Lois Kelly is the author of “Beyond Buzz: The Next Generation of Word-of-Mouth Marketing.” She offered her ideas about the top types of stories people like to talk about. If you’re pitching your company to investors, customers, partners, journalists, vendors or employees and you don’t use at least one of these storylines, you probably have a problem. And, most likely, you’re too close to what you’re doing, so you think that you’re uniquely “patent-pending, curve-jumping and revolutionary.”
1. Aspirations and beliefs. More than any other topic, people like to hear about aspirations and beliefs. (This may be why religion is the most popular word-of mouth topic, ever.) Aspirations are helpful because they help us connect emotionally to the speaker, the company and the issues. They help us see into a person or company’s soul.
2. David vs. Goliath. In the story of David and Goliath, the young Hebrew David took on the Philistine giant Goliath and beat him. It is the way Southwest Airlines conquered the big carriers, the way the once unknown Japanese car manufacturers took on Detroit and the way social media is taking on the media giants. Sharing stories about how a small organization is taking on a big company is great business sport. Rooting for the underdog grabs our emotions, creates meaning and invokes passion. We like to listen to the little guy talk about how he’s going to win and why the world — or the industry — will be a better place for it.
3. Avalanche about to roll. The mountain is rumbling, the sun is getting stronger, but the rocks and snow have yet to fall. You want to tune in and listen to the “avalanche about to roll” topic because you know that there’s a chance that you will be killed if caught unaware. This theme taps into our desire to get the inside story before it’s widely known. It’s not only interesting to hear someone speak about these ideas, but they also have the ingredients for optimal viral and pass-along effect.
4. Contrarian/counterintuitive/challenging assumptions. These three themes are like first cousins, similar in many ways but slightly different. Contrarian perspectives defy conventional wisdom; they are positions that often are not in line with — or may even be directly opposite to — the wisdom of the crowd. The boldness of contrarian views grabs attention. The more original and less arrogant they are, the more useful they will be in provoking meaningful conversations.
Counterintuitive ideas fight with what our intuition (as opposed to a majority of the public) says is true. When you introduce counterintuitive ideas, it takes people a minute to reconcile the objective truth with their gut assumption about the topic. Framing views counter to how we intuitively think about topics — going against natural “gut instincts”— pauses and then resets how we think and talk about concepts.
Challenging widely held assumptions means that when everyone else says the reason for an event is X, you show that it’s actually Y. Challenging assumptions is good for debate and discussion and especially important in protecting corporate reputation.
5. Anxieties. Anxiety is a cousin of the avalanche about to roll, but it is more about uncertainty than an emerging, disruptive trend. Examples of anxiety themes abound: 1.) Financial services companies urging baby boomers to hurry up and invest more for retirement: “You’re 55. Will you have your needed $3.2 million to retire comfortably?” 2.) Tutoring companies that plant seeds of doubt about whether our kids will score well enough on the SATs to get into a good college. Although anxiety themes grab attention, go easy. People are becoming skeptical, and rightly so. Too many politicians and companies have bombarded us with FUD (fear, uncertainty and doubt) with no facts to back up their point.
6. Personalities and personal stories. There’s nothing more interesting than a personal story with some life lessons to help us understand what makes executives tick and what they value the most. The points of these personal stories are remembered, retold and instilled into organizational culture.
7. How-to stories and advice. Theoretical and thought-provoking ideas are nice, but people love pragmatic how-to advice: how to solve problems, find next practices and overcome common obstacles. To be interesting, how-to themes need to be fresh and original, providing a new twist to what people already know or tackle thorny issues like how to get IT and marketing organizations to work together despite deep culture clashes between the two.
Here’s a good exercise for your team. Have them read this column and then answer the question: What storyline does our marketing currently use? Then, if you’re brave enough, ask the question: What storyline should our marketing use?
Guy Kawasaki is the co-founder of Alltop.com, an “online magazine rack” of popular topics on the web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of ten books including Enchantment, Reality Check, and The Art of the Start. He appears courtesy of a partnership with HVACR Business, where this column was originally published. Reach Kawasaki through www.guykawasaki.com or at email@example.com.
The number of seismic changes in the way business is done during the past 10 to 15 years is unprecedented. Just ponder the magnitude of all that has occurred as you read this list: Cell phones became ubiquitous, and computers with 24/7 Internet access moved from the strident screechy tones and beeps of telephone dial up to today’s broadband connections that transmit huge amounts of data in seconds, resulting in virtually everyone being constantly connected.
Instead of getting the latest news at 11 p.m. and sleeping on it, we now receive a constant stream of information in real time. Reaction time has moved from digesting the myriad of hard copy reports that awaited you at the office each morning to now making decisions simultaneously with that first sip of morning coffee while reading data on a smart devise.
In addition, the era of easy money is also long gone, along with what seemed to be extraordinary and unlimited growth where the average company would do just fine, propelled by a rising tide of good times.
