For over 25 years, I’ve been working with business owners who want to consistently improve the performance of their business.  In that time frame, there have been some pretty amazing success stories: companies seeing 30% compounded revenue growth, profit dramatically improving, and the owners taking home real money.  In looking back at the results, 19 of my clients have passed through the magic $1,000,000 personal net worth mark, due to the success of the cash flow of their business.

Whether you have a small, mid-sized, or large company, here are five tips that will help you be better and make more money:

1. Dominate your market.  Find an underlying advantage that will propel you ahead of your competition.  How do you do this? Look at your firms two largest costs; focus on how to stream line and improve the process.  Be much better than anyone in your market.  Have a brain storming session with your key managers – push them to think outside of traditional procedures. Find ways to improve speed, cost, and productivity.
2. USP. Your Unique Selling Position is critical in today’s competitive environment.  Everyone in your organization needs to know what makes your company: a) more unique, b) more valuable and c) a better choice (to your customers). Your employees need to be able to communicate this effectively, as with your advertising and marketing. The central theme in your marketing should always be consistence and repetition.
3. Focus.  Set clear goals for the next 90 days that you communicate to your management team (and maybe all of your employees). This could include: sales, gross profit margins, profit, accounts receivable, inventory turns (reduction), or unlocking a major bottle neck in your company; these are examples of what your management team can rally around and work towards.  Weekly meetings help keep the focus on the issues and measure progress towards your defined objective.
4. Control Your Cash. If Elvis is the king of Rock ‘n Roll, then cash is the king in business. A growing business consumes cash, so it is critical to construct a process in which you always know that you will have adequate cash to operate your business. Ideas can include: weekly billing, one person in charge of collections, a follow-up system on slow accounts receivables, a person(s) in charge of each line item in your expense section of your profit and loss statement, and most importantly (because this will bring all the elements of cash flow management together) a cash flow forecast.  A cash flow forecast is a spreadsheet that projects all the future sources and uses of cash in the business.  An updated monthly (or weekly) cash flow forecast is an early warning system on your cash position. This is the only effective way to “look into the future” of your business for anything you can do. Successful businesses always produce an updated monthly cash flow forecast – always.  This will take the stress out of managing cash.
5. Know Your Matrix.  Profitable growing businesses know their strengths and weaknesses; they know where they have been and where they are going.  It is critical that you know the 5 to 10 key indicators that drive the success of your business.  Most businesses fail to do this and operate by the seat of their pants every day.  Here are some ideas: break-even point (break-even point by division), profit, collected money, cash position, recalls, call backs, number of new customers, on-time delivery, and so on.  Every business and industry will be different, pick those that best reflect the overall picture of your business and review them weekly.

If you do this, you will see steady improvement in your business, I personally guarantee it.  This system has worked for me for years.

Much of what I do with clients revolves around the processes I have just described. While I have always preached on how critical it is to set revenue goals and march toward them, being a sounding board, a confidant, and accountability partner is just as important. If you need help in any of these areas, please give me a call or send me an email.

To Your Business Success:

Dan Lacy
Growth & Profit Coach, Financial Strategist, Cash Flow Doctor, CEO Mentor

P.S. I have received rave reviews for my book – Cracking the Financial Code. This is the most practical book on understanding your financial statements, and how to use them in your business. Get your copy now for only $15.

Go to:

www.dynastybuilder.com to order now.

Here’s what others have said about this book:

“Cracking the Financial Code removed both the mystery of financial statements and my excuses for not diligently using them.  This is a must-read for any business owner wanting to make informed business decisions.”
Jonathan Arnold, President, Tuitive, Indianapolis, Indiana

“In Cracking the Financial Code, Dan has taken difficult financial concepts and made them easy to understand.  This is a “must read” for business owners who want to grow their business.”
Kirk Klabunde, Senior Vice President, First Merchants Bank, Anderson, Indiana

“Cracking the Financial Code is a terrific reference source for growing companies to make sure their financial focus is sound.”
Terry J. Pahls P.E., President and COO, I Power Energy Systems Anderson, Indiana

Here is a proven principal that is very useful in helping you identify the BEST and sometimes the EASIEST ways to improve revenue/sales.  This concept was developed a few years ago by Tom Epply when he, as the president of his company, wanted to help his manager identify the best way to increase sales.

