How To Max Your Money Flow

Whether you are just starting out or run an established business, it’s time to examine whether you really control your company.

Specifically, do you as the owner of your company believe you are 100% knowledgeable about the current financial status of your business?

If you lack experience in managing the books of a company and expect to learn as you go, you should think twice. Managing your own accounting systems incorrectly can hurt you not only now, but also in the long term.

Here is a rundown of the key areas where an in-house or outsourced accountant can assist you in your business:

• Assist with financial analysis of your business and/or help you to prepare one.
• Provide advice on the type of accounting software you may need.
• Make sure your accounting procedures comply with government regulations and requirements.
• Provide advice on how to track expenses during your daily business activities.
• Help ensure individuals who provide service to you are properly classified.
• Explain your financial statements so you can understand the ins and outs of your business.
• Oversee company payroll and payment processes.
• Help you manage overtime.
• Provide advice on estimated tax payments you should make during the year.
• Close out your books and create a multitude of financial reports.
• Help you determine areas for growth by providing insight on cash flow patterns, pricing, and business financing.
• Advise on property and equipment leasing and purchasing.
• Create financial forecasts so you can make better decisions in your business.
• Create a budget that will support your business goals and monitor actual results against the budget each month.
• Provide advice and resources to help you with the sale of your business or the purchase of an additional business.

In addition to taking control of the financial aspects of your company, I suggest six key areas you should focus on to stay on track:

1. Create and maintain a business budget: No time to make a budget? Then how do you know you are operating effectively? A budget will show you exactly where you are overspending and help you determine the best way to maximize earnings.

2. Set up a financial record keeping and accounting system: The first and most important part of setting up a recordkeeping system is to capture the information and review it to make improvements. There are various accounting software packages available including QuickBooks which many small- to large-sized companies use.

3. Create a system to maximize collections of accounts receivable: One of the most important things you can do to make sure your business is profitable and will generate sufficient cash flow is to set up a system to collect money from customers. Learn how to set up a system to monitor accounts receivable and collect on overdue bills while staying within the law on debt collection.

4. Plan for business disasters: All kinds can happen to your business. Set up a plan to prepare for a disaster and recovery by:

• Planning to keep business records safe.
• Planning for employee safety and minimizing damage to property.
• Learning about U.S. government loans and other disaster relief assistance.
• How to recover business records after a disaster.

5. Get your payroll system in order: Make sure you have accurate records for employees, payroll, and payroll taxes, which are one of the top audit targets for the IRS and states.

6. Create and maintain business records for your corporation or partnership: Your business must keep legal records of agreements and director actions. Corporations, partnerships, and LLCs need these records to maintain liability protection.

The most important thing you can do when it comes to your business financials is recognize when you need to enlist the help of a professional and then find that person to help you maintain the fiscal health of your business.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

accounting   better business management   business plans   finance   financial planning   How To   profits   revenue growth   Ron Sorci   

 

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Yes, You Really Do Have The Time

Already into the second month of 2017, now would be a good time to examine whether you are properly managing your time. We are in a very demanding industry where we commonly get pulled in many directions.

Our priorities shift almost hourly. Many days go by where our “to do” items were not completed as fast as we hoped.

Many of you have taken a time management class, read about it in books, and may have tried to use an electronic or paper based day planner to organize, prioritize, and schedule your day. Why is it, then, with all of this knowledge and these gadgets you feel like you still can’t get everything done as planned?

The answer is simple: Everything you ever learned about managing time is a complete waste of time because it doesn’t work. You must first learn what time really is.

There are two distinctly different types of time — clock time and real time. In real time, all time is relative. Time flies by or drags on depending on what you’re doing. Two hours at the Department of Motor Vehicles can feel like 12 years and yet our 12-year-old children seem to grow up in only two hours.

Do you live in real time or clock time? The reason time management gadgets and systems don’t work is these systems are strictly designed to only manage clock time. You live in real time, a world in which all time flies when you are busy, having fun, or even sidetracked.

The good news is real time is mental. You create it. Anything you create you can manage. It’s time to remove any self-sabotage or self-limitation you have around “not having enough time,” or today not being “the right time” to start a business or manage your current business.

There are only three ways to spend time — thoughts, conversations, and actions. Regardless of the size of your company, your work will be composed of those three items.