The tragedy of Sept. 11 jolted the world permanently, altering the way people live and think about the future. There are no more givens that one will grow up, go to school, get a job, have a family and live happily ever after. Two major wars have lingered beyond anyone’s worst expectations. Then came the economic meltdown of 2008 when the wheels came off the wagon and the music stopped playing while everyone frantically searched for too few remaining chairs. With the stock market crash and the banking/lending meltdown, even the most sanguine turned jaundiced toward their views of government, business and what the future holds.
Even those businesses naively ensconced in their fairytale cocoons realized it was no longer business as usual. What worked for years would no longer move the needle. Customers’ attitudes and loyalties could no longer be taken for granted as businesses acknowledged that future success and prosperity could well be the exception, rather than the rule.
Does this mean that everything that we’ve learned in the past has gone swirling down the drain, including basic business principles and practices that were sacrosanct?
There are no pat answers to deal with almost revolutionary metamorphoses, if you don’t change, you most certainly will become a victim of change.
Welcome to the new ‘now.’ If you’re leading an organization today, you must devote the majority of your time and efforts to looking ahead and trying to find the answers before your competitors even know the questions. Change has become how we must do business. What worked for your company previously is, at best, a fleeting memory overshadowed by the customers’ mindset of “What have you done for me today?” In short, there are no guarantees other than you’ll have to continuously get better or be gone.
A scary thought? It all depends how you approach this new reality. With changes come new opportunities, new ground rules and the ability to find a better way and deliver that better way more efficiently and effectively.
So how do you go about preparing for the future? Certainly use all of the new tools that are at your fingertips. Instant information on the Web is available to all of us with a few keystrokes directed at a growing number of sophisticated search engine. Data that took weeks and months to gather can now be gleaned in minutes or hours. While Americans are graying as the over-50 crowd mushrooms, don’t ignore the young who know only this new way of life. Does this mean you should add a few 14-year-olds to your board? Maybe not a practical idea, but be sure you’re at least talking to a couple of them on an ongoing basis. Ideas come in many forms, many times from the most unlikely.
You must retrain your team to challenge virtually everything and find a better way, envision products, goods and services that no one knows they even need yet, and create a strategy to deliver them compellingly and creatively.
Will there continue to be business casualties? You bet. Much more importantly, however, there will be many business successes for those companies led by visionaries who answer that morning wake-up call each day with an open mind to the new now.
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at firstname.lastname@example.org.
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If you’ve been running a business for some time, then I’m sure you know some CEOs who are struggling to keep their business going or have already closed their doors.
In some cases, the cause might be the economy. Maybe they were in an industry hit particularly hard and were crippled by the drop off in sales or maybe a large customer folded or took its business elsewhere.
The most troubling aspect in many of these situations is that the person in charge didn’t necessarily do anything wrong. The leader made all the right calls and did everything by the book but still ended up with a struggling business.
After you’ve been running a business for a while, you realize that even doing everything right doesn’t guarantee success. The harshest lesson to learn is that you can’t control everything and bad things happen to good people and good companies.
The real test for many begins not with how they deal with success but how they deal with setbacks. Most have never tasted defeat before, and it can be a difficult experience. One day they are the CEO of a successful and respected company, and the next day they are sitting at home wondering what they could have done differently. The experience can be depressing for some and overwhelming for others.
But there’s a saying that as one door closes, another opens, and that certainly holds true with business. If you find yourself in the situation of leading a struggling business, you need to approach it as a challenge. Don’t waste time lamenting what could have been; focus your energy on what could be. Maybe you need to tweak your business, or maybe you need to completely reinvent your company, but the key is to do something.
Take McDonald’s for instance. In the early 2000s, the company was distracted by multiple acquisitions, a massive expansion plan and a menu cluttered with items consumers didn’t necessarily want. The stock price dropped to $12. The company reinvented itself by returning to its roots, divesting of the distracting side businesses and revamping its menu and restaurants to appeal to consumers. The results changed the perception of McDonald’s from a restaurant in decline to the undisputed king of the industry with a stock price in the $80 range.
Another example is IBM. The company was saddled with low growth after trying to dominate the consumer and business hardware and software segments, and its stock dropped to $10. The leadership refocused the company on business software, a few key business hardware components and IT services. It now dominates the business IT services category and its stock commands almost $200 per share.
While you may not be as large as IBM or McDonald’s, the point is that business is constantly evolving. Sometimes it means getting back to your roots, and other times it means abandoning one line of business in favor of another.
Take a hard look at your company and think about what you could do differently. Are there some product lines that are better than others? What if you focused on your core products and did them better than anyone else? Can you follow the lead of McDonald’s or IBM to chart a new course?
If it’s too late for that, look at your current situation and find a new path to success. You led a successful business once, so you can surely do it again. Reach out to friends and colleagues to find out where the opportunities may be in the market and think about a way they could invest in your new venture. You never know who may be able to lend a helping hand. One door may have closed in your career, but with some entrepreneurial thinking, the help of some friends and prayer, another will open. The best is yet to come.
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
Emma Dickison knows a good business model when she sees one. As a former executive of both Blockbuster and Sylvan Learning Center, Dickison is now leveraging her business expertise to focus on growing the franchise brand of Home Helpers.
