All business owners know what cash flow is-if not technically, then emotionally. Nevertheless, it's worthwhile to approach this subject from the very beginning because it is key to business success. Some business school professors have even begun to impart to their students the latest thinking about cash flow: "Cash flow is more important than your mother."
A useful way to think about cash flow is to view the business as a living organism. Cash is the nutrient that runs through its arteries and veins. The brain might be viewed as the product or service, the heart as the marketing, and the stomach as the finances, at which point it all begins to get a little messy. If you don't have enough cash flow, though, rest assured that the living organism turns into a skeleton.
The essential point about cash flow that is often overlooked is that it is different from profit and, for a growing business, much more important. It's possible to run out of cash and go broke even if you have a lot of purchase orders because you aren't being paid in a timely way.
This is a problem that has afflicted more than one Inc. 500 company. One such company that sold a big-ticket item (a computer software product for $50,000 and up) was caught in that bind as its sales climbed from $2 million to $5 million. The orders were there, but the cash came in as late as six months after a salesperson received a commitment to buy. That's because the corporate purchase orders might take another two or three months to be executed and the bills another one to three months to be paid after that. This company's executives had to skip a few paydays, negotiate with suppliers to keep essential products and services coming, and otherwise struggle to stay afloat until the cash came in. Things were so tight that the company's treasurer found himself monitoring cash flow on a daily basis.
Cash flow can also be used as a planning tool. By monitoring cash flow on a regular basis as cash comes in and goes out, you'll see a pattern that enables you to plan for the future.
This becomes very important, especially if you want to expand or go after new markets. You can quickly calculate the effect of such actions on cash flow and determine whether you'll need to seek a bank loan or other financing or whether you can support the new activity from internally generated funds.Calculating cash flow. Quite simply, cash flow is a record of cash available at different points in times. It's usually monitored on a monthly basis. A cash flow statement seems complicated at first glance, but it's really very simple, and it's extremely important as a planning tool.You begin with the cash on hand at the beginning of the month. Then you add the receipts during the month-from customers, royalties, commissions, interest, and so forth.From that, you subtract the actual disbursements-the cash going out each month in the form of fixed and variable expenses. Fixed expenses are such things as rent, debt, salaries-items you're committed to for the long term and can't easily change. Variable expenses include advertising, office supplies, promotion, consulting, and other such expenses that can be easily increased or decreased from month to month.
The result is the amount of cash available at the end of the month. The cash flow is the difference between what you started with and ended with.
Fostering the entrepreneurial spirit!
Friday, November 15, 2013
Friday, November 8, 2013
Using a Business Consultant
How can a small business achieve big-business results without spending a fortune on expensive employees? In many cases, the answer is to engage the services of outside consultants. As a business owner, you don’t need full-time staff to cover every operation and function. But you do need to know how to tap into additional resources when necessary. That’s where consultants can be of assistance and value.
Reaching for a consultant when problems arise has become a natural exercise for American business. When you're not feeling well, you call for the services of a doctor. If your car isn't running right, you take it to a mechanic. When businesses encounter a problem, whether in advertising, accounting, computer use, sales, or customer relations, wise business owners are seeking the advice of those with a background in the field. To be successful, a business must keep abreast of the ever-changing world in which it operates. The consultant helps businesses of all sizes make the transition between their present level of operation and the more successful level needed to maintain and grow their share of the market.
Using the right consultants can be a cost-effective way of addressing a wide-range of business issues and operating problems, or the means to elevate a business to the next level. But what should you look for when selecting a business consultant? Here are some suggestions:
1. Experience – Your consultant should be a seasoned business person, who has experienced the difficulties of running a business and can successfully find hidden opportunities.
2. Resources – Your consultant should have access to a wide range of resources and be able bring together the expertise needed to improve the business.
3. Ethics – Your consultant should adhere to a professional code of business practices.
4. Value – Your consultant must provide value, such that the business receives greater benefit than the cost of the services.
5. Real-world – Your consultant should help the business achieve its goals using practical and pragmatic methods.
6. Tailored – Your consultant should provide advice that is customized to the business’ unique issues, opportunities, and specific circumstances.
7. Long-term – Your consultant should be able to step away from the daily flurry of activity to think both strategically and tactically about the goals of the business.
8. Client-focus – Your consultant will provide useful assistance if he/she listens to and cares about the people running the business.
