Food for Thought "If you have the right people, with good, basic values and good work ethic, you can have a tremendous journey."

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Food for Thought 2 "The follow-up in my Food for Thought series, with more focus on my experiences with Six Sigma and Kaizen."

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October 31, 2012

Balance Sheets and Income Statements :: What do they really mean?

Filed under: Food for thought for friends — Alec @ 3:35 pm

It has been 25 years, but I have read and reviewed hundreds of Balance Sheets and Income Statements since I sat through those “Stock Analysis Finance” classes. You can break For Profit Businesses into 4 simple categories:

Cash Cows :: Making lots of money, have market share, does not require a lot of capital [for example Orthopedic Hip & Knee Industry].

Dogs :: Losing market share and not making money [for example Kodak].

Star ::  Making money, has a good market share, growing and long range potential [for example Apple]

Oil Wells or Questions :: Not making money or not making much, requires lots of capital,  but huge long term potential [for example facebook].

All these companies must make money and maintain positive cash flow or have investors with deep pockets. If they don’t they will either go out of business, be sold, merge, etc. When they have to make changes like those I just mentioned, investors, employees and retirees are at risk of losing their stake. It doesn’t take long for big changes to happen, it can be only a matter of a few years.

The Balance Sheet tells us cash flow, long and short-term assets and debts, and usually inventory is in the asset column. The Income Statement tells us profit, but it can also include adjustments for inventory. The Income Statement is Sales (Revenue) minus Expenses. When a company makes money it is used to pay dividends, invest in new capital, invest in growth etc.
When they make more money than the market expects, their stock goes up. When they don’t, their stock generally goes down. And when a company loses money on a continuous long run, or unpredictably, their stock goes down.

The Chairman and his team’s objective is to grow Revenue and Profit percentage every quarter and every year, with the goal of it being higher than the previous. When it doesn’t happen this way, the stock market and stock price reflects poorly. When a company doesn’t make as much
money as the stock market expects, crazy things happen like drastic moves South or worse, to Asia. Sometimes the new location will offer a company huge tax incentives, pay for new capital, and maybe long term income and property tax credits. I am not advocating this approach. It frequently happens in our world today, even if the domestic plant currently is profitable. If the profit isn’t what the stock market wishes, the company may struggle. Raising taxes on local plants can drive a profitable company into a situation where the incentives to move outweigh the reasons to stay.

So what happens to us?! Your 401k, your IRA, your pension fund… is all in these stocks. When companies don’t make money, your financial future is at risk.

It’s scary to think that a company can make a 10 to 20% profit and go out of business. Cash flow and suppliers can put a company out of business. Pitfalls are everywhere : the tendency to over borrow, if a customer doesn’t pay on time or at all, if they over invest in new capital or expansion, or if the bank stops lending to them, the company can end up with lots of assets but no cash. A good example of this happened at International Harvester in the 1980’s. They overbuilt tractors and combines. Many more than they could sell and more than they had the demand for. Profit looked great due to generation, but they went bankrupt.

Business is not as simple as just being profitable this quarter. Being a success in business can be complicated. So what do YOU do? Let US help you be a star of the business world!

October 24, 2012

A Common Sense Approach to Sustainability by Tammy Kohl & Contributing Authors

Filed under: Recommended Reading — Alec @ 12:03 pm

A Common Sense Approach to Sustainability by Tammy Kohl & Contributing Authors

A very interesting read and much different than I expected. I guess that is why you can’t judge a book by its cover! From the title I expected the focus of the book to be on environmental friendliness, which it did include, but book contained much more.

The definition of sustainability by this book’s definition: How to stay in business successfully now and in the future as well as be community and environmentally friendly. The book was written to help understand and encourage business owners that sustainability is a strategic decision. It has become a best practice and core value in business.

Sustainability is about profit growth now and in the future, planning and optimizing resources to support execution in all areas of business. This book provides an overview and concise guide to implementing environmental and business sustainability in order to achieve future successes.

In my own words, a business leader’s role is to paint a picture of the shining star in the sky on the horizon. The leader must then direct management and the organization as a whole towards the star. The clearer the picture and the clearer the path, the better the team will be aligned and the higher the chances they will arrive. Careful selection of new team members can help navigate your organization to the destination point, and help springboard painting the next picture or new star.

