Do You Need A Board Of Directors?

This segment will help you to understand the role of a formal board of directors and a less formal advisory board.

Phil’s Profit Points™ in Brief:

• A board of directors has a fiduciary duty to act in the best interests of the organization.
• Board members may have personal responsibility for certain things such as payroll remittances.
• A board’s major responsibilities include setting strategy and ensuring key people have succession plans.
• An advisory board is less formal and can advise the president as required.

Do you want to be told what to do? I didn’t think so.

A board of directors can be a scary concept for a business owner or founder who is very worried about giving up control. After all, being strong and focused and making their own decisions is what got the owner to where they are now. However, as Marshall Goldsmith said (and wrote a book), “What got you here won’t get you there.”

A good board can help take you and your company to the big leagues. Are you ready for that?

A formal board of directors isn’t there to tell you, as the owner / founder / president what to do and how to do it. Their main responsibilities are to set the strategy of the organization and ensure that senior people have succession plans.

They represent the shareholders’ interests and need to make sure that the president and senior management are heading in the right direction and have the plans, resources and metrics to make progress and measure results.

That may require specific direction from the board to the president, at times. Major decisions should be based on fact, not just gut instinct or hearsay. Individual preference and bias need to be acknowledged and balanced with professional judgment and sound business practices.

A good board will have members who have been there and done that and can share their experiences. Most importantly, they will ask you tough questions that will improve your perspectives and your decision making. A good board is not the president’s ‘yes men.’

The board has a legitimate role and responsibility to make sure that the president, who may not even be a shareholder, executes the business strategy. The board may delegate strategy setting to the president and other key executives. However, the board is ultimately accountable for strategy development and holding the president accountable for execution.

A board that focuses or meddles in operations is not an effective board and will drive management crazy.

Summary of Board Options

Answer these questions to see if a board can help you.

1. Have you grown the company as much as you can yourself?
2. Do you see market potential for additional growth in terms of increased capacity, new service offerings, additional locations and international expansion?
3. Are your customers and bankers asking questions about your succession plan?
4. Does your management team look to you for all the answers?
5. Can you take one or two months of vacation away from your business?
6. If you were unable to make key decisions due to illness or accident, would your management team know what to do?
7. Does your company have a clear business strategy in place?
8. Can your employees articulate your strategy?
9. Do you have a succession plan in place for key managers?
10. Are key people compensated for results or just for showing up?

Symco Resources

We have several resources to help business owners with transition, succession and exit plans here. Call us to discuss how we can help you to formalize your board, establish a succession plan or prepare your transition.

In Conclusion

A board of directors or an advisory board can help you grow your business beyond your personal limitations while still providing you with the opportunity to maintain ownership and control. A board can help you to maximize your business wealth, minimize your risk and take your business to the next level or even into the next country.

Tough Question

Who helps the president to keep focused on the most important, long-term strategic opportunities that maximize company value for all stakeholders including shareholders and customers?

From The Piggy Bank

Racing instructors tell drivers that they need to look where they want to go. Looking far ahead will help you to grow your business. Looking at today’s operational issues might make you efficient, but it won’t help you to effectively grow your business.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

West Palm Beach, FL

Disney World

Copyright 2012. Phil Symchych. All rights reserved.

How To Increase Your Capacity

This segment will help you increase your capacity to get things done and grow your business.

Phil’s Profit Points™ in Brief:

• Capacity includes time, people and money.
• Time is a limited resource so getting the most effectiveness is crucial.
• People can learn and grow so investing in them can provide future returns.
• Money doesn’t replicate itself, at least not at our current interest rates. However, it can buy ideas and ideas can generate more money.

Time

• My mentor, Alan Weiss, has taught me to focus on three important things each day. “It’s more important to move three things a mile than a hundred things an inch,” he says.
• Be selfish. Focus your time and energy on what you enjoy the most, what is aligned with your talents, and what no one else can do.
• If you’re feeling burnt out, you need to recalibrate based on the previous point. The cure for burn-out isn’t horizontal rest, it’s the intentional and strategic alignment of your energy with your personal passion and business strategy.
• Have you ever met a burnt-out dog? They live in the moment, seeking treats or a squirrel to chase or a human to please.
• Keep a time log for a couple of weeks and monitor your most productive times of the day, least productive times, and what tasks should or must be delegated to someone else. I’m immediately more productive when I keep a time log because I’m not going to write down “surfed web for half-an-hour.”
• What are your top three time wasters? Before you read any further, write these down on a sticky note and put it on your monitor or in your calendar. Now, stop doing them.
• Say NO! Don’t let others arbitrarily derail your priorities, attention, enthusiasm and energy.
• Always hire an expert. Outsource specialized tasks to service providers or firms that specialize. Are you still making all of your own travel arrangements? Pick one travel agent, teach them your preferences, and then advise them of your trips and parameters. Use graphic design firms to design marketing collateral and use writers to create the copy or improve yours.
• Use technology to improve your productivity by enabling you to delegate more effectively, communicate faster, and focus on more important things.
• Don’t let technology to lower your productivity by distracting you with social media and internet escapes.

People

• Make sure you have the right people for the job. Natural talents are based on assertiveness, persuasiveness, attention to detail and repetition. You can add other specific criteria for your company and culture. A salesperson needs high assertiveness and persuasiveness. A bookkeeper needs high detail and repetition.
• Ensure the individual fits the job at hand, their workgroup and the corporate culture, in that order.
• Remember, if someone is earning $100,000 per year and they’re doing the work of a $40,000 per year person, the business is losing $60,000 per year.
• Say NO! People will ask for things from their self-interest and not necessarily because it helps your customers or your business.
• Don’t allow your employees to give you tasks or homework. Their job is to make your life easier and your business more productive and profitable. Your job isn’t to make their life easier.

Money

• Analyze your income statement expenditures. What’s in there that has become a habit but may not provide value? What provides the best value to growing your business and delighting your customers? Investments in technology and training that accelerate service speed and capacity and decrease costs are good investments.
• Most business grow from referrals yet have a zero budget for referrals. This doesn’t make sense. If zero generates results, what would 1% of sales invested in a referral strategy generate?
• Say NO! It’s harder to make and keep a dollar than it is to spend a dollar. Yet, spending may seem like taking action to some people. Results are more important than actions.
• Don’t be your customer’s banker. Any accounts receivable more than 30 days old needs to be discussed with your customer and either paid or, well, paid.
• If a customer is withholding payment because they’re not happy with something, but you didn’t know that, then you can improve your process to monitor this.
• Your accounting department shouldn’t be collecting your receivables; your front line manager with the main relationship should be.
• Your accounting department should be measuring your managers’ effectiveness at implementing your strategy, gross margin by product and service line, and customer profitability.

Symco Resources

All professional athletes have coaches, from nutrition and sports psychology to technical performance coaches. Who is helping you, the business leader or owner, improve your results? Our coaching and mentoring services can help you to achieve more and also give you the advice and support that you need to get there. Click here.

In Conclusion

You can increase your capacity by focusing on the results generated from your decisions and investments of your time, people and money.

Tough Question

Which tactic will you implement to increase your personal capacity the most?

From The Piggy Bank

Operational gravity will always bring you down to the lowest level of task that you are willing to do. Yet, your business will grow only to the extent that you spend time on the highest and, often, most ambiguous and least clear task that you are willing to courageously pursue. Don’t let the easy ones push out the important ones.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

We hope that you take some time to enjoy our great country with your family and friends.

Copyright 2012. Phil Symchych. All rights reserved.

Lessons from the Bird Feeder

This segment will help your business to increase capacity so that you can serve more customers and generate more sales with your existing resources.

Phil’s Profit Points™ in Brief:

• Offer your customers different levels of service, including: reactive to proactive, self-serve to full-serve.
• Make it easy for your customers to learn about you, your products and services.
• Give your customers multiple ways to place orders.
• Give your customers flexible options for delivery.

I was sitting on our deck enjoying a warm summer evening while watching the birds take turns at the bird feeders in our yard. Even Lola, our Pomeranian chief morale officer, was enjoying the activities. I’m not sure this is the definition of a bird dog but here is Lola guarding over her small flock of a couple of brave birds.

Bird feeders, I bet, were the first drive-thru restaurants. The average feeding time for a bird up on one of the four pegs is, according to my scientific research, about four seconds, and then another bird pushes them away. Now, that’s fast food. The birds on the ground, dining on scraps, have no time limit or space constraints. Sometimes, there will be 15 or 20 birds on the ground, and even an occasional squirrel.

The black birds will try to sit the bird feeder and throw the seed onto the ground where more of them can get at it. That’s pretty smart.

In your business, how many ways can your customers do business with you? Here are some ideas.

Expressing Interest

• Do you have a pile of customer testimonials on display?
• Do you have good, old-fashioned, nicely printed brochures on display in your business or show room that appeals to your customer’s emotional decision-making and also logically educate your customer on the differences in quality and service?
• Does your sales process or information help your customers become more knowledgeable about the process they are going through (and build their trust in you)? Or, are they laden with technical language that completely ignores any emotional decision factors?
• Do you provide a checklist for your customer so they can compare you to your competitors? Gutsy, yes, but highly effective.
• Is all of this information available on your website, blog and social media links so customers can access it any time of day or night?

Pricing

• Do you give your customers a couple of price options so they can select which best meets their budget and you don’t leave money on the table or lose a customer because you didn’t give them enough choices?
• In our time constrained world, speed has significant value for many people. If we were doing a kitchen renovation, we’d want it completed quickly, during the summer, when we can cook outside on the barbeque and eat in the gazebo. We wouldn’t want it done in the winter, like we did last time, where we had to set up a temporary kitchen in the basement.
• Here’s an example, “we can deliver this product or service in eight weeks for $xxx. However, if you are in a rush, we can deliver this product in eight days for $y,yyy.” I’ve helped clients successfully structure and charge much more for rush service because they met their customer’s true needs, and everyone was happy.

Ordering

• Do you give your customers price quotes or proposals?
• Do you rush to a price quote or do your people ask questions and build trust with your customer first?
• Can your customers order in multiple ways, including by telephone, fax, email, and in person?
• Can your customers select products and services, place orders, and give you their money on your website?

Delivery

How you distribute your products and services can impact convenience, flexibility and speed. The bird feeder shows how the customers have figured out their own system where five times as many customers can self-serve on the ground while a few busy and hard-working customers jockey for position on one of four pegs.

• Do you have flexible delivery hours? The cable and phone companies are notoriously inconvenient because they only allocate times in half day increments and the customer is tied to one place.
• Do you fit your customer’s schedule? A good doctor or dentist can always take an urgent appointment because they don’t fill up their schedule 100% and always have a few openings.

Symco Resources

What’s your business worth and how are you going to convert that equity into cash? Our Business Wealth Builder services can help you with these important to make but easy to put off decisions and plans. Call us or learn more here.

In Conclusion

Analyzing your customer touch points – from initial contact to ordering, delivery and payment – can help you to determine how to provide different levels of access and service for your customers. Just like the bird feeder, the customers can happily buy from you at their convenience, not just yours.

Tough Question

How many different ways can your customers learn about you, place an order and receive delivery?

From The Piggy Bank

You can’t make it too easy or too much fun for your customers to learn about you, talk about you, do business with you or refer you to others. Help them to help you grow your business.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

Proactive Profits

This segment will help your business to be more proactive and more profitable.

Phil’s Profit Points™ in Brief:

• Businesses are either reactive order-takers or proactive value providers.
• Order-takers: high volume and efficiency, low relationship.
• Proactive value providers: ask questions, higher relationship.
• Customers want both.

I was driving home from a meeting in Yorkton last weekend and visited the local Tim Hortons for lunch. Antonio, the assistant manager, was working on the till. “How are you?” he beamed, enthusiastically. Caught a little off guard by his energy, “I’m fine” I replied. “Are you a father?” he asked. “Uh, yes” I replied. “Happy Father’s Day!” he said. Shocked but smiling, I determined right there and then that Antonio has never, and will never, work for Air Canada.

“Antonio, I’m hungry, what do you recommend?” I asked. “How about a turkey bacon club on a jalapeno bagel?” he suggested. I never would have ordered that in a million years, so I said “sure.” The sandwich was excellent.

This is how a typical order-taking, fast-food place can become a proactive value provider. Antonio’s conversation didn’t cost anything extra. And, it enhanced my customer experience. This isn’t typical of order-takers.

A good order-taker thrives on efficiencies and high transaction volume. For example, most drive-thru coffee shops or fast food places take customers’ orders and dole out coffee and fries, usually in under two minutes per transaction. In fact, I’ve conducted experiments and determined that it’s faster to go through a McDonalds drive-thru at lunch time than it is to go and stand in line in the restaurant.

Compared to reactive order takers, proactive value providers are, unfortunately, few and far between. I’m not talking about the hair stylist that out-books you for your next haircut. They’re just scheduled order-takers. Proactive value providers are not telemarketers or pushy salespeople. These are just organized and proactive order-takers.

The best proactive value providers are people that you probably already deal with, that you have a trusting relationship with, and that could provide more value and services to you if they ASKED QUESTIONS, made suggestions, gave advice, and helped you to be, feel, do or look better, personally or in business.

It all starts with a question to learn more about your needs, wants and goals. It does not start with “Can I help you?” In the business-to-business world, there are lots of proactive order takers but fewer proactive value providers. If you let your customer dictate what they buy and when, then you’re an order taker, regardless of how fancy your suit is.

If you fix break-downs, then you’re an order taker. If you prevent breakdowns, and maximize uptime and production and profits, then you’re a proactive value provider.

If you deal with purchasing, you’re probably a order taker. If you deal with the president, owner, or head of operations, then, hopefully, you’re suggesting ideas on how they can improve their business. You are then a proactive value provider.

Other businesses that shouldn’t be order-takers often become one, even when it isn’t in the company’s best interest. My plumber could make more money by servicing our furnace and air conditioner every year, but he waits for us to call. The yard guy missed a month of work (and revenue) this spring, because he waited for us to call.

Resources

Listen to our podcast on accelerating business success here. We have podcasts on many business topics here.

Spending time with your customers, asking them intelligent questions and building your relationship with them will help you and your business to become more proactive and more valuable. It’s all about strategy and how you train your front-line people so that their actions are aligned with helping your customers to achieve a great outcome, even if they’re just buying a sandwich.

Tough Question

What percentage of your revenues and profits come from proactive sales vs. reactive sales?

From The Piggy Bank

Reactive order takers try to maximize the transaction value. Proactive value providers focus on the lifetime value of their customers.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

A Good Accounting Department…can make you money.

This article will give you ideas to help your accounting department make more money by empowering management with information.

Phil’s Profit Points™ in Brief:

• There are three kinds of accounting departments: historians, supporters and builders.
• Their particular role depends on their focus and where they spend the majority of their time.
• Historians report the past.
• Supporters report the past and the present.
• Builders report the past, the present and the future.
• The type of accounting department that you have is due to the direction and resources that you have given them.

The accounting department’s roles and importance depends on a few key factors:

• The accounting system used and how well it integrates with operational data, customer relationship management information, or independent spreadsheets.
• The general ledger does not need to be the company’s main information system. If it is, you may be lacking important operational data and real-time reporting.
• The structure of the accounting department within the company’s organizational structure. Is it strictly a backroom processing centre or is it connected to management’s need for ongoing financial advice and support?
• The leadership of the accounting department. Is the person a leader, a peer or a subordinate of the business decision-makers?

