Business Capital Allocation & Asset Utilization with Tony Roedersheimer

In this, the final episode of our 3-part series with Tony Roedersheimer, Commercial Relationship Manager in the Frederick Maryland market area, we discuss Business Capital Allocation and Asset Utilization. Tony provides tips and best practices on these vital aspects of your business.


Announcer: Welcome to the ”What Matters Most” podcast presented by First United Bank & Trust. That’s my bank. Visit us today at

Eric: Hello, and welcome to ”What Matters Most,” the podcast all about finances, community savings, and security for you, your family, and your business. This podcast is brought to you by the helpful folks at my bank, First United Bank & Trust. I’m your host, Eric Nutter. And in today’s episode, we finish up our three-part series on what matters most in regard to businesses. And in today’s episode, we talk about capital allocation and asset utilization. And for this helpful discussion, I’m once again, thankful to be remotely joined today by Tony Roedersheimer, commercial relationship manager, serving Frederick, Maryland for First United. How’s it going, Tony?

Tony: It’s going well, Eric. Good day, today.

Eric: Yeah. Absolutely. You’d think by three episodes, I’d have your title down pat, but I appreciate you…

Tony: That’s all right.

Eric: I appreciate you joining me again.

Tony: No problem. I’m looking forward to the conversation. This is probably out of the three, this is probably gonna be my favorite one to talk about just because of how many real-life examples that I can pull from and I get to make fun of CPAs for one day in a year.

Eric: Oh, be careful. We’ve had CPAs on the show before, so we may have some CPA listeners. So.

Tony: Yeah, I actually, I say that when it comes to small businesses and business kind of consulting, you know, CPAs and bankers, they agree 364 days out of the year. It’s only on the last day of the year where, you know, if you asked, you know, if you asked your financial representative, they’d be like show a profit, you know, and your CPA is gonna be like…

Eric: Don’t.

Eric: Show a loss, right? Like let’s take as much depreciation as we can. So that’s always my joke is we get along every day, except the last day of the year.

Eric: Nice. I like it. Well, that’s actually kind of what we’re talking about a little bit is the mindset of a business owner and kind of, I guess you and the CPA playing on the shoulders of the business owner whispering in their ears what to do. But so this concept of capital allocation and asset utilization, it’s kind of a mouthful there, but you described it to me as the mindset of a business owner. And so why don’t you define those topics for us and walk our listeners through why those are important?

Tony: Yeah. And I think I’ll kind of take a step back and kind of pull from our last segment, right? We talked about, you know, building an infrastructure, right? And it was really about the strategy is kind of laying out what it was gonna look like. Even if you didn’t execute on it today, what it’s gonna look like. And so it’s the same concept when you talk about capital allocation. So all capital allocation is I have free cash, right? Or I have a loan from the bank, you know, how am I gonna allocate that in my business to maximize profitability? Right?

And so this was a big kind of if you think about big plants, right? So big manufacturing plants, right? They have big capital expenses. And so they said, Okay, do I put another machine on it? Do I add, you know, do I hire another shift for the same old machine? Right? Or do I, you know, create a new warehouse or a new space that I can put a whole new line into, right? Which one of those is going to kind of give me you know, the best return long-term, right? Where do I see forecasting out? And so that’s really what capital allocation kind of boils down to is I have either debt or I have equity, what do I do with it to maximize my return?

Eric: How do I best use the money I’ve got?

Tony: Yeah. And I was gonna say, it’s a fairly basic concept. I think sometimes, you know, we kind of lose focus on that as we look at just running a business, right, to just kind of the rest of the mundane or and we kind of lose focus on that, you know, kind of that pillar of, you know, decision-making.

Eric: Well, yeah, I mean, it makes sense because you get stuck in the, like you said, in the day-to-day, you’re trying to run the business, you’re trying to make the business work and sure money’s coming in or, you know, maybe you’re sitting on a pile of cash and you’re not thinking about what am I doing, that money is not doing any work for me in the same way that you’re worried about the way your employees or maybe are doing work for you. So having that way of thinking might be challenging for some just because it’s kind of out of sight, out of mind kind of thing. You don’t see them every day.

