Tips for Family-Owned Businesses

    1.   Get Expert Help Early!  Use realistic Valuation.

    2.   Understand “min acceptable price” by ALL!

    3.   Agree on “min acceptable price” by ALL!

    4.   Decide what Each Family Member do AFTER…

    5.   Decide How To leave a Solid Management…

    6.   Pick an OUTSIDE Negotiator in Advance.

    7.   Get Cash Out WAY Early: Invy E&T, A/R Tools.

    8.   Have a non-varying Family “Party Line.”

    9.   Do Due Diligence (NO Finger-pointing Ever).

  10.   Get Ferraris, Boats, Airplanes Off BS ˜3 Yrs.

  11.   Use T12M to Up Performance (don’t share).

  12.   Don’t Get “Cold Feet!”

TOOLS ON THE “CEO TOOLS” BOOK’s CD!  Over 20,000 CEOs and Senior Executives use the various tools provided by our website and the “CEO Tools” book.  Microsoft purposely makes it “difficult” or “challenging” for users of its products and ours by introudcing versions that block its own prior files from use as well as ours.  So, here’s the EASY SOLUTION:

Just copy-paste files from the “CEO Tools” CD into a new folder you create on your desktop, re-label it “CEO Tools” and then dbl-clk any tool to open and use it!

PS – Here’s just a “starter list” of management messages from Hoosiers:   Be the Best You Can Be! – Pass the Ball 4 Times (back to basics) – Be Willing to Fail…to Learn! – Visualize and Practice – Put Challenges in Proportion – Never Ever give Up! – Stick to Your Principles/Values/Culture – One Game (Step) at a Time – Grow the Team You Have- This IS Our Team! – Speak in the Listener’s Language – Do Learn from Past Mistakes (Coach Norm) – Give Potential a Chance (Jimmy & Shooter) – I Love You Guys!

This year focuses on “how to manage our businesses better in the next twelve challenging months” with an emphasis on real-time, use-it-now, tools that get results.  These tools work in any recession-like period since they were successfully used by me as CEO in five companies during recessions and several others in good times.  We’ll particularly focus on “how to” aspects with an eye to ease-of-implementation to yield immediate results.

The following topics will be our focus in 2012:   1 – Tools to get more sales & volume, emphasis on “how to.”    2 – Drill-down on cash management, collection ideas.    3 – Operating efficiency with focus on specific tracking tools.    4 – Creating an “I WANT TO HELP & WIN FOR ALL…” culture!    5 – Developing management efficiency…using QPM Accountability.    6 – Seeing into the FUTURE…how to with tools to help!    7 – Growing productivity…$ and # per unit tracking/results.    8 – Inflation is back: how do I increase PRICE?    9 – Anticipating a New Economy (whatever happened to “normal?”)   10 – Maximizing results from Trailing-12-Month Charts.   11 – FUTURE LOOK:  A changing Federal/State picture…prepare for 2013!   12 – And, what should we be focusing on in the coming year?

Please preview the new tools at www.ceotools.com — they’ve all been updated for tracking and reporting through December 2012 (yes, the end of the year).  Just click New Tools Catalog at the website; then scroll down through brief descriptions of the tools.  You can print out the free PDF of any tool or better yet, order the Excel version for a quick download to immediately use the tool for improving your business.

All these tools and tips will be aimed at making you and your business more successful in 2012…we hope these tools and tips work for you!

With very best wishes, Kraig Kramers

So, here are some thoughts and tools to “inculturate” your company with behaviors and beliefs that we have seen work in bringing more top-line, more bottom-line, happier employees creating happier customers, and better cash flow and balance sheet health.

First, try adopting Ron Fleisher’s remarkable value system…three simple values for you a your people to embrace.  They are “Customer is our First Focus Always” and then “Revenues minus Costs and Expenses is Profit” and it’s a VALUE here because without it, there is no company, no customer, no product, no nothing!  And then third: “Over-Deliver” which means promise what they say and they want AND what you know they really need, then Over-Deliver every time.  This approach is simple to instill, and it really works!

Next, add some of the tools we continually talk about in the “CEO Tools” book, namely tools about Walking the Four Corners “W4C” and Communication tools, Recognition tools, Celebration tools and events.  Many easily-implemented tools in these areas are laid out in the “CEO Tools” book which most of you have.  They are also available in the many blogs at www.ceotools.com/blog and on the website.

Another thought on improving your culture: Greg Bustin, a top Vistage/TEC speaker/chair focuses on this area in a unique way in his recent blog and email, which identifies the “culture crashers” in your company; these are those folks who destroy culture and whom you can re-direct.  See his insightful piece at the following URL: http://www.bustin.com/_blog/Greg_Bustin_Executive_Leadership_Blog

Finally, it is my immense pleasure and honor to work with some of the very best cultures embodied by clients that I now work with:  these include Phillips Corporation headquartered in Hanover Maryland, Triton Management Group headquartered in Montgomery Alabama and Hotze Entities in Katy Texas.  These are just a few businesses which anyone would be proud to be affiliated with in any way…there are many, many more!

