Employee Theft | Is It Happening To You?

Employee Theft | Is It Happening To You?

  Employee theft is rampant in small to mid-sized businesses. It never ceases to astound people that a trusted employee could steal from their employer. It is happening every day. Large amounts are being stolen from businesses both small and large.   The Truth About Employee Theft   After the Enron debacle, Congress passed “Sarbanes Oxley” to tighten the responsibility of the accountant to detect fraud. Talk to someone in the accounting community about SOX and they will roll their eyes and heave a large sigh. In all levels of the attest function performed by accountants (compilation, review and audit), SOX has had an effect. The result of this increased testing is that more employee theft than ever before is being uncovered. In fact, the AICPA (American Institute of Certified Public Accountants) released a study that gave some astounding statistics. According to their survey of members, up to 82% of small to mid-market businesses have or will experience employee theft. Among the incidences of theft uncovered, the average theft amount equals $125,000!! And believe it or not, most of these thieves are not prosecuted. Are you a victim? Most of us would immediately say “No, all my employees are completely trustworthy.” But, what about the next employee you hire? What about the employee who has had an unexpected life change (divorce, death, or other experience) that has affected his/her financial stability? What about that employee’s spouse who you might not quite trust? Could that person have undue influence to convince your employee to do something untrustworthy?     Examples of Employee Theft   Cash. Does the employee who collects the cash...
5 Reasons Companies Fail | Avoid Making a Business Mistake

5 Reasons Companies Fail | Avoid Making a Business Mistake

  Companies fail for a lot of reasons, but financial mismanagement is generally at the top of the list.  Here are five reasons why firms bite the dust, and how to avoid making a business mistake: Business Mistake #1 Revenue – or Rather, Quality of Revenue.  Many entrepreneurs – if not most – have a sales background, and they do what they do best – sell!  There are many great sales tracking processes, incentive schemes, CRM systems and rosy projections. Less often seen are client gross profitability models, incentive packages that reward profitability and collectability, and concern about concentration of clients.  When it comes time to value your company – make sure you have revenue quality. Business Mistake #2 Failure to Measure Gross Profit.  Many small companies fail to distinguish between overhead costs and cost of sales.  Cost of sales are costs that are needed to make a sale: cost of product, cost of service delivery, payroll for service fulfillment, etc.  Overhead costs are costs that would be incurred whether you made zero sales or more sales than you know what to do with: rent, administrative costs, and office costs to name a few. Failing to distinguish between the two properly means you have no idea how you are doing relative to peers, and have no way to control overhead or maximize profitability. Business Mistake #3 Lack of Costing Data. Many companies fail to develop metrics that can tell them the cost to deliver a product or service per unit. When you pin down your cost of service delivery, you can start to find ways to reduce or transfer...
How to Succeed in Business – Twelve Points For Your Business Compass

How to Succeed in Business – Twelve Points For Your Business Compass

How to Succeed in Business = A Business Compass Every day, management and employees are faced with difficult challenges. At times confusion, uncertainty and frustration can slow or interrupt the organizations progress toward business success. These twelve common sense ideas can provide the fundamental principles that will help your organization be successful and reach its goals. How to Succeed in Business Point 1 = Keep it Simple The organization has grown so quickly and our business has become so complex that sometimes it is easy to get overwhelmed. When we look at the forest we sometimes forget it is made of individual trees. It is only by getting back to the basic roots of our business that we can understand how our own forest has grown. When we understand the roots, the answers to our problems can become obvious. How to Succeed in Business Point 2 = Unquestionable Ethics In a society that has so many laws and regulations, it is easy to confuse the letter of the law with what is right, fair or just. Our organization (and people) must be known for having the highest standards of integrity and for doing the right thing for ourselves and our customers. If we work as if everything we do will be reported on the evening news and we strive to have ourselves and organization held in the highest regard, we will always do what is right. How to Succeed in Business Point 3 = Aim High Throughout history there is example after example of ordinary people  producing extraordinary results. It is not just luck. This happens because these people...
Does Franchising Work?

