Posts Tagged ‘profitable growth’

My First Job, or “Stock boys are cool”

Tuesday, February 14th, 2012

As a teenager, I thought I was working for gas money and spending money. Many years later, I learned that every job that I’ve had has contributed to my understanding of people, of business and how different people lead and manage others.

I’ve worked in a variety of organizations, from a small retail store to a national bank and an international accounting firm. The cultures were vastly different and so was their effectiveness at motivating and engaging their employees.

My first job, when I was 14 years old, was working in a small department store called The Met, short for Metropolitan. We sold all types of dry goods including clothing, diapers, kitchen goods, cheap hardware, batteries, and my favourite, chocolate bars. We had to keep those under lock and key in the candy room! For some reason, the manager didn’t trust anyone with the key to the candy room. A valuable lesson learned.

My first boss, Peggy, was a great manager and she taught me a lot about treating everyone with respect, to ask their opinions and to let them think.

Now, as the stock boy, I didn’t have to think too much. But Peggy never told me how to do anything unless I asked. She told me what to do, but never how to do it. She was confident that I could figure it out. And, her confidence in me increased my own confidence, although most teenage boys seem to exceed in confidence, for some reason.

I could sweep a 6,000 square foot store in nine minutes flat. The best parts were the handyman jobs like climbing up to the roof or up on a 16 foot ladder to change the eight foot light bulbs. Did you know that they explode into a million little pieces if you drop them?

I also learned that I didn’t want to work in retail. The worst part was working in a basement inventory room, on my summer vacation, during the hot July weather, pricing school supplies. Didn’t I just get out of school? Apparently, retail works one season ahead of reality.

The best part was bagging. It was easy, you got to meet people, and I wasn’t stuck in that darn basement. I learned that just because I could fit something in the bag, it didn’t mean the bag could withstand the weight. Customers got very unhappy if their bag ripped and they dropped their purchases. The manager got really mad if the product broke and we had to replace it. Cause and effect, consequences, logic: all these were burned into a teenagers brain.

We also had ‘management trainees’ sent from head office to learn from Peggy. This was an interesting experience because the stock boy, and everyone else working in the store, knew more about the store than the trainees. The trainees tried to manage by position of power (their perception of it, at least) instead of by respect. That didn’t work very well. Actually, it caused the occasional mutiny and intentional lack of cooperation. The mutinies were an important part of their training experience.

The trainees learned a few things:

  • leadership doesn’t come from a title
  • the most knowledgeable people are front line people, not the people from head office, or their hopeful delegates
  • never let the 16 year old stock boy drive your car.

As a parent, I’m looking forward to the work experience that my teenage daughters will gain. They’re not. Working in a clothing store just might cure their fashionitis, or, they might spend all their money on clothing purchased with employee discounts. Only time will tell.

Copyright 2012 Phil Symchych. All rights reserved.

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Working Out With A Trainer Or A Consultant

Monday, February 13th, 2012

My wife bought a training video from one of the trainer guys (his name rhymes with Bob) featured on a television reality show. Uh, oh! Somebody’s been watching too much TV, me thinks.

After five minutes of the intense fifteen minute workout, I pulled something in my back.

Apparently, working out needs to be done regularly to be effective. So, I’ve booked an appointment with the local gym for an assessment (or sales pitch) so that I can get back into the routine safely and, most importantly, frequently.

Why is it that we all know that we should exercise regularly but only a few, hearty soles have the discipline to sweat it out?

As a former (meaning 20 years ago) recreational triathlete and hockey referee, I’m pretty disappointed with my current lack of conditioning. I almost get tired driving the distances that I used to cycle. Fortunately, my ventilated and massaging car seats keep me up for the driving task.

I’ve worked out with a couple of trainers recently and the results were amazing. First, the trainer didn’t care about any excuses. Second, he and she (they took turns) showed me how to do things correctly. Third, they pushed me harder than I would have ever pushed myself. Fourth, they provided constant feedback, instruction, and, occasionally, motivation.

