Business Smarts for HR Professionals
74
Business Smarts for HR Professionals Peter Frampton WEDNESDAY MAY 17 th , 2017 8:30 AM Birmingham-Jeferson Convention Complex © CAI 2017
Transcript of Business Smarts for HR Professionals
Business Smarts for HR Professionals
Peter FramptonWEDNESDAY MAY 17th, 2017 8:30 AM Birmingham-Jeferson Convention Complex
© CAI 2017
1. Discover a profound model for thinking about business
2. Powerfully position your people as assets within your business
3. Leave with a new leadership and personal finance tool
Today let’s…
Wax on. Wax off.
Wax on. Wax off.
Wax on. Wax off.
6
It’s not you
7
Financial language is a mess
8
This may surprise you…
Income doesn’t come in
9
Strictly speaking, the dictionary is wrong.
This may surprise you…
10
We accountants don’t agree on whether “income” means
‘revenue’ or ‘profit’
This may surprise you…
11
Income isn’t valuable
This may surprise you…
12
Most accountants can’t explain
what an expense is
This may surprise you…
13
This may surprise you…
Prepaid Expenses aren’t expenses.
Deferred Revenue isn’t revenue.
Net Assets aren’t assets.
14
Accounting is now easy.
Hard Easy
15
Not math
Financial Statements
Balance Sheet Income Statement
Balance Sheet Income Statement
ASSETS
INCOME
LIABILITIES
EQUITY
EXPENSES
ProfitBala
nce
Shee
tIn
com
e St
atem
ent
BaSIS Framework™
Everything is inside a duality
Global Retail, Inc.
Everything is inside a duality
Global Retail, Inc.
Assets$50 000
Everything is inside a duality
Global Retail, Inc.
Assets$50 000
Everything is inside a duality
Global Retail, Inc.
AssetsLiabilities
Equity$50 000
$30 000
$20 000
Everything is inside a duality
Global Retail, Inc.
AssetsLiabilities
EquityValu
able
Obl
igat
ions
$50 000$30 000
$20 000
Everything is inside a duality
Global Retail, Inc.
AssetsLiabilities
EquityValu
able
Obl
igat
ions
$50 000$30 000
$20 000
= +
Everything is inside a duality
Global Retail, Inc.
Valu
able
Obl
igat
ions
=
Uses of Funds Uses of Funds
AssetsLiabilities
Equity$50 000
$30 000
$20 000
+
Dollars vs. Dollarization
Global Retail, Inc.
Valu
able
Obl
igat
ions$50 000
=
Uses of Funds Uses of Funds
$
$
Liabilities30 000
20 000
+Equity
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
ValuableTangible/Intangible
Measurable
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
ValuableTangible/Intangible
Measurable
Obligation to lenders
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
ValuableTangible/Intangible
Measurable
Obligation to lenders
Obligation to owners
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
$30,000Bank LoanCash $30,000↑ ↑
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCash
↑↑
↑
↑
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCash
↑↑
↑
↑
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCashCash
↑↑
↑
↑
↑ $400
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCashCash
Generated Eqty
↑↑
↑
↑
↑ $400
$400
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
ValuableTangible/Intangible
Measurable
Obligation to lenders
Obligation to owners
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCashCash
Generated Eqty
↑↑
↑
↑
↑
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
ValuableTangible/Intangible
Measurable
Obligation to lenders
Obligation to owners
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCashCash
Generated Eqty
Value GeneratingActivityVerb conceptSales/Revenue/Income
VGA
↑↑
↑
↑
↑
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
ValuableTangible/Intangible
Measurable
Obligation to lenders
Obligation to owners
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCashCash
Generated Eqty
Value GeneratingActivityVerb conceptSales/Revenue/Income
VGA
Value SacrificingActivity
Very concept
VSA
↑↑
↑
↑
↑
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Uses Of Funds Of Funds
Bala
nce
Shee
tIn
com
e St
atem
ent
ValuableTangible/Intangible
Measurable
Obligation to lenders
Obligation to owners
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCashCash
Generated Eqty
$700
$700Consulting
↑↑
↑
↑
↑
Value GeneratingActivityVGA
Value SacrificingActivityVSA
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Bala
nce
Shee
tIn
com
e St
atem
ent
$30,000Bank LoanCash $30,000
$20,000
$20,000Issued EqtyCash
400
$700Cash/AR
$700Consulting$300Travel
$300Cash
ValuableTangible/Intangible
Measurable
Obligation to lenders
Obligation to owners
Generated Eqty
Uses Of Funds Of Funds
↑↑
↑
↑
↑
↑ ↑
↓
Value GeneratingActivityVGA
Value SacrificingActivityVSA
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Inco
me
Stat
emen
t
Valuable
Profit
VSA
Obligation to lender
Obligationto ownerBa
lanc
e Sh
eet
VGA
Only five boxes.
