Strategy

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Small Business Webinar Series

Learn practical financial insights to grow and strengthen your business.

This free webinar series is designed for small business owners who want to better understand the financial drivers of value, growth, and decision-making. Each session runs 30 minutes, followed by up to 15 minutes of live Q&A. Gain clear, actionable knowledge you can apply immediately to strengthen your operations and improve long-term business success.

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Pro Tip: Company Ecosystem

Nicole Sithithavorn Blog, Pro Tip Staffing, Strategy

Setting up the ecosystem in your company right from the get go is critical in success and in preventing painful staff attrition later. Things like compensation structures, pricing, efficiency and front end acquisition costs must function as a system that provides the margins you need to thrive. Set up right, you’ll create a win-win for both staff and the company. Set up wrong they create confusion and attrition at best, or low margins and cash flow problems at worst. The sooner you fix this in your company, the sooner you can move past these potential painful consequences. We can help!

Calculator on chart and graph spreadsheet paper. Finance development, Banking Account, Statistics, Investment Analytic research data economy, Stock exchange trading, Business company concept.

Using Contribution Margin to Guide Strategic Growth

Nicole Sithithavorn Blog Contribution Margin, Growth, planning, Strategy

Commonly, owners and leaders of smaller businesses are either not familiar with the concept of contribution margin or they are simply not able to access this level of information for their business. This is unfortunate, because organizations that do have this information are able to use it to intentionally deploy their resources to spearhead growth in a way that they would otherwise not be able to. Gaining an understanding of this metric can be the difference maker between intentional high value growth and growth that feels out of control and unsustainable.

Why Contribution Margin Matters

Contribution margin data helps businesses understand the total, all-in cost, of generating and delivering services and/or products to their customer. Many businesses can identify this metric for their entire organization, but they cannot do it in any sort of segmental way. What this means is that while they can look at their financial statement and see some of the contributing items, like their gross margin dollars, and the costs of sales and marketing, they do not have this information for particular portions of their business. For some businesses that means by the type of customer (i.e. consumer vs corporate or wholesale vs retail) and others that means by type of service (i.e. by individual product/service or some sort of grouping of product/service), and for many it means both. Often times, even the organization wide contribution margin calculations are skewed by mis categorization of types of expenses and costs for the business (i.e. staff compensation that is recorded wrongly in operating expenses rather than cost of goods, or vice versa) and/or timing in transaction recording.

Contribution Margin vs Unit Economics

Even those companies that adequately track their unit economics often miss on contribution margin. This can be a fatal error as tracking unit economics solely does not allow business leaders to understand the direct operating expenses that contribute to generating value in their businesses. For example, a company may spend $50 to generate one type of customer, and $2,000 to generate another type of customer, but the unit economics of what is actually sold to them could be the same. The actual net income gains from generating the $50 customer is dramatically higher though. There are other contributing factors that arise when you consider businesses with a recurring revenue model, contribution margin for a customer that is expensive to generate but has a high gross margin and sticks around for a very long period of time might be much better than for a customer that is inexpensive to generate but has to be constantly replaced because of their very short tenure.

Contribution Margin and Capacity

All businesses find their growth restrained by concerns about capacity, it is inevitable. The way that businesses generate more capacity varies dramatically from company to company, however. Contribution margin data by segment can provide great value in informing how to invest resources to increase capacity for higher value portions of the business. It can also inform when to invest in one portion of the business versus another, when capacity gains are needed to allow for more growth.

Determining Contribution Margin

In reality, we can talk all day about how valuable contribution margin is as a metric for strategic decision making and all of that talk will do nothing to practically help business leaders from generating the information they need to make decisions. So, what is the first step to finding out this information for your business? Improve your data. Ask yourself questions like:

Can I identify how efficient different departments in my business are by segment of our overall revenue?
Can I identify how much it costs to gain one customer by segment?
Do I have reliable gross margin information?
Can I adequately track how much it costs for me to sell my products/services by segment?
If the answer to any of those is no then, how can I better use my various systems to give me the data I need?

Data improvement often includes both people processes and tech systems, and a combination of operations and finance systems. The upfront effort to gain access to this data is worth it because the outcomes can be so dramatically improved by having access to it.

Pro Tip: Perfection in Strategic Planning

Nicole Sithithavorn Blog, Pro Tip planning, pro tip, Strategy

Even the best laid plans will not go perfectly. Part of working on strategic growth is an acceptance of this fact and a willingness to pivot when results indicate the need to. Developing a strategic plan that hinges on perfection in execution or results is a recipe for failure. The best path? Create a plan that is both aggressive enough and that allows for lever pulls when things don’t go right. Identify where you have alternatives and when you might elect to put them into place. Empower your team to be resilient and take charge in the tough moments through proactive scenario planning.

