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by Terry Myers Terry Myers No Comments

Apply business life-cycle thinking to your product and service portfolios

We use the term “business cycle” to describe economic conditions like growth, decline, and recovery. 

Some industries have business cycles that may differ from the general business cycle.  Some decline sooner than others.  Some recover later than others.  For example, strength or weakness in the transportation and logistics industries are early indicators of economic expansion and decline.

We use the same business cycle terminology to describe companies.  There are start-ups or early development companies, rapidly growing, and mature companies.  There are also companies in decline and those trying to jump-the-curve by innovating or returning to profitability.

Likewise, business cycle terminology applies to product life-cycles.  Some of your products may be “start-up,” some may be “mature.”  Others may be “growth” or in “decline.”  You may be developing a platform of new products and services to “jump the curve” to future growth.

Understanding your industry’s business cycle and your product and service life cycles are important planning tools.  You may have access to published data, or anecdotal information, or a combination of the two.

Understanding your position – compared to your competitors – may influence your planning and investment decisions.

  • What is the future of your industry?  Where and why?
  • What skills, products, services, and technologies will you need to compete? 
  • How can you use your current service offering(s) to help you bridge the gap to be more competitive?
  • Where and how should you be spending your investment dollars?  Investing in training and education?  Equipment and technologies?
  • How can you expect current and future product offerings to influence your profits and margins?
  • When should you begin transitioning to a new strategy?  Do you want to risk leading or risk following?
  • Who – inside or outside of your organization – has the vision and skills to lead your people, manage resources, and understand the competitive pace-of-play?
  • How can you minimize obsoleting past investments in your productive capabilities?
  • Why are you comfortable with these conclusions and plans?  Have you considered all the reasonable alternatives?  What could go wrong?

These are generic questions that apply to many.  Search your company’s knowledge, experience, and understanding to find others.

Then, talk with your customers, suppliers, and supply chain colleagues. 

Also, consider unrelated industries to learn about their processes and technologies.  They might be offering product and service approaches that easily lend themselves to your industry.

If you are building your company for the long term, become a student of your industry’s business cycle and know your product and service life cycles.  Aggressively differentiate your company and develop momentum to jump-the-curve.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant.  He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com

by Terry Myers Terry Myers No Comments

Major change is a commitment to a new beginning

As a manager, you often think about the next change that will affect your business.

In managerial language, a “change” may be as simple as some new procedures or product variations; or as complex as implementing a new strategy.

Managers often see change as “something we must do, so let’s do it.”  They issue memos to explain the situation, assign accountability, and the start date.  Then, it is on to the next issue.

However, others see, and experience change differently.  They see the details, and people and process interrelationships.  Depending on its scope, an individual “change” may take a week, months, or even years to completely implement.

We hear and use the word “change” so often that we ignore the difference between “a situational change” and “a major transition.”

In her book, Managing Transitions (25th-anniversary edition), Susan Bridges makes a distinction between simple change and significant transition.  Transitions are entirely new beginnings.  They imply a finishing the “old” and familiar and beginning an altogether “new.”  Beginnings include new emotions, risks, and experiences.

Examples of transitions are implementing a new strategy, new enterprise software, succession plans, and organization changes, major technology initiatives, a business unit sale or acquisition. 

Bridges offers a mental model for leading and managing a transition:

Endings → Neutral zone → Beginnings

The neutral zone – the gap – is an emotional state people feel when the past is ending, and a beginning is on the horizon.  It is the gap between the known and the unknown, the familiar and the unfamiliar. 

Each person manages their gap differently – some faster or slower than others, some more emotionally than others.  A few may need more nurturing and personal attention.

Give them the tools for navigating and understanding their transition to the future state. 

Managers need to help their people and perhaps each other through the process.

Here are four simple tools (4-P’s) that can help you and your people navigate the transition –

  1. Purpose – sell the problem, then the solution; avoid the same tired expressions (“we have to be competitive”); make the reason for a transition meaningful.
  2. Picture – sketch flow-charts and diagrams, do walk-throughs and pilots, develop tools to help people get comfortable with the future condition.
  3. Plan – outline and communicate the relevant steps for training and testing, connect with people to show your empathy and concern for their success, post plans and share progress often.
  4. Part – explain their role(s), ask for input and feedback, share ownership and success.

