20 Powerful Principles to boost your bottom line IMMEDIATELY By Bob Vitamante, SCORE Counselor and...
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Transcript of 20 Powerful Principles to boost your bottom line IMMEDIATELY By Bob Vitamante, SCORE Counselor and...
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20 Powerful Principles to boostyour bottom line
IMMEDIATELY
By Bob Vitamante, SCORE Counselor and Chairman of Santa Barbara
Chapter of SCORE
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GOALS/Promises FOR TODAY(ambitious, risky, gutsy)
• Learn insights to change how you:– View your business as the owner– Measure its success
• Walk away with ideas to increase Your Bottom Line starting today
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It’s okay to disagree!
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You, the audience, will help dictate Direction & Scope
• This will be interactive• Where are you in your personal business cycle– Stage of business: concept only? Starting? Running?– Employees– Goals: Have them? Are a beginning, not an ending.
They will change over time.• Who are you?– Entrepreneur or Leader? Key manager? Sole worker?
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First, a little about me
Well known companies
• SelectRemedy Temporaries• Pinkerton’s, Inc.• Olsten Temporary Services• Columbia Pictures Industries • KPMG, Peat Marwick CPA’s
Not-so-well known companies
• RJ Vitamante & Associates• TickerBuddy.com• 3D Shopping.com• Royal Cigar Society• BAC Trading• MLM’s: HUB (Humanity Unites
Brilliance); Rexall Pharmaceuticals
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Principle #1 Know thyself
Strengths Weaknesses Special skills & TalentsPassions LikesDislikes
Questions: Have you done a self assessment? Are you applying it in your business?
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Principle #2 Know thy (Personal) Goals
What are your personal goals for work or business– To lead or to follow?– To work alone or with others?– Inside or outside?– Creative expression?– Contribute to society?– Make a living for self and family?– Very little stress? Safety?– To build?– To get rich? By when?
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Principle #3 Know thy (Business) Goals[aka Your Bottom Line]
• What results do you want?– Must be specific– Must be actionable and measureable– Must be time bound– What is your business cycle - Daily? Weekly?
Monthly?• Why?• What needs do you want fulfilled?
If you don't know where you are going,you'll end up someplace else.
Yogi Berra
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Principle #3 (cont’d)
Some Examples of Personal Bottom Lines:• A specific income stream/salary• A business expressing who you are, with money as a
secondary concern• A sustainable business that can grow & build value• A ‘get rich quick’ technology play• A ‘fix it and sell it’ play• A business to grow and give to family members in one
year, in three years, at some other future time • A business that does ‘good’ in the community
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Principle #3 (cont’d)
What’s your Personal Bottom Line?• For 2013• For 2014• 2020• Beyond
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Principle #4 Need Help figuring this out? Get a mentor!
Who or What is a Mentor?Some History
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Principle #4 Characteristics of a Mentor•Real life experience•Subject matter expertise•Demonstrated achievement•Cares about you and your growth•Objective, neutral•Honest and open, and knows their limits•Solution oriented•Can meet you where you are; been there, done that•'Reduced ego' - Limited personal investment of 'self'•Big picture oriented
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Advisor comparison guideAttribute Family &
friendsTeachers Coaches Consult’nts Employees Mentors
Are independent No No No Yes/no No Yes
Are concerned about your opinion & feelings
Yes Yes No Yes Yes No
Care about you Yes Yes Sometimes No Sometimes Yes
Are balanced & objective
No No No No No Yes
Have detailed practical knowledge
Rarely Yes Yes Yes Sometimes Maybe
Are highly experienced No Sometimes Sometimes Yes Sometimes Yes
Look at the total picture
No No No No No Yes
Are compensated No Yes Yes Yes Yes No
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Principle #5 Follow your bliss• Know who you are and want to be• How does it fit with your skills, talents, passions, etc.
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Principle #6 Be true to yourself
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Principle #7 Define your role, realistically
• Start at the top - Entrepreneur or Leader?– Dick and Mac McDonald• Worked hard and made a good living
– Ray Croc• Bought the Franchise rights• Took little from the business• Hired the best
• Creation, Production or Administration? – You need all of them!
