As a business consultant and coach, I probably hear one question more often than any other: “Where did my cash go?” It is among the most important questions in business because turning cash into more cash is the purpose of business.
The Statement of Cash Flows tells us where our cash went, which is the first step toward managing that precious resource.
Read More
“For me, it’s not about the money.” I was talking to a client about how to increase profits dramatically.
“What do you mean?”
“Well, I don’t want to be greedy and make too much.”
“So, how much is too much...?”
I didn’t get an answer. I never do. I know that some people (hopefully a small minority) are put off by my constant emphasis on making money. I know that because, as a business coach, I have talked with hundreds of small business owners about profit and have often had conversations like the one above. It’s as if the speakers feel guilty about making a profit or that it is somehow noble to loathe money...
Read More
Me: “DO NOT BUY TRUCK.” It was my text to a client who was trying to scale his business. (He knew I was serious because I used all capital letters.)
Client: “Good price - need dependable truck for new hire.”
Me: “You have one - he can drive Ford you used to drive.”
Client, several hours later: “I bought truck.”
Me: ”I guess you’ll learn the hard way.”
Read More
Just after I graduated from college and long before I learned the need for a cash reserve, I learned to fly small airplanes. At the time, I had enough money to rent an airplane, but not enough to rent the airplane AND pay for a full tank of gas. One afternoon my former instructor approached after overhearing me order a half-tank of fuel. “It’s okay to fly on a half tank,” she said, “so long as you run out of the top half of the tank, not the bottom.”
I often quote my instructor to business coaching clients because gas to an airplane is like cash to a business.
Read More
“Martin, I’ve had it with growing my business and your push-through stuff. ” It was a text from a client. I called him.
“What’s up?” I asked.
“I’m going back to just me. I can’t depend on these guys I hired. If they show up, they mess up. I spend most of my time fixing their screw-ups, and I still have all of my work to do. They’re ruining my reputation, I’m out of cash, and I couldn’t pay myself last week. My life was better when it was just me. A lot better.”
Read More
As a business owner, do you have to go to work? If you do, you are trading time for money, and that’s the definition of a job. Business owners should earn distribution checks, not paychecks.
A paycheck is compensation for time spent at work.
A distribution check is compensation for accepting the risk and responsibilities of ownership.
Distributions are a return on investment, which has nothing to do with going to work.
Read More
A lot more of us understand the benefits of delegation than are fully committed to it. I hear a lot of reasons for that, including the ones we’ve all heard: “If you want something done right, you have to do it yourself,” or “Nobody can do it as well as I can,” or “It takes time to train these guys, and I don’t have time.”
There is some truth to all of those excuses, but the main reason we don’t delegate is that we don’t know how to get started writing good systems and processes.
Read More
At the junction of Interstate 80 and Highway 281 in Nebraska, stands a convenience store with a large, well-lit sign. The sign reads “We Have the Best-Looking Cashiers.” Customers judge the offer you put before them, then compare it to your competitors’ offers. If there is no meaningful difference, customers base their buying decisions on price...
Read More
The unwillingness - or inability - to delegate is a principle reason that fewer than 5% of the 28.8 million businesses in the United States ever reach $1 million in sales and fewer than 20% of them have even a single paid employee.
However, we can’t delegate by simply handing off authority and responsibility and instructing our teams to “figure it out.” Doing it right is a process.
Read More
Many of us go to work on the first day of the month believing everybody’s making a little money that day, and the next, and the next after that. Every day we make a little profit; our employees make their wages; our landlord makes some rent; our suppliers, insurance providers, utility companies, and all the people we do business with earn their daily cut.
That’s true of everyone else, but it’s not true about us.
Read More
“So, what do you want?” That’s the first of three serious questions I ask prospective clients. The answer is usually missing from a conversation that goes something like this:
Client: “What do you mean?’
Me: “I mean what do you want?”
Client: “Do you mean for me or the business?”
Me: “Either or both.”
Client: “That’s hard to say... Wow, that’s a really great question….”
Read More
In my last article, titled “Can I Afford to Hire More People?’ (Part I), we saw how to establish a salary cap for our businesses. The salary cap is a planning number, a Key Performance Indicator (KPI), that gives us a budget number we can use to hit a profit goal.
I said that because what gets measured gets better, we also need a way to track labor productivity throughout the year. To be useful, such a number should inform our hiring decisions and provide an objective measure of the results at least monthly.
Read More
Am I getting my money’s worth out of employees?
What employer hasn’t wondered about that on payday as wages and tax deposits suck the cash out of our bank accounts leaving barely enough to pay the premiums on the group health plan.
Even when we are well pleased with our current team, how do we know if and when we can afford to hire more people to handle a growing workload? On the one hand, we’re nervous about growing sales without the people to deliver, on the other hand we’re just as nervous about hiring new people until we have the sales to pay for them.
Read More
Owner: “You just can’t hire good people anymore.”
Me: “Okay, but has anyone hired a good person recently, maybe even today?”
Owner: “Anyone? Well, yeah, I’m sure someone has.”
Me: “So it is possible to hire good people? It can be done.”
Read More
My client was on the phone with his inbound marketing advisor.
“We need a sponsor,” the advisor said. “Who could we get to distribute our content that is well known in your target market?”
My client quickly named the most influential trade association in his industry.
“It would be great to get those guys. Everybody knows them, and everyone belongs to the association or at least attends their trade shows.”
Then came the four words: “Well, let’s call ‘em.”
Read More
It takes courage to raise prices, and many of us are understandably reluctant to do it. I’ve heard many anecdotal stories about the dangers of price increases and lots of reasons to explain the reluctance to raise prices.
Both the stories and the rationale all boil down to one thing: We are scared we will lose sales if we raise our prices.
We don’t have to remain at the mercy of our competitors’ pricing strategies. Instead of relying on anecdotes and our assumptions about customers, we can test our pricing to find the upper limits. That’s the only way to know, yet I don’t recall ever meeting an owner who had systematically tested higher prices and measured the results.
Read More
Edward Deming, one of the great thinkers in business management, is quoted as saying: “If you do not measure it, you cannot manage it.”* The corollary to that statement is: If we don’t manage it, everything that happens to us - good or bad - is an accident.
Key Performance Indicators, or KPIs, are the measurements Deming spoke of, and they are expressed in numbers, often in the form of ratios as “something per something.” Some of us don’t like numbers, but stick with me because KPIs are critical to business success.
Read More
“So what’s the problem with getting the bids out?’ I asked.
“My customers! My team can handle all their issues, but customers always want to talk to me. In fact, since we’ve been talking, I got a message to call a guy back. Elizabeth said I was on the phone and tried to re-route the call, but he declined and wants me to call him back.
“I can’t afford to be rude and act like I’m blowing customers off, but it never stops. I can’t get anything done.”
Read More