Well, the bell was passed to me and I mean this quite literally, as Liz handed me my bell. Everyone here at the office put up with my noisy practice ringing. I’m not sure if people were giving me money for the Salvation Army or to get me to go away!
But, the Salvation Army and I thank you for the donations either way. Our team was appropriately named the Problem Solvers and was joined by Pete Michelini of Sign Designs. The 2010 Kettle Kick-Off began with everyone lining up at the buffet tables to get their turkey and mashed potatoes. I noticed that even with the overwhelming number of people and lines going out the doors of the Modesto Centre Plaza, everyone seemed to be in a cheerful mood. It was nice to see the people of our community come together in fellowship for this great event.
Dr. Curtis Grant was one of the main speakers and he had us laughing hysterically to his jokes and his improvisational comedy.
There were an estimated 1,100 people involved in this year’s Kettle Kick-Off in Modesto, and together we raised more than $183,000 for the Salvation Army. The total dollars were down about 19% compared to 2009, but given the state of our local economy, this was quite generous and very much appreciated.
I want to say thank you to Grimbleby Coleman and to everyone who attended this year’s event and a special thank you to everyone who continues to support the Salvation Army and our community.
I am reminded of Proverbs 19:17 which says, Whoever is kind to the poor lends to the LORD, and he will reward them for what they have done. It is important to remember that the Salvation Army is an international movement, motivated by the love of God.
The history of the Salvation Army goes all the way back to 1852, when a man by the name of William Booth was preaching and helping those in England who were poor, hungry, and homeless. Now, almost 160 years later, we get to keep William Booth’s mission alive right here in Modesto.
The Salvation Army in Modesto has an adage that helps us steer in the same direction as William Booth and that is by “Changing the World One Life at a Time.”
And more importantly, which one has the biggest impact on your success as an employee? EI is Emotional Intelligence and IQ is your Intelligence Quotient. We’ve all taken IQ testing, but how many of us know if we are Emotionally Intelligent or not?
In studies conducted by Travis Bradberry and Jean Greaves (Authors of Emotional Intelligence 2.0), your emotional quotient or EQ has been found to account for “58% of performance in all types of jobs”. They’ ve also found that 90% of top performers are high in EQ. And yet we worry more about traditional intelligence when we hire.
While IQ can not be improved over time, the great thing about our Emotional Quotient is that we can improve it. We can learn and get better at managing, understanding, and harnessing our own emotions and helping others manage theirs.
According to Bradburry and Greaves, there are two main areas of emotional intelligence – personal competence and social competence. On the personal competence side – there are two aspects : self-awareness and self-management. Start out by mastering personal competence and then you can move on to social competence.
Think about the last time you blew a fuse. Do you remember observing your own behavior? Once you observed it, were you able to change the way you acted? If only we could anticipate our behavior and change our actions before we blow that fuse. It is possible if you take the time to learn and practice. That’s how you become personally competent.
As we head into the New Year, it’s a great time for us all to reflect on our skills and to think about our ability to observe and control our emotions.
People don’t buy what you do, they buy why you do it. Simon Sinek, author of “Start With Why”, powerfully argues that people are compelled to look for relationships with someone who shares their purpose. (The video is available at the bottom of this post.)
Consider Apple Computers. They have developed a cult-like following who will buy almost anything they produce (e.g., computers, phones, mp3 players), not necessarily because their products are the best, but because Apple has successfully marketed the “Why?” behind the brand. According to its website, Apple is “out to change the world”. They do that by engineering beauty and functionality into the products they develop. It just so happens that they build computers.
Compare that to other computer companies who market only their features and benefits. “Here’s what we do and here’s how we do it. Please buy one.”
Sinek’s point is that most companies start with “What” and then move to “How”. Rather, they should start with “Why”, explain “How”, and then describe “What”.
This got me to thinking about the “Why?” behind Grimbleby Coleman. Why do we do what we do? Yes, we provide high-quality services and excellent client service, but why? Here’s a brief example of what our firm description looks like, using the “Why, How, What” approach:
We believe that small business drives the economic engine of the greater Modesto area, provides community resources to improve our quality of life, and gives people the opportunity to care for their families.
We support them by investing in the best people and resources available in order to improve business profits and cash flow, maximize the assets that the business owners can control, and provide meaningful financial information to owners, their bankers, and investors.
As a result, we provide quality insight and analysis with the financial statements we deliver, tax planning that considers all opportunities, and business planning that includes strategy development, analysis, and successful implementation of changes to processes and structure.
