From Brian’s Desk
How to Build Strong Business Relationships
Welcome Jim Piechowski, CAE!
Jim Piechowski, CAE, has recently joined the HOCK team as the Senior Director of Global Business Development. We are thrilled to have Jim on board!
Before HOCK, Jim worked with the IMA (Institute of Management Accountants) and other national and international organizations in executive positions. Jim strongly supports professional certifications and is an expert in global business and international relations.
We know that many exam candidates aim to get a promotion and become leaders in their professional field and getting certified is a huge help in achieving these goals. However, there is also a set of skills in addition to the technical skills of your profession that is necessary to build relationships and help your industry grow. So, we asked Jim to share his wisdom.
Working internationally requires a unique set of skills beyond technical proficiency, so I'm happy to share some insights on the most critical soft skills for succeeding in an international setting. These soft skills include increased cultural awareness, adaptability, communication, and emotional intelligence.
- Cultural Awareness: When working with people from different backgrounds and cultures, it's essential to be aware of and respectful of cultural differences. This means being sensitive to different customs, traditions, and communication styles. The more you understand and appreciate other cultures, the better you can build relationships and avoid misunderstandings.
- Adaptability: Being adaptable and flexible is essential when working globally. You may need to adjust your communication style, work schedule, or problem-solving approach to align with your international counterparts' needs and expectations.
- Communication: Effective communication is crucial when working across borders. Clear and concise written and verbal communication are essential for building relationships, managing expectations, and avoiding misunderstandings. Although you don’t necessarily need to know multiple languages, speaking a few key phrases or words in various languages can significantly increase your communication ability!
- Emotional Intelligence: Emotional intelligence is the ability to understand and manage your emotions and those of others. This skill is essential when working internationally because it can help you navigate cultural differences and build strong relationships with people from diverse backgrounds.
Thank you, Jim, for all of the tips and recommendations!
Dear readers, please comment below if you have more questions for Jim.
Realistic Study Time for the CMA Exam
How long should I study?
A common question we get is, “How long should I study for each Part of the CMA exam?” Unfortunately, there is no one answer that is the same for everyone. Each candidate comes with a different background, education, and work experience, and all of those factors influence how much time each person needs to study to be ready to pass their CMA exams.
Calculating the minimum
There are still some minimums that we can use to determine what that target number of hours should be. We will base this on the reality of the study process, not just a number that sounds good or a number that we think students want to hear. This process is what we do when we create our time estimates for studying for the exam. For example, every MCQ you do requires some amount of time. For MCQs and other things, let us assume that you need:
- Three minutes to read an MCQ, to answer it, and to look at your answer to understand why you got it correct or incorrect.
- One minute to watch one minute of video. (It may actually be a little more than that – you rewind something, you listen to something again, but we will say one minute to watch one minute of video.)
- Four minutes for every page of the textbook that you read. In addition to just reading it, you may need to think about it or reference something else. But, for our purposes here, we will say four minutes per page.
- Thirty minutes for every essay you solve.
Now, with those times in mind, let us calculate how long it will take you to study for one Part if you have the following study materials:
- 2,000 MCQs
- 30 hours of videos
- 40 essays
- 300 pages of textbook
Doing the math
We can now calculate how long it will take to prepare as follows:
- 2,000 MCQs at three minutes each will be 6,000 minutes or 100 hours
- 30 hours of videos will take you 30 hours
- 40 essays at 30 minutes each will be another 1,200 minutes or another 20 hours
- 300 pages of a textbook at four minutes per page will be 1,200 minutes or 20 hours
In total, this brings us to 170 hours to do those MCQs, read the textbook, watch the videos, and do those essays. This 170 hours does not include a mock exam, let alone two mock exams. Also, you haven’t reviewed anything, and you have not done any of the MCQs a second time. So, if we add in doing some of the MCQs a second time, two mock exams, and a final review, we are getting to about 200 hours per Part.
Additional study materials
If you decide to add any additional study materials to your study plan, that is going to add more time. If you get a second test bank and solve 1,000 more MCQs, that will add 50 hours to your study time. If you watch additional videos, that is going to add time as well. Everything you add to what you study is going to add time to the amount of time it takes you to prepare.