As a business owner, manager, or supervisor, you may be frequently interrupted or pulled in different directions. While you cannot eliminate interruptions, you do get a say on how much time you will spend on them and how much time you will spend on thoughts, conversations, and actions that will lead you to success.

Practice the following techniques to master real time:

1. Carry a schedule and record all of your thoughts, conversations, and activities for a week. This will help you understand how much you can get done during the course of a day and where your time goes. You will see how much time you actually spend producing results and how much time is wasted on unproductive thoughts, conversations, and actions.

2. Any activity or conversation that’s important to your success should have a time assigned to it. “To do” lists get longer and longer to the point where they’re unworkable. Schedule appointments with yourself and create time blocks for high-priority thoughts, conversations, and actions. Schedule when they will begin and end. Have the discipline to keep these appointments.

3. Plan to spend at least 50% of your time engaged in the thoughts, activities, and conversations that produce most of your results.

4. Schedule time for interruptions. Plan time to be pulled away from what you’re doing.

5. Take the first 30 minutes of every day to plan your day. Don’t start your day until you complete your time plan.

6. Take five minutes before every call and task to decide what result you want to attain. This will help you know what success looks like before you start and it will also slow time down.

7. Put up a “do not disturb” sign when you absolutely have to get work done.

8. Practice not answering the phone just because it’s ringing and responding to e-mails just because they show up. Disconnect instant messaging. Don’t instantly give people your attention unless it’s absolutely crucial in your business. Instead, schedule a time to answer e-mails and return phone calls.

9. Block out other distractions like Facebook and other forms of social media unless you use these tools to generate business.

10. Remember it’s impossible to get everything done. Also remember studies show 20% of your thoughts, conversations, and activities produce 80% of your results.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

Profit Driven   profits   revenue growth   revenues   Ron Sorci   

 

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How To Prepare Your RFPs To Lower Expenses

Controlling expenses is clearly one of the most important actions a business must examine.

Limousine operations rarely look at expenses thoroughly enough where they should be getting to the point of sending out RFPs to vendors for most line items on their income statements.

We are constantly faced with filling out RFPs to secure business, yet when we get to the expense side, companies never seem to try to find out if other vendors can reduce their expenses through an RFP process.

The first step is to research the names and addresses in your area that offer the services and products you need to run your business. Once done, you are ready to prepare the RFP to help you choose the best vendor at the best value for your company.

The five goals you are attempting to accomplish with your RFP include:

1. Get detailed proposals to evaluate each vendor’s response so the best interests of your company are met on all fronts.
2. Leverage the competitive nature of the vendor selection process to negotiate the best possible deal.
3. Ensure the interests of all management team members will be met and a consensus reached.
4. Put your company in control of the entire vendor selection process and set the selection rules up front.
5. Start building the partnership between you and the vendor from the start.

The RFP should contain the following sections, each tailored for your individual needs:

• Submission details: Should include deadlines, mailing address of your company, contact person for questions, and clarifications.
• Introduction and executive summary: Write this section last after the entire document is finished. This is used to provide prospective vendors with a brief overview of your company and the requirements for the product or service you may need.
• Business overview and background: Give a brief overview of your business and the market sector you service. This will help your prospective vendors understand what business needs you are trying to fill with the vendor selection process. You should also provide important background information that will benefit the vendor when responding.
• Detailed specifications: This should be the longest section of the document. For an RFP, it will contain the qualitative measures and requirements that will drive the vendor selection decision.

Specifications of what you may need from vendors may include:
1. Service levels
2. Milestones (benchmarks
for discounts)
3. Deliverables and timelines
4. Technical or business requirements
5. Software functionality
6. Hardware requirements
(if applicable)

• Assumption and constraints: Any assumptions and/or constraints the prospective vendors need to be made aware of must be listed here. Failure to be forthright and upfront with the vendor will open the door to renegotiation of the agreement at a later date and runs the possibility of straining your relationship with your vendor.

• Terms and conditions: Expectations must be listed for the vendor to give a fair and honest response. These may include financing options, discounts, warranties, service levels, etc.

• Selection criteria: The final section should be an overview of the selection criteria you will be using to make your decision. Some companies prefer to keep this information confidential, while other companies believe this will help prospective vendors focus on what is important to your company.

