Making More Money: Simple Strategies for Improving Cash Flow and Profitability

Making More Money

Simple Strategies for Improving Cash Flow and Profitability

Making More Money

Presented to:

The Woodland Park Chamber of Commerce

May 1, 2014

J.R. Dickens

Woodland Park Research Group, LLC

© 2014 Woodland Park Research Group, LLC. All Rights Reserved.

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Put on your thinking caps

• Ideas, not answers

• After-class exercises apply to your current business situation


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Money Drives Business

• Simple concept: make more than you spend

• Reality: competition, slow growth

• More reality: seasonality, interruptions


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Getting Better

• Improvement is the key

• Improvement is a strategy with tools, not a tool to tack on to your strategy

• Opportunity is everywhere, but improvement is not spontaneous


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Three Keys

• What does it take to succeed?

• Excellence

• Integrity

• Innovation


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Excellence means...

• Doing the right thing at the right time, and doing it right the first time


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What is excellence worth?

• Errors, defects, and rework can easily consume 30% of your time and cost

• Lost opportunity can’t be measured


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Integrity means...

• Building trust by serving others


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What is integrity worth?

• Ask the question a different way:

• What will a lack of integrity cost?


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Innovation means...

• Anticipating and embracing change


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What is innovation worth?

• Ask companies that died of obsolescence


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Three Keys

• What does it take to succeed?

• Excellence

• Integrity

• Innovation


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Excellence

• Consider two areas:

• defects/errors

• speed


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Defects/Errors

• Defect is anything that fails to meet customer expectations


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Defecst/ErerRs

• Do it over again

• rework

• Catch it before the customer does

• test/inspection

• When all else fails…

• damage control© 2014 Woodland Park Research Group, LLC.

All Rights Reserved.16

Defects/Errors

• What is the cost?

• more labor

• more materials

• more time

• more capital

• lower productivity

• lost goodwill


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Defects/Errors

• Fix the process

• Prevention, not inspection

• Root cause—address the source—improve the process


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Defects/Errors

• Clue: problem always has a human source

• e.g., process design, equipment selection, maintenance, procedures, training, etc.

• Ignorance—we don’t understand the process

• Disorder is the norm—stuff doesn’t fix itself and it doesn’t want to stay fixed


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Defects/Errors

• Ideal:

• everything right the first time

• no defects/errors, no rework

• with proper control, no need for inspection


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Speed

• Speed is how quickly you generate sales from products/services

• time lag between expense and revenue


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Speed

• Timing is as critical as quality

• Right product/service at wrong time is the wrong product/service


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Speed

• “Productivity” is often the problem

• How are you measuring efficiency?


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Speed

• Typical problem:• too much

• too early

• Additional problem:• too little

• too late

• Too late is probably worse than not at all© 2014 Woodland Park Research Group, LLC.


Speed

• Right product/service too soon:

• slows you down

• increases cost


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Speed

• Slower speed because:

• making more than you need to meet current demand

• excess goes into inventory


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Speed

• Higher cost because:

• takes more money to make more stuff

• materials, labor, etc.

• costs money to store and manage excess

• carrying cost of inventory (~25%/yr)


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Speed

• Ideal:

• right product/service at the right time

• speed/flexibility opens the door for customization


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Excellence

• Tip of the iceberg

• Conversation has revolved around product/service at the customer interface

• Same principles apply to internal processes

• e.g., HR, scheduling, production, inventory, accounting, etc.


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A Word About Value

• Value is the customer’s perception of your products/services in relation to cost

• Think in terms of the total customer experience

• Example: feeding giraffes at the zoo


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Integrity

• Success flows from people

• Customers

• Suppliers

• Employees

• Public

• In a word—relationships


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Integrity

• Relationships are built and sustained on trust

• What does it take to build/sustain trust?

• a willingness to serve the needs of others

• Relationships take time and effort


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Six Principles

• Respect• honoring authority

• Commitment• guarding relationships—confidentiality

• Charity• kindness, forgiveness

• Stewardship• caring for the property of others

• Honesty• truthfulness in all things

• Gratitude• contentment with your own circumstances


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Integrity

• Integrity is concrete, not mushy—principles never change

• Integrity is about personal character

• To be trusted, be trustworthy


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Customer Service

• Integrity applies to customer service

• Customer service is still a differentiator—most people don’t do it


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Customer Service

• Where does your business touch the customer?

• pre-sale

• point-of-sale

• post-sale


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Creating Engagement

• Make it friendly

• Gather information

• Find the customer’s “problem”

• Connect…

• …and reconnect


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What is the Message?

