Cash Flow Management

Without the facts, all we can do is stew around in confusion.
~Dale Carnegie

With that in mind, can you answer the following:
1. What is your cash flow right now?
2. What do you expect your cash flow to be in six months from now?

If you answered the questions with a specific dollar amount, then you understand how important cash is to the prosperity of your business.

Cash flow management is one of the most important daily decisions a business owner has to make. Once you realize what your true cash flow is, your decisions will drastically shift and become more focused and results oriented.

Cash flow is the most precious asset that your business has, and knowing your cash flow will free you from any confusion or worry about the future of your business.

If you are in confusion, then stew no more – answers are a click away!

DLB Consulting, LLC: The Blog

Hi, and welcome to the DLB Consulting, LLC WordPress page. It’s here that you can stay up to date on our all our e-newsletters, and communicate with others through the comments.

Don’t miss our last update, from January 15, 2013, and stay tuned for more!

There are many good companies in this world, but few that are considered to be great. What qualities do these companies have that make them stand out above the rest? Author Brad Hams identified 3 common characteristics of a great company in his book titled Ownership Thinking:

They Care—They have a higher purpose, such as caring for the community or environment. This goes above and beyond the care that they have for their employees, customers, products, or services.
They Have Fun—They integrate fun into the workplace. Examples include noisemakers and toys to celebrate achievements, unique office décor, monthly birthday lunches, competitions, incentives, trips, and anniversary gifts.
They Have High Expectations of Performance—They have winning cultures where high expectations of performance come from the bottom up instead of from the management team.

Companies that are purposeful and fun are usually the most financially successful. Transitioning a company towards purpose and fun begins by setting goals. According to Dave Ramsey, a personal money expert, goal setting is key. Dave says, “Something magical happens when we write down our goals. We somehow begin to live out our plans. When you see on paper what must be done, you will begin to move in that direction as a matter of course.”

Are you looking to be a good company or a great one? What steps will you take to achieve greatness today?
For a complimentary consultation on accounting and small business solutions, email me at dboyd@dlbconsulting.com or call 602-703-4285.

Debra L. Boyd

 

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• Identifying Your Key Performance Indicators

Key Performance Indicators (KPIs) are the operational and finance measures that have the greatest impact on the success of your company. To identify your KPIs you’ll need to gather data, analyze it, develop a few KPIs, and monitor them.

Three data sources that help with KPI identification include:

1. A five-year financial analysis–the financial analysis will help you discover strengths, weaknesses, trends, and opportunities.
2. A survey of employees–Employees can provide insight into critical organizational issues. Furthermore, involving employees in the initial stages of the initiative creates buy-in and ownership.
3. An analysis of the competition–Competitive data may help you identify areas of underperformance as well as areas of where you expect too much from your company, which may cause undesirable outcomes.

Once you have the data, you’ll want a team to sift through it and identify a few KPIs to focus on. For example, when reviewing the five-year financial analysis you identify a significant drop in revenue from one year to the next. Your root-cause analysis indicates that the drop is due to a loss of a major client. You may decide that you want to diversify clients and target another industry. Therefore, your new KPI might be the number of contacts made with clients in the desired industry.

After you’ve identified a few KPIs, you’ll need to track them using a scoreboard. Assign a person with the greatest influence over the metric to forecast it. Use the scoreboard in meetings to review progress towards the goals.

How can the use of KPIs make your company better this year?

• Three Common Characteristics of a Great Company

There are many good companies in this world, but few that are considered to be great. What qualities do these companies have that make them stand out above the rest? Author Brad Hams identified 3 common characteristics of a great company in his book titled Ownership Thinking:

  • They Care—They have a higher purpose, such as caring for the community or environment. This goes above and beyond the care that they have for their employees, customers, products, or services.
  • They Have Fun—They integrate fun into the workplace. Examples include noisemakers and toys to celebrate achievements, unique office décor, monthly birthday lunches, competitions, incentives, trips, and anniversary gifts.
  • They Have High Expectations of Performance—They have winning cultures where high expectations of performance come from the bottom up instead of from the management team.