We invite you to share your purpose with us. Develop the “Why?” around your business and share it with others. Let me know how it changes the responses you get from others. We’ll post your responses below.
Golf is a funny game. The premise is simple. Beginning at the tee, hit the ball into the cup at the other end of the fairway in as few shots as possible. Unlike baseball, the ball doesn’t move while you swing at it. Unlike basketball, people aren’t yelling and waving their arms while you concentrate. And, unlike football, no one is ready to do you bodily harm during your backswing. Yet, it is a very difficult game to play consistently well. (See the graphic at the end of this post.)
After decades of playing decent golf, I decided to entertain folly and contacted a local golf instructor to help me with my swing. At an epiphany moment during my lesson, this story came to mind:
Scenario:
A local business is experiencing cash flow problems. Profits are down, but the company is still in the black. According to the owner, they’ve never been busier, but the line of credit has nearly reached its limit. The owner calls on us for help.
Solution #1:
After reviewing the income statements, we determine that sales are indeed up by 10% over the previous year. Our analysis of the income statement shows that the company’s cost of materials has increased as a percentage of sales, causing the gross margin to slip by 3%. However, upon analyzing the company’s balance sheet, we find that accounts receivable are taking an average of 10 days longer to collect and that inventory has grown from 60 days of sales on hand to a current 90 days. The result is less profit, more cash tied up in assets, a higher debt load, and more interest expense.
Solution #2:
Discussions with the owner reveal that prices were cut by 5% to gain a bigger share of the marketplace. So, while sales are up by 10%, the volume of activity is actually up by 15%. The result is smaller margins on increased sales. As the company became more aggressive with its pricing, it also extended credit to customers with higher credit risks, leading to a longer collection period. Salesmen insisted on having inventory in stock for all sales. Slowly, but surely, inventory had grown by 50% over the previous year.
Now, what on earth could have brought this to mind while hacking 8-irons on the driving range?
As I hit ball after ball, the instructor would watch a few swings and stop me to make corrections to my posture, my alignment, my pivot, my hand position, the position of the ball. (My gosh! I thought I was a fairly decent player, but I felt like a basket case.) One thing, though, that he harped on for several minutes was that I was leaning forward during my backswing. He gave me several tips on how to keep my weight back, my posture straighter, etc., all in an attempt to keep me from leaning forward.
After standing there watching, he finally had an “Ah-Ha!” moment. He noticed that it was nearly impossible for me to keep my weight back because my left knee was bending forward instead of towards my right knee. That simple move caused my weight to fall forward. We made the correction and my swing began to improve.
This was the epiphany. Only by observing, asking questions, analyzing, and tweaking can we get to the root of the issue. Many situations present themselves with symptoms that need to be corrected, but we often treat the symptoms instead of looking for the root cause.
In my case, it was an incorrectly bent left knee. In the situation above, it was an aggressive sales strategy without proper guidelines and controls.
Stopping with the steps in Solution #1 may have led us to advise the owner to reduce inventory, find alternative suppliers, and send customers to collections. However, in short order things would have been right back where they started.
By asking more questions, watching how things were done, and analyzing financials with our SCOPE-It software tool, we were able to get to the root cause of the problem and make corrections that would have a lasting impact. With various team members from sales, operations, and finance assembled togethere, we were able to show the cash impact of the changes that had occurred. We then strategized with them how best to meet the customers’ needs, but to also minimize the cash requirements of carrying accounts receivable and inventory. Pricing strategies were examined and we were able to quantify the relationship between price decreases and customers gained. With everyone more aware of the financial impact and the effect on other departments, the group was able to form a working plan with specific implementation steps. They owned it.
I, too, have specific things I’m working on to develop a consistent swing. Now, if I could just get my putts to go in.
Two weeks ago, in full Administrative Assistant mode, I made a phone call to an insurance company with one goal in mind; to get a copy of my fiancé’s business liability insurance certificate. He is a landscaping contractor and liability insurance is a necessity for him.
After changing insurance companies because of poor customer service, he immediately started having problems with the new company when he needed a copy of his insurance certificate. Although the payment had cleared the bank, he still had a problem getting his hands on the paperwork. Repeated phone calls and e-mails over a week’s time were never returned.
By this time, he had a job that required a copy of his certificate. Except, as he couldn’t reach a live person, he couldn’t get a copy. After another week, he finally managed to get the rep on the phone and was promised a copy. Except, you guessed it, it never happened. Needless to say, he was a little upset (understatement) and frustrated (understandably).
At this point I offered to help by making a call for him. But, he tried one more time, got voice mail again, and finally gave in and let me help. I’d had enough myself and got the contact name and number.
