that, that you're asking to take ownership of different parts of the business.

They're in sales, take ownership of your sales number if you're in finance, take owners of the ownership of the KPIs we use in finance and so on, that they have the data to work with, you know, that they actually can know how their particular department is performing and know how they're performing, you know, personally. Dave Casey (8m 15s): So it's, it's, and he's well schooled in that, and they, they had some long hard conversations about how do we, how do we adopt open book management?

How open are the books? And, and what does that affect on the workforce and, and the team? And, and, and why does that matter? I mean, why does that help, you know, help things grow?

So, and I've got good examples of that. Kim Bentson (8m 44s): So, you know, it's kind of like if your business was a game Yeah. And your employees are playing the game, but they either don't have all the rules, or they could really make some decisions that impact your business in a, in a negative way if they don't understand how that business makes money and making those decisions without context. Dave Casey (9m 15s): So yeah.

And that's Kim Bentson (9m 16s): Asking people to take ownership without showing them the, the scoreboard, I guess. Dave Casey (9m 21s): Yeah. And it's very difficult to do. Yeah.

I liken that back to our kids. I think your kids too. We played in, in YMCA soccer and all those good games, and it was always like red and blue shirts, you know, red shirt and blue shirt, and you, you know, one week you're wearing a red shirt, next week you're wearing a blue shirt, but you have your team. And the big thing was, we don't keep score.

We're just playing for fun. Right? And these are like first graders, right? Second graders, they're playing for fun.

Every single kid on the field knew the score. I mean, they, they knew the score. Dave Casey (10m 1s): They weren't supposed to know the score. And that's supposed to be tracking the score.

Every parent knew the score, right? But, so yes, people, people do need to have the information and they at least have enough information to do their job, you know, really well. And I've always been a proponent of, you definitely need to share as much as you can share that you're comfortable with. Certainly don't share anything that's gonna be, you know, compromised or intellectual property or anything like that.

But, but I think you pointed it out. I mean, you can't ask somebody to take ownership of something if you don't give them, you know, all that information. Kim Bentson (10m 41s): Yeah. I was thinking of a key stakeholder who is running a portion of the business, and the person that was in charge of that business was holding onto the, the reins of the budget and making sure, oh yeah, we were hitting what we needed to hit.

And finally the person that was in charge of that department said, I need to have either access. I need to own that piece of it because I'm making decisions and I don't have the full picture. And so it really changed the profitability of that department when the owner let that piece go. Kim Bentson (11m 23s): Yeah.

'cause the owners pulled in many directions. And so things would slip through, things would happen, and you'd be like, oh. And, and so, but when that, that owner of the department had that piece of the budget, like everything was accounted, we knew exactly what everything went to and why. And so it made a huge difference in the, in the business's profitability and then also the owner's life.

Oh Dave Casey (11m 56s): My gosh. Oh gosh. Yeah. Yeah.

You know, and it's interesting 'cause, and this came up on the podcast with, with David Brown and, and Amy Moore that we did with, when you help people understand how business works, sometimes we get caught up in, you know, we're in the home services business, right? So we're, we help people with their heating and air conditioning and, and maybe their plumbing and electrical and so on. And that's great. And, and, you know, you've got people working there that are plumbers and electricians and, and HVAC, you know, specialists and technicians, and they know their trade very well.

They, they're experts at what they do, but they're not experts at business, you know, the business of business, right. Dave Casey (12m 43s): That they're not experts on, they're banking relationships, cash flow, accounts receivable, accounts payable, payroll, you know, investments. I mean, all the, all the financial things that have to do with the business, all of the psychological things they have to do with, you know, HR and, and legal things that have to do with the contracts and all that.

They don't, they're not privy to all that. They don't know all that. And they want to do their job the best they can, but I think it's important that you educate them on business. This is how business works, whether it's this business or any business, you know, and there's some just basic blocking and tackling.

Dave Casey (13m 27s): I think every employee has to have an idea of why we do the things we do and why we do 'em a certain way, why we don't spend money in this area. And we spend money in this area. And that's very mysterious sometimes to, to, to the work, you know, the workers or the team. It's also, it's a two-way street.