Tom named this the “stop light study” because it resembles a traffic stop light – Green, YELLOW, and RED.  The GREEN is the easiest because it is selling an existing product to an existing customer.  The relationship is already formed, the players are known and all that needs to be determined is what does the customer need that you are currently providing.  This is the easiest way to increase revenue in your business.

The Caution areas are YELLOW.  This is selling either a new customer an existing product or an existing customer a new product.  The familiarity with one of the two key functions is known; either the customer or the product, the other side of the equation has to be created: the customer or the product.  There is one unknown in this step and one known.  It can be done but it is somewhat harder than the GREEN alternative.

The RED box – finding a new customer to sell a new product to.  This has the highest level of failure and the sales cycle is the longest.  Not that this cannot be done successfully; but it takes the longest, cost the most and the highest level of risk.

The easiest, fastest and most cost effective way to grow revenue is by going to existing customers with one of your existing products (GREEN) ; the next best is going to existing customers with a new product or going to a new customer with one of your existing products (YELLOW).  The most risky is trying to find a new customer with a new product (RED).

I’ve help scores of businesses wade through tough times and come out on top. I would be happy to help you as well.

I posted this blog a while back but thought it was worth posting again. Mainly because I’ve had many people say it was helpful.

Getting the top dollar for your business is something that you should start immediately if you want to sell within the next two to five years.  In other words, it is never too early to start getting your business ready to sell; because you never know when an opportunity will present itself to make you a millionaire or multi-millionaire.  On the flip side, a recent study from M & A Today magazine states that 65% of business owners don’t know what their business is worth, 85% have no exit strategy and 75% of their personal net worth is tied up in their business.  So, what can you do? Here are five tips I would suggest:

Tip 1.  Have a plan.  Determine a time line.  Look at your age, your family and your bank account.  How many years to you have before you want to simplify your life?  What must you do between now and then?  Start with the magic year and then work backwards until you get to the next 12 months.  For example, you are 50 and you want to retire when you are 55 and you want $1 million in the bank with your house free and clear.  You need $750,000 from your business to make it happen.  What needs to happen in the next 12 months to make $750,000 a reality at sale time?

Tip 2.  Maximize the value of your business starting today.  Selling your business may be a big part of the financial side of your retirement strategy.  You can do a lot to enhance the value of your business with 24 to 36 months prior to sale day.  For example, if businesses in your industry sell for a multiple of 5 times cash flow and your company is currently generating $75,000 in annual cash flow ($40k in profit, $35k in interest, deprecation and amortization), the value of your company has a value of somewhere around $375,000.  By increasing your pre-tax income an additional $75,000 to $115,000 per year your company will have a market value of $750,000 ($115,000 profit, $35,000 in interest, deprecation and amortization = $150,000 X 5 = $750.000).

Tip 3 Get help to guarantee cash flow growth. It is lonely at the top of any closely held business and here are only 24 hours in a day.  Most business owners immediately enhance performance when they: a) have help drafting an overall plan to attain their long term goals, b) have assistance in evaluating what needs to be done monthly to make the program work, c) have assistance in establishing performance levels with accountability for the top two levels in the organization and d) have a defined monthly review and evaluation of performance on a consistent basis (minimum of monthly) and e) have a 24/7 resource to call when challenges occur.

Tip 4.  Seek professional brokerage assistance. Although it is possible to sell your business without professional assistance, a do-it-yourself approach is one of the surest ways to leave money on the table.  A seasoned business broker with a stellar reputation can help you establish a price, seek out qualified buyers, arrange financing and make sure the transaction is handled correctly and timely.

Tip 5.  Be Patient. If you need a quick sale, there’s a good chance you won’t get top dollar for your business.  It’s not unusual for a business to be on the market for months before the right buyer comes along.

