Help, I Can’t Find Employees

When you can’t find employees – PROCESS IMPROVEMENT

I hear it all the time: “I can’t find employees,” or “I can’t find the right employees.” What do you do in a tight labor market? There is only one other alternative – improve efficiency and productivity. But how?

Every business has a process, or series of processes, for doing the work. Also, every business has inventory, even service providers: raw materials, work-in-process, and finished goods. Every manufacturing operation has these but what about a service business?  Consider Bill Fletcher, President of Unisource Mortgage, a mortgage broker.  His company gathers information from prospective clients about their mortgage needs and researches the optimal potential mortgage to fit the customer’s needs and financial capability.  He then arranges for the necessary legal documents for the customer to sign. Finally, when all aspects of the mortgage are in place and documents are signed, he can close the file for that customer.

Does Bill have any raw materials, work in process, or finished goods?  If you answered yes to all three you get an “A.” Bill’s raw material is the information gathered from the customer and potential lenders. What about Work-In-Process?  When the work begins, Bill opens a file, both physically and digitally. That file contains pertinent information about this mortgage. From the time he gathers the information until he closes the mortgage that file is “In Process”.  At any given time Bill will have numerous “Mortgages in Process.”  In other words, he has an inventory of uncompleted mortgages categorized as “Work in process.”  Finally, when the mortgage is ready for the customer to sign, Bill has “Finished Goods Inventory.”

To improve your processes you must identify each process and the steps taken to complete the process.

Why is it so important to improve our processes? Processes take time, and the more time consuming, the more costly. Reducing the amount of time to do the work will get the product or service to the customer sooner, which they will appreciate. Streamlining the process and eliminating unnecessary steps frees up employee and machine time to do more work delaying the need to hire more employees.  Improving the process should also improve the quality of the product or service, leading to greater customer satisfaction, fewer returns. Efficient processes can prevent poor quality, thus minimizing the risk of lawsuits. More work in less time results in more revenue, profit and most importantly, cash flow.

How do you improve your processes?

Starts by identifying your processes and the components of the process using a SIPOC.

  1. SOURCE: What is the source of the raw materials (data or physical items)?
  2. INPUT: What are these raw materials (data or physical items)?
  3. PROCESS: How are the raw materials combined to make the product or service?
  4. OUTPUT: What is the product or service being provided to the customer and how are you going to get it to the customer (fulfillment)?
  5. CUSTOMER: Who is the customer?

Assume Bill’s mortgage process includes three documents. Each document is done by a different person. Suppose Document 1 takes 30 minutes, Document 2 takes 60 minutes and Document 3 takes 10 minutes.  The entire process takes 100 minutes.

Doc 1 – 30  Minutes
Doc 2 – 60  Minutes
Doc 3 – 10  Minutes
Finished Product

What is going to happen? Document 1’s are going to be piling up on the desk of the person preparing Document 2, while the person preparing Document 3 is sitting idle waiting for work. Document 2 is a bottleneck with the entire process getting bogged down. If the goal is to reduce the overall time from 100 minutes to 90 minutes, what should be changed?  The processing time of Document 2 needs to be streamlined.  Perhaps some of it could be prepared by the employee doing Document 3. Until you identify specific steps of your processes, you have no way to determine how to improve the process.

Most businesses have multiple processes going on simultaneously. Pick one and start working on improving it. When you’ve improved that process it will free up time to work on improving the next process. With some time, effort, and creativity you can reduce the need for more employees.

I hate working overtime unless it improves a process eliminating the need for future overtime.

DIY Virus

The DIY Virus – Small Business Killer

The DIY Virus is insidious and often leads to the death of a small business and many personal difficulties.  It invades our bodies, minds, and businesses and we often don’t even know it is there until it is too late.  It leads us to believe we can do virtually anything even when we know we don’t have the skills and/or knowledge for the task. When our friends and mentors advise us not to proceed, the DIY virus leads us to discard their advice. What do they know? I can do it. Many years ago my Aunt Bet took me to a ranch near Tuscon, Arizona where we did some horseback riding. I had ridden before but very seldom.  After several days of riding, I felt adventuresome and signed up for a trotting ride across the hot dry desert that included a little galloping.  As I was grooming the horse after the ride I commented that I was looking forward to a dip in the pool.  A 90-year-old cowboy standing nearby overheard me and simply said “I wouldn’t do that.”  No explanation, just his warning. Since I was infected by the DIY virus and could do anything, I jumped in the pool and felt no ill effects that day. But when I woke up the next morning I couldn’t move. My back, which wasn’t used to that kind of riding, was literally frozen solid. I couldn’t sit up. I’ve been stiff before after a strenuous tennis game but this was a whole new level. I used my arms to roll out of bed on to the floor and then using my hands and arms, I pulled myself upright.

What is this horrible DIY virus?  It is believing you can Do It Yourself even when you don’t have the training, skills, or knowledge. I once tried to do my own plumbing to save the cost of a plumber. Bad idea. Bad outcome. Expensive.

How is DIY a business killer? Most businesses are started by people who know how to do the work – operations.  But doing the work and running a business are two different skill sets. FYI, restaurants and trucking companies have the highest failure rates.  Just because someone can cook doesn’t mean they can manage, recruit and supervise employees; handle marketing; understand and monitor accounting; deal with legal issues; etc., etc. As a small business owner you have all the same functions as General Electric.  The only difference is that you have to do them all yourself.

Why do we allow the DIY virus to take root?  The most common reason is to save money. But are we really saving money in the long run? Bad accounting can lead to poor decisions and financial collapse. Not understanding your target market can lead to insufficient customers to make your business viable.

DIY Mistake #1

The most common DIY mistake is trying to do your own accounting.  When your business is small it is hard to afford hiring these services. When you try and do everything yourself, not only is it often done wrong, but it creates future problems. Additionally, when you try to do functions for which you aren’t qualified, it takes time away from the operation of the business inhibiting growth. But Roy, I do my accounting at night or on weekends which doesn’t interfere with the operation of the business. Doesn’t that take time away from your family and spiritual life? Recognize there are some things you need help with and find people who can help

You often hear that inadequate financing is a leading cause of business failure. But what is the cause of inadequate financing? Poor or inadequate planning! Inadequate financing usually stems from a lack of understanding all the costs involved in a running a business. You may have a good grasp of the operational expenses related to your product or service but what about all the administrative, marketing, legal, and tax expenses. You may not be able to anticipate every expense but you can certainly minimize the unexpected. As Ernest Yu, Chairman, Erlina Pty Limited, Melbourne, Australia said “Better to be aware of the alligator than trying to manage by crisis.”

DIY Mistake #2

A common marketing failure is failing to fully and accurately understand your target market. Just because you think it is a great idea doesn’t mean there are enough potential customers to make a viable business.  Get help with understanding the market for your product or service. I interviewed Tom Zombik, founder of Hilton Head Glass, for The Alligator Business Solution-Small Business Competitive Advantage. He moved to the Hilton Head Island, South Carolina area from Massachusetts. He knew the glass market in Massachusetts but not South Carolina. Tom found a job with a glass company and studied the market for four years before founding his own company, Hilton Head Glass. That research paid off with a successful and growing business for over 30 years.

DIY Mistake #3

Another DIY mistake is with HR or Human Relations. There numerous legal and practical issues when you start hiring employees.  Failure to comply with IRS regulations and state and federal labor law can end the business. Are you properly classifying workers as employees or independent contractors? Are you in compliance with OSHA requirements? Have you properly recorded payroll withholding taxes and forward that money to the IRS?

In addition to regulatory compliance, there is the job of finding the right people and knowing how to manage and build a great team. Finding employees is tough these days. The economy is essentially at full employment. But you don’t want just any warm body.  The wrong person can  harm your reputation and poison other employees with their bad work habits and attitude. You want employees who have the right experience and skills and who FIT your organization.