So because somebody that's maybe got great financial controls, we're all over expense control, like you mentioned. And I, I, I was guilty of this myself. I was examining our business. We were a IT services company, and we, we help people with their, it, we, we managed it turnkey for them.

Dave Casey (14m 9s): We did a lot of installation of equipment, dein, installation of equipment. We did training, we did all kinds of stuff. And my lead engineer would come to me and, and she was saying, well, we need to make sure that every one of the engineers has a, a stock of cables, you know, in, in their, in their truck. So that when we they get to a customer site, it won't be a situation, oh, we need a different cable and we're gonna have to order that, or I'm gonna have to run to the parts store and get it.

That kind of stuff. We need to, we need to stock all this stuff. And I remember my controller was like, oh, no, we can't do that. Dave Casey (14m 50s): We'll lose track of these cables.

You know, they're, some of these cables are two, three, $400 a piece, and we'll lose track of 'em because they're not assigned to a particular purchase order and a particular customer. And, and they're just gonna get used up, they'll never be bill to the customer. And we'll, you know, it'll be a disaster. We're gonna lose money like crazy.

And the engineering manager goes, I understand that, but here's the reality. I've got an engineer that's a a hundred and some odd thousand dollars a year person that has to stop a job in the middle and run to pick up a $50 cable and run back. And they may not have the $50 cable in the parts store, and now we're stuck and we have to delay to another day. Dave Casey (15m 33s): What does all that cost?

You know, it costs a lot more than having a $50 cable on the truck. So there's just understanding business I think is an important, and, and certainly financials and sharing your, you know, the actual operation of the business throughout all the business units. So everybody understands it's important that sales get to this particular number. It's important that our days outstanding in sales and accounts receivable be a certain number.

You know, so everybody's kind of pulling toward the same things, but they have to understand what those things are first. Kim Bentson (16m 9s): So, yeah. So I think we should connect this to business value. This is the Maximize Business Value Podcast.

So, Dave Casey (16m 19s): Good segue. Yeah, Kim Bentson (16m 20s): Dave, one of the things we talk about at Mastery Partners is that buyers aren't just buying financial performance, they're buying confidence in future performance. Yeah. And what does financial transparency have to do with value?

Dave Casey (16m 35s): You know, there's, there's several aspects to that. One of the things is the depth of your leadership if you are including your leadership in this conversation. So it's like, if an, if an outside buyer is looking at a particular company and they'll say, you know, this company's running really well, and I've talked to the owner because we started this discussion of a potential, maybe a potential transition. And boy, that guy's sharp, he's all over his numbers, you know, which is impressive.

So that's a checkbox. But who else in that business understands those numbers? Because if a transition happens and his business owner sells his interest in the business and, and maybe stays for a little while, but then transitions out and, and, and heads to the beach or whatever, a golf course who understands the numbers in the business, who's left behind that actually knows how all this fits together. Dave Casey (17m 32s): If every department head not only knows their own numbers, but knows the business' numbers and the interaction between them, what a much stronger business.

It removes a lot of risk out of that equation for any potential acquirer, and consequently drives up the value of the business. Kim Bentson (17m 52s): Yeah. Because if the answer is only the owner knows that that's a problem in the big problem, value and the transferability Yeah. Dave Casey (18m 1s): Buckets.

Yeah. There's two things. And yeah, when we talk to business owners, and we try, we struggle sometimes to explain what we do at Mastery Partners. I mean, we, what we do is we work with a business owner to help them maximize the value or build value within their business and make their business transferable.

So it's not just a, a we're building value, and yes, it's worth X amount of money, it's only worth that amount of money if you can actually transfer it to a new owner or a new ownership group, or, you know, and that sort of thing. So it's everything we do when we look at value, we have to kind of look back through the lens of, is this action that we're taking or this information that we're sharing, is that gonna build value or subtract value? Dave Casey (18m 48s): And again, go back to original discussion.

Many business owners think, well, if, if, if my employees understand where we are financially, that's gonna be a disaster. You know, they, they, they're worried about it. And as you know, I went through a very unfortunate situation that my business partner, longtime business partner over 20 years suddenly passed away. And I had a wonderful team.

