Up Your Cash Flow / Goldstein 125-131

131    GOOD PEOPLE WILL MAKE THE DIFFERENCE

The most important and valuable asset in your company is highly trained and responsible employees. Your survival will depend on trained people.

The Pursuit of WOW/Peters 181-182

182 With many companies we start, we don't even do the figures in advance. We just feel there's room in the market...We try to make the figures work out after the event. Richard Branson/Virgin Group.

 

The differences, mostly, lie at the edge--sophisticated products and services on which the rest of us piggyback our way to relative success. Breakthrough products depend, in turn, on an astonishingly small number of people. Providing a climate that produces great microbiologists, aerospace engineers, and architects--and then offers an entrepreneurial infrastructure that turns their work into gold--it essential.

 

Are you regenerating? Are you dealing with new things? When you find yourself in a new environment, do you come up with a fundamentally different approach? That's the test. When you flunk, you leave. Jack Welch/CEO GE

 

 As I see it, business problem No. 1 is that too many still follow the reluctant mutator strategy--e.g., IBM's continuing and ultimately futile efforts to keep an iron grip on its major customers in a computational world gone bonkers.

 

"Advantageous mutations occur so rarely that...it may be helpful to arrange for an increased mutation rate"

Consultative Selling/Mac Hanan 8-9

9 The conversion of price into investment prepares a consultative seller to propose giving money to a customer rather than taking it away.

 

The conversion of technical performances into financial performance defines the subject matter of sales consultation: improving customers' profitability so that their competitive advantage is enhanced.

 

The conversion of product-line sales management into profit-project portfolio management enables consultative sellers to integrate their mission with the customer operating managers who must become their partners.

Up Your Cash Flow / Goldstein 119-125

 125 Often companies need to develop a broader business plan that gives long range goals and ideas to convey the overall philosophy and direction of the company.These plans are used to secure capital through loans, private financing and/or venture capital.

 

The Pursuit of WOW/Peters 174-181

181 The best hope of success lies in having numerous projects percolating at once; this ups the odds of one of them boiling over.

Consultative Selling/Mac Hanan 5-8

8 The traditional buyers are cost-controllers. If you choose to confront them as your decision makers, they will faithfully negotiate away your margins in order to lower "the cost of goods bought"

 

On the other hand, you can choose to partner with managers who act as your economic sellers inside their businesses, promoting your proposals to improve their contributions to profits.

 

If you make the three right choices, you are in position to compare your value against a customer's current value, attach your price in the form of an investment to your value, and partner with a business manager who sells your value. You are selling like a consultant.

 

Vendor sales representatives become consultative sellers by making three conversions in their mindsets:

1) They must convert price into investment.

2) They must convert a product or service into the dollar value that comes from being applied to a customers operation (value added by application VABA.

3) They must convert their focus on making individuals stand-alone sales into making a portfolio of continuing sales, each one of which is a logical migration form its preceding sale. A customer's profit improvement cannot be sporadic, periodic event. Instead , it must be an ongoing process whose continuous inflow of new streams of cash is predictable. Reliability of profit improvements is every consultative partnership's middle name.

GOOD TO GREAT/COLLINS 186-194

194 Enduring great companies don't exist merely to deliver returns to shareholders. Indeed, in a truly great company, profits and cash flow become like blood and water to a healthy body: They are absolutely essential for life, but they are not the very point of life.

Up Your Cash Flow / Goldstein 103-119

119 BUSINESS PLAN: QUESTIONS TO ASK

 

These are a must for a business plan.

 

What kind of business am I in?

How much cash will you need in the future?

When will you run out of cash?

Where will you get the cash? Bankers? Partners? Public? Profits? Or use your own?

 

PRODUCING THE PRODUCT

1. Do I know precisely what my product costs?
2. Will I need a cost accounting system?
3. What are the advantages of producing my own product?
4. What are the disadvantages?
5. What are the advantages of having others produce my product?
6. What are the disadvantages of having others produce my product?
7. Should I manufacture my product or go outside and have other manufacture my product?
8. Should I manufacture it domestically or abroad?
9. What processes do I eventually want automated?
10. Is my plant layout adequate?
11. If my plant layout is not adequate, how will I improve it?
12. Is my equipment obsolete?
13. If my equipment is absolute, what new equipment do I expect to buy in the future?
14. Is the labor costs reasonable?
15. In what direction do I anticipate my future material cost going?
16. Is there an abundant supply of material available?
17. How can I control future costs?
18. Am I buying properly?
19. What can I do to take advantage of discounts?
20. How can I increase my gross margin?
21. Is the demand for my product strong?
22. How can I improve the production of my product or service in the future?