Tony: Yeah. That is right. And, you know, there’s other things that kind of get in, you know, cloud the view as well. But, you know, I think, you know, continually coming back to that conversation, you know, as a business owner is important.

Eric: All right. Well, tell us a little bit about asset utilization then.

Tony: Yeah. Asset utilization is probably my favorite. And this goes back to how we talk about, you know, employees, you know, if you think about management, you know, how are you utilizing the human asset, you know, and are you utilizing them to the best of their ability? And it also works for equipment. You know, so you have someone who has a big balance sheet. And so you’re sitting there and you’re saying great, but, you know, are you tracking what each piece of equipment or each piece of machinery, what it’s actually producing for you? Because at some point, you know, if it’s not carrying its weight so-to-speak, and it doesn’t have a future, then it’s a great piece of machinery, but maybe it’s time to sell that because you’re not getting the proper utilization out of that asset that maybe you should.

And I think sometimes again, we lose, you know, business owners will lose focus of that and they’ll say, well, you know, I’ll use it next year, right? And so having the real honest conversation and saying, you know, are you actually going to do it, and more importantly, do you have the data to track, you know, what its profit levels really are, you know, for that particular asset. And I mean, it can go from equipment to, you know, real estate. I mean the same kind of concept. You have an asset out in the market, you know, is it giving you the return that you need? And if not, you know, is it time to liquidate that asset and get out of that position? So.

Eric: Yeah, that makes sense. I mean, I think part of that might be just human nature, right? Like we do that in our homes all the time, that little, that thing, that project you haven’t gotten around to, or that thing that you keep holding onto because someday I’m gonna do that thing and I’ve set it off to the side, or then I moved it to the storage room and then I put it on the top shelf in the storage room because I’m gonna get to it. I’m definitely gonna, you know, build that shed that I wanted to build or whatever it was. You know, whatever the thing is that you keep putting off and we can find ourselves doing that same thing in the business world. And you’re basically just saying, you need to take a closer look at those things because it can have an effect on your business.

Tony: Yeah. I mean, if you think about you’re right. If you’re starting to, you know, rent storage space for the projects that you hadn’t gotten around to yet, but are going to next year, then, you know, it’s probably time to, you know, sit there and say I’m better off getting rid of those items, right? So that’s a really good example of, and I think you’re right. It is human nature, right? Because we don’t want to, we have it, right, so let’s put it to use. But you can only put so many things to use at one time.

Eric: Right. Right. So what every business owner needs is somebody just kind of nagging them to get that thing done. Just to remind them, just keep reminding, you were gonna use that piece of equipment don’t forget or get rid of it, right? And that’s your job.

Tony: I mean, to some extent, you know, from a financial, you know, kind of performance standpoint, and we talked about this earlier, but, you know, there is the possibility that your performance can kind of get lost in success, right? So you had a really good year, but, and you’re like, Oh, I had a really good year. And so you really don’t take that deep dive into what kind of year it could be if you really executed on all of your strategies. And, you know, I think that that’s important is even good times, bad times, I think it’s easier to do it in the bad times. So going back to your, you know, I’ll get to that, you know, when bad times and you need cash, it’s really easy to sell. Sell those assets off, right? You know, because that’s money there and I need that money to keep everything else.

And so really that shouldn’t drive the value of that asset. The value of the asset should be what you use it for. And so if you think about, you know, compounding, if you would have sold it five years prior and compounded, you know, you utilize that cash and compounded that over time, you’d have been in a lot better situation than it just sitting up on the shelf, right? So I think…

Eric: Right. And then sell it at a loss or something.