Finally, compose a cover letter and send two copies of your RFP to each of the vendors you selected. Include appropriate contact information to help any vendor who may need it. This process will boost your bottom line.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

Corporate RFPs   finance   maintaining profitability   operating expenses   operator finance   Profit Driven   profits   revenue growth   revenues   Ron Sorci   

 

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Don’t O.D. On O.T.

Supervisors are responsible for seeing employees accurately record the time they work and receive overtime when it is due. Frequently, employees have stated “their department doesn’t allow overtime.”

Unfortunately, the unspoken meaning of this phrase means employees may be required to work overtime to complete their work, but will not be paid for it. Employees fear their supervisors will reprimand them if they show overtime on their time cards, so they work the hours and don’t record them.

In addition to this practice being illegal, it creates an atmosphere that hurts morale and productivity. Employees who believe they have been cheated out of pay will not be as productive or willing to go the extra mile. Fearing retribution for recording overtime, employees may carry that feeling over into the rest of their jobs, also fearing supervisors may retaliate against them if they do something wrong. This creates a hostile and intimidating workplace.

Overtime Trust
Supervisors should foster a sense of trust where employees feel comfortable raising the issue if they believe they need more hours to complete assigned work. Upon hiring an employee and at various times throughout the employee’s tenure, the supervisor should be sure the employee understands the following:

• Employees must receive permission to work overtime
• Employees must accurately record all overtime on their timecards
• Employees cannot work overtime out of the goodness of their hearts

You need to keep an eye out for individuals who work excessive overtime. It’s not uncommon for companies to have 20% of their employees working 80% of the overtime. Such a disparity should raise a red flag, because people who routinely log 60-70 hour weeks are candidates for fatigue related errors.

Don’t try to solve this problem overnight. People who work a lot of overtime quickly become accustomed to the larger paychecks and often adjust their lifestyles accordingly. Make sure workers understand the basis for policy changes and build in steps that reduce overtime gradually.

If overtime is a regular feature of your operation, you should have some type of formal distribution system. This reduces the likelihood you’ll be left shorthanded on any given day and prevents workers from feeling a supervisor is playing favorites.

Training For Flexibility
Emphasize cross training in your company. Some companies get into a bind because only a small percentage of the workforce can handle certain jobs and tasks. So a few workers end up getting a lot of overtime whether they want it or not. When you train employees to handle jobs other than their own, it becomes easier to distribute overtime evenly. It may also reduce the need to call people in for overtime and reduce the number of people you need to provide relief coverage.

Raising Pay
Since you will save money by reducing overtime, you may want to offer slight raises to your employees to offset their perceived pay cut. This raise should be less than the money you will save in overtime. If you choose this route, you should compile data and do a thorough analysis on the expected costs.

If your overtime is inconsistent, you may not have to take extreme measures to eliminate it, but you should be aware of when overtime occurs and try to identify the causes. Overtime is costly and can mean the difference between a profitable week and a losing week. By improving your overall efficiency and eliminating waste in your operation, you should be able to reduce the overtime in your company.

In summary, the task of managing overtime is critical on many levels, which includes financial topics as well as compliance with overtime laws. Begin managing overtime before you find it managing you.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

chauffeur pay   driver pay   employee issues   employee management   employee wages   finance   human resources   Profit Driven   profits   Ron Sorci   time management   

 

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10 Things You May Get Wrong While Selling

We’ve often heard in business that “increasing sales cures all ills,” and many times it’s true. Selling techniques play a vital role in whether you will succeed in getting more revenue.

I read an interesting article in Forbes that addressed the “10 Essential Selling Principles Most Salespeople Get Wrong.” Correcting each of them will give you advantages over your competition. We should all strive to implement sound selling techniques to build our businesses.