Please set aside some time in the coming few weeks to consider your culture.  What is it now, how might it be improved, and what is your plan with your senior management team to inculturate your company into greater performance and results?  You will be surprised how huge the positive impact will be on your profitability and cash flow.  Best wishes for creating your championship culture, Kraig

Here’s how:  build your own CUSTOMIZED dashboards after looking at our dashboards on the www.ceotools.com website under “New Tools Catalog.”  Suggest you look at the “Measure Up” dashboard as a model where we display the flow of key charts left-to-right on the dashboard.  Each row is designed to take the most important “driver” that makes your target key indicator happen, followed by the most important “key factor” that makes your key indicator successful, followed by the thing most of us usually measure, namely the “result.”  You get the most visibility and manage-ability of your desired result by designing and seeing your flow left-to-right like this!

You can easily scan down through New Tools Catalog at www.ceotools.com to see the various dashboards for tracking the main big elements in your business, go ahead and print out the free PDFs and then decide what your best dashboards should be.  Encourage your managers to do the same.  Pretty soon everyone will have their own CUSTOMIZED DASHBOARD that works for them!  Then, by sharing those dashboards with each other, your management teams will help each other get results while also improving their own dashboards over the next few months…this works fantastically well and is a technique I’ve personally used in several businesses with huge success.

One additional thought:  really learn how to read your balance sheet…is it “healthy?”  Do you know what happens when you sell something?  It really gobbles cash through increased inventory and/or receivables in nearly all companies.  Whenever an asset increases (other than cash itself), it almost always uses lots of cash…any time a payable increases it generates cash.  S0…sales growth gobbles cash, paying someone gobbles cash, buying inventory gobbles cash…determine your “right” growth rate and then track and manage all these things in a dashboard.

We’ve added a new helper at www.ceotools.com/blog that will guide you with your charts and dashboards:  just go there and search on “re-scale” for complete instructions on easily re-scaling Excel charts in versions published as 2003, 2007 and 2010.  It turns out that Microsoft in its infinite (non)-wisdom changes the methodology for working with charts pretty dramatically with each new version.

May these ideas encourage every member of your management team to grow your business without running out of cash!  And..tracking it all on dashboards makes it so much more manageable.

Very best as always, Kraig

An example of “hidden” cash is printing companies that keep leftover printing paper in short stacks…by resizing or cutting  that paper into smaller sizes that fit smaller printing presses, we get twice as much paper that can be sold to a smaller-format printing business.  Another approach is to look at a detailed balance sheet (yes, to the penny)…we found a half-million-dollar stock certificate that had been forgotten in a Fortune 500 company this way and recapturable deposits in several smaller businesses this way.

Here are more tools for speeding cash inflows and slowing cash outflows:

1. As Red Scott says, Cash ain’t cash unless it’s cash!  (manage cash and credit SEPARATELY)   2. Maybe borrow-down some credit & put it in CDs (to have a reserve of cash)   3. Review all expenses, item by item, and cut…cut again…review quarterly   4. Have an all-hands meeting to work on cash (weekly, stand-up, 15-minute)   5. Start collecting before mailing invoices, not in 30 days   6. Watch like an eagle the over 60-90-120 DSO (they’re skyrocketing as % of total)   7. Use sophisticated asset/cash tools like Earn-&-Turn & Segmented Collections   8. Re-forecast cash out 16 weeks every week, have and use a daily report   9. Try 1%-10 Rebate not Prompt Pay; and COD + 10% or even 20%  10. See more tools and tips on cash at www.ceotools.com/blog

Please also see the original “Top 10 Cash Management Tools” below…these are still loaded with opportunities for finding more money right now.

By mining employees’ and suppliers’ activities as well as hidden locations of cash in your company, we’re hoping you find more $$$ than you ever thought possible!  If just one of the ideas provided here works for you, we’ll have accomplished our goal.

Here’s to more cash, Kraig

Top 10 Tools for Managing Tough Cash Situations and for Staying Out of Cash Trouble!

1. SHORE UP CAPITAL (both equity and debt) – this means leaving equity in the company as you grow so that borrowings can grow as well without increasing the debt:equity ratio.  If already in cash trouble, bring in outside equity.  Preventive: leave enough equity in as you grow profitably to maintain a healthy debt:equity ratio for your industry.

2. TRACK CASH DAILY & RE-FORECAST WEEKLY – so can meter the cash outflow (payments to suppliers) as well as encourage cash inflow (payments from customers) and balance borrowings appropriately.  Yes, CEOs, CFOs, and GMs need to see a daily cash report to stay on top of this, both for preventive and emergency cash management.  The re-forecast out six-eight weeks helps you see the future!  See Kraig’s easy Cash Manager Tool.

3. HAVE AN ALL-HANDS CASH MEETING WEEKLY – with everyone in the business who has a direct impact on cash, whether incoming cash (receipts or collections) and outgoing (disbursements to suppliers and employees).  This is a 15-minute standup meeting without chairs but with agenda to guide discussion.

