How Finance Works: The HBR Guide to Thinking Smart About the Numbers
by Mihir A. Desai
This is an outstanding book which presents some complicated topics in a clear, well-organized manner with real-world examples. The author, a professor of finance and taxation at Harvard Business School and Harvard Law School, includes some sidebar commentary from two CFOs, an investment banker, and a hedge fund manager.
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Small Business Finance and Valuation
by Rick Nason and Dan Nordqvist
A finance professor and a CPA have teamed up to explain finance and risk management concepts specifically for small business, defined as assets under $5 million. They acknowledge that the objectives of small business owners often differ from those of a Fortune 500 CFO, whose focus is typically maximizing shareholder value. Freedom, peace of mind, and other quality of life issues may be more important to a small business owner. Continue reading “Small Business Finance and Valuation”
How to Build a Better Business Plan: A Hands-On Action Guide for Business Owners
by Alastair Thomson
One of the primary benefits of a business plan is “finding a business model that works.” Alastair Thomson, an accountant and experienced C-level executive, guides you to think from a lender’s or investor’s perspective, whether or not you are seeking outside financing. From their side of the table, would you find your business compelling?
The completed plan becomes your “roadmap” for execution. “With the right business plan, you do your thinking up-front. You know how to take advantage when new opportunities come your way and you know exactly what problem needs solving if performance veers off-course.” Thomson encourages planning for three scenarios: best-case, worst-case, and likely outcome. “The biggest danger for a pessimist is under-resourcing their business.” Continue reading “How to Build a Better Business Plan”
After posting more than 250 book reviews, I decided to try something new: an author interview on YouTube. I am grateful to Alastair Thomson for graciously sharing his wisdom on managing small and medium-sized businesses. Alastair has an accounting background, but this conversation is not about debits and credits. It’s about improving your business from the perspective of an experienced CEO and CFO. We cover cash flow, profit, customer experience, metrics, business ethics, marketing, quality, continuous improvement, front-line employees, growth, margins, inventory, and receivables.
An interview with Alastair Thomson, author of Cash Flow Surge
July 16, 2020 – 1 hour – Book Review – Amazon
Transcript
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Cash Flow Surge: 101 No-Cost and Low-Cost Fast-Action Strategies to Boost Your Business Cash Flow
by Alastair Thomson (interview)
In college I took a course called Small Business Finance. The main thing I remember from this course is the emphasis on “cash flow, cash flow, cash flow.” Alastair Thomson is an accountant who has been a CFO and CEO of several businesses in the U.K., across variety of industries. He wrote this book for owners of small and medium-size businesses. While cash flow and profit are not the same thing, many of the ideas in the book can improve both.
The 101 chapters cover suppliers and expenses, customers and revenue, staffing and procedures, communication, insurance, logistics, contracts, and technology. Here are some snippets: Continue reading “Cash Flow Surge: 101 No-Cost and Low-Cost Fast-Action Strategies to Boost Your Cash Flow”
The Shareholder Value Myth: How putting shareholders first harms investors, corporations, and the public
by Lynn Stout
Business schools and law schools teach that the purpose of a corporation is to maximize shareholder wealth. “Shareholder wealth, in turn, is typically measured by share price—meaning share price today, not share price next year or next decade.” Lynn Stout (1957-2018), who was a business law professor at Cornell, makes the case that this is both untrue and harmful.
“United States corporate law does not, and never has, required directors of public corporations to maximize either share price or shareholder wealth… State statutes similarly refuse to mandate shareholder primacy… As long as boards do not use their power to enrich themselves, the [business judgment rule] gives them a wide range of discretion to run public corporations with other goals in mind, including growing the firm, creating quality products, protecting employees, and serving the public interest. Chasing shareholder value is a managerial choice, not a legal requirement.”
Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean
by Karen Berman and Joe Knight
This outstanding book teaches corporate financial literacy to nonfinancial employees. There are 33 short chapters grouped into sections covering the income statement, the balance sheet, cash, ratios, return on investment, and working capital. “You’ll learn how to decipher the financial statements, how to identify potential biases in the numbers, and how to use the information in the statements to do your job better.”
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Rethinking Risk Management: Critically Examining Old Ideas and New Concepts
by Rick Nason
Rick Nason challenges the status quo of risk management which mindlessly follows third-party frameworks and does too little independent thinking. He argues that risk management acts as “The Department of No” while ignoring upside risk. He envisions risk management as a strategic player in value creation rather than a cost center. Continue reading “Rethinking Risk Management: Critically Examining Old Ideas and New Concepts”
How to Think About Money
by Jonathan Clements
Jonathan Clements, a personal-finance columnist at The Wall Street Journal for some 20 years, advises how to think about work, debt, investments, and insurance at various stages of life. He puts an emphasis on preparing for retirement, starting at a young age.
“Chronologically, retirement might be our final financial goal, but we should always put it first. Amassing enough for a comfortable retirement is our life’s great financial task.” Given longer life expectancy, “we need to get ourselves on the right financial track as early in our adult life as possible, so we quickly achieve some measure of financial freedom.” Continue reading “How to Think About Money”
The Most Important Thing: Uncommon Sense for the Thoughtful Investor
by Howard Marks
Howard Marks is the co-founder and co-chairman of Oaktree Capital Management and he ranks #374 on the 2017 Forbes 400 list of wealthiest Americans. In this book he covers 20 topics: second-level thinking; market efficiency and its limitations; intrinsic value; the relationship between price and value; understanding risk; recognizing risk; controlling risk; market cycles; the pendulum; combating negative influences; contrarianism; finding bargains; patient opportunism; knowing what you don’t know; having a sense for where we stand; appreciating the role of luck; investing defensively; avoiding pitfalls; adding value; and pulling it all together.
Can you guess which one is the most important thing? Continue reading “The Most Important Thing: Uncommon Sense for the Thoughtful Investor”
The Key Point 