I would suggest if you have anyone selling your services, you join that person on the next couple of sales calls to see if any of the 10 points below are happening:

1. Assuming the problem the prospect communicates is the real problem. It is normal and natural to assume this. But you should look deeper into each scenario. Before diagnosing and offering how we can address their challenges, we have to ask more questions to get at the root of their problem and bring value to the prospect by supporting their true goals.
2. Thinking your sales presentation will seal the deal. You should always be helping the prospect discover the best reasons to buy from you — not telling them why they should. The prospect should think they’ll buy from you long before you present your final pitch or proposal.
3. Talking too much. At the start of a relationship, salespeople think they need to be doing all the talking when they should be listening and asking questions. If a prospect wanted a rundown of your services, they could just visit your website. The sales process is a conversation, and needs to be an honest and open one.
4. Believing you can sell anybody anything. A prospect must go through a period of self-discovery before deciding your service is the right solution. Resistance is pre-programmed and people don’t like to be told what to do (or buy). The best approach is to ask key questions or relate third party stories that allow the prospect to “discover” the benefits and advantages of your services.
5. Over-educating the prospect when you should be selling. The initial goal in selling is to find out why and under what circumstances the prospect will buy from you. First ask questions and then share your materials and specifics.
6. Failing to remember salespeople are decision makers too. Every step of the way through the sales cycle, a salesperson must make critical decisions as to whether to continue investing time in the relationship with the prospect. If a salesperson is a poor decision maker, the lack of clarity and decisive action will be mirrored in the prospect’s behavior. The shorter the selling cycle, the more leads you will close over time.
7. Reading minds. Always get the facts from your prospects about what they need and why. When your prospect is vague, politely ask for clarity. Veteran salespeople are often the culprits of “reading minds” because they think they’ve seen it all. When you jump to conclusions, wrong assumptions will lead to wasted time at best, lost opportunities at worst.
8. Working as an “unpaid consultant” to close a deal. Salespeople will be in situations where a prospect asks for additional work and information before making a buying decision. The prospect must be asked to picture a scenario where you complete the additional groundwork and provide a solution that fits everything the prospect needs. Then what happens? Will they buy from you? If they can’t envision pulling the trigger even after you’ve done the additional work, or if they’d still need another step in the process, it may be time to walk away.
9. Being your own worst enemy. Never blame the prospect for stalling the process. Instead, look inward. It’s the job of the salespeople to assure the prospect and address detours. The only way to streamline the process is to refine your sales approach and technique.
10. Keeping your fingers crossed a prospect doesn’t notice a problem. The only way to avoid a potential disaster is to address it before it erupts. Always be open and transparent if problems arise along the selling cycle.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

customer service   Profit Driven   Ron Sorci   Sales & Marketing   salesperson   selling techniques   staff training   

 

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Why Investing In Your Employees Pays Off

In our busy world, there is a tendency to not spend enough time on the types of employees we wish to attract.

Typically, we will develop employment ads for various job openings, interview candidates, check references, and either hire the person or move on to the next applicant.

Based on part of my background within human resources, I continue to see a lack of learning about what “makes people tick” and whether they will become an asset to the company.

Handle The Truth
As an employer, you ideally should be seeking someone who knows how to anticipate and control situations to minimize volatility. You also have to be brutally honest with people about where they stand. You do them a disservice by sugarcoating issues or by not giving them the absolute facts.

Unfortunately, many people can’t handle the truth, which most of us remember Jack Nicholson shouting out in the movie “A Few Good Men.” It is, in fact, crucial to be honest with people, as they’re entitled to it. If they can’t handle the truth, they don’t have to work in your company.

You also should assure employees mistakes are not catastrophes. Of course, you prefer them to be small mistakes, but if an employee defends a big mistake, then it is a real insult because they have put their ego ahead of what’s right. That cannot be tolerated.

It’s a natural thing to do. You can end up with really smart employees arguing in a room to prove who was right and defending the mistake. It’s all too common. The point is an employee has to be willing to take the blame, drain the tension out of the room, and ultimately discuss what really happened.

Right Personalities
Employee personalities play a big role in whether they will succeed or fail. Most employers tend to do much better with people who are secure. The more insecure they are, the more likely they will not work out. Surveys show employees must be at least 70% committed to their jobs or they are not good candidates for their positions.

I have heard many employers adopt the line, “the people who work here should be happy they have a job.” Not only is that attitude damaging and narrow minded, but it’s not realisitc. Thirty years ago, when people stayed in one company, maybe they felt they didn’t have a choice. Today, with the fluid marketplace and lower unemployment, employees have choices. They have more power to understand their options than before. People want to work for employers they can relate to, be inspired by, and believe in.