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Principle #8 Do the right thing, personally
• What are you now doing that you should do:– More of?– Less of?– The ultimate test – what will move the business
forward toward Your Bottom Line
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Principle #9 Hang tough
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Accountants may hate this!• Balance sheet (B/S) does not show true value• P/L ‘bottom line’ has very limited use– Doesn’t indicate earnings potential or sustainability– Is easily/readily misleading– Can create a false sense of calm or alarm– Can be useful with some important ‘tweaks’, but proper
timely interpretation is a ‘must’– Does not measure Your Bottom Line
Principle #10 Seek the truth (about performance), and it will set you free(financials have limited value for measuring achievement)
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Principle #10 (cont’d)
(financials have limited value for measuring achievement)
Some examples of financial data that can be misleading • B/S:
– High or low cash balances or receivables– High or low customer deposits & trade payables
• P/L:– Investments treated as expenses– Staff training– Addition of staff and Recruiting costs– New supplies and equipment– Advertising and PR programs– Timing for recurring expenses, such as insurance, workers comp, taxes, property
taxes, incentive payments,
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Sept
Rev 10000
Expenses
product cost 5000
salary 3000
liability ins 1000
rent 1000
supplies 1000
advertising 3000
Assoc dues 2000
Total exp 16000
Profit (loss) -6000
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SeptRev 10000
Expensesproduct cost 5000salary 3000liability ins 1000rent 1000supplies 1000advertising 3000Assoc dues 2000Total exp 16000Profit (loss) -6000
Add backssalary 3000liability ins 1000advertising 3000supplies 1000
8000
Normalized P&L 2000
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Sept AugRev 10000 15000
Expensesproduct cost 5000 7500salary 3000 0liability ins 1000 0rent 1000 1000supplies 1000 0advertising 3000 0Assoc dues 2000 0Total exp 16000 8500Profit (loss) -6000 6500
Add backssalary 3000 0liability ins 1000 0advertising 3000 -3000supplies 1000 0
8000 -3000
Normalized P&L 2000 3500
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Sept Aug Sep-12
Rev 10000 15000 8000
Expenses
product cost 5000 7500 4000salary 3000 0 2000liability ins 1000 0 1000rent 1000 1000 1000supplies 1000 0 0advertising 3000 0 0Assoc dues 2000 0 2000Total exp 16000 8500 10000Profit (loss) -6000 6500 -2000
Add backssalary 3000 0 2000liability ins 1000 0 1000advertising 3000 -3000 0supplies 1000 0 0
8000 -3000 3000
Normalized P&L 2000 3500 1000
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Principle #10 (cont’d)
(financials have limited value for measuring achievement)
Some cures begin with Proper analysis of B/S & P/L:• Cash is king: collect more frequently, pay less frequently• The trend is your friend: compare current period to prior months, prior year
months, budget, competitors• Eliminate (or separate out) distorting items and owner’s compensation (in its
full glory)• What to measure and when: key metrics• Identify items of continuing value in the context of your goals, and ‘suck it up’• Increase income and reduce expenses – in a word, Negotiate• Create the story of your performance each period – explain what’s
happening against ‘goals’
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Principle #11 You can’t manage what you don’t measure
Peter Drucker
• Define Your Personal Bottom Line• Change your measures of success• Plan the necessary steps, such as:– Hire two sales persons– Purchase new equipment or software– Add X number of clients
• Measure attainment of the plan
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Principle #12 No man is an islandJohn Donne
Who’s on your team?• Staff?• Family and Friends?• Professionals – CPA’s, Attorneys, etc.?• Mentors?• Board of Advisors?• Investors?
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Principle #13 Put First things First
• Crawl before you walk, walk before you run…• Develop your idea as a concept• Identify the things required to make it happen• Ask your mentor for advice
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Principle #14 Focus, focus, focus
• Daily question – are my activities today moving the ball forward
• What you focus on will grow, positively or negatively
• What am I avoiding – Deal with it.• Ask your mentor for advice
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Principle #15 – Lead by example
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Principle #16 The Team
• The right skills for the right roles• Hire the best you can, and invest in them• Where do you fit in• What do you love and what do you hate• What will make the difference
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Principle #17 Place a value on failure
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Principle #18 A chain is only as good…
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Principle #19 Alignment is a ‘must’
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Principle #20 The Systems
• Must have certain disciplines to enable repeat performance
• Results must be tested– Spartan training– Demonstrated results
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To Summarize
Our focus today was on:– New, broader measures of success– Your role– Your business priorities– Your planning, goal setting, etc– Your staff– Your external team – Mentors
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Thanks for your attentionGood Luck!