PeerSight

And You Don’t Have to Live in Akron Ohio to Join

Thu, 19 Jul 2007 06:58:00 GMT

I recently found this video on YouTube. It is very well done and packed full of great advice and information about why Peer Advisory Boards work. It is a bit long but if you have the time and are interested in the value of a Peer Advisory Board it is well worth the listen.

It is an interview with a small business coach out of Akron Ohio by the name of Ron Finklestein. I don’t know Ron but what he is talks about is the foundation on which we’ve built PeerSight….the only difference is that with PeerSight you don’t have to travel to Akron to join. You can experience PeerSight from the conveince of your office.

We have not changed the formula for successful Peer Advisory boards….we just made it better. Same great results but at a lower cost and a whole lot more friendly to your schedule.

Reruns.....Accountability

Sun, 15 Jul 2007 17:27:00 GMT

When I was a kid summer was TV "rerun" time. And since there were only three networks "reruns" were pretty all there was. But who watched TV in the summer anyway.

If you are like me though you now enjoy some of the old reruns on the many cable channels that constantly show them. Well since we are in summer I thought I'd trot out a rerun of sorts. This is a post that we wrote back in late 2006. It was also one that was picked up by several media sources....so I thought I'd run it again......that and I am lazy this weekend. Enjoy

What is accountability? Who holds you accountable? I recently asked those questions in several small business forums and got some pretty insightful answers. Many responses talked about the people (family, customers, business partners) in their lives that held them accountable. Others talked about the pressures of meeting revenue and profit targets to hold them accountable. Some said they held themselves accountable. I believe it is all of these things and moreWhat was common among all of the answers is that as humans there are many actions and behaviors that are foreign to our individual natures. For me it is being confrontational. For others it is doing detailed work. It takes intentional effort and discipline for us to do these things.

That’s where accountability comes in. Accountability to ourselves or others can often provide the motivation needed to ensure we overcome our natural resistance. For instance we know we must exercise if we are to stay in shape, but we often allow other things to crowd it out of our daily lives. Accountability to those that depend on us often creates the necessary motivation to make it happen.

So how does this relate to growing a small business? I guess the obvious answer is there are many actions and behaviors related to growing a business that are foreign to entrepreneurs. Huh? I thought being an entrepreneur was all about growing a business? Yes and no. WE entrepreneurs do not like to let go, we do not like to delegate, we like to control and we often dislike structure because we fear it can limit our flexibility to seize future opportunities. These tendencies are all in direct conflict to the growth of small businesses.

Now lets take it one step further. As humans we often don’t see what others see. Others have the ability to see gradual changes that we are oblivious to. The example of the frog in the boiling water comes to mind. We clearly need others to help us here. To speed our progress. To take on the responsibility of holding us accountable.

This is one of the reasons we started PeerSight. To provide small business leaders with a hand picked group of peers that understand the behaviors and pressures of being an entrepreneur, to take on the responsibility of holding each other accountable, to take on the responsibility of challenging each other, and helping each other take on the tough stuff that often is foreign to our natures. To achieve success faster than we can achieve on our own.

Who holds you to account?

Steve

PeerSight.....Simply Complex

Wed, 11 Jul 2007 08:06:00 GMT

Most of the time, we provide practical advice in this space. Granted much of it leads back to the proven value of Peer Advisory Boards, but the value of the advice is always practical with immediate impact to you and your business.

This post is different though….it is a shameless plug for our newly launched webinar series. Come to think of it though, the webinar provides practical advice so maybe we aren’t too far off after all.

Anyway back to shameless advertising. If you have been considering the value of a Peer Advisory Board to your business but want to know more, we have designed this Webinar with you in mind.

The webinar is a fast paced no nonsense 20 minute discussion on the mechanics of what makes a Peer Advisory Board and PeerSight so valuable to many small business leaders…..and a chance to learn from the questions posed by other small business leaders like yourself.

Want to know more? Want to sign up? Learn more and reserve your seat at one of our convenient times by following this link PeerSight Webinar.

See you there!

PeerSight....Simply Better

Tue, 10 Jul 2007 07:19:00 GMT

Hey, so what are those improvements to PeerSight you ask? Well thanks for asking. Here are some of the highlights regarding What Got Better and why.

