Knowledge Center

How Accounts Receivable Impact Cash Flow and Net Profits

The extension of ‘credit’ is often very lax in the startup phase of a business, and usually, no written policy exists. Past due accounts receivable is often a result of not clearly defining the customer’s expectation, granting credit to customers without consistent criteria, and a lack of disciplined follow-up ofaccounts receivable by the business. Businesses with significant past due balances have ‘trained’ their customers to expect a lax or non-existent collections effort.

These outstanding receivables are costing the business money. The business has already expended time, resources, and cash on providing the product or service to the customer. No matter what type of accounting is used, Cash or Accrual, the business has not received payment, and therefore ‘cash.’ Consider past due balances as a ‘gift’ to the customer until paid. Once a business owner recognizes that they are giving away their hard-earned business, they are more likely to pay attention to past due to AR.

Start By Reviewing The Balance Sheet and Accounts Receivables Aging Reports.

Look for ‘past due’ account balances and aging. Determine the percentage of aging based on total AR or Sales. If there is a significant amount of ‘past due’ AR, it is likely that much of it has been ignored due to infrequent reporting or not wanting to ‘aggravate’ existing customers by requesting payment, or perhaps no policy is in place to define credit terms or collections policies. The first step to resolving large past due balances is to STOP extending credit without clear criteria, customer vetting, and adherence to a written policy at every level.

The next step in the process is to analyze past due credit balances, starting with the most significant balances. First, make sure all customer credits have been applied to the appropriate invoices. This is referred to as ‘housekeeping’ tasks. Most successful past-due collection efforts start with the 61–90-day balances. If the client has a great deal of over 90-day balances, much of this debt will be difficult to collect and may need to be ‘written off’ as a Bad Debt expense. Bad Debt expense goes directly against Net Profits and is contrary to achieving long-term wealth and retained earnings.

Establish a Collections Approach

The recommended past due balance collection approach is to start with a phone call. Phone calls are more personal and offer an opportunity to connect with and understand your customer. If you must leave a message, identify yourself, state the reason you are calling, include pertinent invoice information, and request an action such as ‘Please call to resolve past due balance today.’ Sometimes, this process discovers something as simple as an invoice that was lost or misplaced. These situations are easily remedied, result in payment, and often establish greater customer loyalty for understanding and resolving the issue. During the initial phone call, it is always important to establish that there was no problem or issue with the product or service.

Always attempt to get payment over the phone if possible. It is also best to give the customer a couple of discrete options such as ‘pay half today, and the balance in XX Days’ instead of asking open-ended questions like ‘when can you pay the past due balance?’

A detailed log of collection activity and conversations is essential to reducing past due balances. This log is helpful as the process progresses and signals to the customer that you are serious about collecting past due balances. Immediate follow-up to confirm the phone conversation is another key success factor in managing past due balances. An email or letter sent immediately after briefly recapping the conversation and commitments may help reinforce the collection action. These written follow-ups also are referred to in potential future discussions if obligations are not kept. Make sure to identify to whom you are speaking in notes and follow-up correspondence. Often you need to escalate who you need to talk to if past due balances continue to be unresolved. If a customer gives an excuse that they need someone else to do something, then contact that ‘someone else.’

Establish Solid Policies and Stick To Them

Good AR practice starts with a solid credit policy and approval process. STOP the extension of credit without a proper credit approval process immediately. If a Credit Application exists, does it gather pertinent information on the potential account? This should be tailored to the business and consider the conditions that led to existing past due balances and seek information to qualify accordingly. This vetting process is critical to keeping accounts current, and bad debt write-offs to a minimum. If you require a customer to provide banking or credit reference information, follow up to make sure it is accurate and a good credit risk. This step is often skipped but has everything to do with a customer’s creditworthiness. The process of filling out a credit application causes the customer to evaluate their situation and potentially discourages them from seeking to obtain credit currently. By requiring business information, including billing contacts, business longevity, and references, the result of collecting AR balances improves dramatically. Several independent agencies such as Dunn and Bradstreet exist for evaluating creditworthiness and should be used where appropriate. Another good technique is to require that a customer establish good credit by paying for products or services for several transactions before considering extending credit.

Define and implement an AR and Credit policy with buy-in from Owners, financial managers, and sales personnel. Start with a good template and tailor it to the business.

Buy-in from every part of the organization is essential, involving others in the development and implementation process. The credit portion of the policy should establish the vetting process, which makes the final decision, and establishing the ‘credit limit’ extended to each customer.

The AR policy should establish the steps the company will take in monitoring and collecting past due accounts.

Look Within Your Own Business

Often a business owner is quick to judge its debtors harshly, and yet has aging Accounts Payable as well. An assessment of the total AR and AP encourages a complete picture of the business’s cash position, and highlights the need to reduce AR and AP. The old adage of ‘treat others how you would expect to be treated’ goes a long way. Regular review of AR aging reports, along with clear AR and Credit policies, keeps past-due account balances low and bad debt to a minimum.

Utilizing tools such as a cash management system, cash conversion cycle calculations, AR-AP worksheets, and working capital metrics, you will establish good processes and measures to achieve a good cash flow position and minimize bad debt expense. By proactively managing and measuring your cash flow accordingly, you will be able to maximize wealth generation and increase retained earnings.

Importance of Marketing in Business

Marketing is a strategy that businesses do to advertise their businesses. Every business entity needs to understand such a strategy and how to employ it. Business sectors have been using marketing strategies. They even hire people knowledgeable in marketing to help them sell their products. On that note, how important marketing in business?

Marketing and its Importance to Business

There are many important things marketing can do for different business sectors. That is why many business establishments adopt many marketing strategies. Give yourself time to know the importance of marketing to your business.

Marketing helps to boost the sales

Marketing is one way to give information to consumers. This way, consumers will have a basic idea of what is your product all about. They will also know the benefits of buying your products. Marketing educates many people about a certain product. When people are well-informed about your product, your sales will increase.

Marketing creates revenue options

Marketing is a great help for many business establishments to create revenue options. It is when business sectors use different marketing strategies to increase business profits. One way to increase the profit is to reduce the product costs. This way many customers will buy the product.

Reducing the product costs will increase the number of potential buyers, thus getting more sales. It is better to gain smaller profits but consistent sales.

Another way to increase the revenue is to run media advertisements and promotions. It is the easiest way to make people know about your products.

Set better goals for your business

The success of a business depends on its goals and objectives. Marketing can help a business set its goals. By practicing some marketing strategies it will lead to the popularity of their brand. By this, it will motivate the company to maintain its reputation. They will now set clear goals and objectives for their employees to know their targets. These goals will also reach their consumers.

Build a Reputation for your Brand

Another benefit of implementing marketing strategies is to build a reputation for your brand. But it is essential to ensure you are giving outstanding quality and useful products to your target market. This way, you won’t only build an excellent reputation for your product, but also your brand.

Improves Decision-Making

When a company hires a market specialist, they will do everything to boost the sales of your products by making appropriate marketing actions. The first thing to consider in doing these activities is knowing your audience. When the company has known fully their audience, this will help them decide what lines and details they will create in convincing people to buy their products.

The company will gather different tag lines to choose from. Marketing will help them decide what fits and what works for the people.

Types of Marketing

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B2B Marketing

B2B Marketing is the term used for business-to-business transactions. They used this type of marketing strategy when a company sells goods or any other services to an organization.

B2C Marketing

B2C Marketing is another term for Business-to-consumer marketing. This is done when an organization sells its products to people. B2C marketing promotes the business through advertisements.

C2B Marketing

We also know C2B Marketing as Consumer-to-Business Marketing. It is the opposite of B2C Marketing. It is a marketing strategy when consumers give goods or services to a company.

C2C Marketing

C2C Marketing or consumer-to-consumer marketing is a strategy in which the consumers can have an interaction with their co-consumers. It happens when they share a common product or service. This business model enables a customer to transact business with another customer. A good example of C2C marketing is OfferUp and let go apps.

The main objective of C2C is to establish good relationships by helping sellers and buyers. By this, it would be easier for the customers to find products at the same time benefit from it.

How Marketing Strategies Lead to Success?

Every successful business has a story of its marketing strategies. It is the marketing strategies that boost the success of the business. Marketing strategies may include promotions and advertising. It also deals with media relations. Marketing can promote a certain brand, product, and people.

Even though you provide quality goods and services, it can be useless when people do not know about it. One of the marketing strategies is by giving information to consumers. When people are fully aware of your product, it will help in increasing sales. Thus, it means success to the business.

Also, another benefit of marketing strategy is by building a good image for the company. When the company has maintained its reputation and pleasant image to the public, consumers’ trust will increase. This can lead to some companies or individuals investing in them.

Impact of the internet on Marketing

As the world continues to reach advancements in technology, businesses have used it to their advantage. They have used the power of the internet to promote and advertise their products. Using the internet is important in promoting one’s product.

Information about a certain product can now reach many people of different countries using the internet. Consumers can also know a product using browsing on the internet. They can know everything about what a certain product offers.

There are also ways in how your business reaches people.

Bottom Line

Marketing helps businesses reach success. With the right marketing strategies, your business will continue to grow and develop. Finding the best marketing strategy for your business is challenging at first. This post will guide you to determine which marketing strategy will best fit your business and help you succeed. There is no single marketing strategy that will make you succeed overnight. Thus, it is best to do research and try some strategies for your marketing venture.

Author Bio:

Sunny Popli is the owner of SPOPLI Web Development He loves to learn and grow. His key interest areas are to learn and implement the latest & impactful ideas in the field of digital marketing. The SPOPLI Web Development & Services can help you create a friendly website to interact with your clients. This will help you in promoting your products.

How to Design Incentive Programs that Work

To use incentives or not to use incentives, that is the question often being asked by managers in today’s competitive marketplace. Combating high turnover and looking for ways to increase productivity to reduce the cost of processing are the driving forces behind the increasing interest in incentive programs

Experience suggests that the primary reason most incentive programs fail to deliver the desired results is that they are put together and implemented too quickly without adequate thought. To be effective, an incentive program must be tailored specifically to your organization, its people, its jobs, and the company’s culture. A cookie-cutter approach, simply trying to use a program that has worked for someone else, is likely to fail.

The good news is that a well-constructed incentive plan can improve morale, reduce turnover, increase productivity, and have a positive impact on the bottom line.

Pitfalls of a Poorly Designed Incentive Program

Most operations are organized as conventional hierarchical systems with a senior manager, middle managers, supervisors, and staff/operators making up the “org” chart.

Following the appropriate lines of communication and the outlined chain of command are essential in this type of organizational structure. Job descriptions are well-defined. Traditional compensation systems are in place, which includes the appropriated grade levels and associated pay scales. Can incentives work in this environment?

The answer to that question is “Yes.” But before we go any further, let’s take a look at the potential consequences of poorly planned incentive systems.

The same people get rewarded all the time, so the “also-rans” quit trying.
With too much emphasis on individual performance, unhealthy competition develops meaning that people are more concerned about their interests than what is good for the company. There is no incentive for the good performers to help those who are struggling.
It takes so long for people to see the benefit of the program that they give up on it. Weekly incentive programs are based on meeting quality and/or productivity goals every day.

If a goal is missed early in the week, employees see no benefit in struggling to meet the goals the rest of the week.
Unrealistic goals can cause employees to feel defeated before the program gets off the ground.
Complicated formulas for rewarding incentives can give employees the impression the company is cheating them.
Many incentive programs are viewed by employees as simply another management ploy to get them to work harder.
Some managers communicate the workings of their incentive program in such a way that employees see an implied threat of negative consequences if they fail to achieve incentive goals regularly.

Here is an example of how a well-intentioned incentive plan can go awry. On a recent engagement, the manager proudly explained that their incentive program places importance on both productivity and quality and that quality was given the heaviest weight. The manager went on to say that individual employees could receive an additional two dollars per hour for their week’s work if they met the quality and productivity goals set by the company. However, since quality is too important, employees receive no incentive pay if their quality performance is subpar for any one day they worked during the week. So, what is the problem with the program?

After talking with the staff, it became clear that employees have two major issues with this program.

First, if they miss quality goals before their last day of work for the week, a key motivational element is gone.

The focus on quality and productivity fades slightly until the beginning of the following week. The second issue revolves around the method in which the quality of each individual’s work is determined. Some employees feel the quality sampling techniques are questionable, that sample sizes are too small to adequately determine the quality of their work.

How to Design a Successful Incentive Program

How do we avoid the pitfalls that seem to accompany most incentive programs? There are ten keys to developing and implementing a successful incentive program.

A successful incentive program must have as its foundation a solid metrics system that provides reliable quality and productivity data.
Base the incentive on achieving specific cost goals. (Meeting cost goals is, in turn, dependent on meeting quality and productivity goals.)
Find a way to reward both the superstars and those that are showing improvement.
Use a combination of individual and workgroup incentives.
Distribute incentives frequently enough to maintain employee interest.
Don’t keep “raising the bar” to make it more difficult for employees to receive an incentive. If change is required out of economic necessity, explain this to employees before changing performance requirements.
Make the performance requirements clear.
Clearly and simply explain the formula for determining who gets what incentive.
The “reward’ must be meaningful to your employees. Seek employee input regarding your plan before implementation.
Communicate the plan to employees well before the implementation date and answer any questions they may have.

Assume you are spending $56,000 per month on labor expenses. How can we structure an incentive program for this operation?

Designing Group and Individual Incentives

One of the major complaint’s employees have with most incentive and recognition programs is that they focus only on the “superstars” and the tendency is for the same people to win over and over again leaving little or no incentive for others to work on improvement. This approach helps to avoid that issue.

The goal of any company is to make money. Operations contribute to that goal by managing costs effectively. In this case, we have decided to set a goal of reducing our labor expense to $48,000. First, we need to create a pool of money to use as an incentive for reaching the goal. We set aside one-third of the monthly savings, in this case, $2,667, if the goal is achieved with 80% to be allocated for group incentives and 20% for individual incentives.

Using historical data, we can calculate the productivity rate and quality percentage that will yield labor savings. If the group achieves these goals for the month, $2,346 (80% of the $2,667) will be divided among the employees. The percentage of the pool, each individual receives is based upon a simple formula: The number of hours worked by the employee divided by the total paid hours for the month. For example, assume an employee works 120 hours for the month and the total paid hours are 1900. This employee’s share of the incentive pool would be 120/1900 times $2,346 or $148.

To combat the concern that if employees can cut the hours required for the task/project they will be cutting their pay, management must ensure enough work/additional projects are available to keep staff fully employed. If staff is not allowed to work their full 120 hours per month, their support for the incentive program will quickly wane. The goal of the incentive program is to encourage the staff to complete projects with fewer labor costs while meeting productivity and quality goals.

The heavier emphasis on group performance encourages experienced people and top performers to help bring new employees and poorer performers up the curve more rapidly. The sooner they are contributing at an acceptable level, the sooner the lion’s share of the incentive pool becomes available.

Individual incentives are best structured with two components: top performers – those who exceed performance expectations for the month – should be rewarded and incentives for those showing the most improvement over past performance. Adding the “most improved” component gives virtually everyone a chance at the individual incentive pool, too.

To continue with our example, twenty percent of the total incentive pool – $522 – is available for distribution to individuals. One way to allocate this pool is to provide 60% of it to the “top performers” with the remaining 40% going to the “most improved” staff. To performers can best be defined by calculating quality or “error-free” productivity rates for all operators and identifying those whose error-free rate is above the calculated standard.

Error-free or low-rework productivity gives us a simple way to use both quality and productivity performance in calculating incentive eligibility and gives both factors equal weight. If three staff members demonstrate the same error-free performance, 60% of the $533 – $320 is evenly split between them.

To determine who shares in the “most improved” pool, a minimum acceptable level of improvement in error-free performance must be specified. Ten percent for example. The remaining $213 in the incentive pool is divided among those who have shown improvement of ten percent or more.

Momentum, Metrics, and Money

If monthly incentive rewards are received often enough and are large enough to maintain interest and focus; the program will continue to reap benefits for all. However, this approach will fail if a good system is not in place for tracking quality, productivity, and work hours. The incentive program should be reviewed annually for possible changes and tweaks.

The accurate metrics that a good incentive program can deliver reinforces the importance of these types of programs. Improved performance and quality metrics will then enhance the bid and proposal process with more accurate costing. Greater costing accuracy aids the bidding process with more accurate margin determination. Collectively, the combination of all the elements ensures job profitability. Therefore, a well-designed and implemented incentive program that shares operational cost savings with employees is a win-win situation for the company and for the employees.

A solid incentive program that maintains its momentum is a strong contributing component in the execution of the profit program cycle. It provides rewards for staff for delivering productivity and quality, while incentivizing them to continually deliver results while at the same time promoting an increased net profit.

How to Assess Revenue vs Profits for Business Health

Why to Learn How to Assess Revenue

Wall Street judges you on it. Shareholders demand it. Management scrambles to make it happen. Revenue growth is the mantra of modern-day business. Quarter by quarter, the pressure is on for sales numbers to increase. But the question at hand should be: “Is your bank account increasing?” Are you profitable? You may be surprised to learn after assessing your revenue that increases don’t necessarily translate to profitability. There is a very distinct difference between the two.

The difference between profit and revenue.

As is true with most businesses, the common thought within the industry is that profitability is tied to volume. Au contraire! Let’s get out the calculators and do some business math.

For the sake of this exercise, we’ll assume an operation has two customers for whom internal manufacturing costs are $20.00 per widget. A manufacturing reserve fee (much like a retainer) is $500 per month. Customer A has an order volume of 500 widgets per month and will pay $25.00 per widget for a total revenue of $13,000 or $26.00/widget (500*$25=$12,500 + $500=$13,000 $13,000/500=$26.00).

Customer B has an order volume of only 100 widgets per month and will also pay a manufacturing reserve fee of $500 per month plus $25.00 per widget for total revenue of $3,000 or $50 per widget (100*$25=$2,500 + $500=$3,000 $3,000/100=$30.00.)

Which customer account is more profitable to the processor?

At first glance, it may seem like a no-brainer. Go after the big volume customer that is paying more per widget. It’s the smaller customer; however, that will bring greater per widget profit.

The manufacturing profit for Customer A is $6.00 per widget ($26.00 – $20.00 = $6.00). The profit for Customer B is $10 per widget. $30 – $20 – $10). The bottom line is that Customer A has greater revenue, but Customer B has greater profitability. Revenue numbers may look good on paper, but profitability is what you have in the bank.

To make this simplified illustration one step further, we’ll consider the labor costs involved based on the assumption that the time required to process a widget for Customer A is the same as it is for Customer B. If the manufacturing operation had four more customers like Customer B – each with 100 widgets per month – the amount of labor and accompanying expense required to process these 500 widgets would be the same as that required to process for Customer A. Yet Customer B and the four other small customers would bring in a profit of $5,000. Compare that to the $3,000 profit made from processing Customer A’s 500 items. It takes the same amount of work to process the five small accounts as it does the one large one. But you get a bigger return (67% greater) with the smaller customers. The contributing factor is the manufacturing reserve fee. This accepted fee by both parties increases the per widget profitability of the smaller volume customer over that of the large volume account. The fact is that while a large volume account may generate more revenue for an organization, it may not be the most profitable course of action.

Still, it’s big numbers that get the attention of management.

Wall Street rewards revenue growth. However, a company could have a decrease in sales from one quarter to the next but see profitability climb. The irony is that unless revenue rises, stock prices fall. The truth of the matter is: profitability is the real indicator of a company’s health. An investor gets a dividend when profits are up – not just sales.

shifting-profit-to-profitability-is-challenging-but-can-be-accomplished-with-accountability-motivation-and-teamwork

Nevertheless, many manufactures continue to turn down small accounts because they don’t understand the concept of profitability. Given the choice between a single account that will bring 500 widgets and 5 customers that generate 100 widgets each, a production manager will invariably choose one large customer. It’s easier to manage. And it’s easier for a sales associate to sell one high-volume account than to sell 5 smaller ones. When the numbers are calculated, though, it becomes clear that these are not sound business decisions.

Because incentives are based on revenue, salespeople will go to any lengths to win big-name, big-volume, and significant revenue accounts.

Seldom is the priority given to profit over revenue. Take any major industry and think of it as a pyramid. A limited number of companies usually occupy the top tier. Common practice is for most of the manufacturers vying for the business of those few top-tier accounts. Often, to win the business, a price discount is offered, further eroding the profitability. The “lucky” winner of these high-volume accounts may not be so lucky after all.

Not only has the price been driven down, but the manufacturer has more than likely spent quite a bit of time and money to compete for these deals.

A smart alternative strategy is to go after the companies in the lower two-thirds of the business pyramid. They are typically willing to pay full price than to bid down the price that manufacturers do with larger customers.

Another benefit of having several smaller customers than one large one is a risk. It is less likely that you will lose all your small customers at one time. The loss of one high-volume account has a much greater impact on your business than the loss of a single small volume customer.

Refocus on profit by understanding how to assess revenue effectively.

Understanding your business and working smarter are critical factors to achieving success. It is therefore essential that profitability considerations play a major role in business decisions. All decisions must therefore be based on profitability. That means shifting strategies and expanding the myopic view of revenue alone to include a focus on profits. Revenue on its own does not represent the vibrancy of an organization. Many of the past dot-coms serve as prime examples of companies that had millions of dollars on paper but incurred greater expenses than revenue earned. Lack of profit sent them to the annals of failed business ventures.

Perhaps it’s time to look at and approach business differently. Learn to effectively assess revenue, then you’ll make a new kind of history for the record books. One that will be emulated by others for years to come.

Leadership and Succession Planning

Typically, when starting a business, it is very uncommon for the entrepreneurial mind to see itself not being part of that business in the future. As companies endure through time, it becomes essential to the sustainability of the firm and/or its stakeholders to effectively plan for a change in leadership. Most successful businesses understand the importance of succession planning; however, research shows that even in large corporations and their boards, about 46% of them are not grooming a specific successor, and 39% had no immediate candidate if they needed to replace their CEO, therefore, recognizing its importance is not enough.

If large Corporation’s struggle to effectively plan for succession, what can we expect for Medium and Small Business?

