The Basic Approach has many layers and components that closely relate to the layers of life and challenges faced in business. Life and business are what they are, ever changing and evolving – the Basic Approach simplifies winning those challenges and opportunities.
The following Directory is presented in the suggested order of attention.
Cut Accounting Costs & Gain Accuracy
Marketing for Sustained Profits
Tightwads Keep a Wad and Invest for Growth
Open Office is “open source” software developed by SUN Java and supported by Oracle, the arch-enemies of Microsoft. It’s used exclusively in the government and industry of Germany (the only currently growing economy in Euro-America) – they took the bold step of savings millions with no ill effects. You can save, too.
The secret is that Open Office opens and saves ALL MICROSOFT OFFICE FILES and is so much like the “Office” software that there is virtually no learning required – just open a document type (Text, Spreadsheet, Database, SlideShow, Publishing, etc.) and go.
Download at www.openoffice.org and take a break while it downloads and installs – it’s a big download. If you have multiple computers, it’s easier to install on the other computers by copying the download to a DVD and install the other computers from the DVD.
How much will you save never paying Microsoft for software? I’ve used Open Office for over 5 years with .doc and .xls “Office” client files and in start-ups without anyone ever knowing and saved over $9,000 in payments to Microsoft. I don’t hate Microsoft, but I also don’t feel it needs that $9,000 more than I do.
PS: You can do ANYTHING & EVERYTHING offered in “Office”. It’s also very, very secure.
Do it! If you have multiple computers, switch all users to Open Office at one time. That way all updates and new computers (replacements) will be using the same primary system. Devoted Microsoft fans can continue to use paid for Office and share files with FREE Open Office users.
It’s human nature to put our heads down and work harder when we are in a hole. It’s a reflex that assumes the extra work will solve the problem, which may not be true. Yes, it can take a lot of work to turn things around. However, its all about saving time and focusing on the cause(s).
When you find yourself in a hole, you didn’t see it coming or ignored it. Doing more of the same isn’t going to get you out. Here’s where you really invest “thinking time” to find the core causes and pivot points that can change the game almost effortlessly. Tread water and get your bearings, chances are things aren’t as bad as you feel. But changing is required.
The quickest path out of a hole is upward, not down or slide to the side. Use the Basic Approach and get started creating cash. Keep it simple, keep it basic and you will get immediate relief with a path to sustained success.
If you started reading this blog with this article … Stop. Growing without bank loans requires a Basic Approach in use, not just in the planning stage. This makes sense. Once you get the hang of reliably creating new cash, you can start using it to grow and once you do get a loan you can pay it back without strain.
Equipment loans, project financing, etc. and, if you are lucky, a line of credit may still be available. However, working capital and expansion loans are fading into memory. SBA loans typically require real estate collateral and paper, paper, paper for about half of what you need, although if you have the credit rating and the collateral it’s a good loan.
As a very practical matter when you start creating cash and building a War Chest, you will start funding your own growth in a way that will increase the creation of more cash. Since you have streamlined your accounting and refocused it on goals and projects, you know where you are creating cash with spot-on reports.
If you have a real bank manager that you can talk with, casually introduce yourself and tell him how you are creating cash with the Basic Approach. Don’t ask for a loan. He will be intrigued and will call on you, encourage him to drop by when he has a chance. When he does drop by, focus on how you are creating cash that is funding growth. Don’t ask for money, let him make the first move and then hesitate (not too much 
.
Congratulations, you just went from no way to please call me.
It makes sense. Bankers want to back winners who can prove they have the stuff to create cash without a loan. That makes the use of the loan safe and assures the payments are made on time. Just remember if you can generate cash on your own, why go into more debt? Can you assure the uses will create enough cash to have a high payback that is also reliable? Fund your “bets” with created cash, not bank money – use bank money to finance equipment, inventory and other recoverable costs of expansion.
You already know that getting more customers is a Basic Key to success … but doing the same thing over and over isn’t going to get you there. You know that, too. So lets cut to the chase – how can you THRIVE?