While at Blockbuster during the company’s heyday, Dickison helped grow the brand from 150 stores to 8,800 worldwide in her 14 years there. She also helped fuel similar growth at Sylvan Learning Center.
So when Home Helpers Founder and CEO Gary Green recruited Dickison to join the provider of one-on-one companion care and in-home services in 2007, he knew she would be able to help develop a strategy to grow the Home Helpers franchise.
“Gary and I started talking about Home Helpers because of my experiences and where he wanted to take the company,” says Dickison, president of Home Helpers. “I really saw it as a great opportunity to take a company that had done well and make it even better and continue to drive and build it. I think of Blockbuster and how that growth happened and I thought I’m young enough to still do it again.”
Home Helpers has more than 600 locations and has more than doubled its revenue in the past five years for 2011 systemwide revenue of $79 million.
“Home Helpers was a great company and they had just celebrated their 10-year anniversary, but in franchising, the first few years in any concept is really a strong learning curve.”
Here’s how Dickison used her past experiences to develop strategies that would allow Home Helpers to reach new heights.
Change is good
In any business that has the objective to grow its operations, change has to be a necessity that is embraced by the company and everyone in it. Dickison had to find out where to take the business next that would help it in its growth.
“After 10 years, obviously we had a foundation underneath us,” Dickison says. “Home Helpers was started as completely nonmedical services, and it did what was known as companion care, which meant serving as a companion to a client who needed meals made for them or maybe to help getting to and from the doctor.
“About two years before I joined, the industry started to transition into what is called personal care. Personal care is where you’re physically working with a client whether that’s transferring them from a wheelchair to a bed or helping them bathe, it’s hands-on care.
“From that, a year ago, we transitioned to yet another phase out of a strategic decision to continue to be able to provide a broader continuum of care to the client so they aren’t dealing with multiple agencies. We now have our offices in a position where they can provide medical services as well.”
The company then supplemented that with its Direct Link brand, which is vital sign monitoring, medication management and personal emergency response systems to allow clients to remain at home for as long as safely possible.
“So from where I started with largely a companion care business, we’ve now transitioned over the last five years into an organization that allows families to utilize one agency to be able to keep mom, dad, an ill spouse or a sick child home longer than what would otherwise be possible,” she says.
No matter what industry your business is in, change is a difficult thing to grasp and implement.
“We are all creatures of habit, and to have a bold result, you have to make bold decisions,” Dickison says. “For us, that has been strategically to be able to say, ‘What additional services do we need to provide so that families can feel comfortable about their family member?’ Change on any system is a challenge.
“There is a book by Tom Feltenstein and it’s called, ‘Change is Good, You Go First.’ There is a quote in that book that I think is powerful that says, ‘If you don’t like change, you’ll like irrelevance a lot less.’ The reality is you have to provide a product or service that the consumer wants or needs and is willing to pay for, and that’s kind of where we are.”
The services Home Helpers provides are needed, and the company has to continue to change as the industry does and as its consumers do to stay relevant.
“We’re a strong believer in testing and listening to our consumer and our franchise offices and then making the changes, and we’re changing first because we think we need to remain relevant,” she says.
Changes in your business can’t be made without a strong reason for making them.
“You have to have a great understanding of the industry you’re in and where it’s going and how you want to position yourself in it,” Dickison says. “Secondly, you have to take risks. The alternative to not doing something can be fatal.”
Dickison compares risk to a baseball player at bat — you never want to be called out not swinging the bat.
“Some things are going to be a great success, and there’s probably going to be a few things that are not, but you can’t be afraid to fail,” she says. “You have to be willing as a leader to take that risk and step up. Then you have to be accountable for whatever the results are. I take very seriously my role in that the decisions I make as a leader impact thousands of families, and I can’t take that lightly because I know they are depending on us to be that leader.
“I also have to think of the brand and lead us into the future and know that will require and has required us to take risks to figure it out, to make it happen and to move the system forward.”
The changes that Home Helpers makes are part of forming a strategy to move the company forward. These plans have to be carefully thought out and the right people have to be involved in the process.
“The end users, which are our offices, those who deliver every day a core mission to the communities that they serve, have to have a part in shaping strategy,” Dickison says. “We are very strong in seeking feedback from our franchise offices.
“We survey them twice a year formally. We get feedback after every training session and at our national conference. We get feedback on everything, and then we take that feedback and we review it very seriously to say, ‘What is the direction we need to go?’”
Having your stakeholders, which is your staff as well as your franchise offices, have a voice in shaping that strategy is key because then you can get buy in.
“You’re never going to please 100 percent of the people all of the time,” she says. “I have to make decisions as a leader as to what’s going to benefit my brand and the majority of my franchise offices. So having them be a part of that is critical, and we’ve done that in the five years that I’ve been here.
“Our positioning to move into medical services was as a direct result of focus groups and feedback we had done with our franchise offices who were concerned long term that based on where the industry is going, that if we did not make some changes in that direction, we were going to be at a competitive disadvantage.”
Franchise business models are unique in that franchisees don’t actually work for you but with you, which can make strategy implementation tough sometimes.
