3 Critical Indicators you should search for in your Financial Statement Analysis

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Are your financial reports giving you the information you need?

In order for your financial information to be as valuable as possible, it is important to make proper use of the information they generate.  Simply producing reports on a monthly basis is not enough. The tools you use to analyze and monitor these reports can give you a read on financial “vital signs”, gauge your progress towards financial goals and identify problems within your business.

Financial Statements determine your growth potential

1. Risk – Do you have sufficient assets to cover your liabilities?

The ability to pay off your liabilities is a measure of how much risk your business carries. Lower risk means your have the ability to pay and while risk is not necessarily bad it is important to know what balance to have. Borrowing money is a traditional way to fund growth but if that growth doesn’t work as planned your business could collapse

2. Profitability – Are you making sufficient profit?

Profit is the key to long-term survival of your business. You can survive without it for a while, but consistently operating at a loss will eventually collapse your business.

3. Liquidity – Do you have enough cash available to cover your expenses and support your growth?

Liquidity is the key to short term survival. Surviving without profit relies on accessible liquid cash and when that runs out your business will come to a grinding halt.

Review your reports as often as possible

Keeping track of your financial reports will help you detect the impact of activities on your strategic objective.  While many companies might focus on gross sales, a more accurate measurement is profits, as your business needs profits to survive.  Don’t avoid reports; make them a part of your management strategy.

 

For more insight in to your business, you should try our Business Strength Test

Mark Wardell’s Top 10 Tips for Finding and Hiring Great People

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1. Share your dreams with your employees

World-class people are attracted to world-class opportunities. As an employer, you need to share your plans for the future with new (and existing) employees regularly. By inviting your whole team to take part in building your company with you, you create a motivating environment which is exactly the type of place great people chose to work.

2. Find great people by asking your best employees who they know

It’s a universal principal that “like attracts like”, so your best employees are likely to know other people with similar qualities to them. Ask them to help you build a world-class team. Some companies even offer incentives to their employees to facilitate this process.

3. Ask your suppliers who they know

Your suppliers likely have an inside edge to some great future employees. Ask them if they know the type of person you are looking to add to your team. As you have a business relationship with your suppliers, they are likely to be discriminating with any referrals they make.

4. Use the employment classifieds as a last resort

If people are out of work it’s often for a good reason, especially in a labour-shortage market. Although there will always be a few jewels in the haystack, it’s an enormous job to separate the wheat from the chaff. If you must take this route however, you can improve your odds by making your advertisement as specific as possible. For example, if the job involves cold-calling, say so. It is  better to get a few on-target resumes than a whole stack that don’t fit.

5. Commit to only hiring people who fit with your corporate culture

First, you need to know who you are in order to communicate the culture you are offering to your team. Excellence comes in many forms. Whether you’re a fun, energetic team of graphic artists or a cautious group of detail-oriented accountants, you need to be as explicit as possible when you’re seeking to build your team, so that you don’t waste time meeting people who won’t fit in.

6. Be careful about hiring friends and family

This does not mean never do it, but you do need to exercise a lot of caution in this regard. The worst-case scenario is having to “let go” of a personal relationship or any perception of nepotism among other staff. Ensure you screen every individual in a systematic way to avoid perceptions of favoritism.

7. Get your employees involved in the interviewing process

In many cases, your employees will be more in tune with the type of attributes required of their future colleague. Also, because you want your employees to work well together, if they are given input in the process, this will be more likely.

8. Promote your company’s unique attributes

There are people in the marketplace who are a perfect fit for your organization. The problem is they don’t know it yet and a recruiting ad that only states your company name and the position you’re looking to fill isn’t going to change that. Get a little creative and show off your true colors. Promote the unique attributes that set your company apart from your competition. This might include things like flexible work hours, a fun-loving atmosphere, professional development opportunities, and so forth.

9. Be up-front about potential challenges

When hiring, don’t hide potential challenges. If you’re trying to attract a dream candidate, the best way you’ll ensure they are the right person for the job is to be as honest as possible about the “down-sides”. If you have an out of the way location or  challenging aspect of the job, such as cold calling, be transparent , both in the interview and  in any recruitment activities you use. A good ad should repel unqualified candidates as much as it attracts qualified candidates.

10. When hiring, focus on qualities first and skill sets second

Most people do this in reverse and then wonder why they can’t find great people. You can’t train someone to have drive, or a team-player, but you can train someone to learn a program or two. Narrow your candidates down to the two or three with the best qualities and then hire the one with closest match of skills sets. If they are quality people, they will easily develop most of the specific skills required.

How to use job specification to boost employee productivity

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The key to creating jobs that have high job satisfaction and motivate employees is striking a balance between specialization and flexibility. As working environments transitioned from single production cottage industries to standardized mass production, repetitive tasks requiring very little involvement became a symbol of the unsatisfied employee. By creating more dynamic roles that incorporate elements of specialization but with enough flexibility to make jobs interesting. Let’s start by looking more closely at specialization and flexibility.

