Unlocking Business Growth: Strategic Financial Insights with Jason Kruger

In Episode 73 of the Andrew Holland Podcast, Jason Krueger, President and Founder of Signature Analytics, joins host Andrew Holland to share his expertise. Jason discusses the importance of robust financial infrastructure for small to mid-market companies and shares strategies to enhance cash flow, profitability, and business valuation. 

Tune into the podcast episode here:

 

Or, read on for expert insights on the essential role of accounting and financial infrastructure in driving business success.

Understanding the Market Need: How Signature Analytics Started

Jason Krueger saw a gap in the market back in 2008 while working as a Senior Audit Manager at Deloitte. He noticed that small to mid-market companies often struggled with their accounting and financial infrastructure. 

These businesses viewed accounting and finance as a necessary evil—focusing on paying bills, invoicing, collecting cash, and filing taxes. However, as they grew, they faced significant challenges due to a lack of visibility into their financial numbers and poor decision-making capabilities.

What Signature Analytics Does

Signature Analytics provides top-tier financial talent to businesses in a flexible, scalable manner. Instead of hiring full-time CFOs or controllers—who can be expensive and possess a limited skill set—Signature Analytics offers part-time CFOs, controllers, and staff accountants. This approach fills the gaps in a company’s financial team, providing leadership and visibility to help them grow.

The Critical Role of Accounting and Finance

Accounting and finance might seem tedious, but they are the backbone of business success. Many businesses fail within the first five years, often due to inadequate financial management. So, how can business owners avoid this fate?

Understanding cash flow and profitability is paramount. As businesses expand, managing cash flow becomes increasingly complex. Accurate financial insights are crucial for making informed decisions that drive growth and sustainability.

Steps to Business Growth

There are several key steps for business owners looking to grow from $3 million to $10 million in revenue:

Cash Flow Management

Understanding and projecting cash flow is the foundation. A 13-week cash flow projection helps businesses manage their finances effectively and make strategic decisions.

Profitability Analysis

Evaluating profitability on a job-by-job basis is crucial. This helps in understanding which projects are profitable and which are not, allowing for better future bidding and improved margins.

Expense Management

Analyzing operating expenses ensures that every cost adds value to the business. Streamlining expenses can significantly impact the bottom line.

Long-Term Goals

Planning for long-term goals, such as maximizing business valuation for a potential sale, is essential. This involves understanding industry valuation metrics and working towards improving business value.

Maximizing Profitability with Project-Based Fees

One of the core strategies discussed involves evaluating the time it takes for teams to complete tasks under fixed project fees. By thoroughly understanding the labor involved, businesses can more accurately assess the profitability of their engagements. This insight is essential not only for current projects but also for future bids. Knowing how profitable past projects were allows businesses to bid more strategically on future ones, aiming for higher margins and better financial outcomes.

Setting and Achieving Margin Goals

The importance of setting clear margin goals for each project is emphasized. Once these goals are established, they become the benchmark for future bids. By consistently aiming for these targets, businesses can ensure they are maximizing their profits. This approach helps in creating a healthy, profitable business that can improve cash flow, sustain margins, and ultimately enhance business valuation.

Working On vs. In Your Business

As businesses grow, it’s crucial for owners to transition from working in their business to working on their business. This shift involves focusing on strategic growth, building a capable team, and establishing robust processes. By doing so, business owners can delegate operational tasks and concentrate on making high-level decisions that drive growth and profitability.

Top Questions Business Owners Should Ask

To effectively navigate growth and transition in their businesses, business owners should ask themselves several key questions:

Why Did You Start Your Business?

Understanding the core motivation behind starting the business helps in aligning future goals. Whether it was to pursue a passion, fill a market gap, or achieve financial independence, clarifying this purpose can guide strategic decisions and provide long-term motivation.

How Do You Plan to Scale?

Scaling a business requires careful planning and execution. Considerations include expanding market reach, increasing production capacity, and maintaining quality standards. Developing a scalable business model early on allows for sustainable growth without compromising efficiency or customer satisfaction.

Do You Understand All Aspects of Your Business?

A comprehensive understanding of every facet of your business is essential for effective leadership. Beyond your core expertise, familiarize yourself with sales and marketing strategies, operational workflows, financial management principles, and industry trends. This broad knowledge base enables informed decision-making and proactive problem-solving.

Are You Ready to Delegate?

As your business grows, delegating responsibilities becomes crucial for maintaining momentum. Building a competent team and establishing clear processes empowers employees to handle daily operations effectively. This shift allows you, as the business owner, to focus on strategic initiatives, innovation, and long-term planning.

The Importance of Hiring the Right Talent for Business Growth

As businesses scale and expand, the strategic hiring of key roles such as sales and finance becomes paramount. Here’s a closer look at why these roles are crucial:

Sales and Business Development: Skilled sales professionals are instrumental in acquiring new customers and expanding market reach. They not only bring in new business but also cultivate relationships that drive revenue growth over time. By understanding customer needs and effectively communicating the value of products or services, they play a pivotal role in the company’s bottom line.

Accounting and Finance: A competent finance team ensures the financial health and stability of the business. They manage budgets, oversee financial reporting, and ensure compliance with regulatory requirements. Their strategic insights and data-driven decisions help optimize financial performance and support long-term business planning.

Strategic Impact: Hiring individuals who excel in these roles contributes to the overall strength and resilience of the organization. They bring specialized skills and knowledge that are critical for navigating competitive markets and achieving sustainable growth. By investing in top talent, businesses can build a robust foundation that fosters innovation, operational efficiency, and strategic expansion.

Importance of Financial KPIs

Cash Flow Management

Cash flow management means keeping track of money coming in and going out of your business. It’s crucial because it helps ensure you always have enough cash for daily needs and investments.

Accounts Receivable Turnover

This shows how quickly your business collects money from customers. Faster collection means better cash flow and less need to borrow money.

Accounts Payable Management

Managing accounts payable involves paying your bills on time to maintain good relationships with suppliers. It helps you negotiate better prices and receive timely service.

Gross Margins by Product/Service Lines

This tells you how much profit each product or service makes after subtracting its costs. It helps you focus on what’s profitable and set prices correctly.

 

Understanding these financial KPIs helps you make smart decisions to keep your business healthy and growing.

Role of Balance Sheet

The balance sheet, along with the income statement, shows your business’s financial health at a specific time. Here’s why it’s important:

Accurate Financial Reporting

A clear balance sheet helps you report your finances accurately. It shows how much money your business has, what it owes, and what it owns.

Strategic Planning

It helps you plan for the future by showing your financial position. You can decide how to invest or save money wisely.

Tax Implications

Understanding your balance sheet helps with taxes. It shows what you owe and what you can save on taxes, following the rules.

Interdependencies with Income Statement

Changes in one statement affect the other. This is important to keep your financial reports consistent and correct.

 

Understanding your balance sheet helps you make wise financial choices that keep your business strong and ready for opportunities.

Learn More About Signature Analytics

At Signature Analytics, we support our clients’ day-to-day accounting functions, including:

• Invoicing
• AR management
• Bill processing
• AP management
• Forecasting
• Reporting
• Monthly close
• And more…

Ready to get started with outsourcing your day to day accounting services? Talk to an expert today.