I already knew that leaving voice messages wasn’t working, so my plan was to find a way around the voice mail. This was going to be tricky, though, since it seemed that the insurance company’s goal was to be unavailable to their customers.
My first call that morning hit the voice-mail wall and I hung up. How was I going to get a person on the phone? Their phone system was automated from the get-go which made it almost impossible to talk to a living, breathing human being. “Almost” is the key word here, though, so when I redialed I pushed the one button I knew would connect me…
“Press ‘1’ if you would like a quote for new insurance.”
Bingo!! Just as I thought, a live person came on right away. I nicely explained the problem and, before I could say thank you, I was transferred to someone right there in the room who could help me.
The story ended well, with no less than seven apologies, and a higher-level contact person (with e-mail address and direct phone line). And, the company followed through with both the needed documents and more apologies to my landscaper.
After going through all that, I couldn’t help but think to myself, “Just how clever do your customers have to be to get what should be the most important thing of all, the service or product for the money that they’ve paid for?”
As a consumer myself, I think only one thing… “Was what I just paid for worth it?”
If spending just one minute on the phone with your customers will not only care for their needs, but ensure that they keep returning, wouldn’t that be worth the minute? In times of economic abundance, perhaps this isn’t as much of a priority for some. But these days…??
Take a look at your processes, policies, and procedures, and then ask yourself…
The Lakeside Lemonade stand at Pinecrest Lake has employed many business practices that are universal. What is it about selling lemonade that brings you back to the fundamentals? Even Donald Trump used the lemonade stand in 2004 as the very first test on the premier of The Apprentice.
As a business, it’s pretty easy to get started. There’s plenty of time during summer vacation, Mom provides the equipment and the inventory, and the location is generally in your front yard. A piece of paper quickly makes a sign and, voilà, you’re in business.
So, what makes Lakeside Lemonade stand out from the crowd? Here are 10 things I observed first-hand during my five-minute rest.
1) Be passionate – As I previously discussed, the owners showed passion about their business. With energy and enthusiasm, they took pride in what they had done and the opportunities that were ahead.
2) Location, location, location – The business was in a beautiful lakeside setting, in the heart of one of the most heavily-travelled parts of the trail. Another stand we had passed was set up in a more remote setting, up the hill from the lake. Needless to say, sales were not brisk.
3) Invest in your facilities – The business looked successful. Signs clearly displayed prices, ice was close at hand, a new cash box made handling money much more efficient, and the “Recycling” and “Compost” waste bins were clearly marked to show the customer how to keep things “green”.
4) Engage your customer – They were eager to engage people in conversation and lead customers into making more of a purchase than they probably intended.
5) Educate your customers – Nutritional information was clearly displayed for those who may have had concerns about what was in their Country Time Lemonade or Chips Ahoy cookies.
6) Listen to your customers – As a result of listening to their customers, Lakeside Lemonade had added cookies to their previous single offering of lemonade.
7) Provide an experience – Chairs and benches, complete with seat cushions, were available for hikers to take a brief rest while enjoying their refreshments. The enthusiastic banter from the owners welcomed each new customer and helped create buzz among people passing by. One customer even commented, “This time I brought my wallet with me.”
8) Give people options – Lemonade was available in two sizes, with or without ice. Cookies were priced at 25 cents each, but you got one free with the purchase of four.
9) Provide employee incentives – One of the business operators commented that he had just arrived 10 minutes ago from back east. To my comment that he had already been put to work, one of the owners responded, “Hey! I’m giving him part of the profits.”
10) Look for expansion opportunities – Just as these entrepreneurs had used customer feedback to add cookies to their product line, they were also enthusiastic enough to think there were more opportunities available (new products, new locations, etc.)
I’m sure there are other bits of business insight that you could take away from a visit to Lakeside Lemonade. I encourage you to stop by on your next visit to Pinecrest. But hurry, school starts in a few weeks and these business owners will be in recess.
It was a perfect day to get out of the sweltering valley heat. On a somewhat “typical for July” 102-degree day at home and the Sierras only an hour-and-a-half away, my wife and I decided to drive up to Pinecrest Lake for the day. At about 11:00, we decided to take the 4-mile hike around the lake. The weather was perfect, the lake was filled to the brim, and the river was rushing into the inlet. There were also several hundred other people who had the same idea as we did, so the trail was crowded with weekend warriors.
Note the consumer information and the "free water for your dog".
