This 25-Point Diagnostic System applies to start-ups, developing and growth businesses.  Investors and others use this to assess the state of your business.

1. Accounting Ratios

• Identify key ratios relevant to your business.
• Create dashboard metrics that interpret financial statements for you regularly (e.g. once weekly).
• Color code red light, yellow light, green light, to signal urgency.

2. Bank Relationships

• Communicate regularly with your bank with either a written report or a phone call.
• Practice instant transmission of bad news or trouble.

3. Board Governance + Advisory Boards

• Set up a board to govern.
• Learn the role of board and officer positions.
• Gain proficiency in various hats one wears as an employee and as a board member.
• Gain proficiency in forming advisory boards (short term or long term) to engage thought leaders and provide fresh input.

4. Business Plan

• Create a one-page business plan, supplemented by detailed appendices.
• Create a 12...

Here are some highlights from today's mentoring session with The Catholic CEO, Henry Kutarna.

Adversity with the European Distribution Deal

The US distribution deal with the European manufacturer has hit a big snag due to the complete unavailability of the American distributor to start talks. 

 What have we done about that problem? Well, we considered three options:

1. Divide the US territory and do a deal with Europe to claim a part of the USA – and thus start the growth plan in a reduced market.
2. Just buy and resell the product from the existing distributor, which in practice really means buying directly from Europe in a kind of a “drop ship” deal – and thus build a market and sales pipeline in anticipation of a time when a deal can be done and more margin points can be earned.
3. Prepare a full offer to purchase and ensure it “lands on the desk” of the current distributor – and thus provide one last chance for him to...

Today’s work session resulted in a very wide-ranging discussion about quite a few topics. 

My focus in this report is to set out a list of lessons learned, points made, and “observations” made. See what you think:

Bank Financing 

Importing Lessons

METRICS AND DASHBOARD INDICATORS:

Today we came back from a two-week break for the Christmas vacation period. The story today is shocking. We have a willing buyer and a willing seller situation – with a real wrench thrown into things by the parent company that says it wants a change but seems unwilling to throw the switch. Read more about my years of experience mentoring business owners.

European Distribution Deal

• Things moved ahead on the purchase of the shop. Finally the offer was presented. It was written as per the conversations – and it is headed towards completion probably within a month. 
• But a new complexity has arisen. This is typical of what I’ve seen in certain similar business expansion plans. To do a distribution deal by buying the American distribution contract of a large European manufacturer requires definite engagement between the parties.
• My client is of course ready to go and wants to get the deal done. 
• The owner of the distribution business has signaled his...

Today was a wrap up session that coincided with the end of the year 2020 and the Christmas Season. Since this series is coming to you on a delayed basis, some months after the fact, you’ll understand why the meeting was a year-end wrap up and a final, take-stock discussion. 

Here’s what we reviewed:

Priorities for the new-year.

• Finish the acquisition deal – get the bank financing finalized, set up the invoicing, refurbish the old equipment from the main shop and send it to the new location, etc.
• Finalize the European company’s American distribution deal. 
• Put the website into full production and hire the owner’s brother full time to do marketing and social media (and open the new SW distribution center).
• Consider looking for a bigger bank (such as BMO Harris) to handle perhaps $1.0 million of capital needs in the next 12 to 18 months (e.g. distribution deal $0.5 million, equipment $0.4 million, stock for the distribution deal $0.3...

This topic flows directly from current experiences as a business mentor in challenging times.

CAN YOU SET REAL PERFORMANCE TARGETS?

Yes you can. Few try hard enough.

1. Define the three top proofs, indicators, or measures of your business success.

• List the three top key performance indicators (KPI) that prove the business is succeeding/prospering/growing. Examples: Sales growth. Sales growth in the top three vertical markets. Margin. Market penetration (e.g. percentage of the market held, number of customers, percentage or number of customers “retained”, by period). Market capitalization (or equivalent “per share value” in non-publicly-traded businesses).  EBITDA growth (Earnings before interest, taxes, depreciation, and amortization – sometimes simply called “earnings”). There are many more.

2. Construct QUANTITATIVE Measures/Indicators.

• Design quantitative measures of performance that you can actually measure...

Today’s topics – “Sticking To Business”

In today's session, things continued to move along nicely. It was a general conversation about many general matters!

1. The offer to purchase is ready and will be presented to the vendor in the recent acquisition. This deal is going to close in a month!
2. The bank has given a positive signal and wants to see the offer to purchase and supporting documentation. This is fine and is the normal next step. 
3. An interesting current customer development just occurred. A long time customer just announced it’s moving from 1 shift a day, five days a week to 3 shifts a day, seven days a week. Wow! Amazing! This is a half million dollar a year deal for new, sharpened, or re-tipped blades. It’s a pallet shop and that means a lot of rugged, hard usage. Not only is this good news, but the deal that has provided this huge customer increase comes from the acquisition of a business with around 190 locations in the USA. Our...

What is a Cap Table, and Who Uses It? 

I have seen thousands of deals throughout the years as an Angel investor and mentor to start-ups. The capitalization table is a useful tool for investors and business owners. In short, it is a breakdown of the company's shareholder's equity. Here's an article that explains the cap table a little more in depth. My goal here is to demonstrate what a capitalization table tells investors. These are insights you need to know if you own a business also.

I have learned that the cap table (capitalization table) reveals a great many things to savvy investors. This week I studied three different cap tables to discern situations and discover facts. This led me to muse about past cap table lessons.

The discerning investor can tell the following trends and signals about your business by studying your cap table. Even in the absence of a financial statement, minute book or business plan, the cap table speaks clearly.

The 18 Truths of...

In this week's session, we’re getting down into actions that really differentiate us from the competition.

MARKETING AND SALES: 

• We discussed detailed marketing and selling ideas. 
• We talked about how to drive more traffic to the website. One idea is to create an old-fashioned flyer and have delivery drivers drop off copies at all customers over a short period of time – which should inform customers, and, when accompanied by a discount coupon – drive traffic and get people used to buying on-line and scanning the catalog regularly for offers and new products.  
• The email list of 1200 to 1500 customers will also be used to connect with and inform customers. 
• We discussed the use of promo codes for special deals on-line, the use of LinkedIn, a plan to expand to 5,000 customers, a method of growth beyond the region, and a lot of other specific sales and marketing tools. 
• NOW I feel we are focusing on valuable tools that can have a...