The challenge of succession planning when it comes to medium and small businesses it is even more daunting. Some small business owners struggle to know when and where to start. The involvement in the everyday operation of the business or simply not accounting for costs associated with not planning for succession prevents owners/stakeholders to actively and timely prepare for the inevitable, stepping down. This could easily be the best-case scenario; taken into consideration any type of misfortune that can hinder the ability to lead; health issues, family situation, or simply new opportunities that arouse, preparing for their absence is crucial not only for owners and stakeholders but also for key roles and positions in the business.

Changing Times?

The generational change that companies are facing today is revolutionizing leadership lines and succession plans between senior management and the second and third management levels. The entry into the labor market of Millennials and the rise of start-ups has resulted in a change of mentality on the traditional leadership models and begins to establish new rules of the game, establishing the need to adapt quickly to the generational change in top management.

In this new business environment, companies must establish a succession plan that allows them to prepare the best talent so that in the future, they can occupy positions that are fundamental for the permanence, development, and profitability of the organization. Additionally, succession planning is a central axis to achieve the vision of organic growth within a company since it allows to develop, retain, and educate key talent so that business objectives are met.

The best approach that companies should take in facing these new challenges is to implement a strategy of succession for key roles throughout the company. This allows them to recognize the vital or critical positions throughout their different leadership levels and thus prepare for changes in the structures as a result of attrition, resignations or dismissals.

Creating an effective succession plan in 7 steps:

1. Define the context:

For the succession plan to have a positive impact on the company, it is vitally important to evaluate the potential and performance of each of the employees, considering their personal and professional context. On one hand, knowing what motivates them will give the company insight to encourage growth that benefits both. On the other hand, collaborators must be defined in terms of the type of industry, the economy, level of experience, and autonomy, among other things.

2. Definition of concepts and potential:

Establishing who within the company has the potential to assume leadership positions is a job that must be done in conjunction with Human Resources and the first line of command, because not only will the level of experience be evaluated but the soft skills that are fundamental to occupying, for example, a C-Level position. Potential is what determines a professional’s ability to do more.

3. Define performance criteria:

Performance must be measured objectively and under criteria that allow for an evolution within the organization and a positive level of performance to be established from the different performance indicators in each specific position. Having a qualitative and quantitative performance structure allows us to identify strengths and areas for improvement that will have an impact in one way or another on the decision of the ideal person to take over as a leader.

4. Have clarity in the strategy and vision of the future:

Companies must establish a clear strategy that allows them to follow a path that leads them to meet the objectives that have been proposed and, in addition, gives them the opportunity to promote the development and growth of the organization.

5. Build a talent matrix where potential vs. performance intersect (Nine Box):

This is a tool that allows evaluating the potential and performance of each of the employees in order to make decisions about the people who should be kept, those who are in the process of growth, and the actions that should be taken with the people who are underperforming.

6. Know the type of position and the associated risks for the person who occupies it:

Thoroughly investigating the position to be replaced and knowing what the risks are for those who occupy it makes the search for a candidate’s desired profile easier since it allows to have knowledge of skills that the person who is going to occupy this position must have to succeed.

7. Recognize the experience that potential candidates must have for each position:

Immersing yourself in the professional life experience of those who apply to be part of the company is especially important. Ideally, the candidate who is chosen to fill the position must have all the necessary skills and share the values of the company.

Having a succession plan in any size company allows businesses to have employees more aligned and aware of the organizational needs that exist, therefore, it is easier for them to understand and grasp the changes that are necessary to achieving continued growth of the company.

¹Harvard Business Review: Research by Heidrick & Struggles and the Rock Center for Corporate Governance

How to Manage Time Wisely for Effective Business

Defining time management.

It would be easy to think that 19th-century writer, Leo Tolstoy, was thinking of the challenges a small business faces, when he wrote, “The two most powerful warriors are patience and time.” How many times do we think about or talk about time in a day? How much more productive could you become if you were able to manage time better?

Consider time as a measurement of the progression of events, with an emphasis on “progression.” While everyone has the same amount of time–1440 minutes each day—why do some people seem to have more of it than others? Most every saying about time can be applied to a business. “Time is money”, “time flies”, “time is lost, but seldom is it found”, “time cannot be replaced or put on hold, but it can be killed or wasted”, “Time brings all things to pass”, and many more.

Time is an essential resource for a business.

Eight hours doesn’t seem to provide enough of it. There never seems to be enough of it. Is this true for every small business?

Time management is the result of proper planning and analysis. The business manager must know and apply sound management techniques, anticipate and identify the source for any possible issues, and analyze the results to maintain an efficient workplace with the outcome of raising productivity. Of all managerial resources, time is the most discussed but least understood. No one has enough, yet everyone has all the time in the world. Time is not the problem in the workplace. The way we spend and manage time in the workplace is the problem.

A successful time management process is personal, and it must match the manager’s circumstances and style. Changing old habits requires an effort, but it offers benefits beyond increasing productivity. The result is the feeling of accomplishment and satisfaction for completing work activities by the end of the day. It is the freedom made possible by a system where the “to do” list items are checked off. It is enjoying going to work because “the same old same old” is not the same anymore.

Time Management Skills

To understand the best time management skills, it is essential to realize that many of the beliefs for time management in a business setting are merely false.

An active workforce equals accomplishments. (AKA, Busyness doesn’t necessarily result in business).
Staying busy means a lot of business is being done because busy workers accomplish the most. “Busyness” and “business” are not necessarily related. Until an employee has proven a proficiency for results, it is a mistake to believe that just because an employee is busy, they are getting work done. Employees must have a plan before they start work. It is a poor use of time to get started on any work without a plan. Taking the time to create a strategy for completing the task at hand saves time and guarantees a greater chance of success.
The owner or manager always make the best decisions.
The owner, or anyone who has “been around for a while,” possess the knowledge to make the best decision. There are times when longevity and familiarity hamper open-mindedness for seeking a new or more progressive way to conduct business more effectively. Often non-management and lower-level management employees can offer insight for ideas and methods to improve the business by making it more efficient.
Practice delegation to save time and increase efficiency.
Delegation saves time because tasks are completed faster. Effective delegation saves time, but initially, it takes more time. Consideration must be given for what should be delegated. Expectations must be communicated, and time for coaching and counseling, along with analysis, must be allowed to achieve the desired performance. While not a shortcut to avoid responsibility, delegation saves time only if it is done effectively because training others to accomplish the goal can leverage valuable time. A manager who refuses to delegate or, when he does, does not ensure that employees can do it correctly, will be less efficient.
Some managers are irreplaceable.
Many managers have illusions of Concluding that the business could not survive without their continuous attention; some managers pass up vacation, work long days, and weekends and wonder why they are not appreciated more. Their refusal to let others make decisions increases their workload and paperwork has the opposite outcome of proper time management.
Managers who are successful are the most efficient.
Successful managers know how to manage their time best. Having excellent time management skills does not ensure success. Managers can be instrumental at some components of management but may be performing unnecessary work.
An open-door policy means always being available.
An open door improves a manager’s effectiveness in dealing with his or her team. Unfortunately, the open door has come to expect the door is always open. Availability does not guarantee success. On the contrary, the always available manager finds it impossible to get his or her work done. Active managers should plan for unavailability or quiet time without interruption.
A good manager can fix every problem.
Identifying problems is the easy part of problem-solving. Much effort and time are wasted solving the wrong problems. Failure to determine the real issues causes the manager to waste time.
“Shortcuts” save time every time.
Many supervisory shortcuts are time savers. People talk regularly about saving time—often in ways that compromise their effectiveness and ultimately cost more time. Cutting an important conversation short in the interest of time may leave a problem unsolved and allow it to turn into a crisis. Deciding prematurely on a project without a thorough analysis of the options can lead to a wrong decision—wasting much time, effort, and money in the end.
Most items on a “to-do” list will never be checked off.
There is never enough time. A common complaint is that a manager can’t complete all the tasks and responsibilities of the assigned work. There is a simple approach that will confirm if adding to the leadership team is necessary to sustain or increase profitability. Or, if strategies are required to increase the manager’s effectiveness, who may appear busy but is not sufficient. Consider a simple, two-week system that will yield the answer. During the first week, set aside 15-20 minutes at the end of every day for an evaluative discussion. Consistency is essential. Discuss what obstacles prevented the completion of the unfinished work. List any distractions and label them as isolated or recurring. Distractions and other circumstances that prevent a manager from finishing the desired work should be identified as essential or non-essential to goals and objectives. The second action step is to track every task for one week. At the end of each day, the manager should use the information to tally the amount of time spent on each task. For example, the amount of time speaking with staff due to an unrestricted open-door policy, or time spent fielding complaints from customers who were dissatisfied with the resolution offered by employees for their complaints, time re-working for one of the employees who wasn’t trained or doesn’t care about completing his/her work. If this two-week action plan does not reveal specific areas needed to improve efficiency or remaining on task, such as delegation of particular tasks or creating a policy that limits the amount of time spent on working to resolve staff issues, it is time to modify your expectations for this manager or add to the team.

What does this mean for the small business?

Consider all the areas of the business that are directly impacted by efficiency. Seek input from the team to identify areas for improving productivity. The result is always greater effectiveness. Effectiveness equals success. Success equals profits.

Work with the team to understand that while managers who efficiently manage their time are effective, the reverse may not be true. An inefficient manager can still be effective when they are motivated to exceed the time frame, but these managers are more likely to burn out and quit. Managers who refuse to delegate and train others to do part of their work put the entire business at risk in the event they leave or are unable to work. The adage, “time is money,” is never truer than when applied to a small business. Costs to the company to replace and retrain may include lost relationships and revenue.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Increasing Profitability In A Organization

A challenge facing owners and managers of all businesses is how to increase the profitability of the company. The focus almost always turns to increase sales revenue. The strategy is to increase sales to existing clients, finding new prospects, and/or adding new products/services.

Typically, each of these avenues of pursuit requires a lead time before the realization of the additional revenue. The identification and sale to a new prospect are conservatively less than a thirty to sixty-day effort. With more complex, larger volume, and more expensive sales, the elapsed time can easily be three to six months.

Even after the sale, there is a delay before revenue is recognized. The elapsed time required for delivery, installation, and billing can easily add another month. In the best of cases, companies recognize a 30 – 45 days sales outstanding on their receivables.

So, in a best-case world, we might be able to realize increases revenues in as little as 60 days, but more realistically, it can take more than two months before additional revenue appears on the bottom line.

What would be management’s reaction to a proposal to increase profitability in less than sixty days? Such a suggestion would excite almost anybody in the business. What if this could be accomplished without increasing sales volume? Sales volume could remain the same, and profits could improve!

How Is It Possible?

In most companies, the following operational inefficiencies represent between 10 to 20 percent of sales revenue. In less efficient companies, this “operational waste” may run as high as 30 – 50 percent.

Sources of “operational waste”:

People – Inefficient staffing and scheduling, unnecessary work, overtime, lack of training
Materials – Scrap, wrong supplies, excess inventory
Machines – idle time, excess downtime
Method – bottlenecks, inefficient process workflows
Information – lack of communication, miscommunication, delayed communication
Environment – unorganized work areas, poor or delayed staging of work

Let’s Take a Look

For illustrational purposes, let’s take a hypothetical company that has $10 million in sales. Assume the company earns $1 million in profit before taxes. Also, assume the cost of operational inefficiencies is a conservative 15 percent.

Translated, that means that the cost of “operational waste” costs the company $1.5 million per year.

With efficient operational management practices, assume that with a concerted effort, the cost of these inefficient processing practices could be driven down 5 percent to a 10 percent level.

The savings from improvements in operational efficiency are a cost avoidance or reduction in existing expenses and drop straight to the bottom line as the expenses associated with these inefficiencies have already been accounted for.

Let’s take a look at the profitability opportunity from a 5% reduction in “labor time waste.” Assume a company is realizing a 70% utilization/efficiency of paid hours. (2080 hours/year/staff * .7 efficiency = 1,456 productive hours). A five percent improvement to 75% is 1,560 productive hours or a gain of 104 hours per staff per year. With a labor force of 30 staff members and a labor burden of $25/hour, a 5% gain is $78,000 annually in eliminated “labor time waste”.

It is a rare instance when profitability improvement or elimination of “operational waste” is realized from a single source. The reality is the profitability improvement is the cumulation of waste reduction efforts across all the different lines of business.

The effort and cost to realize these improvements are already included in current expenses. The improvements are recognized by improving processes, increasing efficiency/utilization, and making changes in management culture, methodology and approach.

In a comparison of efforts, a reduction of operational inefficiency expenses from $1.5 million to $1 million per year would require 5 million dollars in additional sales, at a 10% profit margin, to generate an equivalent $500,000 in additional revenue.

In our hypothetical company eliminating 104 hours annually of wasted time per staff member appears to be a challenge. However, when broken down to a daily goal, a savings of 24 minutes per day is a lot less daunting.

To shave 24 minutes of wasted time a day does not require supervisors to implement Draconian controls on staff, but instead focus on the minimization of the small lapses in time control that have crept into the operation over time. An uptick in supervisory diligence of 24 minutes of “operational waste” over a day is feasible.

The following are possible opportunities for reduction of staff non-productive time creep:

Personal cell phone calls or use during work hours. 5 – 10 minutes
Extended or additional breaks. 10 – 15 minutes
Extended lunches. 10 – 15 minutes
Slow daily startup. Prep time before starting the day. 5 – 10 minutes
Early quitting/end-of-day wrap-up/cleanup. 5 – 10 minutes
Time spent waiting for work or changing tasks. 5 – 10 minutes

Improving labor efficiency by cutting half of the estimated 40 – 70 minutes daily non-productive time makes the 104-hour annual goal less daunting.

If the opportunity to eliminate “operational waste” in labor can be easily identified and corrected, how much additional opportunity exists in other areas of the business?

Reinforcing a change in operational mindsets and culture with an operational waste elimination-based incentive program (savings commission) can prove to be an easy and quick way to increase profitability.

Is Pricing Your Problem? Opening the Door to Higher Profitability

In startup and established businesses, the need to maintain a consistent revenue flow is constant pressure on management. In responding to the demands of management, sales efforts for any shortfall are easily blamed on pricing. Claims of too high or non-competitive pricing do occur. They are less frequent than claimed and are an easy scapegoat for failing to win a sale.

For the long-term health and profitability of the business, when presented with the option, always price high.

When you do, you can decide to use the additional revenue to increase profits or increase marketing efforts.

The hesitation and failure to understand the critical importance of pursuing the opportunity to use price to increase revenues is a common problem among large and small companies.

Pricing Strategy Errors

Error One

It is a common and easy excuse to believe sales are being lost because the price is too high when the real problem is the product, service, or company is inferior to the competition. If a product or service fails to meet buyer expectations, the amount of buyer’s risk from failure is greater than the bid price for assurances of superior delivery and performance.

In most cases, price sensitivity is a myth. A business that delivers poor quality or inferior service has a short life span in the market. Every business has or should have a unique selling proposition that differentiates them from the competition. Discounted pricing cheapens the value of the company’s unique selling proposition.

Error Two

Fear is a strong motivational factor in the sales process. The fear of not making a sale, lack of confidence in product and service, and fear of not making payroll and pay bills are prime reasons products and services are undervalued. In the case of the less seasoned salesman, unemployment from failure to sell is a constant companion. Lowering price is a perceived path of least resistance to winning sales. However, underpricing results in lost revenue and creates an impression that the company is struggling or inexperienced when a good, feature-rich product or service is being offered cheap compared to the competition.

Charging true worth enhances the buyer and market’s perception of the company while increasing revenues and profitability.

Error Three

In avoidance of pricing challenges during the sales process, another path of less resistance is for the sales contracts to be written with vague specifications pushing the confrontation with the client over expensive changes and add-ons without proper reimbursement to a later date. It is not uncommon in less structured companies for anxiety over missing the sale to keep prices low and driving vagueness in delivery specifications.

Specificity in product and service combined with clear communication of charges for changes promotes strong client relationships by avoiding unnecessary confrontations and protects revenue and profits.

Pricing Strategy

It is a fact that price drives perceived quality. Mercedes, BMW, and other “Quality Brands” have successfully executed the strategy for years. To be viewed as the best and superior to competitors, price higher. Pricing below that of a competitor promotes an inferior perception; pricing the same promotes a perception of no difference in product/service with competitors.

To protect against the erosion of revenues, price all new products and services above existing products and services whenever possible. Failure to do so erodes profitability and destroys sales morale with lower commissions.

A low pricing strategy weakens your market position and lowers buyer’s perception of your products and services. Price reductions allow competitors to raise doubts with potential buyers about your product/service quality, your market position, and business viability.

Competing by lowering the price is a characteristic of modest business expectations and short-term goals/objectives. A viable market position, consistent revenue, profitability, and strong market perception are reinforced by a higher pricing practice.

80% of Failing Businesses Have Poor Job Costing

Job costing is where your revenue comes from. Poorly designed bidding structure and job costing means that profit margins are decreased or even nonexistent. Conversely, a well designed structure will allow your products to be competitively priced while still retaining useful profit margins. The two biggest mistakes business owners make in job costing are being either too structured or not structured enough. They don’t know where middle ground is, they go from one extreme to the other. Then they become frustrated and give up, leaving a flawed system in place.

Too Structured

Some owners believe job costing must be rigidly structured. However, rigid structure doesn’t equal control.

A rigid structure creates 4 problems:

– no one follows the system because it’s too complicated

– bidding takes too long and no one understands how to do it

– it’s impossible to account for everything, the big picture is lost in details

– managers are left trying to manage things rather than people

Too Unstructured

Some owners believe any system is too complicated, a SWAG (Sophisticated Wild A** Guess) is good enough.

They have customers, but are losing money because:

– bids are not consistent

– the owner is often doing the bidding and not running the company

– no system usually results in an underbid

– not enough variables are taken into account

Unfortunately there is no short cut to accurate job costing. The work has to be put in, the numbers have to be run. There is no template that works for every company in the world. The variables at play are too numerous. But if you don’t have the time or know-how to build an elegant, straightforward system for bidding and price quoting, you should seek outside help. You may know all the factors, but a skilled consultant will be able to aid with developing and structuring a bid process.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

10 Workflow Strategies to Improve Performance

Every business follows a certain workflow but what most businesses tend to overlook is the fact that these workflows can be improved and managed better.

A manager surely understands how certain factors such as costs, efficiency, better collaboration, etc. can change the game for them and help give better profits.

A streamlined workflow maintains a steady environment and gives out more fruitful results. That’s where Workflow Strategies come in.

Before we get onto the strategies to get better at workflows, let us understand the significance of Workflow Optimization.

Importance of Workflow Optimization

Serves as a Time-Saving Concept

It cuts down on the tasks that are often overlapped and saves time for employees that can be devoted to other important tasks.

Cuts down on the Bottlenecks in the Process

Workflow Optimization brings in a standard process that is needed to be followed and thereby cuts down on all the impediments on the way, which ultimately improves decision making powers of the business and brings in more efficiency.

Facilitates a Better Data Management System

A Good Optimized Workflow lets the manager access the history of the whole process in place and manage data in the best way possible.

Now that you are fully aware of what Workflow Optimization would do for your business, let us get down to some of the best practices that you should adopt for better efficiency and higher profits.

10 Workflow Optimization Strategies that you should know to Improve Performance

1. Analyze the Ongoing Workflow Process and Identify Areas during the Process

The only way to go about bringing in an efficient system is by analyzing the current one.

Lookout for how the current process is helping you out, what may be the bottlenecks in the way that may be delaying the task completion.

Actionable tasks for you would be:

Communicate with your employees and get feedback from them to get a better understanding of the problems they may be facing.

Sit down and have a discussion with the team to find the solutions to their problems and optimize the procedure to create a better working environment around.

2. Streamline the process by Automating Routine Tasks Automation.

Automation is an underestimated tool. Most businesses lack efficiency because they do not use automation for routine mundane tasks. Processes can run extremely smoothly if you can find workflow automation software that can work together.

Some of the key areas where you can focus on automation in the process are — Assigning the tasks to the employees, setting deadlines for task completion, automating payroll information, etc.

3. Focus on Prioritizing Projects based on their Importance and Urgency

Believe it or not, your team’s working capacity gets adversely affected when you do not know well in advance as to what project you want your team working on.

This confusion leads to complications and results in compromising with the productivity of your employees.

Actionable task for you would be:

One of the ways you can go about optimizing the workflows is by ranking your projects on their importance.

Once done, you can get down to breaking all the tasks required to be completed and then scheduling the tasks based on their importance in the process.

4. Visualize the process for your Team Members

Who likes a doc full of texts and figures?

We are guessing the answer to be ‘none’ and so should you.

Visual task sheets are more pleasing to your team members and are quite easy to understand and process. Workflows that are broken down and presented in terms of graphs and charts make an efficient way to lay it down for everyone to understand what they are required to do.

One of the ways you can go about preparing this visual mapping is by using Gantt Charts and process maps. These can be a little complicated to create on your own, but the market is full of project management software that can ease out the process for you by creating these charts on its own.

5. Master the art of linking the data to Master Data

Communication, tasks, deadlines, and every other important aspect of the workflow gets lost when there is no proper system wherein the data is managed. That is why linking all the important information as well as data to the master data proves to be effective and saves up on a lot of time that can be utilized effectively.

The master data should be such that it has all the information such as department names, budget details, task allotment, etc. and that information can be accessed by all the team members for better efficiency.

6. Always focus on Re-examining

Let your failures teach you a lesson. Any project comes with unforeseen risks and challenges associated with it, but when these challenges are not tackled well or when your workflow is not altered to take on these challenges, that’s when there is a failure.

One of the important things to do here is making an examination of your workflow every now and then – a part of your workflow. Examining from time to time lowers down the chances of unexpected problems that one may face in the process. That is how you can actually optimize your workflow.

7. Keep an eye on the Budget and Allocate Budgets Effectively

Budget Allocation is quite an essential aspect of the workflow. A project that can deliver upon the objectives of a project but cannot keep up with the budget allocation is quite a common example of project failure.

It is of utmost importance to keep all the costs in place, allocate effective budgets to different departments that probably would not need to be revised in the future. Since there are always hidden costs, there should be a plan to manage those by cutting off budgets from required areas.

8. Don’t Underestimate the power of Proper Training

Training can enhance productivity and efficiency of the team by a great amount. It is important to have adequate training processes in place to ensure that workers perform their jobs effectively. This involves streamlining training processes so that workers only receive the training they need.