One of our primary goals is to continually seek ways to maximize our member’s time commitment. A fancy way of saying providing more value for the time each member spends in meetings and meeting prep. Here is what we improved:

We changed the frequency of Board meetings from once every 2 weeks to once every 3 weeks. In conjunction with our other improvements, this gives each member adequate time to address their issues without sacrificing their schedule.

While our teleconference model creates scheduling flexibility we knew we could make even better use of meeting time. The solution is an automated issue preparation process. Using a question and answer format a member can summarize issues in advance of the board meeting. It enables a member to pre-think an issue in a logical format while preserving meeting time for finding solutions.

The value a member receives is equal to strategic value of issues, new ideas and decisions they bring to the board. To increase member value we've introduced a once a quarter “one on one” with an advisor (the board’s facilitator and certified small business expert), where members challenge their focus and refine those issues where the board can provide them the greatest value.

Anything else get better? Another one of our goals is to accelerate a group’s maturity (how quickly they reach the performing phase of teamwork), and do so without limiting the diversity that drives innovation. In conjunction with our other changes we accomplished this by reducing the group’s size from 10 to 8.

But wait, there’s more. Coming soon we’ve two additional improvements we believe further enhance scheduling flexibility and meeting productivity.

The first provides each member access to an audio recording of the board meeting. In the event a member is unable to attend, they can listen at a later date. Of course access to the recorded meeting will be password protected and strictly limited to that board’s membership.

The second improvement adds web conferencing as a meeting feature. This enables members to share documents real time during the meeting.

Stay tuned!

Strategy in Times of Crisis

Mon, 09 Jul 2007 10:48:00 GMT

If you’ve ever been a part of reorganization, downsizing, rightsizing…or any cost cutting activity this post should interest you. Many cost cutting actions are successful, many are not. What defines the successful from the unsuccessful, and what is the application for a small growing business? I think the answer is found in a clearly articulated strategy.

Because entire books have been written on this topic I am not going to condense it into just a few paragraphs. That would be an insult to all of the excellent thinkers that have dedicated time, research and critical thought to this topic. I do however want to talk about the role of strategy in any cost cutting activity…..and while we all know its importance, we (I resemble that remark) don’t always practice it. After all, strategy is long term and cost cutting is short term.

Anyway we’ve all seen the cost cutting messages; “we need to tighten our belts” and “watch our expenses”. If you’ve spent any time in corporate America you probably were asked to serve on a committee that identified cost cutting measures, and while any number of good ideas can come from these committees, my experience was they often resulted in “fringe” ideas and ignored the larger and sustainable issues.

Don’t get me wrong these activities raise awareness of the need for individual responsibility in controlling expenses, but often the fall short and in some cases result in misunderstandings that negatively impact productivity, slow future growth and often result in shifting too much focus internally.

These results can be even more pronounced in a small business, where cash flow concerns are the order of every day.

So how do you make these decisions? Cash flow problems don’t just disappear. Oddly enough strategy is the answer. While it probably goes without saying strategy informs all of these decisions. Strategy tells the business and the team which resources and expenditures are necessary for profitable growth over the long term. Strategy provides the balance between cash flow concerns and the value of the business as measured by its equity.

In a former life I was fortunate enough to work for a business where Michael Porter served as a Director. During our downturn his constant questions were “What’s your strategy? What resources and assets are critical for future profit and growth”? He believed that a clearly articulated strategy was more important in a downturn than in good times. “After all” he argued, “When resources become scarce, determining what to invest in for the future is a tougher and riskier decision”.

In addition, a clearly articulated strategy provides your team with a better picture of what changes are necessary, what is off limits and why?

So if we know this, why isn’t it practiced more often? A quick answer is the pressure for short term results is so strong that it overrides long term objectives…but I don’t think it is that simple. My experience tells me that more often than not it’s because a clearly articulated strategy doesn’t exist, and it is very tough to create one when cash flow demands are beating the door down. It is kind of like going to the grocery store when you are hungry.

So what is the application to a small business?

Work with your team to create a “workable” strategy. A strategy that tells you and your team what future customers look like, where margins will come from, what distribution channels will be used, compelling need and competitive advantage, what products and services will be offered, a clear picture of how the organization will need to change and the details of what resources and people will be required to get there.

Remain flexible. Strategies often change a bit but the critical resources and people seldom do.

Provide the details of your strategy to a close group of advisors. People who are committed to making sure you stay the course.