“The uniqueness of it is if you’re an organization that’s not franchise-owned, it’s easier to make that strategy and communication known and carry it through,” Dickison says. “It has to be a very collaborative effort and everyone has to buy in to the direction you’re going to. That’s why it’s not as simple as it is for some organizations where we decide the strategy, we tell you what it is and you deploy it.
“In franchising, there has to be a collaboration between the staff, the owners and management to work together to realize that strategy and deliver it.”
While everybody has the opportunity to have a voice, you’re going to make some decisions that are unpopular.
“It becomes a matter of showing the value — the features and benefits — of what you’re introducing or eliminating, in some cases, as you move the system forward,” she says. “It really comes back down to including stakeholders in the decision-making process, communicating, gaining buy-in and executing against it.”
Grow your franchise
In a franchise business model, it is crucial that franchise owners are aware of the business strategy and are involved enough that they want to contribute and generate ideas to help grow the company.
“We get those ideas every day, and I’m grateful,” Dickison says. “Our franchise owners give us feedback on ideas that they think could benefit the operating system daily via email, live conversation, surveys, national meetings and any communication style you can imagine. If they could send us smoke signals, they’re willing to share. That’s the great part for me.
“Every time I go out into the field, they are just so passionate about what our mission is and the work we are doing. They are eager to support our growth and our operating system.”
To get your company employees or franchisees involved in the business, you have to make sure you are communicating to them and that they understand what it takes to grow the business.
“It comes down to communication, communication, communication — aligning the strategy, communicating it and allowing them to be part of it,” she says. “I did, when I first got here, a series of town-hall meetings. I traveled all over the country and we talked about where we were and where we wanted to go. I made it clear from that moment that we wanted feedback.
“Not only did I communicate it, I demonstrated it in my actions. Many of the changes that we have seen today are as a result of very incredibly bright business owners who live and work in the trenches every day serving hundreds and hundreds of communities that have been willing to serve and provide feedback.
“Not only did I tell them it was important, I demonstrated it because I took action on the feedback that was given.”
With a strong strategy in place to deliver on what the industry and the company’s clients are asking for and a smart and devoted team of franchisees, Home Helpers is growing to that next level.
“We’re a brand of 15 years into growth,” Dickison says. “We are in 42 states today, which means we still have markets available for owners to come in and be able to build a strong business and serve the communities that they have.”
The keys to this growth have been a couple of points.
“No. 1, it’s selecting the right franchise owner,” she says. “Are they going to have the skill set, the expertise, the working capital to be able to realize their dreams of owning a small business that we can help them support? Selection of those that you are awarding territories is key.
“Then backing them up with a great operating system and a proven operating system that can help support their growth is critical. Then it’s having the right staff in place to ensure that.”
Since Dickison has been at Home Helpers, the staff has grown by about 40 percent and has done so because the company has grown and supported that expansion.
“It comes down to four things: having the right strategy, selecting the right owners to come into the system, giving them a terrific operating system that stays relevant to the industry, and then providing them great support,” she says.
With those four helping Dickison lead the company to that No. 1 spot in the industry, she is able to focus on the future.
“We want to continue to maximize our opportunities here domestically,” she says. “We are going to continue to explore those opportunities that allow us to stay on the cutting edge and remain as a strong competitor in our industry.”
How to reach: Home Helpers: (800) 216-4196 or www.homehelpers.cc
- Embrace change; understand where you want to be.
- Form a strategy to get you were you want to be.
- Communicate changes and strategies.
The Dickison File
Born: Ashland, Ky.
Education: She received a bachelor of arts in history and has a minor in secondary education from the University of Florida.
What was your first job and what did you take away from that experience?
My dad, in the recession of 1972, bought a small, independently owned hotel in Florida. That was going to be my parents’ retirement. They took a huge risk, invested everything they had, borrowed more and bought this hotel. At the age of 10 I was a maid. I cleaned rooms, I helped paint, I helped clean the pool and scrubbed the lounge. I learned from that experience to have an incredible work ethic and know that nothing was going to be given to me without me working hard for it.
What is the best business advice you’ve ever received?
Business is truly about relationships and how you interact with people. It’s really the golden rule — treat people the way you want to be treated. That’s true of your staff, franchise owners and vendors.
Who is a leader you admire in business?
The best leader I ever worked with is a woman by the name of Eileen Terry. She was an executive with Blockbuster. She was the first woman at the time in that role, and I believe there hasn’t been another who has held the title of executive vice president. She was incredibly gifted. She had very high standards, but she was such a great mentor. Today she is at Panda Express.
What are you excited about within the health care industry?
I’m excited about the role Home Helpers will play. Everything I read says we’re all going to need some level of care and so for us to play a part of that, culturally it’s important. Not just from a business standpoint, but how are we culturally going to take care of those who can’t take care of themselves. The fact that we get to play such a significant role in that is exciting.
“You’ve got to be daring! You’ve got to be first! You’ve got to be different!”
