by Russell Cummings | Aug 3, 2010 | Business Tips, Leadership, People
What makes the difference between a successful business person and one who struggles to get by? Of course there is no single factor as there are many skills that a business owner must possess if they are to realise their goals.
One of these factors is to first have a goal, it may seem obvious, but in order for one to ‘get there’ one must first decide where there is. I am constantly reminded of this simple fact through my consultancy work with businesses of all sizes where I see those who can best define their outcomes are generally the most successful.
However having a vision is not enough, successful people work hard on constant improvement. They know they have influence over their destiny whatever the prevailing conditions. They know that by changing their actions or improving their skills in certain areas they can succeed whatever is happening around them. People who readily accept responsibility for their outcomes can be recognised in the way they speak. For example, you will hear them say things like ‘I misjudged the market and bought more stock than I could handle’ or ‘I found that my skills weren’t sufficient to handle the negotiation’. These people have what I will refer to as an ‘Internal Locus of Control’. They are influenced but not controlled by external factors. They take responsibility for the outcomes.
Conversely, if you hear people say things like ‘I would have been successful but the markets turned sour’ or ‘I got caught by the GST and had to sell the business” they have an ‘External Locus of Control’. Put simply they blame other people for their failures. Of course those who have an external locus are generally the ones who find it difficult to change. It’s always someone else’s fault or responsibility. They tend to be problem focused, while a person with an internal locus is solution focused. It is through their desire for continuous improvement that successful people see opportunity where others see barriers.
In which category would you place yourself? Listen to those around you and see if you can tell if they have and internal or external locus of control. Listen to your own self talk and note how many times a day you blame something or someone else for outcomes in your business.
There is an ancient saying, ‘For a forest to be green each tree must be green’ so why not consider adopting an internal approach to business management and enjoy the satisfaction that comes from knowing that you can influence the outcome whatever the challenges.
by Russell Cummings | Aug 3, 2010 | Business Tips, Process Improvement, Technology
Are you working with clients, suppliers or staff at a distance? How can you improve the interactivity of your distance communications?
Broadband speed internet access can revolutionise the way that you can communicate at a distance. This can have enormous cost savings for your business as well as improving relationships.
We are currently using a combination of these technologies in a variety of ways.
I use VOIP as my daily phone service and also use Skype to communicate with colleagues and clients on a daily basis, often using video. I use Instant Messaging via Skype for quick responses and to see whether people are available for a call.
I have found that recent innovations at GotoMeeting, mean that the Conference Call service is being used less and less. I am using GotoMeeting more and more as it makes for far more productive Conference Calls.
We have been using the Webinar feature of GotoMeeting to assist in the delivery of on-line training, especially across organisations with offices in multiple locations.
These tools are outlined below.
VOIP: This stands for Voice Over Internet Protocols as is basically about transmitting voice calls via the internet rather than over a phone line. This results in fantastic cost savings.
There are basically 2 types of VOIP service: hardware and software.
- Hardware VOIP Services: use a device (like a modem) to convert your voice into electronic signals and transmit over the internet. It is just like using a normal phone and costs are in the vicinity of 10c to 15c per call for local and national calls (untimed). Calls to mobile are more expensive and international calls are usually very competitive, Using a VOIP service on my office phone has cut my phone bill by 75%. There are number of providers (most ISP’s offer a service) but I have used www.engin.com.au as they were competitive on price and service. You will usually need to purchase an adapter.
- Software VOIP Services: www.skype.com This is a software system that allows you to make telephone calls from your computer using VOIP. Calls from computer to computer are free and you can also have free video calls if you have a webcam . Skype also allows you to make calls from your computer to landlines at a cost similar to hardware VOIP.Sign up is free.
Instant Messaging: use this to send short messages instantly. It is great for checking whether people are available for a phone call or for simple questions. Solutions are included with Skype but are also available through Yahoo and Microsoft.
Conference Calls: There are a number of low cost Conference Call Companies that enable you to make conference calls often at a big discount to the big players like Telstra.. One of the simplest and best in Australia and New Zealand is www.hotairconferencing.com.au and I have found their costs to be about 50% of the big guys and the system is much simpler to set-up and run.
Online Meetings: There are a number of great solutions for conducting on-line meetings. These solutions allow you to have multiple people “attend” and to see whatever is on the presenter’s screen. This can be a PowerPoint, spreadsheet, document, database, etc. They include full audio and the ability to record your meetings.