And, and I, and I have to confess, not everybody on the team knew our financial situation as a company, but they assumed we were doing okay. So this was a very sudden thing that happened. But that first meeting, all hands meeting I had, following the death of my business partner. Dave Casey (19m 32s): I mean, I could see the worry in everybody's face, what's gonna happen now?

And, and I was able to reassure them and say, you know, financially we are fine. I mean, we are, we are good to go. You know, I said, you know, sales leader, you know, you know your sales numbers, you know where we are year to date, you know, everything that's going on, engineering, you know, our maintenance contract revenue and everything that's going on there. So they, they understood.

I mean, it's a big shock, but they understood that things were okay, you know, and, and certainly we had work to do. We had a, had a fantastic team. They all worked very, very hard. We made it through that whole transition.

Dave Casey (20m 12s): Spectacular really. But, but, but just to be able to say we're okay, you know, and the look on their faces that, that relief, that was, it was cool. Yeah. So, and that's important.

Yeah. And, and that's a, that's a very unexpected transfer, right? So, right. You know, I own half the company and then eventually I owned all the company because of what we, what we went through.

And, but it was a, their confidence in me, I really appreciated. And I certainly had tremendous confidence in the team. So that was helpful. Kim Bentson (20m 49s): Yeah.

That's one of the things I, I did embrace, but there's pieces of it that I was trying to understood earlier, and every business is a little different, but tying what number really impacts. So if someone owns the number, what is that number? Yeah, Dave Casey (21m 7s): Yeah. Kim Bentson (21m 10s): But where I, where I get stuck is I'll just handle it, the revenue, the forecasting, the, and have that because, 'cause I, in my mind, my employees have enough to worry about.

Yeah. But I'm really, you really have to go above the, the waves a little bit and just realize that's really hurting in the long run, because they're not gonna make a decision. They're, they're gonna make the wrong decision that some point because they don't have the context. And that's gonna probably cost you more Dave Casey (21m 46s): A lot.

Yeah. And David Brown has a fantastic example of that. As I mentioned, you know, his company was a data analytics company, so he's got a whole company full of brainiacs. These are brilliant people.

So, and they said, well, we, they had their compensation structure set up on gross sales. So they had it set where, you know, if we sell more, everybody makes more. I mean, that's the way it works, right? And it sounded very simple where they kinda lost the, the, the, the picture was as they grew, their top line sales were growing their net, or their gross profit was not selling, not growing, they weren't getting better gross profit percentages.

Dave Casey (22m 34s): And so they, when they went to open books management, they educated everybody. It's, it's not about the top line revenue, it's about the gross revenue. I mean, this is, our operating revenue is very important, our operating profit, I should say. And, and, and educating people what that meant, and what contributed to that was, you know, we do things one time instead of three times.

We don't waste money in this area. You know, we, we, we make sure that if there's, if you see something that's gonna make a process more efficient, then bring it up. I mean, make have those channels of those communication channels there so people can, can, that are closest to the work and say, you know, I think we can do this better. Dave Casey (23m 19s): And here's what, here's what I propose.

We try. And, and if you get people thinking like that and being engaged like that, it builds some incredible value in your company. And those are stories to capture. So that, again, when you're, you're talking to a suitor, an outside person that's interested in the company, and they start asking about, they'll, invariably they're asking about, tell me about your team.

Well, like I say, Hey, you know, here's what Kim did, you know, and, and Kim suggested this, and that resulted in our gross profit percentage going up by four points, you know, without making any other changes. We didn't sell anymore. We just made more money on what we sold. You know, and just stories like that build value in the eyes of the, of the, of the potential acquiring company.

Dave Casey (24m 3s): So, Kim Bentson (24m 4s): Yeah. So to move to the practical side, you know, I'm kind of a all or nothing person anyway, but I hear us, I hear the conversation and I know better, but yeah, immediately think, am I just supposed to show everything to everyone? I, I need to show my PL and yeah. Do they really need to know what I, you know, am making my gross profit off of my employees?