Ray Kroc, the man who made McDonald’s what it is today, once said that to an audience of entrepreneurs. It can be considered one of the unique value propositions of McDonald’s. Kroc took a small chain of drive-in restaurants and exploded the business into a highly successful national icon. Using his own quote as a road map, you can see his path to success.
Kroc’s McDonald’s began with hamburgers, then added french fries and a beverage to turn it into a meal. When imitators began to gain traction in the marketplace, McDonald’s introduced the sesame seed bun to differentiate its burger. In the 1980s, it dared its competitors to keep up by introducing the Egg McMuffin. McDonald’s also captured the children’s audience with Ronald McDonald, play places in stores and the Happy Meal with a toy.
In short, the 1.5-oz. hamburger that McDonald’s began with demanded a lot of superb marketing to generate preference and brand development.
A new competitor enters the market
McDonald’s isn’t the only fast-food brand specializing in hamburgers that can be first, daring and different, however. In 1969, 15 years after Kroc joined McDonald’s and began to position it as the market leader in the industry, Dave Thomas founded Wendy’s.
While similar to other fast-food restaurants in the market, Wendy’s dared to be different by offering a 4-oz. square hamburger patty instead of the standard 1.5-oz. round burger offered by McDonald’s and some other competitors.
Wendy’s also offered 11 different choices of toppings and sides instead of the standard french fries. It customized each hamburger as requested, with all additions — including the meat — being fresh daily.
It all came together beautifully and the upstart Wendy’s grew rapidly against much larger and already very well-entrenched competitors.
Why does it matter?
While the story of two fast-food giants seems irrelevant to many businesses outside the food industry, all of this information is 100 percent applicable to any industry.
Every entrepreneur strives to be first, daring and different with his or her business. Not all of us can be the first in an industry, but with a little creative thinking, we can all add a new first to an industry.
Reposition competitors so they work for you
Challengers in a marketplace can reposition dominant market leaders, but we must understand what we are trying to do. We must have a unique value proposition that is compelling, and we must do those things well if we are to be successful.
If Dave Thomas had decided to offer the same experience and choices as McDonald’s, Wendy’s might never have left Dublin, Ohio. Instead, he creatively repositioned Kroc’s offerings from the most popular burger to a small amount of meat with one phrase in an advertisement. Entrepreneurs need to always be thinking of how they can ask, “Where’s the beef?” of their competitors.
Focus on the customer
The Achilles ’ heel of most dominant providers is that with success, they inevitably move from an emphasis on trying to sell what the customer wants to buy to using their marketing muscle to try to sell the customer what they want to offer.
The fast-food world can try to throw its weight around when introducing a new product, but it seldom lasts if it is not something a consumer wants to buy. This is dangerous because customers have so many fast-food options that if a certain provider isn’t focused on what they want, someone else will be. <<
Thomas M. Nies is the founder and CEO of Cincom Systems Inc. Since its founding in 1968, Cincom has matured into one of the largest international, independent software companies in the world. Cincom’s client base spans communications, financial services, education, government, manufacturing, retail, healthcare and insurance. Reach him at tomnies.cincom.com/about/
Cash is still king. In 2008 and 2009, many companies failed because of a lack of liquidity, and as the economy declined and sales trended south, many saw their accounts receivable days lengthen out. Combined with overleveraged balance sheets, it resulted in the tragic end of many companies.
“Cash flow is the lifeblood of any company, and managing it is the key to a company’s longevity,” says Edward L. Wood, CTP, regional vice president of commercial lending for National Bank and Trust.
Smart Business spoke with Wood about cash flow management strategies that can prevent companies from becoming overleveraged.
What are the areas of cash flow that a company can control?
The key component to managing cash flow is managing the inflow and outflow of money. A company needs to focus on three areas: accounts receivable, inventory levels and accounts payable. You want to shrink your turnaround days as much as you can for your accounts receivable and inventory levels. The shorter the turnaround on your receivables, the quicker you are collecting cash and putting it back into the company.
For payables, an outbound form of money, the strategy is the opposite. If you are paying your vendors in 10 days, you want to lengthen those payment periods to 30 days. This creates cash in the company because you are slowing down the outbound flow of money from the company.
Every industry varies somewhat on its payables strategy. Have a discussion with your lending officer because he or she can give you a benchmark of your payment strategies compared to your peers to give you an indication of where you should be. But generally, getting your payables out in 30 to 35 days is not unreasonable.
On the inbound side, you need to keep your receivables at the same levels. Less time is better on the inbound side and more time is better on the outbound side.
How should cash flow be tracked?
The main issue is that it needs to be a process that is focused on consistently, not just at the end of each quarter. You need to manage your accounts receivables turn, inventory turn and payables on a consistent, daily basis to know where they are. That is information you can get by using accounting software, or your community bank can take your financials and give you benchmarks.
What are some common cash flow management mistakes?
Particularly on the inventory side, and especially for manufacturing companies, you have to be careful of the inventory you are purchasing and how quickly you turn it around. Buying an expensive piece of inventory and not selling it quickly can tie up cash flow. It is important to buy inventory that you know will have a quick turnaround, not something you have to sit on while you look for a buyer.