I have been using www.gotomeeting.com which has a fantastic built in audio system. Another very popular program is www.webex.com both are reasonably priced with free trial services. The Perfect Storm webinar was recorded using Webex.
Both suppliers also have Webinar options which are tailored to this expanding market and enable you to market, manage and deliver a webinar with multiple speakers to up to 1,000 people. It is very cost and time effective.
by Russell Cummings | Aug 2, 2010 | Business Tips, Leadership, People, Planning
Most businesses know that they need to change the way they operate in order to achieve maximum profit and/or revenue growth, however most fail to actually do it.
Most Business Managers know that they need a plan to guide their development process but most fail to develop one despite the fact that there are literally thousands of guides, training programs and advisers available to assist in this development process. WHY?
I believe that one of the primary reasons is that traditional planning processes fail to take advantage of your CHANGE POTENTIAL, which is your ability to implement change in your business and life.
What factors do you need to address if you are wanting to make a change? These are the individual elements of your change potential.
How do you maximise your change potential?
Your ability to change will be influenced by three things. Your level of dissatisfaction or motivation, your Vision for the future and the quality of your plan for achieving your Vision. The combination of these 3 simple things is what drives people to change.
We have developed a simple formula to measure your change potential. There are 4 things you need to do:
- You need to know how the change formula works.
- You need to know how to create Dissatisfaction (motivation).
- You need to know how to create Vision; and
- You have to be skilled in developing a Plan that works.
If you can maximise your performance in Dissatisfaction, Vision and Plan, you can maximise your change potential.
Dissatisfaction
Pain is a great motivator in the short term. If you can get your organisation to be dissatisfied with, or motivated by, their current performance, it will create an energy you can use. If you are not dissatisfied with your present situation or are too comfortable, it will be hard to find the motivation or reason to change.
If you had to rate the level of dissatisfaction or motivation in your organisation out of ten what would it be?
A score of 0 would indicate total happiness (low motivation), 5 generally satisfied (average motivation) and 10, total dissatisfaction (highly motivated). If you are extremely dissatisfied then you are most probably highly motivated. If you are highly motivated score yourself higher on the scale.
Vision
In a similar way, rate the level of vision in your Business. Vision is a critical element because it provides a picture of what will be achieved.
Score yourself from 0 to 10 on the quality of Vision in your business.
If you have a well articulated Vision that you have documented and that you can draw a picture of, then rate yourself higher on the scale. Rate yourself higher the longer the time frame covered by your Vision. If you have never really thought about where you want to be in the future and don’t have a clear Vision, then give yourself a low score closer to zero.
Plan
How would you rate the level of commitment, involvement and belief in your business plan? Most businesses don’t score well in this element.
Again use the 0 to 10 score. If you have a well documented plan for achieving your Vision with strategies, priorities, actions, timings and responsibilities then score yourself near the upper end of the scale. If you have a very rough plan stored in your head then score yourself towards the lower end.
Calculate your Change Potential
Once you have scored each item, multiply the scores together to get a total value for your change potential. D x V x P = Change Potential. What is the score for your Business or for you as an individual?
Example
Formula D x V x P = Change Potential
Maximum = 10 x 10 x 10 = 1000
Your Score ___ x ___ x ___.= ____
What scores do you think the best performing businesses (or individuals) would have? Typically they are highly motivated, have a very strong sense of Vision and have great plans. Scores in these businesses are usually in the vicinity of 10, 8 and 8 for D.V and P , respectively, which gives them a total score of 640 out of 1000 (10 x 10 x 10) or they are using 64% of their change potential.
How do you compare to the better performing business?
How can you improve your score?
In which area (D,V or P) did you have the lowest score? What can you do to improve this score? What can you do to improve your score in the other areas? Set up some action plans.
Don’t feel discouraged if you scored yourself at the bottom of the range as this means that you have a lot of unused potential. In my experience, most business managers score between 10% and 30% using this methodology. To maximise your change potential, I believe that you need to lift your score to greater than 50%.
But what if I don’t want to change?
“Change is inevitable you can drink it as soup now or take it as an enema later! Either way, you will change! “Anon.
In other words, you can embrace change now or have it forced upon you later but there is no escaping it. This is a quote from a good friend of mine (who shall remain nameless) who is a gifted commentator on world events.