Like, like how, like, is that right? Dave Casey (24m 35s): Yeah. You know, that's, that's interesting. And the all or nothing thing is an important comment because that's what a lot of people think it is.

You know, if it's open books management, that means, well, that same report that I get as the owner from, from my financial folks, that I'm gonna just post that, you know, we'll put that in the break room so everybody can see, right? It doesn't, doesn't work that way. But what you should do is parse that information so that people get to see the numbers that they are responsible for and how those numbers impact the company. Dave Casey (25m 15s): So let's say you're a, a frontline person.

You're a, you're A-A-H-V-A-C technician, right? So some of the numbers they're gonna look at is how many service calls per day in a technician do, and what could we might do that's bad English, but what, what might we do that could change that from handling three calls a day to five calls a day, and I'm gonna work the same day, right? I'm working eight hours. But if I can handle five situations versus three situations, that translates into better productivity or profit for the company, more compensation for that employee.

Dave Casey (26m 1s): Not necessarily linear. Doesn't mean if you double your, your efficiency, you're gonna double your salary, but you'll get a higher salary and you'll have a much better, you know, work environment, you know, you'll be a, you'll, you'll get a sense of accomplishment's gonna be much higher. It's gonna be different for people. Maybe a department manager or somebody that's already has KPIs that they're assigned, but now they understand why that KPI exists and they understand exactly what the, the financial implications are of achieving that.

KPI, you know, I've got this, this indicator, I I'm in this range. This is the low end, this is the high end. Dave Casey (26m 41s): If I get to the high end, this is how much that's gonna affect the company's, you know, profitability and ultimately value. As you get higher, you get, you get people thinking differently rather than just performing their job, they're thinking more about the future and planning and, and doing trend analysis looking backward and say, okay, over the last two years, we've steadily increased our margin in this particular area of the company.

This is what the implication is on our bottom line, and this is what it means going forward. So you get people thinking beyond the task at hand. They, they start to plan for the future and look for ways that to do that. Dave Casey (27m 22s): So that part is not easy because you're taking what you as a business owner see as a, as an aggregation, and you're having to parse that data up and discuss it with different, different people.

But they will appreciate that too, because if you just give an income statement and a balance sheet to a frontline person, it's gonna be meaningless to them. They may skip to the bottom and say, wow, this company made a million dollars last year. I only made a hundred thousand dollars. That's terrible.

You know, it's like, or where's the rest of the money? You know? So, so it, it's, and, and, and actually when HR and stuff, that's where HR comes into play. Dave Casey (28m 6s): I think in that, suddenly HR becomes more important because, and almost every single company labor is the highest cost, you know, the highest on the, on the cost side of the ledger.

And, and what we can do is the more productivity we get from the same labor number, the, the company's in much better shape. So, Kim Bentson (28m 29s): Well, I really like that distinction because it's sharing what people can influence. And even for our smaller business owners where you may not have a huge leadership team, it's really what are the, the dials that are maximizing value in your business? And really getting into those details instead of, oh, let's just look at my financials when it's tax time kind of philosophy.

Dave Casey (29m 2s): Yeah, yeah, yeah. Definitely. Yeah. Yeah.

And I think what happens, I, I I, I'll kind of take that to the next level. If you think about it, I've got a client right now that, that is, that someone told them several years ago that recurring revenue is worth more than one time revenue, which is a true statement. So they're working very hard to, in lieu of selling the product that they, that they work with is, is leasing it to their client base. And, and so that everyone is on a monthly reoccurring, you know, lease kind of structure.

Dave Casey (29m 42s): And that's, that's super important, and it is gonna add a lot of value to their, to their company. But what they left outta the equation is, what does it cost us to do that? In other words, what's the, what's the cost of the equipment itself? What's the maintenance cost, installation costs, replacement parts, all the other things that are associated with that particular device that are factored into that monthly, you know, figure that we charge the customer Yeah.

Is, it's very important how we get to that number. So, so those are the metrics that I think it, it, it becomes very important to that the, the, the folks that are making those decisions have all the information they need. Kim Bentson (30m 22s): Yeah. And if that's a palatable number, like there's so many things that go into, go into that transfer of, Dave Casey (30m 34s): Yeah.

