Need to Conserve Cash?

Conserving cash can create benefits in economic conditions facing business today. When business is in a slow growth pattern, cash is very important and if you don’t have cash when you need it the most operations can be constrained.
Conserving cash may not be easy for those businesses that have been used to having the money to spend at any time. However, when some belt-tightening is necessary, some practical cash conservation methods may be prudent.
Here are a few tips to conserve cash:
• Spend wisely. Make sure that purchases are made for need to have not nice to have items. Items should have a focus on producing revenue where possible.
• Ensure new employee hiring is necessary. Employee salaries are a significant cash drain so efforts to maximize productivity from current employees are paramount.
• Lease equipment. Leasing vs buying can be an important option since equipment purchasing can be a serious cash drain.
• Plan ahead. Make sure you forecast financial activity. A plan outlining expected revenues and expenditures is vital to understanding cash needs. You certainly want no surprises on cash flow activity.
• Renegotiate leases. Rent is often a sizeable fixed cost that can be negotiated. Speak with your landlord; there may be an opportunity to downsize or even temporarily obtain rent reductions. Landlords often prefer to accept lower income than losing tenants.
• Go to the clouds. If your business is large enough to have in-house servers you are aware of the maintenance costs. If business is increasing this may be a cost effective way to create additional capacity without buying expensive new servers.

Business owners should share their cash flow objectives with other key managers to ensure every opportunity to maximize cash savings is realized.

Make Better Decisions

Decision-making is a crucial part of good business. The question then is ‘how is a good decision made? One part of the answer is good information, another part is experience in interpreting information.
Managers can be trained to make better decisions. They also need a supportive environment where they won’t be unfairly criticised for making wrong decisions. A climate of criticism and fear stifles risk-taking and creativity; managers will respond by ‘playing it safe’ to minimise the risk of criticism which diminishes the business’ effectiveness.

Decision-making increasingly happens at all levels of a business. The Board of Directors may make the strategic decisions about investment and direction of future growth. Managers may make the more tactical decisions about how they may contribute most effectively to the overall business objectives. But employees are increasingly expected to make decisions about the conduct of their own tasks and responses to customers. As a result careful recruitment and selection, good training, and enlightened management are important supports to good decision making.

How do you make the best possible decisions, knowing they will have an impact on your company's future?
There are strategies you can use to hone your decision-making skills.  Making better, faster decisions will help you take advantage of business opportunities.

1. Review the problem/decision in a broad context to include as many perspectives as possible. But don’t procrastinate just to get another opinion.
2. Make decisions as much as possible on facts rather than emotion. It is good to challenge your gut instincts; use objective data to reinforce decisions.
3. Don’t hesitate to challenge the status quo. Staying in your comfort zone in order to be comfortable may lead you on the same path. Change does not necessarily take more effort.
4. Be open to others opinion but trust your own ability and ability of employees to make a well-reasoned decision.
5. Recognize that some constraints may influence the decision; financial constraints, practicality, and lack of resources to implement the decision may influence the path taken.

Decisions are not taken in isolation and the effects of any decision will depend on reactions of others. Competitive behaviour should be anticipated and can influence choices. In the end, the review process needs to be completed with minimum delays and decisions finalized. Respect for action taken with a firm unwavering approach or allowing responsible employees to decide will earn respect from the organization.

Exiting the Business

Determining when and how to exit a business can present issues often more challenging than starting the business.  Here are a few thought starters for owners looking for a way to exit their business.




•  Is the business operated from strong principles of strategy with a clear vision? Can that vision be expressed and understood by those who manage the business or potential buyers? If you the owner cannot clearly state the purpose or reasons that you exist don’t expect new owners to invent it for you.

• How will you get the maximum return if you plan to sell? In cases where management/ownership is dominated by a single individual there is a risk that customers will not have confidence in new ownership unless the current owner can provide an effective transition plan that ensures continuity of the business operations. Current owners may need to plan for extensive transitional training.

• Factors that may support your decision to leave can grow out of many conditions. The most common are age or health related. A long career leading to a desire for more personal time; reap the rewards of your career. Age may not be the prime driver but longevity at the job could be creating burn out. It may be time to move on.

• Look for opportunities to exit from positions of strength. A well trained and competent management group may provide the opportunity to offer your staff a management buyout.  Managers may be able to pool resources to fund the buyout, you as owner may offer to finance all or part of the buyout or there may be an option to use company assets to finance the loans needed for the buyout. It also provides good opportunities for maintaining stability in the organization.

• Finally, the marketplace may facilitate determining the right time to exit. Poor economic conditions or competitive activity can have a huge impact on if or when you should exit. Positive conditions too might bring a competitor to the door with a buyout offer.

So the options are many but not always easy to sort through. Timing is critical, business life changes, choose wisely.

Do your Employees Share Ownership Goals?

There are a number of ways to encourage employees to support ownership goals and enhance the success of the business.

Here are a few ideas:
• Show the big picture. Sharing the business strategy allows employees to see beyond their individual role. Allow upward communication as a channel for employees to share their ideas.
• Reward employees who go beyond the norms of their job description. This recognition and expression of appreciation will ensure that efforts will continue.
• Be transparent. When employees see the full context and options considered in a decision they are more likely to support the organization even if they disagree with the decision made.
• Use collaboration. Higher participation in the decision process yields better buy-in for decisions as employees are more likely to support ideas they help develop.

