cash flow management

Working with family


Have you ever worked for a family owned business and you were not part of the family? This was my situation before starting my own business, Fulling Management and Accounting. The business had become a revolving door for the owner’s wife, mother, cousins, and so on. Each time a family member would leave, the business culture became more and more negative. Working with family can be difficult.

[column col="1/2"]You are likely familiar with the guys (and beards) from Duck Dynasty. Obviously, they are a sample of how family businesses can be extremely successful and beneficial for the family. However, in some cases, family businesses can bring blurred lines as it relates to management decisions. The added stress of family relationships in the work place can lead to decisions that would not otherwise be made.

Small business owners are forced to wear many hats and sometimes these hats can overlap and cause friction. Knowing what your role is at any given time is imperative, not only to the success of the business, but to the family unit as well.

One of my favorite stories of a family owned business was from a friend of mine named Joe. One morning Joe was working diligently at his home office to get an important report finished up. His wife, who served as his administrative assistant, walked into his office, sat down and started talking about the kids, laundry, honey do list, and all other home related items. Joe, in a frustrated tone, looked at his wife and said, “I am at the office and will be home at 5pm.” He promptly resumed his work. Obviously, working with family isn't always easy.

While they can laugh about the short conversation now, Joe and his wife learned an important lesson about identifying and respecting the hat being worn at the time. Knowing your role at any given time is imperative to business and family success.

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It's not my fault; A lesson in personal accountability


Fulling_Management_Personal_Accountability_largeWe've all been in a position where we've seen people blame everyone except themselves for a problem. And if we're honest with ourselves, we've probably been in the same boat. One thing I've recognized, personal accountability is becoming a dying trait. A number of years ago I met with a perspective client whose company was struggling with cash flow. The owner, for the sake of this post I'll call him Brad, was doubtful he would have enough money to cover the upcoming payroll for his 15 employees. As I listened to him describe the situation, he made it clear that the declining economy and slow customer payments served as the root cause of his business problem.

Before bringing on a new client we typically go through a fair amount of due diligence. In most cases we review items such as business plans, QuickBooks data, recent tax returns, and other relevant information. It’s amazing how that data can provide some telling information as to the health and management philosophies of the ownership.

As I reviewed financial information from Brad’s company, I noticed a couple months prior to the decline in his cash flow that he had written two checks to himself for a total of $30,000. While there is nothing wrong with an owner distribution, I found it a bit odd that he would take such a large amount in the midst of an impending cash flow crunch. There was probably a good explanation.

Fulling_Management_Personal_Accountability_quoteWhen I asked him about the owner distribution checks and how the money was used his answer was, “That’s none of your business.”

In the book QBQ – The Question behind the Question, author John G. Miller, describes the lack of personal accountability as a problem that has resulted in “an epidemic of blame, complaining, and procrastination. No organization, or individual, can achieve goals, compete in the marketplace, fulfill a vision, or develop people without personal accountability.”

As it turns out, Brad used the $30,000 to purchase two boats for himself earlier in the year. While the down economy and slow customer payments didn’t help the situation, the real cause of the dilemma had been caused by the owner himself. Unfortunately, the lack of personal accountability had a devastating effect on his company.

Fulling_Management_Personal_Accountability_smallWhile you and I may not be out buying a new boat with needed cash flow from our company, we can all learn a lesson from Brad’s example. As a business owner and in your personal life, many of the situations you face today are a direct result of the decisions you made (or didn't make) yesterday. So don't take the easy way out by passing blame. Instead, be a leader that takes personal accountability seriously. Not only will it help you with items such as cash flow management, but personal accountability is a trait that will help you build trust and buy-in with your employees.

As a reminder of improving my own personal accountability, my wife Pam and I will be leading a college and young adult group this fall from the book Taking Responsibility for Your Life: Because Nobody Else Will by Andy Stanley. You can check out the intro of the series here.

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