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Fast and Furious: Tips and Strategies for Fast Growth
Dennis Fortnum
Canadian Managing Partner, KPMG Enterprise
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Companies constantly seek innovative ways to answer some of the key questions around productivity. What steps can we take to improve financial resource utilization and increase productivity in this tough economy? What common missteps can put a damper on that process? What are the best ways to optimize revenue?
Certainly there are some innovative approaches to these questions, but there are some obvious ones too. While some solutions may seem like old business, implementing them-if we are to take the example of many Canadian businesses to heart-is apparently not. When a thing is so obvious that nobody does it, it can pay off to be the first in line to take another look.
Perhaps it’s time to identify easy-to-win opportunities, beginning with creating a more cash-conscious organizational culture. That may seem obvious, but then why isn’t it done more often and more effectively?
For one thing, culture change is a process and not a procedure. It’s simple to pressure clients to pay while holding off on an invoice or two of your own; it’s a challenge, however, to develop a culture where everyone in the organization-end-to-end and top-to-bottom–understands that their individual role and day-to-day actions have a direct impact on financial productivity. True culture change requires planning and multi-stage execution, and many companies-though they clearly see the end value-either lack the internal expertise or do not feel that the time and expense to get there is worth it.
Even at the procedural level, there are straightforward but often overlooked steps that can enhance your financial position immediately. A more valuable way to look at billing, for example, beyond the temporary solutions of hounding clients and stalling creditors, is simply billing promptly. It’s amazing how many companies let this slide, and in doing so limit their access to working capital.
Say you complete a service or ship a product on the 10th of the month, but don’t bill for it until the end of the month, or even later. It does not get into accounts receivable on a timely basis and an extra month goes by before cash is collected. In fact, companies should review receivables for significantly aged accounts. If you’re a small or mid-sized business whose large clients have 30 or 60-day payment policies, make sure you stay on top of that cycle. If you pay clients early and clients pay you late-well, that result is obvious.
The list of often-overlooked measures goes on. Create a robust weekly cash flow forecast that’s reviewed by key management to understand where and why things are occurring; be sure to account for variables like one-time items and seasonality and extend the forecast out for at least two months, ensuring that there is time to deal with unforeseen issues. Take advantage of early payment discounts-or ask for them; extending payables should be a last resort. Also, put the proper controls and processes in place so working capital isn’t tied up in excess inventory. This doesn’t have to be a full “just-in-time” system, but managing excess and potentially obsolete inventory will certainly increase financial productivity. Many off-the-shelf accounting systems have monitoring reports embedded in their systems and companies should look at whether they are using these tools effectively.
Of course, innovation is still a critical driver for Canadian entrepreneurs, and there’s plenty of support for strong ideas, though it’s another area where businesses aren’t taking enough advantage. All levels of government earmark hundreds of millions of dollars for innovative start-ups. The Ontario Media Development Corporation, for instance, allocates money to all kinds of companies, including video game developers, internet ventures, manufacturers and other service businesses. Many companies may not even know they qualify.
One of the key factors in companies ignoring such free advice and financial aid is simple lack of knowledge and experience. Canada thrives on the ability of its entrepreneurs and start-ups, but without a practical knowledge resource in the company, information around government programs, for example, can be time-consuming and overwhelming if you don’t know what you’re looking for. There are however sites that make this process much simpler such as The Funding Portal, and businesses of all sizes are encouraged to make use of this service.
When it comes to implementing the right productivity measures, however, the “obvious” can hide in plain sight, lost in the search for innovative ideas and new approaches that, for some core business and operational processes, just don’t exist. And sometimes it’s achieving the obvious-reaching that end point that’s clearly where you want to be-that’s difficult.
Canada has money for innovation if companies take the time to seek it out. Sometimes, however, straightforward measures like proper billing procedures, prompt collection of receivables and inventory oversight are the order of the day, yielding smoother operations, increased cash flow and the means to drive organic growth.
 Articles in this issue
Managing Growth is About Doing the Math
Read the article
Funding Growth through Working Capital
Read the article
Buying a Business? – Check the Closets for Tax Skeletons
Read the article
The Devil is the Details When Financing for Growth
Read the article
On Demand
NATIONAL WEBCAST:
FuEL Your Business: Tips and Strategies for Growth
Listen to special guest Ian Portsmouth, Publisher and Editor of PROFIT, Canada’s best-read publication for entrepreneurs as he provides insight, tips and strategies to tackle the top opportunities and issues facing Canadian entrepreneurs.
Recommended Reading
Who are Canada’s best Young Entrepreneurs? 
KPMG Enterprise joined PROFIT Magazine for a 2nd year of the Future Entrepreneurial Leader Awards, open to business owners under the age of 30. Over the summer months, the top 20 young entrepreneurs were selected and will be revealed in the December 2012 issue of PROFIT Magazine.
Winners of the 2012 FuEL Awards will receive:
- A profile on the FuEL Awards website and an extensive editorial package in the December 2012 issue of PROFIT Magazine and at PROFITguide.com
- A chance to be named FuEL Entrepreneur of the Year
- A one-day full brainstorming business session with professionals from KPMG Enterprise
- A national accolade that can attract the attention of future investors, employees and customers
- Also, the applicant who attracts the most votes from the public will be awarded with the "People's Choice" award, consisting of a complimentary pass to PROFIT's annual Growth Camp.
Watch for the next edition of PROFIT Magazine and at PROFITguide.com for the unveiling of Canada’s 20 Future Entrepreneurial Leaders.
Issues Monitor: Technological evolution – driving the emergence of futuristic retail concepts (September 2012)
 Driven by technology and evolving consumer demand, the shopping experience has been transformed. With the variety of shopping-enhancement options available today, the customer experience is progressively shifting from being product-centric to customer-centric.
>> Read more (pg 17).
Think That’ll Never Work? Think again.
 KPMG Enterprise is seeking stories of perseverance and adversity for consideration in the next edition of That’ll Never Work. Business lessons from successful Canadian Entrepreneurs.
Visit www.thatllneverwork.ca to share your business lessons and submit your story.
Order your complimentary copy of Canada’s number one nonfiction best seller That’ll Never Work.
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KPMG Enterprise™ Leadership Series
KPMG Enterprise and the Richard Ivey School of Business have partnered again to bring the KPMG Enterprise Leadership Series, a customized development program open to business owners, CEOs, and CFOs of 40 private companies.
The session is an intensive day that will focus on how to build a strategic capability that will give you a competitive advantage in your business by applying the latest strategic insights and approaches. You will experience Ivey’s case study methodology, exercises, structured debates, and class discussion to facilitate learning from each other and stimulate your thinking as we explore what it means to create a coherent, realistic and forceful strategic business direction for your company’s future.
To learn more about the program and request an invitation to attend a session in your city, contact Donna Trifunovic at (416) 228-7142 or dtrifunovic@kpmg.ca.
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PRIVATE COMPANY SEMINAR SERIES
The Private Company Seminar Series - brought to you by KPMG Enterprise - features guest speakers and subject matter experts on business issues of specific importance to owners and executives of privately held companies in Canada. Held in different cities across the country, our complimentary interactive sessions can provide understanding to various approaches helping you to proactively capitalize on opportunities and address today’s business challenges. The Private Company Seminar Series will keep you up to date regarding hot topics, business trends and legislative changes that impact your operations.
KPMG Enterprise is dedicated to sharing knowledge and experience to help you enhance the growth and profitability of your business and mitigate your risks.
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