I put up a simple Atlanta Startup Entrepreneurs (atlse.com) community site yesterday to help centralize information that’s been floating around for a long time.
Please take a look at atlse.com and contribute. How can we make it better?
Month: July 2009
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Rethinking PowerPoint Presentations with BBP
A friend of mine recommended Beyond Bullet Points by Cliff Atkinson last week so I promptly bought a copy on Amazon.com. I’m only a few chapters into the book but it already resonates with me and my thinking on how to do a presentation. Here’s the advice I’ve taken away from the book so far:
- A presentation should be like a story with a beginning, middle, and end
- The presentation should first be built in outline form in a separate program like Word
- After the outline has been built, each slide should be made in notes view with the slide containing the presenter’s notes followed by one sentence and a relevent picture in the slide itself
- With each slide containing no more than one simple sentence and picture, the presentation should be timed such that each slide is used for approximately one minute
The book also does a good job of giving some theory behind how people learn and interpret new information. I’ll do a follow-up post once I’m finished with more insights from it. If you ever do PowerPoint presentations, I’d recommend reading the book as well as visiting the BBP community.
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Three Financial Tips for Growing Businesses
Last week I had the opportunity to participate in the EO Accelerator quarterly education day as I’m the Champion for the Accelerator program on the EO Atlanta Board. Each quarter we have an all day education event taught by a certified facilitator that flies in for the program. The program, for entrepreneurs with revenues under $1 million, is three years long, with rolling admittance and unique content on the topics of People, Strategy, Money, and Sales. This was Money day.
Money day was taught by Greg Crabtree, one of the most entrepreneur-minded CPAs I’ve ever met. Greg runs a firm in Huntsville, AL that charges a flat monthly fee, typically $400 – $1,000, to clients in exchange for fixed quarterly accounting services and unlimited advice. Greg provided several frameworks for thinking about financial concepts in business, that are especially helpful for entrepreneurs.
Salary Cap
The idea behind the salary cap comes from professional sports, like the NFL. The way to calculate it for your business is to take all your non-labor costs on a trailing 12 month basis and subtract that value from your trailing 12 month revenues. Why is this good to measure? It helps you focus on the maximum amount the business will bear for labor costs before the company won’t be profitable. Too often, entrepreneurs add new staff before the business warrants it and this provides a value to monitor. Note that looking at your trailing 12 months expenses and revenue is typically better than looking at annual values on a calendar year, for the purposes of making decisions like hiring.
Core Working Capital
One question I’ve asked many times, and been asked many times, is “How do I determine how much I should have in the bank before expanding/hiring?” Core working capital (CWC) is the answer to that question. CWC, according to Greg’s recommendation, is two months of monthly operating costs in cash in the bank after the following:
- Taxes
- Debt payments (he recommends no debt or line of credit)
- Current liabilities
Of course, the amount of desired working capital will vary from business to business, but this simple rule of two months of cash in the bank is a good starting point.
Profit Margin Goals
The third take away from Greg came in the form of profit margin goals. Greg’s advice was that businesses should strive for a 10% profit margin after fair market wages are incorporated for all principals in the business. Here are the three common profit ranges for a growing business:
- 5% range – the danger zone
- 10% range – the target for most businesses
- 15% range – doing extremely well, especially if the business has scale
I hope these three financial ideas for growing businesses are as beneficial to you as they are to me. Thanks again to Greg for doing a great job.
David Cummings on Startups 