There are some parallels to working with a consultant, you know.

Consultants can help you to:

  1. Focus on the most important things so that you don’t get distracted with the day-today busy work that won’t achieve your goals.
  2. Pursue your goals using proper techniques and practices that increase your odds of success and reduce the chance of hurting yourself or your business.
  3. Push you beyond your comfort zone, because, as Marshall Goldsmith says, “What got you here won’t get you there.”
  4. Constantly hold you accountable and give you feedback on your progress, suggest adjustments, and celebrate your successes.

The best part of working out with a consultant is that you don’t need to wear a heart rate monitor and you won’t pass out from over exertion. However, mental work still seems to require some heavy lifting.

It’s time to hit the gym.

Copyright 2012 Phil Symchych. All rights reserved.

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How To Run A Good Meeting

Friday, February 10th, 2012

“It’s 3:00 on a Friday afternoon. I could be getting some real work done before the weekend. Why am I here?”

Most of us hate meetings, or, more specifically, we hate wasting time in unproductive meetings. However, a well-run meeting can dramatically improve morale, align your people, and generate great results.

Running a good meeting is a critical management task that all entrepreneurs need to master.

Agenda

Agenda

Here are tips on how to run a good meeting:

  1. Distribute the agenda in advance.
  2. Require relevant people to attend, if absolutely required, only the specific parts that are relevant to them.
  3. Don’t make everyone sit through the whole meeting.
  4. Start on time.
  5. Set ground rules: cell phones, interrupting, not being critical during brain-storming sessions (ban ‘yes, but’ from your meetings).
  6. Allow the group to contribute to the ground rules.
  7. Be clear on the purpose of your meeting: presenting information (a poor reason for a meeting), discussing ideas (a better reason), or crafting an action plan and assigning accountabilities (a great reason for a meeting).
  8. Stay on topic. Set up a parking lot for unrelated issues. Don’t let people wander off topic. This takes courage and wisdom.
  9. If you are allocating time limits to topics, make sure you achieve your objectives such as creating action items and assigning responsibility.
  10. Have a designated person take notes so that action items and responsibilities can be clearly assigned.
  11. Less is more. Don’t try to accomplish too much.
  12. Finish on time (or early).
  13. Be positive, professional and prompt.

Ineffective meetings waste time, waste money, deflate morale, reduce your credibility and hurt your company. Or, effective meetings can generate great ideas, hold people accountable and improve your company’s performance. The choice is yours.

Copyright 2012. Phil Symchych. All rights reserved.

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DUDS: How to fix a cooktop in only 54 days

Thursday, January 26th, 2012

“The stove doesn’t work,” said my wife. “Uh-oh” I’m thinking, “kitchen stuff.” This wasn’t starting well and it wasn’t going to end well.

The largest, main burner on our cook-top stopped working. “We’re supposed to host Christmas dinner and I need all my burners,” exclaimed my wife. She called the warranty company – because the repair man told us to always buy an extended warranty on today’s electronically sensitive appliances – and this commenced a lengthy exchange. She provided the serial number and the warranty company needed to send out the local service representative to take a look. Two weeks later, the service rep showed up, made a diagnosis, and left. Then, nothing.

My wife called the warranty company back. They never received any information from the service rep. My wife called the service rep. He said that he faxed the information and will resend it. We waited, and waited. My wife called the warranty people, to whom she wished a “Merry Christmas” because the season was upon us and we, well, my wife, weren’t cooking anything on the main burner. The warranty company still hadn’t received any information.

We called the service company, again. Eventually, my wife helped everyone figure out that the service company had the wrong fax number and sent our information to fax purgatory. Finally, my wife connected the service company’s information with the warranty company.

This is why consulting is so easy, sometimes. Large companies lack management skills and processes and don’t test their own products and services. Small and medium business managers can run circles around any big company manager who has a single department specialty and is busy protecting his turf, but I digress.

