It’s about fundamentals that have served businesses since proto-market was born, when Og dropped his club and suggested to Gog that they do business instead of killing each other for what they wanted. If you’ll find a way to incorporate these 6 fundamentals into your daily, weekly and monthly management practices this year, you’ll have more fun because success will come and play in your back yard.
If you don’t, well, you know.
1. You must produce and manage with regular and accurate financial statements: profit and loss, and balance sheet. In business, you can’t get where you want to go if you don’t know where you’ve been.
2. Someone in your business is likely managing cash every day, but you also need to project and manage future cash conditions over at least 12 months on a computer program like Excel. Since, as the owner, you’re the one who figures out how to cover a future cash shortfall — with more sales, expense reduction or a loan — I recommend you for that job.
3. You can succeed yourself out of business if you don’t understand the relationship between accounts-payable-days and accounts-receivable-days. This perspective will provide you with a better understanding of the impact of time on cash, and how insidiously success burns cash.
4. Declare war on excess inventory. Few pieces of inventory should spend the night under your roof. Successful inventory management means just-in-time, not just-in-case.
5. Convert non-performing assets to cash. Most things are worth less today than they were last year, and they’ll probably be worth less tomorrow. If it isn’t being used, take the hit and cut it loose.
6. Employees spend a lot, if not most, of your cash. Ask them to identify ways to find efficiencies and maximize margins. Tell them their motivation for helping is something called “job security.”
Source: The Business Journals
If you don’t, well, you know.
1. You must produce and manage with regular and accurate financial statements: profit and loss, and balance sheet. In business, you can’t get where you want to go if you don’t know where you’ve been.
2. Someone in your business is likely managing cash every day, but you also need to project and manage future cash conditions over at least 12 months on a computer program like Excel. Since, as the owner, you’re the one who figures out how to cover a future cash shortfall — with more sales, expense reduction or a loan — I recommend you for that job.
3. You can succeed yourself out of business if you don’t understand the relationship between accounts-payable-days and accounts-receivable-days. This perspective will provide you with a better understanding of the impact of time on cash, and how insidiously success burns cash.
4. Declare war on excess inventory. Few pieces of inventory should spend the night under your roof. Successful inventory management means just-in-time, not just-in-case.
5. Convert non-performing assets to cash. Most things are worth less today than they were last year, and they’ll probably be worth less tomorrow. If it isn’t being used, take the hit and cut it loose.
6. Employees spend a lot, if not most, of your cash. Ask them to identify ways to find efficiencies and maximize margins. Tell them their motivation for helping is something called “job security.”
Source: The Business Journals