This does not mean that you shouldn’t add additional items; you should if you need them. But, as you add additional questions or videos or textbooks, you need to make certain that those additional study materials are adding value to you. This means that you need to make certain that those additional study materials will increase your chances of passing your exam. Doing more questions just to say that you did more questions is not going to help you pass your exam. This is why we rarely recommend that a candidate needs a second test bank. A second test bank adds a lot of time to your studies, but it doesn’t really add very much value.
Total study time for the CMA exam
Having gone through all of this, we can come back to the question we started with, “How long do you need to study for your CMA exam?” We have seen the numbers, and we have done the math. To be realistic, you should start with at least 180 hours as a minimum in your mind. Your actual number may prove to be a little bit more or a little bit less based on your background, education, and experience, but 180 hours is a very good starting point based on the reality of how long it takes you to study what you plan to study.
If someone tells you that you only need 100 hours (some providers even suggest you need only 70 hours per Part), you need to ask yourself what it is that they’re expecting you to do as Part of your studies. And more importantly, is what they are suggesting that you do in 100 hours going to be enough to prepare me for the exam? One hundred hours is just enough time to do 2,000 MCQs – and nothing else. Is doing only 2,000 MCQs going to prepare you to pass your exam?
The key is that you prepare as many hours as you need to pass your exam. The amount of time your friend or colleague needs may not be the same as what you need. 180 hours is a good, realistic starting point for your planning. However, as you study, you need to be ready to adjust this so that you study the number of hours that you need to pass your exam.
If you haven’t started your CMA exam preparation yet:
Start with the free CMA exam trial. The trial lasts for 14 days and includes all HOCK study materials for CMA Part 1 Section A and CMA Part 2 Section E. That is an excellent way to familiarize yourself with the exam topics, practice MCQs, and see if your learning style matches with HOCK.
If you are looking for additional study materials:
As mentioned above, reading another textbook or practicing more MCQs will add a lot of time to your study process but not necessarily add value. Instead, check out HOCK stream. HOCK stream is a subscription-based video platform with CMA videos in various formats. You can choose the most challenging topics for you, watch step-by-step explanations, and join CMA experts for office hours. The subscription starts with a one-week free trial.
If you are ready for the exam and want to check your knowledge:
Take free CMA Mock exams to practice! It will help you practice your time management, build stamina (CMA exam is a four-hour exam without any breaks), and help you identify topics that you need to review before the actual exam.
HOCK stream – CMA video subscription platform
What is HOCK stream?
We are thrilled to introduce a revolutionary CMA exam study tool – HOCK stream! HOCK stream is a subscription-based CMA video platform that includes all of the CMA Video content that HOCK has created. This includes the CMA teaching Videos by Brian Hock, the Step By Step Courses and Short Courses taught by Mr. Kazim, MCQ and essay videos, and more. HOCK stream also includes Live office hours with our CMA experts and an engaging learning community to connect with other CMA candidates.
How much does HOCK stream cost?
You get a one-week free trial, and after the trial, the cost is $29 per month. Of course, you can cancel your subscription at any time.
Is HOCK stream enough to prepare for the CMA exam?
HOCK stream is an excellent study tool and supplement for all CMA exam candidates. However, to fully prepare for the exams, you need at least a Test Bank with MCQs and Essays. A Textbook would be helpful for most candidates as well.
Who is HOCK stream for?
HOCK stream is intended for all CMA candidates who are looking for a way to improve their understanding of the exam topics and increase their chances of passing their exams. In other words, all CMA candidates will benefit from their HOCK stream subscription.
You can have materials from any provider and HOCK stream will be an excellent addition to your study materials. HOCK stream also provides you with more than one video style and structure so that you can find exactly what you need for each topic.
- Maybe you are just starting your CMA journey and want to ensure that you have the best tools and expert support available to you and the learning community. In this case, you will be looking for the Step-by-Step Videos.
- Maybe you failed your exams, and you are looking for additional content for just a couple of months while you prepare for your next attempt. In this case, you may be looking for the Short Courses, and some of the CMA with Brian Hock Videos as well. And you may need to subscribe for only a month or two.
- Or maybe as you are getting closer to your exam date, and there are still a few topics that you are not comfortable with. The short courses and MCQ videos will be very helpful for you, and again, you may be looking for only a month or two of access.