And, and even just following, you know, impacts of, of inflation and rising costs, because sometimes that are so incremental, sometimes there's big increases in inflation, but sometimes it's a fraction of a percent. But everyone that goes into that affects your, your bottom line. Yes. And people tend to think about why I can't raise my price to my client because they might fire me, you know, go look for something cheaper.

Right? And that is very true. If you wait for a long time and then do a 40% price increase, you're gonna, you're gonna run off some customers, right? But if you're increasing your pricing on a very small incremental amount, but constant customers won't even notice a lot of times.

Dave Casey (31m 18s): You know, it's, and they expect you to charge more. I've, I've got a, a service I used that takes me to the airport, and I've been bugging this guy, I've been using 'em for several years. I said, why don't, don't you raise your prices? And he says, nah, well, you know, I, I don't wanna, you know, I don't want to, I haven't set price and we're doing okay and everything.

I said, well, you need to think about it. Well, he is taking me to the airport tomorrow. And he's, guess what? He raised his price good for him.

You know, I probably should have had that conversation after this trip, you know, but it Kim Bentson (31m 51s): Or negotiate a discount for the business advice. Dave Casey (31m 54s): Yeah, yeah, yeah. I gave you some good advice there. Yeah.

I want, I want a deal. I want a deal. Okay. But yeah, I, go ahead.

Kim Bentson (32m 2s): I wanna build more financial accountability. Like where do I start? Yeah. Dave Casey (32m 8s): Well, there's the obvious places, and again, this is something that in our practice at Mastery Partners, we do what's called a transition readiness analysis.

So we do a deep dive into the company, over 300 different data points in nine different areas over the company. Everything from corporate governance, through sales, marketing, financials, all the way through any transition planning that's been done. What will come out of that analysis is, is typically there's areas that you can focus on that are going to have moved the needle the most in terms of valuation. Dave Casey (32m 48s): So it might be things like tracking your gross margin, not just your top line revenue, looking at customer churn or customer retention.

You know, how often do you, do you lose a customer? What's the impact of that? What does it cost you to add a new customer Right? To, to the fold.

And new, new customer acquisition is typically very expensive. So people think about, well, do I really need to do that? I've got a plenty of customers and they seem to be paying us every month, sooner or later, they won't be paying her every month for some, for a variety of reasons. So you, you, and translate, again, translate that into each team member's role and what they, so they understand how their actions and their work contributes to the greater good here.

Dave Casey (33m 39s): Then they look for ways to, to better that. So a lot of times those metrics will come from the team themselves. They'll say, I know we're tracking this particular thing and I understand why we're doing that, but why aren't we tracking this? You know?

And, and I think this will have an impact too. And let's, let's track that for a while and see, you know, so you'll get a lot more buy-in typically from, from the team by allowing them to participate in setting up, setting up the tracking that you're doing. So Kim Bentson (34m 10s): What I'm hearing is don't start with the finance class. Dave Casey (34m 13s): No, Kim Bentson (34m 14s): I'll be doing out, I'll tell you that.

Dave Casey (34m 17s): Yeah, yeah. Well, and again, it's like anybody that you put a, a profit and loss statement in front of, unless that's what they do in the company, they're gonna, I don't understand any of this stuff in the middle. I just understand maybe the top line number. We sold 10 million this year and we, you know, the bottom line profit was a million, and that's 10% of the 10 million.

That's all I understand. And for many people, that's all they need to understand, right? So you break down those other scorecard metrics by department of, by individual. So that really helps when you do that.

Kim Bentson (34m 52s): So how often should owners be reviewing those metrics or that financial performance with their teams? Dave Casey (35m 1s): Yeah. Do you remember asking Tom this question? So there's certain metrics that, one, the one metric that I, I, I did this pretty religiously, and I know Tom does it every day, is you check your cash position every single day.

How much cash do we have? How much cash are we gonna use today? And how much cash are we gonna put in the bank today? What, what will, why cash position look like tomorrow morning?

And many business owners lose sight of that. And, and they literally, sometimes they just fade away because they ran outta cash. You know? So that's a, that's a huge one.