We aren’t born knowing how to manage people and lead a company.  Some people seem to have a natural aptitude for leadership and management but these are skills you can learn. While nothing takes the place of actually leading a team and making mistakes, you can learn a lot from studying other leaders. Ultimately you need to adopt your own leadership style and philosophy. An excellent book on leadership is Extreme Ownership by   Jocko Willink and Leif Babin

Find a good HR consultant to help you navigate these complex issues.

DIY Mistake #4 – Part-Time Manager

I often hear people say “I’m going to start this business and then sit back and rake in the money as my employees do the work.” Sorry, it doesn’t work that way. A friend of mine withdrew from active participation in his business to pursue philanthropic endeavors. He thought the manager he left in charge would take care of everything. Wrong! He paid a heavy price in 18-20 hour days for a year and a half trying to clean up the mess.

CONCLUSION

When your company is small you can get away with some DIY. Initialy, due to financial constraints, DIY may become a necessity. But as you grow, you must learn to delegate and supervise the work of the people to whom you delegated. As soon as possible you need to start outsourcing the business functions that are not your core expertise. Sometimes that means hiring someone but often you can get those functions outsourced to retired business people. Outsourcing is a great way to use limited finances and still get the quality of expertise and experience you need.

True or False – Find a Need and Fill It?

True or False – Find a Need and Fill It?

You’ve heard it before – to succeed you need to find a need and fill it. But is this old adage true? Well, yes and no.

When you started your business you did research to determine who your customers are, why they buy, and how many people or businesses need what you sell. Obviously, if no one needs what you are selling there is no point in continuing. However, there is a more critical question than “do enough people need what you are selling.” Do people want what you sell? This is one question you must answer before you consider opening a business or adding a new product or service. It isn’t a matter of whether people need your product or service; the question is, do they want it?

Just because people need something doesn’t mean they want it. We all need an estate plan. If you die without an estate plan, the laws of the state you live in determine how your assets and worldly possessions will be distributed, and to whom. What the state determines may be quite contrary to your wishes. If people need an estate plan, why do so many never get around to setting one up? I’m sure you can think up a lot of reasons and excuses, but it all boils down to the simple fact that they don’t want it, or they don’t want it right now, or they just keep putting it off.

Do people buy products they want but don’t need? Of course, all the time. I asked a guy how he liked the fancy convertible car he drove. He responded, “the car’s a piece of crap but I look really good in it.” Do you “need” an $80,000 pickup truck or will a used $20,000 pickup do the job. People make all kinds of rationalizations as to why they “need” something but the truth is they want it so they make up reasons why they need it.

On the TV show Shark Tank, entrepreneurs seek an investment from the “Sharks.” When the Shark investors ask about their sales, they often answer “We haven’t sold any yet,” or “Over the past two years sales were $5,000.” The Sharks’ response is typically, “You haven’t proven that anyone wants your product.”

Brad Tholen, Owner, Horizon Home Inspectors, provides a service people both need and want.

 

The old adage “find a need and fill it” doesn’t go far enough. A more comprehensive mantra would be

              Find a want and fill it

When you find a product or service that people both need and want you’ve hit the jackpot.

“The fact is that people never buy what they need.  They buy what they want.” – Charles Kettering

Single Focus for Better Results

Have you heard the story about the guy who jumped on his horse and rode off in all directions? You can’t accomplish everything at once, and you can’t accomplish ten things at the same time. Obvious, right?

All too often, small business owners try to accomplish too many things and wind up not doing anything well. Varying the products and services your company offers is fine, but there is a time and place for diversification.

When a lion stalks its prey, it picks one animal out of the herd and focuses solely on it. Other animals can run right in front of the lion, but its eyes will stay focused on the one it picked out. When the lion has finished its meal, it can then focus on something else.

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Many companies try to ride off in all directions. They have so many ideas that they keep skipping from one to another and finish none of them.

One man, a brilliant engineer, solicited my advice about one of his ideas. His ideas are really big; no one will ever accuse him of thinking small. His head is filled with ideas for products. Unfortunately, staying focused on one idea at a time is a problem for him. We discussed the “lion focus” concept. His response was, “Yeah, yeah, I get it!”—but then he immediately launched off on another tangent. I declined to work with him because I knew it would be a waste of his money since he never finishes what he starts.

Another example of a lack of focus is trying to run too many businesses at the same time. I’ve met people who try to run two, three, or even four businesses in different industries at the same time. That may work if you are a large conglomerate with thousands of employees, but it doesn’t work well for a small business.

You’ve heard the adage “jack of all trades, master of none.” Build one business that operates at peak efficiency, profitability, and cash flow first, and then consider other ideas and businesses.

Calfkiller Brewing Company in Sparta, Tennessee, is a prime example of executing one idea, and one business, really well, and then gradually adding more varied products. Don and Dave Sergio love beer. They first learned to brew beer in their kitchen for personal use. Friends liked their beer, so the brothers converted a barn into a larger-scale brewing operation. Gradually the operation expanded, and they began brewing larger quantities for sale to local area bars and restaurants. Initially, they had only one beer, Grassroots Ale. Then they added J. Henry Original Mild, and they continue to add new beers to their product offering.

They have perfected their craft and now have a five-year plan to open their own inn, restaurant, and brewery on the Calfkiller River, providing a dock for kayaks and canoes. The brothers are progressing one step at a time and realistically planning each step. They are

DWITs (people who Do Whatever It Takes). DWITs have “lion focus.”

Be a DWIT with lion focus.

Another example of focusing on one business or idea until it is perfected and then moving on is Olio Tasting Room. In 2011, Penny Williman opened with one store in Alexandria, Virginia, offering olive oil products.

With the first store operating at peak efficiency and profitability, she opened a second. Gradually, Olio expanded its product lines to include pastas, sauces, teas, sea salts, tapenades, specialty condiments, and more. Penny did one thing well—olive oil in one store—before graduating to other stores and products.

Focus on the one product, service, store, or idea until it is perfected and successful in the market. When you do that, you will make some money, and that money will enable you to offer other products or services.

Make Meetings Effective and Productive

Have you ever been in a meeting and felt like it was a waste of time and you desperately wished you were somewhere else. Meetings can be of enormous value when they focus a team’s expertise and experience on solving a problem. Tapping the collective wisdom can provide valuable insights and stimulate the thought process of everyone in the room. Or, meetings can be a complete waste of time. Why spend 30, 60, 90 minutes or more in an unproductive meeting? Here are some suggestions to make your meetings more valuable, productive and shorter.

  1. Leadership: Effective and productive meetings depend on the leader. The leader’s job is to facilitate the accomplishment of the meeting’s purpose in the minimum amount of time. If you are the leader, take time to plan the meeting so the attendee’s time is used productively. The team will follow the example of the leader. If the leader is disorganized and unprepared, the team will probably be the same.

 

  1. Agenda: Send out an agenda several days before the meeting. Attendees need to know the purpose and details of the meeting. The agenda should include:

 

  1. Date
  2. Start Time
  3. Location
  4. Topics to be discussed
  5. Responsibilities – What should attendees be prepared to discuss or present
  6. Reminder to turn cell phones off
  7. End time
  8. Reminder at the end of the meeting to turn cell phones on

 

  1. Start on time: Waiting to start of the meeting while people straggle in wastes everyone’s time. Yes, occasionally there are legitimate reasons why someone is late but by waiting on them you are training people that it is OK to be late. Starting promptly on time sends a message that the meeting will commence with or without all the attendees. Some people are chronically late, which is rude and inconsiderate of everyone in attendance. If they aren’t on time, then they demonstrate a lack of commitment to the team. Don’t enable late arrivals by waiting until they arrive.

 

  1. Purpose: What is the purpose of the meeting? What problem is the meeting trying to solve? Attendees need to know why they were invited to the meeting so they can start focusing and preparing for key agenda items.

 

  1. Understanding: Make sure everyone understands the purpose of the meeting and the issues under discussion. Ask one or more people to restate their understanding of an issue. Just because everything seems clear to you doesn’t mean it is clear to everyone.

 

  1. Respect: Differences of opinion will occur which is good. Just because someone disagrees with you doesn’t mean that person is right, but it should force you to think. Respect, value, and learn from the perspectives and ideas of other team members.