Every CMA exam candidate will find HOCK stream useful and it will add to the confidence that you need to pass the exams. Depending on where you are in your CMA journey, you can subscribe for just a month or for as long as you need to.
What Videos are included in HOCK stream?
There are four different groups, or libraries, of videos that are available on HOCK stream:
- HOCK CMA Classroom Videos (also called CMA with Brian) – there are about 32 hours for Part 1 and 30 hours for Part 2. These are the videos that are part of our You Pass or We Pay Guarantee and cover the entire LOS.
- Short Courses – each of these Videos looks in depth at a specific topic and includes both teaching concepts and solving some MCQs. There are currently 27 Videos for Part 1 and 20 for Part 2. Each video is about 2 hours long and taught by Mr. Kazim Nazeer.
- New Step-By-Step courses that Mr. Kazim is posting on a weekly basis. These courses are our most detailed coverage of the syllabus and include both teaching and MCQs solved by Mr. Kazim Nazeer. The full set of videos for Parts 1 and 2 are scheduled to be completed by the end of May 2023, so you will have access to them before the end of the June exam window.
- Solving Essays and MCQs videos. Although we believe that the most important part of preparing for the exams is understanding concepts, it is also helpful to see the process of solving MCQs and Essays. These short, practical sessions are recorded by Brian Hock and Mr. Kazim and demonstrate solving the more challenging questions and essays.
Why a subscription and not a one-time purchase?
Think Netflix, Spotify, Adobe Acrobat, and other subscription-based platforms. Why do you need unlimited access and ownership of something that you only need for a short period of time? Why buy a movie on DVD if you are only going to watch it once? Subscription is the way for you to get what you want, for as long as you want, at a very affordable price.
As a stand-alone, one-time purchase, CMA with Brian costs $649, and Short Courses would be about $1,100 total, and Step By Step Courses about $1,000. This is a total of almost $2,800! And all of that content is available to you for only $29 per month.
What are office hours?
In addition to all of the video content, HOCK stream is also hosting weekly Live Office Hours with Mr. Kazim for each Part. While each week there is a topic for that Office Hour, you can ask Mr. Kazim any questions you have about that Part of the exam. And if you have a lot of questions or very detailed questions, Mr. Kazim may connect with you outside of Office Hours to answer them.
What is the Learning Community?
The Learning Community is a virtual community where CMA candidates from around the world are able to share study tips, find accountability partners, and motivate each other to the exam date. HOCK experts will also be a part of the community to answer questions and provide support and motivation throughout your study process. With the Learning Community in HOCK stream, self-study doesn’t have to be alone anymore!
Welcome to the HOCK stream!
Before HOCK stream, your options to prepare for the CMA exams have been either self-study or joining in-person classes. However, with self-study, exam candidates often lack community, support, and motivation to keep going. In-person classes require you to follow their schedule at their place and may provide only limited-time access.
That’s why we built HOCK stream. It is a unique learning platform that offers you world-class CMA prep courses in various formats. We have been helping CMA candidates pass their exams for more than 20 years and we are excited about making this new method of studying available to you.
We invite you to prepare for the CMA exams in a practical, personal, and affordable way!
Time to Become Certified – No Excuses
It is often difficult to start on ambitious goals. There is always a reason that we can find that allows us to postpone starting something big and meaningful. Exam certifications are one of those ambitious goals that you may be having trouble getting started. How long have you been thinking of becoming a CMA (What is CMA certification?), CIA (What is CIA certification?), or getting another professional certification (Which accounting certification is best for me?)? Getting certified is one of the best investments you can make in your own career. However, you are likely using one or more of these excuses to delay getting started: not enough time, too difficult, or too expensive.
When it comes to the decision to start studying for your professional certification, all of these excuses can be used to procrastinate. Guess what? You no longer have these as your excuses.
Here at HOCK, we have eliminated these excuses for you – all you have to do is to start studying, and you will pass the exams in 2023!
I don’t have enough time
You may think you do not have enough time, but our interactive study system PassMap efficiently guides you through all the content that you need to know. A personalized study planner will take you through the exam syllabus week by week and adjusts accordingly if your study schedule changes.