Tony: Yes. And you talk about accountability. You know, we talked about this in the last series is that infrastructure. And I said, every great organization has a gas pedal and a brake pedal, right? And so you need that person who’s always pushing the limits and you also need that person that’s saying, Hey, let’s be prudent with this. Just like, you know, within a car, you can’t have one without the other. And so, you know, kind of having that yin and yang is key as you’re building out your, you know, good infrastructure.

Eric: Got it, got it. Well, Tony, you work with and have worked with lots of businesses over the years. Do you have some examples you could share with us to kind of indicate places where maybe people have had that realization and used it early, or maybe they didn’t and then, you know, had to pay the price for it?

Tony: Yeah. I think, you know, and it happens a lot in extreme growth models, right? So someone’s experienced exponential growth. And so they sometimes don’t have the time, or don’t think they have the time to really dive into these kinds of like what I would call strategic planning or strategic thoughts. You know, whether it’s on an individual basis or again, with a team of individuals. But I worked with a franchise at one point and, you know, they had a single location of this franchise and decided as most franchisees will, that they wanted to grow within the franchise. And I think they, you know, I think year one, you know, they brought home from a profitability standpoint, just over like $100,000 or something like that. Over the next three and a half years, they acquired new locations, new territories, and they grew to 13 locations. And at the end of that third year after they had grown from one location to 13 locations, they looked at their bottom line and they made just over $100,000 that year.

Eric: It’s kind of defeating…

Tony: And I don’t, I look back on that, you know, example, and you probably would have looked at year one, and if you ask yourself, is this performing the way I wanted it to, they would have said no. And then they would have said, why is that, right? And I think there’s a couple of reasons, is their geographic limitations to management, so access to management or access to owners, right? And we’ve seen that with real estate where you have an absentee owner versus, you know, an owner-operator. And so it was just really interesting, you know, kind of you’re working, you know, 13 times as hard for the exact same bottom line return.

Eric: Yeah, yeah. That could be challenging. How do you assist a business in a situation like that and that’s kind of coming to that realization and I’m assuming they saw it and were not happy with the results, or maybe they were unaware of what? How do you assist them with that?

Tony: I think in growth, right, you’re always gonna, you know, it’s that, to your example earlier, it’s that thing on the top shelf of the storage that you’re gonna get to tomorrow, right? And so you’re always thinking that, you know, it’s gonna be profitable tomorrow, right? The startup cost or there’s, you know, things that are, were pre-stabilization. And so I think we talked about this earlier as well, but having that conversation with your CPA and your financial institution because they’re gonna be key in kind of pointing things out. And so I always say, if you have a strategy conversation without those two people, then you’re missing out on, you know, because those are the people that are gonna get you to where you need to go from a tax standpoint and from a funding standpoint. So they need to be involved in that conversation.

But I think the help is just to point it out. I have another example where, you know, there was an individual that was growing, they were growing 200% every year. And I said you’re so good at your job because he was kind of a born salesperson. You’re so good at your job, you’re gonna put yourself out of business. Because he would go get the business, right, and then figure out how he was gonna service the business. And so it was a moving company. And so he would quote jobs and win the business for cross country moves and then go have to rent or lease the equipment to complete the move. And so it just wasn’t profitable. And so every transaction that was not profitable, the more he did, you know, the less profitable he was, right? Or the more negative he became.

It’s actually an example I used when I coached basketball. I said, if you move really, really fast and you’re going the wrong way, right, you’re just…or out of position than what you would have been, if you would’ve just moved at a normal speed and so, within a business, you kind of take that same concept with growth. If you’re growing and you’re growing, you know, it’s not sustainable and, you know, it’s not profitable growth, you’re actually digging yourself a hole even though you look at your top line and say, you know, look how successful I’ve been.

So, I think having those, you know, having those other mechanisms and having those conversations, you know, with that peer group and with people that are gonna be honest with you, you know, is always a key. And so that’s how we help, you know, from a financial institution, you know, asking about what the strategy is and asking about kind of where they see this happening and then saying you, I’m not sure if I see the same thing you’re seeing. Ultimately, it’s their business, right? They’re gonna go do…they’re not gonna do or not do something based on the advice of a financial institution. But, you know, I think it’s just having that kind of open and honest dialogue is helpful as people kind of, as business owners look at different ways that they can, you know, make an impact. So.