Practice?
Put a foundation in place…
… to build a solid building
The Value Cycle of business
LiabilitiesAssets
Equity
IncomeExpenses
Presenter
Presentation Notes
How business really works.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Inco
me
Stat
emen
t
Your assets
Saving
Your consumption
Your debts
Your net worth
Bala
nce
Shee
t
Your personal finances
Your earning
Valuable
Obligations to creditors
Obligations to owners
1
3
2
Value Generation Activity
VSA to make sales
VSA to run the operation
VSA to finance the business
Opening retained earningsClosing retained earnings 76,869
39,1919
VSA to run the country
Net VGA during period
Cumulative value retained
1,418,882
4
6
5
Business Narrative
At December 31st 2018, Global had assets totaling (1)______________ in use for the purpose of generating a return for the owners.
Global partally funded those assets with (2)_____________ of debt.
The remaining portion of the assets in the amount of (3)___________ was funded by Global’s shareholders. In 2018, Global generated value for its
shareholders by generating (4)______________ in sales revenue. In order to
deliver those sales, Global consumed value by utilizing (5)_______________ of
resources as expenses ...resulting in net value generated of (6)__________ .
$1,093,428
$1,418,882
Presenter
Presentation Notes
The power of story
Google’s Missing Assets
LiabilitiesAssets
Equity
Google, Inc.
IncomeExpenses
$170bn$30bn
$140bn $660bn
Market Capitalization
Measuredassets only ?
1. Discover a profound model for thinking about business“There are just two things happening in a business: value is being generated, and value is being destroyed”
2. Powerfully position your people as assets within your business“Part of the missing $520bn”
3. Leave with a new leadership (and personal finance) tool
BaSIS Framework communication model + download
We set out to…
Text ‘ALSHRM’ to 82888 for an ExcelPersonal Finance BaSIS Framework
@coloraccounting
Recycle highlighters
Thank you for being great !!
1
2
3
📬📬 [email protected](202) 413 7227📞📞
Questions?
Three timing scenarios - EARNING
1.Receipt before
2.Same time receipt
3.Receipt later
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITYCash $700
700Profit
↑
$700Revenue ↑
Same time receipt
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Profit
Your Organization, Inc.
Receipt later?
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITYAccountReceivable $700
700Profit
↑
$700Revenue ↑
Your Organization, Inc.
Receipt later - earning
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Cash $700700Profit
↑
$700Account Receivable
↑
Your Organization, Inc.
Receipt later – cash received
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Profit
Your Organization, Inc.
Receipt before?
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITYCash $700
0
$700Def. Revenue
Profit
↑↑
Your Organization, Inc.
Receipt before
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Bala
nce
Shee
tIn
com
e St
atem
ent
700
Def. Revenue
Profit
$700Revenue ↑
$700
↑
Receipt before – earning
Cash $700
1.Pre-payment
2.Same time payment
3.Post-payment
Three timing scenarios - EXPENSE
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITYCash
$300
-300Profit
↑
Your Organization, Inc.
Same time expense
Travel
$300
↑
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Profit
Your Organization, Inc.
Payment later?
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Acc. Payable
$300
-300Profit
↑
Your Organization, Inc.
Payment later - expense
Travel
$300↑
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Acc. Payable$300
Profit
↑
Your Organization, Inc.
Payment later – cash paid
Cash $300
↑
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Profit
Your Organization, Inc.
Paid before?
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITYCash
$300 0Profit↑
Your Organization, Inc.
Paid before – cash paid
Prepaid Expense
$300
↑
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Expense $300
-300Profit
↑
Your Organization, Inc.
Paid before - expense
Prepaid Expense
$300
↑
< 43
… continue
< 43
Debit accounts Credit accounts
Debiting DebitingCrediting Crediting
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Bala
nce
Shee
tIn
com
e St
atem
ent
Uses Of Funds Of Funds
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
EQUITY
Bala
nce
Shee
tIn
com
e St
atem
ent
Uses Of Funds Of Funds
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
Bala
nce
Shee
tIn
com
e St
atem
ent
Uses Of Funds Of Funds
EQUITY
Your Organization, Inc.
ASSETS
INCOME
LIABILITIES
EXPENSES
Bala
nce
Shee
tIn
com
e St
atem
ent
Uses Of Funds Of Funds
The Budgeting Cycle
LiabilitiesAssets
Equity
IncomeExpenses
Presenter
Presentation Notes
How business really works.
