Up Your Cash Flow / Goldstein 96-98

98 THESE POINTS CANNOT BE OVEREMPHASIZED

Management must monitor cash and accounts receivable daily. Know what your commitments are, work the cash, and work the accounts receivable. With today's high interest rates, cash management will mean the different between success and failure. Cash is king, queen, prince, and all other titles of royalty. It is our blood.

 

Cost accounting and inventory controls are absolutely necessary where appropriate in your business. You will never be able to know whether your business is profitable or not without accurate physical counts and proper pricing of your inventories.

 

Monitor financial statements every month. These financial statements should be compared to previously established targets and goals. This will enable you to monitor the financial results of the decisions you've made to know whether you are achieving your goals.

 

As an owner-manager of a business, you must keep your finger on the pulse of all phases of the operation. Set in motion a management information system that gives you a constant flow of information regarding your company's financial position and the efficiency of operations at all levels. Regularly monitor sales, accounts receivable, cash balances, and budgets. You will not compile this type of information. Do not bog yourself down in details. Monitor and review the information, then distribute it to subordinates and suggest corrective action.

The Pursuit of WOW/Peters 169-170

170 Per Harvard scholar Richard Neustadt

1) Hard information is often limited in scope, lacking richness, and often fails to encompass important non-economic and non-quantitative factors.

2) Much hard information is too aggregated for effective use in strategy making.

3) Much hard information arrives too late to be of use in strategy making.

4) Finally, a surprising amount of hard information is unreliable [which mocks our tendency] to assume that anything expressed in figures must necessarily be precise.

Consultative Selling/Mac Hanan xvii - 1

1 Consultative Selling is profit improvement selling. It is selling to high-level customer decision makers who are concerned with profit--indeed, who are responsible for it, measured by it, evaluated by it, and accountable for it. Consultative Selling is selling at high margins so that the profits you improve can be shared with you. High margins to high-level decision makers: This is the essence of Consultative Selling.

 

Consultative Selling requires strategies that are totally divorced from vendor selling. It means that you stop selling products and services and start selling the impact they can make on customer businesses. Since this impact is primarily financial, selling consultatively means selling new profit dollars--not enhanced performance benefits or interactive systems, but the new profits they can add to each customer's bottom line.

 

Consultative sellers base price on their value. They consider margin to be their responsibility, not their right. To them it is the sellers' responsibility to add sufficient value to customer businesses so that customers will be able to add margin to the sellers in return.

 

...margin is a consultative seller's pay for performance. The sale itself is no longer a transfer of a product or service in exchange for a price. It becomes a value exchange. In exchange for having their profits improved, customers trade off some of the improvement as margin to the supplier.

 

As consultative seller's price is a function of the contribution made to improvement made to improve customer profits.

 

Consultative Selling is selling a dollar advantage, not a product or process advantage.

 

Consultative Selling, on the other hand, is high-margin selling. Full margins are the proof of value.

 

Performance values are important only insofar as they contribute to the value of a customer's operations--either they add the value of new or more profitable revenues or they help preserve the value by reducing or avoiding costs that would otherwise subtract from it.

Up Your Cash Flow / Goldstein 95-96

 96 Counting the Inventory

 

Your planning should cover topics such as inventory counting teams, the layout of the warehouse, pre-numbered inventory count tags, and supervision.

 

• The counting teams should consist of two individuals: one counter, one recorder. If possible...should not be employees who work in the warehouse.
• Each counting team should be assigned an area of the warehouse.
• Once the counting teams have been assigned their areas, pre numbered inventory tags should be distributed to them.
• All items of inventory should be tagged. After the counts have been made, a tour of the areas to see that all items have been tagged is appropriate.
• The completed tags will be placed in the inventory areas in boxes and on shelves.
• To count large quantities more efficiently, consider the following shortcuts, You can use a scale to determine quantity.
• Adequate supervision is a must.

 

The secret to a successful inventory is careful planning. These guidelines should make your inventory more accurate and more efficient and prevent the complications typically associated with this procedure.

The Pursuit of WOW/Peters 168-169

169 The "obsession for control" mirrored in planning schemes, wrote James Worth, "springs from the failure to recognize or appreciate the value of spontaneity."

 

Consultative Selling/Mac Hanan xv-xvii

xvii ...compete on value, by making positive contributions to reduce customer cost and improve revenues.

 

Consultative Selling restructures the entire vendor sales process.

• It redefines the product from representing a material or piece of equipment or a package good to represent profits.
• It removes price from representing the cost of products, services, or systems and repositions it as the investment required to realize an added value.
• It redefines competition from representing a supplier's rivals to consisting of a customer's current costs to sales revenue targets.
• It repositions the supplier's core capability from creating improved products or services to creating improved profits for customers.
• It redefines the customer from a Box 3 techno-purchaser to a Box 2 line of business or business function manager.
• It redefines the seller from vendor to consultant and redefines the customer to a client.

The Pursuit of WOW/Peters 167-168

168 Henri Foyal, admitted as much. Planning schemes, he said, not only don't encourage flexibility (the only sane response to changing times), but actually suppress it. Dartmouth's Quinn observed, decades later, that the annual planning process was rarely--never, in the research--"the source of radical...departures into entirely different product/market realms." The button-down nature of the procedures per se, he added, "essentially forecloses radical innovations."

Consultative Selling/Mac Hanan xiv-xv

xv. Consultative sellers ask how improved productivity in managing the chain of suppliers can yield an even lower cost base and thereby generate greater revenues.

Up Your Cash Flow / Goldstein 93-95

95 Take an accurate inventory

• Move identical goods to the same location
• Place inventory in order
• Make all items readily identifiable.
• Clear aisles and passageways
• Segregate scrap and worthless items.

 

If your business is a manufacturing entity, schedule production so that work-in-process is keep to a minimum. This will reduce the time and effort required to count and price those items.

 

A proper cut-off involves identifying the arrival and shipment dates of your inventory.

Good received after the cut-off date should be physically segregated and counted separately.

The Pursuit of WOW/Peters 166-167

167...GE chairman Jack Welch zapped his corporation's hyper-formalized planning systems.

 

A good deal of corporate planning is like a ritual rain dance.  Brian Quinn.  It has no effect on the weather that follows, but those who engage in it think it does...Moreover, much of the advice related to corporate planning is directed at improving the dancing, not the weather.

Consultative Selling/Mac Hanan xiii-xiv

xiv The Profit Improvement Proposal (PIP) is the original value proposition. PIP are conversion machines. They convert the operating benefits of a suppliers' technology into financial benefits for their customers.

 

The PIP process focuses on adding value to a customer's cost centers by making them less costly to operate.

GOOD TO GREAT/COLLINS 177-180

180 Why did the gtg companies have a substantially higher success rate with acquisitions, especially major acquisitions? The key to their success was that their big acquisitions generally took place after development of the Hedgehog Concept and after the flywheel had built significant momentum. They used acquisitions as an accelerator of flywheel momentum, not a creator of it.

The Pursuit of WOW/Peters 153-166

165 SOUTHWEST: We hire attitudes. Colleen Barrett is executive vice president for customers. (It's revealing title; she began at Southwest as a secretary in 1971.) Barrett told us that the airlines looks for "listening, caring, smiling, saying "thank-you,' and being warm" - in the people it hires for accounting as much as in reservation agents and flight attendants.

 

166 Southwest's Herb Kelleher, trained as a lawyer, can dissect a balance sheet with the best of them. But he understands that sustaining advantage comes from a relentless focus on the intangibles.