Use all four tools.  Communicate your message using multiple forms and forums.  Repeat, repeat, repeat.  Some people may not understand.  Some may not listen well.  Some may have other issues on their minds.  Some may not take you seriously.

Bridge’s guidance is valuable.  Your next “change” may not be a simple situational change.  It may be a “transition,” and you might need a new paradigm and a separate set of tools and skills to lead your team.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant.  He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com

by Terry Myers Terry Myers No Comments

A tool for managing short-term cash flow


When there are cash shortages, cash controls your business.  Stress levels increase, and the answer to the simplest question depends on your cash balance.

Poor cash flow is not just Finance’s problem.  It is everyone’s problem.  The pressures to collect cash for paying payroll, payroll taxes, suppliers, and lenders effects Sales, Operations and Finance.  There are often closed-door meetings and phone calls, and concerns that both insiders and outsiders will hear about it.

A tool for getting control of your cash-flow is a Thirteen-week cash flow forecast.  The Thirteen-week cash flow is a spreadsheet organized horizontally (week by week) and vertically by forecasted receipts (cash-in) and expenditures (cash-out).

The ending cash balance each week is the beginning cash balance for the following week, and so on for thirteen weeks.

Some include effects of their revolving credit agreements and calculate the details of available line-of-credit draws and payments.

While forecasts are always wrong, they quantify all the details to clarify problems and opportunities.  After a few iterations, it is all there in black and white.

Once formatted to your company’s needs, the Thirteen-week cash flow allows you to plan and adjust for unexpected hiccups.

The process of building a 13-Week Cash flow model is straight-forward –

  1. Start with a 3-month week by week sales forecast.  Salespeople know your customers better than anyone.  They know what, when and why customers buy your products.
     
    Be conservative.  Follow the 80/20 Rule and use the A, B, C forecasting method. Forecast larger customers then move to the smaller ones.
  2.  

  3. Credit people can estimate cash-in week-by-week based on customers’ prior payment histories.
     
    Estimating cash receipts from current receivables is the highest priority.  Using the same payment histories, estimated receipts from the Sales peoples’ three-month forecast.
  4.  

  5. Payroll and Accounts payable people have the details of the payment requirements – payroll dates, payroll taxes due, rents, supplier invoices, banks payments, etc.  Schedule individual payment estimates over the 13 weeks – week-by-week.
     
    Some choose to detail larger supplier payments line by line, then group smaller suppliers as one.  Reschedule missed supplier payments into the future.

The first draft of your 13 Week cash flow will confirm “how bad” your condition.  It is all on one page, and you can check it daily.  Repeat the 13 Week process every week until you learn to improve forecast accuracy.  You will learn to refine details through repetition.

Once you feel a sense of control and have some “best estimates,” you can contact third parties, discuss your situation, and renegotiate terms.  Moreover, your banker will have a sense of confidence that you have a plan and may be willing to help.

Use the Thirteen-week cash flow tool for getting control and keeping control of your situation.  It is not just for cash crises.  It is a useful tool for year-round cash management.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant.  He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com

by Terry Myers Terry Myers No Comments

Stop and think, then decide

 

Thomas J. Watson said, “The trouble with every one of us is that we don’t think enough.  Knowledge is the result of thought, and thought is the keynote of success in this or any other business.”

Some managers struggle to take time to stop and think before making decisions.  In the quest for results, they see thinking as something other than real work.  For them, it is wasting time.

But, it takes thought and time for managers to consider various inputs and alternatives and make good decisions.

We have all studied a failed project and asked ourselves, “What did we think when we…?”

Do you find yourself making early commitments to innovative ideas or projects because things feel right?   Or, staying with the plan despite poor information and flawed assumptions?

Sometimes we invest so much time and money into a project that it is emotionally prohibitive to walk away.  By pressing on, we create deeper trouble and greater stress.

If you are planning, or asked for input, or making decisions; be realistic.  Ask yourself and listen to your people –

  • Are we objective?
  • What have we learned from prior projects and post-mortems?
  • Would others take similar actions to reach the same goal? Why, or why not?
  • What are the alternatives?
  • How do we know that we are right?
  • Then, ask the pre-mortem question: what could go wrong and how will we manage it?