A good accounting department can strengthen the management information system because accountants are experts at measuring activities and results. The best accounting departments balance information about the past, the present and the future. And, they provide useful information to management on a timely and regular basis.

The Historians: Focused on the Past

The historians spend most of their time processing last month’s information. Any requests for current or future information are dealt with when time becomes available and after prior deadlines are met. In other words, the managers requesting information have to wait. This frustrates everyone and hampers profitable growth.

It’s even worse if most of the time is spent creating financial reports for external users such as bankers or the tax man. This is common when a small business had their accounting system set up by their external accountant and management’s needs were not prioritized or even considered at all. You can fix this by helping the department move to becoming supporters.

Accountants as Supporters

Supporters provide information on both the past and the present. They can report on current operating results in real-time, given a day or two for processing. This is highly achievable for most businesses that don’t have real-time operational data and is accomplished by measuring – and reporting – the key results every day.

If you manufacture products, then measure then number of units or square feet of what you produce. If you are a service company, then measure the number of billed hours delivered in the day. Focusing your managers on increasing daily production with the current resources is the fastest way to increase your revenues. If you accelerate collection of those revenues, then you will have increased cash flow.

Accountants as Builders

The most effective accounting model is when the accountants are financial builders and have balance between reporting the past, the present and the future.

The Builders: A good balance between reporting the past, the present and the future.

Builders can contribute to future strategy by generating resources (time, people, money) for future expansion and pursuit of yet unknown opportunities. They can monitor your performance against your budget and business plan so that you know what’s working, what isn’t working, and what you need to do to improve results. They can predict the future based on your historical and current performance.

Action steps:

1. Ask your accountants how much time they spend on the past vs. the present vs. the future.
2. Analyze the reports you get and assess whether they report on the past, the present or the future.
3. Note the date that you receive your month end reports. The later this is, the less time available for reporting on the present and the future.

There is no magic formula to allocate the time. However, the more efficient the systems and processes are, the faster the historical information can be prepared and the more time and capacity there is for working on the present and improving the future.

It’s up to you, the president or business owner, on how you guide and support your accounting department.

If you would like more information on assessing your accounting department and learning how they can help you to drive profitable growth, please call (1-306-569-9111 ext. 1) or email us at info@symcoandco.com..

Resources

See our article on Business Report Cards that measure your financial performance and position here.

A good accounting department can help you grow your business and increase profits by ensuring that your management team has the information to analyze historical performance, current performance and future opportunities.

Tough Question

Which accounting department have you created: historians, supporters or builders?

From The Piggy Bank

The best opportunity for accelerating profitable growth is to ensure that your managers receive real operating and financial information as quickly and frequently as possible.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

Our 14 year old daughter, Anastasia, is a 13 year cancer survivor. This year, for her birthday, she didn’t want presents and, instead, asked her friends and family to make donations to her Relay for Life team.

A generation ago, Anastasia’s cancer was almost always fatal. Today, Anastasia is officially cured, not just in remission, but cured! That’s because research has developed an almost 90% cure rate, thanks to your donations.

If you would like to help support Anastasia and her goal or curing all cancers, please donate here (just click on the big, orange “DONATE” button):

Thanks very much.

Phil

Pricing Hierarchy

This article will help you to analyze and improve your pricing processes by identifying where you are in the pricing hierarchy.

Phil’s Profit Points™ in Brief:

• Pricing should reflect the value to your customers.
• Pricing should be flexible so customers can select the level of value that they want.
• Pricing should not punish your customers.
• Pricing is part art and part science.

On a recent flight to New York, my entire return ticket cost $861. Two days before I departed, I called United Airlines and advised that I wanted to change the return portion of my trip and come home earlier. “No problem, sir,” Collette, the United agent said, and “that will be an additional $1,387.63.”

“That’s more than my entire, original ticket,” I replied in disbelief.

“You will also only be able to use your cancelled portions on the exact travel routes as originally purchased,” she advised.

A quick check on-line and Air Canada could fly me home on a one-way ticket for $799 plus taxes, a lot of taxes. Business class was cheaper than economy! More crazy pricing. I booked the Air Canada ticket.

Air Canada and United Airlines are strategic partners yet their pricing, like many airlines, is perplexing.

How do you price your goods and services? Here is a pricing pyramid that reflects your pricing choices.

The Symco Pricing Hierarchy:

Let’s start at the bottom. If you don’t know your actual costs or what your competitors are up to, then I’m guessing that you’re guessing at your prices. Fortunately, most businesses don’t operate this way. If they do, it won’t be for long. Even my 12 year-old entrepreneurial, jewelry-making daughter quickly found that guessing prices didn’t work. She did her market research and knew her time and material costs. She wasn’t guessing.

Competitors price their products in any of the ways that we see on the pyramid. In fact, they may be guessing, liquidating old inventory, in a cash crunch, or are focused on growing revenues instead of profits. It’s important to know what your competitors are up to: you can check prices on the internet or talk to their suppliers or customers or shop their business. You should know what your competitors are charging but don’t let them dictate your prices.

I remember reading a sign in my lawyer’s office that said: “I have no quarrel with the person who has lower fees. They know the value of their services.”

Pricing on costs and then applying a mark-up is a legitimate and profitable method provided that you know all of your costs. The direct costs of labor, materials, freight and other variable costs are usually easy to determine. The fixed or overhead costs are more difficult and many businesses don’t know these or don’t use them in pricing. Allocating fixed costs is part art and part science.

The easiest (but not most accurate) way to calculate them is to take your total marketing, general and administrative expenses from last year and divide them by your units of production or units of sales for that year. This will give you an overhead cost per unit. Then, update the costs and assumptions for the current year.

Adding your direct costs and overhead costs and then applying a profit markup can work. However, you need to factor in future costs against future volumes. If future costs go up and future volumes go down, then you will lose money compared to the prior year. In other words, the assumptions are critical to pricing.

We’ve helped companies have record profit years by being conservative on the volumes and aggressive on the cost increases, thus creating a realistic overhead base. Once the volume target was achieved in the current year, the company made extra profits.

Scarcity is based on supply and demand; an economic theory. Diamonds are scarce, many natural resources have limited supply, but the commodity that is most scarce is time. If you can save your customers time, you will be more valuable.

Value pricing is based on the value that the customer receives. Value includes financial and non-financial benefits that are relevant for both an individual and their business, if they are a corporate or wholesale customer. The more time and effort that you spend to learn how your customer values your products and services, the more you can attract the right customer and the more your customer will be willing to pay.

Marketing and pricing involves educating your customer about your value. If you don’t have unique value, then you’re just another commodity and those are evaluated solely on price.

Symco Value Matrix™: Service Firm example

You can read more about our value discussion in an earlier Phil’s Profit Point.

Resources

See our video on Value Pricing here.

The airlines seem to have a crazy pricing structure, in my opinion. This is what happens when the company thinks of the customer as a transaction to be maximized instead of a long-term relationship that can be nurtured profitably.

Tough Question

How do you set prices for your products and services?

From The Piggy Bank

Giving your customers pricing choices will increase the likelihood of their buying from you and will increase your margins.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

Daily Flash Report

This article will help you to develop or enhance your daily flash report that displays one metric that measures your company’s daily production.

Phil’s Profit Points™ in Brief:

• A daily flash report helps to focus everyone on the most important activity that drives business results and displays the performance measure daily.
• The daily metric should be operational, such as units of production or sales.
• Everyone should know the metric and how their job contributes to it.
• The daily flash should be posted internally for all employees to see everyday.
• Think of a scoreboard at a football or hockey game.

What do your employees do every day? Do they fix your customer’s equipment, treat patients, give advice, manufacture products, build houses or sell donuts? How many of these did your business produce yesterday? That’s a very serious question.

Production Table: Units of Production e.g. square feet, service calls, billable hours, number of customers, any measureable activity that is important to your business.

A basic production table that measures your key output can help everyone to keep score and focus on generating results for your customers…and you.

If you don’t know how many hours you billed or square feet of stuff that you produced yesterday, then it’s very difficult to improve business results. That’s why, even as kids, we kept score when playing street hockey. People love to know the score. It gives them feedback on their performance, doesn’t cost management time, and a group can self-correct and improve performance if its is empowered. But they need real information to do that.

Trying to grow the business from last month’s financial statements, which could take a couple of weeks (or longer) to produce, is very difficult. The best businesses have real time information displayed for everyone to see.

Alignment

One of my favorite stories is from the airline industry. British Airways used to keep track of any flight more than two hours late. If that happened, the manager got a call from the CEO. That daily flash report carried a lot of weight, motivated managers to act, and aligned everyone’s activities to get planes out on time.

Are your employees aligned? Ask them how they measure their daily performance. You may get some interesting answers. Crossing things off the to-do list probably isn’t an effective factor in aligning the front line with your business strategy. Responding to a customers complaint — and resolving it — within two hours would definitely support your strategy of being a highly responsive organization.

Here are some examples of daily metrics:

• A window and door company measures how many units are installed each day.
• A convenience store measures the number of customers (and average transaction volume).
• A construction company measures the work done against the project plan.
• An industrial company measures its safety index.
• A distribution company measures volume of products shipped.
• A retailer measures dollar sales.
• An accountant measures the number of tax returns prepared.
• A doctor’s office or emergency room measures the number of patients treated.
• A school measures daily attendance (unfortunately, this isn’t the key learning metric).
• Our neighborhood measures the number of pot-holes still remaining on our street.
• Our dog, Lola, measures the number of squirrels that she’s chased.
• As parents, we measure how times we have to ask our kids to practice the piano (usually once) and clean their rooms (usually a lot more than once).

Resources

See our short video on “Knowing Your Numbers” here.

Here is a link to an article called “The Power of Metrics”.

When I’m asked to help a business improve financial results, the first place we start is to monitor daily production. By producing more, you can sell more. If you sell more (and at higher margins) and get paid faster, you’ll improve financial results dramatically.

Measuring and sharing the daily production numbers is a very low cost and high impact management practice that can dramatically increase your profits, business value and wealth.

Tough Question

What single metric has the power to align your entire organization?

From The Piggy Bank

Writing the daily production number on the wall — for all to see — has the great motivating benefit of having everyone try to beat yesterday’s number.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

Weekly Flash Report

This article will help you to develop or enhance your weekly flash report.

Phil’s Profit Points™ in Brief:

• A flash report gives your managers a snapshot of critical business information.
• It includes financial and operating information.
• It fits on one page or less.

I was attending a client’s year-end meeting with their external accountant recently when the discussion turned to the current year. One of the owner’s updated their accountant with the current production speed, weekly sales targets and sales pipeline based on units of production. I was impressed. Knowing your numbers is the sign of a good manager. Do you know yours? If not, a Flash Report can help.

We’ve set up our weekly flash using the same structure found in our Business Owner’s Scorecard™ and our strategic planning metrics. This ensures that all of the information, analysis, decisions and actions are aligned; and that everyone is focused on the same important targets. One of the most powerful management processes is to align your entire company around two or three key metrics.

The major areas of our flash report are:

• Talent — measuring your human resource levels and major activities such as hiring.
• Marketing — measuring key marketing and sales results.
• Operations — measuring key production, safety and asset health levels.
• Financial — measuring working capital and average revenue per employee.

As a manager, you can have the most relevant information in your flash report. People at different levels will have different information. Front line people will have production and safety metrics. The general manager wants to see plant productivity. The president wants to see strategic progress in terms of sales success, market share, costing, and financial returns.

Flash reports can also vary depending on their frequency. A daily flash report may just focus on production and safety. It gets everyone’s attention when employees know that the president looks at the daily numbers. A weekly flash may expand to include talent and financial factors (see our sample below). A monthly flash may highlight results compared to budget or business plan. Remember, it’s your flash report so you can put whatever information you want. This may change as improvements are realized and you focus on more important opportunities.

Symco Weekly Flash Report

Resources

See our Business Owner’s Scorecard article here.

If you are new to flash reports, just start by measuring two or three key factors. You can’t measure everything at once. I recommend starting with a sales metric, a production metric, and a financial metric that measures cash flow (such as days to cash). A start-up will definitely focus on cash flow. Every business should know it’s total days to cash number.

If you are already using flash reports, then I recommend that you enhance them by adding strategic metrics such as customer retention, customer growth potential, gross margin by product/service line and detailed costing information. All managers and supervisors should have flash reports for their key areas of responsibility.

If you get twenty pages of reports from your information system or accounting department and have to spend a couple of hours looking for important information buried in the data, then you definitely need flash reports.

Tough Question

What information would help your managers to make better decisions?

From The Piggy Bank

As Peter Drucker said, “what you can measure, you can manage.”

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

The problem with basic schooling is that it punishes mistakes. My kids are always trying to get 100% in their tests. We’re teaching our kids to be risk averse. In business, that’s a very bad thing.

We don’t learn much from our successes. We need to repeat those and build upon our strengths. However, we learn from our mistakes.

How many schools reward kids who try and fail? None that I know of. That’s probably why there aren’t too many teachers who are successful entrepreneurs.

Here is how innovation works.

• We come up with an idea.
• We take action.
• The idea fails.
• We learn something.
• We adjust and try something else.
• We persist until it works.
• Innovation!

A new idea comes to life, not at the idea stage, but at the sweat and persistent stages.

Maybe it’s time we started rewarding failures – blazing creative failures – in our educational system? After all, failures create learning which creates innovation. Our economy and our businesses could use more innovation.

As Winston Churchill said, “Failure isn’t fatal.”

Copyright 2012. Phil Symchych. All rights reserved.

Does this sound familiar?

• Steak on sale $3.77 per kilogram.
• Tax returns $99
• Couch and chair $699

These are examples of businesses that are trying to attract customers based on the low price of their commodities. Although some products may be pure commodities where the customer doesn’t care about brand, quality, convenience, service or anything but price, these products are few and far between. The customers aren’t loyal. If they had more money, would they buy your product?

For the budget conscious, there are house brands of food or clothes that are cheaper than name brands. Most other products, including ketchup and socks, must earn the customer’s trust.

I don’t want the cheapest cut of beef or the cheapest tax return. Do you? We’ve been trained – properly – to expect to get what we pay for. If you buy something that’s cheap and doesn’t work, you’ve wasted all of your money. If you pay a 10% premium for good quality, you’ve protected your investment.

Most consumers and buyers in general make an emotional decision to buy something.

Are you appealing to their emotional needs and making your customers feel good for buying your product?

Copyright 2012. Phil Symchych. All rights reserved.

How do you support such a large population? In Canada, the government provides services such as health care, education, infrastructure, and, very importantly, efficient tax collection.

In India, only 3% of the residents file personal tax returns, according to onemint.com. That presents a huge tax collection problem that results in there being very little money to fund education, health care, infrastructure or any thing else that a democratic government could be doing for its people.