Our local company sent the information for the third time. We appreciated their persistence. My wife was now on a first name basis with the warranty people and had elevated her concern to the supervisor. The repair was finally authorized, then scheduled and, finally, performed.

Total time: November 24 to January 17. Only 54 days to fix a burner.

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What Can Entrepreneurs Learn From Economists

Wednesday, January 25th, 2012

Most economists that I’ve heard speak (well, two, to be exact) provide their services to major financial institutions and associations. Marc Faber is such an economist and he spoke to the local Chartered Financial Analysts (CFA) last night where a banker friend (yes, I’ll admit that publicly) treated me to dinner.

Dr. Faber has extensive global experience, having lived and worked in many interesting countries. His best credential wass that he visited Saskatchewan in January.

Here are the lessons for entrepreneurs.

  1. There are many investment alternatives including bonds, equities, real estate, cash and precious metals. These alternatives become more complicated when you factor in which industry sectors, countries and foreign currencies provide the best upside with the lowest risk. You need the help of a good professional to navigate all of this.
  2. Remember when our parents invested in Canada Savings Bonds? Life is definitely more complicated now.
  3. Interest rates will go up.
  4. Deficits in major economies such as the United States will continue to increase financial risk globally.
  5. Spending-and by that I mean government supported programs-on consumption is a short-term band aid solution that isn’t sustainable. Spending on capital such as equipment or research and development knowledge can create long-term value.
  6. Countries that print money, and that’s most of them, to try and stimulate the economy, end up creating long-term problems because they can’t control where the new money is being spent.
  7. A business that’s losing money won’t fix its problems by borrowing more money. You have to stop the bleeding first.
  8. The key difference between economists and entrepreneurs is that economists measure things with charts spanning decades and entrepreneurs measure cash today.

In my opinion, it appears that the best investment is in your own business! You know the customers, the suppliers, and the industry. You are in the best position to grow your business. Are you generating a healthy 10% or 20% return on investment in your business? You should be.

You must be proactive, know your numbers and act decisively. Otherwise, there is a factory in some foreign country that is using government funding to create jobs, doesn’t have a profit motive and is trying to enter your market with a ridiculous price. Sound familiar? Are you competing with five dollar an hour wages somewhere?

Here is my economic prediction: the experts still won’t be able to predict the future. No one can. That’s why you have to use your common sense. And, invest in yourself.

Copyright 2012. Phil Symchych. All rights reserved.

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Cashing In On Inventory by Shawn Casemore

Tuesday, January 17th, 2012

Guest blog by Shawn Casemore: Minimizing Inventory – Maximizing Cash

The best inventory is an inventory of cash. If you stock inventory in your business, this article can help you increase your cash.

Maintaining inventory can be a double-edged sword. Too little inventory and you may miss an opportunity to meet unpredicted (but welcome) customer demand too much inventory and a significant portion of working capital can be left stagnant and unavailable for more productive business investments.

The most successful companies manage inventory using a variety of strategies, all of which can be employed by small- and medium-sized businesses if size and volume is leveraged effectively.

Here are five ways to minimize your inventory and maximize your cash.