On the accounts receivable side, the mistake is not monitoring your how quickly your receivables are turning over. When you make a sale, the faster you collect on your receivables, the faster you put cash on your balance sheet. Making a sale doesn’t do anything for your company until you are paid.
Customers need to focus in on methods that make receiving payments faster. To encourage faster payment, you can increase the cost for transaction types that are slower or offer discounts for faster methods.
On the outbound side with accounts payable, you can have a conversation with your customers about when they should expect to be paid. Vendors will often work with you, which will help to better manage your cash flow.
How can a company improve its cash flow?
Depending on your lender, it is always a good idea to make sure you are using cash flow effectively. If you have a commercial line of credit, consider a loan sweep that allows you to automatically apply your excess cash against your loan. If you need money, it automatically pulls liquidity from your line of credit so you are not manually moving money back and forth between your loan and deposit account. A lot of financial institutions will charge significant fees for those, but if your bank is doing so, you need to find a bank that is not.
You can also look at your billing cycle in terms of when you are sending out invoices. If you are not offering discounts on accounts receivable, doing so can be an incentive to get paid quicker.
How do you determine what impact capital assets will have on cash flow?
With purchase of any capital asset, the company needs to look at the value it brings to the bottom line. When you buy a piece of equipment, it produces some benefit over time, which is where financing becomes attractive. If you pay for the equipment in total today, you are putting all of that cash into a physical asset that offers a return over several years. Financing defers the payment of the asset over time to match the revenue coming in from the asset to its debt payments, so you are leveling off the payment structure to match revenue generation.
What products can a bank offer to help improve a company’s cash flow?
Utilizing electronic deposit for deposit transactions is a big plus rather than taking deposits to your bank. You can do this from your office through a check scanner, allowing you to accelerate the collection process, and this lets you know more quickly if you have a problem with a payer.
A lock box is another option. It eliminates the option of having something mailed to company and the need for someone to physically make the deposit. It also accelerates collections.
Edward L. Wood, CTP, is regional vice president of commercial lending and the HCDC (Hamilton County Development Corp.) 2011 lender of the year. Reach him at (800) 837-3011 or firstname.lastname@example.org.
Insights Banking & Finance is brought to you by National Bank and Trust
This is Part 1 of two articles addressing the trials and tribulations of a company’s growth and development. First, let us set the scene: A company is on the path to success … great growth … exciting leadership … but has very little management.
This start-up, entrepreneurial company is driven by personality, and not just one, but a combination of personalities that create a unique cultural fingerprint of the company. It is not a formulaic approach; instead, it develops over time. This merging of personalities is an exciting time, driven by a common purpose and the excitement of building something unique. Things are flowing smoothly, and everyone begins to settle into a comfortable rhythm, says William F. Hutter, president and CEO of Sequent.
“This rhythm of early stage companies is a lot like that favorite recipe — the unique combination of foods and spices that make it smell and taste perfect,” says Hutter. “Remember visiting your grandparents’ house after you have been away for a long time? That smell of Grandma’s favorite recipes is deeply imbedded in your memory. Just one hint of that smell takes you right back to the comfort of Grandma’s kitchen. This same thing occurs in an organization during the early stage.”
Smart Business spoke with Hutter about the early stage of a company’s development and the role of the gun slinger.
How does the combination of personalities impact an organization?
The combination of personalities creates a feeling of comfort for those who helped create the collective personality. The founder/entrepreneur who has always run with his or her hair on fire is the head cheerleader. Everyone becomes comfortable, and the company’s cultural fingerprint becomes more established.
In the early stage, leadership is focused on sales, service and growth. The basic needs of the business — cash flow, growth, scale and bench strength — require that these factors repeat for continued growth. The leadership operates intuitively and influences the organization every day with necessary circumstantial decision-making. They are focused on a single objective — growth. This is the way the company operates and it is an exciting time.
What is the role of the gun slinger in this environment?
In the early stages, the importance of the gun slinger role is staggeringly important, because the gun slinger drives growth. We all know a gun slinger or two. They are in every organization. They get things done. It may be the founder/entrepreneur, or someone who has the courage to take on a tough project. They take risks and blaze the trail. The gun slingers in business are a lot like the gun slingers in old westerns. They are hired to do a tough job. They may move from town to town to ‘fix’ a problem, challenge the status quo or lead a group through troubled times.
In a growing business, the modern-day gun slinger is instrumental in driving the growth and the vision and is a constant reminder of the action and effort that are a necessary complement to the rest of the staff. The role of a gun slinger within a company requires creativity, quick thinking, calculated risk taking, gauging of skills, analysis of the objective and a superior level of individual talent. The role also allows for longevity of service and a willingness to accept individual accountability. Modern-day gun slingers must be self-motivated, willing to invest unrelenting effort with a purity of focus and have the ability to execute without regret. What organization wouldn’t want an employee or two with the skills of a gun slinger?
When does the gun slinger come under fire?