So next time cost cutting is the “order of the day”, ask yourself, “What is our strategy and what is off limits to the long term equity value of our business”. You might just be surprised at what is possible in the short run.

Its All About Community....eh?

Thu, 28 Jun 2007 12:22:00 GMT

"Hey, where have you guys been you ask? You haven't blogged in forever." More on that in a future post... We've been busy improving the value PeerSight offers to the leaders of small business. Anyway that's what we are telling people.....and it’s the truth. More on that to follow.

Today I'd like to talk about "community".

Maybe it is just me, but recently it seems like there is a lot more talk about "community" on the internet...specifically as it relates to small business owners. Large businesses like AT&T, Intuit, and American Express are busy building community. Of course they are wisely doing so to create stickiness, reinforce their brand and sell their services. In addition PeerSight has recently received a number of inquiries from larger organizations wanting to partner or in some instances acquire our organization.....all because of our perceived magical virtual community.

Ah, if community were only that easy.....and maybe some day someone will come along with the holy grail of software that we can all use to build and grow community.....but I'm not going to hold my breath.

So what? Well I'm not here to bash internet communities. I think they all serve a purpose and many provide small business owners with timely advice on important issues. Start Up Nation has even developed a "culture" of fun that seems to create even stronger than normal ties.

No, my focus is about taking community to the next level, (that mystical next level)....specifically to add additional value to small businesses. Communities that grow, that listen, that provide the fuel and support that growing small businesses must have. And yes I'll probably end up promoting Peer Advisory Boards too. As you might imagine I am pretty high on the concept. It is proven and gets results.

So the next level for community. What does it look like? Can it happen on the internet? and what value does it deliver? I'll start with the last question first. I think it will help answer the others. Communities grow only when trust and confidence exist. When members know that the others have their best interests at heart. When members truly listen. When members are there to give as well as to get. When members needs are being met.

Of course In a small growing business this means members have others who will challenge their focus, they take the time to learn enough about each other to understand weaknesses and where support and challenge are needed, ideas (no matter how far out they may seem) can be discussed, and "fierce" and candid conversations are not off limits.

Small growing businesses are all about change and without a solid sounding board it is impossible for the leaders to navigate this landscape.

So how can the current communities on the internet get to this level? My guess is that they can't. Issues of competitive advantage, fears, weakness, new product ideas, and the like can't be discussed on a public forum.

Actually I'll go a step further. The next level of community can only happen in small groups where relationships can be built. It can only happen when someone can objectively facilitate the group. Someone who understands how groups and communities grow, when they are ready to take the next step and when and how they need to be pushed. The next level of community can only happen when members are not competitors.....and innovation can only happen where diversity exists. None of this is simple. It requires time and effort, but all of it is required for growing businesses.

Can this happen on the internet. Not right now. PeerSight's bet is that this can happen on the phone, with professional facilitators supported with simple internet tools and technology that all small businesses have access to.

If you'd like to find out more, talk about community or would like to join us as a member or a facilitator give us a call or email us. We'd love to talk further.

It’s good to be back. Stay tuned for more.

Steve

Invest in People Not Things

Wed, 17 Jan 2007 12:00:00 GMT

An Interview with Zane Zafrit of Conference Calls Unlimited

People make the difference. Blah, blah, blah….How many times have you heard that?

I recently had the pleasure of sitting down with Zane Safrit, PeerSight member and CEO of Conference Calls Unlimited to discuss how people really have made a difference in the growth and success of his company. Not the outcome of a “program” or canned motivational technique. It has been much more studied, proactive and intentional and I think we can all learn something from what Zane and his people have accomplished.

A bit of quick background first. Conference Calls Unlimited is unique in its industry. An industry dominated by low cost, narrow margins, low touch and limited customer flexibility; an industry that includes some very large players and much commoditization. Conference Calls Unlimited is unique in that they are not the low cost provider. They provide their customers maximum flexibility, assistance in customizing solutions, and new ways of using conferencing services to extend the reach of their businesses.

To their customers they are more than a mere expense item; more than a necessary evil and more than a cost of doing business. Conference Calls Unlimited has found a way to take a commodity and create top line value for their customers.

Now for the best part, Conference Calls Unlimited is growing, cash flow positive and profitable.

So what can we learn from Zane and Conference Calls Unlimited’s success? Does their experience teach us that if you treat your employees well, involve them and give them rich benefit packages, you too can expect the same results? Unfortunately no, it isn’t as easy as that. Not that those aren’t good things. Most likely doing those things will have some positive impact on your employees, but by themselves will not guarantee growth, profit and positive cash flow.