At about the 3-mile mark for us, we came across an oasis… Lakeside Lemonade. Oh, we had hiked past a lemonade stand earlier on our hike, but we weren’t compelled to stop. This stand was different, though, as three energetic entrepreneurs (Cal, Beth, and Carter) had set up, not just a lemonade stand, but a business. We pulled up a seat in the cushioned chairs they provided and soaked in the things that made this stand different.
These kids had put together a customer experience for the weary mountain trekker, so much so that they had created their own marketing buzz. As one family walked up, the father blurted out, “We’ve heard about you!” What entrepreneur doesn’t cherish hearing those words?
I took note of the business principles that had been employed in this operation. Of course, they had a desirable product in a great location. But, they had also employed creative pricing practices, customer care services, and consumer information. They had even “gone green” with their “Recycling” and “Compost” waste baskets.
Yet, even with all of these practices in place, one thing stood out that made their business very difficult to copy.
PASSION!
These entrepreneurs had an engaging energy that was fueled by their desire to make this business work, as evidenced by the tremendous pride they took in what they had accomplished. They told us how they had added cookies to their product offering as a response to customers’ suggestions last year. Their faces beamed when they showed us the cash box they had invested in with part of their profits.
To all business owners…!!!
Remember the passion you had for your business when you first started it? The pride you felt in your product or services to your customers? The enthusiasm you had when you went to work each day, if you could even call it work?
Do you still have it? If not, take a hike… around Pinecrest Lake, and get reenergized. Your business will thank you.
To Cal, Beth, and Carter… With your parents’ permission, I would love to add your picture to this article. They can email me at mfox@gccpas.net and we’ll work it out. I wish you all the best and congratulate you on a successful venture. I look forward to seeing what you have in store next year. Who knows, maybe a franchise on the other side of the lake?
As I was reading the latest blog on our website, I got to thinking about my recent road trip and the thought that crossed my mind as we drove home that last day…
We started out on Highway 99, worrying only about watching the other drivers and paying attention to our own driving to make sure we were safe. It didn’t take but a few hours, though, before we not only had to pay attention to other drivers and ourselves, but also make sure we were paying enough attention to the surroundings because there were now “jumping deer” added to the mix. Jumping deer! Jeez..I’m trying to learn to drive a new vehicle (big truck), I’m used to driving a little bitty car, so jumping animals weren’t welcome at this point. However, my opinion wasn’t asked so I dealt with what I was given.
Not long after that, we added “jumping elk” to the mix. (Jumping elk! ”Really, jumping elk?!? Oh man, kiss the vacation goodbye if that were to happen” was the thought that flashed at the first elk sign. At 65-70 miles an hour, a Chevy Sierra + jumping elk = I’m going to be hurting when it’s all said and done.)
(Needless to say, I was thankful and simply smiled when I saw the “cow crossing” signs. No big threat there, right? At least you can see a cow coming at you.)
At this point, and we’re still only day one into our trip mind you, I’m wondering how I was going to manage:
a) watching ‘the other guy’,
b) paying close attention to my own driving in an unfamiliar vehicle (thank goodness for cruise control),
c) anticipating the moment that a deer was going to jump out at me, and finally
d) anticipating the same for the even larger jumping animal – but, still not worried about the cows
Day seven is here and it’s our last day on the road. We had had a wonderful road trip so far - seen beautiful and awesome sites, and managed not to hit or be hit by a deer, elk or cow. Driving through the Sierras, through storm clouds and rain, surrounded by majestic snow-covered mountains, we came upon a sign that scared the day-lights out of me and made me realize that jumping wildlife was a cake walk.
DO NOT STOP
AVALANCHE AREA
Yeah, sure, o.k. Not a problem – NO stopping here – go faster! I got it!!
When I finally managed to get over my fear (well past the last DO NOT STOP sign as I’m a tad bit claustrophobic and ‘buried in snow’ wasn’t a look I was going for), I realized that all those signs along our journey had been reminding me of the messages that we send out in our blogs.
After all the miles (almost 2,000), we had continually been reminded to watch closely to what was going on around us at all times. We were reminded that life, like business, tends to throw those “little” things at you that you must always watch out for to make it home safely. From slow-moving cows that are easy to see and avoid, to an avalanche getting ready to drop and possibly bury you. You may not always get lucky and get the cow, but you can be prepared to move, and move pretty quickly, should it be the other!
With but the thinnest layer of protection, opposition set on maiming you swarms in at a pace that gives you only the briefest moment to make a decision. Your window of opportunity closes quickly as you must hit a target no more than one square foot while on the run.
No, you’re not Jack Bauer… You’re an NFL quarterback.
