By Lary Kirchenbauer
(Editor’s note: The editorial and opinion pages of the Business Journal today welcome a new column, “Building a Business” by Lary Kirchenbauer, a senior consultant with Moss Adams LLC in Santa Rosa. The practice leader for Moss Adams’ Business Advisory Group, Mr. Kirchenbauer has 35 years of experience in both advising and running businesses. Mr. Kirchenbauer has raised more than $150 million for emerging businesses, working extensively with the consumer, food processing, wine, manufacturing and professional services industries. His commentary on businesses and the challenges they face is scheduled for every other week.
“There is nothing more exhilarating than to be shot at without result.”
Winston Churchill could have been an entrepreneur to have so eloquently dramatized the thrill associated with building a business.
Whether you own it yourself or share it with partners, it’s yours to build, to mold according to your dreams and values. You may be building it from scratch or seeking new opportunities to jumpstart a mature company. In either case, we hope this new column will help you on this journey.
Why do you have your own business? Independence, many will say, the chance to run my own show. Be my own boss. Do things my way – maybe because you’ve seen them done the wrong way and you can do better. Maybe it’s to make a boatload of money, retire early and convert the business into a boat, a big one with a chef and crew and a personalized map of the Mediterranean.
When you look deeper, however, you realize that it’s not about ego or money after all, but about achievement and performance. And if you’re building a business, the success of the business must be the foundation of ego gratification and financial security. Only from that platform can you achieve the goals you’ve set for you and your family.
The thing is, you’re not the first one to take this journey. Millions have come before, some of whom were blessed with extraordinary success, others of whom faced catastrophic results. The purpose of this new column is to offer practical advice to help you both avoid the pitfalls and exploit the proven lessons of the successful business.
We’ll cover a wide range of issues, starting with strategic planning. Did I catch you rolling your eyes? You don’t need to, because it’s actually a much simpler process than you’ve been led to believe.
Starting with the next column, we’re going to work to demystify it so you’ll embrace it as a fundamental instrument in your toolkit.
In the meantime, consider the last time you saw a successful construction project without a blueprint. Never.
During our journey together, we’ll also talk about how to apply sound principles of corporate governance to strengthen your business. We’ll also explore the back rooms of capital strategy and learn how to evaluate debt vs. equity and long-term debt vs. lines of credit. What is mezzanine debt, and why should I care?
Of course, you’ve got to get the right people on the bus and get each of them in the right seat.
Yes, my friends, it’s all about the people. Real estate pros chant “location, location, location.” We should bellow “management, management, management” from the peaks of Kilimanjaro. Maybe “leadership, management, management” but some variation of “It’s the people, stupid!”
Managing cash is key
Where’s the cash? My accountant said my business is profitable but where’s the money? Business is good, it’s up 20 percent over last year … but where’s the cash? We’ll talk about profits vs. cash, how to find the cash and how to create more of it.
By now, you may be asking, “What is my perspective on it”? Let me try to answer that by asking you to imagine a large conference table. Around it sits a CEO, COO and CFO along with a commercial banker, an investment banker and a venture capital fund manager. Others include an owner, a buyer, a seller and an investor along with a shareholder, partner, employee and general know-nothing.
Over 35 years, I’ve sat in each of those chairs. I’ve learned a lot, on some days more of it from pain than pleasure, and it’s those insights I’d like to share with you from a broad, general business perspective.
Please join me on this journey every two weeks. I encourage you to contact me at the e-mail address below to extend our conversation. Ask questions, provide feedback, challenge these ideas or offer better ones. Participate in our determined effort to uncover the insights of successful business executives to make your journey the most promising professional experience of your life.
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