It is too difficult
You may think studying will be difficult because the syllabus is so large. But, with our comprehensive and easy-to-understand study materials, we make learning the content as straightforward and as structured as possible. Regular review and practice sessions, detailed video explanations, a final 3-week review system with multiple Mock exams, study tips, and ongoing support from the CMA and CIA experts will make studying much easier than you can imagine!
It costs too much
You may think it costs too much, but we have done everything we can to help you with that as well. Right now, all HOCK CMA and CIA study materials are 50% off. This is the biggest discount we offer during the year, and it is for a limited time. If your purchase is $299 or more, you can use our interest-free payment plan.
With the HOCK PassMap, our study materials, unlimited access, expert support, and a 50% discount, you have no excuses left. Take advantage of this limited-time offer to start your exam studies right now. Start studying today! No excuses!
A Second Certification for CMAs
You passed the CMA Exam – what’s next?
Congratulations to everyone who passed the CMA Exam in the most recent exam window! This is a great accomplishment and one that you should celebrate.
A common question I get from recent CMAs is, “What certification should I pursue next?” While this is a question that depends largely on you and what you want to do with your career, there is one certification that I think goes very well with CMA and opens up some additional career opportunities.
The world’s leading certification for internal auditors
The Certified Internal Auditor (CIA) is the world’s leading certification for internal auditors working in all industries. One of the reasons that CIA pairs well with CMA is that accounting and finance professionals interact with the internal audit activity as it conducts its engagements. Because accounting and financial professionals provide essential work in the management of the company, the internal audit activity will be spending time providing assurance and consulting engagements in these areas. If you are a CMA and are able to demonstrate that you have the knowledge of an internal auditor, you will be in a better position to add value both as an accounting or finance professional and to the internal audit activity. Or, if you decide to look at a career in internal audit, the knowledge that you have as a CMA will provide you with significant benefits as an internal auditor.
What is covered in the CIA Exams?
In addition to the professional connection between CMA and CIA, CIA is an excellent second certification for CMAs because the CMA Exam covers some of the same topics as the CIA Exam. The CIA Exam is made up of three multiple-choice Exams. Part 1 covers the internal audit activity and its operations, and Part 2 covers the performance of an engagement. Part 3 covers some of the same topics that are on the CMA Exam: business operations, IT, managerial and financial accounting, and finance. If you are already a CMA and you decide to take the CIA Exams, I recommend that you start with Part 3 because you have already studied many of those topics.
How long does it take to prepare for the CIA Exams?
While the CIA Exams are not easy (the pass rate per exam is about the same as it is for CMA, roughly 45%), the preparation process is shorter. We recommend about 60 hours for Part 1, 80 hours for Part 2, and 120 hours for Part 3. So even though it is three exams, it won’t take much longer than preparing for the two CMA exams.
For all of these reasons, if you are a CMA looking for a second certification, I recommend you consider the CIA Exams. The best way to start is to download the CIA Exam Guide and sign up for the CIA Free Trial.
As always, if you have any questions, we will be happy to help.
Should I take the CMA or CPA Exam?
CMA or CPA?
I have been asked this question a lot recently, and I would like to offer some thoughts about these two qualifications and provide some insight to think about when choosing between these two credentials.
First, both CMA and CPA are internationally recognized qualifications supported by international professional organizations. While CPA is still more recognized internationally than CMA, the gap between the two is rapidly closing within organizations that hire management accounting and finance professionals.
Your Career in the Future
Second, you need to match your certifications with what it is that you would like to do with your career in the future. If you would like to have a career as an external auditor or a tax professional, you should probably choose CPA because that is the more recognized qualification in those areas. On the other hand, if you want to work in the accounting or finance department of an organization, then CMA will give you much more practical and relevant knowledge. If you want to start your own business, you definitely should study CMA.
The Difficulty of the Exams
Finally, neither qualification is easy to pass, and you will have to work hard to earn either certification. I have recently spoken to a handful of individuals who have done both CMA and CPA and they all said that overall CMA was more difficult. While on the surface you may see this as a reason not to do CMA, the perceived difficulty of the exam is critical to the value that the certificate. If an exam is viewed as being too easy, then passing that exam does not demonstrate any special level of knowledge on your part. However, when an exam is perceived as difficult, then there is more benefit to you that comes from passing that exam.