Dave Casey (35m 43s): But a lot of these things, there's certain things that you could probably look at weekly or monthly. There's some things you probably all need to look at quarterly. So again, as you mentioned, people will tune out if you bombard them with too much information. But the idea is that you give them small slices of information, but the ones that they have influence over and the ones that they can see a change.

So let's say it's, it's the accounting department and just say, you know, our, our goal is we want all our financials for the previous month delivered, and everybody has them by the 15th of the month of the following month. Dave Casey (36m 25s): And so two weeks later, essentially. So that's what all the changes and everything we need to do at the end of the month, end of the accounting period. Many times, once people get grasped that and figure out why that's important, they'll provide those financials within five to seven days.

You know, they'll actually better the, the, the KPI that, that you've assigned. So it's, you know, the goal is not to have a ton of meetings. The goal is to have the work divided up amongst everybody on the team, and everybody's just tracking the things that they need to be on top of. Kim Bentson (37m 4s): I remember, I think it was Mojo Marketing that Mike and Nicole Rose had, and they adopted the open book management.

Yeah. And they did a weekly huddle, and you had to say they had the reporting number, everybody looked at 'em, and you basically said, if you're on track or off track, and everybody could see that, and then what you were gonna do about it, or, and so I always thought that is a culture of accountability. Dave Casey (37m 40s): It, it's, yeah, Kim Bentson (37m 43s): You have the, the peer and, and it is open and transparent. Everyone knows what's going on.

And then the good thing is, is if someone who isn't in the weeds of that every day might have a solution to help you get out of a slump if you're in a slump. Yeah. Dave Casey (38m 1s): Yep. Kim Bentson (38m 3s): I know the goal isn't, isn't more meanings, which I'm alluding to here.

It's, it's more about that culture of accountability and, and then just impacting your day to day Right. And what your team is doing Yeah. To maximize value. So Dave Casey (38m 20s): Yeah, we, at one point, we actually used another business operating system, if you will, called the four Disciplines of execution.

And in its deal was that you can't, you can't have too many goals. You can't have 10 different goals, right? You've gotta, as an organization, you may have a, a maximum of two annual big annual goals that we need to do. Two really big things we need to accomplish this year, right?

And it may be hitting a certain number, it may be a certain size, it might be profitability number, something, you know, and then, then each department has their own little, you know, goals that will help achieve the big goal. Dave Casey (39m 3s): And then the huddle meetings, when we did that, the huddle meetings were done standing up, first of all, which was kind of cool. So every morning, no longer than I think seven minute long meeting. I, I know great game of business has another, I can't remember what their metric is, but it's a, it's an odd number that you're just gonna meet for a short period of time.

And everybody goes around and, and, and you, and you said, okay, my number was this, and here's what I made. So it could be like, number of demonstrations this week, number of sales calls made, whatever it might be. So, and there's always a reason why that didn't work. You know, the dog ate my homework, my computer fell on the floor.

Dave Casey (39m 43s): I mean, there was all these things that happened and everybody's like, yeah, that's too bad. That's, and that's, you know, that's unfortunate. But that number didn't go away. So if you had supposed to do five demonstrations last week and you did three, that means you have to do seven this week, you're five plus the other two.

Yeah. You know, that you missed. So, and that really helped that culture of accountability by doing it that way and breaking it down to that level, you know, Kim Bentson (40m 10s): Level. So Mastery Partners and you mentioned this earlier, uses the transition readiness assessment to evaluate gaps in your business value.

How does this show up in the transition readiness assessment? Dave Casey (40m 23s): Oh, boy. Well, as you know, we, we, we score each of those, each of those 300 plus data points that we're gathering, we score on a, on a, on a range from one to six. One being you're not doing it or you're not doing it at all.

Well, six means everything's running perfectly. And then a lot of the scores were in between. But the, the question that TRA actually, one of the questions that actually comes up is, you know, does the business itself understand how value is created and or does only the owner understand that? And that really gets to the point of, does everyone has everyone learn how business works?