I hope these options provide a better insight on how to improve employee support for achieving company goals.

Are you tuned in to Modern Leadership?

The work environment is in constant change and qualities of managers leading organization also need to change. Here are a few qualities of Leadership I think help organizations succeed in today’s marketplace.

1. Lead vs Direct
Remove roadblocks for employees in order to help them succeed.  The traditional idea of management was based on command and control.  Employees used to work hard to allow their managers to succeed. Let the managers work to make sure their employees succeed. 

2. Be aware of technology
This isn’t the same as technical expertise.  Managers do not have to all of a sudden become IT professionals. However, managers do need to understand the overall technology landscape and how it is impacting the way work is conducted.

3. Lead by Example
 It used to be good enough for managers to say they supported something, to approve the budget, and say “go for it.”  Managers need to commit to more than just funding collaboration.  They need to be the ones on the ground level using the same tools that the rest of the employees are using. 

4. Welcome vulnerability
Vulnerability is about having the courage to show up and be seen. Vulnerability is part of the key to innovation and creativity.  There can be zero innovation without vulnerability.”  Being vulnerable isn’t about being weak it’s about being courageous; a key quality that every manager must have going forward.

5. Share
Today managers cannot believe in hoarding information. There needs to be sharing information and collective intelligence.  Managers need to make sure that the employees can connect to each other and to the information they need to get their jobs done, anytime, anywhere, and on any device. 

Managers should rely on employees to help make decisions instead of isolating them from this process.
These a few thoughts to establish yourself in a modern Leadership position that can enhance the organization’s success.
Perhaps you can share some of your thoughts. Let me know.

Want to retain Key Personnel?

There is a role for incentives in managing and retaining key executives for the company. Here are some reasons for and examples of how to structure effective incentive programs for management.

1. You want to retain key management personnel for a number of reasons. High turnover destabilizes the company and can have severe effects on moral of employees and the bottom line.
2. You want to retain high performing managers to enhance your own company’s growth potential and to keep key people from wanting to look at other opportunities.
3. Good managers don’t expect a bonus without achievement but don’t set the bar so high as to be unachievable. That becomes a disincentive to achieve.
4. Set goals that help improve your bottom line; just achieving new sales records is not a priority if the costs exceed the benefit. Sales executives should be just as concerned about profitable sales as the CFO.
5. Pay executives for overachieving by sharing profits. As profits goals are exceeded rewards can continue to be major incentives if shared fairly. Reward contribution.
6. You don’t have to give everything away in this process. Be competitive but unique and allow key employees to participate in goal setting. When they are part of setting the goals they are more likely to increase efforts to reach the bar.
7. Conduct periodic reviews to ensure all incentive participants know where they stand. Be completely transparent. If goals are profit based show actual revenue/profit results so that there is a clear understanding of achievements.
8. Roll plans forward and allow incremental bonuses for achievements in consecutive years. That’s a great way to keep a key person from leaving; that extra bonus for additional achievement may be too juicy to walk away from.
9. Stock options are often used as a tool for key employee retention. The chance to be a part of ownership can be major motivator. However recent issues in corporate governance have tended to dilute and weaken some incentives. Try to strive for balance without risking responsibilities to shareholders.
Incentives are an important tool to maintain a motivated and dedicated management team and a well-designed plan can bear fruit over the long term.
I hope you find these thoughts of help in your business. Let me know what you think.
Gerry@polarisgroupmc.com
 

Does your business have high standards for business ethics?

Have you ever wondered how many of the successful businesses get caught in the public spotlight and are criticised for the lack of integrity in the organization.


Clearly culture counts and it starts at the top with senior management or the board of directors. Organizations need to understand that ethics drive compliance and the leadership is responsible for setting the tone.

There are different levels of ethical issues; there is workplace fraud and corruption, sometimes conducted at the highest levels of the organization, and ethical issues relating to how employee and customer relations are handled.

Checks and balances require care in how the organization structure is designed, how human resource decisions are made, and how overall business is conducted. Organization integrity is paramount; when difficult decisions are faced the instinct must be to default to core values.

Too often larger organizations pressure smaller business for concessions they can ill afford but if they don’t concede an entire contract may be lost. This happens even if the original pricing were agreed between the parties. Where is the pride in living up to one’s word? What values are at the core of that behaviour?

Ethics are derived from values and they make integrity a way of life in the organization. Honesty, respect, and responsibility can be pillars on which to build. It is essential that these values are shared throughout the organization through practice in decision making.

Corporate governance is used to promote business ethics and social responsibility. It also creates the framework for guidelines used by all individuals who are part of the organization. Fairness is one of the very basic business ethics concepts as it covers how the organization treats people in its commercial dealings.

The vast majority of businesses are ethical and at least have informal standards expressed through the behaviour of the CEO and senior managers. Anyone working in an organization that seems to behave in an overtly unethical way and chooses to stay or ignore the behaviour is part of the problem.