Are you a Procrastinator?

Think the time you spend answering e-mail, composing IMs, and trolling Twitter doesn’t have an impact? Think again. Procrastinating in making business decisions generates enormous costs from time wasted and decisions delayed.

There are several approaches that may be considered to eliminate this waste.

1. Don’t delay. 
Any time you put something off the problem usually gets bigger leading to more stress and possibly more procrastination.

2. Focus.
Reduce the issue to small tasks and work in short bursts to complete each portion. This focused activity for short periods allows you to get the feel for accomplishment. It gets you started.

3. Prioritize. 
You may never get caught up with everything you need to do. To be an effective leader you have to prioritize and decide what’s important and manage your time effectively.

4. Tune out. 
Turn off distractions. If necessary turn off email, stop answering the phone; give 100% attention to the task at hand.

5. Plan.
Create a daily plan. At the end of each day spend 3-5 minutes setting up the next day’s schedule. It may save an hour the next day while you try to determine where to start your work activity.

6. Be accountable. 
Make yourself accountable to someone for what you want to accomplish. This could be an associate, friend, or business mentor.

A task can more easily be tackled if you visualize it completed. Remember the “Law of Expanded Time”. Work will fill the time available to complete it. By making less time available to complete a task, you will spend less time completing it.

JUST DO IT.

Business Management

Build Cash Flow

In times of a slower economy and when growth is difficult to sustain it is important to stay on top of the company’s finances and to preserve cash.

Here are some ideas to maximize cash availability in the business.

1. Track Cash
Track your cash as it comes in and goes out throughout the month. That will help you stay on top of problems and make adjustments, such as delaying discretionary payments.

2. Work with customers and suppliers.
You can increase cash flow by offering discounts to early paying good customers and preserving cash by having suppliers help by extending payment terms.

3. Protect working capital.
If cash is tight don’t pay for long term investments in equipment. It is better to use debt to finance these projects. Debt can be used to re-finance fixed assets to free up capital.

4. Cut waste.
Make every effort to improve productivity, eliminate inefficient equipment and other sources of waste. Engage staff to get involved in developing solutions.

These are just a few suggestions to improve that most vital business tool – cash flow. I hope you agree.
gerry@polarisgroupmc.com

Management

Are the right managers in place?

It’s important to motivate and reward your best people, but is promotion really the right call? Promoting your best people into management roles seems like a quick fix to show employees you recognize their hard work. Unfortunately, many companies find out the hard way that not every great employee is management material.

Before promoting your best people, here are some thoughts to consider:
1. Is the role correct?
Too many companies have a flawed methodology for selecting people into management. How? They base hiring and promotion decisions on an employee’s past experience, and then reward them by giving them an entirely different role.

2. Managerial talents
Management candidates should have a broad set of skills including:
Ability to motivate employees
Take initiative to resolve problems
Support a culture of accountability
Are able to develop trust among employees
Can make well-reasoned unbiased decisions that benefit their team and the organization.

3. Alignment with Company Goals & Vision
A manager will be representing your company in a more visible way. They’ll be interpreting company goals for a team and ensuring organizational objectives are achieved. It is important the employee in question is strategically aligned with company goals and culture. If your company culture says, “The customer is always right,” then managers should embody this mission statement. Just because an employee excels at the day-to-day work of an organization, however, doesn’t mean they’ll be great with big picture initiatives.

4. Are they Communicators?
Communication is important, but listening is essential.
Managers need to listen up and down the organizational chart so they can clearly communicate workflow to their team. They need to not only listen to what is being said, but understand what is unsaid among the employees they manage. If a manager is more focused on their work than their workers, this could spell bad news in a management setting.

5. Do they want to manage?
Not every superstar employee wants to become a manager.
Your top-notch sales rep might have become invaluable because they really love the work they’re doing. You want to reward them by giving them a manager position, but what you’re really doing is taking them away from the work at which they excel.
If the candidate doesn’t seem motivated to manage, find another way to recognize and reward their hard work and find someone more suited to the management lifestyle.

Bad management can truly hurt your company, kill employee morale, and bring down your bottom line. Before promoting someone to a management position, ask yourself these questions in order to ensure you’re making the right decision.

What is the State of your Capital Needs?

Finding a supportive financing institution or bank is the start of one of the key relationships in the life of your business. Understanding how potential financers look at a business can increase your chances of success in landing the financing needed.
Outside views will take an objective look at your business that might not be consistent with your vision.

Sometimes entrepreneurs think they should receive more money than the fundamentals of their business merit. They also often underestimate the riskiness of their project.
At the same time, entrepreneurs shouldn’t forget that banks and other financial institutions are in business too and need to find and keep clients. That can make them an invaluable resource for new business owners.

Whether your plan is to start a business or expand your existing company, here are some key factors to consider when seeking financing.

1. Types of financing
There are two types of financing: equity financing and debt financing. When looking for money, you must consider your company's debt-to-equity ratio. This ratio is the relation between dollars you've borrowed and dollars you've invested in your business. The more money owners have invested in their business, the easier it is to attract financing.
- If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged to the point of jeopardizing your company's survival.


2. Your financial capacity
Having a solid credit history says a lot about your trustworthiness and ability to run a successful, profitable business. A willingness to put a significant amount of money into your business will show your lender that you are committed to the project and willing to share the risk.