There are three paths to “Thrive”, which is that wonderful state where you have more business than you can handle and when you expand … it keeps growing.
Buy Customers with heavy advertising – This is not a suggested path. It is very costly and requires ad creativity. It works for national and global products because the cost per view at millions of impressions is just a fraction of a penny – and they have the up-front cash. The Internet will work if you know how … we’ll get into that later.
Invent a HOT BUTTON - It happens, but for every sustainable success there are a million that didn’t. The concept is solid and should be a factor in every marketing plan, but relying on hitting the hot button right out the chute is Russian roulette with a semi-auto. If you have an innovative product or service, I can tell you from first-hand personal and professional experience that getting close requires a great marketing strategy and a lot of experimentation.
Grow Customers Naturally – Truth is most businesses don’t have any real marketing, the focus is on sales. A great sales team with a well valued product or service is essential, but they need prospects. To create cash, marketing funnels qualified prospects to your sales team. Instead of ups and downs, steady marketing feeds a solid flow of new business.
That makes your sales team happy. It also creates cash in two ways: 1.) New Gross Profit and 2.) No Increase in Overhead Costs = creating cash. Naturally you need to factor in the marketing costs. You can easily evaluate the payback on your marketing costs by tracking new prospects and new sales by source(s). see “Cut Accounting Costs and Gain Accuracy”.
How to Grow Customers with Sustained Marketing … Since each industry, business and area is different, I have to keep to the basics in this blog. For specifics related to your goals, please contact me.
Even if only one of the three campaigns is a winner, you will have created a lot more cash, motivated the staff and having a bit more fun!
I’m using the term Tightwad for dramatic effect and because stashing cash instead of spending it can make you feel that way after 20 some years of a spend economy. But guess who is making hay right now?
American business has become notorious for operating with little or no cash reserves and using credit cards to fill the gaps. Its no surprise that 70% of new businesses will suffer or fail due to lack of cash when its needed the most. So this IS A HUGE ISSUE. As a result – we commonly ignore it!
With all the daily cash demands and surprises, its hard to stay ahead of the game much less build a war chest. Not true! All you need to do are two things: 1.) Use the BASIC approach with thinking time to create cash, and 2.) faithfully follow a few simple guidelines.
Cash Rewards Motivate Participation : Make it a Game where Everyone Wins Employees are only irritated by Tightwad tactics when they suffer but get no more cash in their bank. You can change the whole game with one thing – include them in the rewards. That is a great example of what I call a “pivot point” which is the one thing you can change that makes everything else fall into place.
Make “creating cash” a game with real cash winnings based on a percentage of new cash created. Like Vegas, the house is always the big winner! Set up your version so there is a percentage that goes into a company-wide pool and another percentage that goes to the persons who participated in a specific gain. That way everyone gets a check, all the way down to the part-timer; everyone is equal, some are just more equal than others.
Make a point that a large percentage of cash created will go into the “war chest” so the company (and employees) can grow and have reserves for the unexpected. Job growth and job security are often more motivating than cash in hand with no security.
If I get enough requests, I’ll share some of the great “creating cash” games that work so you can build one to fit your specific goals.
Question Expenses the RIGHT Way - The typical question is, “Do you need this?” WRONG QUESTION – if they didn’t think they needed it, they wouldn’t be asking for it. Take personalities and opinion out of the thinking and insert ROI. ROI is short for Return On Investment or “Payback”. The question should be, “Whats our payback in dollars and percent? How long does it take to get the benefit? Show me the comparables!” You should also ask yourself these questions before signing a check. If there are no good and accurate answers, tell them to come back when they have the facts.
This puts the focus on creating cash by putting your cash into things that will make more cash and/or reduce operating costs. If you have a preferred vendor whose pricing is out of line, you will have the facts and can confidently call them to negotiate. Price comparisons at the item level saves a bunch of cash, since every competitive vendor has price leaders.