 

  1. Turf Wars: Have you ever attended a meeting where everyone in the room was asked to update the team on their progress but all they did was try to defend their department or themselves? They wouldn’t be in the meeting if they weren’t important to the team. Control this by stating at the beginning of the meeting that everyone attending is important and that we are here to solve problem “X.”

 

  1. Preparation: People need to know in advance what they are expected to discuss or present so they can prepare. How would you feel if you were caught completely off-guard? Angry? Defiant? Embarrassed? Don’t kill a team member’s motivation by purposefully putting them on the spot.

 

  1. Weeds and War Stories: Often discussions get off track and people start telling war stories or relate irrelevant stories. My friend, Reinhold Gerbsch taught me this technique to keep meetings on track. He used it at a senior management retreat and introduced it as a playful and humorous way to keep the discussion on track. Have everyone take out two pieces of paper and draw a war scene on one and a pasture scene on the other. Instruct attendees to hold up one of the papers whenever someone starts telling war stories or is branching off in the weeds. I was apprehensive about this technique, but everyone had fun with it and it got the message across in a non-threatening way.

 

  1. Tangents: Sometimes discussions can get way off topic and can be contrary to not only to the purpose of that meeting but also the purpose and values of the team. How can you tactfully redirect the discussion? Make a large banner made that lists the team’s purpose, values, and operating principles. Whenever the discussion gets away from what is on the banner simply point to the banner and ask “Is this consistent with who we are and what we agreed for this team or do we need to change what is on the banner?” Pointing to the banner and asking this question is non-confrontational and doesn’t challenge anyone’s ego. It will quickly bring the meeting back on topic.

 

  1. Input: Have you ever been a meeting where the leader states the problem or objective, tells you his/her solution, and then asked for input? Why waste people’s time if you have already decided on the solution? No one is going to offer ideas if the leader has already decided. The purpose of the meeting is to draw on the collective wisdom of the group to accomplish the meeting’s purpose. The leader should state the problem and then listen, even if he/she already has a preferred solution. The team may have a better solution than the leaders predetermined idea.

 

  1. Parking Lot: Sometimes people bring up topics and ideas worthy of discussion which aren’t on the agenda. If people don’t think they have been heard, you may lose their attention for the rest of the meeting. Post their idea on a flip chart for all to see. This “parking lot” is for topics to be discussed at a future meeting.

 

  1. Interruptions: Let’s face it, at some point in every meeting people’s minds will wander. No one can focus 100% of the time. If an attendee misses a key point they can’t be an effective participant. The leader needs to minimize interruptions and distractions so the meeting’s purpose can be accomplished on time.

 

  1. Close the door – Let people know the meeting should not be interrupted unless there is a real emergency. If the door is open, people may be tempted to drop in.

 

  1. Cell phones: At the start of the meeting remind everyone to mute their cell phones and put them out of sight. Yes, there could be an emergency call, but probably 99% of the time the call/email/text can wait an hour. You can’t focus on the issue at hand if you are constantly looking at your phone. Texting during a meeting is rude and disrespectful. The team deserves your full attention to the issues being discussed.

 

  1. Meeting times: If possible, schedule meeting at times that are least likely to have interruptions, such as before the workday starts, at the end of the workday, or make it a lunch meeting. Coming in early or staying late is an inconvenience, but the meeting will accomplish more and be shorter if it is uninterrupted and focused.

 

  1. Stick to the agenda!: Want to drive people crazy? Add topics to the meeting that they are unprepared to discuss. When the leader adds unannounced topics, it demonstrates that the leader wasn’t prepared and might extend the meeting beyond the exit deadline.

 

  1. Action List: The result of every meeting must be an action list assigning tasks and who is responsible for completing those tasks. Without a plan of what comes next, the meeting was a waste of time. Agree on an action list before everyone leaves the meeting.

 

  1. Exit Deadline: Set the time the meeting will end and stick to it. People have jobs to do, schedules to keep, and lives to lead. If more discussion is needed, schedule another meeting. If you go over the exit deadline, people may be distracted and not focus on the meeting’s purpose. They will be looking at their watches, trying to figure out how to reschedule the rest of their day, and think about other tasks on their action list, etc. End the meeting on time!

 

Conclusion

Some of the above may or may not apply depending on the type of meeting, meeting duration, venue, and the leader and groups personality. Pick and choose what works best for you. I would love to hear your suggestions for making meetings more effective and productive.

How Am I Doing?

You’ve been on the job for 2 weeks, or 6 months, or a year, or maybe 10 years. What question have you been asking yourself no matter how long you’ve been on the job? You are probably asking “How am I doing?”

You want to retain your star employees right? Performance evaluations can help you accomplish that goal. Employees are people, and people, in general, want to feel appreciated and know that they are contributing to a winning team.

Performance evaluations sometimes get a bad rap. The purpose of a performance evaluation is to help someone improve and contribute to the success of the organization. It is not a tool to beat people over the head. If you go into a performance evaluation with the objective of helping the person improve, regardless of whether or not that person stays at your company, then it can be a great tool. If used poorly, it can be highly demoralizing.

People want to know how they are doing, and that doesn’t mean just once a year. If someone did a particularly good job that day or on that project, say something. If you wait until the annual review and say, “Thanks, Alice, for that nice job you did six months ago,” it loses value, and Alice may not even remember what she did. Similarly, if a person messed up it presents a coaching opportunity that should be done immediately and with the attitude of helping the person improve.

Recognize accomplishment when it occurs, but make sure it is deserved. Recognition for achievement shouldn’t be confused with acknowledgment of a person, attention to their needs, and encouragement. Recognition for non-achievement is not encouragement, and it can result in discouragement. Let’s look at a couple of examples of how a performance evaluation can demotivate.

When I was in the army, there was a detailed performance evaluation system. Hopefully, it is different today. I don’t remember most of what was on the multi-page questionnaire except for two questions, and I vividly remember both.

First, the evaluator was asked to give you a percentile rating relative to all other people in that grade (rank). The lowest percentage I ever got was 95 percent, which meant that I was rated higher than 95 percent of all the first lieutenants. It’s a ridiculous process when you think about it. The evaluator couldn’t possibly know all the other first lieutenants in the army, so how could he assign a percentage rating to anyone? One captain gave me a 100 percent. Woohoo! I was now the best first lieutenant in the whole U.S. Army, all over the world! The next question was the real de-motivator: Would you …

  1. a) promote this person ahead of his contemporaries?
  2. b) promote this person along with his contemporaries?
  3. c) hold this person back from promotion?

I was rated as one of the top in my grade in the whole army. How do you think everyone who evaluated me answered the second question? That’s right—promote this person along with his contemporaries. Why bother to excel if there is no reward?

One day my boss called me in and told me I had been promoted to senior accountant. Naturally, I was pleased and excited. He then proceeded to tell me that at this level more would be expected of me. “Great!” I said. “I’m ready. What is expected of me?” “More.” Yes, but “more” of what? He never could tell me. I don’t know about you, but I can’t hit a target I don’t have.

Having  the  Conversation

Why don’t more managers meet regularly with employees to thank them or deal with issues? Often it is because most people don’t like confrontation or conflict. If you let a wound fester it will become infected and now the problem is much worse.

Counseling sessions are an opportunity to get to know your employees’ personalities and a great opportunity to discuss weaknesses, strengths, and goals. They should be in private without interruption, allowing you to provide the employee with quality time with you. There should be value taken from the meeting concerning both of you.

  1. Initially discuss  employee’s  personal  life,  hobbies,  and  inter

 

  1. Opportunity: Where do you desire them to improve? Give clear guidance Give them the opportunity to ask questions. Discuss one opportunity at a time.

 

  1. Strengths: Discuss areas you are happy with, and let them know you have recognized their performance

 

  1. Ask for ideas and suggestions for how the company can improve You might hear a few gems.

5. Explain your vision on the future of the company and where the employee fits i In other words, what could their future be with the company?