In India, according to my employee, Dinesh Sharma, who has lived in Canada for almost three years, there are many subtle but important differences between Canada and India (besides the weather, he adds):

1. Indian’s pay for vehicle registration once. In Canada, we pay an annual license fee.
2. Indian’s pay property tax once, upon initial acquisition value. Canadian’s pay property taxes every year.
3. When the government sends water bills to the residents in India, the residents protest and the government cancels the bills. In Canada, no pay, no flow.
4. In India, people pay for electricity, like in Canada.
5. India’s residents pay to educate their children. In Canada, which has a superior education system, according to Dinesh, education up to and including high school, is free.
6. Health care is paid for by Indian residents. There is no free ride, like in Canada. If you are seriously ill and don’t have money, you “stay home and pray” or borrow money from lenders to pay for the hospital.

Dinesh loves his future in Canada because of the future for his kids, Diksha and Ishan.

Diksha and Ishan

Dinesh also feels that India’s challenges are mostly self-inflicted because many people just don’t want to pay taxes of any kind.

We all hope that the world’s largest democracy will make progress in becoming more self-sustaining and tax efficient.

As Canadians, perhaps we sometimes take things for granted, complain about government inefficiency and taxes, and grumble about our winters. Hopefully, next time to send your kids to school or visit someone in the hospital, you will appreciate our tax dollars being spent to improve our standard of living.

Copyright 2012. Phil Symchych. All rights reserved.

Where Is Your Gold?

This article will help you to identify your most profitable products, services, customers and employees.

Phil’s Profit Points™ in Brief:

• Your gold is the gross profits generated by your most profitable products, services, customers and employees.
• You can evaluate your gold by measuring the revenues — by type — against the direct expenses such as materials and direct labor, thus generating gross profit.
• The volume of gold is measured by the gross profit dollars and the gross margin percentage.
• Gross profit and gross margin are used interchangeably. I’ve attached ‘percentage’ to the gross margin to distinguish them. You can do whatever works for you.
• Converting your gold to cash means that you need to collect on the sale.

The Symco Gold Formula

Do you know where the gold is hiding in your own company?

Most accounting systems that I’ve seen, from Simply Accounting and QuickBooks to more robust applications like Sage’s Business Visions and QuickBooks Enterprise, which are the grown-up versions of the former, can be set up to report revenues and costs of sales by product and service line. This structure is created in your general ledger. You can export the information to a spreadsheet to analyze the data. The best business systems, like SAP Business One, can be set up to generate this information automatically. (Full disclosure, we recently implemented SAP Business One for our companies).

You know your general ledger is set up poorly if the only detailed revenue report that you can generate shows revenues on one line. Major revenue types should have their own account categories for both revenues and cost of sales so that you can create a gross profit analysis and discover which products and services are the best (and worst) performers.

Here is a weak structure, which I call “Level 1-Little League”:

Here is a good structure, which I call “Level 2-Semi-pros”:

Tip: you can also compare the vertical percentage of each column as a percentage of their sales.

Here is a great structure, which adds to the above information, and which I call “Level 3-The Professionals”:

Analyzing your customers by the framework in Level 3 will provide powerful information. A huge customer that takes forever to pay may be costing you money. Small customers that pay quickly might be your golden nuggets.

You can maximize your profits, the value of your business, and your personal wealth by analyzing your business using this framework and by making decisions that ensure that you are allocating your resources of time, people and money to your most profitable products, services, customers and employees.

Your accounting department should be able to create the Level 3 information for you in a couple of hours, depending on the existing structure. You’ll need to help them with the assumptions and allocations of overhead, employees and capital. You can do that in different ways.

The main point is to not constrain your management team to your existing accounting system or the information that your accountants prepare for you. If you ask for the “Level 3-The Pros” financial information from your accounting department, they should be able to build it for you.

Resources

See our video on Knowing Your Numbers here.

You can use the templates above as a quick checklist. Which ones do you receive each month? If you would like a complimentary assessment of your internal financial reports, call us at 1-306-569-9111.

Conclusion

Level 3-the Pros will provide very useful information for your entire management team. It’s powerful because it’s based on facts buried in your accounting and business data. You, literally, have gold hidden in your financial information.

Tough Question

Your best customers are probably subsidizing your worst customers. How do you (and they) feel about that?

From The Piggy Bank

Focusing on cash flow, which comes from margins and velocity and volume, will provide fuel to dramatically accelerate your profitable growth and business valuation.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

This week’s impetus: Pruning for Growth

My gardening experts tell me that we need to prune the flowers so that the strong ones can get enough sunlight and nutrients to grow. If there are too many plants in one area, none of them grow well.

What are the things that need pruning in your business or personal life that are using up or wasting resources that could be better served helping the best parts to grow even stronger?

Monday Minute: Focusing on quality first will help you to grow your business faster than focusing on quantity.

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

Thanks for all the times you drove me to the rink and even watched me play or referee hockey games, even though you never liked hockey, or standing in cold rinks, or drinking bad coffee.

Thanks for all of the times that you and Dad drove Mark and me home in separate cars after I refereed one of his hockey games.

Thanks for letting us play hockey and football in the house when you weren’t home. Sorry about the bent lampshades and broken couch.

Thanks for making perogies, teaching my girls how to make perogies, and then making more perogies; because we could eat a couple of dozen at a time.

Thanks for teaching me how to run a business, by demonstrating how much you cared about each and every guest at Clear Lake Lodge.

Thanks for making our education a priority. I’m still thinking of getting my Ph.D. one of these days.

Thanks for all the sacrifices that you made so that we could have better lives.

We love you, Mom.

Mom goes to Disney World

Hope that you have a great Mother’s Day, Mom.

We are sending special Mother’s Day wishes to Granny, Aunt Leona, Aunt Norma, Auntie Laura, Auntie Colleen, Auntie Sheila, Babi, Baba and Didi.

Best wishes to all Mothers, Grandmothers, cool aunts and all of you who have played a comforting and encouraging role in someone’s life.

Copyright 2012. Phil Symchych. All rights reserved.

Well, if you have, here’s an improvement over the old way, from the Sheraton Hotels.

I wonder if they first came up with this idea on the back of a napkin?

Where do you come up with your best ideas? How do you capture them? How do you build them into something useful for your business or your customers?

Coming up with ideas is easy for some people. Implementing them, learning from your mistakes, and adjusting along the way is what creates value and wealth.

Copyright 2012. Phil Symchych. All rights reserved.

I Don’t Drive 55

This article will help you to accelerate your business growth.

Phil’s Profit Points™ in Brief:

• We can follow the speed limit and everyone else’s rules or we can create our own rules for business success.
• Our business speed depends on our purpose, our ability to drive our business, on our people that help drive it, and on the resources that keep it running.
• Processes can help us to automate many routine things so that we can increase speed, distance and performance.

The Symco Performance Plan

The song “I Don’t Drive 55″ by Sammy Hagar is one of my favorites because it’s about someone who recognizes the limitations of other’s rules. As an entrepreneur, you need to make your own rules, adapt some other good rules, and discard the ‘you should’ rules from people who have not been there and not done that (this includes family).

Most successful entrepreneurs that I know are strong, independent people who take action based on their knowledge, experience and faith in themselves to recognize and pursue an opportunity. There is no single rule book for entrepreneurial success; they created their own.

However, there are lots of people who will give us rules along the way; some are great and some aren’t. If you borrow money from a banker, there are necessary rules to follow to make sure that you use the money to grow your business. Some people don’t understand the bank’s requirements for regular financial reporting. This, in my opinion, is one of the bank’s best rules. Too often, an entrepreneur who is borrowing to fund growth has not had regular, detailed reporting before. Does your banker know more about your company’s financial performance than you do? They shouldn’t.

Now, let’s discuss the model: purpose, people, and process.

What’s the purpose of your business? If you can articulate how you help your customers to be more successful, this will attract more customers.

What kind of people do you need to help you to grow your business? Do you need people with a high attention to detail or who are comfortable with ambiguity and can troubleshoot problems under pressure? Knowing how people perform can help you to hire better people.

People who are positive and optimistic usually get more done. Optimistic people, according to Martin Seligman, are more productive than pessimists because they expect difficulties and are prepared to work through them. Pessimists, according to Seligman, throw in the towel and give up too early.

Enthusiasm is contagious. You can always train the technical details of your business; but it’s difficult (OK, impossible) to train enthusiasm. Any one who has raised kids knows that. Are your people open to new ideas and looking for ways to build on your ideas, or are they saying why things won’t work? Are your people more concerned about your business success or their own egos?

Process helps you to systematize 80% of your business so that you can humanize the remaining 20%. It’s about developing standards for performance so that everyone knows what is expected, what is accepted, and what is not. This makes training and managing much easier. One of the main reasons that franchises have more success than non-franchised businesses is because their systems and processes are documented, they usually measure everything, and managers get accurate information quickly so they can take corrective action. Even management and decision-making are processes that can be systematized.

Focusing on your purpose, your people and your processes can help you to grow your business. You won’t be constrained to someone else’s arbitrary 55 miles per hour speed limit. You’ll be able to set your own.

Resources

See our outline on the “Four Steps to Profitable Growth” here.

If you would like more information on how to accelerate your profits and growth, call 1-306-569-9111 for a complimentary consultation.

Tough Question

Can your people clearly articulate the purpose of your business, in three sentences or less? Are your people a good fit for your business purpose? And, do you have the processes to support them deliver on the purpose?

From The Piggy Bank

The first ski lesson that I told our kids was to “Always ski under control.” For entrepreneurs: “Always keep your business under control by managing your strategy, your people and your cash.”

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

If you find a great opportunity, then the timing may not be right, or you have other priorities, or you don’t have the resources to pursue the opportunity.

If the stars are lining up and the timing is perfect to start that business that you’ve always wanted to, then do you have the opportunity? In other words, you may have capital and even courage, but do you have customers?

The opportunity is more important than the timing. Lots of companies have been scrambling to create their versions of a tablet, while Apple has recently released version three.

Create your own opportunity and take advantage of the lack of timing that faces everyone else, especially your customers and your competitors.

Copyright 2012. Phil Symchych. All rights reserved.

This week’s impetus: Spring Cleaning

When the migrating birds arrived back for spring, they were busy building new nests. The early ones took first claim to the vacant bird house on the fence. They cleaned some of the old contents and built up a new nest.

For our spring cleaning, we’ve cleaned out the basement. It’s amazing how much we can accumulate just because we have the space.

To complicate matters, we had some basement renovations last fall to float the walls. It may come as a shock to you but not all of the renovations were completed. Our contractor completed the walls and is finished with us but the job isn’t finished. The door trim isn’t reinstalled and two doors need to be rehung.

Apparently, the birds are more diligent than we are at getting the nest in order.

Monday Minute: It’s better to finish what we start than to start something new.

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

Focus on Value

This article will help you to identify and communicate your most valuable business outcomes for your customers.

Phil’s Profit Points™ in Brief:

• We can all help our customers but we need to explain it from our customer’s perspective, not from our perspective.
• Our customers don’t care what we’re good at; they only care about their results.
• Customer results include financial, non-financial, business and personal results.
• Your marketing messages need to be aligned with the results that you generate.
• Focusing on results instead of inputs can maximize your prices and profits.

The purpose of your business is to create results and value for your customers. They probably don’t care how you do it, as long as you do it consistently, quickly and cost-effectively. However, there is an art and a science to analyzing those results. As you improve your understanding of the results that you deliver, in the language of your customers, you can enhance your marketing and improve your profits.

The Symco Value Matrix sets up the four factors: financial, non-financial, business and personal results, to help you analyze your value. It’s probably higher than you think.

Financial results include obvious things such as profit and cash flow. Less obvious but even more important factors include the specifics of cash flow:

• Margins — the profit on every transaction, job or sale.
• Velocity — the speed at which you collect cash, total days to cash, days of sales in receivables, days in accounts payable.
• Volumes — the specific production and sales quantities of discrete product/service lines to individual customers.

The faster that you collect your cash, the less you need to borrow and the higher your profits, EBITDA and business valuation will be.

Speed creates wealth.

Non-financial results are very important and include: market share, market awareness and accessibility, branding, customer relationships and loyalty, attracting and retaining talent, operational capacity and efficiency, policies and procedures, management strength, industry knowledge, company culture and everything else that doesn’t have a dollar sign attached to it.

Business results focus on the value that the company, as a distinct entity, receives. These are different than the personal results that your customer, as an individual, receives from doing business with you. Personal results include respect, titles, promotions, bonuses and other emotional benefits.

For example, if you provide industrial repair services to a large company, the following Symco Value Matrix^™ represents the potential results and value to your customers.

Resources

To assess your company’s strategy, use our assessment here.

If you would like more information on how to maximize the value to your customers so that you can increase your profits, call 1-306-569-9111 for a complimentary consultation.

Tough Question

What impact does the value matrix have on your marketing strategies, sales tactics, prices and profits?

From The Piggy Bank

Everyone in your company should be able to articulate customer value so that they understand the importance of what they do and why they do it.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

This week’s impetus: It’s Tax Time

Today is the deadline for filing and paying your taxes in Canada. Now, nobody likes paying taxes, but its unavoidable. The good news is that we live in a country that puts its tax dollars to good use. We have accessible health care, good education, most of the roads are in pretty good shape, and the majority of places in Canada are very safe.

In fact, Canada is one of the easiest and best places to start-up a business. In the U.S., many start-ups must fund a portion of their employees health care costs. Since start-ups don’t have extra capital, funding health care is sometimes not possible and this prevents the company from attracting and retaining great people.

Canadians should leverage their natural resources–which includes our courage, our health care and our tax-efficient systems–to start and build more companies. The more wealth we create, the more taxes we pay, and the better our lifestyle.

Monday Minute: “Paying taxes is better than not paying taxes because it proves that you made a profit.” Phil Symchych.

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

Here is my advice on how to retain key people:

1. Leverage your strengths of a small business: family culture, flexible work environment, opportunities to learn the entire business, building relationships with customers and suppliers, making a difference in your community.
2. While you have unique advantages from being small and knowing everyone’s names, make sure that you run your business like a real company: clear strategy, measuring performance and results, plans and budgets, giving honest and effective feedback, and holding people accountable.
3. Build relationships with your employees so that you understand what makes them tick, how they learn, whether they perform well under pressure or need one goal at a time.
4. Be specific and ask for what you want.
5. Focus on speed and responsiveness in customer service. Compare yourself against the big companies and show your people how you’re better than the big guys. This will give them more confidence and help them sell more.
6. Give people real responsibility for results, for hiring, for spending money and for managing others.
7. With every pair of hands, you get a free brain and a free heart. Make sure you’re utilizing the entire person by getting them excited about your vision and caring about your customers.
8. Utilize your employees natural strengths for the benefit of your customers and your business.
9. Develop an organizational chart and make sure everyone respects the reporting structure.
10. As the owner, don’t meddle or contradict your managers. This destroys their credibility, confuses your employees and will cause long-term damage to your business potential.
11. Compensate people at or above average rates. Provide benefits and training. If you can’t afford to compensate at higher rates, fix your business model and increase your profits.
12. Compensate them, in part (ideally, at least 20% or more), based on results that align with your company strategy and overall business profits.
13. If you reward individual results over company results, you may create hoarding and destroy teamwork.
14. If they’re not excited about your vision and don’t care about your customers, let them go. They’re in the way and preventing your from hiring a better person.
15. If they don’t play well with others, upset your employees, and are regularly giving you grief, let them go. If you don’t let them go, and they’re behaving badly, then the other employees with think that you endorse and approve this bad behavior. The next thing to happen is that the good employees will either leave (and you’re stuck with the lousy ones) or the good ones will start behaving badly.
16. Share financial information for business unit or product line margins.
17. Share the full financial statements with your senior people so they understand working capital, cash flow, leverage, margins, and why a low margin sale to a slow paying customer is worse than no sale at all.
18. Don’t tell them how to do things. That’s micro-managing and probably a waste of your time. However, you need to have documented policies and procedures so that you have work standards and other people can be responsible for training.
19. If you, as the business owner, need to control everything, then you probably shouldn’t be a business owner. Because, you can’t control everything unless you want to stay small.
20. If you want to grow, then hire smart people who know more about certain things than you do. Give them resources and encouragement to take risks and hit the occasional home run. Sure, they’ll strike out, but they will learn something.