Questions?

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Your business is your mission field and a tool that can be used by God in demonstrating the truth of the Gospel. Every day of the week people are influenced by you, and the way you run your business is your testimony to them — the only testimony many of them will ever witness.  The way you operate your business, how you believe in and market your product or service, how you pay your bills, how you maintain your facility, and how you treat your employees and customers are either an indictment or a wonderful demonstration of what God has done in your life.

Those who misunderstand money will misunderstand profit.  If Christians even subtly view money as evil, they cannot properly enact the biblical principles of sowing and reaping and of stewardship of resources.  Consequently, their ability to effectively operate their businesses — their mission fields — is adversely affected.

Just what is profit?  The textbook definition would define it as the difference between revenue and expenses.  But it is really more than that.  Profit is the only business goal that must be achieved.  Profit is the only thing that can reduce debt, increase working capital, and provide the ability to expand in equipment, facilities, markets or personnel.  Profit is the grease that keeps the business moving forward.  Profit insures that new capital and credit will be available.

Conversely, businesses without profit or with profit margins that are significantly smaller than competitors, are at a disadvantage in obtaining credit or attracting new capital, meeting obligations to creditors in a timely manner, properly compensating employees and in reducing debt.  These businesses are unable to grow, expand, and touch other people with their products.

One third of all new businesses fail in the first three years.  Over three quarters of businesses fail in the first ten years. Obviously, many factors go into those failures, but the bottom line is, there simply wasn’t enough profit — without it, businesses become statistics.

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General Attitude

• Have a tremendous need for power, control, and approval.
• Don’t feel rich and do not flaunt their wealth.
• They are frugal bargain hunters.
• Defer gratification today to create a better tomorrow.
• Have a nose for opportunity and are good at getting and processing information.
• Independent thinkers who believe in their own decision making abilities.
• Politically conservative.

Attitude Towards Money

• Highly money motivated and prefer money over material things (they believe money can buy happiness, love, acceptance, security, etc).
• Hate paying taxes.
• Favor direct ownership of assets they can control such as their own businesses or real estate.
• Aggressive growth-oriented investors and very interested in increasing their wealth (they are willing to take controlled risks).
• A small minority favor defensive investments.
• Seek to minimize their personal financial exposure in business and investment deals (example: use other people’s money to enhance their own wealth).

Top Priorities

• Business or career success.
• Financial security for their families.
• Maximizing returns from their careers and their investments.
• Providing an excellent education for their children.

Biggest Fears

• The IRS and taxes.
• Their children ending up as failures and coming back home to live with their parents.
• Losing all of their money and power (particularly strong among people who grew up in poverty).

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T. Ray Phillips Testimonial from Dan Lacy on Vimeo.

There are millions of intelligent business people out there who start businesses not understanding everything they need to in order to be financially successful in the long haul. Have any questions? Let us help your business today.

Of course, what was true for the ancient Israelites is also true today.  Planning is the key for any business owner who wishes to build a company that has a solid foundation for future growth and development.  Yet, less than 15% of small business owners surveyed admit that they are doing an adequate job of planning for the future of their business.  In fact, managers rarely fall short of their real potential for lack of technical competence.  Of all the organizations and businesses I have consulted in the last 30 years, the one principle cause for failure is the inability or unwillingness of the executive staff to logically and consistently plan for the allocation of limited resources – labor, money and time – toward all the viable opportunities that exist.

While strategic planning is an integral part of maintaining the growth cycle of a large corporation it is even more critical to smaller organizations because they, typically, lack the resources necessary to absorb the cost of mistakes, errors in judgment, or failure to foresee change.  The planning process allows management to evaluate the future where they want to be and how to get there.  It helps them establish goals and then gives them a performance standard by which to measure themselves.  Better yet, planning allows them a process to identify and resolve problems before they become crises.