So how do you get there? What’s the starting point? While it may sound much too simple, the first step is to understand your competitive advantage. What do you provide your customer that isn’t easily copied? What is it you do better than your competitors? What factors drive it? What ensures its sustainability and for purposes of this article what role do employees play in achieving it.

Conference Calls Unlimited has not strayed from its original competitive advantage; providing prepaid flat rate services (conference calling, later expanded to include audio and video) and assisting customers in using these services to enhance the value they deliver. While Zane will be the first to tell you he does not know exactly what the future of Conference Calls Unlimited will look like he knows it will involve freedom for their customers to customize his products to meet critical business needs.

Armed with this information Conference Calls Unlimited has been able to define the characteristics of a successful employee, how they add value, and how they are motivated, lead and inspired….all critical elements to ensure that people make a difference in the success of a business.

Zane describes the characteristics of his staff this way, “People who in their DNA embrace a participatory, accountable, collaborative, self starting, autonomous workplace where change, communication and enthusiasm are required. Not exactly the formula for success in a traditional commoditized industry. When asked to explain how he avoids losing his market to a “better mousetrap”, Zane says, “No mousetrap competes well with our level of service. Because of our people we compete successfully against free.”

But doesn’t that sort of put you in a box and limit your freedom to adapt and change your business? “On the contrary” Zane explains, his people provide the key to capitalize on future opportunities. “Customizing our product (and future products) is the key to our growth. That starts with the basics of answering the phone and listening. Our people are good listeners. They are creative and dedicated to finding the best solution. For us to compete and grow we have to do something different”.

Is it the skills or characteristics that make the difference? Zane explains that it is both, “We thought we had an advantage working in a community (Fairfield Iowa) with people deep in sales, telecom and computer backgrounds. We were right and we were wrong. We did know good people but we didn’t originally understand how important the qualities of flexibility, openness, communication, and teamwork were to the profitable growth of our company. Outside the box sounds romantic but some people aren’t comfortable except in a clearly defined box.”

Is this heaven or just Iowa? This all sounds wonderful but aren’t there standards in the business? After all it is in a heavily commoditized industry so it has to have some standards and controls, doesn’t it? How do you take creative people, give them freedom, yet ensure the consistency and quality required of the product? “It is a mix of freedom and controls” Zane explains. “In some respects it has been tough for our company. I give everyone a clear description of how much autonomy and authority they have to make decisions. That extends as far as they need to make a decision with a customer or prospect on the phone. We don’t bring anyone into the company we can’t trust with this responsibility. Oddly enough many people are not equipped to take on this responsibility.”

Zane goes on to explain that of course there are policies, standards and routines, and everyone is expected to follow them, but unlike many organizations they do so mostly because they understand them and they helped create them. “We actually measure and reward this behavior”, says Zane. “We measure it with every discussion and while we are patient with people in embracing this openness…eventually we insist”

Can this environment survive in a talent shortage? Zane says, “It is a question we are mulling over in great detail right now. It’s a core value to our company and its success. I could see us changing our financial principles for a short term goal more than I could the principles regarding our people. The wrong people could kill our brand. We may change a lot of things but the core principles of open communication, finding mature and flexible people who are motivated by playing a key role in the future of the company, who want to play with other adults, who want to be treated like an adult, who want to accomplish something and be recognized for it,…that part will never change”.

How would you describe your leadership style? What is its role in the success of your people? Zane describes his leadership style as “Getting out of the way. My job is to 1) organize procedures to ensure minimal interruptions, 2) provide the resources (equipment, direction, incentives, and mandates, including authority and autonomy) to inspire the best from the people, and 3) ensure smooth communication to and among everyone in the company.”

When asked if he ever “gets in the way”, Zane explains, “I get in the way when a policy needs to be established or changed. I get in the way when change has to come. I get in the way when our people are unable to do their jobs with present resources.” But even then as you might imagine he sees his role as creating change by causing the discussion to occur, by leading the discussion, making sure the issues are clear and leading to decisions.

So what can we learn from all this? What questions should you address to ensure people make a difference in the success of your business? It’s clear that people really do make a difference in the success of Conference Calls Unlimited. It’s also clear that the difference the employees make is not the outcome of a random leadership style or a set of measures and rewards. It’s actually the other way around. The leadership style, the rewards and incentives, etc. they have developed “fit” with the way the business delivers value to its customers.