Retaining talent is about engaging people and giving them opportunities to utilize their talents to help your customers. A happy employee will create a happy customer. And, happy customers will help you to grow your business and provide more opportunities for your employees. Eventually, your business can run itself. You will be able to put your manager’s hat away and just enjoy ownership: dividends without the hours. Good luck. If you need help making this happen, call an expert.

Copyright 2012. Phil Symchych. All rights reserved.

Profit Blueprint

This article will help you to develop a profit blueprint to maximize the profitability — and value — of your company.

Phil’s Profit Points™ in Brief:

• The most profitable point in business is where you align your customers’ needs and wants with your intentional business strategy and the effective use of your internal resources.
• The best strategies are externally focused on providing as much value to your customers as possible.
• Customers can vary from strategic partnerships to price-driven commodity buyers with no loyalty or logic.
• Internal resources include: your people, attracting and retaining customers, performing operations and consuming and generating financial resources.

Profit does not come from the accounting department. It comes from providing valuable products and services to your customers who are willing to pay you a fair price that represents the value they receive. The price, obviously, needs to exceed your costs.

Strategy is the intentional alignment of your people and resources in order to provide maximum value to your customers. Therefore, if you can’t provide maximum value, and charge a good fee, then maybe you shouldn’t be doing the work. I remember working with a small business that didn’t know its cost of operations. We determined that it would be cheaper to give a new customer a twenty dollar bill and send them elsewhere than it would to service and retain the customer, because the company was losing money on this product.

The most important part of strategy is your customers. Have you identified or created a need for them that you can meet and generate sufficient profits? Strategy needs to be driven from the outside-in by your customers, and not necessarily from the inside-out by your methodologies. Ask your customers how they benefit from your service.

Your resources includes your knowledge, information, historical data, understanding of your customers, as well as you people, assets, equipment, capacity and financial resources. One of the most powerful resources is your relationships: with customers, suppliers, peers, associates, competitors and your own people. You can convert these resources into profits by proactively seeking information from all of them, identifying or creating opportunities, and taking action, quickly.

Blueprint Example (you would do this for each of the customer’s specified needs)

If water can cut steel, when it’s focused at 60,000 pounds per square inch of pressure, then imagine what your company can achieve when all of your resources are focused on your customers through an intentional and aligned strategy.

Tough Question

What are the most valuable products and services that you offer, according to your customers?

From The Piggy Bank

Everyone in your company should be able to articulate your strategy. Otherwise, they may not be aligned or focused on providing value to your customers.

Resources

For more information on strategy, go here.

If you would like more information on our strategy development services, please go here, or give me a call at 1-306-569-9111 for a complimentary consultation.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

This week’s impetus: Dance Competitions

Our dancing daughters just completed another weekend-the second of four in a row-of dance competitions. It’s pretty amazing to watch these kids put on multiple performances in tap, jazz, ballet and lyrical, often in one day.

Since it’s a competition, there is judging involved. Granted, judging dance to the untrained eye may seem as scientific as the Olympic judging of figure skating. It’s open to interpretation; unlikely hockey, which has a clear winner. However, my kids are teaching me that choreography, timing, stage presence, execution, emotion, enthusiasm and even hand positions are very important. I wonder if we give our employees that much information for our expectations of great performance?

Judging at this Candance, a Canadian dance organization, event was conducted rapidly by several judges who adjudicated each performance, recorded their observations and allocated marks. At the end of a session, the judges handed out awards and everyone received a bronze, silver, gold, platinum or diamond award based on their group or solo performance. In other words, all three contestants could receive gold. Everyone got rapid feedback. If the group was large enough, than there was a ranking for first, second and third places.

In business, do we give immediate feedback and praise to all of our employees? Does everyone get a chance to win a gold medal?

Monday Minute: “I do not try to dance better than anyone else. I only try to dance better than myself.” Mikhail Baryshnikov.

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

Has this happened to you? You reluctantly hit “unsubscribe” while hoping this doesn’t automatically drain your bank account and share your personal identification?

Here are some specific examples from this week.

Why is Neena ignoring my unsubscribe request?

Persistence at its worst

Why does it take Golf Town up to ten days to unsubscribe my email address?

High-tech at low speed

Our Barracuda email filters do a great job of blocking most of the unsolicited email. For the occasional few that get through,  I am now just blocking the senders and preventing their intrusions.

How are you handling the intrusions?

Copyright 2012. Phil Symchych. All rights reserved.

1. Start-up cash. Make sure you have enough cash to get the business into orbit. We recommend at least four month’s of operating expenses including wages and materials.
2. Find customers fast. Customers will generate more cash. We offered discounts for prompt payment and deferred slower paying business until we could carry it ourselves.
3. Make friends with all of your suppliers and negotiate favorable terms.
4. Keep all of your commitments that you make to your customers, suppliers and investors. The most important thing to build is your credibility.
5. Ask for help. There are lots of experts who have seen, and lived through, many business cycles and seasons. Our lawyer has multiple business interests and understands what it’s like to be an entrepreneur.
6. Keep a tight grip on cash. We measure cash to the penny, by the minute. We have more accurate data than one of our suppliers, a huge company, because we have a better focus.
7. Attract and retain good people. Get them excited about the future while explaining the road may be bumpy.
8. Set up a good administrative system so that you can quickly record revenues, issue invoices, track expenses, measure profits on jobs, and instantly show your cash balance and burn rate.
9. Don’t burn out. Don’t run out of cash. Juggle your jobs so that you get paid quickly and can invoice by the cut-off.
10. Have fun. Focus on attracting great people and customers. Focus on providing value. The cash will come in. And, with a good system, you will know exactly when the cash will come in.

Running a start-up requires courage, faith, and a disciplined approach to business. Don’t be greedy, be helpful.

Copyright 2012. Phil Symchych and Daphne Fiorante. All rights reserved.

Return On Investment

This article will help you to analyze your business results and strategic investment decisions.

Phil’s Profit Points™ in Brief:

• The single most powerful financial measure in business is Return On Investment because it compares the results and position of both your income statement and your balance sheet.
• Return On Investment can be used to analyze business units within a company, companies, industries and even countries.
• Return On Investment presents the economic reality that is contained in your financial statements.

Welcome to issue #52 which celebrates our first year of Phil’s Profit Points. In this segment, we’ll look at how you can measure your Return On Investment.

So that we’re all on the same page, here is the formula:
Returns (revenues minus expenses) / Equity (assets minus liabilities) = ROI, expressed as a percentage.

First, I want to expand and improve upon this highly useful financial metric. In finance, Return On Investment simply means that you calculate the financial returns and divide by the investment. Here’s a simple example: If you have net income after tax of $2 million and you have equity on your balance sheet of $4 million, then you have a Return On Investment of 50%. If you pulled out half of your equity by paying yourself dividends and parking the money in your holding company or some other safe investment outside of your operating company, your Return On Investment would be $2 million / ($4m-$2m) = 100%. That’s even better.

The main goal is to maximize your returns while you minimize your investment…since the investment in your business carries risk.

Ironically, many people minimize their returns by taking aggressive tax minimization strategies that reduce profits—those are your returns—in order to reduce taxes. This is very harmful if you are trying to grow your business and/or you are using debt to help you grow your business. Make sure that you tell your tax professional that you are trying to maximize your wealth, not just minimize your taxes.

Remember, the net income earned in the current year is added to your retained earnings and creates the equity base that supports financial leverage such as debt.

That’s why you always want a strong and healthy balance sheet with lots of equity to support debt or dividends and lots of earnings and positive cash flow to fund the debt servicing and dividend payments.

It’s important to know that there is no magic number. The optimal Return On Investment for your company depends on what you are trying to do and what position your business—and you—are in, such as: start-up, growth, plateau, decline, exit (hopefully, not in that order, in fact, never in that order!). Hint, growth is good, always.

The most powerful way to use Return On Investment is to look at your business divisions or profit-centers in this way. This forces you to create a balance sheet and an income statement for each division, just like large, public companies or conglomerates do. You can’t possibly know which divisions or even product or service lines are the most profitable or are losing you money if your income statement lumps all the revenues in one line. That’s just about negligent, if you ask me. Management needs detailed information to evaluate results and improve them in the future.

Let’s take the Return On Investment concept even further. Returns can include financial and non-financial benefits. If you are a business owner and hire your first full-time general manager, this investment will reduce your net income and will reduce your Return On Investment. However, this should provide you with much freedom to work on more strategic things that will grow your business or, more importantly, freedom to work less.

The most important concept of Return On Investment is to identify the factors that actually improve your business and your life.

Tough Question

What are the most important returns that you want from your business?

From The Piggy Bank

The best entrepreneurs spend as much time improving their personal return on investment as they do on their business return on investment.

Resources

For more information on your financial report card, go here.

If you would like more information on our Business Wealth Builders services, please go here, or give me a call at 1-306-569-9111 for a complimentary consultation.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

This week’s impetus: The ROI of Ego vs. Heart vs. Wallet

How do you measure the outcomes of your business decisions? Do you look at the financial benefit or the emotional benefit…or both?

Return on Investment (ROI) is one of the most powerful metrics in business because it measures the results as a proportion of the original investment. However, ROI is typically restricted to financial measures and directly impacts our wallet.

Often, we expect an emotional outcome as well. After all, isn’t that why we’re in business in the first place: to provide a better life for ourselves and our clients?

An increase in revenue or profit can result in an increase in a dividend to an owner which can be invested in a retirement fund and this provides emotional and financial security. Or, you can use the money to take the family on a vacation and provide a personal experience that strengthens relationships and makes us feel great.

Sometimes, we just need to invest in ourselves so that we feel better. When we feel better, we perform better. When we perform better, we aim higher and eventually earn a higher ROI.

Understanding the desired outcome, whether financial or personal, will help us to make better decisions. Usually, the best outcomes are related and aligned to improve our lives.

Monday Minute: “The best decisions generate a positive return on ego, heart and wallet.” Phil Symchych.

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

Four Factors of Business Velocity

This article will help you to improve your business velocity.

Phil’s Profit Points™ in Brief:

• One of the most powerful business factors that is widely under-used is business information.
• Production means the capacity and speed that you can produce results for your customers.
• People refers to the speed that they can convert inputs and information into results for your customers and you.
• Payment refers to the total days to cash.

This week, we will discuss one of the unsung heroes in business: information. Highly successful businesses use information as one of their strategic weapons. Struggling businesses usually lack good information. This results in poor decision-making, flying by the seat of their pants, guessing, gut instinct, and, most often, denial.

Information

Service businesses are some of the most complex businesses to manage because of the high cost of downtime. Revenues can vary significantly in the short term. The cost of an employee who is standing around instead of being busy goes directly off the top line revenue and bottom line profit at their charge out rate.

For example, if an employee who charges out at $125 per hour isn’t chargeable for an eight hour day, that’s $1,000 of lost revenue and lost profit, because you still have to pay them. If you have 100 employees and 10% your total hours were lost in a week, that cost you $50,000 in one week (100 x 40 hours x 10% x $125/hr = $50,000). Ouch!

A monthly financial statement, received on the 20th of the following month, won’t tell you that you lost $50,000 of your revenues in one week. In fact, if that happened for four weeks, you lost $200,000 in revenues. You need faster information.

The most useful characteristic of information is speed. When you get speed, you will sacrifice some accuracy. That’s OK because at least you will have information fast enough so that you can make better decisions, take action and improve the results.

Business information is not the sole responsibility of the accounting department. In fact, the accounting department should not be responsible for generating critical business information. That’s because they are primarily focused on reporting historical financial results.

If the accounting department isn’t responsible, then who is? Answer: your management information system is responsible. This system provides you with information about your past, your present, and your future operations. Most accounting systems can’t do that. They are focused on historical results and that’s their proper focus. Now, your accounting people might be the best ones to help you set up and maintain the management information system, but it needs to be driven by management, period. Your accounting department should not control your business information, or, by default, your strategy.

The management information system, however, needs to be driven for and by management. It needs to provide real-time information, including:

• sales pipeline for prospects
• production pipeline for confirmed orders
• inventory management
• resource planning for people and equipment
• project and production statistics
• product, service, project and job gross margins (on every job)
• cash flow and working capital, and
• financial information for accounting and financial statements.

Our best clients receive their daily production numbers the next day, or two days at the latest. They have weekly dashboards that measure the past, the present and the future. They receive their month-end financial statements by the 7th of the next month. You need fast information, like a race car driver, so that you can react in real time.

Tough Question

What information, if you received it daily, would help you to make better decisions and grow your profits?

From The Piggy Bank

You can’t hold people accountable unless they have both the information and the authority to act upon it.

Resources

For free articles to help you identify important metrics, go here.

If you would like more information on our Consulting CFO services, please go here, or give me a call at 1-306-569-9111 for a complimentary consultation.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

This week’s impetus: Spring Cleaning

We’ve undertaken a long overdue spring cleaning of our basement and storage room. It’s amazing what we accumulate and tolerate because we have the space and because we don’t notice the difference when things are added gradually to an existing pile.

I remember when we were selling our last house, just over three years ago. My wife, who watches the home renovation and design shows, laid out our marching orders and promptly completed a significant ’staging’ to make the house more attractive.

We shipped a pile of stuff-that we thought was useful but never missed-into storage. She painted any obnoxious colors that we hated when we moved in (but got used to over time) to neutral colors that would not offend a potential purchaser. Our house looked great! Why were we selling? Oh, yes, we needed more space!?

The most amazing part was that we kept the house spotless, with two kids, because the agents would call on short notice to show the house.

It’s the same in business. What are you keeping around-just because you have the space-that isn’t necessary or adding value to your customers or your business? Look at everything: your assets, equipment, old inventory, furniture that doesn’t work, historical records, and even people who aren’t passionately engaged in helping your customers and your business grow. Spring cleaning in your business can help you to see through the clutter and focus on your most important customers, employees and opportunities.

Monday Minute: “Drucker’s genius shines best in the short paragraph or single sentence that cuts through the clutter and messiness of a complex world and exposes a truth.” The Daily Drucker by Peter Drucker, as quoted in the forward by Jim Collins.

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

I’m not asking you to quantify them.

More importantly, what actions do you take to nurture and strengthen your most important relationships and show people that you value them?

In families, sometimes we might take each other for granted, only ask for help when we need it, and offer help at any chance, solicited or not, because it makes us feel good.

In business, we expect our supplier and perhaps our employees to be loyal to us because we pay them. Economic stability is important, granted, but it’s not the most important factor in loyalty. My dog, Lola, teaches me that money has nothing to do with it, every day.