Keep track of the cash created by using ROI with every transaction. A simple list will do, a spreadsheet is better, etc. (The bookkeeper will be glad to do this!) But track it, every day and post the savings weekly so employees “get it” that they will get a piece of the cash created. Keep it simple.
Measure the Cash Created – Beyond tracking cash created by cutting expenses, you need to measure net cash generated from suggestions, changes and new projects. It’s all a part of the incentive pool and war chest.
To make the process fairly effortless see “Cut Accounting Costs & Gain Accuracy” and have your system set-up for projects or classes (so you can easily identify cash creating efforts). With a good set-up, capturing the gains is easy plus you can get up to date reports on any cash creating effort with one click.
For the gaming aspect of this tactic to work, all the players have to feel that the counting is reasonably accurate. You can have open disclosure of cash creating projects and still keep the financial “books” private. That means participating employees can argue the project details, which discloses mistakes without you having to look for them. You keep your financial privacy and they validate the details of their projects with gusto. Very efficient and easy to sustain. Future articles will deal with how this can be easily structured and effortless to sustain.
Save Half the Cash you create using the Basic Approach – Take half the created cash for each month and put into a separate account as a War Chest. Use the other half in daily business and the employee pool, plus a little incentive for yourself. I’m not talking about normal profits, just the new cash generated with the “game”. It adds up fast.
Use Strategy / Tactics / Logistics BEFORE you invest cash into any project or growth – If you don’t understand, see the article, “Strategy, Tactics & Logistics = Winning”. The benefits are:
Being a happy Tightwad is a great for you and your employees.
Sounds like a article for West Point grads and the military minded, but it’s not. All successful enterprises have developed a balanced approach that includes all three, even if they are called by other names. Once you understand it, you’ll see how this basic key concept will save you time, create cash and enable sustained profitable growth.
First lets define terms so you can see how this applies to your business:
You say that’s way too much work! Lets be real – we all waste a lot of time and work doing the same old stuff that isn’t getting us where we want to go. What works is to use the Basics to prove the value of thinking time in creating cash and saving effort. Once you do that, you will understand that Strategy / Tactics / Logistics will get you to the next level quickly and keep you there.
Understanding the value of time and how to save time so it can be invested is a BASIC KEY to any success, in business and life itself. We take time for granted – it’s free and it starts with birth. Even though time is free, it can’t be sold, bought, replaced or recovered. Time, like money, is only worth what you do with it.
How do great CEOs have enough hours in the day to efficiently manage aggressively growing companies? A huge factor is they have learned to invest thinking time to save working time and wasted effort. They have honed the skill of getting to the bottom of things and concentrating on the absolute core causes. Getting it right at the most basic core level eliminates complexity and ineffective partial fixes, both of which cost money and are a drag on creating revenues. By solving challenges at the core, they have time to move on to the next challenge that has a high payback. On and on it goes until things are generally smooth and very profitable without breaking a sweat.
How can you do that? First, be ruthless in the pursuit of THE core cause of any challenge. What is the one thing that will change the outcome? I’m not talking only about huge issues, start small and get the feel for it. Once you get the hang of using thinking time, the huge issues won’t be so huge.
What is your “thinking time”? For many it’s limited to the great ideas we get during the commute, you know the ones we always forget within ten minutes after leaving the car. For others its an agony of worry and re-thinking that won’t go away. In both cases, we go through the day pretty much on automatic, following established patterns that have become habits. Generally, this works well enough to pay the bills or at least most of them.
To save time and keep more cash, change your “thinking time”. Set aside one hour each day of relatively uninterrupted thinking time. Don’t feel guilty, with a little practice you’ll make more money in that hour than you will the rest of the day.
In the first hour session, list all your challenges. Keep it simple but list them from big to small on a yellow pad. That should take about an hour; stop and pick it up tomorrow. It’s important to keep it to an hour or so. The next day, write down a firm dollar amount you expect to save or make (per year) by solving each listed challenge – keep that to about an hour or so. Take as many days as needed. Your subconscious mind is crunching in the background and will guide your creativity and insight. Trust your base instincts. Really think this through because you are setting attainable goals. The next step is to relist the challenges from the biggest pay-back to the smallest gain.
