2005 | ISSUE 6
   
Cash Management Pays Dividends
Developing Your Team Member's Basic Skills
Searching for Top People
Don't Let Others Waste Your Time
Memorable Quotation

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Cash Management Pays Dividends

Managing cash is one of the most important tasks for any business owner and even if it’s not as glamorous as sales and marketing it is the job that makes sure the bills keep getting paid on time.  The cash position of a business at any time is easy to determine if you know just three figures – the cash in the bank, the cash that’s going to be received by the business, and the cash that has to be paid out.

It sounds simple, and it is, yet it’s amazing how many business owners don’t have a grasp of these three cash measurements.  Whether you have a financial officer, or handle the accounts for your business personally, there are things you should be doing to keep on top of your cash position.

Know what’s in the bank at all times

Banks can prepare statements at any frequency you request, and online banking is even easier and tells you instantly how much is in your account. Because this is the only source of funds you can instantly draw upon, you should be aware of your bank balance at all times.

Watch your receivables

It’s not enough to know how much is owed your business - you also need to know when it’s coming in and if any payments are running overdue. This means ensuring that your debtors know when their payments are due, and having a credit policy that is firmly administered.

Know what you owe

The other side of the coin is keeping track of what you owe and when payments have to be made. You might be paying bills too early and could hang onto cash an extra week or two without upsetting suppliers. You also need to be sure you’re taking advantage of any discounts on offer.

Monitor your cash position

Just knowing the bulk figures of your bank account, receivables and payables isn’t enough to give you the full picture of your cash position though. You also need to incorporate the dates when receivables will arrive and when payments have to be made. This will help eliminate the possibility of being in a position where you have bills to pay while still nervously waiting for the cash to come in.

There are three other things to do that will help you get more benefit from your cash.

Put spare cash to work

If you’re lucky enough to have surplus funds or are building up a strategic cash reserve put this money into a short-term interest bearing account. There’s nothing more wasteful than money just sitting in a non-interest bearing account.

Restrict your banking

Don’t have too many accounts, and don’t deal with more than one bank. This makes it easier to know how much cash is on hand and puts you in a more favorable position with a financial institution.

Get expert financial advice

Many small businesses have someone who ‘does the books’ and an accountant who sees the accounts once a year for the purpose of preparing a tax return. Unfortunately, this exposes the business to cash flow problems that can arise during the year. At least on a quarterly basis, have your business’ cash flow position analyzed by an accountant who can use their experience to spot developing problems in cash flow before they become too serious.

Cash management is an important responsibility of business ownership.  It isn’t all that complicated but it does require regular attention and monitoring using cash flow forecasts.

Developing Your Team Members' Basic Skills

Employers that provide their team with training are making a commitment to better customer service and to being more competitive in the marketplace as well as encouraging a reduced team turnover rate.

Few businesses are incapable of providing some sort of in-house training to improve skill levels and the improvements in performance that result makes it a highly cost effective investment.

A typical small business’ basic skills training program can incorporate on-the-job instruction of individuals or groups by supervisors and cover practical subjects such as workplace safety and equipment operation.  It can also encompass more fundamental topics like reading and writing that at first may not seem work related but actually underlie everyone’s ability to perform their job.

It won’t take a lot of time to develop these programs, nor will it require much in the way of resources.  The essence of basic skills training is the sharing of information, letting those with more knowledge communicate what they know to those who will benefit from the exchange.

This type of training is also valuable as part of an induction program for new workers to ensure they have the specific knowledge their work requires. It will give them greater confidence and enable them to be more productive from day one.

Delta Wire, a small manufacturing company in Mississippi, instituted a basic skills training program that enabled workers to record and interpret information on a control chart, and to communicate about that information properly. A year after the program was introduced Delta Wire's non-conforming material had decreased from 6 or 7 percent to just 2 percent and the firm’s output had increased from 70,000 to 90,000 pounds per week.

Here’s how to introduce a basic skills improvement program in your own organization.

  1. Start by analyzing each position in the business and list the specific knowledge and skills that it requires. This will tell you the kind of training you need to provide.

  2. Appoint one senior person from your team as the Training Supervisor. Let them be project manager of the training and work with them on structuring the process that will deliver the skills training needed.

  3. Identify the members of your team who would make the best instructor for each of the skills on your list. Involve as many other team members as possible in the planning and let them help in developing the content of each ‘course’.

  4. You might be able to involve your suppliers or even some of your customers in the process, especially if skills related to equipment or product usage are part of the requirements. Most people are willing to share their knowledge with others if asked to do so.

  5. As with all the training you do, be sure you have a way of getting feedback on how effective the training has been. Ask both the instructors and the students to evaluate the training sessions and use their comments to improve the process.

You can get assistance in planning your basic skills training from a variety of sources including local technical and vocational educational institutions, trade associations, unions and government agencies.  Investigate these before you begin and you may find that someone else has already done most of the hard work for you.

Searching for Top People

It’s one thing to evaluate a tradesperson whose abilities and quality of work can be determined by giving them a short on-the-job trial. When it comes to hiring a senior person however, it’s a different story.

You never really know how a new manager is going to perform until they have started in their position, but there are things that you can do as part of the selection process to lessen the possibility of making an appointment you’ll later regret.

Know What You’re Looking For

Before advertising for the position have a clear idea of the skill set and qualifications you’re looking for.  What are the ‘essential’ and what are just the ‘desirable’ characteristics? This will help you create the advertisement for the position, and to evaluate the resumes when they come in.

When you have identified the candidates that claim to meet all your ‘must haves’ as well as some or all of the ‘desirables,’ you’re ready to start planning interviews.

