2012 TEC Senior Managers' Program

The first session of the 2012 TEC Senior Managers' Program on Feb. 7th in Milwaukee, and on Feb. 8th in Appleton, features Boaz Rauchwerger presenting, "How to Have Confidence and Power in Front of Any Group".

Boaz Rauchwerger will teach attendees how to become confident and highly effective in front of any group - from small group meetings to presentations before large audiences. He will share the techniques he has successfully used for many years to turn business leaders into powerful presenters.

Participants will leave with specific steps and outlines they will be able to easily use to organize and deliver great presentations with confidence. Not only will they be able to present with confidence, but they will have a list of specific ideas that will add power and effectiveness to any of their messages - delivered before any audience.

For more information about the Resource Specialist, his topic, the fee, or to register, please contact:

Rita Rehlinger at:
rita@tecmidwest.com
262-821-3340

Management: Cash flow is king, Get a handle on your company’s finances

By TEC President Harry S. Dennis, III, originally published in BizTimes.

My thanks this month to well known Vistage (TEC) speakers Ron Fleisher and John Zaepfel for their useful insights on the subject of cash flow.

It’s probably fair to say that monthly or weekly cash flow statements don’t exactly make for the most exciting nighttime reading for the typical small company CEO. But after the income statement and balance sheet, this report is perhaps the most important of all.

We’ve all heard that “cash is king.” Running out of cash with nowhere to go spells the end to a business, regardless of how small or large.

A cash flow report should very simply tell you how much cash you have coming in and how much you have going out. It covers three distinct areas:

1. Operating cash flow. This statement indicates the amount of cash being disbursed to vendors, employees, debt payments (including rent) and taxes, offset by the inflow of cash from customers and short- or long-term investments.

2. Investment cash flow. Business owners or managers make short- and long-term investments from time to time.

3. Financing cash flow. This is cash used to finance the business, including the cost of leases for equipment.

These three statements in aggregate determine a firm’s overall cash flow.

The benefits of tracking

The experts recommend tracking cash flow over time because it’s a key indicator of the health of your business. A chart comparing this year’s cash flow with last year’s, month by month, will quickly expose negative trends.

Tracking does something else for you. It automatically adjusts for seasonal and industry trends.  If you spot any other unfavorable trends, that’s a signal to start tracking cash flow much more frequently, such as daily. Specifically:

As an anchor point, always review cash flow monthly.

• Look at your checkbook daily. Note the receipts and note the disbursements.
• Document the cash you have on hand and calculate how long it will last if receipts stop coming in, for any reason.
• Determine your working capital needs (current assets minus current liabilities) for the balance of the year, at minimum.

Undercapitalized businesses are always struggling to support a healthy cash flow business operating environment.

The problems exacerbate when the company experiences a spurt in growth or an unexpected slowdown. A mandate for every CEO is to constantly search for ways to improve the capital strength of the business. Not doing this may be the kiss of death.

Ways to improve cash flow

Let’s review some of the things you can do to improve cash flow. In TEC, these ideas have produced good results over the years:

1. Ask your bank to set up a “sweep” account for you. This is a bank account that automatically transfers amounts that exceed (or fall short of) a certain level into a higher interest earning investment option at the close of each business day. Commonly, the excess cash is swept into money market funds. The “sweep,” per se, varies from one bank to the next, but it’s a good way to get your hands on your cash sooner than later.

2. Go nuts over your receivables. Give your best customers discounts for quick payment of 10 days or less. Consider credit card payments, but only if the total cost to the credit card company justifies it.

3. If you carry inventories, do a physical inventory on them at least twice a year--quarterly if you know you have high inventory carrying costs. There’s nothing worse for your cash flow than low inventory turns, especially in-process inventories. With today’s technology, there’s no excuse for outmoded products sitting on the shelf. GPS has ushered in a whole new dimension of control.

4. When cash flow is tight, negotiate with your vendors for discounts or extended terms. That’s a must. This isn’t an issue of nickel or diming them. It’s asking them to do for you what you do for your better customers.

5. Renegotiate. Long-term agreements, especially leases, are always subject to re-negotiation. Again, the objective is to increase your cash flow.

6. Use pay-for-performance. This is probably the most popular alternative that our TEC members have instituted in the last seven years. Perform first, get paid second.  But set the bar so that the pay reward is worth shooting for. It can be tied to bonus incentives, profit sharing plans and even deferred compensation plans for senior execs.

Conserving cash seems like such a mundane chore, doesn’t it? Pure growth is so much more fun.