Does Franchising Work?

Does Franchising Work? – Preface As a B2B CFO® partner I have worked with a lot of smaller growth companies and it’s always interesting to learn a new business model and see how an entrepreneur makes money. I am frequently asked “What are the most profitable businesses, or what is the best way to grow a business”. As I see the proliferation of frozen yogurt stores in my neighborhood, I thought it would be interesting to take a look at the franchise business model to see how it works. I have enlisted the help of Jim Deitz aka The Franchise Doctor.  Jim has consulted on franchise operations for more than thirty years and is a recognized authority on creating, buying and selling franchises. Franchising is typically the right to sell or distribute goods or services under license, using a common branding and advertising, while the franchisor retains a degree of control over operational procedures. I asked Jim how big the franchising business was. In fact, franchising accounts for 11 million jobs and at $1.3 trillion is just over 5% of national output. There were over 900,000 individual franchised establishments in 2005. Jim said that while Fast Food, Hotels and Automotive sectors are the most well known, there is a diverse range of business models from Janitorial, Hardware, Real Estate, Auto Rental, Learning, Personal Care, Schools, Construction and Maintenance. Does Franchising Work? – Franchisee Investors For many franchisee investors (ZEEs) and potential franchisors (ZORs is franchise-speak for business owners who use franchising to expand their business), the costs and potential profitability are the key issues. Jim says that license fees can vary...
Steven Covey – If Your Company Was A Soccer Team

Steven Covey – If Your Company Was A Soccer Team

Steven Covey – Harris Poll Steven Covey in his book The 8th Habit, which I highly recommend, quoted the results of a Harris Poll of 23,000 U.S. residents employed full time within key industries and in key functional areas as follows: Only 37 percent of those polled, said they have a clear understanding of what their organization is trying to achieve and why. Only 1 in 5 was enthusiastic about their team’s and organization’s goals. Only 1 in 5 workers said they have a clear “line of sight” between their tasks and their team’s and organizational goals. Only half were satisfied with the work they have accomplished at the end of the week. Only 15 percent felt that their organization fully enables them to execute key goals. Only 15 percent felt they worked in a high-trust environment. Only 17 percent felt their organization fosters open communication and better ideas Only 10 percent felt that their organization holds people accountable for results. Only 20 percent fully trusted the organization they work for. Only 13 percent have high-trust, highly cooperative working relationships with other groups or departments. Steven Covey – Soccer Team Analogy Covey goes on to equate these results to a soccer team by describing the team as having only four of the eleven players on the field knowing which goal was theirs. Only two of the eleven would care. Only two of the eleven would know what position they play and know exactly what they are suppose to do. And all but two players would, in some way, be competing against their own team rather than the opponent. The...
Business Investment Analysis – Are You Making Wise Choices?

Business Investment Analysis – Are You Making Wise Choices?

Business Investment Analysis – Preface It is a sales axiom that people buy things based on emotion and seek out facts to justify their decision. I wish I could say that the axiom were true ONLY for personal decisions, but my experience has shown that it is frequently true in the business realm as well. Perhaps we accountants are guilty of scaring off the novice with our intimidating terminology such as “time value of money” and “discounted cash flow” or acronyms such as NPV and IRR%. The purpose of this Part 1 article is to present a simple approach to evaluating investment decisions. Part 2 will present an example. The ultimate goal of the investment analysis process is to organize everything that is known about the potential investment. You are simply comparing the costs you will incur (initial investment and costs of operation) against the benefits (revenue opportunities) that are reasonably assured to be available to you. Keep it simple and don’t over analyze the investment decision. As the saying goes, eat the elephant one bite at a time. I suggest that your break the analysis into bite size parts. The following categories can serve as an example: Business Investment Analysis – The Opportunity When someone is contemplating purchase of a piece of equipment, building or purchasing a building or other investment they are doing so because of an expectation that such a purchase will enhance the profitability of their business. A clearly defined opportunity with accurate estimates of revenues and costs is essential to making a wise business decision. Business Investment Analysis – Investment The purchase price for a piece...