Before gathering your staff together – either formally or informally – to begin the planning process for the future growth and development of your company, it’s important to understand exactly what this vital activity will accomplish:

1. Planning formulates the future. The planning process allows the people in your organization to anticipate and, therefore, shape the future.

2. Planning motivates people. Everyone wants to have a part in determining their future.  The greater the feeling of ownership each individual has in determining the objectives of the organization, the more committed they will be to making sure those objectives will be achieved.

3. Planning establishes the organizational structure of a company.  The planning process will clarify what structural issues need to be resolved in a company.  This will determine what organizational model needs to be implemented to address these issues.

4. Planning directs delegation. The key to effective delegation is understanding what assets and liabilities a company has in terms of its human resources.  By determining who is best suited to handle a particular role, the entire organization should be able to live up to its maximum potential. (Tim Collins – Good To Great).

5. Planning promotes communications. The planning process affects each division of a company, including the finance, marketing, sales and operations divisions.  Thus, for each area of a company to achieve their respective goals, they must cooperate and communicate with divisions that they normally don’t communicate with.

6. Planning fosters the process of monitoring.  The planning process establishes standards or goals that an organization must achieve to accomplish their overall objectives.  Without a monitoring system, management will not be able to assess how well these goals are being achieved.

Planning is essential for the survival of the company. If the organization does not have the time or manpower to do adequate planning, then the company should utilize outside resources to help them set, monitor and achieve their goals.  Time spent on planning is time well spent, and money spent on planning is money well spent when the plan is utilized.

As the Commander of your company, what is your battle plan for 2010?  Do you even have one? Economically, next year should be slightly better than 2009.  Credit will still be tight, there won’t be much growth in the economy and your competitors are doing everything they can to take your market share because they need the revenue to keep their doors open.   If you struggled in 2009, it won’t be much better in 2010.  Do you have a BATTLE PLAN for 2010? Are your chances of success much greater if you do have a strategy or do you believe in the “wait and see” strategy by commander Obama?

Hopefully, you will be one of the 15% of business owners who believes that your chances of succeeding in 2010 are much greater if you do have a battle plan for next year.  If so, here are 31 questions that will help you succeed in 2010:

1. Where are we likely to finish (sales/cash flow/profits) in 2009?
2. What went right this year?
3. What went wrong this year?
4. What should we have done in 2009 that we didn’t do?
5. What did we do in 2009 that we should not have done?
6. What are our remaining three biggest sales problems?
7. What will be the consequences if we fail to overcome them?
8. What new initiatives (sales, marketing, organizational structure, cash flow, financing) should we explore?
9. Besides solving problems and launching new initiatives, what must we do better than we’ve done in the past?
10. What can we do, for example, to insure that we will attain 100% of our monthly revenue targets?
11. How can we increase margins?
12. How can we reduce account receivables on a monthly basis?
13. Where are we wasting and/or spending too much money?
14. What can we do to maximize non-traditional revenue streams?
15. Where is our largest “growth market”, how are we going to identify that target market, and how are we going to sell them?
16. How can we do a better job of prospecting for new customers?
17. How can we improve the revenue from our regular and biggest-spending accounts?
18. How can we up-sell smaller accounts with big-account potential?
19. Should we consider any changes in organizational structure?
20. What additional people do we need for 2010?
21. What additional other resources do we need for 2010?
22. What additional training do we need to improve performance?
23. What “unique expertise” that is not available from our competitors – can we offer our customers?
24. What standard of performance have we set for our salespeople?
25. How do we get the sales staff to buy into our 2010 goals and strategic game plan?
26. What can we do to better manage each salesperson for the good of the company?
27. How can we make our employees jobs more enjoyable?
28. What monthly profit targets should we set for 2010?
29. What monthly cash flow targets should we set for 2010?
30. Does this management team believe our goals are realistic and therefore achievable? Why?
31. Am I willing to commit, without reservation, to hitting my targets and planning for them?

