John D. Rockefeller was a famous industrialist and philanthropist. He founded Standard Oil Company and became the world’s richest man controlling 90% of all in the US at its peak. His fortune at his death was $23 billion in today’s dollars. He was also well known for his generosity and donated over $500 million to charities with medical and educational focus throughout his lifetime.
Last week we did a deeper dive in to Shortening Cycle Times. This week we’re going to talk about how to eliminate mistakes. No matter what type of business you’re in, we’ve all made mistakes in our sales cycle, production/delivery cycle or billing/payment cycle. As we try to shorten cycle times, that means we’re going faster. Often mistakes occur when that happens. Your sales person quotes the wrong price or doesn’t have updated costs in his quote. Your production people miss the specifications of the client’s product and you’ve created waste. You bill the client for the product but don’t include shipping or freight. All these things have a negative impact on profitability. So, how do we eliminate mistakes?
Last week, we had an overview of “3 Tips to Manage The Madness In Your Business.” The first tip was shortening cycle times. Depending on the type of business you’re in, all of us have a sales cycle, delivery cycle and a billing/payment cycle. If you’re a product, manufacturing or contracting company, you also have inventory or work in process, which is included in your production cycle. In theory, if you are able to reduce the amount it takes to sell, make, deliver or collect your business can do more in the same amount of time. Depending on your strategy and processes, you would choose to improve the cycle that has the most impact on your business either in financial or non-financial terms.
In our last post, we discussed that of the 4 critical items, (Profitability, Asset Quality, Liquidity and Leverage) 3 of them are from the Balance Sheet. The 4th, Profitability is on the Profit and Loss Statement, sometimes called the P&L or the Income Statement.
We believe it’s critical for every business owner to know how to manage money once it’s in the business rather than just making sales. And it can be even more impactful if all employees are empowered to know how the decisions they make affect the bottom line and top line of the business. In order to drive performance in your organization, you should have priorities based on the metrics you measure for your business. Those metrics are typically in the areas of profitability, asset quality, liquidity and leverage. (PALL)
I thought this would be a good follow-up to my last post “5 Things to Know Before You Borrow.”
Many of us get an annual physical, the doctor checks us out to see how things look like cholesterol, blood pressure, heart rate and respiration and compare them to last year. We want to manage our physical health to be the best version of ourselves we can be.
A very successful business owner and mentor of mine used to say, “The path of least resistance is what makes men and rivers crooked.” In your business, the path of least resistance is using a credit card or some other form of borrowing. Before you know it, the amount of debt has piled up, the interest you pay on the debt is significant, sometimes 18-24 percent, and you begin to question whether borrowing the money was a good idea or not.
Sometime ago I read an article about Pete Maravich, former LSU and NBA basketball player and what made him so successful. When asked that question by the sportswriter, he answered “before I take the shot, I can’t see myself missing.” While it would be easy to interpret that comment as arrogant, the article stated that what he meant was he pictured the shot “in his
mind’s eye” as going in before he took the shot. Pete Maravich had a vision of the shot going in.