Run Q4 Like It's the Whole Year

In last week’s issue, we discussed losing deals to a new competitor, and the two hours a month that can change that. This week we will look at the ninety days in front of you, and the two ways they can end.

The first way ends on December 31. You review the year-end numbers for a client or for your own company, and the quarter looks like a story someone else wrote. Cash is less than the P&L shows it should be, and no one can say which week that happened. The three priorities everyone agreed on in October are still the same three priorities, but two of them have not moved. The plan for next year is a strategy planning meeting in the second week of January, as it is every year, where everyone takes last year’s numbers and guesses at the new year.

Now for the second way. Same date. The last thirteen weeks were planned, and they are on one page. You can point to the week cash would have dropped below your floor. You saw it coming in October and pushed a big inventory payment back two weeks, so it never did. Each of the three strategic priorities has a name next to it. Two priorities are done, and the third one has a revised date. The business plan for next year was written during a meeting in early December because October through December was managed as a quarter, not as three separate months.

The difference between those two December dates is not effort. It is what happened in the first week of October.

The Quarter Is the Right Size

I have been in the numbers since 1985, and the time frame that has been most effective for the companies I have been involved with is not a month or year; it’s the quarter. Thirteen weeks is long enough to finish a key objective and short enough that the finish line is always in sight. Ninety days with a scoreboard and a date will change how people think and work. They start treating the calendar as a sprint to a goal and can see exactly how far they have come.

Q4 is the quarter where this matters most, because it ends on a hard wall. Whatever is undone on December 31 is undone in the year-end statements, the tax return, and the conversation with the banker in February.

Run Q4 like it’s the whole year. Close Q3 formally in the first week. Then run the thirteen weeks as one sprint with two pages open the whole time: a cash forecast and a priority list.

Close Q3 Before You Plan Q4

Most companies never close a quarter. The month-end close happens, the statements arrive, somebody glances at net income, and the next month is already half over.

Closing a quarter formally takes one sitting and three questions.

What did we say we would do in July, and what did we actually do? Not the whole list. The three or four things the team named as priorities. Mark each one done, partly done, or not started, and be honest about it.

What did the cash do, and did we see it coming? Pull the bank balance at the start of July and today. Then the lowest point in between, and the week it landed. If nobody can name that week, that is the finding. The quarter had a squeeze, and the team found out by living through it.

What would we do differently with the same ninety days? One answer. Not a list. The one thing that, had it been true in July, would have changed the quarter.

If you are the advisor, this is the best session you will run all year. If you are the owner, it is an afternoon with the statements. Either way, do it in the first week of October.

Four Clients, One Tax Season

I learned the second part of this the hard way, from the advisor’s seat.

One tax season I had four clients in trouble at the same time. Two were in the middle of complex real estate transactions. The other two had critical cash flow issues. Each had a good reason to call, and the calendar was already full.

QuickBooks did its job. It shows me a client at a time, and what it is built to show me is the books. What it could not show me was which of the four was closest to the edge.

The hard part of that week was not the work. It was the first question. Which client do I open first?

Here is what I would do differently now. I should have had a thirteen-week cash forecast open before the quarter started for each of those four. A forecast would not have prevented the real estate deals or the cash squeeze. It would have told me, in week one, how close each client’s low point came to their floor, and how soon. The client whose trough sits closest to the floor gets the call first. If two are equally close, the sooner one.

When four clients need you at once, the scarce resource is not your expertise. It is knowing whose problem is closest to the edge.

The Two Pages That Run the Sprint

Page one is the thirteen-week cash forecast. Six rows, thirteen columns, one per week, from October 9 through New Year’s Day. Start with the real bank balance, add collections in the week the money lands, subtract fixed and known costs on their real dates, then variable costs and owner draws, and carry the ending cash into the next column. No formula harder than adding and subtracting.

Then read it for one number: the lowest balance anywhere in the thirteen weeks, and the week it lands in. Draw the floor underneath it, a payroll run plus about a month of fixed costs. If the trough is heading for the floor, you know the week, and every week between here and there is time to act. Build it with the client in twenty minutes this week. Then spend twenty minutes every Monday comparing it with what happened and rolling it one week forward.

Page two is the priority list, re-run for the quarter. Ask each leader to write down the company’s top three priorities for Q4, separately, without talking. Compare the lists. The gaps are the quarter’s first agenda. Then narrow to three, put one name next to each, give that person the authority to get it done, and set a date within the thirteen weeks. We walked out of a planning meeting once with thirteen top priorities across six initiatives. Ninety days later, almost none of them had moved. A priority without an owner is a priority deferred.

Two pages, both updated weekly, both on the table at the weekly meeting. That is the whole rhythm for a ninety-day sprint.

Why the Advisor Runs It

If you advise more than one company, Q4 is the quarter where you earn the renewal, because it is where the difference between those two December 31sts is visible to the owner.

Run the Q3 close with every client in the first week of October, and build the forecast with each one the same week. Keep one page of your own with three columns: each client’s lowest balance, the week it lands, and how far above their floor it sits. That page is your Monday. The client closest to the floor gets the first call, every week, for thirteen weeks.

An owner can run this alone: same two pages, same Monday. The advisor’s advantage is having seen the pattern before.

The Test

Three questions before this week is over:

• Has Q3 been closed in one sitting: what got done, what the cash did, and the one thing you would change?
• Can you name the week in Q4 when cash will be at its lowest, and the number?
• Do the three Q4 priorities each have one name and a date inside the next thirteen weeks?

If the second one stopped you, start there. The free one-page build sheet for the thirteen-week cash forecast is at alinement.com/brief/tools/thirteen-week-cash-forecast, and the three-question priority exercise is the Alignment Snapshot. Build the first with a client this week. Run the second at the same meeting.

Which version of December 31 did your last Q4 end in, and what would have changed it? Share your thoughts.

P.S. Next week: how to read your P&L like an owner, not an accountant. And if you advise owner-led businesses, there is a page for you at alinement.com/advisors.