Leadership Styles
Two leadership styles prevail: In the first, the employer dictates the pay scale, judges the employee, and decides on bonuses and promotions. In the second, you tell the employee you believe he or she is incredibly talented and doesn’t need micro-management. The challenge with that leadership is you must hire triple-A talent and follow strong checks and balances in the cultural infrastructure.

Empower Employees

1. Here are 10 ways to improve your overall approach with employees:
2. Create an open environment to assess people
3. Ask them what they perceive are your biggest challenges
4. Empower your staff to make decisions
5. Become a good listener
6. Learn to say “Yes” to employee ideas
7. Allow employee creativity
8. Find employees who aspire to grow and hold senior positions
9. Look for employees who will put the good of the company before themselves
10. Don’t micromanage
11. Find book smart and street smart people

Building a solid team around you is the single most important thing you can do to grow your business. Good luck to you in finding unique and talented people!

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

cost savings   employee management   human resources   Profit Driven   profits   Ron Sorci   saving money   

 

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How To Avoid Alarm Over An Audit

Our industry and many other small businesses depend on financing from banks, leasing companies, investors, and potential buyers of our companies when we finally wish to exit.

If you have one form of an audit from an outside accounting firm, the credibility gives your published numbers a better appearance than internally prepared financial statements.

The three most common audits you can choose involve costs that vary based on your choice:

Compilation: Compiled financial statements represent the most basic level of service CPAs provide for financial statements. In a compilation engagement, the accountant helps managers present financial information as statements without assuring no changes should be made.

Reviewed financial statements: Provides the user with comfort that the accountant, based on a review, is not aware of any changes that should be made to the financial statements to conform with the financial framework. The CPA will perform certain procedures to provide a “reasonable basis” for limited assurance that no material changes are needed.

Audited financial statements: This is the most comprehensive and expensive audit out of the three. The auditor, after examining and verifying many records, certifies the financial statements meet the requirements of the US GAAP (Generally Accepted Accounting Principles). An auditor can give an unqualified opinion of agreement with how the company prepared the statements, or a qualified opinion disagreeing on certain aspect(s) of the company’s statements. In extreme cases, the auditor may express no opinion on financial statements at all in cases where the scope of the audit was insufficient.

Preparing for an audit will save you a lot of money. Items include schedules that reconcile your fixed assets, depreciation, and inventory, and all vehicles bought and sold must be accounted for. Bank reconciliations must be current, and you should document all loans. Provide detailed schedules of all car leases and purchases which include car number, amount of lease/purchase, lender, term, interest rate, monthly payment, balloon payment (if any), and mileage. Accounts receivable and accounts payable aging reports should have detailed explanations for any 90-day balances. Using Excel is highly recommended so the auditors can move data into their desired formats.

Review all “red flags” that appear and prepare detailed explanations before the audit begins.

I suggest you have an Accounting Policies and Procedures Manual. The auditors will not only ask you for it, but you should use it to assure your internal controls are in place. I’ve prepared such manuals for certain clients, and it has proven helpful in many ways. Companies of all sizes need such a document.

An audit serves many purposes. In addition to giving you the credibility with the lending community and potential buyers of your company, it provides some peace of mind your books and records are clean. Paying attention to the accounting policy manual gives you the tools to help correct wrong postings, deter employee theft, and start a platform for your audit team.

The final perk from this process is if you’re ever audited by the IRS or another government agency, a completed audit and a strong accounting policy manual will reduce exposure from such audits in the future.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

audits   finance   money   Profit Driven   record keeping   Ron Sorci   

 

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How To Track Your Bottom Line Numbers

Over the years I have worked with companies of all sizes in our industry. I’ve seen various approaches to how owners study their financial results. The levels at which they are studied vary dramatically. In this column, I will highlight some of the key benchmarks to look at during the review.

I am a strong advocate of surrounding yourself with smart, dedicated, and loyal employees in every department. This will help drive the positive financial results you desire.

Reports To Review

Assuming you’ve attracted a talented team, are they achieving the profit margins you strive for?

To answer that question, you should be reviewing many reports, some daily and others monthly or quarterly.

Success stems from a strong cash flow model. This report will not only tell you if you are on course for positive finances, but also serve as major criteria to a potential buyer when you decide to exit your business.