On a related note, if you would like to be an internal auditor you should study CIA, and if you want to go into investment banking, then you should study CFA.
Regardless of which certification you choose, make your decision looking at your future and which one will help you the most in your desired career.
Brian Hock, CMA, CIA
Get Your CMA Certification
Why CMA is the Best Accounting and Finance Certification
There are several well-known international certifications for accounting and finance professionals, including CMA, CPA, CIMA, ACCA, ACA, CIA, CFA, and others. The first step for you as a professional seeking a certification is determining which one will be the most beneficial. This requires looking not only at your current job, but also what you would like to do in the future. By looking ahead, you can be certain that you have the needed skills, experience, and certification(s) for your career.
I have been involved in professional certifications in accounting and finance since 1998 and through all of these years, the certification that is generally the most valuable is the CMA. Of course, if you want to be an internal auditor, you become a CIA and if you want to be an investment banker, you should become a CFA. However, if you are looking for a career in accounting or finance, are looking to start or operate a small or medium-sized business, or want to have a certification that will provide the most flexibility and most options for you in your career, the CMA is the best certification for you.
There are five main reasons that the CMA is the overall best accounting and finance credential:
1. The CMA Syllabus is practical and relevant to your job.
Everything in the CMA syllabus is something that a business does or should do. Such a practical syllabus provides a lot of benefits to you:
- It makes studying easier. It is a lot easier to study and learn something when its relevance to a business is easy to understand. Also, by being practical, there is a greater chance that you will have some experience or exposure to the concepts before you start studying.
- The content you learn is useful for your current and future jobs. Ideally, studying for your certification will help you perform your job better. Whether you are in accounting, finance, budgeting, management, or operations, what is covered on the CMA Exam is what a company does or should be doing.
- The knowledge does not limit you to a specific department or career path. With topics ranging from financial accounting to management accounting, to planning and budgeting, to internal controls, to ethics and decision making, CMA prepares you for any job that is connected to management of a small or medium-sized business, or the accounting and finance functions in any size company.
2. You only need a Bachelor’s degree and two years of relevant work experience.
While some accountants have advanced degrees, there are many accountants who started in a different career and may not have a business degree or number of hours of accounting courses. For the CMA exam, as long as you have a 3 or 4 year Bachelor’s degree in any subject, you meet the education requirement.
Furthermore, as long as you have two years of relevant work experience, you will meet the experience requirement. Your experience does not need to be with any specific position nor does your supervisor need to be a CMA.
3. You only need to pass two exams to become a CMA.
While it may seem at first that only two exams are not enough for a professional certification, the two CMA exams cover a wide range of topics that are all tested in depth. This means that you get a rigorous exam that covers everything it needs to cover, but without a multi-year time commitment. With only two exams, you will be able to earn your CMA in around a year (average), and you will actually have a certification. While there are certifications with many more exams, if you don’t complete them all there is no benefit to you.
4. Your CMA certification is internationally recognized.
In all likelihood, you will have a number of different jobs during your career, which may include working for a multinational corporation, or in another country. Because the CMA certification is internationally recognized, it will help you get a job anywhere in the world. Having a CMA will also show to others in your organization that you are committed to your profession, which will help with promotions.
5. The CMA Syllabus is practical and relevant to your job.
Yes, this was also #1, but it is so important that it needs to be listed twice. An international syllabus (without country-specific details such as US Tax law) allows you to learn what is needed in today’s international accounting and finance marketplace.
For all of these reasons, I strongly recommend CMA as the best international certificate in accounting and finance. Of course, when you have a particular career goal, or your company requires a specific certification, then you need to pursue that required certification. If, however, you are looking to develop and expand your career prospects and possibilities within accounting and finance, then I strongly recommend the CMA Certification.
Brian Hock, CMA, CIA
What is my first step to becoming a CMA?