To do this, you need to make sure that your team members are well aware of the task allocations and their role in the process. Once they do, inform them well in advance of the training schedule for them.

9. Make use of the Tools Available

Most companies are now using software available in the market to regulate their workflows and optimize their workflow management. No doubt, it is a great way to streamline the process if adapted by the team well, and it really multi folds operational productivity, but at the same time, it can be detrimental too if the software is not considered to cater to the required needs of the business well in advance.

Therefore, in order to choose the best tool for your organization, consider factors such as features, pricing, compatibility, etc.

10. Do not overburden Your Employees

Sometimes, while delegating tasks, one tends to overlook how much of the work is being delegated to each member, and that tends to overwork the employees. It is essential that each member is delegated an equal amount of work. If it’s not, then that adversely affects the efficiency of the team and disrupts the smooth workflow.

There are various tools available in the market that can do this task of delegating tasks efficiently based on member’s profiles. This, in turn, improves productivity and keeps the employees motivated.

Conclusion

As you can infer from the blog, a good Optimized Workflow in place has its own set of advantages such as better communication, consistency, and efficiency at the same time. Therefore, it is essential that you understand what all profits a great optimized workflow can reap for your business and get started on these techniques you just learned!

Author Bio:

Sara Williams

Sara is a content writer at PeppyBiz, a platform that helps you automate routine processes into workflows in your Slow workspace through workflow builder software.

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Cogent Analytics, LLC is a business management consulting firm, with a primary focus to help small to medium size, privately held businesses achieve success and long term profitability. Cogent provides powerful solutions with integrity and transparency to privately-held businesses throughout the United States.

Two Ways to Make Your Business More Successful

You know what is odd? Nobody expects successful experts – doctors, electricians, sports figures, lawyers, plumbers – to just wing it. We know they put a lot of time into learning about and training for their profession. In fact, we require that they don’t.

We want the surgeon performing our operation, the mechanic fixing our car, and the quarterback leading our team to have a lot of practice and be exceptional at what they do. We expect them to study and practice. We expect them to work at being the best in their profession.

So, why do people expect the “profession” of business ownership to be any different? Why do people believe that business owners can become successful just by winging it?

The reason only 30% of businesses make it into their 10th year is that the owners were unprepared to run their companies. They did not understand and were not able to meet the requirements of being a professional business owner.

What does it take to be a successful business owner? Here are two places to start.

Knowledge

The reality is, you can never know everything you need to about running your company. This doesn’t mean you’re stupid, weak or incompetent. It is just a fact that there is too much for one person to learn and understand in business, and it is always changing (i.e., laws, tax codes, best practices, tech).

All owners reach a point where they do not have the knowledge required to be successful. When they reach this point, they decide to get the help they need or to go it on their own. Experience shows that a person who is willing to learn from others increases his skill level and chances of achieving his goals.

Skills

You may be good with numbers but struggle with talking to employees and customers. You may be able to sell ice to Alaskans, but your paperwork is a mess and causes production/quality problems. You may be the best electrician around, but are unable to make a profitable bid/estimate.

Running a successful business requires a variety of skills, and no one is born with all of them. Just as we cannot know everything, we are not skilled at everything. We all have things we are good at and things we are not.

Luckily, you do not have to be good at everything. Using the information you get from others, and your own experiences ask yourself the following questions.

What am I good at and interested in becoming better? What knowledge and training do I need?
What am I okay at and interested in becoming better? What education and training do I need?
What am I bad at and not interested in becoming better? How do I cover this gap in my skill set (i.e., develop and implement self-sustaining systems, hire or delegate an employee to do tasks, outsource/outside help)?

Successful business owners understand and accept that they will always need others to help them grow, stay competitive and make a profit. Do not limit yourself through lack of knowledge or skill. Once you start saying – “I’ve tried everything. There’s nothing anyone can do to fix or solve my problems.” – you have stopped being a problem solver and started being a problem creator.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

How to Increase Profits Without Raising Prices

While it’s undoubtedly true that one way to increase profits is to raise your prices, it’s rarely the most reliable. It can be difficult to predict the effect price increases will have on your sales volume. Lots of factors drive pricing, competition in the marketplace being at least as significant a determinant as your costs. So, pricing is not quite as simple as backing into the price required to get a reasonable return for your efforts. You need to consider what price the market will bear for the service or product you are offering.

I recommend to my clients that they first look at improving efficiencies. If you find yourself in a low margin situation, say 5%, and can identify fixed costs to reduce, every dollar of reduction is the equivalent of increasing sales by twenty dollars. The challenge with reducing fixed costs is that in many cases the potential fixed cost reductions impact the lifestyle of my clients. An example of this is company cars, insurance policies or rent the company is paying the owner for facilities. This takes us to a third area to look for engineering in improved profits; increased sales volume or reducing the cost of providing the service or product.

It is in this arena, increasing sales volume and reducing unit costs that the greatest value is created. The nice part about this is the two are synergistic.
Assuming your sales volume is currently at $3,000,000, and your overhead or fixed costs are $300,000 for every dollar of sales ten cents or 10% will be required to cover overhead. At $6,000,000 in sales, your fixed costs may rise but not in proportion to your sales. Let’s assume fixed costs do rise in relation to sales and that at $6,000,000 in sales your overhead has increased to $400,000 to cover additional administrative expenses of $100,000 associated with the incremental $3,000,000 in sales.

From your original $3,000,000 in sales 10% went to cover overhead but for the second $3,000,000 in sales only $100,000 or 3.33% was required to cover overhead freeing up 6.67% for incremental profit. Of course, reducing the direct costs has a similar effect and in manufacturing environments, there are frequently economies of scale (buying in greater quantities, discounts on freight with increased volume, increased production efficiencies from increased utilization of capacities) that kick in as production volumes rise and these create additional profits. However, in a firm that provides services, these economies of scale are much more difficult to achieve, and generally one must look to increased utilization of labor resources to reduce direct costs.

While increased utilization appears, at first, to be difficult, there is usually some low hanging fruit such as better routing of technicians to reduce windshield time or better discipline regarding start times. It’s not unusual for companies to start their days at 7 am, but its usually 8 am before anyone’s performing billable work. Reducing this lost time by 15 minutes every day increases utilization by 3.125%.

So, if all other factors remain the same, that 3.125% increase will translate to an equal increase in your net profits. If you are currently earning 10% net profits that you represent a 31.25% increase in your net profits. So, when you are engineering your profits and considering price increases, but do not believe the market will bear the price you need to achieve your desired profits, look at improving the efficiency of your organization. I assure you that your competitors have and that’s what’s setting the market price.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

The Secret to Business Success

Small business owners often struggle with how they can attract top talent for positions within their company that will best grow their business. Every business started small and will have at some point struggled with how to improve internally and financially. As more and more small businesses continue to populate the globe, business success remains an ongoing urgency in the minds of business owners and managers.

Apparently, the concerns have become more of a mission to understand what business owners are missing and how to assist in seriously changing the internal dynamic that will in turn, likely change the financial trajectory of the business.

The questions that recent studies have asked and explored include – what would happen if employees were allowed to collaborate in unconventional ways? We are not just talking about the few at the top; we are talking about giving some credence and value to the thought processes of the whole human aspect of the company, the collective and not only the individuals or the “stars” of the company but alongside the stars.

Does current success of business today truly depend solely upon the education levels of administrative members? Or, does success rely so highly upon technology and how much of that technology is affordable? Is it at all possible that business owners are oblivious to the potential value of the ideas of all of their employees as a collective? These are only a few questions that business owners should consider exploring.

More studies are beginning to show that continued separation of the people who make up a company as a whole is a grave mistake, regardless of the possible conflicts contained within alternative strategies. Often encouraging everyone to participate through passive communication can be far more productive and beneficial if only business owners and leaders are willing to accept the fact that a collaborative approach, to include their followers, just may afford the company the ability to produce the golden egg that creates an amazingly successful company.

Chief Research Officer, Kevin Martin with The Institute for Corporate Productivity, an organization that performs research to help businesses build and sustain higher levels of performance, states: “The lack of incentives and rewards is the most common and powerful barrier to effective collaboration. Yet, most talent management systems are designed to reward individual achievement, not team accomplishments.”
It is not all about money and financial incentive, but also job satisfaction and the mere gratification that lies within being a part of a successful business in which an employee’s role in collaboration is critical to that success. An even more powerful avenue to understanding the benefits of this particular strategy can be found in the Ted Talk “Forget The Pecking Order,” performed by Margaret Heffernan. Margaret has been the CEO of five businesses and speaking within her experiences and studies; she addresses the consequences that businesses bring upon themselves by failing to explore “human cohesion,” and “social capital” among other subjects that often stunt the growth of today’s businesses. She addresses:
- Social Connectedness within the workplace.
- Helpfulness and its core importance to business success.
- Bonds, loyalty, and trust to experience confident employees that want to remain in place and become a part of the vision of your business.
- The redefinition of leadership and more.

This information is not filled with current buzzwords, but with credible studies that just may set business owners and thought leadership on a new path to internal success and profitability.

Although these strategies are not easy, (for a myriad of reasons), business owners may find that if they implement these ideas and strategies within their internal environment, the financial aspects just may begin to resolve themselves sooner than later. We would be interested in your thoughts regarding these strategies and how they may work for your respective business.

At Cogent Analytics, is a business consulting firm dedicated to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Using Outlook to Get Organized in a Digital World

Why become organized with Outlook? Because the tools it offers can help you master the myriad and an increasing number of tasks you undertake each day. Disorganized people suffer more stress, become less effective, and are less valuable to employers. To stay organized, subordinate your emails and stay focused on your calendar.

There is a general understanding that computers make life easier. This is a fallacy; computers are data storage, processing, and data transmission tools. We have always had to manage data, our time, and communications. Digitization has, however, dramatically increased the speed of these processes. This means we have far more data in the shape of requests, queries, and shared information arriving in our inbox. The Adobe Email Usage Study, published on Sep 12, 2019, found that Americans spend up to 3 hours a day checking work emails.

here used to be a time when the papyrus reeds had to be cut and dried in the sun. The berries picked and squashed. The feathers plucked. Once the scroll had its instructions scribbled upon it, some poor blighter had to run, ride, or even sail for a significant amount of time to deliver the message. The same amount of time was needed to reply, and thus the pace of life was perhaps more agreeable. Of course, that is unless the British Regulars are on the move and your name is Paul Revere. Then maybe a horse would be more useful. Assuming you do not look good with a beard and overalls or a homemade dress and bonnet, it is essential to find ways to control the beast that is the digital age and not be consumed.

Another mistaken belief some people have is that they can multitask. This is also a misconception.

David Barkus discounts this myth in Psychology Today (Nov 15, 2018) and cites how several studies explain that we do not perform multiple tasks simultaneously. Instead, we switch between tasks quickly, like juggling balls in the air. This practice is ruinous to focus and concentration.

The height of concentration is when you lose track of how much time has elapsed since you began a task. This state is named “flow,” and it is one of the most productive conditions to be in, according to Mihaly Csikszentmihalyi, a Hungarian-American psychologist.

Eisenhower won WWII (with the help of the long-suffering allies) using an “Urgent and Important” filter for all incoming tasks. Urgent and Important gets done now. Important and not Urgent gets put into the future. Urgent and not Important:” I’m sorry, why are you bringing this to me?”

Having dispelled a couple of myths and introduced two proven methods to be effective, here is some advice garnered over the transition from the analog 1980’s to the digital 2020’s.

Well Organized People:

Spend more time on important actions.

Spend less time reacting to urgent and unimportant C.R.A.P. (Cannot Realize A Profit) issues.

Deliver better quality work and create less cleanup for colleagues.

Enjoy increased control over their work, are less stressed and more able to enjoy free time.

Increase their value to the company they are working for.

The Four Tools of Microsoft Outlook:

Email – Communications: Send, receive, and save communications.
Calendar – Big Actions: Manage yourself and those around you.
Task Pad – Small Actions: Assign and control small tasks.
Address Book – Directory: Keep details accurate and quick to access.

Note: MS Teams is evolving into the central tool. But should stay subordinated to your calendar.

Email:

A common mistake made by many is that an email must be responded to within 15 minutes. This is untrue and will often fill your day with mindless busywork while you neglect the big important things that you will no doubt be measured on during an appraisal. Remember, your boss will assign the most important tasks to you in meetings. She will use the phone if it is urgent. Emails convey the details already agreed.

A rule of thumb (check your company policy) for a reasonable response time is as follows:

Papyrus scrolls via the seven seas – 6 months (not as useful as horses if “the British are coming”)
Email – up to 8 business hours (depending on your role, customer service can be 2 hours)
Voicemail – up to 4 business hours (again, depending on your role)
Pounding on your door/ workstation – right now!

Remember that your meaning is not perfectly understood via emails. The tonality, body language, and timing are missing. Ensure that you concisely explain the context and who should do what and when. Some characters think that once they have sent an email that their part of it is over. This is untrue as communication is comprised of four parts: sending, receiving, comprehension and agreement. An email is just a written expression of the first part in the process.

Always empty the non-essential emails from your Inbox at the end of the day. This way, you will clear the clutter and focus on the emails that need to be addressed.

If you develop a comprehensive filing system, it will be easy to retrieve anything you wish to review later. Remember, the Search function will help you find any email.

The Four D’s:

This system is a way to approach a full Inbox and quickly reduce the volumes methodically.

Do it: This applies the ‘handle each piece of paper once’ approach.
Delete it: If the email is significant enough to warrant action, if not delete or archive it (CYA)
Defer: The message in question might be necessary but not urgent. In this case, do not sit on it and occasionally prod it, but drag it (literally) into your future calendar where it belongs.
Delegate – Leaders drown if they do not delegate. This does not mean losing control; instead, instructing, teaching, trusting, and sharing.

Email Tips:

Write clear, concise messages with a background, what requests on which individuals and when.
Add all relevant information such as product codes, descriptions, invoice numbers, dates, etc.
Remove “I, YOU, ME” especially from ANGRY emails. Sit on them overnight before sending.
Type a short message in the subject line and then “END.” This way, the receiver knows there is nothing in the body and does not waste time opening it.
Use CC, BCC reply to all only when necessary – we do not all want a copy of everything.
Do not Reply All. To stop people from being able to reply all when you send a mass email:

TO: your email only and BCC: all groups lists and individual respondents.

Drag and drop emails into the Calendar to make appointments.
Schedule time to deal with your Emails – 5 times per day maximum.
Clean up email strings. Write a summary and add your comments or requests and delete all else.
Set Up Rules – non-urgent or sensitive info goes into folders you can review later/never.
Use the Archive function to save emails you may need fourscore years later.

Email Ribbon Options:

The Ribbons at the top of each screen are one-touch buttons to help navigate and manage the data.

Often many of these functions can be found elsewhere can always be accessed through File/Options.

New: Email, Appointment/ Meeting/ Group/Contact/ Task or Teams Meeting.
Delete: Ignore (current and future), clean up redundant messages, Junk, delete, and archive.
Quick Steps: these are useful shortcuts and can be set up using “create new.”
Move: move or copy a sent email back into the inbox if follow-up is needed.
Tags: Categories can be used to highlight and differentiate types of tasks (admin, sales, personal).
Find: an invaluable function that will accelerate the time to retrieve information.
Add Ins: Translator/ Drobox/CRM’s (Salesforce/HubSpot)/ Click-Up/Concur (expenses).

View:

Settings, Screen view set up: Arrange columns (by Attachment, From, Subject and Fonts).
Messages: The order emails are in. Choose chronological over the other nonlinear groupings.
Message Preview: A two-line view allows you to gain insight into the content without opening it.
Arrangement: Organize emails by date, from, to, flag status and categorize by color.
Layout: Set the Folder pane to “Normal” with tighter spacing. Switch the “Taskbar” off because it is less important work, and you don’t want it cluttering your desk (can be retrieved later).

Folders:

New/Actions: Create new folders and move them around. Alternately, Right-click in the folders.
File/ Options/ Mail/ Save Messages/ Save copies in the sent folder: so you can retrieve them later.

Deletion:

File/ Options/ Advanced/ Check the ‘Empty Deleted’ Items when exiting Outlook for a clean desk.
Uncheck Warn Before Deleting: they are still retrievable if needed.

Spelling:

File/ Options/ Mail/ABC/ Always check spelling: Minimize distractions for the reader.
Suggest alternates, English (USA/UK) dictionary.

Reminders:

Turn them all off. Ringing bells and whistles ruin concentration and the flow state.
In Windows: Action Center/manage notifications/ turn all off or work offline (Send & Receive).
Use your phone alarm/ vibration if you have an event(s) you must not miss.

Rules:

Home/ Rules/ New: Set up rules that will automatically move files into specific folders (or delete) to read later. For example, unimportant or confidential emails.
To color-specific message text: View/View Settings/ Conditional Formatting/ Add New Rule/Font/ Choose Color/ App/ Select types of messages.

Calendar:

The calendar is an organizational tool and a means to focus, prioritize, and defend your time. My Outlook first opens to the calendar where the Important and Urgent action items are. Here are the activities that push you or your company forward. Emails are usually someone else’s less important waffle. If you are already at capacity and your boss wants to give you more work. Open (or share) your calendar, and together you can decide which tasks to push into the future, which to delegate or delete, and which tasks are ‘Urgent and Important.’

Tips:

Push non-urgent items into the future (clean desk). If you get ahead at any time, you can always reach into the future and get them done early!
Endure you predict a realistic amount of time, add travel, breaks, and project completion time.
Avoid butting up meetings back to back or conflicting with others’ commitments (use scheduler).
Schedule time each day to manage Outlook.
Use categories to color code your entries by activity type. It provides a quick view as to where you spend most of your time.
Double click on the calendar and set up the subject, invite attendees, date, and time (or drag an email into the Calendar and drop).
Attach files into appointments or meetings using ‘insert.’ This way, everything is in one place.
Book resources/rooms.
Privacy: some appointments do not need a public view. Use the ‘Private’ Icon or right-click.

Ribbon:

New: Meetings or appointments.
Teams: video meetings, OneDrive, SharePoint, meeting recordings, text conversations.
Arrange – Use the workweek to get more space and can focus on work unless you are seven days.
Manage Calendars: Share your calendar with those you work with to manage expectations.

To Set Up Your Calendar:

File/ Options / Advanced / Outlook start and exit: See your important work first, email second.
File/ Options / Advanced / Uncheck reminders: These are distractions.
File/ Options / Calendar / uncheck default reminders: Flow interrupters.
File/ Options / Calendar / set up work times: When can others share your time.
File/ Options / Calendar / allow attendees to propose new times for meetings: Fair is fair.
File / Options / Calendar / add holidays: Know what dates not to organize a meeting.

Tasks:

Not urgent and not important items – so they don’t get allocated a lot of time.
You can place tasks on another person; this is controversial, better to send an email requesting something than just delegating.
These can be reminders to do things or even think about issues.
It is also a place for odd bits of information you might need later but will most likely delete.

Contacts:

Add full details, including spouse, children, and interests.
Categorize people by company and department.
Share contacts and create groups to increase efficiency.

Conclusion:

According to McKinsey, emails will use a lot of your valuable time (up to 28% of the average US worker’s day) with very unproductive issues. I am still yet to hear a client, leader, or colleague say:

“That individual is really going places. She sends a cracking email!”

Focus on the calendar where you have to opportunity to achieve great things. ‘Plan your work’ using the calendar, then turn off as many distractions as possible so that you can ‘work your plan.’

Investigate and try different settings in the Outlook setup options (File/ Options/ General or Mail or Calendar or Advanced).

As in most tasks in life, preparation is key. If you set up the structure and learn the most useful ‘one touch’ buttons in the ribbons, you will increase your control and create more time to prepare.

Remember that Outlook is your tool and not the other way around. Turn it off when you don’t need it. Set yourself a task, complete it, and then check Emails, Tasks, Teams requests, Texts, Carrier Pigeons, and all the various other “Ping” methods that people use to interrupt your focus with their “Urgent” but not always “Important” issues.

Staying up to date with whatever everyone is watching on TV or laughing at their tacky memes will keep you popular with the less productive members on your team. It will also dramatically reduce your inherent value to your employer.

The more time you spend doing quality work, the happier you will be, and the more time you will have for personal interests and time with your loved ones.

Forming Strategic Partnerships Checklist

Look around and you will see that at every level of business – from Nike and Apple to your local landscaper and painter – companies are joining forces. Strategic partnerships are becoming more common and will continue to grow. They will grow because there are many benefits to establishing a strategic partnership.

Some of the benefits include: increased market share, building your reputation through positive association, added value for your clients, shared costs/resources, scalability, brand revitalization, greater audience reach and moving you ahead of your competitors.

In a typical strategic partnership, each business operates as a separate legal entity. But, even though you may not be legally liable for your partner’s problems, there is always the potential for other risks. Here are 6 things to do to reduce risk, and have a successful partnership.

1. Shared values – Research and understand your prospective partner’s past, present and future corporate missions, goals and strategies. Also, be very clear with them about yours. You are looking for synergy, common ground and similar ideals.

What do they stand for/against? Do you have the same ideas on how business should be conducted? Do they meet your level of professionalism?

2. Brand vision – Make sure you share the same brand ideas, and that both parties will benefit from working together. Although your products may go together your visions may not – your brand is based on a “good, quality product”, while their brand is “our product is inexpensive (cheap)”.

Does the partnership evenly improve each of your brands, or is it lop-sided? What is their attitude toward customer service? Do they have a well conceived, long term plan for their brand?

3. Due diligence – It is vital that you take the time to do your homework. It may save you from problems (i.e. financial, reputation, market share, legal, guilt by association) in the future.

Are they on firm financial ground? How do the market, customer and community view them? How, exactly, will they enhance your business?

4. Communication – The key to initial and on-going success depends on communication, a lot of it. It is important to make regularly scheduled meetings a priority. You want to: monitor the action plan, review problems/issues, track ROI and assess goal attainment.

When and how will you communicate? What is the process for decisions making and who will be involved? What are the approval and refusal rights for all communications?

