Posts Tagged ‘Tom Sponsel’

Does Your Business Have Any ‘Broken Windows?’

Tom SponselBy Tom Sponsel, CPA/ABV, CFF
Managing Partner

You may have heard of the “broken windows” theory, but probably in connection with politics and law enforcement. Former New York City Mayor Rudy Giuliani famously employed this philosophy in the 1990s to clean up his city.

The basic idea of broken windows, which was first introduced by George L. Kelling and James Q. Wilson in The Atlantic in 1982, is that if you let the little problems slip, like broken windows, vandalism and rampant graffiti, bigger problems eventually become insurmountable. Ignoring tiny errors or mistakes, invites ambivalence to much larger problems!!

Some years later author Michael Levine adapted the theory to the business world in his book, Broken Windows, Broken Business: How the Smallest Remedies Reap the Biggest Rewards. His take was that if you let the little things degrade in your operation, particularly how you treat your customers, it will eventually impact the entire company.

When problems go unaddressed, they tend to repeat themselves. Soon a mistake becomes standard operating procedure. That sets the bar even lower for other areas of your operations. Employees start to take less pride in what they do, impacting productivity and morale. Clients notice they aren’t getting the level of customer service they’re accustomed to, and begin to look for other partnerships.

Say you’re walking by a restaurant and you’re hungry. You notice the windows are so dirty you can hardly see inside. Would you want to go in? Or you do enter and notice there is flaking paint and chipped plaster on the walls near the cooking area. Does the grumbling in your stomach suddenly stop?

Even though these things may have no impact on the quality of the meal you receive, they send a signal to customers — that management doesn’t care about the details and makes you wonder what else are they cutting short and ignoring a commitment to quality.

Transfer the example to a professional office setting. Is the carpet in the reception area worn? Is there nobody manning the front desk, or the person there seems disengaged and bored? Do your employees dress and behave in a professional manner? When people call your office, are they put on hold for long periods with an automated message telling them, Your call is very important to us?”

If you are the owner or manager of a business, you have to take on an almost obsessive-compulsive personality when it comes to how the organization runs on a daily basis. You must manage the organization in a very meticulous, deliberate way so that any problems are quickly discovered and addressed.

Take the initiative to see your company from the perspective of a current or potential customer. Are they getting the experience they want from the engagement? Are there shortcomings, even minor ones that could be remedied to improve how they view your organization and their overall experience in interacting with your company?

The best way to determine how people see your business is to ask your customers. Reach out to them for feedback from time to time, and ask them to report flaws in what you do. Invite constructive criticism—to make your operation BETTER!! Some industries even use secret shoppers or other monitoring services to report back with unfiltered information you can use.

We can apply the broken windows idea to virtually every aspect of a business. Is your website up to date and easy to use on every platform? Is it simple for people to find and contact your company? Is the method for receiving incoming inquiries monitored constantly and professionally?

In finding the little flaws in your business – and keeping them from becoming big ones – the secret is to think about the type of brand you want to build for your organization, and then work to make it reality. Envision the customer service experience you want your customers to have, then find out if that’s what they are actually getting. As the owner– it is OK to be OCD about customer service and your customer’s experience!!

If you find there are any broken windows in your business, even teeny cracks the customer can’t yet see, fix them quickly before they become the new normal. Duct tape may keep the glass from shattering, but replacement allows the customer to enjoy the experience.

If you need any advice about how to find and fix any issues challenging your organization, please call Tom Sponsel at (317) 608-6691 or email TSponsel@sponselcpagroup.com.

 

CPA Celebration Honorees

INCPAS honors

Tom Sponsel, Emily Campbell and Ryan Hodell (l-r) were honored at the 2017 INCPAS CPA Celebration on May 12.

The Indiana CPA Society (INCPAS) held their annual CPA Celebration on May 12th. Sponsel CPA Group had several team members recognized for their accomplishments.

Emily Campbell and Ryan Hodell were recognized for successfully passing the rigorous CPA Examination!! Tom Sponsel was recognized for reaching his 40th anniversary of INCPAS membership.

We would also like to congratulate Brandon Hoge, who has also successfully passed the CPA Exam. He will be recognized at next year’s CPA Celebration after attaining two years of public accounting experience.

We are very proud of all our team members, but want to congratulate those that were recognized at this annual INCPAS event!