Companies that are purposeful and fun are usually the most financially successful. Transitioning a company towards purpose and fun begins by setting goals. According to Dave Ramsey, a personal money expert, goal setting is key. Dave says, “Something magical happens when we write down our goals. We somehow begin to live out our plans. When you see on paper what must be done, you will begin to move in that direction as a matter of course.”

Are you looking to be a good company or a great one? What steps will you take to achieve greatness today?

January 15, 2013

• What Customers Really Want: A Business Resolution for 2013

Beyond the essentials of ownership thinking within your organization and aligning the business motto with staff behavior is recognizing the revolution that has taken place through social media—from Facebook to Twitter to the blogosphere.
Words have power, and when they have the potential to be shared with millions of people—at virtually no cost to you—the social media revelation should not be an oversight in your business perspective.
A story that generated a half million Facebook “likes” was one that involved Panera: According to AdWeek, Brandon Cook of Wilton, New Hampshire was attending to his aging grandma at the hospital, trying to see what would comfort her during her final days. She stated her dislike for the hospital’s soup and told Brandon how much she’d appreciate having Panera’s clam chowder. Although Brandon knew Panera only sold clam chowder on Fridays, he called a nearby store and explained his situation to manager Suzanne Fortier. In response, Fortier made the soup and included a box of cookies for Brandon’s grandma.
Brandon’s response was typical of those from his generation: he shared the story on Facebook. His mom, however, took it one step further and posted Brandon’s comment on Panera’s Facebook page. Within a week, that single post generated over 500,000 “likes” and 22,000 comments from customers who clearly still care about quality service and heart.
All it cost Panera was a bit of thoughtfulness, time, and generosity.
Although Fortier insists she did what any employee would have done had they answered that phone call, Brandon, his family, and even The Harvard Business Review claim that it was Fortier’s humanity that made for good business.
It’s important for businesses to embrace technology and use analytics to hone their market base. However, the real lesson here is that good business is not just about how many “Likes” or “Retweets” a post gets, but about how remembering that if businesses put people first, people respond.
In a social media culture, responsive customers make for thriving businesses.
Happy New Year to you.

• Inspire Your Mission from Within

“At The Ritz-Carlton Hotel Company, L.L.C., ‘We are Ladies and Gentlemen serving Ladies and Gentlemen.’ This motto exemplifies the anticipatory service provided by all staff members.” -Motto, Ritz-Carlton Hotel Company, L.L.C.

Does your company have a mission statement or motto that is prominently displayed for customers on websites or in brochures? If so, do your employees know this motto, and are they reflecting the values and vision of the company’s mission?

Corporations like the Ritz-Carlton flourish largely because customers know what to expect—from their reservations to their final checkouts. Because hotel patrons anticipate the highest standards from the hotel and its staff, they’re willing to pay top dollar for excellent service. The Ritz-Carlton not only encourages customers with their mission statement, but they have required their staff to operate by its principles. By doing so, the hotel has become a visionary leader in the service industry.

I encourage you as a business owner to reflect on the impact of your mission statement by starting first with your staff.

In 2013, may you inspire everyone in your company to learn about and live according to the business mission statement. As a result, may you see tangible results that stem directly from all members of your team uniting from a shared vision.

Happy Holidays from me to you.

• What Employees Don’t Know Can Hurt the Company

When people aren’t informed, they tend to make things up. According to Hams, although finance is not intolerably complex, companies suffer because they don’t teach employees enough about relevant money matters.
Most employees assume their companies generate more profit than they actually do; because of this thinking, they can become wasteful. What’s more, if employees feel as if the owner, rather than themselves, is raking in tons of profit, they feel resentful and tend to be even more inefficient.
Hams recommends companies offer employees workshops to teach them the business of finance by relating it to personal finances; this technique alleviates intimidation, makes concepts more relevant, and—most importantly—trains employees not only in creating profitability but in generating cash.
Because a company may be profitable even if it runs out of cash, the entire company—from the leadership team down—must have financial know-how. By providing understandable concepts to train employees in avoiding wastefulness and generating cash flow, the business owner’s once-sole burden can be shared and perhaps solved.