Specialization:  One worker performs one specific task or narrow group of tasks as part of a large production system. In general, a specialized working environment promotes:

  • A quicker learning curve due to repletion and simplicity
  • Faster production due to increased efficiencies
  • Reduced labour costs due to lower wages and faster production

Flexibility: One worker performs several tasks in the same production process or they may rotate, performing different tasks at different times. In general, a flexible working environment tends to promote:

  • A happier, more dedicated workforce, due to reduced tedium
  • A more educated workforce with the ability to multi-task when necessary
  • Reduced hiring and training expenses due to lower turnover rates
  • Reduced overtime expenses due to more flexible working schedules

Specialization and flexibility are two ends of a continuum

If your employees find the work in your production process to be excessively tedious and repetitive, you may be able to improve the situation with one or more of the following techniques:

1.  Job Rotation

Consider rotating employees through different production jobs on a predetermined schedule. It gives employees the opportunity to expand their skill set.

2.  Job Enlargement

This is the horizontal expansion of the number of different tasks performed by each worker, for example, a factory worker, who previously was just installing the upholstery, may get the opportunity to assemble the entire chair. The additional activities may alleviate boredom and encourage employees to expand their skills.

3.  Job Enrichment

This is the vertical expansion of a job by involving workers in various aspects of the production process, specialized workers preforming specialized tasks, for example, a salesperson may be given approval to offer discounts on certain products, without first seeking approval from the sales manager. This technique requires more authority on the part of the employee and more trust from the employer because they are part of the entire process more directly.

Job satisfaction has a major impact on employee productivity

When people are inspired by the work they do they will work to complete tasks with more energy and ingenuity. Increasing job satisfaction comes hand in hand with a strong company culture, one where the right working relationshipsconflict resolution and team work come into play.

4 Useful Tips for Greater Business System Efficiency

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When you think of your business as a system, you can see that it is a collection of activities working towards a common goal, an organization of individual elements working as a unit. The effectiveness of your business is measured outcome of these activities.

Each system within your business needs to have a purpose

Systems will run most effectively when they align with the achievement of your Strategic Objective. You can more successfully meet your goals when you seek to continuously improve the efficiency or productivity of your systems.  If you can reduce or eliminate problems, your system will automatically improve.

Start with accurate business systems information

How do you know your systems are working? What information is currently monitored in your business and how accessible are the results? Information is the central nervous system of your business. It provides feedback on nearly every aspect of your business, it can show whether you are actually making progress or it just seems that way. Effective business leaders use organized accessible information to make intelligent, independent and immediate decisions.

Four ways to reduce inefficiency in your business systems:

Reduce idle time

Look for gaps in your system. Must one task be put on hold while it waits for another task to be completed?

Tip: Analyze each step of your process to determine where equipment is not fully utilized.

Reduce travel time

Any time something or someone has to move from one place to another, time, energy and money are wasted. Can a more efficient route be planned?

Tip: An overlooked source of wasted travel time may exist right inside your own facility.

Reduce correction

Correction occurs when errors are found through an inspection check. The error must then be corrected, drastically reducing the efficiency of the system that produced the error.

Tip: Consider building in mechanisms to ensure that your system is followed completely.

Reduce complexity

You can dramatically reduce errors due to confusion by simplifying your system.

Tip: Test complexity by trying to explain your system to someone who doesn’t already know it.

Successful Businesses Think in Systems

Your business is a complex series of moving parts and elements. With the right information you can increase the efficiency of these elements by aiming these systems to address your strategic objective and reduce idle time, travel time, correction and complexity. Wardell can analyze your business system efficiency for free with our Business Strength Test.

 

Sales Tools for Handling Prospect Objections

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In the sales process there are points where a prospect may have reservations about making a purchase. In a sales role, your duty is to create a positive relationship where trust is quickly established and maintained. As the knowledgeable guide bringing your prospect closer to a solution, handling objections must be executed with tact and grace.

Avoid arguing with your prospect

Building a positive relationship with a prospect requires patience and tact. An adversarial relationship is less likely to lead to a sale and the possibility of a repeat purchase is extremely unlikely. Opposing opinions can be changed but your goal should be to encourage them to discover differences for themselves rather than push them into something they don’t want.

Give options not ultimatums

Engage your prospects in a conversation about options for their decision but be careful about putting them in a position of having to say yes or no to your offer. Forcing your prospect into an ultimatum may overlook reservations or issues that have not been addressed. The more a prospect feels in control of their decision, the more they can trust you to be their knowledgeable guide as they make their way towards their final buying decision.

Respond on an emotional level

Buying is an emotional decision and thus appealing to prospects feelings will create a stronger relationship. Until your prospects know that you recognize their concerns they will not be ready to hear your “logic”. By reducing ultimatums and encouraging more flexibility and emphasizing perception, the “feel, felt, found” method of communication can build trust.

Take blame when it doesn’t really matter

Some objections result from simple misunderstandings or miscommunications. Be aware that your prospect may have misconceptions that could impact your potential for a sale. Try to identify and clarify these as soon as possible.

Recognize the buying signals hidden inside objections

When a prospect has a specific objection it indicates that they are paying attention to what you are saying. In some cases one or two objections can often be buying signals in disguise. If you can isolate these issues the probability of a purchase can increase.

Make sure you are in front of all the decision makers

Your sales pitch has been designed to create excitement and reduce reservation, but if it is not targeted at someone with the authority to buy, time may be wasted.  If you are able to speak to someone in an organization make sure they are the right person, with the required authority.

 

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