Should I Fire My Largest Customer?

Tom SponselBy Tom Sponsel, CPA/ABV, CFF
Managing Partner

Everyone who’s ever run a business understands the concept of having a customer who’s more important than the rest. After all, nothing happens without a sale, and no sale occurs unless there’s a customer. But a very large customer may not always be the best thing for your company.

Often we find that a business owner/manager hasn’t performed adequate analysis to see if their biggest customer is really producing the outcomes they desire. They may look at the top line and see that their largest client is responsible for a huge chunk of total revenue. What they don’t realize, is that single customer may be eating up a disproportionate share of resources and thus not having the impact on the bottom line as assumed.

It’s also not healthy when a firm has a customer so big that they are economically dependent on them. When this happens, we even see the customer starting to dictate policies, procedures and prices. They monopolize resources and hinder the ability of a company to grow and evolve. Soon your business becomes a mere extension of their business. They many times become a barrier to growing the enterprise with new customers, even some which may have greater bottom line potential impact!

The corporate world is littered with people who built a great company, but depended on a single client for 60 or 70 percent of their revenues. When that went away …the firm floundered.

Leaders should strive to have a customer base that is large and diverse enough, that the sudden loss of any single customer would not threaten their continued viability as a going concern. Always preserve your independence to the point you have the freedom to “fire” your biggest customer, if the relationship is no longer mutually beneficial.

It’s easy to become bedazzled by a big client. You enjoy the prestige of partnering with a high-profile company, and the numbers on your gross revenue spreadsheets are eye-popping.

But when is the last time you performed a gross profit analysis, looking at not only sources of revenue, but how much you are spending to serve them? Explore beyond the topline numbers to reveal the true cost of having them as a customer. Are there other initiatives you’ve been wanting to explore, but your team is so monopolized there isn’t time pursue them?

There’s nothing wrong with having a big client who generates profits for your business. But a prudent business leader will look at the longer term, and manage clients so as best to perpetuate the sustainability of your own organization, including your overarching mission and the welfare of your employees. You want every relationship between your company and its customers to be win-win for both parties.

The example of one of our clients best illustrates this point. During the Great Recession, they lost a major customer and as a result a big portion of their topline revenue. But they were surprised to find that their profitability actually INCREASED! That’s because they had lost sight of how much it was costing the business to serve that one client. By being forced to explore other opportunities, they were able to make up the difference – and more.

In another case, the largest customer demanded and was provided terms which allowed payment of invoices within 75 days rather than the normal 30 days. Thus company was being “the Bank” for the large customer thus requiring the company to increase their working capital line of credit to fund the accounts receivable extended terms, thus increasing their risk and interest costs.

This is why it’s prudent to run an analysis from time to time on your customers. Take a look at not just the benefits, but also the risks of having a large customer.

If the overall profitability of a customer is not commensurate with the level of services they are demanding, or if you find yourself unable to adequately meet other customers’ needs, or if you find yourself economically dependent on the leadership of another company, you might want to consider severing or altering that relationship.

It’s better to fire your biggest customer than become beholden to them, which may stifle your own ability to GROW! Because when that happens, for all intents and purposes, they own your company as well as their own. They may squeeze your profit margins that they become razor thin, and/or demand additional services that further squeeze your profitability. You find yourself in a vicious cycle of trading dollars, but not realizing an adequate rate of return on your investment.

In every healthy business relationship, it must be mutually beneficial for both parties. Just make sure your well intended desire to hang on to that BIG customer, does not get in the way of other growth objectives of your business!!

If you need any advice about how to analyze your customer profitability, please call Tom Sponsel at (317) 608-6691 or email TSponsel@sponselcpagroup.com.

Employee Spotlight – Tom Sponsel

Tom SponselAfter 40 years in public accounting, Tom Sponsel is a fixture in the Central Indiana business community. He has helped countless people achieve their personal and entrepreneurial dreams.

Nearly eight years ago, he had the idea to launch a new kind of CPA firm, gathering a team of trusted professionals with a diverse set of skills and unified in the mission of providing clients not just financial acumen, but executive-level counsel to bring more value to their endeavors. Tom is proud of the fact that in most cases, our clients become friends, the ultimate endorsement of a trusted relationship.

