Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
UPSIZE STAGES: THE EARLY YEARS
09 :: Handling daily finances.
Pay attention to
all-important cash
flow to avoid downfall
With the struggles of starting a new business, making sales calls and monitoring employee productivity, it can be easy to fall behind on day-to-day accounting activities like entering transactions or filing payroll taxes.
It?s also one of the biggest and most overwhelming mistakes a start-up company can make.
While it depends on the initial size of the company it often makes sense to outsource accounting functions initially so entrepreneurs can focus on their business, while knowing the daily cash flow statements, monthly financial reports and quarterly tax filings will be up to date.
If you choose to keep the accounting functions in house you need to immediately establish procedures so you know where you stand. Accountants recommend looking at the overall financial picture at least once a month, more often depending on the industry. For example, cash-intensive businesses such as restaurants should be checking cash flow daily in order to make sure inventory isn?t disappearing, pricing is correct and margins are consistent.
It?s also important that employees know you are keeping up on the books. It allows you to provide them with enough information to feel comfortable about working at the company and it also, at times, can help keep them honest.
Part of the procedures should cover dealing with collections and accounts receivables. Establish a plan for billing and following up with companies that haven?t paid in a certain timeframe. It?s easy to let that slide. Payment calls aren?t fun, but you need the cash flow and you need customers to understand that if they don?t pay they will hear from you.
As you are preparing to start the business discuss with advisers or peers the type of accounting system you plan to install and what you want it to show you. It?s vital because cash flow is so important.
You can have a general sense for where the company is at, but without up-to-date financial statements you don?t really know and as a start-up, if you lose track for even a few months it can be your downfall ? and, observers note, it can cause you to start hating your business.
Whether you outsource or keep much of the accounting in house, establish a relationship with an accountant. This person can be one of your most valued confidants as financial situations arise.
And finally, it sounds simple, but make sure the money gets deposited in the bank. On some occasions financials have been off simply because a lack of communication left thousands of dollars worth of checks sitting undeposited in someone?s desk drawer.
As the name suggests, Owatonna-based Kamp Automation looks for customers with a process they’d like to automate. It could be a small, inconvenient, tiny part that people can’t assemble. It could be a high-volume product so needed that the customer can’t find enough labor to produce it in the necessary quantities. “We’ll work anywhere from medical device companies to the seed industry for corn and soybeans,” says Kent Patterson, co-founder, president and CEO. “We just jump all over wherever there is custom automation.” The company started in his garage. Patterson and his partners built a machine. The company started to grow to the point where now it has 48 employees — and had a bunch of people and stuff in different locations. “We went from a garage to a shop to a shop and just kept moving to new places and signing leases,” he says. “We got to a point where it’s like, OK, this is getting big enough and sustainable — we felt that we wanted to look for our own space.’”