In business, we hope that our customers appreciate how hard we work for them and how much we care about them. Working and caring are inputs. Results, or outputs, are more important than inputs.

How do you demonstrate that you contribute to your customer’s results, that you anticipate their needs and that you are crafting your future business strategies around them?

I’m constantly learning from my clients, consulting peers, business associates, employees, and my family. Here are what some of the best relationship builders do:

• They call unexpectedly and offer ideas.
• They call for lunch at 11:55.
• They share good news and successes, not just problems and challenges.
• They send articles about things that I’m personally interested in (cars, travel) and that don’t relate to work.
• They tell me what I need to hear and not what I want to hear.
• They are available for important conversations on short notice.
• They share their challenges and help me to keep things in perspective.

What things can you do for or with the people that you value?

Copyright 2012. Phil Symchych. All rights reserved.

Improving Cash Flow

This article will help you to improve your cash flow by focusing on the three main factors of cash flow.

Phil’s Profit Points™ in Brief:

• Cash flow depends on three factors: profit margin, velocity and volume.
• Profit margin means how much gross profit is generated from the sale of every product or service unit.
• Velocity means how long it takes to get paid, from initial input costs to final payment.
• Volume means how many units you can produce and sell.

Profit Margin

Most accounting systems can show cost of sales which includes direct labour, materials and other costs that vary with production. Revenues minus cost of sales equals gross profit margin. Increasing your profit margin can be accomplished in two ways: increasing your price or decreasing your variable costs of production.

Most business can increase their prices by improving their marketing message and strengthening their value proposition to their customers. By focusing on the factors that are important to your customer, you can become more valuable and therefore charge a premium. Even in a commodity business, there are opportunities to differentiate the service component of your entire customer transaction experience, from ordering to delivery and payment, that can make it easier for your customer to do business with you.

Velocity

Velocity is about the speed of payment. This is often under-estimated by most business owners. You pay your employees every two weeks or, if you’re lucky, twice a month (we recommend semi-monthly, it makes the cash flow smoother and avoids the two months that have three payrolls). You probably pay your suppliers every 30 days.

The faster that you can generate sales and get paid, the faster your velocity. If your customers can pay you a deposit to secure their future production and sales order, that helps out with velocity. Offering electronic payments and discounts for prompt payments can accelerate cash inflow.

If you sell to large companies, they may take 30 to 60 days (or longer) to pay you. That slows down velocity. Some large companies take great care of their suppliers and pay within ten days. Just ask, and offer something in return.

Volume

If it takes one week to produce something that, for example, costs $500 in labour and $500 in materials, each unit of inventory cost $1,000 plus an overhead allocation. Now, consider inventory, for example. If there are 1,000 units in inventory, that’s $1 million of cost sitting in inventory.

If your monthly sales are 1,000 units, than one month of inventory is about right. If your monthly sales are 250 units, then it can take up to four months to turnover your inventory. That requires lots of working capital to carry inventory that you paid for, in full, four months ago. The key to volume is to increase sales while decreasing inventory or decreasing non-billed labour in a service firm. Aging your inventory and clearing out slow or obsolete inventory will free up working capital (and space) for faster moving, profitable items.

Sales volumes drive cash flow. That’s why I’ve often repeated my wise accounting professor who said, “Business don’t have cash flow problems. They have marketing problems.”

Cash flow, as a definition, is too vague to improve. Analyze your business from the specific perspectives of gross profit (dollars and percentage of sales), velocity and volumes to determine which areas are strong and which are not. Build on your strengths will improve your cash flow quickly.

Tough Question

What are your gross profit margins by product and service line, velocity and volume?

From The Piggy Bank

Divide and conquer: focus on each factor—profit margins, velocity, and volume—to improve your cash flow.

Resources

For free articles to help you improve your cash flow, go here.

If you would like more information on our Profit Building CFO^™ services, please give me a call at 1-306-569-9111 for a complimentary consultation.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

This week’s impetus: Systematizing Success

I remember reading that, on average, franchised restaurants are more profitable than independently owned restaurants. Why is that?

Franchises have clearly defined operating policies and procedures, specified standards, consistent branding and advertising, and their customers know what to expect. The franchisors even audit their franchisees.

Clearly documented systems, perhaps in a binder called “This Is How We Do It Here” can help you accelerate your business success. Systems don’t slow you down and don’t create excessive rules. They clarify what each team member is responsible for and how to perform their tasks. Systems reduce the time to train a new employee and increase their productivity. Systems standardize repetitive tasks.

The key management factor is holding people accountable to implementing and using the systems. Your management processes need to monitor and reward (or punish) compliance with systems. These management processes are another type of system.

Surgeons use checklists to perform complicated surgeries. Professionals and skilled tradespeople use checklists and manuals to guide their procedures. When you systematize 80% of the tasks, you allow creative freedom to personalize and customize (and humanize) the remaining 20%. That can help you to stand out in any business.

Monday Minute: “Those mundane and tedious little things that, when done exactly right, with the right kind of attention and intention, form in their aggregate a distinctive essence, an evanescent quality that distinguishes every great business you’ve ever done business with from its more mediocre counterparts whose owners are satisfied to simply get through the day.” The E-Myth Revisited by Michael Gerber

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

Even government departments experience March Madness. That is, governments need to to expend their, well, our, surplus budget funds prior to their March 31^st year-end.

The pressure to spend someone else’s money must be enormous. How can they resist the madness?

Now, I don’t know what a bureaucrat under pressure looks like (having never seen one). But, I’m speculating that ordering new furniture that you don’t need or signing up for motivational seminars that don’t work must  be pretty stressful.

How about sending the surplus funds back to the taxpayers? It’s our money!

Copyright 2012. Phil Symchych. All rights reserved.

Increasing profits is more important than decreasing taxes.

Here are some tips on how to find (and interview) a good accountant.

A good accountant:

1. Provides the business owner with proactive business advice, not just historical financial statements and compliance tax returns.
2. Makes introductions to their professional network such as a banker, lawyer, insurance agent, and others who can help the business owner.
3. Gives you a structured accounting system that shows your gross profit by product and service line.
4. Is highly accessible to take your calls, responds quickly, and isn’t overwhelmed with a high volume of low value personal tax returns.
5. Educates you on the importance of cash flow, profit and building equity.
6. Explains how to use your financial statements as a monthly management tool.
7. Doesn’t minimize your taxes at the expense of building equity to support leverage and fund your future growth.
8. Asks you questions instead of just answering your questions.
9. Shares ideas from other industries and businesses.
10. Doesn’t charge by the hour or the minute.
11. Doesn’t have files piled all over the floor.
12. Focuses on maximizing your profits and after-tax cash flow.
13. Practices what they preach, is happy, treats their staff well, and has a good business.
14. Has happy, profitable clients who are growing their businesses, paying tax and building their wealth.

A good accountant can help you to structure your business for long-term success. Like any important relationship, it’s based on two-way communication and mutual respect.

Copyright 2012. Phil Symchych. All rights reserved.

Do You Have A Strategic CFO?

This article will help you to evaluate your Chief Financial Officer and the entire accounting department.

Phil’s Profit Points™ in Brief:

• Are you receiving information from your Chief Financial Officer, Controller or internal accountant about the past, the present or the future?
• Does this information help to explain what happened, what is happening now, or what is going to happen?
• As a manager, which information is most useful to you?

A Strategic Chief Financial Officer

You’re busy running a growing business. Is your CFO helping you to improve profits, increase cash flow and build up your business value? Many CFOs are glorified controllers in that they control information and prepare historical financial statements. Often, this isn’t even the CFO’s fault. Many CEOs aren’t directing or utilizing the accounting department to its full potential.

Personally, I hate riding backwards in a vehicle, whether I’m on a train or even a bus. I need to face forwards and I want to see what’s going on. Your CFO needs to do the same for you: show you the future.

In business, the future is more important than the past. The past, which is reported in your historical financial statements, tells you what happened according to specific accounting rules. Accounting rules were developed to standardize financial statement reporting so that external users like bankers and investors can evaluate different companies and make financial decisions.

Accounting rules weren’t developed to help managers run and grow their businesses. That’s shocking, I know.

That’s why you need a strategic CFO that can interpret the past, monitor the present and predict the future. You also need management information that measures business performance, in real time, so that you’re not constrained to historical financial statements.

Here are some key questions to guide your CFO or accounting department:

• What are the gross profits and gross margin percentages of our main product and service lines?
• How do these compare to the prior years?
• Are margins increasing or decreasing?
• What are the trends and estimates for future costs?
• Which products and services represent our highest revenue and profit potential?

Ruthlessly pursuing profits will help you to increase your bottom line. For example, if you add $1,000,000 to your bottom line, you’ve added between $3 million and $5 million to the value of your company, assuming standard valuation multiples of three to five.

A strategic CFO can help you to improve profits in the short-term and increase the value of your business in the long-term. Investing in a strategic CFO is good for business.

Tough Question

Are you positioning your CFO as a strategic player on your management team and are they stepping up to your expectations?

From The Piggy Bank

Hiring people smarter than you and empowering them is the best way to achieve profitable growth.

Resources

For free articles to help you with evaluating your financial statements, go here.

If you would like more information on our Profit Building CFO^™ services, please give me a call at 1-306-569-9111 for a complimentary consultation.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

See our Business Wealth Builder services here.

Copyright 2012. Phil Symchych. All rights reserved.

This week’s impetus: Is technology helping you to get more done or slowing you down?

When I was involved in a large financing transaction, a senior lawyer working on the deal told me that deals used to get done faster, before the wonderful invention of email and word processors. People (and their lawyers) would sit down in a room, negotiate and finalize the deal. Now, she said, “the negotiation takes much longer.”

It’s technology’s fault, because of all of the minor changes are being sent back and forth with the ‘track changes’ feature enabled, and both sides making minor changes. When you combine the fact that many professionals charge by the hour, thereby rewarding them with higher billings and fees, the technology enables the advisors to be ‘productive.’ However, they may not be adding value.

They’re certainly not speeding things up, and that’s reducing value, in my opinion.

As the client, you can demand that things are done within a certain time frame, and that you’ll only pay for one version of edits. Get it done right the first time.

Monday Minute: “Everyone needs deadlines.” Walt Disney

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

This week’s impetus: Is technology helping you to get more done or slowing you down?

When I was involved in a large financing transaction, a senior lawyer working on the deal told me that deals used to get done faster, before the wonderful invention of email and word processors. People (and their lawyers) would sit down in a room, negotiate and finalize the deal. Now, she said, the negotiation takes much longer. It’s technology’s fault, because of all of the minor changes are being sent back and forth with the ‘track changes’ feature enabled, and both sides making minor changes.

When you combine the fact that many professionals charge by the hour, thereby rewarding them with higher billings and fees, the technology enables the advisors to be ‘productive.’ However, they may not be adding value. They’re certainly not speeding things up, and that’s reducing value, in my opinion.

As the client, you can demand that things are done within a certain time frame, and that you’ll only pay for one version of edits. Get it done right the first time.

Monday Minute: “Everyone needs deadlines.” Walt Disney

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Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

One of the most important factors in business success, especially for growing businesses, is speed. Small businesses and mid-market companies have significant advantages over larger companies because of their nimbleness and responsiveness.

We can register a domain name, for example, faster than a big company can send a formal request to their legal and marketing departments.

When you customers ask you for something, you should be thinking, “How quickly can I provide this value to my customer?”

Customers value speed. Ironically, any company that charges by the hour has a disadvantage in the speed zone because their model doesn’t incent them to provide value faster, even if their customer is willing to pay for it. My plumber charges the same fee whether I have an emergency or not, provided that he can fit me in to his schedule. Of course, evenings and weekends cost more. The plumber’s core strategy driver isn’t service, its queue management.

Here are key measures for success:

Total Days to Profit

How long does it take to generate profit? Measure inputs such as labour, materials and overheads and then compare these costs to how long it takes to generate a sale. For example, if it takes a company one month to produce inventory, it sells $250,000 of product each month and the total inventory is around $500,000, it’s taking three months to generate profits (one month to produce and two months to sit on the shelves). That’s a long time and that’s why inventory build up is dangerous.

Reducing your inventory build up, responding quickly to customer orders and minimizing costs that don’t add value will enhance your total days to profit.

Total Days to Cash

In addition to measuring profit, an even more important measure is Total Days to Cash. You pay your employees every two weeks. You probably pay your suppliers monthly. How long does it take to get paid from your customers? The best businesses have negative days to cash in that they get paid in advance and before they incur significant costs. Using the above example, and allowing your customers to pay you “net 30 days” and suddenly it’s four months or 120 days until you get paid. Many companies underestimate their Total Days To Cash.

Taking deposits and offering discounts for early payment can dramatically accelerate your total days to cash.

Total Days To Strategy

How long does it take to convert a new idea into a viable new product or service and a new revenue stream? Rapid prototyping and testing with your customers can accelerate your strategy and success. Your existing customers already know you and trust you. By listening to them and responding quickly to their requests, you have an opportunity to quickly develop successful strategies.

Remember, strategy is the intentional alignment of your resources to provide focused and differentiated value to your customers. That means that your strategy needs to focus on your customer and not on your technical expertise or methodologies.

A great idea that is implemented quickly and presented to a customer can generate success in days, not months.

What can you do to accelerate your Total Days To Success?

Copyright 2012. Phil Symchych. All rights reserved.

Exit Stage Left – Don’t Sell Your Business

If you think keeping your business is a crazy idea, and that selling is your only option, then this article is for you.

Phil’s Profit Points™ in Brief:

• Take steps to control if, and when, you need to sell your business.
• Don’t sell your business, keep it.
• If you don’t have to be there, and you still make money, then you have a great business.
• Fire yourself and become the shareholder you always wanted to be.

Control

It doesn’t matter what age you are or how long you’ve been in business, developing an exit strategy will give you control and confidence over your financial and business future.

Imagine that someone else is handling the day-to-day, that you receive monthly reports on the performance and status of your business, and that you participate in quarterly conference calls and board meetings, from the beach, to guide your management team as required. Now, that’s ownership!

You see, the worst title in any company is that of “owner-manager” because, well, you can’t wear two hats at one time. If you are dealing with customers or employees or bankers or accountants, you’re in the management role. If you are evaluating dividend rates or portfolio return on investment, you are in your ownership role.

There is actually very little for an owner to do in a business. Yet, some owners feel they have to do everything because they are the owner and no one can do it as well…and that is the flaw of the owner-manager. Owners need to clarify and formalize the management roles. This process will relieve owner-managers of their perpetual burden. I’ve seen some owners struggle with implementing decisions because they overthink the negative impact on their potential wealth instead of appreciating that business is part art and part science.

You will have two outcomes from a business decision:

1. That didn’t work, we’ll have to try something else, or
2. That worked well, we should have done it sooner.

You’re Fired

You need to fire yourself off the management team. When your name can’t be in any of the boxes on the organizational chart, except maybe as the president, then you will be able to call yourself a business owner. You won’t be in the conflicting positions of being both an owner and a manager.

Shareholders

Shareholders appoint the board. It’s the board’s responsibility to set the strategy and ensure that succession planning is taking place. Shareholders do not automatically get management duties. Shareholders should never meddle in management.

Strategy

The board may, very carefully, delegate the strategy process to the management team. However, be very aware and cautious that many managers think that strategy means extrapolating from the current position. That’s not strategy, that’s incremental planning, and it’s holding many fine companies with high potential back from truly growing.