Unfortunately, in today’s fast moving business environment avoiding change just isn’t possible. All businesses change even if they don’t know it. Changes in customer expectations, communications technologies, legislation, banking and finance all occur without us even being aware of it! Therefore not changing just isn’t an option!
The key is to be aware of the changing environment and to adjust your plans to include appropriate elements of change. A good planning process will include a process for prioritising the implementation of your plan which will filter out unnecessary changes and include essential developments.
by Russell Cummings | Aug 1, 2010 | Business Tips, Planning
Introduction
Developing a 20 year life plan is one of the most powerful actions you can take to focus your energies in your personal and business lives.
The key to business success is developing a business that meshes with your personal goals and ambitions and that meets with your personal values. Failure to align your personal and business activities with your goals and values is the major cause of stress in most business people.
Developing a 20 year life plan is a simple and effective way to start this process. It is easy to do and we have developed a simple model and format to help you complete this essential task.
Make sure you take time to review your 20 year plan at least once per year as we all know that as we grow and develop some of our plans and objectives will change as well. I have found that our 20 year goals have changed little in the time we have been life planning, but that the shorter term goals have changed.
Remember that you are most likely to over-estimate what you can accomplish in 1 year but will severely under-estimate what you will achieve in 10 years!
How to Build Your Plan
Developing a 20 year life plan is relatively easy. We have broken it down into a simple process. Find some time (allow an hour) and complete the plan. It is quicker than you think to do your own plan.
We want you to start at 20 years and work backwards through 10 years to 5 years and finally 1 year. At each stage, answer the 4 questions below with reference to your previous answers. For example: At 10 years and the “What will I own?” question – ask yourself if we are to achieve the assets owned in our 20 year Vision, what will need to own by 10 years?.
At each stage in the planning process, we want you to answer 4 key questions:
“At this stage in your life:
- What will you BE?
- What will you have ACCOMPLISHED?
- What will you be DOING?
- What will you OWN?”
These are the suggested headings for each stage, but don’t feel that you are restricted to these headings. Add additional headings as required.
Remember: there is no right or wrong way to answer these questions. You can interpret the questions in a way that makes sense to you. We have provided some guidelines for those who may need more information.
What will you BE?
Think through the various roles you will have in your life at this stage. What are they? Father, mother, grand-parent, sibling, scholar, friend, mentor, etc. Think carefully about the roles that you would like to have and why. Write them down.
What will you have ACCOMPLISHED?
At this stage, what will you have accomplished? What achievements will you be proud of? List them.
What will you be DOING?
This is different to the roles you have outlined in “What will you be?” but maybe supportive of those roles. What activities will you be involved in? business, travel, family holidays, community work, etc. List them.
What will you OWN?
What assets will you have? What will your debt structure look like? Be as specific as you feel you can. Where possible put $ amounts next to asset items. List the major asset groups eg. houses, cars, “big toys”, investments, business assets, savings, etc.
8 Steps to your 20 Year Plan
Step #1: Where will you be in 20 Years?
Begin by developing a Mindmap (or by making a list) of the 4 headings. Expand on each question and add as much detail as you require to give a complete picture of 20 years. Then move to the next Step.
Step #2: Where do we need to be in 10 years?
As discussed above, answer the questions by thinking about your 20 year plan. If you are to achieve your 20 year goals, what do you need to have achieved in 10 years. Make a separate mindmap (or list) for 10 years the move to the next step.
Step #3: Where do we need to be in 5 years?
As for 10 years, develop a separate mindmap or list for where you need to be in 5 years.
Step #4: What will things look like in 1 year?
With respect to your 5 year plan, answer the questions for 1 year out. Complete a separate mindmap or list.
Step #5: Where are we NOW?
Complete the 4 questions to get a good picture of where you are now. Make a separate mindmap or list.
Step #6: Compare and consolidate your Plans
We recommend that you compare your plan with others that it may influence eg. your spouse or life partner. We recommend that you start at 20 years and each participant completes their own Vision for 20 years. Then compare your 20 year plans and develop a composite view. This will usually entail some discussion and even compromise between the parties. Then move onto the next time period and repeat the process.
Step #7: Develop some action plans
As you have completed a picture of WHERE you want to be and where you are NOW, you are able to develop some actions plans – The HOW.
Start with HOW you will move from NOW to your Year 1 Plan. What strategies will you need to implement? What actions will you need to take? Select the 3 most important Strategies and enter into the Table below. Break each Strategy down into the 5 key actions that will progress it towards your goal. Allocate responsibilities and timeframes to each action. Use the table below to record your action plan.