 

  1. Ask if they have any questions about anything.

 

First, put the person at ease and establish a rapport. Let them know you care about and are interested in them. Then discusses opportunities for them to improve. Takes the positive approach of “how can I help you?” Then move on to recognizing their strengths and contribution to the organization.

Understand that people won’t open up to you until they trust you. Building trust takes time and occurs when people realize that what they say won’t be held against them. If they open up and make a suggestion, take it into consideration. Ask them how it might be implemented and how it would benefit the company. You can’t implement every suggestion you get, but you can acknowledge and appreciate every suggestion. Also, you should be able to give a reason why that suggestion can’t be implemented but don’t tell them no at that time. Consider their idea for a while and, when you have a logical, well-reasoned explanation, go back and talk with them.

Finally, reiterate to the person the organization’s vision and how that person fits in its future growth. It is also an opportunity to communicate the company’s fundamental purpose, values, and operating principles.

What? You Don’t Believe In Training Employees

You can’t teach people to be passionate, and you can’t teach them to be ambitious. They either are or they aren’t. But you can give them opportunities to grow and improve!

I once asked a business owner—let’s call him George—what kind of training he had for his employees. He immediately replied, “I don’t believe in training.” I was stunned and asked why? He said that he wasn’t prepared to take the loss. He figured that if his company spent money on training an employee who left to work elsewhere, particularly for a competitor, then his company had paid for training that benefited another business.

George was worried that a properly trained employee might leave, but what about the consequences of an untrained employee staying? Essentially he is saying by not doing any training that he wants unqualified, unproductive, inefficient, uneducated employees who can’t contribute to the success of the company and probably offer poor customer service. George thinks he’s saving money and protecting his business, but he’s really asking for a lot of headaches and is putting his business at risk.

It is amazing that owners see the obvious need for preventive maintenance for their equipment, but even though salaries can be anywhere from 30 percent to 70 percent of their expenses, they spend less than 1 percent of their budget on training. Keeping and improving employee skills is more valuable than equipment maintenance. You might say, “If the equipment fails, we can’t do the work.” But what happens if the employees can’t do the work or do such a poor job you lose business?

Employees in most small businesses tend to be good, hard-working people who prove that business owners take hiring seriously. A few bad hiring decisions will convince any owner of the importance of hiring good people, but the people that a small business can afford don’t necessarily have the qualifications and experience that a huge company can draw. This is why ongoing training is essential for your business, so you can raise the level of your employees’ qualifications and skills, in just the way you want and need.

How can your employees improve at what they do or how they interact with customers, vendors, and coworkers without training? How can they understand how they can help the company reach its goals, and what’s in it for them, without training? When you provide training, you are saying to employees, “You are valuable, and I see a future for you at this company.” If you have an employee who you wouldn’t consider training, do you think you have the right employee?

Is every employee trainable? It’s a matter of attitude. If people believe they can learn something, they are right. You can learn virtually anything if it is critical to your success or well-being.

Alligators don’t want to be trained except perhaps about coming to dinner. One of my BNI friends, Steve Anderson, is in the property management business for gated communities. In our area, alligators abound in ponds and lagoons, and they like to bask in the sun. A lawyer renting a home in one of Steve’s communities wanted to get a picture of his ten-year-old daughter standing next to an alligator, so he told the girl to walk up and stand close to it. If you are thinking that this was a bad idea, you’re right. The alligator hissed and snapped its jaws, and the terrified girl ran away.

The lawyer then went to Steve and complained angrily, saying that Steve needed to do a better job of training the alligators. He refused to believe it when Steve told him that alligators can’t be trained. Alligators can learn where to look, what to look for, and how to use what they find. Beyond that, there isn’t much an alligators can learn.

But your employees can learn a great deal. Not only are there important skills that will help them be more productive, but there are also people skills that can help them interact with other employees, vendors, and, of course, your customers.

Training is not an expense. It is an investment in the future of your organization that will pay dividends for years to come.

7 Keys To Retaining Star Employees

FACT: Star performers can leave anytime. Mediocre employees will probably stay, and poor performers will normally never leave. Star performers have options and are in constant demand. If they aren’t happy, they can easily find work elsewhere. Mediocre and poor performers are happy to work for you because there aren’t many other companies that want them. So, you want to keep the stars, nurture the mediocre into stars, and weed out the poor performers. Easier said than done, right?

Exceptional people are scarce, costly, and highly mobile. Turnover is an expensive problem for a small business. You invest time and money in a person and then they leave. Add to that the fact that in many cases a small business can’t afford to hire the exceptional person nor can they afford not to hire them, so they are caught “between a rock and a hard place.”

How do you retain stars? Why would they stay with your company when they get an offer for more money somewhere else? Everyone has different motivations.  Numerous studies show that money isn’t always the highest priority. Seven key elements in retaining stars.

 

  1. Vision – Are your employees excited about the long-term vision for your company? Would you follow someone who doesn’t know where they are going?

 

  1. Fundamental Purpose – Do your employees believe in your purpose (how you help people and make the world a better place)? When you believe in a purpose or cause, you are excited to get up and go to work every day.

 

  1. Fundamental Values – Do your employees share your values? Your values define who you are as a person and as a company. Would you stay with a company that violates your values?

 

  1. Fundamental Operating Principles – Are your employees comfortable with your culture and “how things are done” at your company?

 

Vision and fundamental purpose, values, and operating principles are discussed in more detail in The Alligator Business Solution – Small Business Competitive Advantage https://alligatorbusinesssolution.com/

 

  1. Future Opportunities – Do your stars have a future with your company. Most stars are ambitious, and they want to know this? Do they have advancement or potential ownership opportunities?
  2. Recognition – People want their contribution recognized and to feel like they are contributing to a winning team. They want to know how they are doing, and that doesn’t mean just once a year! Recognize accomplishment when it occurs, but make sure it is deserved. Recognition for achievement shouldn’t be confused with acknowledgment of a person, attention to their needs, or encouragement. Recognition for non-achievement is not encouragement and can result in discouragement.

 

  1. Appreciation – Employees want to know that their contribution is appreciated. There are numerous inexpensive ways to show appreciation. A good book with many ideas is The Best Place To Work by Dr. Ron Friedman.

 

These seven keys are not about a bigger paycheck. Star employees are more likely to stay because of where you are going, how you make the world a better place, the values you believe in, how your company operates, and whether they feel recognized and appreciated. As one young star said, “I moved to South Carolina because I wanted to work for this company even though the pay was less than I was making in Texas. I believe in who they are, what they stand for, and where they are going.”

Finding The Right Employee

“I’d rather have a lot of talent and a little experience than a lot of experience and a little talent.”  – John Wooden

Mike Covert, the owner of Covert Aire, said the toughest business decision he ever made was hiring his first employee. He wasn’t concerned with how to cover the cost of an employee because he had prepared for that; he was concerned about giving up control. Someone else would be out there maintaining and fixing HVAC systems. He knew the quality of his own work, but would the new person deliver the same? If not, the image of Covert Aire could suffer from Reputation Deficit Syndrome.

If you have ever hired someone, then you know that sometimes, despite your best efforts, you end up choosing the wrong person. If and when this happens, it is your responsibility to learn from the mistake. Were there any warning signs you missed? Did you have any hesitation about your decision, or did you settle on choosing the best from a bad group just to fill the position? Unless you can function alone, then you’re going to have to try hiring again, and you may as well arm yourself by learning as much from your mistakes as you possibly can. (more…)

Tax Strategy

At year-end, business owners look for ways to save taxes.  That often means buying equipment or vehicles to take advantage of bonus depreciation.  QUESTION: Does the tax saving purchase fit with your business strategy?  Do you really need the item? Will it generate revenue in the coming year? Do you really need the top of the line truck or will a less expensive one do the job? What is the ROI (Return on Investment) for this purchase?  Buying things inconsistent with your business strategy is a bad idea.  It reduces cash that could be used for other strategic investments or it involves loan payments that may not be affordable or could be a burden if the economy falls into recession.