Strategy is about identifying a future state. I define strategy as the intentional alignment of decisions, actions and resources to provide focused value to your customers. Once you set the strategy, then you work backwards on how to get there from where you are now. The best companies set strategy in this way.

Succession

Succession is about depth on your management team. It’s not just about ownership. Ownership is a separate issue. For management succession, all of your key positions should have a clear ‘second-in-command’ identified and being groomed to take over, including your position! Your organizational chart should be set up for the next ten years. You could be two or three times as large by then, and you will be if you set a good strategy and implement effectively.

Tough Question

If you sold your business for five times its EBITDA (earnings before interest taxes depreciation and amortization) and invested the money at two percent, what would your returns be and how do they compare to your current income level?

From The Piggy Bank

Firing yourself, building your management team and improving your EBITDA are excellent ways to exit the day-to-day of your business while retaining ownership and a revenue stream to help you maximize your wealth.

Resources

For free articles to help you with strategy, succession and business transitions, go here.

If you would like to discuss your exit options or are wondering where or how to start, please give me a call at 1-306-569-9111 for a complimentary consultation.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

The winter of 2010/2011, we had a mountain of snow and much spring flooding that resulted in our lake being six feet higher, submerging the marina and eliminating most of the beaches. Many farm fields were too wet to seed, resulting in reduced farm production and hurting the economy. This past winter was relatively mild with little snow and many record warm temperatures.

Here are the signs of spring in my neighborhood.

I saw the first robins of the year.

The geese are migrating back up north.

Lola is enjoying sunning herself on the deck and on guard against the squirrels. She has chased several squirrels up the side of our stucco house but, alas, she has never caught one. A couple of weeks ago, a squirrel was looking into the kitchen door when Lola was looking out. Once we released the excited hound onto the deck, we realized that the squirrel had a distinct advantage: it could fly. The squirrel lunged itself off the deck up to the tree. Lola, since she can’t fly, was limited to running down the steps and then barking up at the squirrel, who chattered nervously but safely from his elevated perch.

Note the shovel in the background. We don’t put the shovel away until July 1st!

A friend moved here from the U.K. and found himself without a car snow brush one fine May morning when his car was covered with snow. I let him in on a Saskatchewan secret: we always keep the snow brush in the car, year round.

I’ve put the table and chairs on the deck, ready for afternoon sessions in the sun.

What are your spring traditions?

Copyright 2012. Phil Symchych. All rights reserved.

This week’s impetus: Life is a team sport. The best part is that you get to choose who you want on your team. Great team member’s are sincerely happy for your successes, will be brutally honest with you, and have the courage and character to share their stories and challenges with you.

A great team makes all of its members stronger and more successful. It’s focused on results and success. Team members don’t try to change or improve other team members. They focus on improving themselves and leading by example.

Chad Barr, Phil, Guido Quelle

I’ve learned many things from the awesome people on my team, including Chad Barr and Guido Quelle, pictured above. The most important things include:

• we are never alone
• others have faced and overcome similar challenges
• we are much smarter and stronger together than individually
• I am not limited to my own ideas or resources
• I need to let go of my own ego and get out of my own way
• when I trust others’ advice and implement, good things will happen
• I continually learn and grow when I am helping others.

Who is on your team? Do you need to add anyone to your team? Is there someone who is bringing you down and needs to step up or be let go? Are you avoiding a difficult conversation with anyone on your team?

A great team wins together by constantly sharing and supporting each other. My team includes family, friends and paid advisers, who have been there and done that. We win or lose as a group, we have fun, we hold each other accountable and we contribute to, and for, each other’s benefit. Thanks, team!

Monday Minute: “You want people around you who can tell you when it wasn’t your fault and when it was. You want people who can help relieve the strain and pressure, but who can also demand accountability and responsiveness.” Alan Weiss, who is my mentor and consultant, writing in The Consulting Bible (Wiley, 2011)

Privacy statement: Our subscriber list is never sold, rented or shared with any other party.

Contact information: info@symcoandco.com

http://www.businesssuccessforlife.com/

http://www.symcoandco.com/

Copyright 2012. Phil Symchych. All rights reserved.

Easily.

A friend has a brother who owns a small firm and they asked for some advice. These tips apply to any small company that is competing against a larger firm.

-differentiate by using environmentally superior cleaning products that  are more human friendly, less likely to trigger allergic reactions

-focus  on businesses that place a higher priority on cleaning or have to  comply with government regulations, such as restaurants, doctors  offices, high end retail

-show up with bonded, trustworthy employees that have had criminal checks

-offer to pick up and drop off good employees as some new employees may not have a driver’s license

-offer options for add on services such as window washing, construction clean up, frequent cleaning of high traffic areas, paint touch ups

-offer bronze, silver, gold levels with different response times

-offer a la carte upgrades

-offer  free trial services of valuable or expensive services (my BMW dealer  washes my car inside and out once a month, included for free with my  purchase)

-offer to clean the owner’s vehicles or fleet

-offer free samples or discounted samples to their customers’ customers

-get testimonials from everyone

-work closely with  experts so that they know how to clean Italian ceramic tile, restore granite counter tops

-change light bulbs (always work safely at heights)

The best tip is to ask your customer how you can be more useful and valuable to them. There are probably things that your customer needs done that their employees are too busy to do or don’t want to do.

The larger your competitor, the easier it is to provide a valuable service. Focus on the relationship, the convenience and the results for your customer.

Copyright 2012. Phil Symchych. All rights reserved.

Exit Stage Right

Are you part of the majority that does not have a plan to exit their business? There are many right ways and even more wrong ways to exit your business. Today, we’ll discuss three ways for you to exit your business the right way.

Phil’s Profit Points™ in Brief:

• An exit plan deals with the ownership factors that are impacted by your business exit.
• Ownership depends on the legal structures of your business.
• Ownership exit requires a plan that identifies the future shareholders.
• Exit options include winding up the company, selling a portion of the company to employees or a new group, or selling the entire company.

Exit Planning

Exit planning typically begins in one of four places:

1. Kitchen table
2. Boardroom table
3. Hospital emergency room
4. Funeral home

Which place you begin at is entirely up to you. I do recommend the first two. If you start at the kitchen table and discuss what you want to achieve, you will be more prepared for the boardroom table discussions with your professional advisors.

Exit Planning: Where will you begin?

Ownership

Ownership is about the shareholders of your company. There are two main types of shares: common and preferred.

Common shares are voting and participating (defined as the shares that increase and decrease in value) and control the company. Preferred shares typically do not vote and may be fixed in value. They are called preferred because, in the event of a company windup or forced disposition, the preferred shareholders receive their funds before the common shareholders receive any money. The common shareholders carry the risk and, thus, the reward, if their shares increase in value.

If you are the founder(s) of your company, you most likely control the common shares. A major part of your exit plan needs to include formal strategies to maximize the value of your common shares. Please see our other articles on valuation for ideas on how to do this.

It is common for privately-held companies to have several share classes. However, it is typical that only one share class, frequently the “Class A” shares, has the voting and participating characteristics.

The best way to understand the legal ownership of your company or companies is to have your professional advisors draw the legal structure. It’s very important for you to understand this. I’ve dealt with very good professional firms who inherited an organizational structure that was developed by another professional. The client was not aware of the details and the new firm, although they understood the structure, did not confirm the client’s understanding of the structure.

Once I drew the picture out, it was clear that the organizational structure was not completed as intended. The professionals sprang into action and finished the structure changes required.

It’s much more cost effective to have any changes made as soon as possible, if they are required. It’s more expensive, time-consuming and stressful to try and correct a deficiency if a key person is unable to participate in decisions or even sign their name.

Unanimous Shareholders’ Agreement

Every corporation needs one of these. It’s the basis for how you and your shareholders will operate the business and govern the shareholders and their transactions. It’s also critical to have a signed unanimous shareholders’ agreement.

Basic Legal Structure

Please consult your professional advisors for specific advice that best represents your personal objectives.

For simplicity, this diagram assumes that the entity above it owns 100% of the common shares that are voting and participating. However, you can achieve maximum protection and tax flexibility by having multiple types of share classes involved. Remember, always consult a professional!

Action point: Consult your professional advisors and have them draw your legal and tax structure. Make sure that you understand it and that it represents what you need for the future. This should show all of the individuals involved as well as legal entities.

Our accountant provides our updated diagram to us every year as part of our financial package. If your accountant doesn’t give you a tax diagram, just ask them. They probably have it in their files already.

Ensure that your lawyer and accountant have a copy and that your wills reflect the current legal structure.

Exit Options

The basic options to exit your business are:

• To wind up the company, cease operations, and dispose of the assets. This will not maximize your wealth but may be your only option if you leave things too late or are in a declining industry, or if the owner has neglected the company for a while.
• To sell a portion of the common shares to an employee group, for example. You will still retain control. This is a gradual, controlled exit.
• To sell all of your shares to an employee group or a strategic buyer such as a competitor or a consolidator. This should maximize your wealth, depending on the structure of the transaction.

Tough Question

Where are you going to start your exit plan: kitchen table, boardroom table, hospital emergency room or funeral home?

From The Piggy Bank

Designate one of your key advisors as your exit plan quarterback because you need someone to hold you, and your professional advisors, accountable for developing and implementing your exit plan.

Resources

For free articles to help you with exit, succession and business transitions, go here.

For information about how we can help you with exit planning, go here.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

• Take more vacations.
• It’s important to take time to relax, even if you are busy, and, especially if you are really busy.
• Take time to sit back and relax during the day, every day, to keep your head clear.
• Spend time each day talking to people about non-work things such as hobbies, movies or personal topics.
• If you’re riding the roller coaster, keep your eyes open, otherwise you might miss something big.
• Don’t rush when you are doing things, so that you can observe everything else that is going on.
• Getting more done doesn’t mean your having more fun.
• Enjoy the moment. They go by quickly and they may not come again.

Thanks, girls.

Copyright 2012. Phil Symchych. All rights reserved.

Another level of trust: the world’s financial markets trust the U.S. Dollar as a base currency for international exchange.

We trust companies that we do business with because of their brand power, product quality and how they treat us when things go wrong. Solving a customer’s problem or complaint is a huge opportunity to build trust. When we spilled a drink at a Disney resort, they replaced it at no charge and were sending a clean up crew to help. Disney has earned my trust through repeated, excellent experiences.

What about individuals?

It seems to me that there are various levels of personal trust.

We trust people that we know and whom have earned our trust through our historical dealings.

We trust the neighbor’s teenager to babysit our children for an evening. That’s a pretty high level of trust for compensation that’s below minimum wage.

We may trust someone with our wallet…cash, credit cards, personal information.

However, we are more careful whom we trust with our reputation.

Hiring employees, for example, is difficult because the new employee represents our reputation to our long term customers, who trust us to look after their best interest. Most, if not all, employees understand the business and customer relationship and are aware they have a responsibility to provide value.

Are your employees aware that your personal and professional reputation is at stake with every customer interaction they have? If not, it’s time to explain the risks and rewards of entrepreneurship to them. This will help you to build their trust in you.

Copyright 2012. Phil Symchych. All rights reserved.

Here are some examples of things to look at while you wait:

• The General Motors Test Track exhibit goes through an automobile test factory and assembly plant to show how some things are tested and put together.
• Then, you get to ride in a test car that goes through several acceleration, braking and turning tests. Finally, you get up to 65 miles per hour on the test track. That’s pretty cool for a convertible that seats six. I didn’t use enough hair gel that day.
• The Toy Story queue displays various toys and games on the walls and suspended from the ceiling. The ceiling is a giant Scrabble board.

To reduce your waiting times, you can purchase a Fast Pass that gives you a designated time range to attend your event or ride and a special entrance or lane that gives you priority access.

What can you do in your business to make the waiting process more enjoyable or useful for your customers, or to reduce the wait time altogether?

Here are some ideas:

• Offer different price points for different responsiveness or timing.
• Offer faster service for your best customers.
• Offer special services or deals available only to your best customers.
• Focus your services on generating results for your customers or clients.
• Don’t constrain yourself to using every tool in your tool box. When the plumber tunes up our furnace, he only uses the tools he needs. He doesn’t use every tool just because it’s in the tool box.
• Charge for the service, not by time. Our plumber fixes the furnace as quickly as possible, so that he can complete more jobs and earn more money.

You can minimize your customer’s wait time and increase your profits by making sure that your business is set up, strategically, to offer different levels of speed. Customers will select the wait time they want. Managing your customer’s expectations by giving them choices and clear service parameters will improve their perception of your quality.

Copyright 2012. Phil Symchych. All rights reserved.

Many businesses don’t know or under-estimate how long it takes to convert new strategies or inputs into cash.

What metrics do you use to measure cash in your business?

Here are the factors of Total Days To Cash:

• developing strategies
• identifying customer needs, wants and value drivers
• implementing strategies including product/service prototyping, testing and launching
• marketing to capture awareness, attention and interest
• sales cycle to convert interest into orders
• input costs for labour, materials, administration
• inventory costs for storage
• shipping costs
• retail promotion costs
• accounts receivable days for waiting until you get paid
• opportunity cost for funds tied up in this project

Symco Total Days To Cash Model

Symco Total Days To Cash

Tips on how to improve Total Days To Cash:

• develop strategy in close collaboration with your customers so that you understand their needs and wants, can customize to maximize your value to the customer, and eliminate unnecessary costs
• minimize batch sizes to reduce inventory and storage costs
• focus on meeting specific customer needs by customizing your product or service
• take a deposit for orders to prioritize production
• take the entire fee up front, if the product is customized

Improving your Total Days To Cash is key to increasing the profitability and value of your business.

For more information on improving your Total Days To Cash, please contact us at 1-306-569-9111.

Copyright 2012. Phil Symchych. All rights reserved.

Are You Stuck?

Have you ever gotten your car stuck in the snow, unable to move forwards or backwards, gradually spinning and sinking deeper? It’s like being stuck in your business; stuck at the bottom of a business cycle, with decreasing revenues and cash flow, wondering how to get out.

Phil’s Profit Points™ in Brief:

• You can’t spin your way out of being stuck, you’ll only get more stuck.
• Eliminate the obstacles that are blocking your path.
• Create positive momentum towards your ideal path.
• Gradually increase your speed.

Winter driving on the prairies requires a mixture of skill, courage and faith. After a heavy snow storm, and once the ruts start forming on the roads, it’s common to get stuck. This isn’t a big deal if you know how to get out. It is a big deal if you don’t know how to get out, because you’ll just get yourself more stuck and possibly damage your car.

It’s the same in business. Business is about peaks and valleys. I don’t know any businesses that have a flat trajectory year-round. We need to elevate our business base lines above the valleys, like a four by four truck that has high clearance and large tires so that it doesn’t get stuck. Businesses that have longer cycles, such as agriculture or large project-based service or construction firms, have the risk of even larger valleys. Don’t let getting stuck burn out your transmission or your business.

If you’re driving your vehicle in the snow and get stuck, this is what you do:

• Clear away any excess snow in front and behind all four wheels. This alone may solve your problem.
• Back up slowly.
• Shift gears and accelerate forward slowly to drive out of the rut.
• You may need to do this a couple of times, or ‘rocking’ your vehicle, to create the positive momentum to get you unstuck.
• Don’t spin your tires as the friction will melt the snow and turn it into water and then ice. Then, you will have no traction and you’ll need a tow truck to pull you out.

