In this episode, Robroy Wiley interviews Lynda Martin, EOS Implementer about the relationship between EOS system and Exit Business Planning. Lynda defines how the EOS system helps the business owner(s) gain focus and clarity around their business. We discuss how the EOS system works in developing transferable value in the event that an owner(s) wants to sell the business.
How the Entrepreneur Operating System organizational chart is developed.
What the Entrepreneur Operating system does for a business owner(s) and their team
Which components of the Entrepreneur Operating system help in exit business planning and transferable business value.
When Craig started his engineering firm, it was just him and Angie. Three years later, there were thirty people working for him. Craig describes himself as “an entrepreneur with an engineering degree” – it is his vision and salesmanship that has sparked the firm’s growth. With that growth has come the need to make decisions based on more data than what he can find in his hip pocket. He needed a clear view of the how money affected the path of his growth.
“I was used to making decisions about hiring and equipment purchases and marketing based on my ‘feel’ for how our cash was flowing. I’m used to functioning that way, but it did make me anxious, even though I was always pretty good at guessing right.
Then I started using a budget and cash flow projection tool. It was hard at first, and I really wanted to hand it off to someone else – anyone else! It’s a little embarrassing that it took me two years to really get the hang of it. I’m so glad my controller was patient!
The best thing is the freedom I feel!
This year, I did the projections and brought them to our annual planning meeting. We were able to use them to test our ideas against financial reality and do ‘what-ifs’ about market changes and hiring. Our controller feels like she has guidance and support and isn’t always having to be the bad guy when we say we need something. I feel in control of the growth, and, although I’m submitting to a discipline that I used to hate, well, did I mention the freedom from worry?”
Get with your controller or bookkeeper to help you fill in the numbers, then make a copy and use it to play what if about your growth plans. Many a company has strangled over cash flow even when highly profitable. Don’t let that happen to you!
Ever looked at your profitable income statement and wondered why there isn’t that much money in your bank account? You’re not alone – and many a profitable business has struggled to survive because they couldn’t manage cash well.
One step is to have a budget and cash flow projection tool.
If your strength is not the reconciliation of balance sheets and P&Ls to bank statements, and sometimes it feels like your accountant and controller are speaking a foreign language, it can feel as if one of your most important assets is hovering just out of your control.
Many of my clients have found this simple (not easy!) spreadsheet to be a way to get their arms around the details of their cash flow. The process of understanding it gives them sometimes shocking insights into how their business works and how the money is managed.
For Robert, a financial manager with excellent financial skills, it was a revelation.
“Maybe it took someone who’s not a professional numbers person to get simple enough to help us get the big picture – but this is incredible. For the first time (it’s embarrassing to admit) I have a long term view of how the cash in my business flows.”
Now he’s expanding through acquisition and hiring with great confidence because he has a tool that pulls together all the intricacies of expanding income, payroll costs, equipment purchases and bonuses.
As an EOS® Implementer it’s my job to help my client’s identify the holes in their buckets and help them fill it. My cash flow projection tool came out of my frustration for clients who couldn’t get the information they needed to figure out the impact of their decisions on their cash. It has had such an impact on every client I’ve given it to that I wanted to share.
Here’s a picture of it:
A pretty standard P&L budget. The magic is in the cash adjustments at the bottom, and the formulas. This allows leaders to look out a year, and to play “what if” with market, hiring and purchase decisions.
If you want the spreadsheet with the formulas and simple instructions for using it, click here.
Helping good business people get control of their business is my passion. That’s how my clients can live the lives they dreamed of when they took the risk of entrepreneurship!
P.S. I’m a big fan of a folk singer named Odetta. Here’s the video of her singing at Carnegie Hall with Harry Belafonte. The song? “There’s a Hole in the Bucket!”
It made me laugh – haven’t we all had conversations like this in our business life? No time to watch the video, read the lyrics. You’ll get the idea. But seriously, who can pass up such great singers having such fun?