Now you are ready to start facing those challenges. You can dive right into the biggest payback or you may want to pick a challenge or two that are smaller to get the feel of the process. The way you think is very personal, but here are some key guidelines:
I know it sounds like a lot of work. It really isn’t, some challenges can be permanently solved in just a few hours while others may take longer. Often those with the biggest payback take less time than the small ones.
After just a few challenges you will notice you are getting to the core causes quicker and the solutions are coming almost effortlessly. The trick is to dig down, deal with facts (not opinions) and let the Solutions be whatever they are. What is, is – work with it, not against the tide.
With bookkeeping and accounting, the 800 lb. gorilla in the room is the government and banking compliance demands. Basically we feel forced to keep compliance books to stay out of trouble with the IRS, EDD, State, County and City – plus the banksters.
With the whole accounting structure in our modern economy geared to the convenience of government and banks, it’s no wonder you hate the word “accounting”. By getting back to basics, you can can eliminate most of the compliance costs while also getting all the facts and meaningful information you need to prosper.
You have operational systems that you use everyday to do what you do. These are the “natural” ways you do things. Often you use software that fits your industry. The first step is to really look at your current work-flow processes. Start with just one first; it’s best to start at the beginning with customer orders/sales.
Simply list the steps in your existing work-flow, including how the accounting is “done” (or who it’s sent to). Usually the accounting is a second process done after the business process. If you are using operational software (software used to run your industry or type of business), it is likely that it gathers all the information needed for accounting automatically.
The “problem” is getting the operational information into the “accounting” system. I use “problem” to highlight that you don’t need to waste your time and money to have a software interface that makes the transfer automatic. If an interface is available, great, but if not any competent bookkeeper or accountant can take reports from your operational software and insert the totals into your government forced accounting system with a simple and quick Journal Entry. If your operational software can export data, all the better, but not required.
But what if you aren’t using any operational software? Chances are you have Quickbooks or some other accounting software for small-medium business. The winning approach is to use the features of that software to do invoices, write checks, issue purchase orders, etc. Basically you replace your current “paperwork” by using the software; most software allows look & feel customization. You “embed” the accounting software into your daily work-flow and save time and costs while increasing accuracy.
Lets look at the results. By looking at the work-flow, you probably saw some room for improvement and streamlined the natural flow of things. That saves time and effort. By letting your operational software take care of your data gathering, you eliminate accounting duplication and your books are based on your reality. That saves cash and gives you a clear vision.
Your books will reflect the financial results of your daily operations, government compliance is effortless and …. you save a wad.
Although you will gain significant savings and insight by examining each work-flow process, the benefits really kick-in when you are done. Now you can USE your books to measure end-to-end performance against cost which is invaluable.
BIG COMPANIES USE THIS AND SAVE MILLIONS I was involved in the Year2000 conversions of many global companies and they used the opportunity to completely revamp and “embed” their accounting into redefined work-flows using Oracle or SAP. These projects cost over $100m to complete. However, they all saved enough money to pay for the projects within 18 months plus $100m or more each year thereafter.
HOW TO START Pick a work-flow and get started. Unless you have a real hairball that needs immediate attention, start with the first customer contact and work through all the work-flows in order. Don’t try to tackle more than one at a time.
Grab a yellow pad and write the steps out as you know them. If staff is involved, ask them to review what you have and add or change it so it is 100% the way things are done. Working with staff and your bookkeeper, start streamlining and “embedding”. Before you know it things will be more efficient and effortless.
Keep things as simple as you can and still get all the meaningful facts. Please make a comment (below) with your questions or suggestions.
There will be many more articles and videos on how to embed your information/accounting system. They will address specific areas of operations, such as sales/AR, Disbursements/AP, Payroll, etc.