Persistence

Once when I was a teenager I set a goal to swim across Chautauqua Lake in Western NY. It was a 3-mile swim and several friends had done it. It was a lot harder than I thought with the waves beating you up. Eventually I was exhausted and told the guys in the boat beside me to haul me in. They kept encouraging me saying you are almost there. But I gave up. When I got in the boat I was stunned to see that I was only about 50 yards from shore. I could have made it. It taught me a great lesson about persistence. If it is a worthwile goal, never give up!

LOCATION?

In retailing, it is said that the 3 keys to success are location, location, location. That isn’t true. In any business, the 3 most important things are preparation, preparation, and preparation. Finding the right location is part of preparation. Success happens when opportunity and preparation meet. All of us will have opportunities in our lives but if we aren’t prepared then the opportunity is lost.

Cash Flow Discussion

If you could only do one thing to improve cash flow, what would it be?

 

 

Roy Austin new

Roy Austin, CPA, CMA, MBA

Business Coach & Trainer for Sustainable Success | Purchasing Solutions | LION | 1800+ Contacts | rockwell@hargray.com

Top Contributor

I posed this question to the Chief Financial (CFO) Network on LinkedIn.  Here are their responses.  Hopefully their expertise will help you improve your cash flow.

 

FOTEINI STAGAKI

Owner, NETSERVE

Improve the average collection period

Jose-Zulmar

 

José Zulmar-Gerente Financeiro //Finance Manager// CFO

Gerente Financeiro// Finance Manager // CFO // Diretor

Top Contributor

Roy,
There´s no magic formula: sell more and well

The faster a seller moves goods to a buyer, the faster the buyer will pay for those goods, and that impacts cash flow. Therefore, businesses must ask themselves how they can better improve the speed at which their goods exchange hands. And this goes well beyond the actual transportation of the goods. Rather, it requires an examination of the entire process–from sales all the way through invoicing.

Pierre-Miron

Company management and Financig

Roy,
I believe that, both comments from Mrs. Foteini and Mr. Zulmar Lopez, are very accurate. It all depends on how fast you need to improve your cash flow. On a short term push collection and stretch payables. If it is a mid-term issue Mr. Zulmar Lopes solution should be put in place. And I would recommend in the examination process to look at the turn around time of your inventory. Do you need all that inventory on shelves.

Seraphim-Tsoutsos

Seraphim Tsoutsos

Consultant- Looking for new opportunities

I’d check (trend) my CA indices as well as the debt burden each CA item carries (currently). Then it’d be obvious where to focus

AJAJ Minnetian

Senior Director – Technology Finance l Strategy l Accounting l Business Development Professional

the classic way to do it in the near term is to stretch the balance sheet, lengthen your AP days, and shorten your AR days. Easier said than done!
Obviously, this will only have a short term effect, you ultimately want to increase your net income by improving revenues, less so lowering costs.

Jim-SmithJim Smith

CEO, Enterprise Management Group | Enterprise Wide Expense Reduction | Profit Improvement |

Reduce operating expenses in a sane and employee involved process. It is not possible for a company to to not have needless costs. Things get initiated for one valid reason or another then go on auto-pilot, become part of the culture and no one bothers looking at it again. If they do, it’s usually part of a bigger enterprise wide initiative and everyone, to be fair, gets the same objective, the same percent.

That makes absolutely no sense, but it is the most frequent approach. What happens when a CEO takes this approach, high value departments get penalized with, the say a10% cut, while low value departments are rewarded with being allowed to keep 90%, all in the name of fairness.

Sometime ago I averaged the net margin of the ten largest Fortune companies. It was 6%. So if you’re trying to impact cash flow, it takes $17 of incremental sales to drive $1 to the bottom line and $1 of expense reduction to drive $1 do the bottom line. Seems pretty obvious. if you can do it.

We typically generate a sustainable 10% SG&A reduction, regardless of what has occurred just prior and the percentages per department are all over the scale. One hundred percent of the savings are the result of employee input occurring as soon as we have suspended the company’s culture, politics and silos and it’s all done in ten weeks. One example: a sustainable $300 million SG&A reduction, a $200 million reduction to already approved capita and a one-time inventory reduction of $45 million. All in ten weeks.

Go for the expense reduction, which will occur far quicker than any revenue ramp up.

Jm Smith
CEO Enterprise management Group
www.emgc.com

Alex-LeungAlex C. Leung, CPA, CA

Performance Management Professional

A company’s industry and business environment / competitive landscape dictate what options are available to increase cash flows. That said, dare I potentially bare the wrath of a frenzy of thumbs down and suggest:

Pay AP sooner to take advantage of supplier discounts where offered for early payment. Real cash flows potentially gained, real cost savings, and happier suppliers who can help you make happier customers and potentially faster cash receipts.

Jose-ZulmarJosé Zulmar-Gerente Financeiro //Finance Manager// CFO

Gerente Financeiro// Finance Manager // CFO // Diretor

Top Contributor

I´d would add.

If improving cash flow is a priority, make sure all of your employees understand that. Remember that your employees will be motivated by the targets you set for them.

Obviously, collectors should have collection targets. But even your sales staff should be on board. If a salesperson only has a revenue goal, he or she will work to meet it, regardless of whether the invoices are paid on time or in full. Instead, institute a policy where, if something is written off, the revenue is backed out of commissions.

If employees have a target, that’s what they focus on,

Bob-Rafflo

Bob Raffo, Jr.

CFO at PSKW

If I were to focus on one thing only it would be the quality of my customer. Everything else is a short term solution. Make sure your customers are credit worthy – timely payers – financially secure. That is a long term strategy to positive cash flow.

Jose-ZulmarJosé Zulmar-Gerente Financeiro //Finance Manager// CFO

Gerente Financeiro// Finance Manager // CFO // Diretor

Top Contributor

Your most important customers are not those that generate the most revenue but those that can unlock the most value in your business

Jose-Aristondo-MAruriJose Aristondo Maruri

Director Financiero Subdirector General

Excellence in debt collection

Bill-MilewskiBill Milewski

Global CFO / Finance Director – Relocating to Washington, DC

Top Contributor

Debt issues begin BEFORE anything is sold. It’s a 360 view of managing your business.

Sr-Manager-Group-FinanceSr Manager Group Finance at ARASCO

Roy,
My advice is to create a product within your product mix that is sold on a cash basis only. The revenue streams from this product would provide a great cash flow to finance other products that your company sells on a credit basis.

Fidelis-MuiaFidelis Muia

Director of Financial Operations

Top Contributor

I will be glad to get your views on how to improve cash flows from a not for profit point of view.

 

Ammar Khadim

Chief Financial Officer at WMO

An interesting discussion as, in most of the cases, the main reason of business failure is poor cash flow management. In short term, simply try to reduce receivable days and increase payable days.

Fidelis-MuiaFidelis Muia

Director of Financial Operations

Top Contributor

Analyze which of these two components (receivables and payables) mostly affect your cash flow.

Roy Austin newRoy Austin, CPA, CMA, MBA

Business Coach & Trainer for Sustainable Success | Purchasing Solutions | LION | 1800+ Contacts | rockwell@hargray.com

Top Contributor

Thanks to all of you for your responses. Now let me rephrase the question. Long Term, what is the most important thing a small business owner could do to improve cash flow.

Howard-MulcaheyHoward Mulcahey

Vice President and Chief Operating Officer at Forensic Economics, Inc.

Excellence in the revenue cycle: solid sales with the expectation of prompt payment; lots of attention to the sale until and after it is paid; effective collections; stretching AP but stretching expectations during procurement; and making all of that part of that daily operating mindset. No small task.

Lee-McLendonLee McLendon,CPA,CGMA

CFO

Fidelis Muia requested suggestions from not for profit view. I have been in both environments and there really is no difference. You still have to manage cost, collect accounts and manage payables. Because of focus on bottom line, the level of intensity of the issues may be lessened in the not for profit environment but the principles remain the same.

