David Hill's WebLog

With the dawn of this new year it's hard for me not to regard 2010 as the start of a new decade. Statements about there being no "year zero" notwithstanding, I, as an information systems professional who worked on the colossal Y2K programming effort, regard the year 2000 as the beginning of the new millennium. So for me, this is the start of a new decade.

It's also hard for me not to be optimistic about the year and decade ahead.

I'm not talking only about economic indicators and such. While there are bright spots there, my optimism is largely based on the general mood and comments I've picked up on in the past few days. There seems to be renewed energy and a dedication to making good things happen. And in my experience, optimism can generate its own momentum. If we focus our attention on what works and simply stop expending energy on what doesn't work, we'll see improvements in everything we're involved with.

For me, an optimistic attitude goes well beyond the personal "feel good" realm - it has become a bona fide business strategy.

So… work hard, keep good records, and enjoy yourself along the way.

Happy New Year!

As one would expect, the Business Journal reports on the bigger national/global corporations and publicly traded firms, but it also covers small and medium businesses very well.  That's important because SMBs are HUGELY important to the regional economy.  This fact has become even more obvious since mid -2008 when the national economy began to stumble.

My sense is that the immediate general health of the small business economy will largely depend on the ability of the owners of those businesses to manage cash flow and costs, and generally run a tight ship. My concern is that a lot of owners don't have time or don't know how to do that. That's why I've been positioning Amplus to be more inclusive with the services it offers to small businesses.

By providing essential operations support (bookkeeping, GL, software training, for example), I hope more small businesses will survive and endure.  Then they can turn their attention to strategic financial management. That's what will enable them to grow and thrive.

As a member of the Portland Business Alliance (Portland's Chamber of Commerce), I have the opportunity to meet a lot of interesting people. At a recent meeting, I exchanged business cards with a banker who loans money to businesses. On the back of her card was a "Business Loan Application Checklist", a brief reminder for how to prepare when applying for a loan. Putting such information on a business card is a great way to get small business owners thinking about their goals in the context of a longer time frame.

It's easy to find similar checklists; they're all over the Web. Nearly every one contains the item, "Business Plan". A business plan, including a complete set of projected financial statements, is certainly essential for getting a loan. But I believe the planning process is equally, if not more important. Such an exercise brings the hopeful business owner face-to-face with one of the central realities of running a business: that "flying by the seat of your pants" is a very poor substitute for forecasting likely outcomes based on reasonable assumptions.

I've heard business people say that creating a business plan is difficult. Thinking through the various aspects of a business operation can seem daunting, especially
the first time. But it pales in comparison to being caught off guard by events that would have been predictable had one gone through the exercise of writing a plan. Maybe it would help to think of it this way: business plans are for bankers, business planning is for owners.

This really is NOT a nostalgia piece about "back in the old days", but…

In the mid-eighties when I first started consulting/programming, I noticed right away that most of the people who were hiring me were the CFOs and accountants of their companies.  Most of the training I provided and programs I wrote related to accounting and finance systems.  (That's not too much different from today except that now I actively pursue that type of work.)

When I returned to business school to get my accounting degree, one thing really struck me about the majority of projects I've done for small businesses: they are concerned mostly with looking back, not looking forward.   Maybe this is because when most people think about accounting they picture adding up where the money came from and where it all went and counting what's left over.  I've developed plenty of systems in which reporting on past financial performance was a key component.

My point is this: most small businesses operators do nothing more with their financial information than use it to report on past performance - always to the IRS and sometimes to themselves.  Reporting on "the old days" is important (a requirement, really) but we cannot change those old days - they're done.  The "new days", the upcoming quarters and fiscal years, are the only thing businesses have any control over.

Rarely do I encounter small businesses that prepare any sort of financial projections and forecasts and the ones that do tend to be more successful than the ones that don't.  But the most ironic thing is that systems for reporting past performance are likely to be more complex and expensive than those for preparing forecasts and projections.

Go figure.

Business.  Information Systems.  Accounting.  Software Development.  Financial Analysis.

For me, these are all part of the same continuum.  Over the years, my software projects have largely focused on designing and developing financial systems of one kind or another. Even though that can cover a lot, it's become somewhat of a specialty.
It occurs to me that this particular field I'm in needs its own name.

I frequently find myself at some business function and someone will ask me what line of work I'm in.  I start with the software development, and I mention that it usually has some connection to financial systems. Then I throw in accounting because I have an accounting degree.  And don't forget e-commerce because that's been a significant part of my work.  But to tell them all that takes a bit of time.

Everyone knows that a chemical engineer, for example, combines knowledge of both chemistry and engineering.  Or that a food writer doesn't just write but writes about one subject in particular: food.

So we need a convenient name for someone who develops software that's specifically designed for finance and accounting operations.  And add to that information systems for health care finance and also business processes.  We need a term that wraps all that up in one tidy package.  So when someone asks, I could just say, "I'm a -----." and they would immediately know.  It would make it much easier to explain what I do.