Create a plan of action based on your answers, and you’re on the path to great success. My monthly business owner workshop can help you work through these issues. I take 10 business owners, just like you, who are going to thrive in 2010. This is a hands-on monthly workshop that will help you create the battle plan that will drive you to greater success. Call 765-644-8887 or email Dan@DynastyBuilder.com to reserve a spot in the next group.

• Have a tremendous need for power, control, and approval.
• Don’t feel rich and do not flaunt their wealth.
• They are frugal bargain hunters.
• Defer gratification today to create a better tomorrow.
• Have a nose for opportunity and are good at getting and processing information.
• Independent thinkers who believe in their own decision making abilities.
• Politically conservative.

Attitude Towards Money

• Highly money motivated and prefer money over material things (they believe money can buy happiness, love, acceptance, security, etc).
• Hate paying taxes.
• Favor direct ownership of assets they can control such as their own businesses or real estate.
• Aggressive growth-oriented investors and very interested in increasing their wealth (they are willing to take controlled risks).
• A small minority favor defensive investments.
• Seek to minimize their personal financial exposure in business and investment deals (example: use other people’s money to enhance their own wealth).

Top Priorities

• Business or career success.
• Financial security for their families.
• Maximizing returns from their careers and their investments.
• Providing an excellent education for their children.

Biggest Fears

• The IRS and taxes.
• Their children ending up as failures and coming back home to live with their parents.
• Losing all of their money and power (particularly strong among people who grew up in poverty).

1. They always live by the motto, “I must do the most productive thing at every given moment.” There are only so many hours in the day, and losing a few minutes here and a few minutes there adds up. To stay focused and productive, end each day by writing down the six most important things you have to do the next day and then follow your list.
2. They plan their time well in advance. Keeping an updated calendar will help you avoid conflicts and be more efficient in allocating your time. Don’t forget to schedule some personal time too.
3. They have a game plan for where they want to go. By writing down your mission and vision, you’ll have a goal to work toward and a game plan to keep you on the right path.
4. They are early-risers. By rising early, you can get a leg up on everybody and take advantage of the early morning hours when everything is peaceful and quiet.
5. They know the difference between good fear and bad fear. Use good fear to encourage you to take stronger action and eliminate bad fear by not worrying about things you have no control over (like the markets).
6. They have well-defined short, medium and long-term goals that meet the SMAC test (specific, measurable, achievable, and compatible). Have clear goals that are motivating and review them every day. Consider putting your goals into a PowerPoint slide and then have your local copy shop print it and laminate it for you.
7. They abhor busy work. Don’t let idle chitchat; paper shuffling and busywork bog you down. Focus on your goals and eliminate what gets in the way.
8. They are very organized. By keeping your desk clean, organizing your files and using checklists, you can eke out more hours in the day. Extend this to your personal life too.
9. They are great communicators. Ronald Reagan was a master communicator and storyteller. Whether you like his politics or not, he was able to articulate his message and make you feel good about it. By improving your communication skills and storytelling skills, you’ll make a better connection with clients and prospects, which, in turn, will lead to more business.
10. They are health conscious. Being a top achiever requires energy and stamina. Regular exercise and a healthy diet will make you feel good, improve your confidence and give you the fuel to keep going when everyone else is falling by the wayside.
11. They have a burning desire to succeed. You can work smart, have discipline and be knowledgeable, but if you don’t have a burning desire to succeed, you’ll fall short of your potential. Burning desire comes from within, so spend some time identifying what it is you want in life, then put all your energy and resources behind getting it.
12. They can motivate others. Success is best when it is shared. Being able to motivate others and help them reach their hopes, dreams and aspirations will go a long way toward helping you reach yours.
13. They practice the fundamentals. In football, the quarterback and the running backs get most of the glory. Yet, without the lineman, there would be no protection and no holes for the running backs to shoot through. By staying focused on the basics, you can position yourself for the big breakthroughs.
14. They are spiritual. They have faith in a higher being and follow a path toward enlightenment.
15. They continually seek wisdom. The minute you close your eyes to learning is the minute you start to atrophy. Top achievers constantly learn from others and know they’ll never know it all.