 

MARKETING

1. Where will I get future business from?
2. Will I stay local, regional, or become national?
3. Will I advertise?
4. Should I use an ad agency?
5. Should I hire a public relations firm?
6. Should I do media advertising-television, newspaper, radio?
7. How much money should I spend on marketing int he future?
8. Will I need a sales manager?
9. Are my distributors adequate?
10. Should I change distributors or hire additional distributors?
11. Will I need brochures, advertising products, samples?
12. When is the best time for me to do my advertising?
13. What results do I expect from my advertising?
14. Is my showroom adequate?
15. Are my displays adequate?
16. Are my window trimmings adequate? 
17. Am I using proper methods for submitting bids?
18. Who is the best in my organization to be meeting with prospective customers?
19. Are my sales personnel trained adequately in the process of selling?
20. Are there trade associations I should join?

 

PERSONNEL

1. Are my personnel adequate for my future needs?
2. Am I training personnel properly?
3. Am I giving personnel adequate responsibility
4. What training programs or training facilities will I utilize in the future to assist in the training of personnel?
5. Will I need to expand the number of personnel in various departments throughout the organization?
6. What criteria will I use for determining who, when, and how to hire or fire?
7. Do I have appropriate fringe benefits?
8. Are my salaries competitive?
9. Do I have proper recruiting techniques?
10. Am I following all the laws with regard to personnel?
11. Will I need a personnel director?
12. Will I need a greater level of expertise within our personnel?
13. How will I acquire this?
14. Are my personnel growing as the company is growing?
15. Am I capable of motivating personnel?
16. Do I display appropriate respect for personnel in my dealings with them?
17. Do I have adequate personnel manuals?
18. Is there an adequate review procedure to keep personnel informed of their progress within the organization?
19. Are the top levels of management able to function when I'm not around?
20. Do I encourage my employees to be creative and innovative?
21. As the leader of the company, am I assessable?

 

FACILITIES AND ADMINISTRATION

1. Are my facilities adequate for my future needs?
2. If they are not, will I buy or lease?
3. Where will I relocate?
4. When should I be planning for any future changes in location of facilities?
5. Will I need a purchasing agent?
6. Will I need a cost accountant?
7. Will I need a controller?
8. Is my accounting firm adequate?
9. Are my lawyers capable?
10. Is my rent reasonable?
11. How can I reduce my communication costs?
12. How can I reduce my administrative costs?
13. Do I need an office manager?
14. Are my plant and facilities will organized?
15. Am I using appropriate modern equipment?
16. Am I well insured?
17. Should I incorporate or unincorporate?

 

MONEY

1. How much money will I need in the future? This question leads to the need for doing a cash budget and/or forecast>
2. When will I run our of money?  All small and medium-sized businesses will run short of cash.
3. Where will I get money to cover my future needs?
4. What will I need to prepare for a financial presentation to a prospective financier?

The Pursuit of WOW/Peters 173-174

174 Once we have appointed our managers, we let them reinvent the wheel...The world is changing so fast you'll always be needing different wheels for changing terrain. Paul van Vlissingen, chairman, SHV ($10 billion revenue, Dutch-based retailer)

 

Van Vlissingen says that integrity in all business dealings is a must. Other than that, the idea of a common corporate culture is wrongheaded. Keep finding and developing great people, he says, then let'em do it their way.

 

The object of business is to invent, to grow--and add to employment over time.

 

The study's winners got to above-average profits via below-average costs (along with average revenues) or above-average revenues (with average costs)

GOOD TO GREAT/COLLINS 182-186

186 THE FLYWHEEL AND THE DOOM LOOP--Key Points

• Gtg transformations often look like dramatic, revolutionary events to those observing from the outside, but they feel like organic, cumulative processes to people on the inside. The confusion and end outcomes (dramatic results) with process (organic and cumulative) skews our perception of what really works over the long haul.
• No matter how dramatic the end result, the gtg transformations never happened in one fell swoop. There was no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment.
• Sustainable transformations follow a predictable pattern of buildup and breakthrough. Like pushing on a giant, heavy flywheel, it takes a lot of effort to get the thing moving at all, but with persistent pushing in a consistent direction over a long period of time, the flywheel builds momentum, eventually hitting a point of breakthrough.
• The comparison companies followed a different pattern, the doom loop. Rather than accumulating momentum--turn by turn of the flywheel--they tried to skip buildup and jump immediately to breakthrough. Then, with disappoint results, they'd lurch back and forth, failing to maintain a consistent direction.
• The comparison companies frequently tried to create a break through with large, misguided acquisitions. The gtg companies, in contrast, principally used large acquisitions after break-though, to accelerate momentum in an already fast-spinning flywheel.

