Finance

Nickels and Dimes
Finance, General Interest, Operations

Nickels and Dimes

"Nickels are precious, Mike." I almost laughed in his face. This was one of the nuggets of wisdom I received from one of my mentors, long ago.  He always insisted that we hold tightly to every nickel and dime we had in hand, or had earned but not collected. I used to think this was an extreme point of view, but experience has shown it to be valid.  Because so many years have passed, I might say it a bit differently today: Dollars are precious. Particularly when it comes to managing our cash. (more…)
Show Me The Money
Finance, General Interest

Show Me The Money

How much cash does the firm have today? Pretty easy to figure that out. How much will we have next month?  The month after that?  And at the end of the year? It matters. If profit is the air we breathe, then cash is the lifeblood of the firm. (more…)
Take A Load Off
Finance, General Interest, Operations

Take A Load Off

Ever have that feeling that you brought too much stuff, and now you're stuck with it? Last week, we likened Overhead to a heavy load that a firm must carry alongside direct salary costs. Baggage, if you will. Sometimes, we over-pack.  Then, we must carry all that stuff until we do something to lighten the load. (more…)
How Much Can You Carry?
Finance, General Interest, Operations

How Much Can You Carry?

Imagine the firm's Overhead Rate as a burden placed on its back as it goes about the business of doing its work. How much is the firm built to carry? The man who taught me the most about design firm management was absolutely relentless about reducing our Overhead Rate. He would not rest if it wasn’t in the vicinity of 1.0.  If it increased to 1.20, he would become incensed and storm around the office, berating people about their non-billable time and overhead expenses. Anything approaching 1.50 was nothing but mismanagement to him. (more…)
Signs of Failure
Finance, General Interest, Uncategorized

Signs of Failure

How did this happen? Suddenly, without warning?  Or were there warning signs that we ignored? For the past few weeks, and even months, many of us in Texas have experienced a continued barrage of heavy rainstorms.  Virtually overnight, we've gone from living in long-term drought conditions to living in flood-prone conditions. Flood warnings have become so prevalent that they no longer grab our attention. Then, one morning, we wake up to this scene. Overnight, we've lost the ability to go forth. (more…)
Gross Fee Anatomy
Finance, General Interest

Gross Fee Anatomy

We need to discuss a gross subject. Fees. Gross Fees, to be precise.  Gross Revenues, if you prefer. As in the study of gross anatomy in medical school, we can learn a lot through dissection. So, let's dissect our subject. (more…)
What’s Cooking?
Finance, General Interest, Operations

What’s Cooking?

Someone at the bakery had been cooking more than pastries. The deeper they looked, the bigger the theft appeared to be. I know, I know—it’s not going to happen to your firm.  Your firm is solid, and you trust everyone in it. What could go wrong, anyway? (more…)
Getting the Scoop
Finance, General Interest

Getting the Scoop

We've got to get the story. And then report it.  Quickly. Eventually just isn't good enough. Good financial management requires good financial reporting. Good doesn’t necessarily mean exhaustive. But it does mean timely. (more…)
In Summary…
Finance, General Interest

In Summary…

Following the last three posts, we can now finish our exercise in creating a reliable, and ongoing, predictor of profitability. Admittedly, for some, this can be a rather dry topic area. Nevertheless, as we discussed in Solving the Profit Riddle, it is much, much simpler than the blackboard calculations in the photo, and it can bring great insight into the firm's financial stability. (more…)
Put It On Our Tab
Finance, General Interest

Put It On Our Tab

Keep those receipts! We've got to explain to our persnickety accountant what we spent, and why. But will we be able to tell him what we're going to spend next month, and why? That's impossible to predict, right? Sure we can.  For the firm as a whole, anyway. (more…)