Eric: Well, it’s definitely smart to have those kinds of people, those kinds of folks in your court that can just, like you said, just ask you the questions to get your thinking maybe different than what you’re currently thinking because in a traditional sense, a lot of businesses and business owners are focused on their business and just serving their customer and getting the job done. And they’re not thinking about the impact of that to the bottom line on a day-to-day basis in the same way that their financial advisor or a CPA might.

Tony: No, I 100% agree. And then looking at trends year over year, you know, it’s not just what happened this year, but what was different from this year to last year? And again, you know, I think sometimes we like to sugar coat things as business owners and kind of say, well, you know, and I, again, I equate it to the golf game, right, is you get done with the round and I don’t know how many times I’ve ever said, well, if my pudding was on today, I would have been in the low 80s, right? You know, ah, man, if my driver worked today I would have been in the low 80s. And it’s like, listen, none of those things have all come together, right? Like you haven’t had the driver on and the wedge game and the butter all on, and you’ve never been in the low 80s.

And so I think businesses sometimes will look at that and be like, ”Well, if economic conditions were better, I would have had a better year.” Well, guess what, if it’s not economic conditions this year, it’s gonna be something different, you know, next year, right? It’s gonna be…

Eric: Stop making excuses.

Tony: That’s right. And so I think having those people, you know, those advisors and those people that are close to you, they keep you honest. And you’re not able to just, you’re not able to kind of just wash away performance with different excuses.

Eric: Right. Yeah. For my golf game, it’s more about if there were no water, no trees, and the hole were bigger.

Tony: Right. Right. Same concept. Same concept.

Eric: Tony, do you have any final thoughts you wanna give us on this mindset of the business owner, this capital allocation asset utilization conversation?

Tony: Yeah. I think the final thought I have is just being consistent with that approach. You know, I think it’s easy to kind of come up with, you know, kind of a strategy and then, you know, kind of put that strategy to paper and then, you know, revisit it once every three years, right? I think having a consistent, you know, here’s what I’m setting out to do, here’s kind of my mindset, here’s my strategy and then looking at it every month, you know, did I execute on what I set out to do? Did the numbers match the execution? If not, why? And then after you get used to it, you can move to quarterly, but whatever the frequency is, I think it’s important to revisit that again, to hold yourself accountable and keeping that strategy in place and that mindset in place that will build success over time.

Eric: Awesome. Awesome. Tony, thank you again for joining us. This has been an awesome series, and I think that hopefully, our listeners were able to get a lot out of it. If any of them have any questions, wanna learn more, can you remind them again what’s the best way they can get the support they need?

Tony: Yeah, I think the best way is just to go to, hit the contact button, and that’ll get you in touch with your financial institution to have any questions there.

Eric: Cool. Awesome. Well, thanks again, Tony, I really appreciate it. And hopefully, I’m sure we’ll have other topics that you and I’ll discuss down the road, but thanks for joining me for this few episodes, last few episodes to kinda, you know, share all this great advice to our customers.

Tony: No, yeah. I greatly appreciate it and appreciate the opportunity. And thanks for putting up with me over this three-part series.

Eric: It’s been really good and really informative, so.

Tony: Thank you.

Eric: Well, that brings us to the end of our show. You can always find more episodes by visiting, or find us on your favorite podcast app. And we are on basically all of them so you can find us on your smart device, on iTunes, or whatever podcast app you might use. And while you’re there, give us a five-star review. That helps other people find us that they might also be benefited by this great content that folks like Tony are sharing each episode that we have. You can also always leave feedback, ask questions, or request a topic for us to discuss by sending an email to Thanks again for listening. We’ll be back next week with more helpful content, but until then, we wish you the best in focusing on what matters most to you.

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