Thomas-Della-FrancoThomas Della Franco

Chief Financial Officer

Most beneficial, long term impact always involves inventory management and turns reductions, together with laser focus reduction of E&O balances. Unfortunately, this is also a difficult area to yield immediate results. The real skill is in developing optimal stock levels and turns to satisfy demand, while understanding and focused management of historic root causes of E&O.

Janine-MeiraJanine Meira S. Koppe Eiriz

Finance Manager – FP&A, Treasury and Finance Project Management at Cameron

I learned from experience that it is good to make everyone aware of how they are affected and can influence cash flow generation – and in communicating with all the enterprise we cannot be restricted to our finance jargon with terms that are so far away from everyone else´s day-to-day work in operations, sales, HR, IT… each employee has their share and they should know what it is in their own “language”…. While having someone trying to grasp the DSO concept in a chart I had a quick turnaround by saying: this is how long it takes us to get the cash in our pocket to reward everyone´s effort… he smiled and eversince became a great contributor to improve collections!

Kumar-MKumar M

Intern at Varma & Varma, Chartered Accountants

Short Term Plan:
(a) Reduce the AR period. Negotiate and re-negotiate with the debtors that may go bad to recover as much as possible.
(b) Optimize the payments to creditors so that you retain their confidence.
(c) Offer discounts on non-moving goods.
(d) Strict control on Inventory replenishment and reorder with respect to Quantity and Time

Long Term Plan:
(a) Emphasis on Cash Conversion Cycle.
(b) Redesign the processes to eliminate non value adding activities.
(c) Focus on new products and New markets to generate revenue. Targeting markets similar to the existing markets would have an advantage on cost front.
(d) Review of purchase processes and Sources.

Note: The question asks to mention only one thing. But, I mentioned quite few things here. I am sure most of you would agree with me if I say, they are interrelated and the action to be taken depends on the type of industry/environment that the company is operating in.

Jeremy-SlaughterJeremy Slaughter

Client Partner and Principal at Tikvah Group

There are a lot of great things listed in these posts and all can help cash flow in some scenario. I think it might be challenging to assume all businesses can improve cash flow by doing the same “one” thing. I work with a company that produces revenue in the neighborhood of $50M/yr and they have no receivables, no inventory and no products of their own to sell. While all the actions listed above are absolutely capable of improving cash flow this company isn’t impacted by them. Their best controllable expense is labor and travel as they are a rep agency for other companies and their revenue mix is most impacted by the terms of each manufacturer and the markets in which they represent companies. I mention this not as the “one” way, but to say every company at any given time can be different so diligence and awareness are imperative in determining the best action each company can take to improve their respective cash flow.

Roy Austin newRoy Austin, CPA, CMA, MBA

Business Coach & Trainer for Sustainable Success | Purchasing Solutions | LION | 1800+ Contacts | rockwell@hargray.com

Top Contributor

Let me shift gears a little. For small businesses, what are the most important things they can do to improve cash flow. While the basics of cash flow improvement are universal the dynamics and resources of small businesses are different than for large companies.

Bob-RaffloBob Raffo, Jr.

CFO at PSKW

A small business needs to do the following:

1. Develop reliable and accurate financial statements – not a 10K but at least a P&L, Balance Sheet and Margin Analysis. Produce these reports monthly and manage the business by the numbers.

2. Establish a line of credit – no matter how small. Use it and build it and make sure you have access to funds to help support growth.

3. Understand ROI – if you are going to spend money on advertising – how will it drive revenue. If you are going to buy equipment – how will it lower your costs to improve margin – etc.

4. Most importantly – Sell. Sell. Sell.

David-ZaleskiDavid Zaleski

Chief Financial Officer

I think it all starts with education – educate all employees on cash flow importance and then let your entire company help with ideas. Integrate it into the culture, the company metrics, the bonus plan, etc. Make it everyone’s business, keeping it out in front and it will develop quickly. But you as CFO must walk the talk and be visible in the process and just as importantly, you must get the CEO on board.

Mark-McLarenMark McLaren

Innovative Financial Consultant

Build or provide a top quality product and support it. There are very few business who do this to any significant degree anymore, but when it is done, it provides a long tail of profitability and cash flow. Too much energy is wasted on beefing up short term CF.

Costco is an excellent example of this. Wall Street always pushed for higher margins from Costco, but Costco pushed back. Costco is much more profitable because they operate this way. Happy customers produce repeat sales which, in turn, bolsters long term CF’s. Cable companies’ major focus is ST CF. How satisfied are their customers?

While I am an accounting and finance person, you never want the cart before the horse!

Robert-MeybohmRobert S Meybohm

Results Driven Executive

I must not understand the question? If you want to deal with cash flow over a long period of time take a look at the cash flow statement and see what the largest positive numbers are on the statement; likewise look at the negative numbers. What can you do to make the positives go bigger? Seems to me, the answer is typically tied in to running a larger organization (sales growth ), while not experiencing leakage in profits or efficiency (i.e, DSO, inv turnover turnover ratios)

Ronald-RaadsenRonald Raadsen, M.B.A.

Accountant | Consultant | Looking For New Opportunities

If there is only one thing, then it is a complete understanding of the cash flow cycle of the organization. It is understanding where the money is going, where it is coming from, all the internal controls to safeguard cash, how quickly customers are paying their debts, the time frame for paying invoices.

There is an inherent with the premise of discussion, there are too many factors that can suddenly explode to cause a hemorrhage. It’s like a doctor during a physical, he looks at everything.

 

 

 

Abhishek Choudhary CPA (USA), CA(I)

Corporate Controller: Financial & Accounting Management, Budget, Debt & Project Funding, Restructuring, Tax Planning

Cash flow improvement efforts could be an industry specific or specific to a particular organization. Though there are general points to focus,

a. Understand clearly Cash flow items (both Inflows and outflows), as only those items will be the players

b. A simple approach has been to reduce deferred collection, and rather offer reasonable discount for the cash transactions, as anyway external borrowing cost is normally higher than these discount; and these discount could be offer as marketing promotion to serve dual objectives

c. A cash reserve helps in several respect, e.g. Grabbing a cash deal, M&A, Stock prices, Attracting better human resources

d. At the same time, Cash outflows management can also contribute in improving Cash flow, e.g. Corporate account with Vendors, Longer terms (60-90 days) with bulk orders, Terms negotiation/renegotiation

e. CAPEX can be a major item in Cash flow, and this outflow could be reduced by opting other alternatives such as Capital leasing, Financing, Lease cum buy option or sometime operating lease

f. It is most important than anything else that business is growing, company’s customer retention is good and always focus on new acquisition (customers)

g. Alternatively, these programs could be considered for a specific situations, e.g. Factoring (for over 30 days AR), AP/Merchant financing (in case of cash or lower vendor terms), Private label CC (GE Capital program- in case of repetitive customers), Line of Credit (on AR &/or Inventory)

Joe Kirby

Chief Financial Officer at NorthPoint Health & Wellness Center

We run a human services non profit and are driven mainly by contracts along with some fee for service revenue. For us, looking at CF over a two year period of time helps us to focus on what we need to accomplish now in order to stabilize CF in the longer term. So, for me, adjusting everyone’s mindset to think more strategically and prepare now for tomorrow is important.

James-WadeJames Wade, Director of Finance

Finance leader who partners with business leaders to deliver ‘the story’ behind the numbers.

If it’s one thing, then it has to be about Revenue. Sales must drive the equation.

Richard-TaylorRichard Taylor

Controller at Lomax Construction

My “one thing” would be to understand the costs of the products/services being sold are, in fact, sold at a profit.

Kelly-ParkerKelly Parker

Vice President at R.T. Beers and Company

High company morale. You can build the best product and have superb sales; however, if company morale is low it will lead to high turn-over, employee injury claims, and low productivity. Keep the employees happy, keeps the business viable. How much does it cost to train an employee, an insurance claim, or a large lawsuit? A happy employee can safeguard against those and not put the businesses assets in jeopardy. Which in turn, leads to long-term cash flow. More coming in-and less going out.