The Right Certification for Your Future
A wooden bat
The last year that I played Little League Baseball as a child, probably about 15 years old, I had a favorite bat. This bat was a wooden bat, and it made me unusual because most of my teammates used an aluminum bat. As I remember it, I played well that season, but not as well as I had hoped or expected to. Then, in the last game of the season, my wooden bat broke, and I had to use an aluminum bat for the first time. In that last game, I hit the ball harder than I had all season. I hit the ball harder because I was using a better bat – the aluminum bat. It turns out that all of the other kids were right – an aluminum bat was better than a wooden bat. It turns out that my performance falling short of my expectations was because I was not using the best tool for the job.
Having the right tool
This is not my only example of the fact that having the right tool for the job makes the work easier, but also leads to a better result. Using the right type of saw or drill makes the sawing or drilling process easier. Using an electric screwdriver is faster than a hand-powered screwdriver. The right tools make gardening easier. The list goes on…
The best professional certification
The list also includes your professional certification. When you choose your professional certification, you need to choose the right one for the job. And in this case, “the job” is your career. You need to choose the professional certification that will serve you the best in your career. It is important to keep in mind that the best certification for your friends and colleagues may not be the best certification for you.
How do you determine the best certification for you? There are a few questions you should answer to determine the best certification for you.
- What do you want to be doing in 5 years or 10 years? You need to look into your future to determine what will be best for you. You should not choose your professional certification based on what you are doing now (you already have that job), but rather on what you want to do in the future. What certification will give you the skills and knowledge that you will need to perform that job you want in the future?
- What certifications do people who have the job you want have? Look online at people who currently have the job that you want, and see what certifications they have. If they all have a certain certification, then chances are good that you will be expected to have that same certification in that job.
- Are you able to gain that certification? Some professional certifications have strict eligibility requirements regarding education and/or experience. You need to be certain that you meet those requirements. If a certification requires an education that you do not have, then you should not spend time trying to pursue it. For example, becoming a CPA has very specific education requirements and if you have already graduated and are not close to meeting those requirements, then CPA is not a certification that you should plan to pursue.
Related to this point, you also need to ask how realistic it will be for you to complete the certification? Some programs have 12 or more exams that take as many as four years to complete. Do you have the time, and the financial resources, to be able to make that investment?
- Are you going to be able to do the required studying? You also need to be certain that you are going to be able to put in the time that is required to study what is covered in your exams. If too much of the syllabus is new to you, or in topics that you do not like, it will be very difficult to put in the time needed to prepare properly for the exam. On every exam, there will be some topics that you do not like, but they should not be a majority of the topics on the exam.
Jump-start your career
If you choose the correct certification, it will provide great benefit to you throughout your career. You will start to see those benefits as soon as you start studying because your skills and knowledge will improve. You will see the benefits of your certification as you get promoted, find a new job in a new company, and move into the job that you saw when you chose your certification. The benefits will continue to come to you as you become more involved and active in the professional organization and the networking opportunities it provides. The right certification will jump-start your career and help you reach your professional goals.
So, before you start studying, spend some time thinking about the questions above to make certain that you start pursuing the best certification for YOU. Your certification is a tool that you will have available throughout your career, so make certain that it is the best tool for what you want to do in your career.
Brian Hock, CMA, CIA
Your next read:
Approach Your Exams Like a Buffalo
Approach Your Exams Like a Buffalo
The Rocky Mountains go through the state of Colorado and big mountain storms come down from the mountains and head east into the Great Plains of the United States. While many animals live in the Great Plains, it is the cows and the buffalo that we are interested in.
As a storm arrives, the cows walk with the storm trying to stay ahead of it. Of course, the storm moves faster than the cows so the storm overtakes the cows. And because the cows are moving in the same direction as the storm, the cows spend even more time in the storm than if they had just stood still and let the storm pass over them.
The buffalo, on the other hand, take a different approach. As the storm approaches, they walk into the storm. While this is a strong and cold headwind, because the buffalo are walking against the direction the storm is moving, the amount of time that they spend in the storm is greatly reduced. The buffalo spend significantly less time in the storm than the cows because the buffalo know (somehow) that heading into the storm with determination is the fastest way to get out of the storm.