Learning results from thinking – both your thinking and your organization’s thinking.  Making informed decisions based on reasonable risk and contingency actions is one thing; wishful-thinking is another.

When you make decisions, get away from the noise and pressure for action.  Make some quiet time to think and reflect.  Consider all the inputs.  Be objective and rational.  Then decide.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant.  He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com.

by Terry Myers Terry Myers No Comments

Every business needs a plan

Your business plan is your primary business development tool.  It communicates your vision, direction, and goals.  It defines the organizational structure, sales, operating, and financial performance benchmarks.

From the outset, Owners should lead the planning process.  They should explain their vision, direction, goals, and guidelines for investment, debt, etc.  Managers and key staff prepare the plan for presentation and review by the Owners and the Board.

Planning engages people at all levels, encourages debate and decision-making.  Plans answer the what, why, when, where, who and how questions.

A summary plan does not need to be more than 3 to 5 pages.  Across the planning horizon, the plan should declare your business’s:

  1. Purpose and goals;
  2. Internal strengths and weaknesses, and external opportunities and threats;
  3. Organization structure and accountabilities;
  4. Core capabilities and processes;
  5. Significant operating policies to add, remove, or change;
  6. Sales, operating, and financial priorities and targets;
  7. Major projects and initiatives;
  8. Significant risks to mitigate; and
  9. Financial forecasts, ratios, and covenants to monitor.

The Strategic Planning horizon is usually three to five years.  Annual Operating Plans are twelve-month rolling plans.  Strategic Plans are reviewed quarterly and updated annually.  Annual Operating Plans are reviewed monthly and updated as corrective actions or amendments are necessary.

Many companies do not have written plans – some say that they do not know the future, they are too busy, or ______ (fill in the blank).

While no one knows the future, an organization needs to have workable strategies, plans, and policies for distributing resources to meet customer, labor, and financial challenges.

An unplanned business is an under-managed and under-led business left to personal notions, and there is no structure for prioritizing and filtering decisions.

Owners and managers need plans to communicate and align resources.  Managers and employees need plans to understand which opportunities to leverage and what priorities to execute.  All share ownership in results when plans are routinely communicated and measured.

When there are written plans and organizational buy-in, there is a roadmap for communication, measurement and business development.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant.  He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com.

by Terry Myers Terry Myers No Comments

Litigation is like running hurdles

Our division was making strong profits and under serious competitive pressure.  The parent company was profitable.  Its stock was doing well.

I was assigned to visit with our law firm to investigate possible litigation against Korean manufacturers for product dumping.  There was no question of dumping.  The Europeans investigated us and found that we were not the culprits.  The only group left was the Koreans.

Ralph was the lead international lawyer at our company’s law firm.  He had a strong reputation for successfully litigating against foreign companies.

After laying out our evidence – costs, etc. – Ralph offered an interesting observation.  He said three things: we appeared to have a strong case, we could expect to spend a lot of money to pursue our case, and that the money would be better spent on product development rather than legal fees.

He went on to explain that a legal case is like running a hurdles race.  Every time a runner jumps a hurdle, there is another one thirty yards down the track.  The only difference between a hurdles race and a legal case is that the track event has a defined distance, but a legal case goes on and on.

I went back to our management team with Ralph’s comments.  Cooler heads prevailed, and we put the money into product development.

We got the invoice and gladly paid it.

If you haven’t ever participated in a legal proceeding, think about the unknowns.  There are strong egos, sleepless nights, recalled facts and conversations, late night note-writing, endless financial analyses, proofreading drafts, pleadings, depositions, hearings, continuances, and delays.  That’s before your case gets to trial.

If you win (or lose) at trial, there is always Appeal, possible reversals, etc.

And, throughout your case, you assume that you will get compensated if you win.  However, winning only earns you a judgment.  Collecting compensation (cash) to pay for your loss and the cost of your attorney fees is another issue.

There are lots of attorneys with lots of opinions – all serving a limited pool of clients.  Use them wisely.  Excellent attorneys provide valuable assistance helping you defend, negotiate, and interpret laws and regulations.  But litigation is another matter.