Spending with absolutely no concern for the consequences seems to be the providence of the U.S. government. The rest of us out here, who play by the rules, need to heed the rules of cash.

Until next month, please remember: cash remains king!

Management: Be ready for the nuances of 2012

By TEC President Harry S. Dennis, III, originally published in BizTimes.

It’s hard to believe that 2012 is just around the corner. The best word I would use to describe 2011 is tumultuous. Everything bad that could happen economically happened.

For small and medium-sized businesses, 2011 can best be described as unpredictable.

But businesses have endured because, for the past decade, they’ve learned to think about surviving first, and then about the good times that might lie ahead.

So this month, let’s take a look at the nuances for business planning next year and the variances we’ll be facing.

In statistical jargon, error variances explain the strangest things: a missile that unexpectedly deviates off course, an aircraft that crashes because of an instrument deviation, an airbag that deploys without warning, and so on.

We have variances in our business planning, too. Here are tips on how to deal with them.

Sales projections

In the good old days, we were accustomed to talking about the 90/80/70 percent variance contingencies. The assumption was you began with a 100 percent optimistic sales plan.

If, after one quarter, it was obvious that you were overly optimistic, you would start working the 90 percent plan. You’d throttle back your cost-of-goods sold and net operating profit projections.  Usually, plans for capital expenses would remain in place, but with “delay” written next to them.

If, after two quarters, it was clear that your projected revenues wouldn’t be greater than 80 percent of your plan, you’d cut back across the board on things such as capital expansion, hiring employees, new lease commitments and so on.

Once you determined that your company was unable to exceed a 70 percent annual revenue target, you might start laying off employees, possibly eliminating entire shifts if necessary. You needed to enforce extreme cash savings measures too.

The nuances or variances associated with 2012 almost guarantee that manufacturing and service firms will experience these roller coaster rides.

Why plan at all under these conditions, you ask? Because this is truly the new normal. As much as we despise it, it won’t end anytime soon. Being prepared is almost a myth, in fact.

Intra-business stability

On Dec. 23, 2010, Air Force Magazine reported, American troops in Kabul, Afghanistan, were in their usual high alert and conducting assault training exercises at city central.

The training was to create a sense of internal “business as usual” operational stability among the troops. Likewise, any business operating from a contingency plan can continue to train and retrain employees to meet the unexpected.

Any procedure that might fit under the rubric of standard operating procedure needs to be re-examined.

Business slowdowns present a great opportunity to take on projects that usually fall between the cracks during busy times. One of our favorite projects at TEC is work flow, especially computer-to-computer or network-to-network.

I’d place website upgrades into that category. Good websites are upgraded three to four times a year. When was the last time yours was upgraded?

Seizing global opportunities

For the past year, the stock market has been reminding us in knee-jerk fashion that the effects of global events, primarily those dealing with the economy and banks in European countries, are so severe that they may as well be happening to our next door neighbor.

But dismal global reports are offset by continuing super strides in countries like China, India and, most prominently, Brazil. The challenge to the United States is how to let smaller businesses claim a piece of these growing pies. This is one solution to abating the 90/80/70 percent revenue syndrome.

Something more than determination is really needed. When I hear a company say, “We’re just a regional business and don’t have the wherewithal to go elsewhere,” it reminds me of a former TEC company that made the move quite successfully.

At the time, they were in the phone booth and telephone enclosure business, serving Ma Bell for the most part. Due to the onslaught of cell technology, phone booths became dinosaurs almost overnight. With perseverance, the company opened up Third World markets in places such as India, Indonesia, the Caribbean and Eastern Europe.

Net result? The business was saved. You might recognize the company’s name: Fortec.

Bring it on

It used to be that the only two things we could really count on were death and taxes. I think we can safely add a third one: the world of business nuance as seen in a string of unexpected variances.

Until next month, and a new calendar year, may these nuances work for you, not against you.

Human Resources: A sneak peak at tomorrow’s workforce

By TEC President Harry S. Dennis, III, originally published in BizTimes.

Some of us will still be in management positions in 2021.

That means that, right now, there are 12-year-olds in grade school who may be junior employees at your company in what seems like a few short years.

Here’s a quick primer to remind us where we were and where we are now. My thanks to TEC resource, Dr. Gustavo Grodnitzky, for this review.

The Silent Generation

This group was born between 1925 and 1945. Many have left the workforce. But many also have re-entered in part time or other vocational areas, simply to make ends meet in this economy.

Several of our TEC chairs and staff, including yours truly, fall into this category. We’re also called “rationalists.” We are loyalists and principled in our commitment to one company or one occupation during our careers. We’re not known as extreme risk-takers. We accept the pluses and minuses that any job has to offer. We’re good company role models, as well.