Under his leadership as Managing Partner, Sponsel CPA Group has been recognized as one of the fastest-growing firms in the Midwest. Tom provides comprehensive strategic advice to corporations, family-owned and closely-held businesses and nonprofits at every stage in their growth cycle. He is also recognized for his experience in succession/estate planning and mergers & acquisitions.

In addition to being a CPA, Tom is Accredited in Business Valuation (ABV) and Certified in Financial Forensics (CFF), and provides expert testimony in legal proceedings. He often makes public/media appearances, has been profiled in The Indianapolis Star, and has received awards and professional acclamations, for which he is humbled.

Tom’s lifelong passion for community service has become a core staple of the firm’s culture. Tom and his six siblings are very proud of their heritage of growing up on the near-eastside of Indianapolis. He has held many volunteer positions or donated his time to numerous community endeavors, including the Catholic Community Foundation, Arsenal Tech High School, St Philip Neri Parish & School, St. Vincent Health, Perry Township Schools, the Indiana CPA Society and the Archdiocese of Indianapolis.

He takes great delight and comfort in his wife of 42 years, Barbara, their two grown children and five grandchildren. When he’s not working or volunteering, Tom likes to read – especially business profiles and self-improvement books – watch the Colts and Pacers, and play with his grandkids, who “make the world a lot more joyful.”

“Clearly the last eight years have been the most exciting times in my professional life. We’ve worked hard to get here and enjoy the success that we have,” Tom said. “I think a lot about the promising future that lies ahead of us, and cultivating the people who will take us there. I get a great deal of personal satisfaction in seeing young people recruited out of college, join the firm, progress and grow into leaders.

“We truly do it all as a team. We all work together in a very unselfish way, and that’s been the key to what we’ve achieved — TOGETHER!!! … and WE HAVE FUN EVERYDAY!!!

CEO, Where Is Your Time Best Spent?

Tom SponselBy Tom Sponsel, CPA/ABV, CFF
Managing Partner

(Part 1 of 2)

When you’re the leader of an organization, one of the most important daily struggles is to determine where to spend your time. As a CEO (or whatever title you hold), it’s your duty to take a broad view of the company, recognize untapped opportunities and create the strategy that leads to greater success and prosperity.

Too often we fall into the trap of working “in” the business instead of “on” the business.

This is especially true of small- and medium-sized organizations, where the operations may require more direct oversight by the top leader. Sometimes this sort of personal intervention is necessary to make sure the “trains run on time” — keeping customers happy, making sure employees are motivated and on-task, products and services are being delivered on time, etc.

But if you’re the sort of CEO who wants the business to grow and evolve beyond where it is today, you should set aside time on a regular basis to take a step back and look at the bigger picture. Preferably at least once a week, reserve a portion of your schedule to assessing your processes and systems. Are they working the best they can?

It’s a matter of being a proactive leader instead of a reactive one. A reactive leader soon finds themselves constantly responding to crises large and small. Their days are so filled with responding to critical situations that there’s never any time to plan and strategize so these sorts of emergencies can be avoided in the first place. You become a CEO that focuses more on fixing the past errors, rather planning for your future successes.

A proactive leader devotes time to looking ahead, finding ways to make the company better and more efficient. They recognize weaknesses in their operation that could lead to strife, and endeavors to improve them so the worst scenario doesn’t come to pass.

When you have superior systems in place, most crises can be resolved before they happen, or any damages mitigated after the fact.

When a leader acts in this way, their team members will recognize them as a forward-thinking individual who strives to create a culture of continuous improvement and learning. You’ll find yourself with a stronger, more loyal workforce. Your whole company will be energized to focus on the FUTURE and your success!!

It can be very hard to set aside this time to planning. Most leaders of an organization already put in a lot of hours at the office, so it can seem like a zero-sum game. But if you make that effort to spend even a few hours a week toward analysis and planning, the rewards will come back to you multiplied many times over.

From a time management perspective, think of this not as a cost but as an investment toward a better future.

As a CEO or manager, your primary duty is to focus on creating the most value you can bring to your organization. By coming up with a vision for change and improvement, and working to implement it within your business, you will find this the best time you can spend.

In next month’s article, we’ll talk more about turning your vision into reality.

If you have any questions or comments, please contact Tom Sponsel at (317) 608-6691 or email TSponsel@sponselcpagroup.com.

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