Reaching for a consultant when problems arise has become a natural exercise for American business. When you're not feeling well, you call for the services of a doctor. If your car isn't running right, you take it to a mechanic. When businesses encounter a problem, whether in advertising, accounting, computer use, sales, or customer relations, wise business owners are seeking the advice of those with a background in the field. To be successful, a business must keep abreast of the ever-changing world in which it operates. The consultant helps businesses of all sizes make the transition between their present level of operation and the more successful level needed to maintain and grow their share of the market.
Using the right consultants can be a cost-effective way of addressing a wide-range of business issues and operating problems, or the means to elevate a business to the next level. But what should you look for when selecting a business consultant? Here are some suggestions:
1. Experience – Your consultant should be a seasoned business person, who has experienced the difficulties of running a business and can successfully find hidden opportunities.
2. Resources – Your consultant should have access to a wide range of resources and be able bring together the expertise needed to improve the business.
3. Ethics – Your consultant should adhere to a professional code of business practices.
4. Value – Your consultant must provide value, such that the business receives greater benefit than the cost of the services.
5. Real-world – Your consultant should help the business achieve its goals using practical and pragmatic methods.
6. Tailored – Your consultant should provide advice that is customized to the business’ unique issues, opportunities, and specific circumstances.
7. Long-term – Your consultant should be able to step away from the daily flurry of activity to think both strategically and tactically about the goals of the business.
8. Client-focus – Your consultant will provide useful assistance if he/she listens to and cares about the people running the business.
Tuesday, November 5, 2013
What Do Effective Leaders Have in Common?
"The best executive is one who has the sense to pick good people to do what they want done, and self-restraint enough to keep from meddling with them while they do it.” – Teddy Roosevelt – US President
What characteristics do all leaders possess? Here are four to consider:
1. Commitment to a vision
2. A means to communicate that vision
3. Ability to build trust among associates
4. A positive self-image--leaders believe in themselves.
In addition to these four traits, a good leader also possess two vital people skills: communicating with and motivating employees.
Communication. To be a leader, a manager can't believe he or she is on a pedestal. One company limited the dividing walls in its building so there is easy access to every employee with no knocking required. This company also holds formal meetings weekly for a group of managers who try to identify problems in each department.
A telecommunications company holds a meeting of the entire company every six months and once a year holds a series of roundtables. This company also conducts employee attitude surveys in which employees anonymously ask questions of upper-level management.
Motivation. Can a leader best provide a sense of direction for his or her company by quantifying goals? There is mixed opinion on this.
One theory is that goals need to be specific for each individual. Target bonuses are seen as helpful.
The opposing view considers the adverse consequences of not meeting goals--if employees fall short of the goals, it can act as negative reinforcement. People have built-in insecurities, so goals must convince employees that they are incredible.
Some systems make everybody a winner. A goal system at IBM was mentioned as one illustration of positive reinforcement. IBM emphasizes respect for the individual by tilting the review system to the affirmative--70% of employees make the goals.
What characteristics do all leaders possess? Here are four to consider:
1. Commitment to a vision
2. A means to communicate that vision
3. Ability to build trust among associates
4. A positive self-image--leaders believe in themselves.
In addition to these four traits, a good leader also possess two vital people skills: communicating with and motivating employees.
Communication. To be a leader, a manager can't believe he or she is on a pedestal. One company limited the dividing walls in its building so there is easy access to every employee with no knocking required. This company also holds formal meetings weekly for a group of managers who try to identify problems in each department.
A telecommunications company holds a meeting of the entire company every six months and once a year holds a series of roundtables. This company also conducts employee attitude surveys in which employees anonymously ask questions of upper-level management.
Motivation. Can a leader best provide a sense of direction for his or her company by quantifying goals? There is mixed opinion on this.
One theory is that goals need to be specific for each individual. Target bonuses are seen as helpful.
The opposing view considers the adverse consequences of not meeting goals--if employees fall short of the goals, it can act as negative reinforcement. People have built-in insecurities, so goals must convince employees that they are incredible.
Some systems make everybody a winner. A goal system at IBM was mentioned as one illustration of positive reinforcement. IBM emphasizes respect for the individual by tilting the review system to the affirmative--70% of employees make the goals.
Friday, November 1, 2013
Principles for Effective and Ethical Consulting
• Take the time to really understand your client’s perspective on their issues, including what they have tried, what has worked, what has not worked and what they think should be done now. It is better to go slower with your client than faster without them.
• Come to every engagement with a basic implementation framework in mind. Early in an engagement, the major purpose of the framework can be as a common frame of reference when talking about the project goals, methods, evaluation and learning. Be willing to modify that framework as you and your client work together.
• Your value is in collaboration and communication. Your client will value you if both of you continue to work together in a process that is collaborative, well understood, communicated to all and focused on results.