Your Exam Is the Storm
If you have not figured it out yet, in this analogy the amount of time that you need to prepare for your exam is the storm. And you have the choice to be either a cow or a buffalo. If you take the cows’ approach and do not make a dedicated effort to do your studying, the time that it will take you to get through your preparation will be a lot longer. It may seem for a while that you have been able to stay ahead of the storm, but eventually you will realize that even if you delay, the storm is still coming and you will need to pass through it. All you have done is extended the amount of time that you have had to live with your preparations.
You could instead choose to be the buffalo. When you do this, you make a plan, make a schedule, and start your studies from the beginning with the intent of sticking to your plan even when it is difficult and you are tired. But, by doing this, you will reduce the number of weeks that you spend studying and you will get to the other side of the storm much faster.
Whether you have not yet started studying, are partway through your studies, or are almost done, you can decide how you will go through the remainder of your studies – like a cow and drag it out for longer, or like a buffalo and attack the storm head on so that you can get through it as quickly as possible.
Brian Hock, CMA, CIA
Blog: Losing Weight and the Health of a Business
If you have ever tried to lose weight, or know someone who has, you are probably aware that there are a lot of different diets and weight loss programs that a person can choose, and that advice from friends can add even more “options” for trying to lose weight. There are diets that do not allow fat, and some that do allow fat. There are some that exclude carbohydrates, and there are some that allow them. Some people say that you should not eat after 6:00 p.m, or maybe 9:00 p.m. Other people say that certain foods should not be combined in the same meal and yet others say that specific foods should be combined. Some diets and advice are even contradictory. How is a person supposed to lose weight?
Cash as Calories
For companies, especially small companies, cash is the critical measure, just as calories are for a person trying to lose weight (except that a business wants to have more cash in than out). There are a lot of ways that a business can be measured or evaluated – numerous ratios, formulas, and key performance indicators that can be calculated for a small business. But, for the health of a small business, the best thing to look at is how much cash comes in and how much cash goes out. Maybe the company has great ratios, high ROI, and other metrics that show the company is doing well, but if more cash is going out than coming in, then the company has a problem. When small companies lose sight of cash flows and start to focus on other things, the company is at risk of going bankrupt even if “things look good” when looking at other measures.
Burn more calories than you eat
While some of the diets we read about may have some health benefits that are not weight-related, the most straightforward diet that most people can use to lose weight is simply to burn more calories than you eat. This means that you can start losing weight by eating less, exercising more, or a combination of both.
I do not want to imply that the diets that have books written about them, are featured in magazines, or are on TV do not have some truth to them. It may be better for your body if you limit your fat or carbohydrate intake. It may be better if you do not eat before bed. It may be better if some foods are consumed separately, or together. But, for me, the bottom line to losing weight is how many calories you burn and how many you consume.
I am certain that for serious athletes and those who are trying to fine-tune their body to be in the best shape possible, some of these more specific and complex dietary rules may be necessary. However, those people are beyond counting calories – they are trying to balance the different nutrients that are used and different types of energy for different exercises and they are trying to do things that 95% of the people who want to lose weight do not care about. (After people lose weight, their next step may be to fine-tune their body, but losing weight is the critical first step.) For the vast majority of people who are trying to lose weight, the best place to start is eating fewer calories and burning more. In the case of losing weight, keeping it simple may be the best advice for many of us.
If more cash is going out than coming in, then the company has a problem
For a company (and in particular a small company), cash is the same thing as calories are for a person trying to lose weight. There are a lot of ways that a business can be measured or evaluated – numerous ratios, formulas, and key performance indicators that can be calculated for a small business. But, for the health of a small business, the best thing to look at is how much cash comes in and how much cash goes out. Maybe the company has great ratios, high ROI, and other metrics that show the company is doing well, but if more cash is going out than coming in, then the company has a problem. When small companies lose sight of cash flows and start to focus on other things, the company is at risk of going bankrupt perhaps even if “things are good.”
Yes, there are many more advanced metrics than cash flow to measure business performance. For established and mature businesses, maybe those metrics are important to fine-tune their performance and to try to get the most out of the assets invested. But, just like a person and their weight, the best way for a company to improve its health in the short term is to increase cash inflows and decrease cash outflows. After the company has a positive cash flow, then it can turn its attention to more of the specific and detailed measures of a business, just like a person can fine-tune their diet once they have started the process of losing weight by burning more calories than they consume.
Brian Hock, CMA, CIA