  1. Plan inventory purchases: Through proper inventory categorization and planning, inventory investment and obsolescence can be dramatically reduced. Identify materials and products of high consumption. Negotiate good prices by buying in larger quantities, less frequently. In doing so, volume discounts can be obtained, thus reducing your cash outflow and retaining cash. For lower quantity purchases, increase the frequency of purchases and reduce the volume of each purchase. This should have no impact on the purchase price, because you are negotiating in advance based on annual projected volumes, but will serve to ensure that inventory investment is minimized and obsolescence is avoided.
  2. Outsource inventory investment: Request that your suppliers manage inventory of high consumption materials such as hardware, janitorial supplies, and office supplies. Suppliers will often offer, at no charge, onsite inventory review and replenishment. This serves two purposes. First, it reduces the amount of time you must invest in managing inventory. Second, it ensures that you only pay for what is consumed. In setting up such a program, identify your preferred minimum and maximum inventory levels so that suppliers  avoid over-replenishment.
  3. Monitor inventory accuracy: Maintain a close view on inventory levels of highly volatile or costly materials to ensure order accuracy and avoid excessive investment. Inaccurate inventory leads to excessive costs in two specific areas: over replenishment of material as a result of under-stated inventory levels, or missed customer orders as a result of over-stated inventory levels. Think about inventory accuracy like the fuel gauge for your car, too much or too little are both a problem.
  4. One man’s junk is another’s treasure: We have helped some of our best clients use the online marketplace as a means to sell obsolete materials. This provides an opportunity to recoup a portion of investment before the asset is written off. In some instances, where our clients have in the past paid for disposal, they now have an alternate revenue stream.
  5. Leverage the future: Too many growing businesses fail to leverage their future growth as a means of achieving reduced prices. Suppliers are interested in customers who have aggressive growth plans, and are often willing to invest (in terms of reduced revenue) in anticipation of future business demand growth potential. We often leverage our clients’ future volume predictions as a means of achieving competitive pricing despite lower volumes. Consider this strategy as involving your suppliers in a win/win proposition.

Spending some time identifying and implementing the right inventory management strategies can significantly reduce investment, freeing up working capital for growth and acquisition.

© Shawn Casemore 2012. All rights reserved.

Contributed by:

Shawn Casemore

President, Casemore and Co.

(519) 379-7697

Email: info@casemoreandco.com

www.casemoreandco.com

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Know Your Numbers by Phil Symchych

Monday, January 16th, 2012

The best managers, running the most profitable businesses, know their numbers. Do you know yours?

Here are several key questions that, when answered, will give you a powerful insight into your company’s profits.

  1. What are your top three products or services, as a percentage of your total revenues?
  2. What are your gross margin percentages for these top products and your company average?
  3. How much of your total gross profits do these top products contribute? Remember, the 80/20 principle can apply here.
  4. What is your overhead rate by hour or person or unit of production?
  5. What is your break-even sales figure each day, week or month?
  6. Who are your most profitable customers?
  7. How much time and resources do you spend building relationships and selling to your most profitable customers compared to other customers or non-customers?
  8. What percentage of your revenues come from proactive selling vs. reactive order-taking?
  9. Which customers pay the fastest or the slowest?
  10. What is your days to cash? That is, how fast do you collect your cash. To calculate: Divide your accounts receivable into your annualized sales and then multiply by 365. The lower the number, the faster you’re getting paid.
  11. Are you actively promoting your most profitable products and services to your most profitable customers?

Knowing your numbers can reduce your risk from guessing and improve the probability of producing profits.

Copyright 2012. Phil Symchych. All rights reserved.

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Don’t Aim For Yesterday

Friday, January 13th, 2012

SUMMARY: Aim high. Encourage risk taking and support failure. Hold people accountable for results. Provide constant feedback. Banish excuses. Pay for performance.

If you want to achieve success, you have to aim for success. That means that you need a marketing plan and a budget that push your people to achieve more. You won’t replicate last year’s success because the market keeps changing so don’t aim for yesterday. You need to aim higher and then innovate and implement your way to success.

Never tolerate a break-even scenario. There’s no such thing in the entrepreneurial world. If you’re not gaining, you’re losing.

Employees think and act differently from entrepreneurs and owners, as we all know. They are scared to fail. Give them permission to fail! They will learn that failure isn’t fatal and that you will support them. This is how they learn and how they will eventually start hitting home runs for you.

Constantly challenge your people to perform more, better and faster. They’re not motivated by a paycheque (but some can be, see below for more). They need challenges and feedback on their progress in order to raise the bar.

Listen for excuses and then observe your own behaviour. Are you tolerating, or even encouraging, excuses? Your business value, profit and performance are all your responsibility. No excuses!

Once you’ve got them focused on raising performance, as determined by measurable outputs and business results, then align this behaviour with performance based compensation. Don’t give them an annual raise because the price of eggs and milk went up, start adding performance compensation to their base. If they are in sales, most if not all of their compensation should be variable. After all, as a business owner, all of your compensation is ultimately variable, based on your business performance.