So what questions should you ask yourself? What is your company’s real competitive advantage? How do you know? Would your employees agree? What role do employees play in ensuring it? What employee behaviors and characteristics “fit” with your business? What leadership style, hiring practices, and environment motivate and encourage these behaviors? How do you know? Something to consider….the profitable growth of your company probably depends on it.

One more thing….we always ask this question at the end of our interviews. If your son or daughter were to takeover for you tomorrow, what would you tell them? I think you’ll enjoy Zane’s response. It is not only humorous but also gives insight into his personality and why it fits so well with the culture he has created at Conference Calls Unlimited. Enjoy. Here is his response.

“Good luck. Make sure my payments are automatically deposited. I hate coming in from the beach.”

Steve

Tell Me Something I Don't Know

Mon, 18 Dec 2006 14:00:00 GMT

“Listen to your customer. Change your product to meet the customers’ needs or change your market.” You’ve heard this, I’m sure.

Kathleen Dahlberg (Founder of numerous companies and currently the CEO and Founder of oVention, a technology firm ensuring hard returns on technology) says that “entrepreneurs spend too much time creating their product and not enough time selling it. They must change the product to meet the demands and needs of the customer. If the customer doesn’t like it, it doesn’t matter what you think of it. They won’t buy it.”

Great, what if the customer doesn’t know what s/he wants? How do you get the right balance of what they want and what makes sense from a profit perspective? How do you know what they will want in the future? ”This is tough stuff” says John Fox (President of Venture Marketing and author of The Marketing Playbook. Venture Marketing is a marketing consulting firm focusing on its client’s top line revenue)

Kent Nelson (CEO of HRH Illinois; formerly TJ Adams. HRH is the 8th largest insurance brokerage in the U.S.) recognized most of his competition (insurance brokerage) used the simple approach of shopping for expiration dates and quoting lower prices to find new business. That solved the customer’s cost issue, but only until the next broker came along with a lower price.

But the customer has many more issues than just cost. In response his commercial property and casualty business offered safety classes, introduced wellness classes, and provided blood screening to small businesses. The value added was obvious to the customer, and shopping price quickly evaporated. Customers no longer jumped to another insurance broker because HRH offered so much more. “Cross-selling” eliminated the price war, and everyone within HRH selling each of the services participated in the commission. Nelson’s customers didn’t know they wanted wellness classes and blood screens. But it has broadened their attitude toward their insurance broker and the value they offer.

Nelson has now expanded his brokerage service to include an HR outsourcing solution for small business (5 to 2500 employees). By introducing these different services, HRH has multiple “points of value” with prospects. It’s no longer just quoting premiums, but truly hassle free solutions in areas small businesses can’t afford to hire independently.

Ben Carnevale (Former President of Oxford International, a high growth Chicago based multinational corporation serving the OEM automotive industry) says, “Keep an open mind and recognize the opportunity provided by the relationship. By working hard to understand Chrysler and working closely in a ‘give and take’ relationship, we saw needs well ahead of our competition.” Oxford’s close communication with Chrysler allowed them to develop technology that solved problems. “We began combining elements that led to higher efficiency within Chrysler. We saw the need for automation and delivered the first automated plant of the 80s.” The result was a better, more competitive product for both Oxford and Chrysler.

But the customer doesn’t always know what they want? What then? John Fox tells the story of a major manufacturer of garage door openers who sold millions of remotes each year, but failed to see the automotive industry offering the remote as a standard item in newer cars. Now, they sell less than 100,000 remotes a year. The customer could not have told them this…..so how should they have known what the customer wanted?

Oxford’s thorough understanding of the automotive industry not only brought better efficiency to Chrysler, Chrysler saw them as a problem-solver. “Here is how we did it. We sent three people into the assembly line to study their process. What happened to our product when it went in? We noticed we could reduce cost on packaging, we could provide a lighter product, and better quality was the result. We were perceived as going beyond the scope of the vendor – just by listening.”

So what’s the so what of all this? How do you listen to the customer when they don’t know what they want? Your success is tied to the questions you are not asking as well as they ones you are. What does that mean? Instead of merely asking the customer what they want, become the customer for a day. Invest time in understanding them…and their businesses. Ask them how they do things? Why they do them? How much it costs to do them? What keeps them up at night? What are their priorities for the next 12 months? If they could change three things about their business what would they be?