5. Identify expectations and division of work – Identify in writing who, what, when, where, how and why. Partnerships usually fail and end up in court because of unclear, therefore unmet, expectations. At the start identify and provide solutions for any problems which might come up. As the partnership progresses immediately address and resolve all difficulties.

What is the strategic plan and who is responsible for getting it completed? What ROI does each of you expect? Who is the project manager, what are his duties and how much power does he have in each company? What resources are each partner contributing (i.e. financial, staff, time, knowledge, experience)?

6. Legal – Even in the best of situations problems occur. It is always good to talk to a legal expert when you enter into a business relationship. Partnership agreements can be very helpful in building trust between companies.

Do you need a partnership agreement? Should you include arbitration? Does either partner have any past, present or possible future lawsuits?

Forming a strategic partnership with other companies who offer complementary products and services can be a great way to grow your business – when it is done correctly. But, when it is done incorrectly a partnership can be quite damaging to your business and brand. Take these steps to increase your chance of success.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Time Management in Small Business

Managing your time is relevant to everyone, from kids in school to people at home or work. The issue of time management becomes even more paramount to owners of small businesses. We have all either experienced or witnessed people who struggle with time management in small business. The tell-tale signs are individuals who seem to be constantly fighting fires, who when they get to the end of the day do not feel they accomplished anything, and who cannot seem to get to their desired personal or business goals.

Time management in small business certainly brings a degree of frustration to many business owners, but on the positive side, when time management improves and becomes a productive habit or normal working state of anyone, real goal realization is possible. It is all about learning and implementing those time management tools rigorously. Many business owners become comfortable with poor time management aspects. A day full of unanticipated events can easily attract people; that is where there is never a dull moment and putting out fires is the norm rather than the exception. Yet when business owners analyze their business, the inability of the business’s realization of future goals typically comes back to their lack of effective time management.

Stephen Covey, First Things First Diagram — Figure 1. Stephen Covey “First Things First”

Now that we know why time management is so relevant in today’s small businesses, let us explain what and how to improve time management for business owners and the key players within this workplace. First, it is essential to know what to label the various business owners’ activities, either planned or unplanned, that happen each day. Specifically, the activity fits into the matrix below (Figure 1). Analyzing an individual’s daily activities or tasks as it corresponds to urgent/important matrix provides the transparency needed to understand how many activities, and the time associated with these activities, are happening in a typical day. With this time management awareness discovered, a clear picture of needed changes is revealed. It is worth noting that this matrix’s goal is to move away from unimportant activities and move toward less urgent activities (as best as possible given the business) in the long term.

Shown below in Figure 2 is a good example of typical activities or tasks that would fall into the various quadrants.

Stephen Covey, First Things First — Figure 2. Stephen Covey “First Things First”

Once there is a fundamental understanding of where your activities fall into the matrix, the next step is to begin the change process of time management through the four D’s. The four D’s corresponds with the four action areas to make efforts to move and purposefully fill the quadrants in a controlled manner over time. The business owner’s four choices or action areas are either DO, DEFER (Plan from Figure 1), DELEGATE, or DROP (Eliminate from Figure 1). The best method to move forward with applying the four D’s is to have clear and articulated business/personal goals. These goals will be the litmus test for determining which D to choose for any given activity, either planned or unplanned. For example, as an owner, if managing accounts payables takes a day out of your week when sales follow-ups would be a better use of time to move the business closer to the goals developed, then this task needs to be delegated.

What prevails from this introspection on daily activities is choices that move the business closer to the desired goals, not further away from said goals, as is when letting activities choose you. Creating a sustained habit with these time management techniques enables business owners to take control and realize their business’s goals immediately.

Time Management | Utilizing Your Time Wisely

Very often, we hear clients, and peers, say “There isn’t enough time in the day to get everything done.” Yup! You are right; often, there is more to do in a day than there is time in a day. However, it all comes down to your daily approach to addressing the proper activities and actions to have the most productive day while positively impacting your business. Unfortunately, many individuals do not take the time to plan out their day or time carefully. After reading this, you will have additional soft skills to properly equip yourself with the proper tools and techniques to manage your time better instead of letting time manage you. So, let us look at what time management is, why it is essential to manage time, and specific techniques in helping with your day-to-day planning.

What is Time Management, and Why is it Important?

Oxford dictionary defines Time Management as “the ability to use one’s time effectively, especially at work.” Nevertheless, we can take a deeper dive into what time management means for you and its impact on oneself. The benefits of managing your time correctly are gaining productivity, improve your reputation, increase opportunities for personal and organizational improvements, and most importantly, less stress in your life and the ones around you.

Not effectively managing your time has the opposite effect. A high likelihood that one that does not effectively manage their time fails to meet deadlines, low quality of work, stalled company productivity or profitability, and a higher stress level than desired. So, what can be done about it?

Techniques in Helping Your Daily Activities and Actions

Let us discuss a few simple techniques; however, before we get into two simple methods, let’s review how to prioritize those tasks effectively.

Managing one’s time helps set priorities based on urgency and importance.

The difference between urgency and importance is critical to understand and know. Urgent tasks are highly time sensitives tasks that demand immediate attention. Important tasks are not time-sensitive but provide long-term value; however, important tasks may become urgent if not addressed. When looking at daily activities, or tasks, one should have the ability to determine what needs to get done today and what can be postponed for a later date based on urgency and importance. Then, rank those activities based on importance and impact on the business, or based on a pareto or barrier identified impacting the business or operation in a negative way.

Let look at the first method of prioritizing your tasks and activities.

Write out all of your daily activities and tasks, such as a “to-do” list.
Then, using the chart below, place those tasks in the appropriate quartile.
Address the top left quartile first because they are activities that are highly urgent and important.
Next, work on the highly urgent and low important tasks
Lastly, if time allows, work on the low urgent and high important tasks.
The remaining tasks DO NOT DO because they are of low importance and can be planned for on another day.

This is one of the simplest methods in time management practices, which will allow you to remain focused on the critical tasks and activities for the day, or week; however, you decide to plan out your work out.

Another method of managing your time is as follows:

Write out all of your daily activities and tasks, such as a “to-do” list.
Reviewing the list, determine its impact and difficulty in addressing your activities.
Each task should have a number or letter associated with it.
Place the letter associated with each activity and start addressing the high impact but easy to complete activities and so on.
Then start working on the activities based on the example listed below:

Activities C & E should be completed first. Then activity D, then F, then A, and lastly, if no other activities arise, B.
However, recognize that activity B, or activities within the Low Impact and Hard Difficulty to address, may not be worth the $ spend addressing the issue.

As C. Ray Johnson stated, “Prioritizing is the answer to time management problems…You do not need to do work faster or to eliminate gaps in productivity to make better use of your time. You need to spend more time on the right things…”

Doing the right thing at the right time with the right resources, remember that as you plan out your day and the way you prioritize your time. Always have a plan. Understand what you need and want to get done. Make sure that your plan aligns with your organizational goals and have the ability to say you had a good or bad day/week based on what was planned out and accomplished. Remember that you must allow time for the unexpected because unscheduled “emergencies” do arise.

When focusing on your daily activities and tasks, do not allow yourself to over-commit and find ways to tactfully say no to a request. Do not assume that every request is an emergency; therefore, understand the task’s timeline and importance.

In closing, always create a daily plan and use your outlook/email calendar to stay organized. Limit interruptions and time wasters. Target due dates to be early to minimize activities becoming urgent within your business. By limiting interruptions, you are allowing yourself to stay focused on the important tasks at hand. When creating your plan, also try to batch similar tasks and leave appropriate time buffers between tasks.

Revenue Growth Through Product Development

Difficult times often require rethinking a company’s products and markets to maintain or grow revenue. These last months have certainly been a time for owners to review their business model and product strategy. Many markets have shifted or disappeared entirely. Products that worked yesterday may be obsolete tomorrow.

Merely being the best or lowest cost of producing a product that the market moves away from will not help grow revenue. Therefore, businesses must seek to maintain and increase their product revenues by applying several product and market strategies.

In the 1950s, Igor Ansoff1 came up with a new market strategy matrix based on two factors: Product and Market. Simply put, you can improve or change the product or go after new markets, or both. A simple illustration of Ansoff’s Product / Market Matrix is shown here. Each strategy carries a varying amount of risk, based on how many changes and how much the change.

According to Ansoff’s matrix, a company can choose to take several alternatives with increasing risk but potentially increasing returns. The matrix allows a company strategist to evaluate the options for growing sales revenue.

The first and least risky approach is to obtain deeper market penetration with existing products within existing markets. Higher market share can be achieved through increasing awareness, price reductions, and sales incentives. Another approach is to evaluate selling an existing product into a ‘new market.’

New markets can be new geographic markets or find alternative uses for the product in markets other than the primary market. Think of the traditional marketing of baking soda as an odor absorbent in refrigerators.

Finding alternative or subsequent uses for a product can sometimes out-perform the original market the product was intended for. Deep insight into how existing customers are using a product can often identify these potential market expansions.

When considering new ‘products,’ one must be careful to do appropriate due diligence on the market and the competition before making large product development investments. The easiest way to develop a ‘new product’ is to significantly change or improve an existing product in such a way as to out-perform the other competitors in the current market. This product enhancement often has limited duration if the competition can also add features or match performance without violating patents or proprietary designs. Another twist on this approach involves redesigning a product to reduce its material or labor cost significantly. While it may not increase sales volume or revenue, this approach can benefit a company through higher gross margins and net profits.

Lastly, developing a new product based on company strengths and capabilities can allow the company to continue to grow and expand. What core competencies does the company possess? How can these core competences be leveraged into new products?

What market intelligence do you have that would give insight into the opportunities? Product Development can be a significant investment; however, it can also reap growth and potentially extend a company’s life. Disciplined product development starts with accurate market information on what the product needs to do, who would potentially be the customer and end-user, any alternatives that might exist, or development.

Once it is determined that a potential market exists, key product characteristics and features should be defined. Many market research firms provide information on potential market growth.

However, this market information can sometimes be misleading or inaccurate. A prudent next step is to validate the market. This can be done in several ways. One popular method is to define a ‘Minimum Viable Product,’ or MVP, and find a way to ‘test’ the market. This could be a conceptual product brochure, a virtual product that potential customers can interact with, or an actual physical prototype. This step is often overlooked in many product development efforts. This step’s importance is to make sure that 1) the market exists and 2) that your product concept meets the market need. Before companies spend large amounts of money developing a product that no one wants, they must test the market.

If there is some validated market need, these early MVPs can refine the essential product features. In Eric Ries’ book The Lean Startup2, he states that successful product development companies master the ‘design-measure-learn’ feedback loop.

This concept is a repetitive process of building or designing something, measuring how it operates (in the market, for instance), and learning from the feedback to modify the design and go back through the process. This product development method ensures that the right product is developed to meet the real market need. The converse of this approach is to spend large amounts of time and money and design the perfect product that no one will buy. Many an entrepreneur has fallen into this trap.

By far, the riskiest approach is to develop a new product for a new market. In this case, little data exists on the potential market or what a product might do to capture it. History is full of recent product / new market successes such as online auctions, secure web payments, and handheld digital music devices. These new product developments are not for the faint of heart and often require significant research and development resources that most small and medium businesses don’t have. However, innovative companies create these new products launched into new markets every day. The wisdom here is to know what it will take and balance it against the potential return.

These are a few of the options for revenue growth through product development and launching products into markets. The most important take-away is to evaluate the product and market strategy before going down a path. Know the risks and potential returns. Evaluate what makes your company what it is. What are you good at? What do you see lacking in the market? New product development can be an exciting and invigorating process if done correctly.

It can ensure the longevity and success of a company, or it can bankrupt it. Know yourself, know your markets and make a conscious decision to pursue the strategy that suits your unique situation. Dream big and good luck!

Cogent Analytics exists to help small and medium-sized privately held business reach their goals. This is accomplished through establishing partnerships to build, implement, train and evaluate systems, processes, people, and organizations that create value for owners. We achieve this through coming alongside companies to provide Profit Engineering, Organizational Engineering, Process Engineering, and wealth creation for its owners.

Designing Organizational Systems

In today’s global market, it is becoming more complex and competitive to efficiently and effectively run an organization.�

This article will address some key principles which need to be considered by leaders when designing organizational systems.��

Systems Thinking

Systems thinking is comprised of three types, including mechanistic, organismic, and social systems.�

Leaders of organizations using an overarching method of systems thinking enable themselves the opportunity to be flexible and rapidly able to change their management styles to react to changing business conditions and situations (Skarzauskiene, 2010). System thinking involves using all three types and being flexible to adapt to changing business conditions and situations.

Leaders also have to be responsive to their employees and cultivate a business environment that promotes creativity, growth, training, and development (Ackoff, 1994).�

The Case study authored by Nayar illustrates how one CEO made a change in the decision-making processes which created creativity, development, and growth in the organization.�

Case Study Positive Opportunity

In the case study by Nayar (2010) titled Employees First, Customers Second: Turning Conventional Management Upside Down, he highlighted the focus of the relationship between the CEO and the organization’s employees in terms of making decisions. The CEO found different opportunities to engage the employees in decision-makers rather than just asking for direction.�

This was key because, as Nayar explained, the workers were closer to the process and were more intimately involved in the process. The most significant aspect that he highlighted was the idea of “creating a self-governing and self-organizing company” (p.31, 2010). Another theory that supports employee satisfaction and engagement is the path-goal theory developed by House in 1971, which illustrated how a leader’s behavior is motivated by his/her subordinates’ satisfaction, motivation, and or performance levels. I liken Nayar’s study with the Chaos Theory authored by Thietart and Forgues (1995), which contends that organizations need order and stability (p.24).�

This order and stability in Nayar’s article were created by using the tool MyBlueprint, which gave a venue to the employees to ask and answer questions and solve problems and make decisions based on their experience and expertise. This contributed to increasing value to the customer by improving the services and allowing the employees to make decisions.�

Leaders using a single system limit themselves to a limited amount of opportunities to better the organization.�

Using a Single System�

Using a single method, such as the mechanistic type, creates a challenge for change to the traditional way those in management roles organize and lead organizations. In leading organizations and maximizing profitability for their companies and their shareholders, leaders using the mechanistic type pose disruptiveness within their organization (Ackoff, 1994).��

This was substantiated by Gharajedaghi and Ackoff when they stated, “mechanistic management strives for efficiency and tries to construct social systems that behave like machines and to train people to behave like machine parts. This resulted in a bureaucratic structure that was capable of neither learning nor adapting” (p. 300, 19). Learning and adapting is key to an organization if it is to succeed in this ever-changing global marketplace, and the use of a strong vision is equally important.

Culture

A successful leader will incorporate these into the vision statement, reflecting the organization’s values and cultural consciousness. This will promote the organization as socially responsible, environmentally conscious, and provide the employees a sense of where the company is going and who they are. Communication and interpretation are vital in today’s organization, especially in global organizations. Through manifestation, realization, symbolization, and interpretation leaders’ guidance is processed and administered.� ��

One particular principle that stands out is that of interpretation, according to Hatch (1993) the leader’s vision and guidance is only as good as it is understood and interpreted by executive, managers, mid-managers, and associates. By adding to Schein’s (1984) Model of Organizational Culture, Hatch has closed the “gaps” in Schein’s theory and created a model called “cultural dynamics” (p.1, 1993).�

In cultural dynamics, the appreciation for symbols and processes completes the dynamics of a circular process. As a leader shares his/her vision, it is essential that this vision is tied into the cultural fabric of the organization through manifestation, realization, symbolization and interpretation (p.30, 1993). The development of a vision is vital to the organization and should reflect the organizations beliefs, the company’s goals, why they are in business. These could include a sense of cooperate sustainability, social environmental considerations, local community partnership and so on.��

Conclusion

There are many key principles which should be observed in order to design an effective organizational system. Leaders of organizations using an overarching method of systems thinking enable themselves the opportunity to be flexible and rapidly able to change their management styles to react to changing business conditions and situations (Skarzauskiene, 2010). By changing and being adaptive a leader can harness the best ideas from their employees by incorporating new ideas such as the MyBlueprint system which greatly enhanced employee engagement. Finally, through manifestation, realization, symbolization and interpretation leaders’ guidance is understood which incorporates cultural dynamics.

References:

Ackoff, R. L. (1994). Systems thinking and thinking systems. System Dynamics Review (Wiley), 10(2/3), 175-188.

Gharajedaghi, J., & Ackoff, R. L. (1984). Mechanisms, Organisms and Social Systems. �Strategic Management Journal, 5(3), 289-300

Hatch, M. J. (1993). The dynamics of organizational culture. Academy of Management, the Academy of Management Review, 18(4), 657-657.

House R. (1971). A Path Goal Theory of Leader Effectiveness. Administrative Science Quarterly [serial online]. 16(3):321-339. Available from: Business Source Complete, Ipswich, MA.

Nayar, V. (2010) Employees First, Customers Second: Turning Conventional Management Upside Down. Boston, MA: Harvard Business Press

Thietart, R. A., & Forgues, B. B. (1995). Chaos Theory and Organization. Organization Science, 6(1), 19-31

Skarzauskiene, A. (2010). Managing complexity: Systems thinking as a catalyst of the organization performance. Measuring Business Excellence, 14(4), 49-64.

Recruiting and Hiring Practices

When speaking with clients about Recruiting and Hiring processes, one of the first things I always hear about is their challenges in filling the role with the right candidate. This always gets me thinking, why is this such a challenge for any company of any size? The answer is straightforward, and throughout all companies that I have been engaged with, they all have one common denominator, the lack of precise recruiting or hiring processes or practice. The majority of small business owners will slap together a brief job description, throw it online, and hope for the best; however, you get back what you put into it. So, putting a little more thought and having a solidified hiring practice can be simple but critical for the operation in vetting the proper candidates to fill the position. Below, you will learn a few tips and processes that you can implement in your business.

First, what is the purpose of having a recruiting and hiring process? In short, having a strategy for recruiting and hiring ensures that the organization has a consistent approach in how they vet candidates for any position within the company. Recruiting employees can be challenging when processes are not followed or used due to the lack of consistency and the lack of recruiting the proper talent level required for a role. However, following this outline will give you a leg up on the competition regarding hiring the right talent for the organization.

There are three simple steps to follow within your recruiting and hiring process. Those are; define your objective, post the job requisition in the most effective place (including local paper or service, or online), and employee selection.

Define your Objectives

A position description is important from the business perspective, but it is also critical for the individual interested in applying for the role. The right information will allow applicants to determine if the position is in line with their current skillsets and if it is a job they would be interested in doing. It will enable both the business and the candidate to match as closely as possible based on the role itself. Identify what type of applicants you are seeking – precisely what kind of work experience and skills are you looking for? Additionally, focus on the type of questions you may want the candidate to answer during the initial screening call and then the interview. Having the right questions will give you a clear idea of the talent you are interviewing. Questions can be based on the following criteria: behavior questions based on prior experiences, determining if the candidate is a cultural fit, technical and soft skills, industry-specific questions, and overall work experiences.

Post the Requisition in the Most Effective Place

A well-crafted job posting is essential to attracting the highest volume of qualified applicants. All job openings should be posted on any company page on social media, including Facebook, Linkedin, etc. Linkedin is a triumvirate of a professional social network, headhunting tool, and job board. With 300m members, LinkedIn boasts the biggest potential candidate pool. On LinkedIn, you can search for profiles, post jobs, and message candidates directly.

However, LinkedIn is not your only option – sites like Zip Recruiter, Facebook, CareerBuilder, Monster, etc., can be utilized as a means of posting a job. All job postings must include the job description with detailed requirements for consideration, as listed below.

Employee Selection

Employee selection should be a minimum of a 3-step process.

The 1st step is a review of the candidate’s resume and relevant experiences and skillset. By going through this process, the company will vet out several candidates that do not fit the organizational need.
The 2nd step is a phone interview, or screening, where we spend approximately 15 minutes with a candidate by asking five or fewer questions. These questions can vary; however, they should be basic questions to verify the candidate is a fit for the role and company. After the phone screening is completed, the hiring manager or owner should rank them from highest to lowest. Once the pre-screening is complete, final interviews should be conducted with the top 5 candidates.
The 3rd step is to conduct face-to-face interviews with the top 5 candidates. The questions you want to ask these candidates will provide you with a clear understanding of the candidate’s skill set, capabilities, and fit for the organization through planning and knowledge. Once the face-to-face interviews are done, complete another ranking of the top 5.

If the interviewee is a fit, make an offer. If interviews are not a fit, keep interviewing the next five candidates.

By following these simple steps, you and your organization will see a tremendous and vast improvement in the company’s candidates. You will see retention also increase as you mature by understanding the right questions to ask.

What’s Going to be New in 2021?

2020, The Year of Innovation.

2020 has been an incredible year for innovation opportunities and possibly a wakeup-call or reset of complacency or standard thinking. Yes, it was a strain on our patience, wallets and a significant change to our daily lifestyle. But let’s not forget, with adversity comes opportunity.

So, what happened in 2020? Most of the world had our daily lives turned upside-down. Many people lost their jobs due to COVID-19’s evisceration of your company or industry. Careers, individual livelihood, and the financial impact on the economy are the most talked-about. However, consider the effect on education, medicine, social services, religious services, job hunting, and even the ever-popular happy hour with friends and co-workers. Perhaps it was not as urgent as our ability to pay the electric bill, but important, nonetheless. Unable to meet face to face, or at least discouraged from doing so, has changed us all whether we know it yet or not. Some examples: Crime has dropped in some areas and categories (PMC statistics on crime and environment changes during COVID-19). You will find plenty of interesting reading on the changes in crime, air quality, and other unexpected positives from this pandemic. Let’s look at some of the opportunities as well.

I won’t say there is a silver lining to a global pandemic. There may be, but it would be in poor taste to say so. But there are some potential positives I think we should consider. You have probably seen at least a variant of the social media jokes that may hit a little close to home, such as ordering a $2 ice cream sunday and having it delivered for $12.99. Cooking less and eating more may not be suitable for our waistline. Still, it has spurred new industries or at least bolstered existing ones—delivery of everything from food of any kind to groceries, prescriptions, and more. Some of these services were already available. But now are commonplace. How might your business benefit from the “new norm?”