Fundamentals of Small Business Value Creation

Nicole Sithithavorn Blog Small Business, Strategy, Value, Value Creation

The most important thing to remember is that above all else, the valuation of a business is subjective. As with anything, the true value of something is established by what another party will pay for it. In private businesses, this is difficult to determine because shares of them are not sold on any open market (i.e. a stock exchange). Even when you do engage a firm for an independent valuation, their value is based on what they have been told, on their review of the financial reporting, and/or possibly even on a forward-looking financial forecast that depicts the future potential.

The real question is, what are some fundamental items that can either increase or decrease value in a small business?

Quality of Financial Reporting: for any business, your financial reporting does more than just show what you earned and spent in any given period. Your financials have to tell the story of how your business has been operated, how it has grown, and how it has either succeeded or failed over time (particularly in the most recent 12-to-36-month period). If you can use your financial reporting to demonstrate how your intentional decisions have resulted in improved performance, the value of your business will benefit from that. If your financials are not sophisticated enough to do that, the value of your business will be harmed by the fact that they are lacking in that area.

Management Team: when an Owner (and sometimes their immediate family members) play too much a part of the key value driving roles of a business (for example: sales, skilled service delivery, etc.) the value of that business is diminished. This is because if someone was to purchase the business, and the Owner was no longer involved, the value they are personally bringing will no longer be present. This is similarly true if the Owner was unable to participate in the business for any other reason. In very small businesses, this level of Owner involvement is often inevitable, but as the business grows, it should be a priority to evolve away from it as much as possible. This process could take many years to accomplish.

Client/Customer Concentration: in general, if a business is growing, but a large proportion of their overall revenue is related to one or to a small number of very significant customers, the perceived risk of that situation is high. That risk generally lowers the value of the business. This is because if the business were to lose one of those very significant (for example: 25 percent of revenue or more) customers, the entirety of its profits (or more) could be lost. Potentially this risk could be mitigated by very long and tight contract terms, or if the purchases of that customer were of an exclusive product with no alternatives, that must be regularly replaced. Ultimately though, any customer could stop buying for a reason outside of your control, and it is uncomfortable for the financial resiliency of your business to be so tied up in that truth.

At the end of the day, business value is some sort of equation that is represented by:

Profits x Y = value

What number that Y equals is very significant. Thinking about some of the trade-offs between increasing profits and gaining value through improving parts of the business to allow for a higher multiple is not an insignificant thing. The longer your timeframe is to make those sorts of intentional choices, the more you could stand to benefit in the long run.

Tips for Better Cash Flow Management

Nicole Sithithavorn Blog Cash Flow, Small Business, Strategy

Cash flow management is a key area of concern for almost every small (and even larger) business owner. The truth is though, when a business owner says that they are concerned about cash flow, it can mean a variety of different things, like:

They have cash on hand, but every month it is dwindling down bit by bit and if something doesn’t change, they will be in a precarious position in the near future.
They are able to manage their cash flow but it gets tight sometimes and they would like to have more visibility farther in advance about when that might happen.
They are really struggling to keep up with their outflow requirements (vendor payments, payroll, credit card payments, etc.) but things generally even out over a period of a few weeks.
They cannot keep up with their cash outflows and they are really worried about managing their vendor relationships in light of this. They feel like their operations should be able to support the cash needs of the business but it is and has been a constant struggle.
They are behind on their obligations, they are in a cash flow hole that they are sporadically plugging by injecting their personal cash into the business and it feels like a downward spiral has hit.

Just like these are different scenarios that can be explained by the same vocabulary, the reactions you can take to approach them are also different and more or less possible due to the level of financial stress in the business. Here are some possible pathways to address them:

Short-term Cash Wins

Review your Accounts Receivable processes to make sure that you are billing your clientele in a timely and accurate fashion. If you have aging A/R, make it a daily task to make efforts to collect that.
Asking vendors for temporary consideration on better payment terms (i.e. longer payment terms). This works better if you are not already late with them.
Looking for options to accelerate the cash payment terms from your clientele. This may be more possible with new sales than it is with existing relationships, but it is not impossible with those either.
Considering uses of cash that are not apparent in the costs and expenses reflected on your P&L. For example: do you have inventory that does not turn? Can you offload that for some quick cash?
Using tools like purchasing cards to extend the cash impact of your business-related purchasing out for one additional monthly cycle.

Longer-term Cash Strategies

Cash flow forecasting can give you foresight into when you will be short on cash, and thus the ability to strategize to prevent it rather than only reacting to it in the moment. This is much more effective if you are not using cash-basis accounting. It is very laborious and difficult to forecast cash flow when you have no visibility to your payables until they get paid.
Considering the item above, converting to an accrual basis is very helpful in providing better cash flow visibility in advance.
Implementing tools that better manage inventory turnover by SKU. Holding inventory too long is one of the primary ways to negatively impact your cash conversion rate.
Revising your contract payment terms with clients (more applicable on longer term contracts) to better align their payments to you with your payments to your vendors.
Paying very close attention to your gross margin performance by revenue type. You may be losing margin due to ineffective pricing strategies and be unaware of it if you do not have visibility to your margin by segment. In general, higher margins result in more cash flow.
Review of operating expenses, particularly that related to advertising and staffing, with an eye toward return on investment. This is not necessarily only about cost cutting, but about allocating resources in the best way to create the most return.
Considering options for refinancing higher interest debt into lower interest debt, particularly if it may be spread over a longer term.

These are just some strategies that can help with cash flow, they may or may not be applicable to your business, but we certainly hope they help you think more constructively about how you approach the management of your resources in the future.

Social media marketing concept. Attracting (emoji, like, love, star, comment icon) with a huge magnet.

What Are the Goals of a Social Media Campaign?

Nicole Sithithavorn Blog Marketing, Strategy

Social media advertising has exploded in the past decade. Ten years ago, if your company had a social media marketing department at all, it was probably an afterthought headed by whichever team member spent the most time on Facebook. Recently, however, companies have learned how to turn networking sites to their advantage. That’s good, because anywhere your customers spend their leisure time is a place you need to be. But it also means that your social media campaign needs as much planning and forethought as all your other marketing.

Before you can plan a campaign, though, you need to establish goals. Obviously, the goal of any advertisement is to be seen by lots of people. But here are some questions you should bear in mind.

What’s our target demographic? People gravitate to social media sites with other users of their age. A teen may have a Facebook account to keep track of his aunts’ birthdays, but he probably spends most of his time on Snapchat or TikTok. Before you advertise on a site, find data on its users and decide whether they match your clientele.
What personality does our company have? There’s nothing new about this question in the field of advertising; some companies create ads that are slick and professional, some loose and silly. However, the word “personality” gains new meaning when your brand has social media accounts. When fans can send friend requests and post comments or send direct messages as if they were talking to any other friend, your brand has to have a persona that’s consistent and engaging.
What are our KPIs? Before you can even decide on a realistic goal for your campaign, you have to establish what you are measuring — your key performance indicators (KPIs). Do you want more followers or higher engagement from the followers you already have? Do you plan to make your social media accounts sales platforms and measure their impact in dollars and cents?
Who is following us now? The best part about social media advertising is that you can track its impact. Every platform has an analytics tool that gives you specific details about who engages with your content. That should give you an idea of whom to market for in the future. Just remember, these people aren’t a random subset of your users — they’re going to be skewed because of the demographics of the platform.

When you’re planning your social media campaign, it’s important to begin by setting goals. If you start with a clear idea of what you want your campaign to accomplish your plan will fall into place easily.

Pro Tip: Questions to Plan 2026

Nicole Sithithavorn Blog, Pro Tip 2026, planning, pro tip, Strategy

Sometimes planning for next year is best started by asking yourself and your management team questions, here are some suggestions:

– What available capacity do we have now that we should try to make the best use of?

– What have been the key barriers for growth in the last year?

– What service lines do we have that are most profitable?

– What geographic areas do we have more opportunity in?

– What are potential service lines that we can offer to our current clientele in our current area?

– Where are we efficient with staffing and where are we not?

– What do we need operationally to meet our goals?

Market Research: The Key to Business Decisions

Nicole Sithithavorn Blog Market Research, Strategy

Like every business owner, you want to remain relevant and competitive in your marketplace. And you know that to have a sustainable business, you constantly need new ideas to satisfy the evolving demands of consumers. However, you also know that sometimes new ideas fail because you haven’t done adequate market research.

Market research gives you access to insights. These insights can optimize your current and future product offerings and assist in connecting your brand to the right customers. That’s why investing in insight generation is the right way to drive informed and effective decision-making. It was W. Edwards Deming who said, “Without data, you’re just another person with an opinion.”

There are many types of research. Exploratory research is open-ended and qualitative. It helps you identify trends that you’re currently not aware of. Setting up a Google Alert for a keyword that your team doesn’t know much about is exploratory research, and so is a survey with open-ended questions. But its key characteristic is that it is flexible; changes of plan and even changes of format are expected. Some businesspeople consider exploratory research an important starting point for innovation.

Specific research is more precise and focused on solving a particular problem or testing a new idea. Specific research can help you drill down deeper into an outcome of exploratory research. This is probably what you think of when you think of market research: detailed surveys, focus groups, customer interviews and studies.

Both exploratory and specific research are types of primary research. Secondary research is the study of research that already has been published by others. Reading reports compiled by the government, trade associations or other businesses is secondary research.

Research provides you with a lens with which you can look at your company’s current performance and its past trends. Knowing more about what your customers want and what else is going on in your industry can help you understand what’s happening to your own sales. That in turn can help you understand what you need to do to better serve your customers.

Here are some tips on how to apply market insights to your company’s strategy:

Establish clear goals and objectives for research. Who are your potential customers? What do they buy now? Why do they buy it? What would make them switch to your product? Be specific about what you want to know and how this information will drive decision-making. One goal might be to test a new idea or campaign.
Prioritize the research. You can’t research everything, so make sure you focus on critical information requirements that give you the quickest payback.
Consider less-expensive research alternatives. You may want to generate insights in-house by calling customers, analyzing numbers, using social media and researching consumer likes, dislikes and preferences.
Work with external partners, but make sure that whomever you decide to partner with understands your business.
Your reports can generate links from other websites and yield new subscribers.
Present your new data with beautiful graphics, which can entice people to share it on social media. Having proprietary data gives your firm a unique angle, and presenting it with graphics makes it easy for others to share.
Your research may lead to an increase in search rankings, more website traffic and new customers. Fresh content is important, not only because it means you’ll have a better social media presence but also because you’ll get free public relations when external sources link to your corporate pages.

Just as you wouldn’t go on a vacation without making any plans, you shouldn’t design marketing strategies without backing them up with research and data. Market research takes a lot of time and money, but if you’re venturing into a new market, it’s vital.

Problems, business environments and trends are constantly changing, so your research will never really be over. The more you know about your buyer personas, industry and company, the more successful your marketing efforts will be.

Man with a Note and a Single Word Compensation

6 Guidelines to Develop a Compensation Plan for Legal Associates and Support Staff

Nicole Sithithavorn Blog Compensation, HR, planning, Staffing, Strategy

Setting up a compensation plan can be a long-term and complicated process. You can get started, however, on this important task by keeping the following guidelines in mind:

Determine your law firm’s vision. How can your benefits package reflect this? A staff-oriented business wants to nurture its team and keep them for many years. A strong retirement plan with a generous matching system entices support staff to stay. You may want to consider options such as a tuition reimbursement plan or performance recognition programs.
Recognize that your compensation plan needs to fit your budget. Your compensation plan should stay consistent, even in challenging years. Especially in high-profit years, you don’t want to offer a meager compensation plan. Flexibility is the key: Offer bonuses based on performance. This serves as an incentive for staff to work harder.
Research the options. You can include many benefits in your compensation plan in addition to bonuses and merit incentives. In fact, the options are limitless. Talk with other firms about their solutions for staff loyalty programs.
Offer a compensation plan with a mix of benefits. Offer long- and short-term options: Reward your support staff in the short run, but also connect with such long-term benefits as a healthy retirement plan, health plans, and even dental plans, if you can swing it. And don’t forget flexible spending benefits. Consider family-oriented benefits, such as on-site childcare or day care reimbursement.
Don’t be too generous with your compensation plan. Avoid resentment among your staff — it’s easier to add a benefit than to take one away. If your business isn’t doing too well, don’t subtract benefits. A better way to go is to be realistic when designing your plan.
Put your compensation plan in writing. Make sure you’re following current employment laws to ensure compliance. Go over benefits plans with new associates and support staff when they’re hired.

Motivating your staff is the name of the game in this competitive environment. Controlling costs and ensuring equity of compensation programs are features of most well-designed plans. Mirror the culture of your firm by establishing a compensation philosophy that reflects your compensation strategy. This helps in recruiting and retaining associates and support staff. Does your compensation plan reflect how much you value certain positions in relation to other positions in your firm?

A growing number of law firms are incorporating performance-based compensation plans to boost productivity and maximize return on investment in compensation. Basically, the idea is to reward your most productive support staff. Traditional salary increases aren’t as connected to performance as they should be. Conversely, a well-thought-out performance-based bonus plan can be tied directly to the results of the firm.

Developing a performance-based compensation plan isn’t easy. Don’t set performance targets too low or use the wrong metrics to determine your staff’s performance. Instead, call us today and learn how to ignite your law firm through motivational plans that are positive for everyone.