• Success comes from who you are as much as (or more than) from your expertise. This is true, especially if your client perceives you to be authentic and respectful, and consulting with focus on results and learning. Similarly, one of the most powerful influences that can have with your clients is to model the behaviors that you want from them.
• Do what you say you are going to do. In every engagement you will help improvement almost immediately by remaining grounded and centered, clear and consistent. Your consistency builds trust and commitment with clients and their employees as well.
• Always explain the reasons for your recommendations and the benefits that will come to your client as a result.
• Clients often struggle with certain issues. They may not want to change and might resist your attempts to help them. In those instances, remember that those responses are their choices but your role as facilitator and mentor for them will help them move past their hesitancy. And remember… people learn only what they are ready to learn.
• Experienced consultants remember there are many perspectives on an issue in the organization. Those perspectives should be encouraged and explored because they often lead to more successful problem solving.
• You are an “instrument” of change with your client, so you should be willing to suspend your overall biases, assumptions and beliefs when working with people.
Prepared by the Organization for Entrepreneurial Developments Editorial Staff July, 2010
Copyright OED 2010
• Come to every engagement with a basic implementation framework in mind. Early in an engagement, the major purpose of the framework can be as a common frame of reference when talking about the project goals, methods, evaluation and learning. Be willing to modify that framework as you and your client work together.
• Your value is in collaboration and communication. Your client will value you if both of you continue to work together in a process that is collaborative, well understood, communicated to all and focused on results.
• Success comes from who you are as much as (or more than) from your expertise. This is true, especially if your client perceives you to be authentic and respectful, and consulting with focus on results and learning. Similarly, one of the most powerful influences that can have with your clients is to model the behaviors that you want from them.
• Do what you say you are going to do. In every engagement you will help improvement almost immediately by remaining grounded and centered, clear and consistent. Your consistency builds trust and commitment with clients and their employees as well.
• Always explain the reasons for your recommendations and the benefits that will come to your client as a result.
• Clients often struggle with certain issues. They may not want to change and might resist your attempts to help them. In those instances, remember that those responses are their choices but your role as facilitator and mentor for them will help them move past their hesitancy. And remember… people learn only what they are ready to learn.
• Experienced consultants remember there are many perspectives on an issue in the organization. Those perspectives should be encouraged and explored because they often lead to more successful problem solving.
• You are an “instrument” of change with your client, so you should be willing to suspend your overall biases, assumptions and beliefs when working with people.
Prepared by the Organization for Entrepreneurial Developments Editorial Staff July, 2010
Copyright OED 2010
Monday, October 28, 2013
Ten Ways to Be A Leader
Ten Ways to Be A Leader
1. Begin with praise and honest appreciation.
2. Call attention to people's mistakes indirectly.
3. Talk about your own mistakes before criticizing the other person.
4. Ask questions instead of giving direct orders.
5. Let the other person save face.
6. Praise the slightest improvement and praise every improvement.
7. Give the other person a fine reputation to live up to.
8. Use encouragement.
9. Make the fault easy to correct.
10.Make the other person happy about doing the thing you suggest.
Dale Carnegie (1888-1955) American writer and speaker
1. Begin with praise and honest appreciation.
2. Call attention to people's mistakes indirectly.
3. Talk about your own mistakes before criticizing the other person.
4. Ask questions instead of giving direct orders.
5. Let the other person save face.
6. Praise the slightest improvement and praise every improvement.
7. Give the other person a fine reputation to live up to.
8. Use encouragement.
9. Make the fault easy to correct.
10.Make the other person happy about doing the thing you suggest.
Dale Carnegie (1888-1955) American writer and speaker
Friday, October 25, 2013
Leadership Characteristics
“A good leader takes a little more than his share of the blame, a little less than his share of the credit.” - Arnold Glasow
Leaders have the authority of knowledge. Leaders have demonstrated ability/talent that colleagues and subordinates admire. To be a leader you cannot just be a talker ... you must bring something special to the situation.
Leaders are visionaries. Leaders see things, that others see as ordinary, in a way as to make them extraordinary. Leaders can make the complex seem simple. Leaders look beyond today.
Leaders produce positive change. Change is seen by leaders as an opportunity and a challenge. Leaders always question why things work, or are done, the way they are.
Leaders give their all. Leaders do not hold back. They do not allow themselves to be sidetracked and always exhibit a high degree of energy and ability.
Leaders are good listeners. They are able to really hear what people are saying and empower people to follow their vision.