Remember Ralph’s advice.  Add potential lost time, energy, emotional stress, and ego to the cost of legal fees.  Then ask, is it all worthwhile?  Maybe not.  Choose wisely.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant. He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com.

by Terry Myers Terry Myers No Comments

Help for visionaries

 

Every company needs visionaries.  They challenge the status quo.  They motivate us to innovate and move forward.

But, some visionaries come into meetings, spew ideas, and rearrange the deck chairs.  They leave everyone asking do we follow their lead or continue to follow our plan?  Everyone knows that tomorrow the visionary will bring a new group of ideas and everything will change again.

I talked with a guy whose boss owns a $50M company.  Their visionary Owner dominates staff meetings with new ideas and priorities.  While people admire his energy and creativity, their morale suffers.  They leave meetings wondering where are the resources and how will we execute?

By comparison, we worked with a visionary Owner whose company was very profitable.  During the company’s early days, he was disruptive.  He had too many ideas, too many priorities.  Everything was askew.  Yet, they made money.

Then, someone took him aside and told him that he needed to reign in his ideas if the company was to grow.  He created too many distractions and a lot of disruption.

He listened and adopted the discipline to control himself.  He began carrying 3 x 5 cards and wrote down his ideas.  Then he took the time to think and make additional notes.  His Assistant filed the cards.

Once a quarter, he and his Board reviewed the entire inventory of 3 x 5 cards.  The Board included internal and external Directors, and he listened and respected everyone’s input.  Discussions went into the wee hours.

They discussed every card.  Some ideas were good, some not so good, some deferred, some discarded.  Some ideas were adopted, accountability and resources assigned.

Every quarter, they conducted the same activity.

Visionaries are necessary.  They challenge us, and they create anxiety and aggravation.  But they keep things moving, improving, expanding and growing.  When they are sensitive to people’s ability to digest and transform their ideas into executable actions, growth and profits follow.  Morale is strong.

By contrast, a flurry of random, disjointed and disconnected ideas creates organizational indigestion and angst.  There is confusion and frustration.  Morale suffers.

Not every idea is a good idea.  Good ideas need time to germinate, take root and sprout.  Other ideas need delay and pruning.  Some need weed control.

Consider the 3 x 5 card approach for managing your visionary’s ideas.  It’s the opposite of Ready, Fire, Aim; but it keeps things organized, moving, and stretches everyone’s thinking.  There’s time for buy-in, alignment, effective planning, and execution.  It’s disciplined, and it’s simple.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant. He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com.

by Terry Myers Terry Myers No Comments

Devote time to reading and learning

 

Some time ago I found an article – “The Discipline of Reading” by Brian Tracy.  Tracy is a well-known motivational speaker.

The message is simple: leaders are readers, leaders are learners.  I strongly agree.

When I conduct client education sessions, I dedicate time encouraging managers to cultivate a commitment to life-long learning.  Business approaches and ideas change rapidly.

If you are already committed to reading and life-long learning, Congratulations!  If you are not as disciplined as you wish, act.  When you’re giving performance reviews, admonish your people to make reading and learning a habit.

I have liberally quoted and condensed Tracy’s article.  I cannot find a web link.  Here’s is the essence of his advice.


Some things in life are optional, and some things in life are mandatory.  Building a personal library and becoming an excellent reader is mandatory, essential and indispensable for success and self-motivation.

Most people read very little; 58% of adult Americans haven’t read a nonfiction book from cover to cover. The average American reads less that one book per year.

According to a Gallup study of the most successful men and women in America, reading one nonfiction book per month will put you into the top one percent of living Americans.

It takes regular, persistent reading and studying for you to improve, and to move to the front of your field. Reading is not optional.

Tens of millions of Americans have graduated from high school with poor reading skills.  Others do not understand how important it is to read.

Lifelong learning is the minimum requirement for success in any field today.  Your ability to read well is critical to your success.

Some people do not read because they are lazy.  They don’t have the motivation to read, learn new knowledge, new ideas, and new theories.

Life-long education is not something that can be done for you by others.  In school, you listened, completed assignments, and took exams.  At work, you’re responsible for your own education – buying books, planning courses of study, and continually upgrading your skills.  Today, you are in charge – it’s all up to you.