Somewhere along the line, I read about the progression a quarterback must make in transitioning from high school to college and, finally, to the NFL. In order to succeed, the quarterback must deal with changes in these four factors.
The increased size of the players (and, it so happens, the level of injury threat),
The speed of the game (imagine a 300-lb lineman who can close faster than a used-car salesman),
The complexity of the offensive and defensive plans (who knew Stephen Hawking designed game plans), and finally
The shrinking size of the target the quarterback must hit to complete a pass (high school – 5 feet, college – 3 feet, pros – 1 foot).
In recent discussions with business owners, these same factors have come to mind when talking about how business has changed with our shifting economy.
The risk of being in business has definitely increased. Our local unemployment rate hovers near 20% and we are smack in the middle of the foreclosure capital of the country. Failed businesses line our main business districts.
The rate of change is faster than ever. Technology advances open new opportunities (for both the business and its competitors), new products and services are constantly introduced, and banks have tightened their qualifications for small business financing. Owners must pay more attention to what’s going on around them if they want to succeed.
The business and regulatory environment has become much more complex. Owners must wade through complex health insurance regulations, labor laws, safety and environmental standards, municipal codes and regulations.
The margin of error continues to shrink. Owners who succeeded “in spite of themselves” must now know exactly where to look for increases in efficiencies, new market opportunities, cash management strategies, etc. They must pay attention to the details.
Over the past several months, we have had many opportunities to work with local business owners who have successfully weathered the toughest times and are now seeing opportunities open in front of them. From our position, we have noticed that successful business owners…
stay informed.
use their advisors wisely.
pay attention to details.
know which things are critically important and closely monitor that information.
anticipate changes and plan for the future (both short-term and long-term).
stay fiscally fit so they are healthy enough to weather the tough times and take advantage of opportunities that arise.
As I’ve previously established, I’m a rabid baseball fan and have been for nearly half a century. (Oh, that hurt!) I love the pace of the game, the finesse skills of the athletes, and the strategy involved in pitch selection, positioning, player substitutions, etc. Don’t even get me started about the designated hitter rules.
I’ve always loved reading and analyzing baseball statistics. Each day when I open the newspaper (I’ve already established my age so, yes, I do read a newspaper), I’ll skim the front page to make sure that global annihilation is not imminent and then I’ll peruse the sports page, particularly, the box scores and stats leaders. Baseball is loaded with measurable statistics. At Bats, Runs, Hits, Runs Batted In, Home Runs, Strikeouts, Walks, Earned Runs, Innings Pitched. (In short hand, AB, R, H, RBI, HR, K, BB, ER, IP.) These measurements are then used to create other stats, such as Batting Average, On-Base Percentage, Slugging Percentage, Earned Run Average (ERA), Walks + Hits per Inning Pitched (WHIP), and on and on.
The obsession with statistics in baseball has led to an entire field known as sabermetrics, “the search for objective knowledge about baseball.” It is the quest for the holy grail when comparing players from different eras or different leagues (“Who was better, Willie Mays or Mickey Mantle?”) or to predict the future value of current players (“What is Pablo Sandoval’s future value based on his current production?”) Sabermetricians have even come up with new statistics, such as OPS (On-base + Slugging) and Runs Produced.
My interest in baseball stats comes from the same curiosity that drives me to look at business metrics. Every business has certain measurements or statistics that can be used to measure the performance of the company or individuals within the company. There are also measurements that can help predict the future profitability of the company. The key is to find the right metrics. Sabermetrics for business. It’s not quite the search for the holy grail, but it is critical to find the right mix of drivers.
You see, by identifying the business’ key performance indicators (KPIs), we can address several critical questions, similar to the Mays vs. Mantle question above. How does this period stack up against last period? What trends can we spot in revenue and expenses? How do we compare to the industry as a whole?
While these are interesting questions, KPIs can be even more useful as predictors of future outcomes. Just as baseball owners look at critical stats to see which areas need the most improvement, business owners need to know which KPIs to improve in order to give them a better chance of improving profits and cash flow.
We are fortunate to have several tools that allow us to analyze KPIs across multiple periods against industry averages and to use that analysis to predict and plan for future outcomes. Whether we’re looking to improve cash flow from operations, net profit before taxes, or debt-to-equity ratios, we can analyze a company’s performance to determine where to focus the business owner’s attention and to develop strategies to implement the necessary tactics.
My parents probably thought I was wasting my time reading the sports page so much. Little did they know I was building my professional tool chest.
Subscribe to our Blog
Entries RSS