Buyers and lending institutions study a company’s cash flow more than any other financial component.

I suggest building a foundation of financial reports and have them evolve into a working tool that enables you to make intelligent near-term decisions while giving you insights on anticipated long-term decisions ahead.

Expenses

To establish a reasonable goal, let’s use a 65% cost of goods sold number, which represents all direct expenses to run your fleet against your revenue base. Such expenses include non-officer salaries, payroll taxes, health insurance, perks, vehicle leases and vehicle depreciation. It also includes repairs and maintenance, GPS, credit card fees, commissions, workman’s comp, and all expenses associated with chauffeurs and vehicles.

The next grouping is general and administrative expenses. That total should not exceed 25% of revenue. Such expenses include officer salaries, payroll taxes, perks for the officers, rent, telephone, advertising and marketing, travel and entertainment, professional fees, etc.

Therefore, if your budget (yes, you must have one) reaches the 65% and 25% levels, your pretax profit margin will reach 10%.

Metrics

To monitor whether you are meeting all of the goals stated above, you should review:

• Cash flow report – daily
• Profit by vehicle report – should list every expense associated with determining whether the revenue is generating a profit by vehicle and also by vehicle type. This report will produce calculations showing which type of vehicle generates the highest profit. You will then be able to focus your marketing on that business segment. The report should be generated monthly and year-to-date numbers calculated as well.
• Income Statement, Balance Sheet and Cash Flow report – monthly
• Line-by-line comparison of all revenue and expense categories between current period and same period last year.
• Budget line-by-line comparisons and examination of all significant variances between budget and actual results.
• A review of your balance sheet, examination of all debt, and decisions on how to reduce or consolidate such debt.
• Consider sending out RFP requests to all vendors to reduce expenses. Every dollar saved will flow into profit. Also consider a barter arrangement with some vendors to lower cost.
• Examine all bank lines of credit and vehicle leases to lower interest rates going forward.
• Study and evaluate credit card fees. Are your discounts in line, and are you paying too much in fees?
• Although many owners focus on the top line (revenue) and operational aspects of their companies, every expense line deserves close attention.

The above reports are a sample of the countless tools available to manage your business. A concentrated and consistent effort in managing your business finances will not only help you reap benefits today, but will someday help you exit the company when ready.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

bottom line   business growth   business management   finance   money   operating expenses   Profit Driven   profits   revenues   Ron Sorci   

 

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How To Face The Toughest Business Decision

Our industry has gone through many cyclical periods when merging, buying or selling companies became leading topics.

Once again, the idea of exiting or expanding through acquisition are worthy subjects with the rise of transportation network companies (TNCs), more government regulations, complex labor and wage laws, and the challenge of maintaining profit margins.

Asking Questions
To begin the process, you must ask yourself, “Am I ready to sell, and if so, why?” Most companies in our industry have started with one vehicle and built up larger fleets. The comment most heard deals with a seller’s belief that he should be paid a premium for the blood, sweat and tears he put into building his business. The reality is the buyer understands the emotional thought process. But his focus is on the company’s pre-tax profit, cash flow and EBITDA (earnings before interest, taxes, depreciation and amortization). Both sides must understand the differences in thinking here.

The personalities of buyers and sellers are an interesting dynamic, and like all essentials of business, the need for strong chemistry will enable the possible deal to move forward.

Documenting
The initial process begins with the seller getting his company ready for sale. Many documents are needed that will also be used in the due diligence process. Expect to have bound and ready the following once the buyer has signed non-disclosure and confidentiality agreements:

• Two to three years of federal tax returns
• Reviewed, audited or internally prepared financial statements for the same period. It should include income statements, balance sheets and statement of cash flow
• Revenue by client for a three-year period
• Schedule of vehicles to include year, make, model, mileage, term, monthly payment, lender’s name and balance remaining
• Schedule of other assets
• Organizational chart
• Building lease
• List of employees, their positions, and annual salaries
• Schedule of all benefits
• You will need several other items, but the above list is a strong sampling.

Negotiating
Assuming you both agree on the initial terms and conditions, all of which are subject to due diligence, you will then be moving toward the letter of intent (LOI).

The LOI is essentially a non-binding document that lays out the foundation for a structure between both parties. Established timelines will ensure the process moves along.