Take specific ideas to them and ask, what if? What would be the benefit to them? See the world through their eyes. This isn’t easy, but it must be deliberate and become a formal part of operating your business. As John Fox says this is tough but very necessary stuff.

Something to consider.

Andrew

Cash Power - The Financial Momentum to Move Your Business

Wed, 13 Dec 2006 14:00:00 GMT

“Momentum is the result of both speed and size.” A bullet has tremendous power due to its speed, notwithstanding its tiny mass. An avalanche has tremendous power due to its mass in spite of a slow beginning. Michael Gerber (best selling author of E-Myth Mastery) uses this analogy to describe the cash power within the organization. “The more cash you have at your disposal, and the faster it moves through your organization, the greater your financial momentum.”

We have all heard the stories about growth companies that fail because they outrun their cash. When you first hear about it, it seems kind of strange doesn’t it? After all, a rapidly growing company with new customers, increasing sales, revenue and profitability, what isn’t good about that? Management says “We’ve got the formula for success, let’s push it up another notch”.

Ben Carnevale (Former President of Oxford International Ltd.; a high growth Chicago based multinational corporation serving the OEM automotive industry) says “We learned a valuable lesson. We were expanding rapidly and focused on technology and satisfying the customer, but not paying attention to the financial guy. We out ran our cash”. Fortunately for Oxford they caught it in time. Lesson learned.

Oddly enough the attraction of this scenario is common for rapidly growing companies. We have all heard the stories, but how does it happen? How can you avoid “out running your cash” from happening to your business? Is the only answer to slow the growth? That seems counter intuitive.

Let’s set some context. Why does growth cause cash shortages? We all know the answer, growth is fueled by sales and marketing, and the fruits of those labors don’t pay off until some time later. But if it is so obvious, why do intelligent leaders of rapidly growing companies still end up as a statistic?

We believe it is a combination of factors that appear in several of our featured articles:

Companies are integrated pieces of a whole. They must be managed by looking at the “big picture”. Carnevale says “We did not watch the entire process”.
Lack of formal basic cash management processes. In our feature article Navigating Growth we suggest that cash management processes are among the few formal pieces of structure that must be in place initially. Mike Slattery (President of Arthur P. O’Hara, a $5M Chicago based office distribution company) advises, “Early on, put a financial system in that provides key information”.
Lack of adequate measurement. Lack of prediction. If you don’t measure it, you are not objective.
The attraction of growth and lack of focus on cash management.

Most businesses, says Gerber, think only in terms of increasing revenues and decreasing expenses. Instead, consider the assets you have that can be sold to generate cash without hurting your business. Are there “pools” of cash lying dormant within your asset base?*

Gerber suggests six rules to maximize “cash power.”

1. Decrease assets
2. Increase liabilities or capital
3. Increase revenues
4. Decrease cash expenses
5. Improve productivity
6. Optimize timing

Even these actions speak of the business as an integrated whole. Each can have significant impact on the success of the business.

Get creative!

Graseby PLC, a $30 million laser optics company, owned a building (no debt) with a market value of $3.5 million. The second floor (vacant) was leased to a Fortune 500 defense contractor for $300,000 a year, Graseby then sold the building to an investor and leased their own space back at market rate. As a result they were able to capitalize the two income streams at the then favorable rate of 8%. The building sold for $4.5 million, and freed up $1 million in cash flow.

Don Urbancicz (CEO and Founder of Insurance Vianet and The Insurance Noodle, a rapidly growing $25M web enabled platform for the distribution of small commercial and property casualty insurance) addresses it this way. “In addition to securing a strong financial partner, most of our marketing success is driven by word of mouth referrals. Not only is it more effective, but significantly less costly too”.

John Fox (President of Venture Marketing and author of The Marketing Playbook. Venture Marketing is a marketing consulting firm focusing on its client’s top line revenue) says, “Don’t overlook financing by your customers.” Fox worked with a telecom company who wanted his technology, but could not purchase “new” technology. It had to be established. Fox needed $2.5 million to finance their project, but didn’t have the cash. He sold them a modem for $2.5 million with an agreement to receive the payments up front. He now had the cash, and delivered their project. The customer made it work. Had Fox not asked, the customer would never have thought of it.