Dave Casey (41m 5s): Not just the business you're in, but business in general. And so if all your financial con conversations are strictly the owner and maybe the controller and the outside CPA, but no one else talks about financials, then that's a warning side for us that that owner's gonna get a, a low score in that area. Same thing on hr, you know, that we do, yes, we've got an employee handbook. We, we, in fact, it's seven years old and we haven't opened it in seven years now.

We've never updated it. We're just assuming, you know, everything we're doing is still in compliance with, you know, the way things are supposed to be. Just stuff like that. Dave Casey (41m 46s): I mean, and, and so those are things where it's important that everyone understands that we're building value in the company, not just the owner.

Kim Bentson (41m 56s): Yeah. Yeah. And I think it's, it reminds me of the analogy of you kind of have this rubber band of, you know, you need grace and truth, and there's a tension there. And I think the same thing holds true with value.

Value and transferability. Like, there's a tension between those two that you have to have a balance to create that, you know, ultimate value, the value you want and to get it off Yeah. You know, to sell it successfully. So, Dave Casey (42m 29s): And, and it goes beyond the numbers.

Yeah. Right. It's way beyond the numbers. And that's, that's where I think what we do is so valuable to a business owner.

And this is part of the thing that I, I've told Tom many times that where I missed out in terms of when we do that analysis, we're not just looking at the numbers. A lot of people do valuations on companies, just gather numbers and give you a number back. We dive deep into finding out how the teams are constructed, how they're led, how the leaders are, you know, what type of enablement do the leaders have? I mean, how much leeway do they have to do their job?

And, and everyone in the organization, how much leeway do you have to do your job? Dave Casey (43m 11s): And what's the mechanism if you have a, if you think you have a better way to do it, what's the mechanism to to feed that back? And there's always gonna be people that, their job in life is to stop you from doing that. There's gonna be people that like, Hey, what if we just painted everything blue?

You know, that'd be cool. You know, so it's, it's, and so you have to, you have to balance all that. And, and, but a buyer can see really quickly looking from the outside in looking at a business, if, if everyone is pulling in the same direction, if, you know, everybody's roles and responsibilities are super, super clearly defined. Everybody has numbers and metrics that they know they own, that they are proud of, that that stuff just shines through.

Dave Casey (43m 57s): And that really drives value, Kim Bentson (43m 59s): Right? Because when it just sit with one person, the buyer gets nervous. And when the fire gets nervous, they're either gonna take a haircut, you're gonna take a haircut on the value, or they're gonna walk away, Dave Casey (44m 13s): Or they're gonna ask you to stay for three years. Kim Bentson (44m 18s): Right?

Dave Casey (44m 18s): Look, looks like you're the only one that knows how this thing runs, so we're gonna buy it. But you're gonna have to, you're gonna have to run it until we understand how you run it. And that's the last thing usually a seller wants. Kim Bentson (44m 32s): So.

Well, you know, it's funny, I, I've taken the TRA for my business and I wasn't, I was barely, I think I was two or three years in, and it just revealed all the things I wasn't doing, which it was Yeah, very helpful. It was, it was like a masterclass in business of all the other things I needed to be thinking about and doing when running a business. But I think most business owners tend to shy away from it, because to me, it's like going to the doctor and you get that printout of your, all your levels and your blood work and you know, your weight range is not where it should be.

Kim Bentson (45m 16s): And when you see those numbers, it's just like adding to not wanna know that sometimes it's just, Dave Casey (45m 21s): Yeah, yeah. Kim Bentson (45m 22s): Blind. But when you get serious about maximizing that value, this is a tool that really helps get you to where you wanna be. Dave Casey (45m 34s): Yeah.

And I think it, it also makes, just makes your life easier when you are, the more stuff you can turn over to other people and understanding that sometimes you're gonna do that, it's not gonna go well. You're gonna have to dive back in and fix the problem, or, you know, resolve a situation. And that's, that's fine. But over time, life's gonna get easier.

Company's gonna be more productive. People are gonna be happier that work there. They're gonna feel like what they do really matters. And at most of the time, that's what, that's what really motivates people.

I believe it. They're not moti, they're certainly motivated by income and they're motivated by, wow, there's a lot of nice people there. Dave Casey (46m 18s): Like, we're going to work 'cause they're great people, but they're really motivated when they can see what they do makes a difference. They can see the company progressing, new people being hired, new customers coming on board.