Go virtual or go home. Or more accurately, “Go virtual AND go home” has become the standard. Services such as medical visits, counseling sessions, and myriad other “things” we used to do face to face went virtual to one degree or another in the second half of 2020. Many corporate networks were caught off guard and unable to handle the increased network traffic. So, new views of infrastructure emerged and were implemented faster than they would have otherwise. What innovations are brewing now that we will start to see in 2021 and beyond? What good will come from all this bad?

First, let’s agree on our understanding of a few types of innovation. One of my favorite professors at Harvard Extension School was in my “Innovation with Block Chain” class to pursue my master’s degree. During this class, I learned there are different kinds or levels of innovation. GOOGLE “innovation” and you will probably find these and other terms to describe the concepts, but, here are some of the basics.

Incremental Innovation:

Small improvements in existing products and services. Think features added to smartphones, back-up cameras on automobiles, and other new tech on new cars. Tiny steps to make an existing product or service a little better each time.

Sustaining Innovation:

Improvements on current overall systems and products, but slightly more impactful and could be classified as inventions of their own. Fuel-injected engines bring far more power and efficiency to internal combustion engines, GPS on phones for navigation, solid-state memory, and storage in computers. These are new branches to existing products and services.

Disruptive Innovation:

Innovations that change how we do things entirely. The first cell phones to smartphones, giving us computing power in the palm of our hands, personal computers, and the internet allowing for business and exchanging information in milliseconds rather than days.

And lastly,

Breakthrough Innovation:

The Steam Engine allowing locomotives to transport people and products across the country in days rather than months. Electricity sparked, no pun intended, entire industries of products, or, antibiotics that cured diseases that were previously death sentences.

In what group each of these innovations falls is a subject of some debate. Let’s agree that there are different levels of innovation and that while necessity may be the mother of invention, innovation is usually the child’s invention. So, what will 2021 and 2022 bring to your business?

My predictions:

1. A continued and growing boom in virtual living. School, shopping, business meeting, medical diagnosis, etc. In 2020, every aspect of our lives had been touched by virtual livelihood by video appointments, interviews and school for your kids. We’ve already seen huge leaps in adoption and improvements in all these areas and more. Think of the revenue and profit to be made and money and time to be saved by the consumer, the business owner and entrepreneur! But, this isn’t news to us, is it? Virtual reality has been in games for a while now.

2. Relationships will go global in a way we may not yet comprehend. Business relationships, friendships, scientific and medical collaboration, governmental negotiations and new ventures facilitated by virtual living being thrust upon us. E-mail, the internet and social media have reconnected families and friends for years now.

But we never depended on these digital “tools” as we have in 2020 and now 2021. Who will take that to the next level by establishing more virtual offices, more collaboration over borders? How much cost can you eliminate from your business structure by “visiting” clients screen-to-screen in a video conference? What new forms of security will be required and evolve from these new avenues and increased dependance of connectivity? Many telecom companies have invested heavily in 5G network infrastructure being the next big thing. I believe it’s almost outdated already. Think of how quickly the world changed from VHS to CDs to DVDs and now Streaming.

3. A stronger global communication shift. This is not just words and pictures, but invention and products created remotely by Additive Manufacturing (3-D printing on a commercial scale). Again, GOOGLE “additive manufacturing” to see what I mean.

Think about the possibilities of specifications being sent to print a new specialized tool or surgical instrument at your local UPS or FedEx location from designs minutes old from 5 different countries. Sounds a lot like science fiction. However, it is already in use, (Najmon, Raeisi, Tovar, (2019)). Additive manufacturing was described as items designed piece by piece in different countries by PhD’s, engineers, civilians, farmers, and now you, that can fit together to make something completely new, all transmitted to each other, consolidated into one product and constructed via Additive Manufacturing with new materials, computers, lasers and plasma to build it thousands miles away or in the next room.

New items are constructed in a small and completely different location from where their inventors and experts live and work. Just by transmitting the specs to the right machine anywhere on earth, a new product is formed. Talk about “Zero Inventory” or “Just In Time” logistics!

So, what has all this got to do with you the business owner? The vast majority of innovations today are in the incremental category; small steps to improve what you have, what you do and how you do it. And, they are profitable! How often do you upgrade your smartphone just because you want the latest and greatest features?

Think about it this way, with the computer on your desk; you can increase your business relationships by having a video call with a client! It’s easy and inexpensive and can be done on a phone, tablet computer or your desktop computer. Reaching out is easier than ever before out!

Share quotes on-line, discuss terms, see the face of the person you are talking to and read their emotion and body language. Let them see who they are talking to. It can be personal and effective. Incremental innovation is in your business TODAY, and can save time, expense and increase sales. They say nothing can replace person-to-person communication, a handshake or lunch together. Maybe not. But can video meetings and chats with your customers and other business locations help your business today and into the future? I’m betting, YES.

Bibliography

Review of additive manufacturing technologies and applications in the aerospace industry. Joel C. Najmon, Sajjad Raeisi, Andres Tovar. (2019, Additive Manufacturing for the Aerospace Industry, Pages 7-31)

How Root Cause Analysis Applies to the Business Owner

As a business owner, how many of you end up spending a great deal of valuable time addressing the same issues over and over? Many of you can identify with this question and are looking for ways to make your operation run more smoothly so that you can focus valuable energy on those aspects that are critical to forward progress with your business. This is actually quite common in today’s world, where many feel too constrained and overloaded to take the required steps in reaching the root of a problem or weakness due to the amount of work one simply has to face in running a business. This article will focus on ways that you, as the business owner, can stop wasting valuable time treating symptoms and get down to the real root cause of the problem so that you can successfully achieve true problem resolution.

After identifying the root cause, or performing what is better known as Root Cause Analysis, you need to then implement actions to correct the problem (corrective actions) coupled with the implementation of actions to prevent problem recurrence (preventative actions).

An aspect of Root Cause Analysis and Corrective/Preventative Action implementation is that it addresses problems after they have already occurred. One way to take your operation to the next level is the implementation of mechanisms that will help you identify problem areas and respond to them before the resulting failures and issues can occur. Such activity is called Failure Mode Effect Analysis (FMEA). The next few sections will describe Root Cause Analysis (RCA), Corrective Action and Preventative Action (CAPA) implementation, and Failure Mode Effective Analysis (FMEA) in more detail so that you, as the business owner, can apply them to your operation. Many of you may already be familiar with the above mentioned terms from a technical standpoint; however, each one has valuable application in the business world.

Root Cause Analysis (RCA):

In order to stop treating symptoms of problems and start identifying the root of the problem, one should perform a Root Cause Analysis. It is only after you have identified the root that you can truly fix any problems you are facing and gain better control over your operation. There are many techniques out there one can apply in utilizing the Root Cause Analysis tool. However, the focus of this section will be a general explanation of the process so that you can seek ways to effectively implement this value added problem resolution tool within your operation.

Once a problem or failure occurs, it is critical that you investigate the event to determine what really happened. The investigation process should reveal not only what occurred but should also reveal why it happened. It is in asking the question “why did this occur?” that one can peel back the layers of symptoms and get to the root cause. Many make the mistake in stopping after the initial round of asking “Why did this happen?”. Generally, this will reveal a symptom of the problem rather than the true cause.

One should continue to ask the question “Why?” until they reach the root of the problem. At this point, it may seem like a redundant and, therefore, futile exercise; however, if you do not continue to drill down to the root of the problem, you will, unfortunately, only be addressing a symptom which will result in problem recurrence. By continuing to drill down to the real root cause of the problem, you may find that a procedure is not clearly written, a tool being utilized is not the right fit for the task at hand, software being utilized to capture and manipulate data is out of date and in need of revision, and so on.

Key Points:

The Root Cause Analysis tool will greatly assist you in the value added effort of reducing negative productivity and frustration along with enabling you to maintain operational control, which will ultimately significantly reduce cost.
One key to successful implementation of the Root Cause Analysis tool is the understanding that each problem is an opportunity containing the critical information required to eliminate the problem.

Corrective Action and Preventative Action (CAPA):

Once you have identified the root cause of the problem, you need to implement actions that not only correct the problem but also prevent problem recurrence. Many make the mistake in focusing solely on the correction aspect of problem resolution; but, in doing so, did you really resolve the problem? The answer is, “No!”. If you simply correct the problem but do not take steps to systemically prevent its recurrence, you have not truly performed problem resolution. Save yourself time on the front-end of problem solving by implementing both corrective and preventative actions.

Failure Mode Effect Analysis (FMEA):

Once you have established systems to effectively identify root causes and implement subsequent corrective and preventative actions, you must now focus on ways to prevent problems from occurring to begin with. One such method is Failure Mode Effect Analysis. The application of Failure Mode Effect Analysis is the evaluation of all of the potential failures or problems, the modes or ways in which failures or problems can occur, and estimation of how critical the problem effects are to the operation or organization. This “bottom-up” approach allows for the prediction of problems before they occur.

As a business owner, your energy needs to be focused on running your organization in a forward thinking fashion to assure continued growth and overall success. Implementing the Root Cause Analysis, Corrective Action / Preventative Action, and Failure Mode Effect Analysis tools into your operation can work greatly towards peace of mind that your operation is running in a state of control and that you are not wasting time addressing the same problem over and over. With your business running in a state of control, you are better able to focus time and energy on those aspects that are critical to growing your business instead of those needed to just simply sustain operations.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Two Uses For a Business Consultant

Founders and owners of privately-held companies are experienced, proud, and capable people who have shown that they possess the drive, fortitude, and business smarts to start a company and then to lead it through the period of its early growth. Business consultants are strategic partners that allow business owners to strengthen the skill-sets already present in their business.

While owners demonstrably have the organizational and leadership skills to get a business off the ground, in many cases these attributes, unfortunately, can also tend to work against them as well. Having mastered a wide variety of sales, marketing, operations, product (or service) development challenges during the startup phase, many owners are reluctant to admit – or worse, unable to recognize – when the business landscape has changed that presents threats beyond their competence, or which requires a knowledge base other than what they have developed up until this time.

Small business owners are forced by circumstances to become a jack-of-all-trades. However, in many cases while their portfolio of responsibilities is extensive, their depth of experience can at the same time be quite shallow…or their range of expertise is limited to working within a single industry. Owners are typically highly skilled at fire-fighting, which they do on a daily basis, and as a result, have finely honed tactical decision-making abilities.

However, as deeper structural business-related issues arise, or when the business reaches an inflection point in its growth trajectory, many owners find themselves outside of their depth. Good tactical skills do not necessarily result in the ability to formulate a strong strategic vision. Tactical skills have a time horizon measured in hours and days, while strategic vision has a horizon that can last from months to years. People who are used to making short-term decisions with near-immediate results often find it difficult dealing with issues that will take lengthier periods to resolve or to show tangible outcomes.

It is at this time when it makes sense to call in a business consultant, a professional who has the knowledge and experience managing meaningful business transformation initiatives or leading critical restructuring efforts. The average competent consultant has seen a wide range of best practices and solved a large number of complex business challenges. Consultants have typically worked in multiple industries, and thus seen policies and practices beyond those usually dominant in a single sector. This variety of experience and skill is what gives a consultant his or her value when working with a business owner.

Business Consultant Helps with Company Restructuring Image It is clear that there are two times it is critical to call a consultant for help.

1) Changes to the external environment. These changes can be in the form of new competitors, the introduction of new (or disruptive) technologies, significant shifts in customer preferences, or alterations in the regulatory environment. These changes typically prompt business leaders to consider restructuring as a means of streamlining operations, cutting costs, rationalizing the organization, rolling out new products, or remaining competitive via increased efficiencies or revised go-to-market strategies. For example, changes in retailer purchase preferences can prompt a consumer products company to rethink its distribution strategy to maximize the relationship with its channel partners.

2) Changes to the internal environment. If a company merges with or buys another business, or becomes over-leveraged through the acquisition of significant debt loads, these can cause substantial internal business challenges. Mergers and acquisitions often necessitate a large-scale restructuring to promote a smooth integration of the businesses, while high financial leverage or unsustainable debt levels often force companies to reorganize operations to minimize their financial exposure. Additional internal factors that can compel restructuring are poor management and the failure to execute on critical initiatives (including the inability of management to achieve its strategic goals), the inability to integrate new product lines, or a failure to motivate their workforce.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Is Digital Transformation Necessary for Your Business?

The short answer to this question is yes. Digital transformation is not only necessary; it’s inevitable. As Henrique Dos Santos (past Senior Project Director for Cogent Analytics) writes, the topmost steps to increasing productivity are: developing a good working environment, using new tech to your business’s advantage, and making sure not to waste the time at hand. And with all of these steps and more, digital transformation can pave the way to a brighter future.

The Digital Workplace Training Room

One of the keys to a good working environment is proper training. And today, this is much easier to accomplish thanks to the emergence of digital training tools accessible to anyone with an Internet connection. ERP software giant SAP for instance has a suite of learning management systems (LMS) that’s dedicated to employee training. One of these systems is called SAP Litmos, an intuitive, user-friendly, and standalone training system designed to be rolled out quickly and efficiently.

This means that it’s easy for even managers without technical software skills to craft and license their own specific materials and online training modules on SAP Litmos LMS. Whether the topic is sales, engineering, distribution, customer service, or whatever type of course you want to teach remotely, this LMS can do it. Furthermore, SAP Litmos’ custom interface also allows you to integrate other course providers and preconfigured learning materials, making it easier to scale training according to your needs. And all of it can be done online.

Tech giants like Google and Amazon have taken things further by taking the initiative and creating their own programs to educate employees in coping with digital transformation. The subsidized online IT support certificate program at Google, for instance, has enrolled around 75,000 students. Meanwhile, Amazon has recently channeled $700 million of company funds to retrain 100,000 of its employees through its own post-secondary programs. Apart from their own employees, these tech giants have also opened these programs to the public.

Alongside their own independent training programs they also continue to partner with universities through offering online IT training and credentials programs as well. Google’s certificate courses are still integrated with Northeastern University’s stackable pathways for their four-year IT degrees. Meanwhile, Maryville University’s online bachelor’s in computer science degree heavily involves training in the use of cloud software like Amazon Web Services and Microsoft Azure. And apart from integrated credential programs with tech giants, these university IT degree programs also include intensive courses in programming languages and other skills pertinent to the ongoing digital transformation happening in industries across the globe.

In short, the lines are blurring between online degree courses and independent online corporate training systems. Whether through degrees from schools like Maryville University and Northeastern University, or through the certification programs at companies like Google and Amazon, there’s no shortage of digital tools for empowering employees to better cope and develop within digital transformation models. And for virtually every industry or business model, this has made it easier to develop employees as well as a good working environment.

The Power of Analytics

The aforementioned examples of developments in employee training and the digitization produce a lot of data. This data can then be organized, parceled through digital tools or AI, and analyzed for actionable business insights. This is the process of analytics in a nutshell. And it’s a process that can be applied to fast-track employee training, optimize manufacturing or logistics operations, calculate insurance premiums, and a host of other use cases wherein sizable amounts of data can be found and analyzed for insights.

The use of analytics for business intelligence has been around for years, and one of the most promising developments in the field is the use of AI for augmented insights. Combining AI-enabled machine learning and natural language processing, companies using augmented insights have faster access to actual actionable insights that can optimize their operations or allow them to pivot with more agility. In fact, IT giant and global research firm Gartner predicts that the use of augmented insight-driven reports for business intelligence will be the norm in 2021.

Therein lies the inevitability of digital transformation. Whether you want to increase productivity, improve the way you train employees, optimize operations, and make the most out of your time and resources, the answers lie in embracing the digital transformation of industries.

Written for cogentanalytics.com

Jennifer Vivian

Weaving the WHY into the Workplace

Why… three letters which are utterly simplistic and valuable though often not communicated in the business world. When questioning clients or tasking employees, the “why” is often dismissed by those seeking information or giving directives. This can be a result of the individual in charge subconsciously soliciting results in a premeditated manner without feedback or variation from the other parties involved.

Many can recall instances where they have been charged with completing something without understanding the objective only to find out that later that given the chance, the results could have been achieved much easier.

When the “why” is omitted the tasked individuals will execute by either completing the said task or question the director of the scenario until he or she is satisfied with the answer. The issue of the omitting leaves much to the imagination including; the urgency of the task, the level of importance, the repercussions of inaccuracies, level of detail required and a potential missed opportunity to solicit a different viewpoint which could amount to a level of execution not previously perceived.

Some will say that communicating the “why” at each instance where they question or task will take too much time. The question that must be posed is “At what expense?” Do individuals skip an opportunity to motivate others at the risk of adding what could amount to ten minutes to their daily schedules? Do they fail to acknowledge the intellectual resources available to build a better mouse trap?

Communicating the “why” may seem simple…and it is. But just as everything else that breeds success, it must be intentionally woven into the culture of the organization by setting the expectation with the entire workforce. This must start at the front line and continue to the presidency of the organization. Proper expectations will serve as a guide leaving employees anticipating a full understanding of the workload before them along with empowering employees to develop another method of completion.

Following the development of the expectation of the “why,” the employees must hold themselves accountable for the application. Just as a follow-up is conducted at regular intervals to ensure that performance is on track, regular follow-up from different levels of employees within the organization must exist to ensure that the proper communication is taking place rather than conducting the behavior to satisfy the commitment or skipping explanations for the sake of time.

The introduction and use of “why” within an organization will yield a workforce who are motivated by a clear understanding of objectives and are now given the opportunity to contribute to the team’s success.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Safety and Marketing: How it Affects Profitability

Many business owners do not realize that their Experience Modification Rate (EMR) safety rating can be a powerful marketing tool. In industries where the competition is stiff, business owners are always looking for the upper hand to increase their bid: award ratio. It is not uncommon to have a business owner try and undercut a competitor’s offer. That is not always the best plan, as it will eventually cut too much into the business’s profit. The better option is to find a place where your business has more success and market that to the prospective client.

As a small business owner or marketing manager, you are always looking for that differentiator that separates you from the competition. Whether it is an award for being one of the companies to be listed three times on the INC 5000 fastest growing companies or a certification from a safety company like U/L, it is essential to share your company’s wins. By your company having those awards and credentials, it provides you with small differentiators that can influence a client when they are comparing you to a competitor. A safe company has another internal certification that can be just as important as the external certifications, and that is the companies EMR.

What is an EMR?

Insurance companies and OSHA use a measurement called EMR or Experience Modification Rating to rate their clients based on the number and severity of an injury to an employee. These ratings are number-based, with 1.0 being the average for a company in an industry.

Ok, our company has an EMR Rating, how can that differentiate our company from our competitors.

The EMR tells the insurance company how your company is doing compared to all the other companies in your industry. If you are rated:

a 0.8 EMR rating means that your company is performing its duties in a very safe environment in your industry, and you should be paying lower rates.
A 1.0 EMR rating means that your company is performing average in safety in your industry.
A 1.2 EMR rating means you can pay an additional 20% over a standard premium and that your workplace is a less safe work environment.

The rating is part of a system that your insurance company uses to charge you for insurance coverage for on the job accidents by your employees.

The other major part of your insurance charge is the type of industry. A steel mill worker will have a different higher incident rating over a receptionist. These combine with other environmental factors determine what you pay for insurance.

So you have an excellent rating, everyone gets up and cheers, the safety manager continues to go out and change the number of days without a lost-time accident by plus one along with the company historical record of consecutive days 1,863. Then everyone gets back to work and figure out how to be better next year.

We are back to that great marketing manager and how he can include this information on the company’s brochures and train the salespeople on the EMR talking points when in conversation with the client’s buyer or senior management.

Here are some idea starters for your company’s marketing package each focusing on the strength of your companies safety record;

When you are in an industry that has few accidents and even fewer differentiators use the record of consecutive days without a lost-time accident and or your current record. Add the rating to your document with your U/L and industry credentials as a differentiator from the competition.
IF your EMR is a high number, put it on your sales literature and have your salesperson educated on what it means. A well-aware buyer will consider this, similar to a U/L listing or an award.
List your EMR position. If there are 100 companies in your industry and you and ten others have no incidents, you can list that you are in the top 10% in the industry or that your company has the highest rating awarded by Osha and the insurance industry.

Generally, a buyer or an accountant is aware of the EMR rating, as they have to shop around for the insurance and pay for it.

If they are not aware, tell them about it and tell them how they can help to improve their rating by working with their insurer. The insurers, generally, use some of their proceeds to help improve overall industry rating, which also helps their clients improve, they do this by making services and trainers available to the client, mostly at no charge. These speakers and demonstrators will come and help your company to raise their employee’s awareness and assist them in improving their safety rating.

Your company will become more profitable when both the safety and marketing teams work together. Your marketing team will be able to help your salespeople relay the information that you have the accreditation needed once the safety team helps your company earn a lower score. By marketing your rating, you will likely help your company win more of the jobs you are bidding for, increasing revenue, while also decreasing an insurance expense

In closing, safety is a great tool to communicate to the world, mainly your clients, on how well your company is performing. It is a confidence builder, that you are not passing on the cost of poor safety to them and gives the impression your product may have fewer problems because your employees are aware and care.

And if your company’s story is not great yet, tell your safety director about the insurer’s program. You will both be doing a service to your company!

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Retirement Planning for Business Owners

As a business owner, you are used to thinking ahead concerning your business strategy and taking care of finances. But do you take enough care of your personal strategy and finance? Many business owners are so involved in their business that they forget about their private future. As a business owner, a business might go bankrupt, and you do not have the same safety net for retirement planning as an employee.

Start to build your private financial future early.

“A journey of a thousand miles must begin with a single step.” Lao Tzu, ancient Chinese philosopher

You should start to think about your retirement now! An analysis shows:

When you start at age 15, you need to save 8% of annual income for life at age 30.
You need to save 21.4%, at age 40.
You need to save 43.2%.

Age of Starting to Save:	15	20	25	30	35	40
% of Annual Income:	8%	11.1%	15.4%	21.4%	30.1%	43.2%

If you look at your personal finances, there should be a certain degree of saving that you should have.

Compound interest rate and dividend growth compounding work in your favor

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t… pays it.” Albert Einstein

The compound interest rate describes the interest on the interest. Reinvesting profits leads to an exponential return on your investment. There is an interesting story to explain what the compound interest is: An Indian man invented the chess game in the 3rd century. The king of that time was impressed. He asked him how he could pay the inventor for his great idea. The inventor said that he wanted a single rice corn on the first field of the chess game, and it should be doubled for every field. The king thought how much of a modest man the inventor was. However, the king did not realize that for 64 fields, a total of 18.4 quintillions (10^18) rice corns must be paid. This is more rice than available during that time on the entire earth.