The Baby Boomers

Born between 1946 and 1964, they’re called boomers because so many were babies created after GIs returned from World War II. Boomers are driven to excel. They want steady job progression and the wealth and materialistic rewards that come with it. These folks introduced the idea of the 60- and 80-hour work weeks. They equate effort and time invested with their expectations of financial and material return.

Generation X

Xers were born between 1965 and 1981. Unlike the Boomers, they want work/life balance. They’re more focused on the productivity and efficiency required to get the job done in 40 hours or less. This gives them the balance to pursue interests outside of work, such as families, hobbies, a healthy lifestyle, and so on.

Generation Y

Yers were born between 1982 and 2000. They’re also known as Millennials, reflecting the symbolic change to the 21st Century. Unlike Xers who are preoccupied with work/life balance, Yers have trouble making the distinction between this semantic dichotomy. Instead, they prefer a blended lifestyle. In other words, they hold very close what they think is important in their work life. They equally value what’s important in their personal life. Yers are complex and more difficult to understand and manage than Xers and Boomers. You can see the differences here:

• Time. Grodnitzky talks about employers shifting from a traditional time-keeping methodology to a progressive one, which he describes as paid time off, or PTO. PTO replaces personal time, sick time and vacation time. Basically, it says to the Yer, “You are an adult. Use your time wisely and fairly so it doesn’t detract from your job responsibilities.”
• Flexibility. The close cousin of time is flexibility. And the close cousin of flexibility is pay that is tied to performance results, not a time clock. Pay for performance is catching on at a number of TEC companies. But most will tell you that having the right metrics in place to measure performance is critical. This means that whether a Yer is working in the office, on the road, or at home, you should expect the same performance results.
• Personal Growth. I have found that Yers have the highest quest for personal growth and knowledge among all the employee groups mentioned above. A savvy employer will give them opportunities to grow.
• Relationships. A Yer’s relationship with supervisors is critical to how long they stay at your company. Boomer supervisors, in particular, need training on how to relate to the Y generation.
• Cause. Yers are most effective when they can relate to and embrace causes. Your mission statement or vision or “why we do what we do” statements are places to begin. But the message must be meaningful, short, to the point and engaging. Otherwise, Yers won’t really care.

Generation Z and beyond

Next, we have Generation Z, sometimes defined as those born anywhere from the mid-1990s and early 2000s through to the present.

They’re raised on the Internet, adept at multi-tasking, able to sift through large amounts of information quickly and eager to share what they’ve found.

They, and the other generations before them, will make up the workplace a decade from now. Here’s what employees in our future workforce might look like:

• They will be a weighted composite of boomers, Xers, and Yers, with the Yers weighted the highest.
• Their speed of output will double from today’s standard.
• Marriage and children will not be a significant goal for them.
• Mobility coupled with job stimulation will be a high priority.
• They will have an Internet business in addition to their primary vocation.
• They will show fierce independence, but exceptional work pride, with multi-talent capabilities.

That’s the view, a decade from now. Until next month, what else do you see?

4th Quarter Productivity: Make the season work

You and your team have been working hard all year. First quarter, second quarter, third quarter, and now rounding towards – a holiday party? Even if the holidays are your favorite time of year, it’s hard not to worry that productivity could be sidetracked by distractions during 4th quarter. So how can we get the numbers where we need them without turning into Scrooge?

Checking it twice: Start by assuring that your Human Resources department has sent out a list of your company holidays and time-off policy well ahead of time. You may want to suggest a deadline when all requests need to be in order to be considered for priority.

All is calm: Have your Project Management team conduct more resource planning check-ins and detailed time-off calendars to assure your planned work is covered. Since distractions and time-offs during this time of year are a given, build some extra time into each project. Be sure to include any of your holiday parties into the work schedule, too.

Shake the tree: Your Sales team should follow up with prospects one more time to see if any year-end sales can be added. A sales challenge with a respectable prize can be tied in with your holiday theme. Don’t forget that some clients may have annual budgets to use or lose. Propose concepts that bring some last minute value and lead to more work in the new year.

Setting a jovial tone during the holidays can motivate your team to face year-end challenges with determination. Accept that some decline in productivity is a reality at many companies this time of year. Showing your teams gratitude, tolerance, and flexibility in the face of holiday time-off requests can make the hours they are at work as productive as ever. And proving that you are there to hold down the fort no matter what is a great way to remind your team that we still have a job to do.