Pet Care Services Bankrupted, Now What? Fertilizer!
November 8, 2011
Review The Business Plan OR Call For A Pitchfork
March 15, 2012

Build A Spending Plan OR Purchase A Shovel Today For The Poop That Will Come Tomorrow

Last week we talked about the Pet Care Service Association bankruptcy, dog poop and our response. This week we will begin the conversation on what we learned from PCSA and how we can turn poop into fertilizer for our own businesses.

Lesson 1 – Plan, Plan, Plan! OR Buy A Shovel

This seems like a “no brainer” – have a budget. However…..that is Really easy to say and Really difficult to accomplish! In a business environment, just like our personal finances, it seems that there is always a new “emergency” that requires our money. Then there is the “head in the sand” syndrome. We know that the finances need to be addressed but either the fear of the process, or “we are to busy”, or “I’ll do it later” or name your favorite excuse, keeps us from completing this one task. And sometimes we make a conscious decision to take what monies we have and invest it back into the business without a financial plan. Than the poop begins to pile up and we are looking for the “shovel”.

Unfortunately all these excuses or reasons undermine the business. In some ways we saw this from afar at PCSA. The one statement that continues to come to us from PCSA members is, “I knew they were having financial problems, so I shouldn’t be surprised”. But it seems that we were surprised. I like surprises but not the “no money in the bank” surprise. So lets look at the steps we need to take with our own finances and began the plan for long-term sustainability.

Troubled-Finances-Buget-broken-piggy-bank-on-sick-leave1First we need to have a picture of where we truly are today. This requires pulling out the bank statements and all the accounts payable. If you are using a program like QuickBooks and you are reconciling the accounts every month, this process is really easy – just pull an income/expense report. If you are doing the finances using a ledger this process may take more time. Whatever way you use the end result we are trying to achieve is “how much money do I bring in and where is all the money going”. You might find that your piggy bank needs immediate attention as you are “breaking” the bank every month to make ends meet.

When I was a financial counselor this “where is all the money going” was the most difficult piece. Looking at the income and identifying the bills that needed paying was the easy part, it was the cash withdrawals that seemed to be difficult to narrow down. Money was spent and we had no idea where it went. So the long process of writing down every expenditure started. This continued for an entire month. At the end of the month we would categorize all those cash expenditures and a new picture would began to develop.

Normally I would say this should not be an issue for a business – but sometimes our petty cash box and/or the “till” becomes the major leak in our businesses. Sometimes it is poor planning also known as budgeting that causes our problems. So be honest with yourself and really track the money for one month.

Budget-Crisis11step is to build a “Spending Plan”. Some people call it a “budget” – but I prefer “spending”. Plan to “spend” every penny you bring in. Yes every penny! Spend some on savings, spend some on future repairs or additions or remodeling – but spend it all. I know, I know, I know…. some of you are saying “Carmen I spend all of my money now and thats the problem!”. Spending money as the bills come in or payroll has to be paid is different than spending the money deliberately. Thats what we want to achieve: deliberate spending. If we know what monthly operating expenses are we can plan for it and find ways to put money back for the future of the business. You might even find that you have been overspending. I’ll give you an example…

At the Unconventional Convention this year, we had a member who was spending $3500 a month for a professional cleaner to come and clean the facility. When we got to the bottom of the story we discovered that the employees did not want to clean and so it was hired out. Fear of losing employees and increasing the unemployment insurance was keeping them from building proper job descriptions. We encouraged them to tell the employees what their jobs were and if they didn’t want to comply, well, they could leave. One conversation $3500 per month = $10,500 per quarter = $21,000 every six months = $42,000 a year in savings! Now thats what I call cleaning up the poop!

Third step – revisit the spending plan often. At first your reviews may be weekly, then bi-weekly, then monthly. You may find that you can move to quarterly reviews fairly quickly. Just like your business plan, a spending plan is meant to be dynamic. And that moves us to next week – your business plan.

I invite your comments and conversations. How is your financial plan coming along? And what about the poop that comes with poor Business Planning? Come back next week while we turn more poop into fertilizer for our businesses.