• Content is king

• Focus of client engagement is providing information

• Internet is the new sales funnel—where people go for answers


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Integrity

• We’ve applied integrity to customer relations

• Integrity applies to all relationships—professional and personal


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Innovation

• Innovation is about growth...

• ...and growth is not about getting bigger

• Think of the maturation process

• Growth may mean getting smaller


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Innovation

• Three premises:

• You tend to act according to your assumptions

• Your assumptions are often wrong (or incomplete)

• Opportunity hides behind wrong assumptions


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Innovation

• The key to innovation is challenging your assumptions

• Ask the right questions....


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Paradigm Paralysis is...

• The condition of not being able to see beyond your assumptions

• What are the symptoms?


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Paradigm Paralysis

• “This is the way we’ve always done it.”

• “We already have an SOP.”

• “This is a matter of company policy.”

• “No one is allowed to question that.”


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Paradigm Paralysis

• We tend to ignore or dismiss information we don’t like

• Reality doesn’t go away—so we might as well confront it


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Sacred Cows

• Sacred cow: something that no longer serves a useful purpose

• Worse: no one is allowed to question it

• Needless waste of resources


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Sacred Cows

• How to find them?

• Start from scratch—think like a beginner

• Ask, “Why?”


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Sacred Cows

• Thinking like a beginner means putting aside your assumptions


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Strategic View

• Look at your business from 10,000 feet (or 20,000 feet, if you live in WP)

• SWOT with an extra T• Strengths

• Weakness

• Opportunities

• Threats

• Trends© 2014 Woodland Park Research Group, LLC.


SWOT/T

• Strengths—what you already do, well

• Weaknesses—what you already do, poorly

• Opportunities—what you could do, in the future

• Threats—conditions that pose an imminent danger

• Trends—the general direction of things that affect your business (good and bad)


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SWOT/T

• Helps you look inside and outside

• Helps you think strategically—where you are, where you’re going

• Reality check—not intended to be a feel-good exercise


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SWOT/T

• What do you do better than anyone else in the world?

• Differentiation

• Branding

• What can you get someone else to do for you?

• Ideal: you’re not the best, you’re the only one© 2014 Woodland Park Research Group, LLC.


“The Paradigm Question”

• What fundamental change would put you out of business and/or turn your industry upside down?

• Don’t take success for granted—be prepared for change and/or anticipate it


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Summary

• We’ve highlighted the areas of Excellence, Integrity, and Innovation in relation to improving your financial success

• Next step: Workbook exercises• Brainstorm, prioritize, and attack

• Quantify opportunity in $$$ wherever possible

• Take ownership for change© 2014 Woodland Park Research Group, LLC.


Suggested Reading

• Sacred Cows Make the Best Burgers (Kreigel)

• It’s Your Ship (Abrashoff)

• Paradigms: The Business of Discovering the Future (Barker)

• The Goal: A Process of Ongoing Improvement (Goldratt)

• The Quality Secret (Conway)

• The Seven Habits of Highly Effective People (Covey)

• The 21 Irrefutable Laws of Leadership (Maxwell)


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http://www.amazon.com/Sacred-Cows-Make-Best-Burgers/dp/0446672602/ref=sr_1_1?s=books&ie=UTF8&qid=1398271162&sr=1-1&keywords=sacred+cows+make+the+best+burgers

http://www.amazon.com/Its-Your-Ship-Management-Techniques/dp/145552302X/ref=sr_1_2?s=books&ie=UTF8&qid=1398271281&sr=1-2

http://www.amazon.com/Paradigms-Discovering-Joel-Arthur-Barker/dp/0887306470/ref=sr_1_1?s=books&ie=UTF8&qid=1398271344&sr=1-1&keywords=paradigms+the+business+of+discovering+the+future

http://www.amazon.com/Goal-Process-Ongoing-Improvement/dp/0884271951/ref=sr_1_1?s=books&ie=UTF8&qid=1398271382&sr=1-1&keywords=the+goal+a+process+of+ongoing+improvement

http://www.conwaymgmt.com/PlaceanOrder.html

http://www.amazon.com/The-Habits-Highly-Effective-People/dp/1451639619/ref=tmm_pap_title_0?ie=UTF8&qid=1398271468&sr=1-1

http://www.amazon.com/The-Irrefutable-Laws-Leadership-Anniversary/dp/0785288376/ref=tmm_hrd_title_0?ie=UTF8&qid=1398271512&sr=1-1

Woodland Park Research Group, LLC

PO Box 122, Woodland Park, Co 80866

(719) 687-4304

www.woodlandparkresearch.com


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http://www.woodlandparkresearch.com/