“A good listener is not only popular everywhere, but after a while he knows something.” - Wilson Mizner
Leaders are good communicators. They are clear and concise, complete and consistent. They create enthusiasm and excitement.
Leaders are students. They never stop learning and growing. They are willing, and able, to learn from their mistakes. Leaders read ... read ... and read!
Leaders take risks. They create change which requires risk because they visualize how things can be done better.
Leaders are ethical. People will not follow someone who cannot be trusted, consistently.
Leaders are optimistic. Trust and hope are the basis on which leaders empower other people. They believe (and have proven) they are winners!
Leaders have the authority of knowledge. Leaders have demonstrated ability/talent that colleagues and subordinates admire. To be a leader you cannot just be a talker ... you must bring something special to the situation.
Leaders are visionaries. Leaders see things, that others see as ordinary, in a way as to make them extraordinary. Leaders can make the complex seem simple. Leaders look beyond today.
Leaders produce positive change. Change is seen by leaders as an opportunity and a challenge. Leaders always question why things work, or are done, the way they are.
Leaders give their all. Leaders do not hold back. They do not allow themselves to be sidetracked and always exhibit a high degree of energy and ability.
Leaders are good listeners. They are able to really hear what people are saying and empower people to follow their vision.
“A good listener is not only popular everywhere, but after a while he knows something.” - Wilson Mizner
Leaders are good communicators. They are clear and concise, complete and consistent. They create enthusiasm and excitement.
Leaders are students. They never stop learning and growing. They are willing, and able, to learn from their mistakes. Leaders read ... read ... and read!
Leaders take risks. They create change which requires risk because they visualize how things can be done better.
Leaders are ethical. People will not follow someone who cannot be trusted, consistently.
Leaders are optimistic. Trust and hope are the basis on which leaders empower other people. They believe (and have proven) they are winners!
Monday, October 21, 2013
What Do Effective Leaders Have in Common?
“The best executive is one who has the sense to pick good people to do what they want done, and self-restraint enough to keep from meddling with them while they do it.” – Teddy Roosevelt – US President
What characteristics do all leaders possess? Here are four to consider:
1. Commitment to a vision
2. A means to communicate that vision
3. Ability to build trust among associates
4. A positive self-image--leaders believe in themselves.
In addition to these four traits, a good leader also possess two vital people skills: communicating with and motivating employees.
Communication.
To be a leader, a manager can't believe he or she is on a pedestal. One company limited the dividing walls in its building so there is easy access to every employee with no knocking required. This company also holds formal meetings weekly for a group of managers who try to identify problems in each department.
A telecommunications company holds a meeting of the entire company every six months and once a year holds a series of roundtables. This company also conducts employee attitude surveys in which employees anonymously ask questions of upper-level management.
Motivation.
Can a leader best provide a sense of direction for his or her company by quantifying goals? There is mixed opinion on this.
One theory is that goals need to be specific for each individual. Target bonuses are seen as helpful.
The opposing view considers the adverse consequences of not meeting goals--if employees fall short of the goals, it can act as negative reinforcement. People have built-in insecurities, so goals must convince employees that they are incredible.
Some systems make everybody a winner. A goal system at IBM was mentioned as one illustration of positive reinforcement. IBM emphasizes respect for the individual by tilting the review system to the affirmative--70% of employees make the goals.
What characteristics do all leaders possess? Here are four to consider:
1. Commitment to a vision
2. A means to communicate that vision
3. Ability to build trust among associates
4. A positive self-image--leaders believe in themselves.
In addition to these four traits, a good leader also possess two vital people skills: communicating with and motivating employees.
Communication.
To be a leader, a manager can't believe he or she is on a pedestal. One company limited the dividing walls in its building so there is easy access to every employee with no knocking required. This company also holds formal meetings weekly for a group of managers who try to identify problems in each department.
A telecommunications company holds a meeting of the entire company every six months and once a year holds a series of roundtables. This company also conducts employee attitude surveys in which employees anonymously ask questions of upper-level management.
Motivation.
Can a leader best provide a sense of direction for his or her company by quantifying goals? There is mixed opinion on this.
One theory is that goals need to be specific for each individual. Target bonuses are seen as helpful.
The opposing view considers the adverse consequences of not meeting goals--if employees fall short of the goals, it can act as negative reinforcement. People have built-in insecurities, so goals must convince employees that they are incredible.
Some systems make everybody a winner. A goal system at IBM was mentioned as one illustration of positive reinforcement. IBM emphasizes respect for the individual by tilting the review system to the affirmative--70% of employees make the goals.
Subscribe to:
Posts (Atom)