If your business is stuck in low revenues or cash flow, here is how to get unstuck:

• Clear away an unnecessary obstacles to short-term cash flow such as discretionary spending, excess inventory or surplus assets. This can be difficult because most expenses are not variable in the short-term but liquidating assets can generate quick cash.
• Factor your accounts receivable to convert to quick cash.
• Aggressively collect your accounts receivable. You are not your customer’s banker.
• Tighten up your credit policies because the last thing you need is a new customer who won’t pay you.
• Ask suppliers for temporary extended terms to preserve cash.
• Identify your most profitable products, services, customers and employees.
• Conduct interviews with your best customers to learn how they use your products and services so that you can identify new and profitable ways to provide more value, faster and more profitably. Eliminate or reduce the high cost (to you) portions and increase the high-value and low-cost options. (I hope you’re not pricing purely on cost.)
• Target your best customers and prospects very specifically. You need a clear focus here.
• Promote your best products and services to your best customers by in-person sales calls (a declining art that is still very effective), personal phone calls, lunch meetings, free seminars or workshops, webinars, and every form of internet and social media communication.
• Continually ask for the sale, ask for referrals, ask for testimonials and ask for references.
• Offer discounts for accelerated payment terms. This is crucial for start-ups that are stuck on the starting line and need cash to get going.
• Be prepared for success.

You’re not going to wait for the warm spring weather to melt the snow and get you unstuck. So don’t wait for the business cycle to end. In fact, no one can predict the new business cycles. Build up your own momentum with marketing and use your existing customer relationships to pull you out of the rut and get you unstuck. Full speed ahead!

What’s Your Exit Plan?

Our New Service – Business Wealth Builder^™

If you meet these general criteria: have been in business more than five years, have twenty or more employees, are considering exiting your business in the near future, or want to seriously grow your business regardless of size or time in business, then we can help you maximize the value of your business and position your business — and you — for success, growth and transition.

We are pleased to announce our new Business Wealth Builder™ series of services that help established, profitable and successful business owners to:

• Maximize the value of their existing business with our “Get Richer Quicker” proprietary process that performs due diligence on your own company as if we were buying it, and makes recommendations on how to optimize your structure and refine your business strategies to maximize the short-term profits and long-term value of your company.
• Develop and implement “Growth Acceleration Strategies” that can dramatically boost revenue growth, capacity, profits and equity valuation.
• Successfully implement profit improvement and growth strategies, monitor progress and formalize accountability to ensure that you systematize success with our “Results Mentoring” services.
• Strengthen financial performance with our “Profit Building CFO” services where we formalize financial management and reporting so that you’re running your company like a major corporation.

Tough Question

Are you repeating your successes, or your failures, in hopes of getting better?

From The Piggy Bank

You can stress test your own business by figuring out what you would do if sales dropped to 50%. The best businesses prepare for success but plan for tough times.

Resources

For free articles to help you grow your business profitably, go here.
For information about how we can help you to borrow wisely, go here.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

Here are some tips to increase your momentum:

1. Focus on goals, not tasks.
2. Use one system as your calendar, goal setter and task tracker.
3. Identify potential obstacles and be prepared to deal with them. Optimists get more done than pessimists (according to Martin Seligman), not because they don’t encounter obstacles, but because they do and are prepared and persistent.
4. Build on your strengths and natural talents. In other words, focus most of your time and energy on things that you like to do.
5. If you hate doing something, then do it right away or delegate it, defer it or delete it. Minimize the dread!
6. Measure and celebrate results and outcomes. When playing street hockey, we celebrated after every goal. And, there were thousands. The positive reinforcement helps you maintain momentum to overcome the negative events, like when the other teams scored their thousands of goals.
7. Capture all of your tasks in one place. Multiple lists can create confusion and anxiety.
8. Organize your information. I’ve recently started using Evernote (it’s free!) and it’s very useful for capturing information related to research and client projects.
9. Plan in weekly increments.
10. Review your progress at the end of the week.
11. Leave slack in between meetings so you don’t have the stress of being late or rushing.
12. In your business, you may wear many hats such as owner, president, chief sales person, and quality control (because your name is on the sign). Allocate specific time, if possible, for the different roles, so that you are in balance.
13. Beware of conflicts such as between a management role and a technical role. Schedule time for each and clarify which role you are in if you are speaking to someone.
14. It’s not how many things that you start, it’s how many that you finish, that counts. I’m continually learning and improving this.
15. Keep yourself in great shape: mentally, physically and emotionally.

Most entrepreneurs and business owners that I know are running multi-million dollar businesses. Their lifetime earnings potential and the value to their businesses, customers, employees and communities exceeds that of many professional athletes. Yet, I’m not sure that all entrepreneurs see it that way or take as great of care of themselves as athletes do.

If you were the wealthiest, most powerful person in the world, what could you accomplish? Well, get to it.

Have a productive and profitable week!

If there is a topic that you’d like to see discussed in our Monday Momentum, just let us know and, if it fits, we’ll work it in to a future issue.

Copyright 2012. Phil Symchych. All rights reserved.

While shopping in a dollar type store recently with my creative daughter who was seeking art supplies, the store was playing a local radio station over the speakers, perhaps to keep parents entertained. The radio talk show announcer said that you had to be careful shopping in dollar type stores. The talk show mentioned specifically that we shouldn’t buy baby toys or dog food because we couldn’t be guaranteed about the quality of certain ingredients.

The gas jockey asked me (again) if he can check my oil. Actually, he can’t. There’s no dipstick. You have to push a button on the car’s computer. And, by the way, the oil is synthetic and lasts 24,000 km or about one year. However, I sure use a lot of windshield washer fluid. It would be nice if someone offered to top that up once in a while.

A salesperson sent me a technical report as a preliminary sales pitch. Since I couldn’t interpret the report, there was no sale. I wonder how many professionals, including lawyers, accountants and consultants, send technical information to their clients while failing to realize that it is the professional’s role to interpret the information and educate the client about their options and actions.

Hmmm…

Copyright 2012. Phil Symchych. All rights reserved.

Increase Your Sales

This article will be of interest to you if you want to increase your revenues without spending lots of time and money on advertising and promotional activities.

Phil’s Profit Points™ in Brief:

• The easiest sale is to your existing customers.
• Develop new products and services for your existing customers.
• Be proactive and provide value – continually – to your existing customers.
• Be strategic and focus on helping your customers to be more successful.

Increasing revenues can dramatically improve your profits and strengthen the value of your company. You can do this very cost effectively by utilizing the excess capacity within your company. Most businesses can easily squeeze out another ten percent of production without breaking a sweat.

These concepts apply whether you sell to a very narrow niche or a very broad market of diverse customers.

Chart 1: Growth Matrix (Boston Consulting Group)

The easiest sale is box 1. where you sell more of your current products and services to your existing customers. Your customers already know you, trust you and love you. This the most frequently overlooked opportunity and the first place to start.

You can tell if you’re not pursuing this opportunity by answering this question: are you an order taker or a proactive seller? If you are busy enough because the phone rings and orders walk in the door, and you don’t proactively contact your best customers, then you’re guilty as charged of failing to proactively maximize your sales.

Since your existing customers know you and trust you, the next easiest sale is to develop new products and services in box 2., and present these to your existing customers.

It’s more expensive and time consuming to attract new customers through advertising and promotion in box 3. However, if you ask your existing customers for referrals, they can introduce you to new customers and you can leverage the referral relationship to accelerate the sales process. Your lawyer, accountant, contractor and lawn care guy all grow their businesses this way. This will cost you virtually nothing and actually strengthen your relationship with your existing customers.

The least effective and most expensive method to increase revenues is to try and develop new products and services and then attract new customers. Moving diagonally from box 1. to box 4. is virtually impossible and, actually, unnecessary. Move vertically first by adding new services and presenting them to your existing customers, then horizontally by seeking new customers.

What’s Your Exit Plan?

Our New Service – Business Wealth Builder^™

If you meet these general criteria: have been in business more than five years, have twenty or more employees, are considering exiting your business in the near future, or want to seriously grow your business regardless of size or time in business, then we can help you maximize the value of your business and position your business – and you – for success, growth and transition.

We are pleased to announce our new Business Wealth Builder™ series of services that help established, profitable and successful business owners to:

• Maximize the value of their existing business with our “Get Richer Quicker” proprietary process that performs due diligence on your own company as if we were buying it, and makes recommendations on how to optimize your structure and refine your business strategies to maximize the short-term profits and long-term value of your company.
• Develop and implement “Growth Acceleration Strategies” that can dramatically boost revenue growth, capacity, profits and equity valuation.
• Successfully implement profit improvement and growth strategies, monitor progress and formalize accountability to ensure that you systematize success with our “Results Mentoring” services.
• Strengthen financial performance with our “Profit Building CFO” services where we formalize financial management and reporting so that you’re running your company like a major corporation.

Tough Question

Where are your new sales coming from: incoming calls, outbound efforts, referrals, repeat business?

From The Piggy Bank

Most customers leave a business because of perceived indifference. Make sure that your customers know that you appreciate their business and want to help them be more successful.

Resources

For free articles to help you grow your business profitably, go here.
For information about how we can help you to borrow wisely, go here.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

Therefore, I’m pleased to announce that Air Canada deserves its own DUDS award!

Fortunately, we have an unlimited supply of DUDS, that is, large companies will continue to provide us with fodder forever.

I’ve come up with a new tagline for the airlines: “Over-sold and under-served”

Here are the Air Canada stories (yes, there’s more than one) from my friend:

I was flying from Regina to Ottawa and had purchased a first class ticket. Before going to the airport in Regina I received a phone call from Air Canada advising that they substituted a different aircraft which did not have first class and they had reseated me in coach.  They also said I would be reimbursed for the fare difference.  I knew I had paid and premium of $800 for first class. Air Canada’s offer was $40. I told them they must be joking. After emails that brought automatic responses saying I would get a real response in 15 days and phone calls to more answering machines than I could count I was getting more and more frustrated. There was no way to talk to a real person.

On the way back from Ottawa I expressed my frustrations to a very friendly flight attendant. She gave me a direct number to her supervisor. She knew she could not help but could find me someone who could.  She did. I had a person in “customer service” who I could explain the unreasonableness of the offer. Through much discussion and several calls we agreed on a $400 voucher. To get my money I had to fly with Air Canada again.

So on my next trip to Ottawa I booked a first class ticket to Ottawa and used the $400 voucher.  The adventure began again. Our flight to Toronto was delayed and the connection for Ottawa was very tight.  I got to Ottawa but my luggage did not arrive until 2 days later.  Then on the way home they (Air Canada) decided to downsize the aircraft from  Toronto to Regina again and again I did not have a first class seat. This time I had the number to call and was again offered a $400 voucher. I refused saying I would never fly with Air Canada again and I wanted cash.  Eventually I got the cash.

Whatever happened to “customer service”.

——

Feel free to send me your DUDS. Maybe, just maybe, these big companies will start listening to us, their lowly, paying customers.

Copyright 2012. Phil Symchych. All rights reserved.

Was this accidental, I wondered.

“This has been happening for twenty years,” said Donna, the gate agent. “It happens every year, at spring break.”

I thought that was interesting. Why would a company want to annoy and inconvenience their customers.

According to United’s website and code of conduct:

“We all have a personal responsibility to ensure that we follow the Principles every day. We are role models and must lead by example to contribute to a work environment that promotes integrity, fairness, honesty and respect towards our co-workers, our customers and our business partners.”

Now, I’m just a customer. But, I wonder: does it represent integrity, fairness, honesty and respect towards their customers when:

• they sell more tickets than they have seats
• they ‘bump’ people as if they’re inanimate objects
• they offer one $15 meal voucher per day, even though most of us eat three meals per day
• they offer a ‘compensation’ travel voucher of $400, or $16.67 per hour assuming you have to wait one day, or 24 hours.

This is why small and medium-sized businesses can compete with large companies in many industries and markets. Now, we can’t create a global airline with 86,000 employees, and the most fuel-efficient fleet, when factoring in cabin size. But, we’re probably not going to sell more tickets than we have seats.

It doesn’t take a code of conduct and leadership educated at Princeton and Harvard to figure that out.

Copyright 2012. Phil Symchych. All rights reserved.

After a few back and forth questions to clarify the information and finalize your statements, you will probably (hopefully) meeting with your accountant to review your financial statements.

Now, you can have the accountant read your financial statements to you, line by line. Or, you can have a useful, powerful conversation and access their great advice. The choice is yours. But, you need to take control.

You can take control by asking questions. Here are questions to ask your accountant.

1. What are the trends that you are seeing in our industry?
2. How are we performing compared to other businesses in our industry?
3. What are the major opportunities that you see for us in this market?
4. How is our balance sheet stronger or weaker than last year?
5. What can we do to improve our working capital?
6. What can we do to improve the financing our operations and growth?
7. How do our income statement ratios compare to last year? (you should know this already)
8. What should we do, internally, to improve the quality and timeliness of our accounting information so that I can make better decisions?
9. What do you know about my business that I don’t know but should?
10. What are businesses selling for in our industry or market? You are looking for a general multiple of earnings, such as three time, or eight times earnings. These depend on industry, your management and a lot of other factors that we’ll discuss in another article.
11. How can we structure the business to position it for my eventual exit?
12. Who can you introduce us to, within your client base, that would generate a mutually beneficial business relationship?
13. The most important question (it’s not ‘how to minimize tax’): How do I maximize my business value and personal wealth? If you only ask them one question, this would be it.

Your accountant has a very unique and powerful skill set that can help you to improve your financial management skills and results. They have many clients in many industries and see what works and what doesn’t. They know the story that your financial statements tell. You want them to tell you that story.

Copyright 2012. Phil Symchych. All rights reserved.

Symco & Co. finds SAP® Business One from ProjectLine Solutions as its answer for an integrated business management system

2/21/2012

Saskatoon, SK – ProjectLine Solutions Inc. (www.projectline.ca), a leading reseller in North America, today announced that Symco & Co. is one of its newest customers deploying the SAP® Business One application.  With offices across Western Canada, ProjectLine Solutions is completing the implementation of SAP Business One from its Saskatoon, SK office.

Symco & Co. (www.symcoandco.com) is a strategic business consulting organization in Canada that supports, strengthens and empowers entrepreneurs to build successful businesses creating profits, jobs and stronger communities.  As a result of the professional services it provides, Symco’s clients have experienced growth in areas including revenue, profit, leadership and strategy.

Symco & Co. required a solution that would meet its diverse needs.  It wanted a comprehensive business management application with a strong focus on customer relationship management, project management and time-tracking capabilities.  The company decided that the SAP Business One deployed by ProjectLine Solutions would be the best fit for its business.

“Many small and midsized enterprises that I’ve consulted with lack information to make quick decisions, can’t take advantage of opportunities, and don’t know how they’re doing.  SAP Business One is a powerful solution because it empowers them to finally integrate their financial, customer and production information into one system,” said Phil Symchych, president, Symco & Co.  “With the solution, Symco & Co will be able to access this important information easily and make better decisions that will drive profitable growth in our business.”

