Setpoint Systems, Inc. is an open book company, which means we open our books to our employees. Every Monday at 1:00 pm we gather together to see how the prior week went financially. It’s been that way at Setpoint pretty much from the beginnings of the company in 1992.
After arguing with their CPA and trying to understand QuickBooks, the founding Joe’s became confused and were looking for help. I was working as a financial consultant after starting my career at Ford. Joe Cornwell called me and asked if I could help him with his challenges in finance. I remember Joe bringing me into Setpoint Systems which at the time had 5 employees, the two Joe’s and three others. It was in the evening and it was just me and him. He said “why do you finance guys have to make this so hard?” He then went to the white board and said this is all that matters. Then he wrote the following on the white board:
– Stuff to Buy
I told Joe C. that in finance we called aggregate remainder gross profit. Joe told me that it is so great you finance guys have a name for that number because that is an important number in business. So instantly I became the gross profit expert for Setpoint. Later I would become a co-owner and CFO for the business.
Over the years we have developed our own system for tracking financial success in our business. We have used Joe C.’s philosophy to keep it simple. I told Joe that we did not need to follow GAAP (the Generally Accepted Accounting Principles) which is what his CPA was requiring. Since we were a private company, we could present the numbers in a way that makes sense to our employees and managers. I could take our home cooked numbers and present them to our banks and the IRS for taxes in the right format after the fact.
We developed three training courses on the income statement, balance sheet and cash flow. We started a bonus plan based on our financial performance. Along the way we realized that we had developed a unique open book approach to manufacturing automation equipment. We now realize that the weekly board and our tracking system that is behind us is our single best asset in the business.
Over the years we have seen competitors come and go. We have seen our employees work through problems on our books. Recently one of our project engineers was under on the accrued profit on a very profitable job. When it was presented on our board several of our shop employees challenged the numbers. They knew that the conservative reporting understated the profits of the business for the month which would affect their bonuses for the month. So our project engineer was forced to update the profit on the project more accurately.
I could tell several stories like this one. Over the years our system has kept us honest. When the board looks bad we have all worked together to solve the problems and when the board looks good we share in the success through bonuses. If you are interested in learning more about Setpoint Systems open finance approach you are welcome to visit us on a Monday at 1:00 pm in Ogden, Utah. Our system was featured in an article in Inc. Magazine, September, 2001 issue.