The next step is the due diligence work. In addition to all of the previous items, you can expect to receive a thick stack of documents the buyer and his team will want to review. In speaking with various sellers over the years, many have compared the due diligence efforts to going through an audit. As a seller, you must simply view this as a necessary step for the buyer to confirm everything you have told them. Respond to any questions as quickly and thoroughly as possible. Never forget you are trying to reach your goal of selling your company.

Other steps will include “reconstructed financial statements,” which reflect all expenses not present upon final sale. That may include all or a portion of your salary, salaries of certain employees who will not be needed, various perks, bonus payments, extraordinary expenses, etc. The purpose of reconstructed financial statement is to show a higher profit, which will increase the overall purchase amount. For every dollar added to profit, the seller will receive multiples of those dollars in the purchase price.

Last Steps
The final step will be the definitive purchase agreement, which may be attached to employment agreements for you and key individuals within your company. There may also be earn-out agreements enabling you to receive additional dollars that depend upon the future profitability of the company. Typically, your company will be sold as an asset sale whereby you keep the accounts receivable and accounts payable as of the date of closing. The vehicle debt or assumption of debt is negotiable.

As I’ve explained in my book, Selling Your Company In the Millennium, buying or selling a company can be a daunting task, spanning multiple emotions. Proper guidance can ease the process and stress, and enable buyers and sellers to reach their goals.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

finance   financial planning   operator finance   Profit Driven   profits   revenue growth   revenues   Ron Sorci   

 

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How To Master Money-Making Roles

In our industry, we are all striving for ways to increase revenue. It’s a daunting task when faced with local competition, rate structures and the increasing presence of TNCs.

Despite such obstacles, you can use multiple ways to separate yourselves from the rest and grow sales. I’ve researched various recent studies on this subject and share results here. I will also cover in subsequent articles how to achieve profitability on those accounts you have added to your client roster.

We all have attempted to secure accounts in various ways, but one basic sales “rule” stands out. It is the 100-10-1 rule which states that for every 100 calls you make, there will statistically be 10 meetings to evolve. From those 10 meetings, there will be one account that will close. Those numbers vary depending upon who is calling.

Word of mouth is clearly one of the most driving forces in growing revenue, which leads to the survey regarding customer satisfaction.

Make Customers Happy
The study shows that 91% of unhappy customers will never call you again for service. To limit this, please note the following:

• You should consistently survey clients to measure overall satisfaction. You can outsource this function if you lack time, as it will give you critical information on how your clients feel about your service.

• Assess loyalty. To generate repeat business, you must measure client behavior by examining client history, incidents and preferences.

• Apps for monitoring quality service. Two to research: Qualardo and Temper. This will give you feedback on overall client satisfaction.

• Consider a live chat window on your website where you can immediately interact with clients and their issues.

Keeping Customers Long Term
A recent article in Forbes highlighted the seven best practices for building client relationships:

1. Be patient in building new relationships. It clearly takes time, and always remember that no amount of personal connection can substitute for great work. Too often, we believe relationships will solve everything, but they don’t without superior service.

2. You must get to know your client’s industry and, specifically, their company. You don’t have to be an expert, but clients want to do business with someone who can speak the same language.

3. Go the extra mile. Customize solutions. Clients will remember the times you came through for them. It actually may open additional revenue streams.

4. Treat every client as your most important one. When you do, such clients will give you the most referrals. Those decisionmakers also switch jobs and bring your company’s services along.

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5. Respond promptly. One of the biggest complaints from clients is how long it took to get a response and/or resolve a problem. You must reply to a client’s e-mails quickly as they need the comfort of knowing you are treating their concerns immediately.

6. You must be more than just an e-mail address. In today’s busy business climate, clients need to talk on the phone, on Skype and in person.

7. When discussing any issue with a client, summarize next steps. You should recap the conversation to avoid any later confusion.

Growing Revenues
The final survey, which I found interesting, was published in Forbes and it deals with the five principal ways to pursue revenue:

1. You must have an account strategy. Plan for the long term and focus solely on client needs.

2. Be an introvert and extrovert. It takes both personality traits to achieve increased sales. The introvert listens carefully to customers and avoids the appearance of being overly confident or excited while the extrovert is assertive and enthusiastic to persuade a close to get the account. Mastering a combination of those traits will separate you from the rest.