Things to consider:
pg 31: What would it mean to your business if you had zero effluents, no solid waste, no liquid or gas exhaust? What if all by-products were sold and you didn’t send anything to a landfill? Even stuff from the break room was recycled?

pg 76: Sustainability is about meeting or exceeding all the stakeholders GREEN expectations. Stakeholders include owners, employees and the community. Sustainability requires a whole shift in paradigms and a belief that we can find a way.

pg 46: Reduce usage and waste, Reuse, Recycle, Sell waste products

pg 60: Sustainability has a marketing advantage

pg 62: What do you think about a bank that accepts checks deposited remotely, paperless?

pg 77: Sustainability research: Take the time to investigate at all your waste streams, measure, and track, compare. Be informed.

The Small Business Association says the small businesses represent 99.7% of businesses, employ over half the private sector jobs, and create 64% of the new jobs. This book provides insights on how to be part of the success of small business as the marketplace evolves.


October 17, 2012

Expect What You Least Expect

Filed under: Food for thought for friends,Motivation — Alec @ 12:56 pm

Ever play chess? Usually you plan and strategize a couple moves, maybe 3 or 4 in advance but have some other plans in case your competitor changes the game on you. Have you ever found yourself with a better next move because of the choices your competitor made?

Are you a fan of the Peanuts cartoon? My favorite is “Spike and the Fox”. Spike was Snoopy’s cousin. He decides to go on a foxhunt with all his bigger, faster dog friends. But after a short period he is left far behind, and it starts to rain. He gets cold and hungry. Just when Spike thinks all is lost, the Fox comes along and show Spike the way home.

My point is, sometimes the person you least expect can help you. Often, we learn the best lessons from the most unlikely source, even someone you may consider an adversary. Don’t be afraid to help someone, or let someone else help you grow and learn.

October 11, 2012

No Man is an Island

Filed under: Food for thought for friends,Motivation,Services — Alec @ 10:35 am

One person–one man–can’t win a football game by himself. A great individual effort can certainly make a big difference but even Barry Sanders, Walter Payton, or Aaron Rodgers can’t win football games by themselves. Without a great offensive line, they were nothing. Even a great offensive line can’t win without the defense. However, one man can lose a game. One poor performance can cost the team with a dropped pass, a missed field goal or a fumble. If you don’t have all the parts of the team working together, your favorite team is only mediocre.

It is the same in business. No one person makes the company successful. Everyone must work together like a finely tuned racing engine. We must be exceptional in our execution of the fundamentals and stay focused on the customer, making money now and in the future. If we improve “customer delight” through zero errors, zero defects, kept promises and exceeding expectations, we will take giants steps with our customer’s satisfaction.

That being said…YOU are IMPORTANT! You are part of the team. We need great individual efforts, but it’s even more important that we help each other improve. When we learn from our mistakes, we help others avoid repeating our mistakes in the future.

October 4, 2012

A Little Goes a Long Way

Filed under: Sales,Services — Tags: , , , — Alec @ 12:47 am

Kindness. Have you ever wondered why some employees at stores are always friendly? Sometimes their friendliness is the attitude at a particular store or chain. I have been shopping a lot lately at Menards and Lowes. In my experience, it’s hard to find a person to help you in either, but 100% of the time when I do find a person at Menards they are extremely friendly. When I find a person at Lowes, about 50% of the time they are very friendly. I think it even applies to the person at the check-out, although they tend to be the friendliest of all the store employees. So let’s say 100% friendly at Menards, 75% friendly at Lowes (thank goodness for the cashiers!). Menards even has a “have a nice day” person at the exit.

The friendliness could be coincidence or a certain location. Maybe it is that the Store Manager at Menards is a really
nice person, very customer friendly and the culture has filtered down.

But I am guessing that it is part of the store brand and that there has been some customer loyalty training. If you really want to sell, have return customers and referrals, and grow your network, you MUST be genuinely friendly. Don’t fake it; hire good people with positive attitudes. Train them to be outgoing and considerate. Give them a few elementary rules:

1.   Say please, thank you and have a nice day (I say have a “Peachy” or “Grape” day)

2.   ALWAYS use an out-of-office on your voice mail and email when you are away from the office

3.   Have a signature with your full name, company name and phone number on
your emails.

4.   Always respond promptly (less than 4 hours) to emails and phone

5.   Smile. Often.

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