Take risks – but do not take uncalculated risks.

“Risk comes from not knowing what you are doing.” Warren Buffett

The different asset classes are associated with different risks. Within an asset class, risks can vary a lot; however, each asset class itself carries a particular risk that is being categorized by institutional and private investors. Cash, Cash equivalents, and bonds are generally considered low-risk assets. Equities (mostly stocks) and real estate are considered medium-risk assets; meanwhile commodities, modern investments (e.g., bitcoin), and passion investments (e.g., art) are considered high-risk investments.

As there is no asset class without risk, a strategic asset allocation mix helps you to distribute the risk among different investments while still being profitable.

You do not need a financial consultant to invest

“If you’re so smart, why aren’t you rich?” Introduction of The Riddler in Batman

Whenever you take financial advice from a professional, you will pay for it one way or the other. Bank consultants are trained to sell you overpriced products, e.g. you charging additional 5% to buy a fund or a high annual fee. Independent financial advisors will charge you on your profits without taking responsibility for your losses or they will charge you a flat fee which reduces their interest in you making a good profit. Depending on your level of motivation to invest on your own, a financial consultant might be helpful. But always keep in mind: If you really want you do not need a financial consultant and if you need one, be sure he will charge you. There are so many people working in the financial industry which promise you great profits. However, most of them are not specifically rich. It is scientifically proven that most professional investors do not achieve higher returns than any individual investor. Probably you are your best advisor!

Become an investor – not a speculator or trader!

“The individual investor should act consistently as an investor and not as a speculator.” Benjamin Graham, the grandmaster of Warren Buffet

Investing is fundamentally different from speculation and trading. Investing means putting money to increase personal wealth over an extended period of time with a balanced risk. Investing is based on facts and conditions that allow you to be as much in control as possible with the smallest risk possible. While investing, you should reduce costs as much as possible. This leads to buy and hold strategies. Reinvesting profits and using tax optimized approaches to maximize profits and reduce risks is part of investing for your personal retirement. Speculation and trading, in contrast, are short-term approaches with a high risk that the average investor ends up with negative returns.

Markets must grow with time

“The overall point is that new technology will not necessarily replace old technology, but it will date it. By definition. Eventually, it will replace it. But it’s like people who had black-and-white TVs when color came out. They eventually decided whether or not the new technology was worth the investment.” Steve Jobs

Markets grow in the long-term. On the one hand, there is inflation. On the other hand, the population in the world is growing and technology is progressing. Along with the global population, average wealth is increasing as well. This means that there will be a constant growth in the long term. According to projections of the United Nation, the global population will be 9.8 billion in 2050 and 11.2 billion in 2100.

Technological development is faster than ever. The Time artificial intelligence will reach human intelligence by 2023 and the intelligence of all people in the world by 2045. Be part of this development!

Conclusion: Constant investment is important! ETFs are a possibility to invest with low cost and low risk

“The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time because you’ll be buying into a wonderful industry, which in effect is all of the American industry…People ought to sit back and relax and keep accumulating over time” Warren Buffett

The asset allocation determines the risk and return of your investments. Low-risk investments such as bonds currently offer small returns only. High-risk investments are an expert-only area. This leaves you with few alternatives: equities and real estate. Real estate offers good investment possibilities but also means additional work. Equities, mostly stocks, must be diversified. You can purchase single stocks, funds or ETFs. ETFs have recently become widely popular as they allow you to diversify your investments in the same manner as with a fund at a price a little higher than what you pay for stocks. Therefore, ETFs are an easy choice with diversification included. Other asset classes can be added if you feel comfortable, e.g. passion investments in art, whiskey, wine or classic cars – but only if you have the knowledge. Bonds on the other hand can be a safe investment with guaranteed (low) returns as a counterpart for more risky investments. However, ETFs offer a great basis for your investment strategy. If you want to learn more about investing and build your own investing strategy, check out investmentcanvas.com.

About the Author

Jan-Patrick Cap, MBA, Ph.D., is a mechanical engineer working in top strategy consultancy. In his doctoral studies, he focused on innovation and network management. He worked in Europe, the USA, Brazil, China, and UAE. His passion is finance and entrepreneurship. Jan-Patrick is the co-founder of investmentcanvas.com, a website that offers a free academy and tool to learn to invest with a long-term perspective.

Disclaimer: All content provided is for informational and educational purposes only and is not meant to represent trade or investment recommendations. Reliance on this content for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. Any person who is in doubt about the investment to which this document relates should consult an authorized person specializing in advising on investments. The author is affiliated with investmentcanvas.com.

8 Steps for Small Business Project Management

Small Business Have a Big Role
Small businesses play a big role in the overall health of the US economy and in the well-being of a large percent of the population. They employ almost half of people in the workforce and account for about 99.9% of all US businesses. It is apparent that having successful, sustainable small businesses is in the best interests of the country and its citizens. But at a small company level, how should owners and employees manage their work to drive success and ensure their futures? How should they identify and isolate specific actions to drive new business, cut operational costs, ensure employee loyalty? How should they create, deliver and charge for products/services and provide an acceptable level of profit?

What’s Business As Usual (BAU)?
Small businesses can sometimes get caught up in focusing on activities that have made them successful in the past, but may not consider initiatives to ensure ongoing success, growth or scale. This makes sense on some level because it’s that ‘business as usual’ or BAU that is the lifeblood of a company. But, small companies need to consider activities that can lead to new business opportunities or allow them to run their businesses better, if they want to continue to thrive.

A small business would be well-served to institute a practice to identify opportunities for innovation or ‘renovation’ and create new initiatives separate from BAU. If an idea is sufficiently vetted and promises tangible results to the business, undertaking the actions necessary for success can be organized into a project complete with a scope, budget, timetable, assigned resources, deliverables and metrics. While this may seem to invite the bureaucracy and complexity seen in much larger corporations, small businesses can undertake project management at a level that allows appropriate organization and structure to ensure success and institute good business practices that can be applied for future initiatives.

8 Steps for Project Management
So how should small businesses go about project management? First, business owners should consider having regular idea-generating sessions to identify opportunities to innovate for generating incremental revenues or for improving operations for generating incremental profits. Once a good idea has been chosen, take the necessary steps to plan and organize the work create a foundation for success:

Clearly identify the benefits of doing the project. What is the expected impact on sales or operational expenses? Are there other benefits you desire such as customer loyalty, employee morale, industry recognition or employer wealth and security? When you identify specific, measurable benefits, you justify undertaking the actions necessary to achieve those benefits which can then be organized into a project.
Create a specific scope of the work to be undertaken. The scope should encompass the exact area(s) of your business that you want to address while putting limits around it to avoid scope creep, which often plagues larger organizations. Simply put, the scope is the body of work you and your team intend to do to achieve your desired results.
Develop a project plan. As Antoine de Saint-Exupery famously said, “A goal without a plan is just a wish.” Your project plan should a list of discrete tasks to be completed over a specified timeframe with assigned responsibility. Keep in mind that a plan does not need to be cumbersome or adhere to a specific format. A simple Excel file might suit your needs or, if you’d rather start with a project plan template, try searching the Internet for samples specifically designed for small businesses.
Set up a team to do the work. Reach into your organization to assign the best team members to your project tasks. If one of your employees helped you come up with an idea for a project, think about giving that person a key role in managing the work. By putting a project structure in place, you will be creating an environment that will stretch you and your team to become more ‘business-like’, moving from technicians working a craft to managers driving a project.
Identify tangible ‘deliverables’ or work products that you expect to create during the initiative. Deliverables might include the creation of a new web page to attract niche customers or a defined set of work practices to boost productivity. You don’t need to solve the problem up front when coming up with deliverables, but try to identify what you expect to create, so you’ll have something to show for your efforts after you complete the project.
Come up with a budget. Having a budget does not mean that you must earmark a specific dollar amount to complete the initiative. It may be better to approximate how much time you want to dedicate to the project for yourself or for your employees. For example, you might allocate a certain number of hours per week for you and your selected team to have meetings, make customer calls, document processes in the warehouse or do any other activities over the course of the project. You might also allot a specific amount for expenses such as travel, supplies or outside services. These elements can constitute a budget that you put in place up front to ensure you and your team are putting a reasonable amount of effort into achieving your goals, and not wasting time and money in the process.
Identify specific ways to measure your results. Define the metrics you will use to determine if the project is successful. You’ve already identified the outcomes you want to achieve when you justified doing the project. Now you’ll need to put together a few key performance metrics to determine if you achieve those outcomes. Check whether your metrics are well stated using the SMART technique: are they Specific, Measurable, Achievable, Results-focused and Time-bound? Use these metrics to track achievement of objectives over the course of the project and when it’s completed to ensure you’re making sustainable changes.
Communicate early and often with your team. If you are embarking on a new way of approaching work, your employees are going to notice. Tell them up-front what you are planning and why you are doing it. Involve them in the process and make it clear why the intended change is good for the company and good for the individuals. Ask for input and feedback as you go along. Celebrate success and look for obstacles that may inhibit progress, so you can be proactive in managing them.

To get started in using project management for improvement initiatives at your company, it might be wise to engage outside help. Cogent Analytics has a staff of experienced consultants to can help you identify game-changing ideas to improve your business and set up the project structure you need to ensure success. Even small businesses can benefit by leveraging practices usually employed by larger organizations. Just be sure to equip yourself with the appropriate resources and tools for your specific needs and get ready to plan and execute projects to help you build your future!

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

LEARN MORE ABOUT COGENT ANALYTICS

3 Ways to Stabilize Your Business

The Architectural and Engineering (A& E) Industry’s business cycle is one of peaks and valleys. Its history is filled with boom and bust times. Its customers (i.e. manufacturing, steel, auto, construction, oil, infrastructure) have all had their day, and some may be coming around for another one. Successful and proactive A & E small business owners are constantly looking for ways to weather the cyclical nature of their industry.

Here are 3 things they do to stabilize their businesses.

Get control of bidding and estimating
Ideas concerning a business’s responsibilities are changing, and one difference is that firms are being asked to assume greater financial risk. There is more demand for lump sum, turnkey (LSTK) contracts and it is expected to continue. Also, strong governmental pushes toward creating public-private partnerships (PPPs) are looming on the horizon.
Another new change is that customers are breaking large projects down into smaller parts. They cherry pick the parts with the best cost positions and do the project management themselves on those parts. This limits the A & E company’s ability to off-set lower margin areas with higher margin ones, which decreases their profit.

The days of just tracking costs and passing them on to the client are coming to an end. Unfortunately, most A & E owners do not know how to do it differently. Successful ones have learned how to correctly estimate and bid, using a solid understanding of cash flow, margins, cost controls and profit.

Someone must manage
A & E firms are unique – unlike typical small businesses they usually have multiple partners, who are notorious for being poor managers. Most of the partners have little or no desire to supervise people or run a company. In fact, when asked about it the common response is, “I just want to be left alone to do my work”.

Unfortunately, this is not a choice if they want the business to thrive. Companies must be actively managed to achieve long term stability. This is especially true in an industry where volatility and change is a given. If no one is steering the boat, then surviving the rapids is luck, not skill. Successful people do not rely on luck. A firm will be more secure when operations, strategic planning, communication, work flow, sales and financials are monitored by someone.

Define and focus on market position
The common A & E small business has one simple sales philosophy – people, you are on your own. There is no sales strategy, and usually no sales person. If there is a sales person he does not sell, he functions as an overpaid customer service rep. Consequently, the company: does not have growth capital, has an unreliable revenue stream, is unable to provide partner by-outs and often needs an infusion of owners’ cash during lean times.

Management teams who overcome these problems commit to a comprehensive sales strategy. They solidify their current market position and look for ways to develop new ones. They do this by expanding their criteria and committing to diversification (i.e. expanding geographical and market segments, creating new and improving current service offerings, co-branding). The ability to rapidly identify and contact potential customers is vital.

The A & E industry will continue to be one of feast and famine. But, not all A & E firms have to be trapped by the cycle. Commit to doing these 3 things well and yours will be one of the companies who make it out of the trap.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

The Profit Platform® of Business

From Behind The Desk offers valuable information during these difficult economic conditions.

Rob Braiman, CEO of Cogent Analytics, provides PSAs for business owners around the country to make sure they’re ahead of the ball regarding what is happening right now.

In this episode, Rob discusses the four essential pillars of your business (Business Development, Organizational Engineering, Process Management, and Measurement) and how important each pillar is vital for profitability within your business.

The Power of Cash

Rob Braiman, CEO of Cogent Analytics, provides PSAs for business owners around the country to make sure they’re ahead of the ball regarding what is happening right now.

In this episode, Rob discusses the power of cash in your business and the impact it has on future decisions in your business.

Learn more on how to make the right financial decisions in this time of uncertainty.

Cash Flow vs. Cash Management

From Behind The Desk offers valuable information during these difficult economic conditions. Rob Braiman, CEO of Cogent Analytics, provides PSAs for business owners around the country to make sure they’re ahead of the ball regarding what is happening right now.

In this episode, Rob discusses the differences of Cash Flow and Cash Management.

Both cash flow and cash management are vital to the business, especially during these unprecedented times.

Learn more on the differences between the two financial factors in your business and be ready for the future.

Recession Readiness – PSA

From Behind The Desk offers valuable information during these difficult economic conditions.

Rob Braiman, CEO of Cogent Analytics, provides PSAs for business owners around the country to make sure they’re ahead of the ball regarding what is happening right now.

In this PSA, Rob discusses Recession Readiness. A recession is a market condition, not a business condition. Most successful companies during a recession are the ones that innovate and seize market share. Manage your financials effectively and stay open during a recession.

5 Signs You Chose The Right Business Mentor

Business Mentor | Cogent Analytics | Business Management Consulting

These days, we can look up mostly anything on the internet, and this has led a lot of people to now turn to YouTube videos, DIY blogs, and online courses whenever they need to learn something new. However, if there’s one thing you can never DIY, it’s growing a business, and that’s where a mentor comes in. Finding the right business mentor is extremely important because you will be entrusting them with your time, resources, and future career. A business mentor can affect not just your ROI, but also your ability to maintain a healthy work/life balance, your development as a leader, how your issues affect your business, and much more. Unless you’re super lucky, finding the right mentor can take multiple attempts, so in this article, we’ve listed five signs that mean you’ve gotten lucky and picked the right one.

They’re approachable and easy to talk to

Your mentor should be an expert in your field, but if they’re not approachable or easy to talk to, then you’ll have a hard time learning from them. Inc’s guide to finding the right mentor mentioned that the right one is someone who can clearly explain and communicate what they know, on top of actually taking the time to do so. Their willingness and desire to impart their expertise in such a way that will make sense for you and your company is also essential.

They motivate and inspire you

Regardless of the field you are in, establishing a business is hard. There are moments when even after you’ve done everything you can, you still fail to achieve your desired outcome. The right mentor will serve as your confidant: they will listen to you, offer advice and, most importantly, help keep you motivated and inspired. Your mentor will encourage you to reach your full potential and persist even in the face of failure.

You have similar goals for the future

One sign of a great mentor is that they have your best interests at heart. For one, they’re not encouraging you to spend beyond your means even as you grow more financially successful. Preventing lifestyle inflation includes knowing the cost of climbing the ladder in business. This involves being aware of how much you’re spending when it comes to “dinners out with colleagues, happy hours after work, and other after-hours social commitments.” With a goal similar to yours, your mentor will teach you how to effectively manage your finances and not overindulge, especially if you are doing well at work.

They encourage you to step out of your comfort zone

The right mentor will encourage you to step out of your comfort zone, try new things, and challenge yourself. You won’t be able to learn anything unless your mentor gets you to consider new perspectives. The right mentors are the ones who teach mentees by challenging their views and opinions when it counts, as opposed to dismissing the mentee’s ideas based on seniority.

They are truly honest with you

Your mentor should be your honest critic and be the first one to provide you with feedback. As entrepreneurs get caught up in the daily operations of their company, they tend to overlook a lot of things. The characteristics of a good mentor are that they will inform you of your shortcomings without breaking your confidence and aid you in identifying corrective actions that you can take to be more successful in the future.

As highlighted in a previous article, one of the ways you can ensure that the business you’ve dedicated your whole life to stays flourishing is by training individuals who follow in on your footsteps or becoming a mentor yourself. After getting guidance and help from the best, pay it forward, and be an effective mentor when it’s your turn.

This guest post was written by Bernadette Jones for the sole use of Cogent Analytics, LLC.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

The Secret to being a Successful Sales Professional

The best sales professional has an extensive set of tools that they can utilize to close a sell. One of the most important tools they have is called empathy. Empathy is best described as the ability to understand and share the feelings of another.

Every salesperson would like to join the ranks of the best of the best, the top 1% of selling champions that bring in the lion’s share of the sales in their organizations. I have witnessed these people. Some are one-hit wonders, here today gone tomorrow. Then there are the ones who consistently stay on top. They are high achievers, humble in their own right, quietly going about their business, and racking up sales. What do they possess that many within the sales profession don’t? What’s their secret? That’s what this paper is all about.

Sales Professionals | Empathy | Cogent Analytics | Business Management Consulting

Successful and responsible sales professionals often have a willingness to serve, an attitude of helping and giving to others. Lending a helping hand is one of the easiest things a sales professional can do to make a difference and an impact in someone’s life and in this world, one day, one relationship, one earned client at a time.

Approach each prospect/client/customer (PCC) with the mindset as an opportunity to serve, visualizing yourself sitting on their side of the desk, getting an understanding of what is going on in their world, (with empathy), when interaction with PCC in that manner will be a step on the path to greatness.

I appreciate the book Good to Great by Jim Collins. Level 5 leadership is a concept developed by Collins. Collins explains that Level 5 leaders demonstrate a compelling mixture of personal humility and invincible will. They’re especially ambitious, but their ambition is first and foremost for the cause, for the organization and its purpose, not themselves. As sales professionals, we can certainly learn a lot from that wisdom. Personal humility and an indomitable will, in my opinion, are the hallmarks of any sales champion.

Can you learn to develop these qualities “values.?”

After reading Collins’s hypothesis, he mentions that there are two groups of people: those who possess the seed of Level 5 and those who do not. The same can be said about salespeople in general.

Collins goes on to say, “the second category of people—and I suspect the larger group—consists of those who have the potential to evolve to be great, the capability resides within them, perhaps buried or ignored, but there nonetheless. And under the right circumstances—self-reflection, conscious personal development, a mentor, a great teacher, a significant life experience, a Level 5 boss, or any number of other factors—they begin to develop.”

Being in sales today can be challenging. It requires unique, and well-rounded skill sets that’s hard to come by. However, while there are “natural sales professionals,” core skill sets are essential for any level of sales professional, and they can be developed.

If you wish to create a favorable response with PCC, you do so by example with, sound communication skills with the art of persuasion, not by being deceitful but by genuinely getting to know them, by having an honest conversation, by asking good questions and truly listening to them and their needs.

Concentrate on their positive attributes, not only what they fear or dislike. When you get to know them, learn about PCC’s hopes, dreams, and aspirations, determine what motivates them. Then show them how to align their goals with your value proposition, working together for mutual advantage. When you do, everybody wins.

What’s the secret of high achievers? The greatest quality and the secret of high archivers is that of service to others, then delivering exceptional value without any expectation of reward. By further the interest of PCC and delivering what they want and need your scorecard will be your paycheck.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Innovate to Generate Revenue

With economic conditions changing as a result of COVID-19, Rob Braiman, CEO of Cogent Analytics, discusses the importance of innovating different ways to generate and maintain revenue through the coming months and beyond.

“From Behind the Desk” PSA’s are a series of informational segments designed to help guide business owners through turbulent economic conditions and provide direction that will help them stay in business.

Please refer to the video below as Rob Braiman discusses innovative ways to generate revenue.

Adversity Breeds Innovation

In these unprecedented times, adversity has hit the ceiling. Entrepreneurs are facing struggling times and becoming stagnant.

From Behind the Desk with Rob Braiman, a series of PSA’s on the issues business owners and entrepreneurs face.

In “Adversity Breeds Innovation” – Rob discusses how to innovate during challenging times. Now is not the time to stand still – now is the time to innovate.

Paycheck Protection Program, What Does It Mean?

As the Paycheck Protection Program (PPP) rolls out for small businesses, Rob Braiman, CEO of Cogent Analytics, discusses the pros and cons of every CARES Act and SBA Relief program, helping business owners make the best strategic decision for their business.

Rob presents important information for business owners that will help them ready their business for an economic downturn.

Please refer to the video below to view which program fits best for your business:

Have a (Succession) Plan

It may be hard to fathom the reality of selling your business. You had a goal to grow and build your business, and over years of work, your energy, your vision, your customers, based on your value stream, is now realized after years of working towards that expected goal. A succession plan is vital when you have decided that it is time to exit your business, and move on to your next life adventure.

succession plan | business management consulting | business | business owner

Have you planned how your dream will succeed without your ingenuity and magic touch or even the input from critical personal? For many small businesses, succession planning is only a wish list at the forefront of business owners’ minds but on the outskirts of actionable plans. Removing oneself from the day to day nuances of the business to having comfort in knowing that the company will sustain profitability in the event of retirement or leave. It is a plan that takes critical thought to divest the owners’ mentality in working on the business instead of for the company. Succession planning is vital in the current scenario of tight talent market management. It is a strategy in transitioning essential functions and roles to employees having standby reinforcement. You built it now; it’s for them to keep it. Succession Planning consist of identification of the following for a specific outcome:

1. Key positions and status (Critical, Impending, & Potential Vacancies). Knowing what roles are vital for backup is essential in maintaining strength and focus on operating the business successfully.

2. Potential Successor is where talent management comes into play, identifying relevant knowledge, skills, and abilities.

3. The timeframe of the leave status of key individuals ensures the framework for which plans need to be implemented. This allows an opportunity to strategize their retention potential and mobility transfer potential of identified potential successors.

4. Gap analysis which defines the competencies required to perform specific role functions to include leadership and behavioral identification skills that are needed for senior positions.