For the present keep yourself current in your field reading news media – magazines, newsletters, journals, books, and other materials. 

Invest in the future while you read for the present, read another hour each day learning something new – new ideas and insights.


Tracy offers a powerful message about reading and learning.

Ignoring your professional development is a serious career risk.  Don’t get left behind.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant. He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com.

 

by Terry Myers Terry Myers No Comments

Learning, unlearning and more learning

Many think that achieving a degree or professional certification is enough for business success.  It’s not.  Many successful people have little or no formal education.  They’ve worked many hours and earned their share of sweat-equity.  They’ve experienced successes and setbacks.  They’ve analyzed, reflected and learned when others might have quit.  They may be your competitors.

Business success depends on your and your organization’s ability to learn, unlearn and relearn.

There’s a big difference between sitting in class, listening to professors, writing papers and taking tests; and struggling with everyday business challenges, customers, employees, profit-making and loss-prevention situations.

Professional certifications are meaningless if there is no commitment to professional and personal development.

Success in business requires mastering skills like leading and managing others, networking, selling, collaborating, reflecting, discovering, decision-making, and ignoring the irrelevant – all in real-time.

What challenges will your company and your profession be facing in the next year, or five years?

Whatever your role there are emerging issues, breakthroughs, and new approaches that go far beyond deadlines and to-do lists.

Are you and your company better equipped with more knowledge and experience than your best competitor?  What’s your learning plan to either gain the advantage or maintain the advantage and have time for key project assignments, implementing and executing process changes, and delivering more value-add?

Think seriously about how you will keep current and lead.  Create and manage a reading list, browse bookstores and websites for the relevant topics, webinars, and seminars.

The world is a library of leadership and management experiences, trade publications, video and audio materials on every subject imaginable.  Access it.

Evaluate and update your plan annually.  Work the plan.  A passive approach to professional development will leave you by the way-side.

Also, take a proactive interest and encourage your people to develop and manage their learning plans.  Who will take your place?  Are they ready?  Will they be able to tackle the issues and make an immediate contribution?

Expect some to push-back saying they want to devote more time to family, faith, and friends – all are important.  Remind them that a career is a balancing act.  Balancing means making choices and recognizing that balance does not always mean 50/50.

For you and your people, quality time with family, faith, and friends are just as meaningful when your company is confidently navigating industry leadership, profitability, and change.

Terry Myers, Principal of Business Edge, is an experienced Management Consultant. He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com.

by Terry Myers Terry Myers No Comments

Some situations are a bridge to nowhere.

bridge to nowhere
Some companies are willing to accept almost any new business.  Or, they fear to raise prices or to tell problem customers to go down the road and buy from the competition.

Taking marginal business and keeping bad business is like an addiction – often based on glowing estimates and hopes of optimistic outcomes.

Why risk it?  Some say it’s to make the revenue numbers or to leverage hidden market opportunities.  Some attempt to spread fixed costs over more revenue and hope to increase future prices.

Others have invested so much effort negotiating that their egos do not permit them to walk away empty-handed.

How do you prioritize your opportunities?  The answer says a lot about yourself and your management team.

Nearly everyone has similar answers: shared values, profit opportunities, niche markets, long-term growth, capabilities fit, etc.

If those are the criteria, why are some situations much more successful than others?  Why the unexpected losses, stressed employees, and disappointed customers?

It’s time to stop the bleeding!  Encourage your team to be brutal.  Get real!

Critically evaluate your customer list from top to bottom.  Realign costs, revenues, and customers to match your capabilities and realistic margin goals.  Sell to your strengths.

No amount of optimism, cost over-runs, and missed assignments can make up for operating losses, marginal cash-flow, aggravated customers and stress.

Be willing to tell some customers, “It’s not working.” Or “We’re raising prices.”  Or “Good-bye.”

Terry Myers, Principal of Business Edge, is an experienced Management Consultant. He partners with Tom Schnurr to guide companies to bridge the gap to revitalize and optimize stakeholder value.  Contact Terry at tmyers@bizedgeusa.com, or Tom at tschnurr@bizedgeusa.com.

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