If you are unsure of exactly of how to develop an action plan we suggest that you forcefield the issues.
Once you have completed your 1 Year Plan, schedule times to work on your plan and monitor your progress on a regular basis. You can also begin to work towards developing your actions to move you towards your 5 Year Goals.
Step #8: Review the Plan
Allocate time in your schedule or make a note to review your 20 Year Plan in 12 months time. Start from the beginning and review your 20 Year goals and see that they are still in line with where you want to be. Then simply work your way back. It is best to review your plan with your spouse or partner to ensure that your plans are not diverging and to reach a consensus on where you would like your life to be.
| Strategy |
Actions |
Who ? |
When ? |
| Strategy # 1. |
1.
2.
3.
4.
5. |
|
|
| Strategy # 2. |
1.
2.
3.
4.
5. |
|
|
| Strategy # 3. |
1.
2.
3.
4.
5 |
|
|
Setting goals and planning your future is a critical element of business success. If you don’t know where you are heading personally then it is unlikely that your business will help you to get there. Do the plan – revise it regularly and work towards your goals.
by Russell Cummings | Jul 30, 2010 | Business Tips
What are the Cash Drivers in your Business?
There 3 primary cash drivers in any business and 3 secondary drivers. The primary drivers are responsible for the overall amount of cash that you generate. The secondary drivers are responsible for the amount that you have access to at any given time. It is often the secondary drivers that are overlooked. We will focus on the secondary drivers in this article. What are the drivers?
Primary Drivers:
There are 3 primary cash drivers: Sales, Direct Costs and overhead Costs. Sales generate the cash and then our cost areas remove it hopefully leaving us with a surplus. However, unless we manage the secondary drivers, we often will have a much smaller volume of cash to work available to us.
Secondary Drivers:
Debtors (or Accounts Receivable), Inventory and Creditors (accounts Payable) are the 3 secondary drivers.
Debtors
is money that is owed to your business and is outstanding sales. The faster we can collect this money the more cash you have at any given time and the less exposed you are to the risk of customer or supplier foreclosures.
Collect your debts promptly. Most people pay bills on the “Sqeaky Door” Theory – the more noise the more attention. Send your bills promptly and considering shortening your billing period from monthly to weekly or fortnightly. Do not extend payment terms rather create incentives to pay early.
Secondary Driver 2: Inventory
Like Debtors, inventory levels can climb in periods of high growth. As we have already paid for the stock (or raw materials) on the shelf, this removes cash from the system until we can sell the product. In service industries, inventory is usually accounted for as Work In Progress (WIP).
Most businesses do not have an accurate inventory. It is usually very easy to set-up a simple monitoring system and requires some forethought, but as most business are usually carrying way to much inventory, there is plenty of room to move and plenty of cash to recover!
Think of ways that you can reduce the level of inventory. Ask suppliers to deliver on a Just-In-Time basis or to stock-pile on your premises and you only pay for what is used. Introduce better sales feedback mechanisms that help you control inventory. Introduce visual management systems or bar-code systems to help manage and control.
Secondary Driver 3: Creditors
Creditors or Accounts Payable is money that you owe to others. Paying your bills too quickly can remove cash from your system and paying too slowly can cause problems with suppliers and destroy relationships that have taken years to build.
Generally, we recommend trying to pay within acceptable payment terms for the supplier, especially key suppliers. If the Supplier is silly enough to offer 60 day terms, the take them. Use credit cards to gain you extra days of free credit and to access reward and loyalty programs.
Cash Management Tips
There are several other reasons why business managers don’t plan:
- Monitor your cash drivers, especially the secondary drivers;
- Collect your debts as fast as possible. Offer incentives for quick payment;
- Manage your inventory levels – this is the hidden cash problem in most businesses.
- Be a responsible Corporate Citizen and pay your debts when they are due, but don’t pay them any earlier than you need to.
- Pass on the GST, if you have been tempted to absorb the costs. Most consumers have learned to accept the cost.
- Keep your books up to date – minimum monthly. If this means that you need to invest in a better accounting software solution, then do this.
- Use the data available in your business to monitor it.
Next Steps:
Review your accounting software. Is it up to the task? Use it to monitor you cash drivers. If not, set up a simple spreadsheet.
If you are using MYOB, get a copy of the CD-ROM based training program “MYOB & GST”.