Unexpected results

• Those inside the gtg companies were often unaware of the magnitude of their transformation at the time; only later, in retrospect, did it become clear. They had no name, tag line, launch event, or program to signify what they were doing at the time.
• The gtg leaders spend essentially no energy trying to "create alignment," "motivate the troops," or "manage change." Under the right conditions, the problems of commitment, alignment, motivation, and change largely take care of themselves. Alignment principally follows from results and momentum, no the other way around.
• The short-term pressures of Wall Street were not inconsistent wit following this model. The flywheel effect is not in conflict with these pressures. Indeed, it is the key to managing them.

Up Your Cash Flow / Goldstein 98-103

103 Using Ratios to Interpret the Data

 

Current Ratio: (Current Assets Divided by Current Liabilities) ...tells you how many dollars should be available in the next 12 months to pay the liabilities that will mature in the next 12 months. The higher than $1 the better.

 

Quick Ratio: (Cash & Accounts Receivables Divided by Current Liabilities)...gives an indication of how quickly a company can pay its current obligations without relying on future sales.  The higher than $1 the better.

 

Debt to Equity: (Total Debt Divided By Total Equity)  is the ratio that compares the amount invested in the business by creditors versus the amount invested by owners.  1 to 1 excellent. 3 to 1 typical for small business.

 

Net Income to Equity (Net Income Divided By Stockholders' Equity) indicates the return on the investment (ROI) that shareholders are receiving based on the equity they have in the business. .22 represents 22@ return on equity remaining in the business.

 

Inventory Turnover:  (Cost of Goods Sold Divided By Inventory) ...the number of times that a business turns inventory during the year. Many companies try to strive for the most turnovers within an operating cycle. Be cautious with this approach. To increase your inventory turnover you must reduce the amount of inventory on hand, and this might result in lower sales if you have an insufficient amount of goods available for sale of customers.

 

Net Income to Net Sales (Net Income Divided by Net Sales)...indicates how many dollars of profit you earn from each dollar of sales made. 8.9 would mean that for every dollar of sales the company earns 8.9 cents profit.

 

Account Receivable Turnover (Net Sales Divided by Accounts Receivable)...indicates how many times the accounts receivable are being paid and re-established during the accounting period. The higher the turnover, the faster the collections.  The collection of accounts receivable is critical. Keep a close eye on this ratio. If it begins to indicate that collections are slowing down, take strong action to improve the company's collection policies.

 

Accounts Payable Turnover (Purchases Divided by Accounts Payable)...indicates the number of times accounts payable will be paid during the year. 

 

The Pursuit of WOW/Peters 170-173

173 Sometime during a two-year curriculum, every MBA student ought to hear it clearly stated that numbers, techniques, and analysis are all side matters. What is central to business is the joy of creating. Peter Robinson/The Red Herring.

 

You should be looking at projects that promise to transform a corner of your industry.

Consultative Selling/Mac Hanan 1-5

4 Consultative Selling vs Vending

• The sellers supply profit as their product vs The seller supply product.
• The sellers offer a return on the customer's investment. vs The sellers charge a price.
• The seller uses a Profit Improvement Proposal vs The sellers use a bid.
• The sellers quantify the benefits from their customer's investment vs The seller attempt to justify their cost.
• The seller attach the investment to their customers' return. vs The seller attach a price to their product.
• The sellers help their customer compete against the customer's competitor. vs The seller attach price to their product.
• The sellers let their customers close. vs The sellers try to close.
• The sellers sell to a business manager vs The seller sell to a purchasing manager.
• The seller feature their customers' improved performance. vs The seller feature their products' improved performance.
• The sellers' products are improved customer profits. vs The sellers' products are equipment, a service, a process, or a system.
• The sellers sell vertically to a dedicated industry and to dedicated customers within it. vs. The Sellers sell horizontally to all industries within a dedicated territory.

GOOD TO GREAT/COLLINS 180-182

182 Each piece of the system reinforces the other parts of the system to form an integrated whole that is much more powerful than the sum of the parts. It is only through consistency over time, through multiple generations, that you get maximum results.