• Work Hard: Eradicating Entitlement Mentality

Entitlement mentality—the kind of thinking that arrogantly refuses to adopt a strong work ethic to achieve success—can cripple businesses.
Nevertheless, many companies fail to thrive because, while business owners may strive for excellence, if they do not expect the same standard of each employee, the entire company suffers.
Some disown this responsibility by awarding everyone—even by giving a “last place ribbon” to those who, essentially, have not met the highest standards. This not only establishes a false sense of security for those who do not actually earn their awards, but communicates to them that they are not expected to work hard.
This creates a disastrous scenario for employers because now their employees—regardless of the quality of work produced—will expect generous rewards. Entitlement thinking breeds a culture that works less but demands more. It caters to an unrealistic neediness in people who expect, but don’t want to work.
The solution is to align with people who are producers: those with a strong work ethic who enjoy working and recognize that rewards are concomitant to hard work. Producing, for them, is exciting not only for the rewards they may receive but also for the true self-esteem it builds by establishing personal growth and a sense of worth.

• The Necessity of “Ownership Thinking”

According to Brad Hams in Ownership Thinking: How to End Entitlement and Create a Culture of Accountability, Purpose, and Profit, “Ownership Thinking” is essential to a company for the primary purpose of creating wealth.
Ownership thinking, however, isn’t just for management; employees must be taught and held accountable for wealth creation. To do this, everyone in the company—from the top down—is invited and encouraged to be “active participants” in the company, taking responsibility not only for the company but also, in Hams’ view, for the employees’ role within that company.
When the team knows its purpose, every member can work together to achieve a common goal.
To do this, Hams encourages business owners to consider the typical mindset of most employees; the average employee cares most about her salary, benefits, specific job duties, security, recognition, as well as how the company’s environment factors into her well-being and long-term goals.
This kind of thinking—although mainstream—doesn’t facilitate the strongest small businesses. Each person is out for her own good rather than the company’s.

Hams argues that for companies to “create wealth and extraordinary organizational cultures,” employees must align more with management thinking:

1. Profit generating: The company’s revenue must be greater than its expenses.
2. Understanding Cash Flow: Although a company can look profitable on the books, it could be struggling due to insufficient cash.
3. Risk-taking: Oftentimes, business owners have their personal wealth on the line.
4. Competing: Can the company compete with others in the same market?
5.  Managing Employees: From hiring and training—and related psychology and legal issues—employers have people to manage effectively.
6.  Controlling Costs: Employers have to balance costs to achieve their top priority of profit generating.
If employees are empowered to engage in management-level thinking, they’ll rise to the challenge.
In the next several newsletters, I’ll discuss with you how Hams creates a structure for “Ownership Thinking,” along with how other experts in the field support his theory.

• Anybody Could Have Done It

A few weeks ago I had someone share with me that they felt the cost of a business coach was too expensive. That could be right, but it also depends on whether they are doing the work for you or if they’re guiding you to make profitable changes.

Here’s a short story I want to share. If these people are working for you, I believe it would be profitable to make changes regarding how to hold others accountable.

This is a story of four people named Everybody, Somebody, Anybody, and Nobody.

There was an important job to be done and Everybody was asked to do it.
Everybody was sure Somebody would do it.
Anybody could have done it, but Nobody did it.
Somebody got angry about that because it was Everybody’s job.
Everybody thought Anybody could do it, but Nobody realized that Everybody wouldn’t do it.
It ended that Everybody blamed Somebody when Nobody did what Anybody could have done.

– Unknown

To get a no obligation consultation on accounting and small business solutions email me at dboyd@dlbconsulting.com or call 602-703-4285.
Debra L Boyd
DLB Consulting, LLC