4. FIND CASH BY SEEING WHERE “C-H-I-P-S” ARE HIDING – Cash Hides in Peculiar Spots, so find ways to see it.  Getting an outsider to walk through your business and ask questions like “what are those small stacks of paper” in a printing company led to selling all that paper (that would never be used) for 100’s of thousands of cash dollars!

5. STAY CLOSE TO LENDERS & PROSPECTIVE INVESTORS long before you need them.  Whether preventively or emergency, to get cash when you need it you must have prior happy relationships with those who will provide the cash timely when you really need it.

6. GROWTH GOBBLES CASH FOR BREAKFAST – you might not make it through the day!  So understand your growth rate.  Don’t grow too fast – determine your “right growth rate” by seeing pages 126-128 of Kraig’s book “CEO Tools…for Every Manager’s Success” and then use the What Causes Sales tool from www.ceotools.com to grow at that sales growth rate.  You’ll maximize profitability while staying out of cash trouble forever!

7. CONTINUE TO LEARN ABOUT CASH – by reading and networking on the subject.  One book Kraig likes is Barry Schimel’s “101 Ways to Prosper in Today’s Economy.”  And, become a cash student for life by continuing to study the things that have driven your company and others into cash paroxysms in the past and things that make cash plentiful!

8. BREAK THE CHECK-SIGNER’S ARM! – And then sign the checks yourself as CEO or GM for a while. This will help you REALLY understand where the cash is going and who in your company is spending it.  Many CEO’s and CFOs do this once a year on a surprise basis for a month just to refresh themselves on what is happening in their company from a different viewpoint.

9. REMEMBER, OWNING 40% OF A SUCCESS IS FAR BETTER THAN 100% OF A FAILURE! – Too many entrepreneurs and control-types have hung onto 100% ownership right into Chapter 7 and 11!  Be willing to bring in equity investors of all types, selectively.  You can control your business 100% with only 1% actual ownership yourself using an LLLP or ESOP as your form of corporate legal organization.

10. BECOME A “CASH STUDENT” for life…keep on learning cash tools, even though in more mundane areas like the collection function in your company.

How?  Try really digging into “What Causes Sales” (WCS) in your company.  Two ways to brainstorm and determine, and then use WCS for you:  first, start with the event where the order is taken in your business, then back up through the chain of events that lead to that order…you want the earliest event that you can MANAGE as well as MEASURE consistently and reliably.  A second way is to have a separate second brainstorming meeting with the key people in and around your company…use a starter list of WCS from other industries to get started, write down all possibilities for your company, then discuss the likelihood, practicality, and applicability of each.  Pick the one or two most likely, then test or try them.  Go with the one that works!  Be sure to bring the customer into your thinking about WCS in your brainstorming and testing.

Here are some examples of WCS in different businesses:

Lawnmowers:   Rain causes sales…it makes grass grow; manage it by forecasting rain by locale and then quadrupling your advertising only where it is raining!

Ski Resorts:  # of well-groomed acres and short lift-lines cause sales; so focus on more and better-groomed slopes as wll as lift-line management.

Everyday Retail:  Location, location, location!  You’ve heard that, but it’s conveniently-located, visible, and easy-ingress-and-egress plus demographics of your customers nearby; so focus on these!

Specialty Retail:  Here it’s best offering, most conveniently bought, gotten and used, with easy information / accessories / support.

Sporting Goods Distribution:  Industry practice dictates suppliers to retailers provide long-gun dating, so it’s the “flooring” of the retailer’s inventory…but it’s also fill-rate and extra support and services provided.

Commercial Printing:  Here it’s expertise and access to truly expert (technically adept) salespeople.  Many businesses are like this, so it’s ongoing training of sales-personnel and customers plus the interpersonal skills of the salespeople.

Financial Services:   Customers want to be able to TRUST what they’re buying here…so personal referral is usually WCS.  Your company needs a “referral management system” here, including individual targets for salespeople with a tracking system (T52W Charts).

Hope these examples are useful to you:  in every case, WCS is really about getting to the SOURCE of the cause, almost always involving the impact on or perception of the customer.

With best business betterment wishes, Kraig

What to do about it?  Work with our suppliers to give us somewhat better payment terms without messing them up (indeed, talk to them, maybe trade price concessions for cash concessions).  Try reducing dependence on immediately available inventory (less $ tied up there) through more careful purchasing, outsourcing, or supply chain management.  And get more permanent working capital using several techniques.

These techniques include additionl/supplemental/different borrowing (try regional and local banks, supply chain financing, credit unions, and even SBA loans now available up to $5 million which are backed by one of the many trillions of “stimulus” money.  Also, private placement offerings are raising multi-millions for many companies, but expect to pay fairly hefty interest rates.  And of course there are boutique investment banking firms that can help you raise permanent or semi-permanent capital (such as Bulkley Capital — email me for information).

If you have another idea or something you’ve been successful with, please let me know and I’ll post on my blog next month.  As always, hope this helps you, and if you know others who are struggling with cash/capital, please share this blog-post with them.

With best regards, Kraig