Featured interview - Jim Biehl

Biehl

Jim Biehl is a shareholder with Clayton and McKervey.

To read a blog post about this topic, go here.

Jim Biehl, Clayton & McKervey: CPAs for Systems Integrators

ADDEDTuesday, December 10, 2019

  • Q
    What’s your favorite part of the job?
    A
    I love being out, talking to the clients. It’s fun. Plus, it gives me information to understand what they’re doing, why they’re hiring, what’s happening, and I can advise them down the road. But nothing is more enjoyable than to get a call from a client you had a chance to add value or identify a problem or help them capitalize on an opportunity. That’s the fun stuff of the job.
  • Q
    Some data that indicate three in five small businesses do not have a business succession plan. Does this stat align with your experience and more importantly, why does it even matter?
    A
    I would say yeah. Two out of five have documents. What I mean by documents is they have a buy-sell document that – or they have a redemption agreement in language in their LLC operating agreement. They’ve got life insurance policies. 
    
    But almost none of them have a functional or operational aspect of a succession plan. Taking it beyond the documents to say, “All right. What happens if something happened to the owner? Where are we going eventually with this business to sell the business? What is the game plan to sell the business?”
    
    A well-documented and communicated succession plan ensures all stakeholders are protected. It’s basically an insurance policy.
    
  • Q
    When it comes to the financial side of things, what do successful companies do that others might not?
    A
    The highflyers that I have that do well, they never wait until the financial statements are issued to determine whether they made money or not. They know. There are some leading indicators. It might be the number of bids, outstanding bids, bids won, loss percentage, something that tells them on a day-to-day basis or a week-to-week basis that we’re doing well, we’re making money, we’re bringing revenue in, we’re cost-containing or we’ve right-sized the organization and it fits.
    
    So long before the financial comes out on the 15th or the day of the following month, they know that they’re making money. The successful ones never have to call the bank at the last minute to get an increase in their line of credit because they had some surprise that came up. They’ve got a structure in place, whether it be a cash flow, a weekly cash flow analysis or monthly cash flow analysis or a review of their balance sheet. They’re constantly projecting out the impact of all significant decisions, and they’re trying to get a true picture the future from their existing financial position.
    
  • Q
    What has your experience taught you about company culture?
    A
    My experience is most companies; they don’t really take the time to clearly understand what their culture is. It takes time for the team to self-reflect and document who they are and what they value and what they’re all about.
    
    You might not like it once you’ve documented or pulled back and looked at yourself and said this is what my culture is. It can be changed by training or management initiatives. Or it can be changed by hiring or eliminating employees because that alters your culture.
    
    But we found that the more successful companies, they just take the time to have a clear and realistic picture of the culture. The existing culture or aspirational, where they want to go, and it’s invaluable for them to make decisions on team members. 
    
  • Q
    In your experience, do you find that some companies struggle to be open to new ideas from outsiders in particular?
    A
    It’s just the way that we tend to reject new ideas, reject feedback. But companies need to ask themselves. Are the team members encouraged to solicit new ideas? Is there anything training to support the objective?
    
    If you want to be more positive and open to new ideas, you’ve got to set a system to train people and reward people. But my experience is that most companies really, really struggle in this area.
    
  • Q
    I’m sure as companies scale, processes and procedures become more important. Can you speak to that a bit?
    A
    Based on my experience, the lack of documented processes is the No. 1 inhibitor to growth. In other words, a company will grow to a certain size, and then hit the glass ceiling and come back down because eventually the operation will grow to a level of dysfunction that can’t be managed. It can’t be managed by individuals. You must have systems in place to allow the systems to help manage the business, not the individuals.
    
    Many times, when you start with smaller businesses, it’s the owner or the individual that started the business that is the glue that’s holding it together. You need to transition into more systems and processes as you grow to allow the organization to break through that glass ceiling.
    
  • Q
    What about successful companies’ approach to their customers?
    A
    We’ve found that the top performers are immersed in customer-focused thinking. What I mean by that is that you’ve got to see things from the customer’s perspective. But many times, what we do is we pull together as a team and identify a customer problem. And then we come up with a solution to that customer problem without ever talking to the customer.
    
    It sounds obvious. But the top performers have figured out it’s critical to interact with the customers and industry leaders, so outside your customer base as well. Those inside the industry is critical. To ask questions and listen and learn, the problems, the issues the opportunities from the customer’s perspective.
    
    Then the final thing in that area as it relates to customer focus is you learn from the feedback. We get feedback all the time. Many times, it’s negative. There’s an issue with the product or service, and it comes in a negative fashion. But how does the company train themselves to take that negative feedback and turn it into a positive, as an opportunity to improve what they’re doing and improve the product?
    
  • Q
    What makes some companies last for generations while others seem to flame out?
    A
    Over the years, it has become clear to me that to increase your chances of success and potentially last for generations, you need to work on the business, not just in the business.
    
    What I mean by that is, we all show up at work every day. We’re trying to put product out the door or doing the service that we do and our heads are down and we’re absorbed in the day-to-day activities of our business.
    
    I found that the truly successful business build in processes to work on the business. It allows them to pull back from the trees, see what’s really happening to the business. 
    
    For example, successful companies will implement some form of a strategic planning process. Usually it’s done off site or with a segment of the management team. The focus is to assess the strengths of the businesses, the weaknesses, the threats and opportunities, which is called a SWOT analysis. Then once you get those all down, the management team prioritizes, and then they step forward on a plan to tackle them on an ongoing basis.
    
    Then the second is a business coach. Every team, every athlete, has a coach who can, again, pull back to 14,000 feet, look from the outside and give tips and help on how to improve their performance. 
    
    Same thing with the business. The ones that last, the ones that really are successful are the ones that are getting that outside input.
    
  • Q
    For starters, why don’t you talk a little bit about your background?
    A
    I am a shareholder of Clayton and McKervey. We’re a regional CPA firm, in Southfield, just north of Detroit. The firm is a niched practice that’s focused exclusively on closely held, for-profit businesses. I’ve been in that role for over 20 years. As a shareholder, I’m responsible for around 25 different client relationships, predominantly manufacturing, which would include the traditional accounting type things of financial statements and tax returns and tax planning and strategy.
    
    But I also get much more involved in the operational advice and counsel just aimed at improving performance with the clients that I deal with.