KE-International seminar

GETTING EMPLOYEES TO THINK & ACT LIKE OWNERS

Presented byKasey Eidukonis Senior Business Analyst

KE-International Management Consultants

Every day we go to Every day we go to our place of business.our place of business.

What is it that we What is it that we personallypersonally want want from this activity? from this activity?

Why?

MoneyMoney

EnjoymentEnjoyment

SecuritySecurity

Business Definition:Business Definition: An economic unit formed to provide An economic unit formed to provide

goods and/or services to customersgoods and/or services to customers Make a profitMake a profit AndAnd satisfy the personal needs of the satisfy the personal needs of the

owners and the employeesowners and the employees..

If a business does not If a business does not satisfy the needs of its satisfy the needs of its

owners and owners and employees it has no employees it has no basis for existence.basis for existence.

What must we do to What must we do to provide owners and provide owners and

employees what they employees what they want?want?

Establish goals that will last foreverEstablish goals that will last forever

We WantWe Want MoneyMoney EnjoymentEnjoyment SecuritySecurity

Our Employees WantOur Employees Want MoneyMoney EnjoymentEnjoyment SecuritySecurity

Goal #1Goal #1 Provide sufficient ProfitProvide sufficient Profit to enhance the to enhance the

standard of living ofstandard of living of ALLALL who are who are associated with the businessassociated with the business

PROFITPROFIT

“It is why we are in business”

Profit Is An Attitude(Not a Dirty Word)

Why Do We Need ProfitWhy Do We Need Profit Sustain the businessSustain the business Re-invest (perpetuate)Re-invest (perpetuate) Pay peoplePay people Return on investmentReturn on investment AttitudeAttitude

PPeople & Planning (Management)eople & Planning (Management)

RRevenue (Marketing & Sales)evenue (Marketing & Sales)

OOperationsperations

FFinance & Capitalinance & Capital

TTechnologyechnology

Five Core Drivers of Profitability

Goal #2Goal #2 Provide the highest qualityProvide the highest quality product product

and/or service commensurate with our and/or service commensurate with our marketmarket

Goal #3Goal #3 Perpetuate the businessPerpetuate the business It must be built to last foreverIt must be built to last forever

Strategies to Strategies to Achieving Our Achieving Our Business GoalsBusiness Goals

a written marketing plana written marketing plan personnel strategiespersonnel strategies operational planoperational plan an dynamic financial planan dynamic financial plan

Develop:

A Written A Written Marketing PlanMarketing Plan

What is our market?What is our market? Who are we?Who are we? CommunicationCommunication CalendarizeCalendarize

Opportunity will knock Opportunity will knock on your door when on your door when you tell opportunity you tell opportunity

Where the door is!Where the door is!

The Marketing ProcessThe Marketing Process

Marketing side Selling sideMarketing side Selling side

The goal of marketing is to get the prospect The goal of marketing is to get the prospect

to the seller to the seller

Who Are We?Who Are We? Ask! survey customers, employees, etc.Ask! survey customers, employees, etc. What are our talents?What are our talents? Find out as much as possibleFind out as much as possible You can’t market what you don’t knowYou can’t market what you don’t know

What Is Our Market?What Is Our Market? Learn as much as you can:Learn as much as you can: PricePrice LocationLocation SizeSize SpecializationSpecialization FutureFuture Impact of technologyImpact of technology Narrow the marketNarrow the market

CommunicationCommunication Now that we know our market Now that we know our market Now that we know what we’re going to marketNow that we know what we’re going to market

Tell opportunity where the door isTell opportunity where the door is

How?How? MediaMedia NewslettersNewsletters BrochuresBrochures PresentationsPresentations Trade ShowsTrade Shows AdvertisingAdvertising CyberspaceCyberspace NetworkingNetworking TelemarketingTelemarketing

CalendarizeCalendarizeYourYourPlan Plan

1 2 3 4 5 6

7 8 9 10 11 12 13

14 15 16 17 18 19 20

21 22 23 24 25 26 27

28 29 30 31

12Sun Mon Tue Wed Thu Fri Sat

2000

Trade Show

Personnel StrategiesPersonnel Strategies

Hire theHire the bestbest people availablepeople available Stop complaining andStop complaining and start trainingstart training Push responsibility to its lowest levelPush responsibility to its lowest level Reward excellenceReward excellence

Operational PlanOperational Plan If its not broken break it, fix it andIf its not broken break it, fix it and

make it bettermake it better

For all those questions that keep you For all those questions that keep you up at night . . . there are answers.up at night . . . there are answers.

If you’re not getting the answers you need, If you’re not getting the answers you need, perhaps you need to start asking different perhaps you need to start asking different questions.questions.

Instead of asking . . .Instead of asking . . . Why aren’t we making money?Why aren’t we making money? Ask . . . What activities are critical to the profitability of this business and Ask . . . What activities are critical to the profitability of this business and

how are we performing in these areas?how are we performing in these areas?