So what questions should you always be asking your self? Am I watching the entire process? Are my cash management processes adequate without being too cumbersome? Am I realistic about how soon cash will start flowing from my marketing efforts? What are my cash requirements? Have I found the pools of cash in my business? What levers can I turn and what is their impact on the other pieces of my business?

We’ve all heard it. Cash is king!

Is Measuring a Bureacratic Waste of Time

Tue, 12 Dec 2006 18:00:00 GMT

Many business plans somehow imply that the future is predictable, but as any business owner knows, they do not. We all learned that from Steinbeck in Of Mice and Men. Michael Gerber (best selling author of E-Myth Mastery) exhorts us to begin, not with a plan, but with our vision.

The vision includes our strategies, tactics, and a direction to take our company. Our vision also includes our most valuable asset: passion. Vision leads to passion and passion leads to joy. Passion is what gets you out of bed each day to slay the dragon. A mediocre plan with passion is far better than a superior plan you don’t strongly support. But what is the key to executing your business plan, mediocre or otherwise? Kathleen Dahlberg and Ben Carnevale insist the answer is “measuring.”

Measuring quantifies the truth about your business. It allows you to know your business outside of your biases and emotions. “Your personal view will always be distorted when looking at this magnificent organization you have put together through brilliant, unparalleled genius”. Measuring allows you to base your decision-making on solid evidence versus misinformation. It pinpoints where things are going wrong, allowing you to anticipate problems before they materialize, before they cause you to lose customers.

But watch out. Don’t be measuring for measurement’s sake. Here are some good rules of thumb:

Fewer is better. The process of identifying the really important measures usually results in a better understanding of your business.
Understand what makes your business work at every level. From top to bottom, (strategy to systems) and side to side, (financial, customer, operations and people).
Use measures to communicate and improve.
Include leading indicators. The business environment is constantly changing. Leading indicators are your early warning system.
Use measures that utilize readily available data, are simple to calculate and credible.

Ben Carnevale (Former President of Oxford International Ltd.; a high growth Chicago based multinational corporation serving the OEM automotive industry) agrees. “You have to measure the right things but measuring delivers a ton of data. You must be careful to make sure it is relevant and worth the effort….otherwise it can be overwhelming and a waste of time”

Carnevale also insists that measuring becomes a powerful improvement tool when you share the information with the people who do the work being measured. Make announcements of key measurements a positive experience. It is meant to connect all personnel with positive, continuous improvement.

Kathleen Dahlberg (Founder of numerous companies and currently the CEO and Founder of oVention, a technology firm ensuring hard returns on technology) stresses the need for leading indicators. “The business environment is always changing and leading indicators are the only way to make sure you know what’s coming. Most small business owners know them in their “gut” but don’t take the time to quantify them. If you don’t measure them they are not objective.”

OK, great. So what do we measure? Gerber suggests that we need to measure at three distinct levels in the business; (1) Key strategic indicators, (2) Key business indicators, and (3) Key system indicators.

Strategic indicators sense the health of your organization and provide the “big picture”, however, they can not be used in managing the day to day operation of the business and are not precise enough to detect or diagnose problems.

Key business indicators provide a picture of the integrated whole versus the piece parts of the business. They are multidimensional and all inclusive. Their creation and use force the discipline that ensures you manage your business as an integrated whole.

Carnevale explains that not watching the big picture has consequences. “As Oxford grew we expanded we focused on technology, and expanded too quickly. We were so determined to satisfy the customer we did not watch the rest of the processes. We weren’t paying enough attention to the financials and we outran our cash”.

Key systems indicators allow you to see the specifics of what is going wrong with each part of the business and fix it. Oxford Limited used key system indicators to measure results in all its production process. “It was the best way to isolate what caused problems by knowing exactly what is happening within any one system. The alternative is frustrating guess work.”

If you don’t measure it you can’t be objective about it.

Quantification (measuring) reveals problems and suggests solutions. It eliminates personal biases, decisions based on anecdotes, and personal observation. . . Quantification gives you control, objectivity, and a deep understanding of your business. [It] is the magnifying glass, the X-ray machine, the telescope, and the microscope that allows you to see into every corner of your business, and, at the same time, enables you to see the integrated whole of it. Quantification isn’t just numbers. It’s insight . . . understanding . . . [and] the path to a business that works.

- Michael Gerber, E-Myth Mastery, p 106.