Mark-McLarenMark McLaren

Innovative Financial Consultant

Kelly, What you described is the perfect description of the Costco model. Every single time I go to Costco, I find the employees helpful and cheerful. I think you are right on. Focusing on the financials first will always be a bad long term solution to LT cash flow. After seeing the deluge of people at Costco, getting the service I liked and getting high quality merchandise for a good price (Peter Lynch method), I investigated the financials. Good as well. Additionally, Charlie Munger sits on their board and Charlie is Warren Buffet’s right hand man. So…steady as she goes. I bought the stock over the 2008 to 2010 time period. Glad I did!

Javier Egozcue, MBA, CPA, CGMA

Internal Audit Manager

Great question with lots of different possible correct answers! First we need to narrow a bit…

1) Understand your company costs structure and business cycle.
2) If we are focusing in the operating cash flow, I would focus on keeping sales in a growth mode, keep a close eye on receivables (sales to quality customers = good receivables turnover) (DSO management)
3) Keep a close eye on inventory (inventory management is critical) work to achieve a high inventory turnover. (DIO management)
4) Manage your accounts payable to squeeze as much as you can from your payment terms. (DPO management)

1)+2)+3) = The famous Cash Conversion Cycle

Other key matters are:
Capital expenditures should be monitored very closely (ideally for projects showing positive NPV). Other key ingredients to this recipe are good cost control and good gross margins.

If a company can manage these key areas I would say the LT cash flow will be healthy. Obviously these are general measures that could be applied to a business in almost any industry. Also, this is only the numerical side of the equation…we also need to factor in an important ingredient…employee teamwork, dedication an commitment to succeed from top to bottom.

Mark-WagstaffMark Wagstaff

Vice President of Finance at Connecticut Lighting Centers

For long term cash flow improvement it essential that a coherent sales strategy needs to be implemented to grow sales within the territories/markets and expand into new markets and/or new product lines. Everything else (cutting expenses, etc.) is short term

Warren-HuangWarren Huang, Ph.D 5500+

Global strategy integration: Big data, economics , capital market, value chain , technology, trade innovation Founder,

Process/product/technology/maraket innovation increse revenue, profit margin growth and cash flow

Mary-BodajloMary M. Bodajlo

Finance Column Editor of an International web at Great New York

Listed imminent “Ali Baba,” Why can produce beautiful results? Its recipe for success. . .
This Chinese electricity supplier giant said Wednesday, June 30 at the end of the quarter, the company’s profits almost tripled, reaching $ 2 billion (about 12.3 billion yuan). Given its total revenue of $ 2.5 billion, indicating profit margin reached a startling 80 percent. With less than a month before its initial public offering, Alibaba Group intends to show just how profitable – why? How? He focused on mobile – simply – to seize the market.

I think, no matter how kind you are big or small business, you still need to understand the market, in order to win the market and your customers’ needs, to set up your merchandise at competitive market, with business, with the guarantee of cash nature .
I use to track and learn how their live around my home the businesses sales – “Customer First, always keep in mind” is a guarantee of success. (I can talk for hours, now consolidated for your reference)
1. Fixed source, (it guarantees you a fixed cash income);
2. Develop new customers, uninterrupted launch prominent cheap merchandising (coping customers to shop around) to boost the marketing of other goods;
3. Employ short-term (1-175 days) temps, found excellent staff left for permanent workers; attention attitude and quality of staff training is an important means to retain regular customers;
4. If the conditions established client accumulation accounts, reward; track market needs and your customer base;
5. Adjusted merchandise, record customer inquiries and this business does not have the goods to be added; If 3-6 month sell nothing the goods should for special sell on the cost and not to carry.
5. Whether large or small businesses had to adjustment goods’ prices to ensure to keep your business the competitive counterparts;
6. What customers think, the old, the disabled person home delivery plus discounts, access to customers credit and become your obligation salesman;
7. Must have an excellent and hardworking, intelligent market administrator ( or a team) in your business is essential.

Edmund-MAbutiEdmund Mabuti

CASH IS KING. I USED TO BE A VP-FINANCE & ADMIN OF ABB PHILIPPINES, AND I CONSIDER ABB AS AN INSTITUTE WITH LOTS OF REGULAR SENIOR MANAGEMENT MEETINGS AND WORKSHOPS ON HOW TO KEEP A HEALTH CASH BOTTOMLINE FOR THE LONG-TERM. AS A CFO, YOU HAVE TO DRIVE THE BEST POSSIBLE WORKING CAPITAL MANAGEMENT AND BE READY WHICH COST COULD BE FREEZED WHEN YOU FORSEE SOMETHING WILL AFFECT YOUR COMPANY’S CASH POSITION.

Mark-SpicerMark Spicer

GM Finance | Driving powerful business capabilities | NOW AVAILABLE

Roy, if it has to be one thing, establish and maintain well thought out, well documented processes. Everything stands (or falls) on them. “well thought out” means effective, efficient and scalable.

Kok-PooKok-Poo [KP] LOW 卢国宝

Senior Finance Manager, BDO LLP Group – Singapore

Basically, all matters in business created by human beings so motivating employees working happily with commitment to the company vision which will in turn lead to long-term cash flow stability & business sustainability.

Jason-Wangjason wang

Vice Persident at MDT InfoTech Ltd

Adjust or change business model is working for your long term cash flow problem.

Poul-ErikPoul Erik Kamstrup

Global Finance Executive

In a B2B context:
1. Know where you want to position yourself in the market.
2. Have a value adding product/service offering that matches your positioning. Be able to adapt quickly to market requirements.
3. Work on continuously improving the supply chain in close collaboration with customers and suppliers to eliminate waste.
4. The better brand recognition/customer loyalty, the better share of sustainable cash flow your company gets.

Susan-WilsonSusan Wilson

Director

The most important thing you can do to improve cash flow

Going back to the basics

1. Review your Terms of Business.
2. Re-negotiate credit terms to be extended.
3. Manage your stock levels.

George-Habib

Deputy Financial Controller at Azur Travel

The most important thing is Sales information
Examining the data from the sales staff on a regular basis. How much was sold yesterday, how much will be sold today, and what about tomorrow? The more accurate this information, the tighter the inventory. And the tighter the inventory, the better the cash flow.

Filipe-Moura

Filipe Moura

Assistant Vice President, Financial Services Manager / People’s United Bank

Keep your fixed costs low!

Shafiq-EbrahimjeeShafiq Ebrahimjee

Chief Finance Officer

It varies from industry to industry. Cash flow management is linked to customer/creditor support too. The relationship that will exist between yourselves and the creditors will determine how much reasonable time you can obtain in addition to normal (30/60 days) period. This is of course a plus to all the other points mentioned above earlier.

Kirk-AbriolaKirk Abriola, CPA

Senior Finance Professional with Top Secret Clearance Seeking New Opportunities

Execute to your companies strategic plan which includes cash flow expectations. If this does not exit, may want to start here.

Greg-ThorneGreg Thorne

C.F.O at Tom Lange Company

Relationships with customers and suppliers is key . When your customers are tight on cash they will generally prioritize available cash amongst their suppliers . You want to make sure that you feature high on , or at the top of that list . The type of service / product you provide obviously influences this but so does having a solid relationship with your customer . Similarly with your own suppliers , good relationships lend themselves to suppliers being more flexible on payment terms to them .

Venkataramanan-Thiruvenkataramanan Thiru

Practicing company secretary at

my earlier comment is not appearing

Kelly-PetersKelly G. Peters, CPA, CMA

Director, Compliance, Land and Armaments Sector at BAE Systems

The biggest opportunity for improved cash flow is often inventory. Improving inventory turns, while maintaining days receivables, will often bring significant, long term cash flow benefits to the company. These strategies often require partnering with your suppliers for co-investment in product development and holding inventory on their books, being able to implement JIT, attacking waste, etc.

Another model is selling your suppliers goods through your web-site, taking a commission on the sales (I believe this is the Ebay and Amazon models).

Henrique-PezzuttiHenrique Pezzutti Ribeiro Teixeira

Financial Market Professional

“Natural Hedge” is the most efficient way to manage your exposures, investing time to balance your AR and AP in the long term.