How can we get our employees to be more productive?How can we get our employees to be more productive? Ask . . . Have we given our employees the tools, training, and Ask . . . Have we given our employees the tools, training, and

information they need to be productive? information they need to be productive?

How come things never get done right around here?How come things never get done right around here? Ask . . . Is this a recurring problem? Is it a people or process issue?Ask . . . Is this a recurring problem? Is it a people or process issue?

Why do they always come to me for the answers?Why do they always come to me for the answers? Ask . . . How well are our systems/procedures documented? Do we Ask . . . How well are our systems/procedures documented? Do we

reward initiative or punish it?reward initiative or punish it?

Performance Measurement can close the gap Performance Measurement can close the gap between the questions that keep you up at between the questions that keep you up at night and the answers you need to manage night and the answers you need to manage your business more effectively.your business more effectively.

When applied properly, a performance When applied properly, a performance measurement system can take the guesswork measurement system can take the guesswork and arbitrary decision making out of and arbitrary decision making out of managing your business. Armed with better managing your business. Armed with better information, you’ll be in a position to make information, you’ll be in a position to make better decisions on a real-time basis.better decisions on a real-time basis.

What is performance What is performance measurement?measurement?By its very nature, a performance By its very nature, a performance

measurement system provides real-time measurement system provides real-time feedback about key activities that are critical feedback about key activities that are critical to the company and serves as a predictor of to the company and serves as a predictor of future outcomes.future outcomes.

Simply put, performance measures serve as Simply put, performance measures serve as indicators of progress toward specific goals indicators of progress toward specific goals that are critical to the success of your that are critical to the success of your company.company.

Copyright Mentor Plus 1998Copyright Mentor Plus 1998

How Does Your How Does Your Company Company

Keep Score?Keep Score?

What to DO?What to DO?

Develop a financial planDevelop a financial plan

Dynamic Financial Dynamic Financial PlanPlan

Monthly financial informationMonthly financial information 12 month profit and loss plan12 month profit and loss plan 12 month cash flow plan12 month cash flow plan Accounts receivable programAccounts receivable program Inventory management programInventory management program

Bring Your Financials to Life . . .Bring Your Financials to Life . . .

. . . They must tell you a story. . . They must tell you a story

What’s Wrong With What’s Wrong With This Statement?This Statement?

It lists income and expense It lists income and expense without giving a clue as to without giving a clue as to what is right, what is wrong.what is right, what is wrong.

Numbers are a stagnant list.Numbers are a stagnant list. Most entrepreneurs will look Most entrepreneurs will look

at the bottom line without at the bottom line without looking at what’s between looking at what’s between top and bottom.top and bottom.

It doesn’t tell you a story.It doesn’t tell you a story.

SALESSALES $575,000$575,000

COST OF SALESCOST OF SALES 300,000300,000

GROSS PROFITGROSS PROFIT 275,000275,000

EXPENSESEXPENSESAccountingAccounting 1,0001,000AdvertisingAdvertising 25,00025,000AutoAuto 5,0005,000ConsultingConsulting 2,0002,000Depr eciationDepr eciation 5,0005,000

Inter estInter est 4,2004,200Payr oll taxesPayr oll taxes 15,00015,000Pr omotionPr omotion 5,0005,000RentRent 2,8002,800Salaries – administrativeSalaries – administrative 35,00035,000

Salaries – officeSalaries – office 19,00019,000Salaries – salesSalaries – sales 45,50045,500SuppliesSupplies 1,8001,800TTelephoneelephone 5,5005,500TTravelravel 5,5005,500

TOTAL EXPENSESTOTAL EXPENSES 177,300177,300

NET INCOMENET INCOME $97,700$97,700

STSTAATEMENT OF INCOMETEMENT OF INCOMEFor the Period Ended ________For the Period Ended ________

SALESCOST OF SALES

GROSS PROFITEXPENSES

AccountingAdvertisingAutoConsultingDepreciationInterestPayroll taxesPromotionRentSalaries – administrativeSalaries – officeSalaries – salesSuppliesTelephoneTravelTOTAL EXPENSES

NET INCOME

STATEMENT OF INCOMEFor the Period Ended ________

Actual$575,000

300,000275,000

1,00025,0005,0002,0005,0004,200

15,0005,0002,800

35,00019,00045,5001,8005,5005,500

177,300$97,700

SALESCOST OF SALES



NET INCOME


Planned$615,000

320,000295,000

1,50029,500

3,5002,5005,0004,200

10,0006,0002,800

32,00019,00040,000

2,0004,0001,500

163,500$131,500

Actual$575,000

300,000275,000

1,00025,0005,0002,0005,0004,200

15,0005,0002,800

35,00019,00045,5001,8005,5005,500

177,300$97,700

SALESCOST OF SALES



NET INCOME


Difference$(40,000)

20,000(20,000)

5004,500

(1,500)500

––

(5,000)1,000

–(3,000)

–(5,500)

200(1,500)(4,000)

(13,800)$(33,800)