You will achieve more success by trying to win instead of trying not to lose.

Copyright 2012. Phil Symchych. All rights reserved.

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Start-ups: are you a sprinter or a marathoner?

Monday, January 9th, 2012

There are two kinds of business start-ups: sprinters and marathoners.

Both have courage. Both want to control their destinies and both want to be successful. However, there are some key differences.

Sprinters

  • Have experience and expertise in their business and industry
  • Have learned the ropes on someone else’s dime
  • Have good relationships with customers or prospects
  • Generate sales and cash flow quickly
  • Develop their operating policies and procedures on the fly, but get them on paper
  • Focus on their core strengths and competencies, in other words, their ’sweet spot’
  • Are comfortable saying “No” to requests or opportunities that don’t fit their sweet spot
  • Have a culture of performance, accountability and success
  • Attract great people and customers because of their positive attitude
  • Are focused on a couple of key strategic goals; especially generating revenues and providing a great customer experience (quality, service, consistency, breadth, convenience)
  • Can generate positive cash flow from zero to 60 days

Marathoners

  • Have diverse experience but don’t have expertise in their new venture
  • Are learning the ropes on their savings, investor’s or banker’s dime
  • Think that their management skills are transferable to any industry or business
  • Have good relationships with referral sources or prospects
  • Generate sales slowly and steadily
  • Are too busy marketing and selling to develop operating policies and procedures
  • Try to keep everyone happy and will do just about anything for cash flow
  • Have a culture of sales and customer focus
  • Try to minimize their wage expense until they can afford to hire great talent
  • Are focused on growth for growth’s sake

I’ve played lots of sports including hockey, tennis, golf (well, some people think golf is a sport, especially golfers), and participated in endurance sports such as triathlons. As soon as I was in a triathlon race, I was figuring out how to conserve my energy so that I could finish the race. My strength in cycling didn’t make-up for my swimming and running.

It’s the same in a start-up. You can’t think about endurance, the long-term or trying to do everything yourself. You have to focus your team on creating short-term success, like a hockey shift or a tennis rally or a hundred yard (meter) dash, in order to grow your business.

The critical success factor in start-up success is speed: attracting customers, generating sales, converting sales to positive cash flow, reinvesting in your business, achieving profitable growth. These are a series of sprints. If it feels like a marathon, something is wrong.

Can you see the finish line or are you climbing yet another hill with no end in sight?

Copyright 2012. Phil Symchych. All rights reserved.

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Growing too fast?

Thursday, November 3rd, 2011

Here are some questions to ask that will help you grow profitably, at any speed.

  1. What are the growth dashboards and metrics? How fast are you growing?
  2. Leadership-do the leaders really want to figure this out along the way, or do they want to grow into a long-term, sustainable, scalable model? What leaders can they hire who have been there and done that?
  3. Cash-are they creating or consuming cash? When will they run out? What are the financial assumptions? What is the financial reality?
  4. People-what kind of culture do they have now and want in the future?
  5. Processes-are the processes standardized, measurable and replicable? Where are the bottlenecks? Do the bottlenecks keep going in circles because improvements are minor and incremental instead of significant?
  6. Information-how do they keep control, how are performance and output measured?
  7. Capacity-are they growing within their capacity or running constantly at the red line without any down time for maintenance?
  8. Scalability-are they going to expand by replicating existing operations or are they going to continually expand the existing operation?
  9. What’s the motivation for growth? Competitive opportunity? Top line revenue growth? Market share and customer acquisition? Bottom line profit and cash build up?
  10. What can go wrong and what are the contingency plans?

Your business is an organic entity and its natural inclination, if it is healthy, is to grow. Remember, though, that high performance athletes rest regularly so they can compete and perform at their highest levels. You need to make sure that your team is healthy so that your business can be healthy, too.

Copyright Phil Symchych 2011. All rights reserved.

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