Adam-RyanAdam Ryan

Seeking VP of Finance Role – Global Financial Professional, Turn Around Specialist, Strategic Planning, FP&A

You need to asked some basic questions about your business before you can determine a long term cash flow planning:
1) How much will your sales grow over the next five years and what will are affect on profit margins
2) How long does it take to collect your outstanding A/R and what could cause collection problems
3) What are the capital expenditures over the next five plus years
4) How much is the company’s head count going to change over the period that your planning for on the cash forecast, what are the benefits costs and changes in wages plus bonuses
5) What are the impact of variables, raw materials, delivery, electric, and others
6) The costs of banking like interest, lending cost and other financing costs
When you have answered these basic points list above then you are in a position to project your cash requirements long term.
All this work can become worthless in a moment if there significant economic changes within business or the economy.
Long term cash forecast are good to plan but difficult to control over extended periods.

Brian-AwuorBrian Awuor

Management Accountant at Mabati Rolling Mills

Hi Roy, in my opinion in the long run cashflow and profitability are one and the same. In order to improve cashflow in the long run a company needs to maximize the efficiency at which it generates revenue from every shilling (dollar/pound/euro/yen/yuan/dinar/etc) invested. Also, the company needs to reduce the payouts it makes that do not have a direct or indirect effect on the inflow of revenue and work on having a reasonable debt appetite.

Florita-BenemeritoFlorita Benemerito

Business & Finance Manager at Caresharing, Inc.

Improving cash flow Long term – regardless of what type of business you are in-the Dynamics of Cash Flow Management should not rest only with a specified department within the company but rather all the major players of the company should be involved for their COMMITMENT AND their sense of OWNERSHIP(as trusted management of the company). So all the proposed cash flow budgeting controls shall be properly downloaded and implemented company wide even to the lowest rank. Meaning each major players within the company should have an awareness of the importance of each role for the survival of the company which would translate to a continued employment and happiness to both the investors and the employees -as well as as its positive effect towards continued business with the external partners-Customers, suppliers, etc. With this scenario, planning and implementing controls for a Long Term Cash Flow management would become easier not only for the CFO/Director in charge but also in getting the approval of the company stakeholder to infuse more investment and looking positively towards a long and positive prosperous business ahead.

Joserico-MartinezJoserico Martínez

Shaklee México

Cash is the result of CAPEX activities into the organization. There is not a formula since this depends of each industry, nevertheless the good policies will determine the correct way to have a good administration. Remember that: If this Company were my own business, I really would be taking the best decision?

Melissa-MillerMelissa Miller

Director of Financial Services at Firestone

Being able to capture the data necessary to track and adjust inventory turns, expenses, receivables, etc. is the key to having what any CFO needs to adjust and address areas of concern. Absent sound data we are relying on only judgment which may or my not be accurate.

Luiz-Filipe-MascarenhasLuiz Felipe Mascarenhas

Senior Manager FP&A at World Fuel Services

Good stuff! Another point to be consider is the gap between the sales forecast and the real sales. The sales forecast drives a lot of activities in our business, like diesel supply. We have to pay in advance for selling after. If we don’t sell, it will turns in inventory.

Arturo-CarbonellArturo Carbonell

Senior Finance PRG

Not always easy, however, wherever possible making use of deposit payments. 50% up front fees, securing prices for customers especially where volatility exists. There are potentially vat implications as this would not be due until final invoice is raised, making this more attractive.

Dan-HansenDan Hansen

CPO | Director Group Procurement, Sourcing, Category, contract, Finance, logistic, Tax & IT

Above is all levers – and good levers – but having executed 3 global Cash flow programs, then I learned that the key driver is
TRANSPERANCY: Create insight in where you REALLY are, and where you REALLY are heading
OPERATIONAL COMPLIANCE: Its all about working on the same agreements and compliance. (Example Using PO does not help, if PO is not aligned with Commercial contracts).

So the easy and fast view
Short term its (DPO 70% / DSI 20 % / DSO 10 %)
Long term ts (DPO 40% / DSI 40 % / DSO 20 %)
Above is based upon creating more than 15 % improvement on Cashflow in less than 1 year (want to learn more – Mail dan.han@mail.dk)

Jelili-AdewaleJELILI ADEWALE ADEYANJU

Group Head of Account at Computer Warehouse group Plc (CWG)

first integrate the ideal in all staff
secondly, encourage advance payment from customers
thirdly, negotiate a better payment term with the supplier
lastly, ensure the deal is profitable

Victor Mamtora

Financial Controller Improving Internal Controls Streamlining Processes Managing a Finance Department

Pick whichever ONE suits your needs:
————————————————–
– Tighter control over stock with a view to reducing to bare minimum levels.
– Offering credit customers discounts for prompt or cash payment.
– Move loans to cheaper financers if possible.
– Reduce the biggest cost in any business – (salaries) through staff reduction. Stop paying overtime. Automate procedures wherever possible.
– Reduce advertising if you have an established customer base.
– Finally look at your Receipts choose the biggest one and try to think of ways to improve it and then look at your Expenses and think of ways to reduce the biggest one.

Warren-HuangWarren Huang, Ph.D 5500+

Global strategy integration: Big data, economics , capital market, value chain , technology, trade innovation Founder,

Process/product/technology/maretk innovation increas profit margin through high value added product up grade

Retief-UeckermannRetief Ueckermann

Chief Financial Officer at Cape Gate Fence & Wire Works (Pty) Ltd

Teach everybody in the organisation the following:
Sale is vanity
profit is sanity
cash is reality

 

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Susan-KorathSusan Korath, CCIM

CFO at Tulfra Realty II, LLC

Most important – control and monitor costs. No matter how successful a company may be in increasing its revenue, if its costs are not tightly controlled, then it’s analogous to a pocket with holes.

Dan-HansenDan Hansen

CPO | Director Group Procurement, Sourcing, Category, contract, Finance, logistic, Tax & IT

… Add to my previous input.
Update all Suppliers to Minimum 90 Days (where legal possible)
Reques maximum 30 days from Customer (Where the Power game allows)
Implement Supplier Financing model
Establish “One Planing” function – across all sites.
Ensure a good match btw production material needs and supplier delivery time (there is no need to have 3-10 days stock, if you supplier can deliver in 2-3 Hours (so Adjust you Max/Min control active with your supplier delivery possibility)
Implement reversed Supplier planing (Strategic suppliers, have access to your planing – they will be responsible for you have “Just in time” delivery.
Monitor payment run (automatic block all early payments)
Ensure that you finance system is adjusted to your actuall terms (not standard terms)
Hire a Cash flow director – give Him/Her the mandate to act

David-BAkerDavid Baker, C.P.A.

VP & Chief Financial Officer Peerless Pump Company at GRUNDFOS Holding A/S

Profitable revenue growth is the single most important thing for long term improvement:
1. Seek margin improvement by exploiting sales niches with tactical price increases.
2. Review variable and fixed cost components by revenue stream to uncover incremental sales opportunities for products with available capacity.
3. Use the information from #1 and #2 and target a 10 day improvement in the complete revenue cycle by a combination of improving collections and pushing out supplier payments.
4. Look for resource sucking customers to fire. e.g. Pareto chart customers by cost of quality, billing disputes, collection issues etc.

Gidi-BAcharGidi Bachar

Business oriented Finance Manager with strong accounting skills

What I’m usually trying to make sure to improve long term cash flow is to shorten customer payments and extend supllier’s. It’s very basic buy crucial .
However , one should bear in mind that there is a lot of education behind it , vs. the company’s customers and vs. suppliers as well.
On top of that , the specific market environment that the company operate in will effect it as well.

SMARTS

You don’t have to be smart to run a successful business but you need SMARTS.  You’ve all heard about SMART goals (specific, measurable, attainable, relevant, time bound).  But this formula is incomplete.  All goals are but a wish unless there is a plan or strategy for achieving the goal.  So add the “S”, Strategy, and your SMARTS will lead to great success.