Use the resumes you’ve received as a guide to the questions you might want to ask particular candidates. What you really want to find out from interviewing them is how well they’ll fit into your business; their resumes are about their previous employment and won’t answer this most important question.

The Interviews

Outline a structure that you will use for the interviews – the basic questions that you’ll ask everybody and the particular questions for individuals about whom you’d like some more specific details. Now you’re ready to begin.

It’s always best to have more than one person interview a candidate. This will help remove the influence of particular personalities and give you some different views when it comes to making the final selection. Two or three people should be enough; you don’t want a committee interview situation.

Greet each candidate and explain your objectives for the interview. Tell them the structure of the interview and an estimate of how much time they have with you. Stay on track and don’t deviate from the structure you’ve outlined.

Provide a brief company profile – the background of the business, what it does, how it relates to the market, and anything else you feel they might need to know. Tell every candidate about the position you’re hoping they’ll be able to fill and how it fits into your organization. Be sure they’re clear about the work they would be expected to do.

As much as possible let the candidate do most of the talking for the rest of the interview. Pay close attention to everything they say and make as many notes as you need so that you can be sure you remember the candidate and what they said.

Use ‘Situations’ Questions

Ask them to tell you the details of a particular situation that arose in their previous position – something they see as a personal achievement. Find out what situation they faced and how they handled it. Let them tell you why they feel it’s an example of their managerial abilities.

Now pose a hypothetical situation that they might experience in the position with your business – something that’s a definite challenge but that they should be able to cope with if they get the job. Let them tell you how they’d handle it and why they’d do it that way.

The third stage will be for you to ask them to relate the two situations. What were the similarities of the situations and the solutions?

From this you’ll gain a much better understanding of how the candidate feels about them self and what their approach is to problem solving. You’ll also have given them a chance to relate their past role to the one in your company and assess if their experience could benefit your business.

When each interview is finished do a quick review of the person against the job requirements. Review everything you’ve written down and make additional notes about your personal impressions. This isn’t final selection time but it may be the only opportunity to meet the person face-to-face and you want to be very clear in your mind about which candidate said what.

The Selection

When all interviews are completed meet with the other interviewer or interviewers and rate each candidate against the job requirements. Rather than trying to choose ‘the one’, rank all candidates and give careful consideration to whether the number two or even number three could also handle the job.

Now check all references carefully. This is where most job selection processes fail; if not done well it can open the door to someone whose background isn’t quite as portrayed on their resume. Reference checking requires asking direct questions and getting detailed answers, and you need to probe the referees almost as much as the candidate.

Only now, when you are happy with both a candidate’s personal interview and their referees assessment should you move to making an offer of appointment.

Don't Let Others Waste Your Time

Most business owners find there’s never enough time in the day. Your time is valuable and the demands of your business usually dictate how you spend it. The last thing you can afford is to have your time wasted by others.

Time-wasters are people who take up your time in such a way that it distracts you from running your business. You’re unable to manage because you have to spend your time dealing with people who just don’t seem to understand that you have more important things to do.

Business owners need a set of communication techniques they can use to deal with this kind of person – techniques that are always there and ready when needed. These techniques need to be as effective as they are inoffensive because regardless of whether you use them with your team, your customers, your suppliers or anyone else, the aim is to manage the conversation, not alienate the person.

Think of the last time you had the feeling that you just couldn’t escape from a customer or a phone caller. Your mind kept thinking about all the things you needed to get done but couldn’t because this person was monopolizing your time. 

Time is money and whenever that situation arises it’s costing you money. You need a way to get conversations with time-wasters under control. So start by taking the initiative in the conversation and employing one of these techniques:

Respond with a ‘conversation killer’

Have a prepared list of questions that are real conversation killers. “Have you tried (other business name) for those?” or “Why don’t you ask about that at (other business name) – I’m sure they can help you” are examples of this.  This sort of response should be helpful but redirect their attention from you to another target.

Provide the information impersonally

There are lots of ‘shoppers’ that are just gathering information but don’t really intend to buy anything. An example of this is DIY homeowners who use hardware store owners as a source of information because they can’t be bothered looking up how to do simple things around the house.

Hardware store owners have learned that the best way to deal with this is to keep a list of sources of handyman related information that they can hand DIYers instead of having to take them through the whole process of how to paint a house or fix their leaking faucet.

‘Backroom’ the paperwork

Business owners need time to concentrate on the never ending flood of paperwork that crosses their desks. Try to do as much paperwork as possible away from customers and instead of having them wait until everything’s finished, just send them their copies in the mail.

Hang up on telemarketers

Telemarketing is so common these days that you’re likely to get at least one call a day from these time-wasters. They have a number of ways to keep the conversation going so don’t let it even begin. Once you’re aware it’s a telemarketing call just tell them “Sorry, I don’t have the time for this now” and hang up.

Delegate ‘handling time’

You don’t have to deal personally with everybody that wants a slice of your time. Learn to delegate ‘handling time’ to others and tell the time-waster something like “I’d really like to help you but (team member) will take down all the details and order that part for you”.

Not everyone you encounter will be a time-waster but even a few of them can be a big drain on your resources. You need to identify them quickly and apply the most appropriate technique that allows you to take control of the situation.

Memorable Quotation

“Failing organizations are usually over-managed and under-led.”  - Warren G. Bennis.

How to Make the Most of Your Newsletter

Be sure to read each article with the mindset "How could this apply to our business." Thinking of it that way will guarantee that you get value. Better yet, take notes as you read and commit to having the ideas implemented by the time the next edition arrives. Also, make copies for each team member. To really make sure something positive happens, work with your business development specialist to talk your team through the ideas and how to set a schedule for getting them implemented. We're here to help you get started.

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