5. Training requirements, either internal or external, brace the company for success. Training, although costly, is an investment in the future of your business and is critical to the future success of your company. Ongoing employee training helps develop employees and increase their experience by engaging in challenging duties, which in turn helps to build loyalty to the business. Employees need to be productive, efficient, exceed standards. While adapting to improve skills in several areas, including communication, critical thinking, and problem-solving.

In so doing, you will well-position the employees who will assume new roles or functions. It brings focus to the process of identifying critical attributes of your business and addressing weaknesses found in individuals that will be considering those functions. Strengthening talent has a direct impact on bottom-line results and contributes to organizational growth. It is an opportunity to help employees learn new skills for development, targeting strength, and ensure greater worker engagement. Hence development at talent level is a must for overall organizational growth.

When you decide to exit your business, it is important to have a succession plan. Succession Planning will make the transition of ownership flow more smoothly for your employees, existing customers, family, and yourself.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Cash Management Plan: Know Where Your Money Is

A cash management plan is important in any business whether you are a contractor, wholesaler, or even a business management consulting firm, because it allows you to be better prepared for future expenses. Your cash management plan should be easily accessible, and a major part of your businesses strategic plan. Often business owners find themselves asking the following question: “Where did my cash go?” How often do you ask yourself this question when you look at your company’s finances?

Unfortunately, many small businesses don’t proactively manage their cash. They look at what they spent their money on in the past weeks, what bills need to be paid next week and how much money is in the bank. And often hope that they have enough to make payroll at least.

This malpractice often results in stress, and sometimes the owners write personal checks to the business so they can cover their expenses.

Why it is essential to manage your cash actively:

Know how much money you have on hand
How much money will be coming into the business
Know where your money is going
Ensure you have sufficient cash to make all your required payments, i.e., payroll
Plan for future purchases
Build a cash cushion and reduce stress

What does that mean to manage my money actively, and how do I do that?

cash management plan | business management consulting | Cash | Strategic Planning

The first step is to have an accounting system set up, such as Quickbooks, which records all the transactions of the company. More specifically, it shows all the company’s assets and liabilities and owner’s equity. As long as all the financial data has been recorded, we can work on putting a cash management plan in place. Ideally, the cash management plan will focus on what resources we have available weekly, over the next 12 weeks, to pay all recurring expenses as well as payables that are due, and to maintain a working capital cushion. Acceptable working capital levels (short term assets – short term liabilities) vary by industry and type of company. Typically, a working capital ratio called the quick ratio (short term assets/short liabilities) of 2 is viewed as representing a good level.

The second step is to have an adequate cash management plan is to know what the weekly/monthly recurring expenses are. The following are examples of recurring costs, rent, mortgage, utility payments (gas/oil and electric and waste management services), internet, telephone, cable, copier lease payments, insurance expenses (medical, dental, auto, liability, etc.), payroll-related expenses (Gross and Net payroll, Employer taxes, workers comp. etc.), IT, etc. Once we have listed all these expenses and the corresponding amounts that need to be paid each week/month, we know what the “minimum” amount of cash is that we need to have available to pay all those expenses during a given month. All of these expenses typically have to be paid on time in order not to incur additional fees or the possibility of service disruption and are essential to keeping the business going. In most cases, these expenses will correspond to the fixed costs of the company to operate.

Next, we need to know how much cash we have available in the bank, and any petty cash the company may have, minus any checks or other forms of payments that have been made but have not yet cleared our bank accounts. It is better to use the amounts shown in your accounting software, as those balances will reflect any checks issued or wire transfers made, etc. that may not have cleared your bank yet. Also, we need to take a close look at our accounts receivable to see which payments we are expecting to receive during the next 12 weeks. It is important to note that we should only take those amounts into account, that have a high certainty of being collected, rather than expect that money will be received based on the due date. Therefore, it is essential to have an effective policy for Accounts Receivables collections in place, as it is an integral part of any cash management policy. The company needs to review existing bank or credit lines to see how much has been drawn on them and how much is available as any undrawn amount will provide a possible source of cash if there is a shortage in operating capital.

Once we have established our cash position and anticipated cash flows that the company will receive, we need to gather information on all the cash payments the company needs to make over the next 12 weeks. This entails going through the accounts payable to see when vendor payments, service provider fees, consultant fees, credit card payments, etc. are due over the next 12 weeks. All of those payments, which can easily be determined by running an accounts payable report from Quick Books, will be recorded in the cash management plan. This piece of the cash management plan is crucial, as it is these payments that we have to go through to determine which ones we might be able to push out if needed. As part of the cash management plan, a compelling accounts payable policy needs to be in place that addresses how and when the company communicates with its vendors and service providers to make sure they understand when they will get paid. It is strongly recommended to be proactive in managing those relationships so as not to be charged late fees or even be dropped as customers.

Now that we have determined what our sources and uses of cash will be over the next 12 weeks, we gain a clearer picture of what our cash position looks like at the end of each week. This, in turn, allows us to manage our cash position over the next weeks actively.

If we have an excess of cash over the next 12 weeks, our aim should be to review how we can make that “extra” cash work for us. Such as, placing it into a securities account or interest-bearing account, or it will allow us to make necessary asset purchases or pay down outstanding debt. On the other hand, if we have enough cash to meet all of our obligations, then we should work on improving our cash position in the future through increased sales efforts and a reduction in expenses. Alternatively, if we have cash deficits during any of the weeks, we need to review our collections efforts and determine which accounts we need to place a greater emphasis on collections. If this effort turns out to be insufficient and we expect to have a negative cash position during any of the weekly periods, we need to go through our payables and see which ones we can push out. By doing this, we can make sure we have enough liquidity to pay recurring charges and other payments. To address such instances, we also need to review our available bank/credit line and be ready to draw on them. In that eventuality, we need to include in our cash management plan a repayment schedule.

The cash management plan needs to be reviewed and updated weekly to be a useful management tool!

Summary

Actively managing cash is an effective means to plan the sources and uses of money in the future, and to address working capital issues before they become a problem. Furthermore, it provides insights into a company’s payment and collection practices and sales, thus allowing management to see where changes need to be made.

It needs to be noted that the difference between a cash management plan and sources and uses of cash or cash flow analysis is that a cash management plan is a tool to manage our cash position in the future actively. In contrast, sources and uses or cashflow are typically only for one point in time.

A cash management plan lets us determine which payments need to be made and which fees we want to and can afford to make over the next 12 weeks without impairing the ability of the company as a going concern.

Every successful company needs to have a cash management plan in place, whether this is done through commercially available software or an excel spreadsheet.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Take Control! Motivation to Improve Cash Flow

Cash flow is the primary responsibility of the business owner, yet many owners aren’t motivated to improve it. Everyone knows more money must be taken in each month than sent out, but many owners make the mistake of believing high revenue ensures an excellent cash flow. One doesn’t necessarily guarantee the other. A business can appear profitable, but still have significant cash flow issues. Poor cash management is the primary reason a small business will fail.

Cash Flow | Business Management Consulting | Cogent Analytics

To begin, make it a habit to forecast cash flow 12 weeks in advance. Cash flow is not the same as a budget, and while it may be challenging to reconcile the figures to the dollar, the bookkeeper should be tracking all previous data to provide the most accurate forecast. Even when not experiencing a shortage, the cash flow forecast allows the owner to understand what amount of funds are available for improvements, taking on or retiring debt, adding staff, etc. Get motivated with these suggestions and put an end to the uncertainty and anxiety of meeting payroll, overhead, funding long-term capital improvements, the frequent “out of nowhere” expenses, and addressing your dream list for your succession. Isn’t it time for some peace of mind?

Control yourself. Implement a system that prevents “impulse purchases” even when they promise improvements that appear to have significant benefits. While it may be a great idea, don’t drain your reserves to pay for it without giving it some thought as to its long-term benefit. Just as magazines, candy, and gift cards line both sides of the check-out lane to tempt the grocery shoppers to buy on a whim. Many owners fall prey to impulse purchases that are poorly thought out and, in the end, unnecessary, at the expense of cash flow to satisfy the belief it will solve whatever problem it is being promoted to solve. Impulse buying is an action designed to satiate a need that is usually not apparent as pressing until given some thought. Everyone is vulnerable. Create a system that prevents impulse buying and requires time to reflect the real purpose of and motivation for the purchase. Remember that a large number of businesses rely on impulse buying. Don’t take the bait. Create a system that requires the accountability that comes with an automatic waiting period and stick to it. Beware of purchasing products or services that require a contract for recurring expenses. Concerning recurring costs, keep all overhead flexible, when possible, weighing the risks and benefits for long-term leases and other agreements. This includes leasing space.
Control your staff. Evaluate the responsibilities and efficiencies of the staff. Avoid the urge to automatically add to your team when an employee complains they don’t have enough time to complete their work. Taking time to observe their actions and habits over some time—sometimes as little as a few hours—provides the necessary insight into their efficiency and productivity. Many owners use their workday to mix work and personal time. Most often, employees scrutinize this behavior but fail to realize that unlike the owner, their workday ends at 5:00 when they exit the building with little thought of business until the next morning. While it is the owner’s privilege, it is often a surprise to learn employees are enjoying the benefits of ownership without the worry and headache that often accompany it. Try to get an idea for the number of times employees are paid to conduct personal business during the workday for phone calls, online shopping and social media activity, smoking and other social breaks (not a requirement for the company to provide in most states) along with other nonproductive activity before adding the expense of a new employee. Without being known as a demanding boss, there are reasonable chance expectations that could be more significant. Take time to train employees on the reasons for and necessity of following workplace policies and meeting the aspirations for their position. Remind them they will be held accountable for the tasks they are assigned and then make them accountable. Also, identify an employee to be held responsible for determining the appropriate level of inventory necessary to conduct business efficiently. Inventory management is often overlooked as an effective system to increase cash flow, so find someone and make it their sole responsibility for doing so. Last, consider the ways the cost of taking on a new employee will impact cash flow. If the result is more cash in than out, place the ad! When a hire is made with the sole purpose of aiding the current staff, take a good look at productivity, expectations, and training first. Using what is known to cause the right decision has lasting benefits. So make the hasty decisions, so take time to gather the facts and always train as a first step.
Control your customers. Don’t rely on a limited number of customers to keep you in business. Losing one would be devastating to cash flow. Conversely, understand the costs for maintaining customers known to be the source of headaches—the ones who don’t pay or insist on multiple return visits before being satisfied with the work or product—and cut them loose. They cost the business money. Understand the impact of late-paying customers and consider getting payment upfront or, at a minimum, adhere to a system of same-day invoicing. Chasing down money comes with costs.

Be inspired to take control to improve cash flow. What’s in it for the business owner? Likely a better night’s sleep! As often as possible, get paid for the product or service upfront. Collecting the payment at the time of the transaction ensures, and when this is not possible, implement the same day invoicing system.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

7 Ways that Technology Increases Profits

Guest post about using technology to increase productivity and profitability in a business.

Technology has greatly evolved in almost all aspects of life, and workplaces have not been left out. The office environment has changed a lot, allowing businesses to reach a global market, thanks to improved tech. Without a doubt, technology has enhanced efficiency and convenience in handling business.

As such, small and large businesses alike have always been on the hunt to new and useful technology for more significant benefits. That has made the business world competitive than ever before, but this has a desirable effect on productivity. If you have been wondering how technology increases productivity and profits, have a look at the following points

1. Efficiency and increase productivity

A few years ago, one of the main challenges that most businesses faced was gaining access to information while on the road. This had unwanted effects, such as delayed results when serving customers.

Limited information accessibility means a business cannot reach the maximum potential in terms of performance. However, this has changed with improved technology, such as cloud storage, fast internet access, and more. Businesses can serve their customers more efficiently than ever before.

2. Reduced marketing costs

Print marketing was associated with a high overall cost. The advent of the internet has brought severe change with the introduction of LED and LCD screens in digital signage and marketing. Businesses can also use social media platforms and other platforms for cheaper yet effective marketing. Besides, it easier to create more targeted ad campaigns, and such approaches do contribute a lot to reduced marketing costs.

3. Easier to identify challenges

Technology | Profit | Productivity | Business Management Consulting

Before improved and efficient technology, businesses had a tough time trying to establish the reasons why they were not doing well. This has changed with time, allowing businesses to carefully analyze their strategies and know what does not work for them. By identifying their weak points, companies can come up with better plans to achieve their objectives.

4. Better organization and time tracking

When members of a team want to achieve a common purpose, they have to collaborate and be organized. Online productivity tracking has made this possible, with functions like goal progress tracking, time tracking, and project management. The ability to track the progress of a project makes it possible to avoid nasty surprises when the time comes to deliver results.

5. It’s easier to reach experts

With the different outsourcing tools available, a business does not have to rely on their employees for all expert advice and service. It’s easier to hire renowned experts who can help a company get the best results. Hiring experts allows the employees in a company to concentrate on their expertise as the experts do their thing.

6. Improved business safety

With manual records, it was quite challenging to ensure the safety and integrity of information. This was mainly as a result of how the data was being stored, accessed, and maintained. Modern technology has eliminated this challenge by allowing controlled storage and access of data. It’s possible to ensure business data security, as only the authorized people get their hands on the data.

7. Reduced overall costs

One of the best ways to maximize business profits is to reduce costs where possible. With things like cheaper and more secure storage options, reduced labor costs, and others, businesses can reduce the overall operation costs. Companies can also invest in LED and LCD screens for digital signage, allowing them to interact better with customers and save money in the long run. That way, more cash is channeled to the profits account.

The above are some of the main ways through which technology is enhancing productivity and profits in businesses. Both small and large companies can now use technology to improve their performance and get better returns. The main benefit of technology is that it always evolves to become more efficient and has never-ending benefits.

Mia Clarke is part of the content and community team at Userful.com, experts in all things video wall and display solutions. When Mia is not spreading the word about video walls she is often found discovering the great outdoors, walking or cycling.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. To learn more ways to enhance your business, check out this post for helpful business information:

Break-Even Point: The Secret To Success

Business owners who do not know their break-even point will eventually find themselves asking,

“I’m making money, so how come I don’t have any?”

The answer for most owners is simple – because you are not doing the math. Making money is not making a profit, and you cannot make a profit if you do not know your break-even point. A lot of business owners do not understand how to read their financials or use them as a management tool. These are usually the same people who ask the above question. Just bringing in money does not guarantee solvency, you also need to make a profit on the money.

Let’s look at how profit, loss, and break-even works.

If you earn $1.00 and have expenses of $.90, your profit is $.10. You have a profit margin of plus 10%. When your margin is positive, you are getting paid to provide your goods or services. If you earn $1.00 and have expenses of $1.10, your loss is $.10. You have a loss margin of minus 10%. When your margin is negative, you are paying for providing your products to the customer. If you earn $1.00 and have expenses of $1.00, you are at break-even or zero. You have no profit or loss, neither making nor losing money.

break even point can help small businesses make money

To understand the importance of knowing your break-even point look at this example. In 2014 ABC company had a net income (money they got to keep) of $500,000 from sales of $5 million, this is a profit margin of 10% ($500,000 divided by $5 million). In 2015 they got a new customer. But, instead of doing a break-even analysis they estimated the costs and miscalculated the increased expenses (i.e., labor, supplies, overhead). They made $500,000 again, only it was on sales of $5.5 million, resulting in a 9% margin. They were making less money on a higher volume. In 2016 the client offered ABC more business, which they accepted without running the break-even numbers. Increased expenses (i.e., new machinery, overtime, warehouse space) produced the same net income of $500,000. Only it was on $6 million, which was an 8.3% profit. The company increased its volume by a million dollars over two years but made less profit. The owner could not understand why he had a smaller bonus in 2016 than he had in 2014, especially when he was working longer, more difficult hours. Math is non-negotiable – your product cannot cost more to make than what you charge for it. The only way to know how to make a profit is to figure out the break-even point. So, in spite of what you thought, you do need some of your high school math in the real world. It can mean finally having enough money in your pocket.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Three Unavoidable Operational Risks

There are three unavoidable operational risks common to all businesses if they survive and grow. These risks are predictable and addressable, so long as the owner knows what they are looking for. Everything else is “just management.”

Risk 1: Managing the growth exceeds the owner’s experience and knowledge

When company growth out paces the owner’s experience, the company will suffer. Growth is always the goal, but when an organization grows faster than anticipated, the business is put in the position of either turning down profits or rapidly expanding. Turning down business is an alien thought to most business owners, so they expand. Hiring new employees can be difficult. What if the new employees don’t mesh with the rest of the team? What if they are not as skilled as their resume indicates? Ideally, the business owners will leverage standardized and highly clear-sighted hiring practices to ensure that they avoid the Three Biggest Hiring Mistakes.

If the owner decides that they don’t need to grow their team, they must be aware of the additional strain that will be placed on existing employees. If you work them harder, then you must have a strategy to alleviate their frustration and make them feel as though their additional work is appreciated. Keep the 5 Primary Motivators in mind when working with employees who are stretched thin, as these are the times when a motivational misstep could be the most detrimental.

The real issue arises when the business owner doesn’t know how to manage success. It is an interesting paradox; businesses can do so well that they fail.

When this happens the owner has two options: learn and adapt or bring in outside help.

Taking classes and reading books is the slower of the two options, if the business is hemorrhaging money and in danger of going under then the business should bring in outside help.

Risk 2: Change in ownership or upper management

Many businesses fail when they change ownership because:
– The new owner doesn’t have the correct training or knowledge.
– The old owner never really hands over control and continues to try to run it.
– There are no stable or sustainable procedures in place.
– The old owner had the operations in his head or in books that are indecipherable.
– The new partners are unable to co-manage

If you integrate new leadership into existing structures before they take the reins, they will have time to adapt to existing systems and procedures. This will lessen the shock that comes with a managerial transition.

Risk 3: Not generating enough revenue to support the overhead

When the expenses of the business are more than the money that is brought in, the businesses will go under. You can deal with this risk by ensuring that the business has a strong revenue stream, this means evaluating the effectiveness of the sales team and the job costing/bidding structure. Determine where money is being left on the table, then stop leaving it there.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Effective Coaching To Win Big With Your Team

In 2019, New England Patriots Coach Bill Belichick was the highest-paid coach in U.S. sports with a $12 million annual salary. Dabo Swinney negotiated a $93 million, 10-year coaching gig at Clemson University. The general public supports this monetary reward and status for the winning coaches, but is there a coaching reward (return) for the small business owner? Effective coaching creates a positive workplace. A small business owner who learns how to become an effective coach will develop a highly productive team. The employees will perform at their highest level because they feel they are part of the team, not merely employees on the team. This top-performing team tends to offer outstanding customer service, and the result is higher revenues for the well-coached team.

Effective Coaching is as crucial for developing and improving an athlete’s performance as it is the employees’ performance. When someone mentions the word “coaching,” the most often image that comes to mind is the inspirational athletic coach. Demanding and supportive at the same time, the coach works hard to develop the players. He or she insists on high standards and a great deal of effort. In return, the coach imparts knowledge that will help athletes grow.

Managing employees is not the same as coaching a team. A manager is more involved in the “game” than an athletic coach, and management does not necessarily stay on the sidelines. The gap between the experience of supervisors and the employees may not be as significant as between coach and athlete.

The employees need to be challenged and supported. But there are factors that make coaching a challenge for the small business:

Degree of flexibility by the management team
Changing work climate
Diverse workforce
Increase difficulty in gaining commitment
Lack of clarity
High expectations of employees.
The accelerated pace of the business environment

Effective coaching requires the ability to analyze and understand what needs to be done. The business coach must monitor progress towards meeting objectives established with employees. The coach must know how to delegate effectively and provide appropriate feedback. Effective coaching is an enabling process, and inspires individual employees to do more, enables or helps the business grow to achieve the company objectives. For this to be possible, the supervisor must understand what needs to be done. Then the supervisor works to monitor progress made toward those goals, reviewing and resetting objectives when necessary. Is it worth the time to develop your crucial management into an excellent coaching position? Yes, but the challenge is that there’s no single or ideal answer in handling most situations. Every action a manager takes has advantages and disadvantages. Just as Coach Belichick must decide whether to “go for it” on the fourth down, awareness is needed for possible consequences for each coaching dilemma.

effective coaching for small business | business management consulting

Just like in professional sports, an essential element of effective coaching is that it is sometimes necessary to motivate people under challenging circumstances. People don’t always land in positions or jobs that are perfect for their talents. The supervisor sometimes has to make unexciting tasks seem routine. Effective coaching applies to the team, as well as the individual. In the supervisory role, there will be a need to train individuals to keep the focus on the team, and as leaders, take action when the game isn’t going well. Often, a supervisor can produce more only by delegation. Time and energy have limits. The more the employee is ready for increased responsibilities, the more the supervisor can delegate.

Providing appropriate feedback allows the supervisor to influence the situation. Employees don’t want to feel checked on but often need or want guidance.

Every great coach will expect problem areas that will require attention.

Employee’s work is not up to the company standards.
The employee has shown a recent decline in performance.
Employee’s work may be satisfactory, but not up to their potential.

Some circumstances will require management to hold a work improvement discussion.

Describe the situation in specific detail by reviewing the situation and continuing the previous discussion. Some circumstances warrant immediate discussion.
Confirm the reasons for the situation and discuss any new factors (such as extreme hardship, illness, etc.) Listen and respond with empathy.
Indicate what action must be taken and why. Describe the action and outline elements involved in taking action. Be specific when explaining the reasoning and use backup documentation, such as reports of previous conversations, etc. When the employee owns the action plan with the expected behavior, performance will improve. The supervisor continues to be responsible for the results, but having the employee take ownership of the plan increases the probability of achieving the desired result.
Agree on a specific action that the employee must take to remedy the situation and reach an agreement on the necessary steps to achieve positive results. Set a follow-up date and confirm that both parties have clear expectations about what will happen.
Indicate your confidence in the person by pointing out the plan provides an opportunity for the employee to improve. Remind the employee of their abilities. Recognize this conversation may be a turning point.

It is a problem-solving discussion, so both management and the employee must have equal time. When the conversation is dominated by one or the other, it is not a shared problem-solving situation.