3. Be driven. Showing that you possess an overwhelming desire to succeed, while being competitive, optimistic and ambitious are further strengths to help generate sales.

4. Use social media. 78.6% of those who use social media outperform those who didn’t use it. The Harvard Business Review reported that LinkedIn proved to be the most effective social media tool.

5. Be either a closer, use a consultant or become an expert to obtain sales. The closer can generate large sales but at times their talking style doesn’t work well for selling services. The consultant listens well and would be a good problem solver when faced with challenges from clients. The experts are typically well rounded and excel at all facets of selling.

If executed properly over time, all of the above pointers will help you grow sales. I wish each of you the best as you build your business.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

business growth   finance   financial planning   operator finance   Profit Driven   profits   revenue growth   revenues   Ron Sorci   

 

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Clear Answers Enlighten Path To Profits

COLUMN DEBUT: It is with great pride and enthusiasm that I introduce my column for LCT Magazine, appropriately called Profit Driven. I would like to show you better ways of growing revenues and making money, drawing from my long career as a business executive.

I will cover the major areas of finance, revenue, marketing and business development. Each segment involves many sub-topics that I believe can supply you with detailed information to apply to your operations and businesses.

I also welcome your input on topics that you’d like to see covered, as the primary goal here is to give you value and help in improving your business.

This column will cater to owners running fleets of all sizes. I will share different strategies and benchmarks for your business, and explain how to grow it to the next level.

Our industry faces so many obstacles. To navigate through them, we need a sound plan to execute. Obstacles vary in difficulty, but with the right knowledge, talented employees, financial capacity, ingenuity and proper leadership, we all can face and conquer any challenges that emerge.

Topical Tour
My column will deliver insights gleaned from detailed research and the experiences of businesspeople who found solutions in strengthening their businesses:

• In the articles addressing finance, I will offer information on how to analyze line-by-line income and expense categories, balance sheet considerations, direct billing versus credit card processing, leasing versus buying equipment and vehicles, mergers and acquisitions, vendor negotiation, use of barter and a host of related topics.
• On the subject of revenue, we will explore analyzing each client for profitability, cultivating an account, solving client incidents, avoiding too heavy a concentration within the overall revenue base, referrals, client surveys, affiliate relationships, customer service, commissions, discounts and overall rate structure.
• In approaching marketing and sales, I will divulge details including the various methods used to attract new business: Use of free advertising, promotional ideas, value additions, referral networks, cold calling, use of the Internet, social media, newsletters, company websites, and a list too lengthy to put here.
• Lastly, for business development, you will gain information on: how your team can play a role in business development, commissioned sales reps, concierges, reaching the decision makers, the 80/20 rule, how to listen to your client needs, reaching the clients’ goals, and required follow-up steps to maintain the business.

Applying Solutions
I know firsthand that simple solutions to ground transportation problems are rare. But I find most answers to problems involve a series of bullet point approaches that are well thought out and easy to understand.

In today’s business climate, the challenges often seem to outweigh the opportunities for success. Over the years, our industry has encountered issues with overregulation, independent operator vs. employee debates, airport and port obstacles, rising costs of almost every line item, stagnant rate increases, local and national competition, and now the growing presence of transportation network companies (TNCs), such as Uber and Lyft. Despite all of those issues facing us, we must find ways to survive.

I’ve seen many owners and operators struggle. My goal for this column, along with the services I provide through my consulting company, is to alleviate that stress and get everyone on the right track to drive profits.

In addition to sharing vital information and ideas, I will rely on you to email me questions on column topics so we can all learn from each other and grow stronger in business together. Everyone in this industry works tirelessly to succeed. I’m here to help you on that well-deserved and earned path to profits.

Ron Sorci is the founder and CEO of Miami-based Professional Consulting Resources Inc. (www.pcrforyou.com). A former senior executive at public and private companies, Sorci most recently worked as CFO of Aventura Worldwide Transportation in Miami. He also served as President of the National Limousine Association from 2009-2010. He can be reached at Ron@pcrforyou.com or (786) 229-3662.

Keywords

business growth   business management   finance   operator finance   Profit Driven   profits   revenue growth   revenues   Ron Sorci   

 

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