The lender will also want to know how you are going to use the money, when and how you are going to repay your loan and whether there’s any security that can be pledged against it such as equipment, buildings or personal property. It might take two or three meeting to sort everything out.

3. Know your break-even point
- Breakeven analysis is a tool used to determine when a business will be able to cover all its expenses and begin to make a profit. For the startup business, it is extremely important to know your startup costs; you need to understand the level of sales revenue needed to pay the ongoing expenses related to running your business.
- A startup business owner must understand that $5,000 of product sales will not cover $5,000 in monthly overhead expenses. The cost of selling $5,000 in retail goods could easily be $3,000 at the wholesale price, so the $5,000 in sales revenue only provides $2,000 in gross profit. The breakeven point is reached when revenue equals all business costs.

The lender wants to see that you have built your plan based on a sound analysis that takes into account the market, the competition and the economic context. Do your own research and show that you know the trends, the opportunities and the risks when you present your plan. This boosts your credibility and a simple, concise presentation of facts and figures will back up your statements and business plan.
Good luck with your planning, I hope this brief outline helps.
gerry@polarisgroupmc.com

Succession Planning

Are you ready to pass the baton?

How much time have you spent recently preparing your organization for the future with a succession plan?

Too often owners of business have given no thought to how their business continues past their time or even who should be in line for succeeding others in key positions.

There is a fine line between structuring an organization so strong back up is available for all key positions and being top heavy with management staff. While it is important to develop and maintain an organization chart that identifies potential replacements for key positions it is a plan that must be kept confidential among only a few very senior managers. Clearly if the succession plan was broadly known the group of subordinates would constantly be chafing at the bit to move up the ladder. 

The succession plan should be updated regularly. Performance of employees change, new stars arise and training of key individuals to broaden their experience becomes important elements of the plan to maintain.

In small family organizations succession plans may be even more important. The owner may have family members who she/he would wish to carry on the business but are they qualified? Are there competing siblings who vie for the role of president and how does the current owner resolve that issue?

A well-developed plan not only provides for a smooth transition when needed but also can be a critical tool in situations that result from an untimely injury, illness, or death of the owner. You do not want a vacuum created from the absence, for any length of time, of leadership in the business. A prolonged absence of an identified leader can destabilize the business and lead to losses and in extreme situation lead to the collapse of the business.

The owner or president of the business has the fiduciary responsibility to be proactive and protect the business and ensure survival is optimized. That means an active role in preparing for his/her exit and change in other key management positions. 

You never know when there will be a need to pass the baton.

Financial Monitors to Focus on

You don’t need to be a math wizard to understand which numbers can tell you how well or how poorly your business is doing.
But you do need regular financial updates and the discipline to sit down and check the key performance indicators that matter most: sales, profit margins and cash flow.

Modern accounting software makes it easy to generate financial statements so you can perform some quick calculations to check the financial health of your business.
Here a few key areas that should be monitored monthly to enhance the opportunity of success.

1. Growth
Are your sales and profits increasing or decreasing year-over-year? Is there a trend?

2. Gross profit margin
Indicates the profitability of the business and reflects your control over cost of sales and pricing. You may want to compare this ratio with prior financial periods or industry data.

3. Inventory turnover and Customer Base
Measuring the number of days it takes to sell inventory allows you to adjust your pricing or marketing. A low number means stock is being sold quickly. In addition to profitability, a growing customer base is a sure sign that you are effectively reaching your target market, and reaching your target market is what your business is all about. The long-term growth of your company is tied directly to your ability to not only reach your customer base, but to expand it to accommodate your long-term goals.

4. Liquidity
The most common liquidity ratio is the current ratio, the ratio of current assets to current liabilities. This ratio indicates a company's ability to pay its short-term bills. A ratio of greater than one is usually a minimum because anything less than one means the company has more liabilities than assets. A high ratio indicates more of a safety cushion, which increases flexibility because some of the inventory items and receivable balances may not be easily convertible to cash. Companies can improve the current ratio by paying down debt, converting short-term debt into long-term debt, collecting its receivables faster and buying inventory only when necessary.

These are a few of the measures to check regularly. I hope the comments help.
gerry@polarisgroupmc.com

Struggling to deal with a crisis management plan?

 Is your organization struggling to deal with a crisis or plans to ensure the business exposure to a crisis is minimized?  It is not uncommon to see this paralysis because managers often prefer not to deal with the situation.




Here are a few steps that can be taken to help build a safety net.

1. Maintain sensitivity for even minor or seemingly insignificant events. Some could have the potential to develop into major issues that could be a blow to the business.

2. Plan ahead with a look to long term strategies as a guide. Work out best and worst case scenarios to help prepare for unseen events.

3. If a crisis arises act quickly; procrastinating rarely improves the situation.

4. Create a crisis management team with a mandate to trouble shoot, identify potential problems and empower them to recommend and enact changes to protect the business.

5. Provide strong and effective training to key employees and take steps to eliminate small issues so they don’t erupt into major problems.

6. Explore optional solutions and look for new ground to operate from if standard solutions prove inadequate. Think outside the box for solutions.

7. Don’t panic in a crisis situation. As the leader employees want strength. Keeping a cool head may facilitate focussing on the issues and getting a solution right.

The key to avoiding or minimizing the impact of crises that may arise is to be proactive ahead of adversity. I hope these tips provide insight into ways to fight through any situation that may arise with minimal damage to your business.