We're gonna provide new products and services, we're learning new stuff. We're, you know, we're, we're, we're embracing ai, we're doing all this cool stuff, whatever it might be. They see that it's an ongoing booming kind of thing, and it's a place they want to be. And I've always felt like one of the key things of building a business is you want your business to stand above others.

When people are looking at joining, you know, and, and when good people, whether they're right outta school or very experienced people, when they're looking at making a change and moving to a new environment, they don't want to go to the same thing they were doing or lesser, they want to go to something new, bigger, challenging, more exciting, and, and you wanna attract those people. Dave Casey (47m 21s): So this is, this all ties together. It really does. And if you can explain that we have a culture where everybody understands what's going on and everybody is given, you know, key metrics that they're going to be expected to achieve, but they're also are given all the things to do that too, and explanations of why it's important and how it fits into the greater, greater deal.

So it's, it, it, to me, it's, it's exciting to see a company when they start to operate that way. Kim Bentson (47m 51s): Yeah. And we've seen it time and time again. The businesses with the most options in the future are rarely the businesses where the owner is holding onto everything.

Yeah. The huge value killer. Dave Casey (48m 8s): Yeah. It and killer.

It's, and sometimes they understand that, and many times they don't. They just said, you know, I want, you know, I want my team to do their job and I wanna do my job. And, you know, it's, but they do not understand that their team is growing every day too. They, they need to learn more, they need to.

And it's, and it's, it's almost like training, you know, try not to train my people too much because if I train 'em up really well, they'll leave. They said, what If you don't train 'em and they don't leave? But If you stuck with that, so, I mean, it is like, it's, it's a, it's simple, but it's hard. Dave Casey (48m 51s): So, Kim Bentson (48m 52s): Yeah.

Well I've learned, I've learned that lesson as a business owner. If you train 'em and they leave, then you hired the wrong person. So Dave Casey (48m 60s): Yeah. Or they, you know, maybe, maybe you'll work for them someday or when they come back to you.

'cause they found out the grass wasn't greener. They might be in a lot, you know, a lot more valuable next time around. So who knows? But who knows?

That's a Kim Bentson (49m 16s): Full other podcast, Dave. Dave Casey (49m 17s): Yeah. There's, there's two or three podcasts in there, I think. Yeah.

Yeah. Kim Bentson (49m 21s): It's too many stories to tell there. But yeah, If you're listening and realizing too much of that understanding that Dave was talking about still lives with you, the business owner, that's exactly what the transition readiness assessment is designed to help uncover. And at Mastery Partners we help business owners identify those gaps that impact your ability to grow your transferability and your value.

And so check out our website at Mastery Partners dot com and, you know, get time with a partner and they can run through pretty quick and let you know, you know, how to move forward. 'cause the sooner you see that, the more options you have. Kim Bentson (50m 6s): So Dave, thank you so much for your perspective today. And thank you to the business owner who submitted this question.

I think Dave and I probably could have talked another 30 minutes on this because there's to take, but chances are, if you've been wondering about, you know, sharing financials and how much do I share? So have a lot of other owners. So a really, really good question. Yeah.

If today's conversation challenge you to think differently about leadership accountability, how value is created in your business, that's exactly why we do this. And, and So if you found this episode helpful, be sure to subscribe and don't miss those future conversations. And until next time, keep maximizing business value. Tom Bronson(50m 57s): By listening to this podcast, you are already taking steps on the path of improving your business readiness.

Nice work. Got a question, but we'd love to hear from you. Submit your questions at Mastery Partners dot com and look for the red business owner hotline button. And as you think about today's episode, remember the decisions you make every day as a business owner are either building value in your company or quietly eroding it.

So here's a question to take with you. What decision will you make tomorrow that builds value in your business? Now go get it done. At Mastery Partners, we're the people that make companies more valuable and more transferable.

Our guides help business owners build companies that's ready for whatever comes next. And if you want to see where your business stands, visit Mastery Partners dot com to learn more about the transition readiness assessment. So until next time, keep maximizing business value.