Do I Need You

Who Decided?

I was referred to a company that was having its banking relationship called - i.e. the bank wanted out. I reviewed the financial statements and found the real estate had been put in the company within the past three years - why? I asked the owner. Because my accountant told me to - so the accountant made the financial decision. I asked the accountant why he told the client to put the real estate into the business - because the banker told us we had to. So the banker made the financial decision. I looked at my client and said - but the banker is calling your loan. Stunned silence. We were hired and fixed things - but it took longer and cost far more than it should have.

Just this one thing....

Company owner called us to "fix a receivable problem". Reviewing the financial data, the receivable problem was really a cash flow problem, that stemmed from a customer credit problem, that started with a large bad job, that included equipment purchases on a working capital credit line, unearthing a weak working capital position that revealed an inadequate bank lending structure. Just a "receivable problem"? We fixed ALL the issues and helped this company soar in value.

Take the Test

* Do I have the optimal financial structure - balance sheet, cash flow?

* Is my business regularly analyzed?

* Is my banking structure adequate and proper?

* Do I understand my bankers' needs?

* Do I have a five year operating and financial plan - tested for risk?

* What financial risks affect my business and am I covered?

* What is my Z score?

* What is my sustainable growth?

* Are my customers, who likely make up my largest asset (AR) in good financial health?

* Do I know my working capital levels?

* Is my working capital cycle increasing or decreasing?

* Do I have a cash flow plan?

* Are my long term assets matched with my long term liabilities?

* Do I know my breakeven level?

*Are my personal assets exposed to lenders or other creditors?

* Do I know my company's value?

* Do I know my cost of capital?

* Do I know my return on equity?

* Am I planning the last three items?

* Do I know my sources of liquidity - are they stable?

* Do I pay out the least I need to outsiders including taxes and other creditors?

* Do my financial decisions match the type of venture I am?

* Am I being compensated for the risk I am taking?

Test Results

So how did you do? Seems like a long list - but these are only a few of the items we cover, but they are the major ones. If you have them all covered - you probably have a good handle on your financial situation and I thank you for visiting my web site.

On the other hand, like most business owners, if you don't have them covered or you indicate someone else has them covered - cpa, attorney, investment advisor, banker, etc. - you could be in or headed towards trouble (or at least lower value for your risk committed). Don't misunderstand, there is a vital need for all your professionals - but using them for their expertise will improve your company.

A final thought

A professional who started a business remarked that he had no training in financial matters and did not know where to get it -he was happy to have us. We straightened out his balance sheet, fixed his banking and offered ways to reduce risk - he opted for a few of our recommendations. We saw trouble coming and recommended more drastic measures. But one day he remarked "what am I going to do with you - how am I going to use you?" (he had a new cpa and a "management consultant"). Stunned - we removed ourselves (a joint decision) - operating losses tripled and financial trouble increased substantially.

So what are you going to do with us?

Sheehan Financial Advisors LLC

A member of The Sheehan Financial Group