Planned$615,000

320,000295,000

1,50029,500

3,5002,5005,0004,200

10,0006,0002,800

32,00019,00040,000

2,0004,0001,500

163,500$131,500

Actual$575,000

300,000275,000

1,00025,0005,0002,0005,0004,200

15,0005,0002,800

35,00019,00045,5001,8005,5005,500

177,300$97,700

ActualActual PlannedPlanned DifferenceDifferenceSALESSALES $575,000$575,000 $615,000$615,000 $(40,000)$(40,000)COST OF SALESCOST OF SALES 300,000300,000 320,000320,000 20,00020,000

GROSS PROFITGROSS PROFIT 275,000275,000 295,000295,000 (20,000)(20,000)EXPENSESEXPENSES

AccountingAccounting 1,0001,000 1,5001,500 500500AdvertisingAdvertising 25,00025,000 29,50029,500 4,5004,500AutoAuto 5,0005,000 3,5003,500 (1,500)(1,500)ConsultingConsulting 2,0002,000 2,5002,500 500500DepreciationDepreciation 5,0005,000 5,0005,000 ––InterestInterest 4,2004,200 4,2004,200 ––Payroll taxesPayroll taxes 15,00015,000 10,00010,000 (5,000)(5,000)PromotionPromotion 5,0005,000 6,0006,000 1,0001,000RentRent 2,8002,800 2,8002,800 ––Salaries – administrativeSalaries – administrative 35,00035,000 32,00032,000 (3,000)(3,000)Salaries – officeSalaries – office 19,00019,000 19,00019,000 ––Salaries – salesSalaries – sales 45,50045,500 40,00040,000 (5,500)(5,500)SuppliesSupplies 1,8001,800 2,0002,000 200200TelephoneTelephone 5,5005,500 4,0004,000 (1,500)(1,500)TTravelravel 5,5005,500 1,5001,500 (4,000)(4,000)TTOTOTALAL EXPENSESEXPENSES 177,300177,300 163,500163,500 (13,800)(13,800)

NET INCOMENET INCOME $97,700$97,700 $131,500$131,500 $(33,800)$(33,800)

STSTAATEMENT OF INCOMETEMENT OF INCOMEFor the Period Ended ________For the Period Ended ________

....Sun Tsu, about 600 B.C..Sun Tsu, about 600 B.C.

TranslationTranslation

Foretelling TriumphForetelling Triumph

Those who triumph, compute at Those who triumph, compute at their headquarterstheir headquarters a great a great number of factorsnumber of factors prior to a prior to a

challenge.challenge.Those who are defeated compute Those who are defeated compute

at their headquartersat their headquarters a small a small number of factors prior to a number of factors prior to a

challenge.challenge.

MuchMuch computation bringscomputation brings triumph.triumph.

LittleLittle computation bringscomputation brings defeat.defeat.

How much more so with How much more so with no computation at all!no computation at all!

By observing only this, I By observing only this, I can see triumph or can see triumph or

defeat.defeat.

TO ACHIEVE TO ACHIEVE SUCCESSSUCCESS

PLAN FOR IT!PLAN FOR IT!

How much cash will I need?How much cash will I need?

When will I need it?When will I need it?

Where will I get it?Where will I get it?

Effective cash management must always to answer in advance:

The Primary Elements of Your PlanThe Primary Elements of Your Plan

The Profit and Loss PlanThe Profit and Loss Plan– Shows anticipated operations (income and expenses) Shows anticipated operations (income and expenses)

over the next 12 months or longerover the next 12 months or longer

The Cash Flow PlanThe Cash Flow Plan – Takes information from P&L plan, converts it into cash Takes information from P&L plan, converts it into cash

flow, answers basic questions of “How much cash will I flow, answers basic questions of “How much cash will I need?” “When will I need it?”need?” “When will I need it?”

Forecasted Balance SheetsForecasted Balance Sheets– The forecasted balance sheet is the only check The forecasted balance sheet is the only check

available to ascertain the reasonableness of the P&L available to ascertain the reasonableness of the P&L and Cash Flow plans.and Cash Flow plans.

Recap of the strategies Recap of the strategies to achieve our business to achieve our business goals. goals.

a written marketing plana written marketing plan personnel strategiespersonnel strategies operational planoperational plan an annual financial planan annual financial plan

Develop:

LEADERSHIPLEADERSHIP

only the leader makes only the leader makes it happen!it happen!

All it takes is:All it takes is:

Good things come to Good things come to those who waitthose who wait

but only the things leftbut only the things leftby those who hustleby those who hustle

Dynamic AreasDynamic Areas

ORGANIZATIONORGANIZATION - The people and information factors - The people and information factors

FISCAL FISCAL - Money, how we get it, how we keep it- Money, how we get it, how we keep it

OPERATIONSOPERATIONS - Our products or services, how do we do it - Our products or services, how do we do it

MARKETINGMARKETING - How we sell- How we sell

INFORMATION TECHNOLOGIESINFORMATION TECHNOLOGIES - How do we keep track of it. - How do we keep track of it.

KE-International.KE-International.

“A professional Business Development “A professional Business Development Corporation”Corporation”

KE-International seminar

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