Business management consulting | Effective Coaching for Small Business

An effective opening of the work improvement discussion gets the discussion off to a good start. Communicate the subject, the objective of the discussion, and confirm the employee knows the expectation for participation — a good coach checks for understanding. Once the employee is trained, the business owner will need to continue their development through effective coaching. In the small business, coaching is a process of maximizing an employee’s potential–motivating an employee to do the best possible job he or she is capable of doing.

Aside from the pay, the most significant difference in athletics and small business coaching is that in the athletic arena, there is one winner. The results for calling the right play is a guaranteed championship every time. In summary, here is the playbook for the winning coach.

Plan the discussion. Review the sources of information and make preliminary decisions ahead of time. Roleplay the discussion if necessary.
Be firm but fair in the determination to correct the situation. Listen with empathy and maintain the employee’s self-esteem.
Expect and manage employee hostility. Use empathetic responses and remain calm.
Concentrate on solutions, not the employee’s faults. Build on the employee’s ideas and help the employee overcome roadblocks.
Indicate support as this alone may cause a behavior or attitude change.

By following this playbook, you will improve the culture within your business, a culture that is built on honesty, respect, and support. While there will likely be some push back as you begin the process, you should eventually notice that the morale of your employees will increase along with productivity. As a small business consultant, we see this happen. Often, the initial phase can be rough at times. However, with the dedication and ‘trusting the process,’ you and your employees will see the benefits down the line.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Business Plans Provide Small Business with Direction

Are you a small business owner who has not taken the time to develop or update a formal plan for the business? Do you understand why business plans are essential? What could it mean for your business? What if you were told that there was a possibility for a $1 million return for spending only two workdays—16 total hours—developing a business plan? Would it be worth your time? This article simplifies the steps for writing a first-rate business plan and shares the benefits of having one.

It is not uncommon for a business to skip over having or updating a business plan. It’s one of those things that is easy to put off until it is needed. Sometimes understanding why or when it would be found to be valuable is unknown to the owner. As an owner, have you ever daydreamed about the fun for jumping right into starting a new business—bypassing all the planning, financials, paperwork, possible doubts, concerns and oppositions? Wake up because jumping into any business investment without the clarity of a well-thought-out plan is more challenging to navigate than staying off the interstate during a coast to coast drive without a map. Solid business plans function as a road map that specifies strategic stops that help steer the business to discover insights for the initial and long-term sustainability of any new venture investment. A well-written plan is structured beyond providing a determination for the probability of success. It is a comprehensive written document communicating the goals for the investment. It includes any required resources and provides the details for how they will be reached. Without it, the small business owner will find themselves lost at some point on the journey. The plan should incorporate information for the industry and provide specific details for how the business stands out in the field of competitors.

What happens when the time comes to expand or reinvest in a small business to replace worn-out equipment or make other capital improvements? It is not possible to get outside funding from banks or investors without sharing the business plan. The plan must share the business’ story—from where it started, where it has been, and where it hopes to travel. Having a business plan is critical for financial assistance from banks, investors, and bidding on state and federal government contracts. Financials are important, but they don’t always tell the entire story. If a bank or investor knew the small business retained 300 customers each year, they might be viewed in a different light, depending on the industry.

Approach it “one hour at a time”:

Business Plans for Companies from Small Business Consultants, Cogent Analytics

Description of the business. Provide a description of the company, including what it does, objectives and accomplishments, and what makes it unique, competitive, and successful. Describe special features that make the business attractive to potential customers considered the keys to success. Be a definite but concise as possible.
Executive summary. Identify the names and positions for crucial leadership.
Company Ownership/Legal Entity. Indicate what type of business the business is. Is the market a sole proprietorship, corporation (type), or partnership? You should also define the industry the business serves when possible; for example, does the company function in the manufacturing, merchandising, or service industries? If the industry requires licenses or permits, describe the requirements for acquiring them and where you are in the process. Identify whether this is a new independent business, a takeover, a franchise, or an expansion of formal business.
Highlights. Feature critical highlights such as charts that reflect sales, expenses, and net profit for the last four years.
Objectives for the business. Provide a specific definition of the objective and include a timeline for the identified goals.
Mission Statement. Enlist the help of key team members to develop one.
Location. Location is essential for some types of businesses, less for others. The following is a guide:
- A company that does not require specific location considerations could be an advantage and should be noted.
- If the location is chosen, describe the highlights for that setting. If the area is unknown, specify the key criteria for determining a suitable place for the business.
- Describe any particular area that would be especially desirable from a marketing viewpoint?
- Consider traffic access and flow, parking, street lighting, proximity to other businesses that may provide foot traffic, and probability for attention by the public passing by.
- Consider appropriate signage is appropriate and share any local ordinances concerning signs that might adversely affect or contribute to the business. For a start-up, include the cost of signage.
Hours of operation. List of the days and times the business will operate during a normal work week.
Products and services. Describe products or services and establish there is a demand for them. Identify the potential market, how they benefit customers, and discuss ideas for the ways a particular product(s) or service(s ) provide a competitive edge.
Suppliers. When information about suppliers, including any financial arrangements with them, is relevant information and should appear in this section.
Manufacturing. If applicable, the description of the process, including special machinery and facilities, is included.
Management. Describe how each management person contributes to the business and its impact on the overall plan. Include specialized certifications and licenses for each management person. Describe the chain of command and the company’s handbook provided to the workforce.
Financial Management. This section details how the finances are managed within the business.
Advertising, Promotion, and Marketing. Describe potential customers in as much detail as possible—who they are, what they want (and don’t want), and commonly-held expectations for the products or services offered. Describe how the business will be advertised, including social media, media (newspaper, magazine, television, radio), direct mail, telephone solicitation, seminars and other events, joint advertising with other companies, sale representatives, word of mouth, and any other avenues. Describe how the budget determined and how and how often the business tracks results.
Market segment. If the market is segmented, describe and include any details of segmentation governed by geographic area, product lines, pricing, or other criteria.
Competition. Describe others in the same industry within the demographic and physical location.
Pricing. Describe how the company developed the pricing policy referencing retail costs, competitive positioning, pricing below competition, pricing above competitions, multiple pricing, price lining, cost-plus pricing, mark-up, or other. Include and provide a comparison for the competitors’ pricing policies. Stipulate whether all prices are within industry averages.
Strategy and implementation. A strategy for implementing the business plans needs to be summarized. If the business is new, prioritize the steps necessary to open the doors. Describe the objectives and time frame.

Still unsure if business plans are worth the time to create it? Don’t go down the wrong road even when the challenge is not for a financial need. A good plan will keep the business moving in the right direction by setting S.M.A.R.T. goals and maintaining accountability.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Consistency: Two Sides to the Same Coin

What are the benefits of consistency to a small business? Most will answer it is a critical element for forecasting revenue, and that is true. It is impossible to plan for profitability without consistency. Businesses who are consistent know the direction they are headed, but many don’t understand that the principle of consistency provides benefits not only for the company but for their employees. For a moment, imagine holding a large coin with “Small Business Owner” written on one side and “Employee” on the other. Flip the coin over in your hand and consider how consistency impacts each side. How do the actions, or inactions, for each side effect profitability?

On the side of the small business owner, the prerequisite for consistency is, of course, the business plan. A business plan is the written description of the potential of the business. A good business plan provides the structure and organization necessary to evaluate how marketing, sales, products, services, customers, and other components should increase the probability of success. It communicates the long and short-term goals. It includes specific actions. While there will be some things that happen beyond the control of the business owner, identifying the KPIs (Key Performance Indicators) and consistently focusing on them, allows the business to forecast where it will likely be at the end of the year. Forecasting is the most valuable benefit for consistency. An owner can’t know where money will come from to cover raises, improvements, expansions, and other expenditures without an ability to forecast the expected revenue. Consistency provides this capability.

On the flip side, consistency offers excellent benefits for the employees. Believing the expectations for the satisfactory performance of assigned tasks applies to everyone empowers employees to confidently and comfortably work through their daily plans. When expectations are fair and remain the same, trust is built between managers and employees. Employees are more productive when they know management will not “flip or flop or stop” the expectations for each worker and work initiatives. The result is greater job satisfaction and increased productivity, which is the reward for a small business that holds the principle of consistency as a standard of work — being consistent results in predictability for all measurements. When management is consistent, employees are not surprised or confused about the expectations for them. The work environment is less chaotic. When employees can be counted on to work with consistency, their work results are predictable, and management can focus on other areas anticipating daily operations to function with less attention needed.

Consistency is the key in small business

If consistency is critical for the success of the small business, why are some small business owners failing in this area? First, many haven’t taken the time to identify their KPIs. These should be written down and should be measured. Some owners don’t know how to measure results. If a method for measurement is in place, the timelines for reporting how KPIs are measured must be evaluated and analyzed regularly. Inconsistencies in pricing models may also be a factor due to careless errors in calculation costs. These errors may be the result of a lack of accountability and discipline. Inconsistency in work methods—the way the job is performed each time—has an impact on revenue.

An example is in the construction industry, which includes general contractors, plumbing, cabinetry, HVAC, and small electrical businesses. Work methods must be consistent for pre-trip and end of day routines. Many small business owners experience pre-trip issues, such as employees leaving the workplace each morning without confirming that all materials and tools needed for the job have been secured, as well as obtaining any necessary permits. Returning to the workplace to collect any forgotten materials and tools or delaying or failing inspection results in lost time, fines, additional payroll hours, and other expenses. If the expectation for the end of each workday is for the employee to update job status and turn in any paperwork, it is essential to recognize that accurate billing for services and preparation for the next workday is hindered by the inconsistent end of day work methods.

But why are employees inconsistent? The first action for management is to train the employee for the job and give them all the tools necessary for success. During the training, it is essential to check for understanding. Communicate expectations and get agreement from the employee. They can be counted on to the job, right? Unfortunately, not always. When an owner or manager cannot rely on an employee to complete tasks for which they have been trained. The three most common reasons are procrastination on the part of the employee, poor time management, and the employee’s opinion they are not held accountable for their performance. Employees are very aware of the lack of enforcement for policies, rules, and discipline.

Still not sold on the power of consistency? Maybe it is easier to consider the outcome for consistently making the wrong choices. Now, contemplate the rewards when the principle of consistency is applied for the right work actions and attitudes. Employees are proud of being viewed as specialists in their positions. This is the outcome of the consistent expectation the job will be performed to the expected level of satisfaction. Take it one step further and consider how this impacts the customer’s perception of the employee/business? What is the potential referral power of every satisfied customer? This is just one of many ways consistency increases production and profitability.

In closing, there are two main reasons to explain why the business lacks consistency. The first is the most common. The time required for running the daily operations of the company leaves little time for the owner to identify and measure their KPIs. Many fail to comprehend the missed opportunities when this is not a priority. The second reason is that as a result of the first, owners do not hold themselves, their management team, and their employees accountable. Employees must understand that once trained; they will be held responsible for completing their work to the expectation of management.

Is consistency an opportunity for growth in your small business?

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

More Profit: Earn More Profit Than Last Year In 6 Steps

With the new year just underway, everyone is talking about New Years Resolutions, and every business owner has the same one: Earn More Profit than last year. Business owners often look at a new year as a new beginning; with a new year comes new goals and a unique opportunity to earn more profit than the previous year. Ideally, a business owner will have started this process in the 4th quarter; however, if they haven’t, it is not too late yet to prepare for the rest of the year. You must start by developing goals based on your objectives for the year. For starters, what objectives, often called KPIs (Key Performance Indicators), should you even measure? This will vary from business to business and industry to industry, but some of the most basic KPIs include:

Sales
Number of active clients
Profit
Productivity
Employee turnover %
Quality of product
Customer satisfaction
Customer retention

Once your KPIs have been identified, setting realistic time frames and frequency to monitor results is critical. While it’s great to have yearly goals, don’t forget to set some smaller period goals, such as monthly or quarterly as well. Remember, the longer the time allowed to achieve the goal, the less urgency is likely displayed toward meeting it by staff. Set up regular meetings, discussions, and report outs with your teams so that goals and results may be analyzed and updated with key team members regularly.

So, how do you get started? You can begin by following this six-step plan to prepare, plan, and present a meaningful roadmap for earning more profit in the new year.

Perform an in-depth analysis on what you accomplished this year with your stated KPIs and metrics. Compile and distribute year to date reports to understand where you succeeded and fell short. Don’t just post a scoreboard of wins and losses. It’s imperative to know the reasons why you achieved what you did. For example, ask yourself and the team:
- Did you predict the market trends accurately for the year? Did you course correct as conditions changed throughout the year?
- Were the targets set too high or too low? Were they adjusted up or down during the year as trends were analyzed?
- Did you have the right people in the right places to be successful?
Have in-depth conversations with your teams about what went right during the previous year and what you could have done better. This will help keep you from repeating the same mistakes in 2020 or abandoning successful practices from 2019 which is a sure recipe for disaster and missing out on making more profit. Business owners must understand where they have been to know where they are going.
Set company-wide goals and targets for the upcoming year. Collaborate with the leadership team to create high-level company goals for the forthcoming year.
Each department in the company creates their goals from the company goals. Each department should understand what the company is committed to achieving in the new year so that they can create their goals and tactics to support the overall company goals.
Ensure all your goals are S.M.A.R.T. S.M.A.R.T is an acronym for five essential elements of goal setting: specific, measurable, achievable, relevant, and time-based. Stay away from vague goals that have no way to determine if the objective was truly met. Once you do this, your S.M.A.R.T. goal of earning more profit in 2020 will be easier to attain.
Present your goals to the entire company in a clear, concise, and inspirational way. Your full company must buy-in to the plan and work toward the results every day. Spend a lot of time in this “buy-in” phase. You can hold department meetings, schedule one on one conversations with key employees, even present the entire plan again. A team is only as good as their belief in the mission.

Remember, the goal of any KPI or goal is to create sales and more profit for the business. As part of the goal-setting process, understand how much additional revenue each initiative will bring in comparison to the overall sales and profit goal. This exercise will help determine if the tactics you plan support the global goals. For example, if you have KPIs that call for 12 additional projects to be sold in 2020 vs. 2019, tie that back to how many sales dollars each job will create and do a full analysis to understand how much profit each job will bring. If the 12 projects don’t create the sales and profit goals, you must change either the goal or the tactic (i.e., # of projects) so that the two align.

One of the more essential parts of earning more profit is finding the “sweet spot” for goals that are challenging enough to stretch the business but not so challenging that they are entirely unattainable. Remember, one of the criteria of a S.M.A.R.T. goal is that it’s achievable. It may take a bit of trial and error to get to goals that challenge the staff, but it’s worth the effort. Make sure to include key team members (not just management) in this process. Getting the team’s buy-in during this process is a crucial component to success.

By the way, it’s okay if every goal isn’t met at the end of the year. Some people use the term “stretch” goal for targets that are achievable but just outside the comfort zone of what people think they can achieve. By creating these stretch goals, you have a much broader avenue to manage for success. The best-case scenario will come when the team is suggesting even higher goals than you thought were possible. You may need to talk them off the ledge a little bit and move them back to an attainable goal, but the enthusiasm and buy-in from the team that created the higher goals is a critical element of success and earning more profit.

As with any plan, much of the success is found in the execution. The critical thing to remember as we begin the new year is that you must set goals and benchmarks for your business to earn more profit in 2020 than in the previous year. Once your plan is in place, work it very day. Throughout the year, goals and objectives will likely change but, don’t worry; that’s all part of the plan.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Ask for an Advisor

If you are in the market for a consulting firm, then you should always make sure that you are in control of the conversation. To ensure that you are getting actionable guidance rather than a flimsy sales pitch, you should talk to an advisor as opposed to a salesman.

This distinction may seem minor, but it is integral. A salesman’s duty is to encourage you to purchase the package or service. A conversation with a salesman is one that is intrinsically pressuring you to purchase. Even if they are not manipulative, their goal is the sale. Your purchase is their concept of success. In the long run this could benefit you, they may be a fantastic consulting firm, but the relationship is starting off on the wrong foot.

Speak to an advisor. To an advisor, success is improving your business. If you are trying to decide between firms, meet the people who you will be interacting with directly. Do you mesh well? Are they reasonable? Can you see yourself pursuing a relationship with them?

We have recently opened a communication avenue where businesses can speak with us openly on the challenges they are facing. Our prospective clients loved it. By providing them with direct access to our advisors, we removed the pressure to purchase and start the relationship off with a constructive dialogue. The prospective clients were able to determine if the advisors were a good fit. Since our advisors are business professionals who have a tremendous amount of experience in consulting, they were able to provide prospective clients with more information than a sales force would be able to.

These no-obligation calls are a growing trend in the industry so even if the firm that you are considering doesn’t initially offer one, you should request one. Request to speak with one of their advisors and see what they say. If they are afraid to put you in direct contact with one of their business advisors, then you should ask yourself ‘why’.

What you can expect during the no-obligation call?

Most of the time, these calls last for a few minutes. But these could be the most important few minutes that you, as a business owner, will spend for your business.
During this time you can learn more about the strategies that successful companies used to excel in the current economy.
You can access key strategies which can be quickly implemented to benefit your business.
Don’t expect one of these calls to cure every trouble spot instantly, as there is likely much work to do.

At Cogent Analytics, we have made a no-obligation-conversation free and easy.
Just fill this form or call us (336) 665-8154 to start a conversation with a business advisor.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Inventory Management in 3 Steps

Many businesses manage inventory well. Firms that recognize the importance and benefits of excellent inventory management, typically have better customer service, higher margins, and more robust cash flow. Follow the below three steps to improve your product management.

First, you need to have the products organized and a system to track inventory. While this sounds simple, many smaller businesses without an ERP system overlook the importance of even a simple spreadsheet that can record and track stock on hand. Stock is an asset, and it should be treated as such. When supply is untracked and unorganized, the result is more time spent troubleshooting, which can lead to unnecessary purchases. Keep track of what you have on hand and what is on order and ensure the inventory records are accurate. Proper management will save time and money and will increase efficiency and productivity.

Second, forecast your demand. In addition to being organized and tracking on-hand inventory, it is also essential to have a system or process to predict the market to determine needs before they are needed. Identify which items are high moving and stock those, if you can delay purchases do so. Cash is always something to manage and optimize, and proper stock management will maximize the money tied up in inventory. Don’t waste precious capital on slow-moving products. Proper demand management helps you figure out exactly how much inventory you need to have on-hand so that you to stock just enough inventory and minimize what is required in the warehouse.

The third is having a specific area for receiving and stocking products or materials, which should include a designated area for returns. While this is technically keeping organized (step one above), a good inventory management process requires extra discipline concerning returns. Returns need to be processed quickly, and often a proper return authorization (RGA) is required. Ideally, there should be a visual cue to identify what returned inventory needs an RGA, what has a pending RGA, and what stock has an RGA and is waiting to be returned. Once you get authorization to return, do it quickly. You have already paid for the inventory, and it will take time for your vendor to process the return and give you credit.

Proper stock management both requires and promotes an organized warehouse. If your warehouse is not held, you will have a challenging time managing your inventory. Better inventory planning (forecasting) will help identity which products are needed. If your product list is organized correctly, there will be a clear way to tell what products are stocked. Be space-efficient and cost-effective; proper inventory management is a sound business strategy.

Businesses can control inventory to increase profitability in their business. When a company manages inventory well, it will reduce the cost of goods sold. They will also be able to order more of the materials or products that sell well rather than ordering the things that do not sell as well and take up a useful resource, space. When businesses can keep a better supply of in-demand products, they are more likely to sell that product to a customer, rather than losing the customer to a competitor when they are sold out. This will increase revenue and the customer experience leading to the retention of customers for the future.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

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Utility

Knowledge Center

Start By Reviewing The Balance Sheet and Accounts Receivables Aging Reports.

Establish a Collections Approach

Establish Solid Policies and Stick To Them

Look Within Your Own Business

Marketing and its Importance to Business

Types of Marketing

How Marketing Strategies Lead to Success?

Impact of the internet on Marketing

Bottom Line

Pitfalls of a Poorly Designed Incentive Program

How to Design a Successful Incentive Program

Designing Group and Individual Incentives

Momentum, Metrics, and Money

Why to Learn How to Assess Revenue

The difference between profit and revenue.

Which customer account is more profitable to the processor?

Still, it’s big numbers that get the attention of management.

Because incentives are based on revenue, salespeople will go to any lengths to win big-name, big-volume, and significant revenue accounts.

Refocus on profit by understanding how to assess revenue effectively.

If large Corporation’s struggle to effectively plan for succession, what can we expect for Medium and Small Business?

Changing Times?

Creating an effective succession plan in 7 steps:

1. Define the context:

2. Definition of concepts and potential:

3. Define performance criteria:

4. Have clarity in the strategy and vision of the future:

5. Build a talent matrix where potential vs. performance intersect (Nine Box):

6. Know the type of position and the associated risks for the person who occupies it:

7. Recognize the experience that potential candidates must have for each position:

Defining time management.

Time is an essential resource for a business.

Time Management Skills

An active workforce equals accomplishments. (AKA, Busyness doesn’t necessarily result in business).

The owner or manager always make the best decisions.

Practice delegation to save time and increase efficiency.

Some managers are irreplaceable.

Managers who are successful are the most efficient.

An open-door policy means always being available.

A good manager can fix every problem.

“Shortcuts” save time every time.

Most items on a “to-do” list will never be checked off.

What does this mean for the small business?

How Is It Possible?

Let’s Take a Look

Pricing Strategy Errors

Error One

Error Two

Error Three

Pricing Strategy

Importance of Workflow Optimization

10 Workflow Optimization Strategies that you should know to Improve Performance

1. Analyze the Ongoing Workflow Process and Identify Areas during the Process

Actionable tasks for you would be:

2. Streamline the process by Automating Routine Tasks Automation.

3. Focus on Prioritizing Projects based on their Importance and Urgency

Actionable task for you would be:

4. Visualize the process for your Team Members

5. Master the art of linking the data to Master Data

6. Always focus on Re-examining

7. Keep an eye on the Budget and Allocate Budgets Effectively

8. Don’t Underestimate the power of Proper Training

9. Make use of the Tools Available

10. Do not overburden Your Employees

Skills

Well Organized People:

The Four Tools of Microsoft Outlook:

Email:

The Four D’s:

Email Tips:

Email Ribbon Options:

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Folders:

Deletion:

Spelling:

Reminders:

Rules:

Archive:

Calendar: