“We’ve decided to freeze all salaries for next year, and my employees are now asking if there’s any point to performance reviews in this situation. I don’t have a good answer.” Mike: Ideally, a performance review should be a discussion about an employee’s performance, not about raises and bonuses. Go ahead and talk with your [...]

“I have three key executives–co-founders, really–whose options are now fully vested. However, it looks like we face at least another three or four years of hard work and small paychecks before we get to a liquidity event, and I’m concerned they’ll leave before then. What incentives can I offer to keep them on board?” Mike: [...]

“One of our major competitors is telling customers that we’re in terrible financial trouble and might go out of business soon. The truth is, money is tight and we’re sometimes slow in paying our bills–but we’re certainly not close to shutting down. Is there anything we can do to disprove the rumors? Mike: Your company’s [...]

“We have a rule that says employees have to work the day before and after a holiday to get paid for the day off. So now a bunch of people come in Friday morning, put in a few hours, and leave at lunchtime. I know I’m being picky, but is there a formal definition of [...]

“My employees have been getting a pretty predictable bonus for about five years now, and some seem to think it’s become part of their guaranteed salary. I’m worried that we’ll have an ugly situation if we ever have a lean year and can’t afford a bonus. What can I do?” Mike: You have two separate [...]

“I’m trying to develop a forecast that will show best-case and worst-case outcomes, and I’m stuck on how to define ‘worst case.’ There always seems to be something ‘worse’ than what I project, even though the likelihood gets silly (e.g., what happens if a meteor blows up the planet?). Is there some standard way of [...]

“We retained an operations consultant six months ago, and he quoted us a pretty reasonable hourly rate. He’s been doing a good job, but I’m beginning to think he’s padding his hours. It’s awkward at this point to ask him for documentation–kind of like accusing him of theft. What can I do?” Mike: It’s awkward, [...]

“The airlines just eliminated direct flights to one of our largest customers, which adds a full day of travel, going and coming, every time our technicians go to work on-site. Our contract says we can charge for out-of-pocket travel expenses, but the customer’s purchasing people insist that any extra payroll costs for the travel time [...]

“I hired an MBA to put together a financial presentation for a venture firm we hope will invest in us. He’s put in terms like IRR, EBITDA, and WACC. Since I have no idea what these things mean, I feel awkward about making the presentation. What should I do?” Mike: Don’t worry about it. These [...]

“I’m supposed to be in charge of collecting receivables, but every time I lean on a slow customer my sales manager has a fit. The CEO just says, ‘Work it out somehow.’ Any advice?” Mike: Before you can solve this problem, you need to get at the root cause. The most likely explanation is that [...]

“Most of our business involves small retail transactions. My controller spends several days every month trying to reconcile the checking account against the general ledger, and often there’s a small discrepancy of a few dollars. Is there a rule of thumb for how exact we ought to be?” Mike: The rule of thumb is that [...]

“Until recently, I’ve been handling ‘business development’ work myself–working with resellers, handling licensing contracts, finding new partners, and other non-standard deals. Now I’ve decided to ask one of our regular sales reps to help me part-time. But I’m baffled about how to pay the guy. Right now he gets a base plus commission for product [...]