As the company grows, both internally and externally, the original entrepreneurial spirit and attitude begin to wane, and the gun slinger comes under fire. Early stage success brings with it the realization that this new company may very well have a long life. Therefore, a transition that ‘feels’ necessary begins to manifest.
Logic sets in. The organization has grown, and the early stage leadership realizes that planning for the next stage is imminent. Financial reporting is hazy, and people begin to point fingers rather than taking responsibility or working together to analyze procedures and methods. So a decision is made to look at what has been an ‘intuitive’ formula.
Time is spent documenting processes and systems to improve efficiency and move from an intuitive formula to one that is more prescriptive. The company also starts to see the risk of having leadership in such a crucial role. As a result, questions emerge — questions that involve re-evaluating what led the company to where it is today. Questions include:
- What do we do if something happens to the leader?
- The company is now a significant asset to its investors. How will the assets be protected?
- How do we document knowledge? How do we establish leadership as a mentor for sharing their unique knowledge?
- Can we decentralize to improve integration of departments?
- Do we need more management oversight?
All of these questions are legitimate, but we sometimes fail to recognize the consequence of seeking answers to these questions.
What happens when the gun slinger is no longer welcome?
In evaluating the factors that led to the early stage success, what had been the company’s strength is now examined as the company’s weakness. Often, when objectives have changed, the esteem once commanded by the leadership is questioned. They are no longer viewed as the strong gun slinger. Just as in old westerns, modern-day gun slingers, while welcomed in times of need, find their welcome has run out once their job is completed.
Next month, watch for Part 2 of the story, “Death of the Gun Slinger.” Learn how the changes fostered by the re-evaluation questions produce separate and distinct outcomes, which ultimately lead to the death of the gun slinger.
William F. Hutter is president and CEO of Sequent. For more information, visit www.sequent.biz. Reach Hutter at (888) 456-3627 or email@example.com.
Insights HR Outsourcing is brought to you by Sequent
Standard business VoIP (Voice over Internet Protocol) sales are increasing as business owners become more aware of the technology and how it has matured over the years. Business IP phones are no exception, and improved features are impacting business efficiency.
“Five or 10 years ago, early adopters were willing to accept poor quality to be on the cutting edge, but now, the quality has caught up with the demand,” says John Putnam, vice president of direct sales at PowerNet Global. “Today, you have low cost, good quality and a lot of features that people with older phone systems didn’t have and are now necessary in order to be competitive in the marketplace.”
Smart Business spoke with Putnam about how business IP phones can improve all areas of your operations, from customer service and communications to sales force activities.
What are some recent feature improvements with business IP phones?
Unified communications, a big buzzword within the industry, combine email, fax and voicemail into a centralized location. Within your email inbox, faxes are converted to emails through E-Fax, and with IP-based phone systems, voicemails are converted to a WAV file and emailed to you. Then, faxes and voicemails can be saved in the relevant customer file. By integrating the phone and computer technology, employees are able to retrieve information quicker.
Phones and computers can also be used more efficiently. A phone call brings up the caller ID and relevant contact information — if that person is in your contact management software — on your computer screen before you answer. You can also open your contact records, click a button and dial the phone. From a contact management standpoint, you now have a record of incoming and outgoing calls in your system, including missed calls that didn’t leave a voicemail.
The next big thing is cell phone integration, in which mobile employees can push a button on their phones or cell phones to forward calls from the office to their cell phones.
How can these advances help employers run their businesses more productively?
Businesses with sales organizations are routing calls to the company first and then bouncing them out to the sales force. As a result, the company directly owns that relationship, while calls still get out in an efficient manner. Then, if a salesperson leaves the organization, you can easily reroute those calls to his or her replacement or manager within, maintaining the client relationship.
Business IP phones give companies options in terms of employees who aren’t located in the office by routing calls to either an IP-based phone or a cell phone. This allows employees to telecommute, so you don’t have to have square footage to house them in your bricks-and-mortar location.
Some business owners have closed their office space entirely and have all employees working remotely. Customers never know they are calling into someone’s house through auto-attendance and IP-based phone systems, and employers aren’t paying rent or any of the other costs associated with having a bricks-and-mortar location.
Routing calls works well with a sales force but also for others such as lawyers who often travel between their offices and court. Travel time becomes more productive for those who have meetings outside the office. Not only can those employees receive calls, but it can be easier for them to retrieve voicemails. They see the caller ID, date, time and duration of voicemails on their cell phones, and then choose what to listen to based on priority, improving your company’s response time.
Additionally, the ability to easily transfer calls to a different location provides better disaster recovery options. For example, if there is a problem in the work space, such as a loss of power, you can take your VoIP handsets and relocate to a place where there is Internet connectivity and power to get the company back up and running as quickly as possible.
How else can business IP phone features improve customer service?
By having remote employees across the country, businesses can extend their hours. For example, an organization can take advantage of the fact that 5 p.m. on the West Coast is 8 p.m. on the East Coast, allowing office hours or support line hours to be extended without paying overtime.
Companies that have teams dedicated to specific clients can bounce calls between offices so that only someone who is on the team is dealing with that important client. This skill-based call routing is possible because there is flexibility not only within offices but also call routing between branch offices.