“We are pleased to welcome Symco & Co. as one of our newest ProjectLine customers,” said Derin Hildebrandt, vice president, ProjectLine Solutions.  “As someone who is in the business of enabling his customers to fuel dynamic growth, Phil Symchych immediately understood the value of SAP Business One.  I have no doubt that the chosen solution will quickly become an integral part of Symco & Co.’s growth objectives.”

The SAP Business One application is designed specifically for small and midsized businesses that want to fully integrate their business and grow.  SAP Business One is a complete, integrated business management solution that provides transparency and instant visibility into operations. The solution helps companies to better unify, manage and control their entire business across financials, sales, customers and operations while eliminating redundant data entries and errors at the same time.  Customers have flexibility to extend the solution to accelerate growth with more than 500 pre-integrated, industry-specific and horizontal solutions from local SAP partners.

About ProjectLine Solutions

We are a solutions provider that specializes in the implementation and support of software systems that improve business performance.  As an SAP gold channel partner that has been in business since 2001, we have provided clients in Canada and the United States with world-class software solutions and business consulting services that have enabled them to grow their businesses and be more profitable in today’s competitive business market.  To learn more about how ProjectLine Solutions improves business management, resulting in enhanced quality and streamlined decision making, visit http://projectline.ca/.

# # #

SAP and all SAP logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries.

All other product and service names mentioned are the trademarks of their respective companies.

Media Contact:

ProjectLine Solutions Inc.

Derin Hildebrandt

dwh@projectline.ca

290A 2600 8th St E, Saskatoon, SK S7H 0V7

306-373-3150 ext 100

A 747 has several things that a high growth company need:
-a large fuel tank (cash)
-two professional pilots (management, with a clear ’second in command’)
-a flight path (business plan, they don’t just wing it)
-discipline, rules, procedures (risk management, evaluation)

If you want to be a 747 and grow your business, then there are specific things that you need to do.

1. Pilot, first officer: Create or strengthen your management team.
2. Flight path: Have the team develop your growth plan.
3. Fuel: Obtain financing for your growth, increase operational capacity, launch marketing campaigns.
4. Get cleared for take-off: test strategies carefully, expand in a controlled manner.
5. Monitor your flight: evaluate business results in real-time, speed is more important than accuracy for information on customer preferences, pricing feedback and what is working or not in the market.

If you need a 747, then you need a team and an infrastructure to support a 747. A 747 can fly further, faster and more safely than a Cessna. But you can’t convert your Cessna into a 747 in the air. So, take your team to the hangar and get to work.

Copyright 2012. Phil Symchych. All rights reserved.

How To Read A Balance Sheet

This article will be of interest to you if you want to really know what your business looks like to a banker or investor, if you want to increase your financial knowledge, or if you want to increase your business wealth.

Phil’s Profit Points™ in Brief:

There are five levels of balance sheet analysis.

• Level one: What is your cash position?
• Level two: What is your working capital position?
• Level three: What is your financing structure?
• Level four: What is your value?
• Level five: What are the trends?

Let’s continue the story from the last issue that looked at how to analyze your income statement. This week, let’s look at your balance sheet.

The balance sheet presents a snap shot of what you own – the assets – and what you owe – the liabilities – at a specific point in time. This is different than the income statement, which shows performance for a month or some other period of time.

Most entrepreneurs are intimately familiar with their income statements. However, did you know that bankers and investors are more concerned with your balance sheet? That’s because the balance sheet presents the overall health of your company. It incorporates cash flow and asset management analysis with the profits accrued on your income statement.

Analyzing your balance sheet and income statement together, which we’ll discuss in the future, will provide you with a powerful and effective way to ensure that your business is heading in the right direction.

A good balance sheet, one that you receive by the tenth or fifteenth of the month, does several things:

• It tells the story of whether your cash is going up or down.
• It identifies the good, improving, declining and poor results in terms of working capital items such as cash, accounts receivable, inventory, work in progress, and accounts payable.
• It shows whether customers are taking longer to pay you.
• It allows you to analyze the value of your company every month.

Level one: What is your cash position?

At the very least, your balance sheet should show your cash position. Unfortunately, this requires the bank reconciliation to be completed. With online banking information available immediately, this function should be completed within a couple days of month end (at the latest).

1. Is cash increasing or decreasing, and why?
2. Are you using short-term cash to fund the purchase of long-term assets?
3. Are you effectively using excess cash?

Level two: What is your working capital position?

Working capital includes items that will convert to or utilize cash in the next twelve months.

1. Are accounts receivable increasing or decreasing, and why?
2. Are inventories and work in progress increasing or decreasing, and why?
3. Are accounts payable increasing or decreasing, and why?

Level three: What is your financing structure?

There is good debt and there is bad debt. Good debt lets you borrow money at low interest rates and turn that money into profits, thus increasing the value of your business, and your wealth.

1. Are you borrowing appropriately by matching working capital needs to an operating line of credit?
2. Are you using short-term cash to fund long-term asset acquisitions such as equipment or vehicles (this isn’t a good idea, unless you have lots of cash)?
3. Is your debt to equity ratio less than 2.0:1.0 and preferably much less (unless you are a start-up, then all bets are off).

Level four: What is your value?

The balance sheet presents the value of your business in the equity section as retained earnings. This is also called book value because it is based on the accounting concept of historical cost where all of your assets, liabilities, revenues and expenses are recorded at their actual cost. If you bought your building twenty years ago, and it appreciated in value, then your book value will be artificially low.

1. Is your retained earnings, which is the accumulation of your profits less dividends paid out, growing?
2. If you need to borrow money or want to sell your company, aggressive tax minimization practices that reduce your profits and retained earnings can hurt your valuation in the eyes of a lender or investor. Is your equity sufficient to attract capital or investors?
3. What is your plan to convert your retained earnings into personal cash and wealth?

Level five: What are the trends?

Most accounting software will print a ‘comparable balance sheet’ which shows the account balances for the current period and the same period one year ago.

1. What are the major dollar variances between accounts?
2. Do these changes make sense given your recent business performance and market trends?
3. Proportionately, is your business stronger and healthier than a year ago?

Announcing Remote Profit Mentoring^™ and Profit Immersion^™

If you run a small or mid-sized business and don’t have a full-time chief financial officer to interpret your financial results and give you proactive advice, we can help. We are excited to announce two new services.

Our Remote Profit Mentoring^™ service has three options and ways for you to access our services, develop profit plans and receive advice on improving your financial condition. Financial management is important for both profit and non-profit organizations that want to increase the results they generate.

For a serious jump-start to improve your profits, we offer our intensive Profit Immersion^™ process. Spend a day with us to learn how to enhance your strategy, refine your business model and turbo-charge your profits.

Tough Question

Are you using your balance sheet to help you evaluate your company’s performance like an investor or banker would?

From The Piggy Bank

Your balance sheet says more about your company and management than your income statement.

Resources

For free articles to help you grow your business profitably, go here.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

I do, I do.

For a small business, that means that you had profit of about $2.6 million.

$1.6 million remains in your wallet. Not bad.

Minimizing taxes can cause you to intentionally or unintentionally reduce your profits. If you’re trying to sell your business and receive a multiple of earnings, you want those earnings to be as high as legitimately possible.

Copyright 2012. Phil Symchych. All rights reserved.

The key areas to maximize wealth in small and mid-sized businesses are:

1. Cash flow – is the business generating surplus cash? Cash flow comes from margin, velocity and volume.

2. Management team – has the owner transferred power (to hire and fire, to spend money) to a management team and are they held accountable for results? Does the team have a formal plan and budget and do they operate the business in a professional manner?

3. Financial management – does the business increase its retained earnings and use this to borrow wisely and grow more quickly? Is working capital increasing or decreasing? Is the financial structure optimized for growth or transition or whatever the owner’s objectives are? Tax minimization reduces the equity retained in a business, reduces its borrowing potential and immediately reduces the value of the business.

4. Processes – are the policies and procedures documented, improved, used for training and used to maximize production? Is capacity increasing? Are speed and quality improving?

5. Freedom for the owner – consistent with Alan Weiss’s definition of ‘wealth as discretionary time,’ does the business provide freedom for the owner. Does the business operate independently from the owner? If the owner has to be there all of the time, they may not have a business, they may have a job. It’s OK to have a job but the business will be more valuable and easier to transition or sell if the owner has freedom from the business.

You can maximize the profitability and value of your business in order to increase your personal wealth and freedom.

Copyright 2012. Phil Symchych. All rights reserved.

McKenna Tile & Stone is Regina’s newest tile distributor.  We distribute mainly porcelain and glass tile to the Saskatchewan market. Our selection boasts of quality and style.  Currently, we are looking for a part-time customer service and administrative assistant.  Student resumes are welcome.

We are looking for a reliable, outgoing self-motivator who has experience or education related to working in an office setting.  An interest in design and creativity are also an asset.

Main Duties:
- Placing orders and checking stock
- Create purchase orders
- Creating quotes
- Manage outgoing shipments
- Updating and creating price lists
- Receiving inventory into computer system
- Answering customer inquiries
- Deposits
- Accounts receivable
- Creating spreadsheets
- Ensuring the outbound sales representatives have adequate marketing material and the tools necessary for sales
- Inside sales
- General office duties

Required Skills:
- 3-5 years in office setting
- Business diploma or certificate an asset
- Organizational skills
- Computer skills (Microsoft Word and Excel, accounting software)

Please forward your resume to Alyssa@mckennatile.com

Or, click here for more information.

Copyright 2012. Phil Symchych. All rights reserved.

Do you need to micromanage and babysit and punish every little mistake? Of course not.

Holding your team accountable means that you need to ensure they are aligned with your company’s goals and objectives. If you strategy is to provide high quality (and charge higher prices for that, which you deserve), then you need to ensure that your people, processes and performance are focused on quality. If your focus is on quality, then you might need to sacrifice speed.

After all, a drive-thru restaurant hamburger is not going to be as good as a prime rib hamburger at the fancy steak house, but it will be fast.

Holding people accountable is easy and transparent if you do these things:

1. Have the team participate in setting their operational goals and benchmarks. For example, a production facility may set targets of units per shift.
2. Measure the goal every day. It’s amazing how powerful this is to drive the behaviour that you want.
3. Proactively ask the team what obstacles they encounter or foresee, and what ideas they have to overcome them.
4. Help your team to be more successful. This is the key. Accountability doesn’t mean whacking them when they miss their goal. Accountability, and it’s a two way street, means that you are willing to be held accountable to helping them improve performance and be more successful.
5. Celebrate success. Every incremental gain can increase confidence and momentum. This also reinforces that you are focused on rewarding positive behaviors.
6. As a manager, beware of trouble-shooting for your employees. Part of the accountability is to develop their independence. When they present a problem or dilemma, ask them for their suggestions. If they don’t have any, give them homework and tell them to come back more prepared.
7. It’s your job to allocate resources. Make the team come up with the ideas. Remember, with every pair of hands, you get a free brain.

Holding people accountable is as simple as keeping score of the important things in your business. The fewer things that you track, the easier and more powerful the process will be.

Copyright 2012. Phil Symchych. All rights reserved.

How To Read An Income Statement

This article will be of interest to you if you want to make your monthly financial statements more useful, if you want to increase your financial knowledge, or if you just want to give your accounting people something useful to do.

Phil’s Profit Points™ in Brief:

• There are five levels of income statement analysis.
• Level one: Did we make a profit?
• Level two: How do the results compare to last year?
• Level three: What are the trends we see this year vs. last year?
• Level four: How do the results stack up against our profit plan?
• Level five: What are the real business metrics: sales and production?

We’ve all heard that a picture is worth a thousand words. A good financial statement, in the hands of a professional, is worth ten thousand words because it tells a story about your business.

A good financial statement, one that you receive by the tenth or fifteenth of the month, does several things:

• It tells the story of where you are now and what happened.
• It identifies the good, improving, declining and poor results.
• It shows whether things are going to get better or worse if no one does anything different (hint, they usually get worse, and you might already be half-way through the next month).
• It allows you to hold your people accountable for performance.

Level one: Did you make a profit?

At the very least, your income statement should show a vertical percentage of all expenses as a percentage of total revenue, so they add up to 100%.

1. Did you generate a profit or a loss, how much, why?
2. Are you accruing amortization, corporate tax and loan payments each month so that the statements are accurate?
3. What are the gross profits by product or service line, customer or employee?

Level two: How do you compare to last year?

It’s reasonably useful to compare the individual month and the cumulative year-to-date financial results vs. the same periods last year.

1. Are results better than last year?
2. Are revenues and profits moving in the same direction or opposite directions? Increasing revenues with decreasing profits is not sustainable.
3. Are we growing and getting better at sales, production and costs?

Level three: What are the trends compared to last year?

Looking at the numbers is an easy mathematical exercise. Figuring out the story behind the numbers is more difficult and more important.

1. What’s going on in your business and market compared to last year?
2. Why are revenues going up or down?
3. Why are profits going up or down?

Level four: How do the results compare to your profit plan?

Now, we are finally getting into serious financial and business management practices that will help you to accelerate your profits.

1. How do revenues and profits compare to plan?
2. Which marketing activities are most effective or least effective?
3. Which customers are growing and which are shrinking (paying slower, ordering less)?

Level five: What are the business metrics: sales and production?

This is the most powerful level because it ties your business activities and production results to your financial statements. The major problem with most off-the-shelf accounting systems is that they can’t report production numbers such as square feet or hours charged.

Production makes an ideal daily and weekly metric, by the way, that you can measure in real time and use to hold people accountable for results.

1. How much have you sold?
2. How big is the order queue?
3. How much did you produce last month? Is production increasing due to efficiencies, or decreasing due to errors (most common) or breakdowns?
4. What is the average price per unit, cost per unit, and margin per unit, and what are the trends?
5. Are the margins increasing or decreasing, and why?

Your income statement, also called the ‘P&L’ or ‘profit and loss’ statement, provides a wealth of information to help you run your business. That is, if it’s set up properly and if you are recording the correct information on a timely basis.

Announcing Remote Profit Mentoring^™ and Profit Immersion^™

If you run a small or mid-sized business and don’t have a full-time chief financial officer to interpret your financial results and give you proactive advice, we can help. We are excited to announce two new services.

Our Remote Profit Mentoring^™ service has three options and ways for you to access our services, develop profit plans and receive advice on improving your financial condition. Financial management is important for both profit and non-profit organizations that want to increase the results they generate.

For a serious jump-start to improve your profits, we offer our intensive Profit Immersion^™ process. Spend a day with us to learn how to enhance your strategy, refine your business model and turbo-charge your profits.

Tough Question

Which level of income statement analysis do you presently perform? Which level do you need? How will you get there?

From The Piggy Bank

Accounting transactions, and financial statements, don’t create reality; they represent it.

Resources

For free articles to help you grow your business profitably, go here.

Have a profitable week!

Phil Symchych, C.A., M.B.A., is the president of SYMCO & CO., author of Phil’s Profit Points^™, and owner, or part-owner, of four businesses.

Share the Wealth

If you find this information valuable, please feel free to forward it to a fellow entrepreneur, friend, customer, supplier, banker, advisor or business associate. We are improving entrepreneurs’ lives and strengthening our economies. Thanks!

You may subscribe and encourage others to subscribe by clicking here.

We are now on iTunes! Check out our podcast series called Phil’s Profit Points.

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.

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.