How do these phones make communication more efficient in an office?
With unified communications, you have a centralized location for voicemail, email and faxes so employees aren’t spending their time chasing down and sharing information. Communications are saved in a shared folder on your network and multiple people can retrieve them more quickly.
Digital recordings also can be used for training purposes, such as for customer service in terms of coaching — the customer was angry and here is how the account manager defused the situation and addressed the client’s needs. Your sales manager can refer back to recorded conversations, and say, ‘Here’s what you said in this situation. Maybe you could have tried this or addressed it differently. Next time, why don’t you try saying this?’ This allows salespeople to more easily take advantage of each others’ experiences.
In addition, recorded conversations can be used as a part of contract negotiations or for a dispute on the collections side. Recorded calls and digital voicemails also create an easily transferred reference if someone else is working that account because of turnover or employee absence.
Business IP phones create more flexibility and accountability, which, in turn, increases your company’s efficiency and productivity.
John Putnam is vice president of direct sales at PowerNet Global. Reach him at (866) 764-7329 or firstname.lastname@example.org.
Insights Technology is brought to you by PowerNet Global
In business, as in life, there’s a benefit to having guidance that’s tried and true. Most successful business owners can cite mentors who have directed their paths along the way. As companies grow, those informal relationships are usually replaced by formal boards of directors. A board of directors is a very useful method for allowing significant shareholders to feel they have a say in the strategic planning for the company.
It’s my opinion that all companies – regardless of size – need to have a board. In this two-part series, I will explore the benefits that a small company can gain from having a corporate board and how a small business owner can establish a board.
First, let’s examine the benefits:
1) A good board of directors will do what employees often are afraid to do: challenge the leader. Most employees don’t feel empowered to speak up when they think a strategy is misguided or out of sync with customers or a target market. Board directors should be willing to openly question ideas and the assumptions that guide strategic planning to help the president or CEO suss out their soundness.
2) A board can provide accountability – particularly in family-run businesses where it can be hard for an unbiased assessment of the business without familial issues clouding judgment.
3) Boards can help with recruiting, evaluating and selecting top job candidates, as well as setting compensation criteria that are fair and transparent. Since directors are removed from the daily running of the business, they can help with succession planning.
4) For companies considering a public offering, setting up a board early can help acclimate the owners to the enhance scrutiny that they will face once the company is publicly traded.
5) A board of directors is legally required for registered corporations.
Next column: How to create your own board.
Patricia Adams is the CEO of Zeitgeist Expressions and the author of “ABCs of Change: Three Building Blocks to Happy Relationships.” In 2011, she was named one of Ernst & Young LLP’s Entrepreneurial Winning Women, one of Enterprising Women Magazine’s Enterprising Women of the Year Award and the SBA’s Small Business Person of the Year for Region VI. Her company, Zeitgeist Wellness Group, offers a full-service Employee Assistance Program to businesses in the San Antonio region. For more information, visit www.zwgroup.net.
When Andrew Dorn, Industry Leader, Information Intensive Business, Acxiom Corporation, was recently researching the top manufacturers in the United States, one topic kept coming up — the strong growth expectations focused on the world's emerging markets. With the economies of the U.S. and Europe in flux, Dorn felt that, now more than ever, manufacturers need to be attentive to those emerging markets.
"The world is now flat," says Dorn. "Competition comes from everywhere, so manufacturers need to be everywhere."
Because of that, Acxiom has partnered with Smart Business to present a special one-hour webinar: "Driving Global Sales for Manufacturers: Why global growth for manufacturers is more important than ever."
During the webinar — on Wednesday, September 19 at 1:00pm EST — we will discuss why global sales for manufacturers is critical, what factors should be considered in developing or refining the international strategy, and, finally, present a roadmap that can be employed to optimize chances for success.
Featured panelists will be Zia Daniell Wigder, Vice President and Research Director, Forrester Research; Jennifer Barrett Glasgow, Global Privacy and Public Policy Executive, Acxiom; and Michael Biwer, Managing Director, Acxiom.
"As you enter the global market, it is imperative you understand the privacy laws in each country as they are quite complex and some are very stringent, for example, having criminal penalties for some violations," says Barrett Glasgow.
Other topics to be discussed include:
- How to determine which countries to enter and what data to gather to understand regional customer requirements
- Recommended approaches to building country-specific strategies that can help facilitate smooth transitions, lowest possible cost-of-entry, and consistent performance
- Considerations for navigating the complex web of country-specific data protection and privacy laws companies must adhere to in their efforts to connect with customers and prospects
- Best practices used by leading companies that have successfully entered new markets
"The U.S. and European economies are still recovering and the balance of growth is constantly shifting," says Dorn. "For example, China and Brazil have been experiencing strong growth. They are encountering a maturity curve, but that doesn't lessen the importance of the issue — manufacturers need to be diversified and have a presence in all major world markets."
The webinar, "Driving Global Sales for Manufacturers: Why global growth for manufacturers is more important than ever" will be held at 1:00 pm EST on Wednesday, September 19.