(CS01) CASH FLOW - The Eight Steps
Controlling Your Cash Before It Controls You

Cash - the organizations most precious asset. Control your cash before it controls you.

Cash management is a problem for almost any firm, large or small. The worst symptom of the problem: your business runs out of cash. For most smaller firms, cash flow is more important than profits, particularly for new businesses. Analysis of smaller and new business successes and failures shows that the company that focuses on cash flow rather than profit lasts longer and is more profitable in the long run. For larger organizations, the departmental or strategic business unit (SBU) budget is frequently as rigid - exceed your spending budget and you are out of business as well!

For financing purposes, cash flow analysis is more important than any other single form of financial management. Bankers and other outside financing intermediaries will almost always look for a cash flow analysis in preference to any other financial statement. In larger companies, the cash budget for a new project or expansion is critical to the overall decision to commit funds and move forward.

In this topic, cash flow analysis is described as an eight-step process that will help you understand your own business better. For many users, this provides a slightly different view than they have had before of the business or their SBU. In addition to improving profits, cash flow analysis is particularly useful in helping to cope with seasonal fluctuations and to avoid money crunches caused by rapid growth. The underlying objective of the process is to make your business planning more profitable and your operational decisions more successful.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

Forecasting or projections are the core of the financial data in any business plan, which is looking to the future. In order to get anywhere, you need to identify your destination before you can determine the best route for getting there. The same is true in your business or SBU. Forecasting is a process of identifying that destination and then establishing a rough map for your businesses’ future activities. It’s not 100% accurate, but accurate enough to locate prominent hazards and to establish direction for the business to follow.

Forecasting is based on carefully reasoned assumptions, quantified in a systematic way to make your projections about what will happen in the future as accurate as possible. By taking a systematic approach to forecasting, you gain a deeper knowledge and understanding of your business. Add the concept of break-even analysis, and you have a powerful tool to improve decisions regarding expansion, pricing, product mix, advertising, staffing, and many other areas of your business management system.

The final product of your forecasting effort becomes your projected cash flow, the basis of the cash budget, which in turn is the primary tool for controlling your business. The purpose of the forecasting process is twofold: it affords an excellent opportunity to review the past and it provides the best guide to the future your business can have.

In this topic, forecasting is described as a seven-step process. It involves a systematic analysis of the current and projected structure of the business, a break-even analysis, and various ways of determining reasonable growth patterns for your operation.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS03) MANAGEMENT CONTROL - The Four Steps
Decide what needs to be done, who will do it, and how you will know when it is completed

Management is control. Without control, the future of your organization is due to pure chance. Management helps you to make the most efficient use possible out of your scarcest resources, time, people and money. Planning the use of these assets enables you to get the greatest return for your efforts.

Management control systems take the form of MBO (management by objectives), MBE (management by exception), deviation analysis, and others. While each technique is somewhat different, they all achieve the same goal: Who is supposed to do what, when, why, and how will everyone know whether it was or was not achieved. All of this is organized into a single operating plan. This workbook provides a framework to aid in assembling these various pieces into a coherent whole package. The important point is to develop a management philosophy and a management system for its fulfillment.

The four steps of management control allow you to think about your own management style in a systematic way, and to consider the impact that your style has on your employees, your customers, and your business operations in total. There are ways for more effective behavior, but that comes from your willingness and desire to apply the techniques described. Accordingly, this topic will help you develop a management strategy that is most appropriate for you, your business and your employees, all to receive the maximum benefit from your total business operation. That benefit means the dual objectives of profit and satisfaction.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS04) TARGET MARKETING - The Eight Steps
The key to marketing success – focus, focus, focus

Who are your best customers? Where should your direct your marketing activities? Where and how should you allocate your advertising and promotional efforts? Target marketing provides direction for all of your sales activities, and guidance for other aspects of your overall operational planning. It helps you make the most efficient use possible out of your scarcest resources, time and money. Target marketing helps you to understand specifically what needs to be done to reach your objectives. It is both a planning and an action tool. The process is straightforward. Plan what needs to be done, then implement the specific activities needed to turn these plans into reality.

Target marketing provides a simple, direct and effective eight-step process to help identify those segments of the market most apt to become your customers. Once identified, developing the rest of your marketing strategy becomes much easier and guides your other operational planning. The customers themselves then help to define these other aspects. Success here is not a matter of spending a lot of money or even requiring sophisticated staff. It is instead the result of careful application of some basic principles. These are principles, which a small firm or a single operating department (SBU) today can apply with sometimes even greater benefits than a larger company. A customer orientation and small size allows a clear focus on needs satisfaction and great flexibility to change when the circumstances change.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS05) TIME MANAGEMENT - The Seven Steps
Time is an asset - once gone, it’s gone

Time is the one irreplaceable asset common to all companies of all sizes everywhere. It is the most critical and valuable resource which any business has access to.

Yet, it is one of the least carefully managed assets, perhaps because it doesn’t appear on the balance sheet or income statement, or because it is not tangible or because it seems to be free. Time squandered defeats the best-laid plans. Carefully used, it makes the task of management more effective, less panicked and more controlled. The sad truth is that time, once spent, is gone and can never be retrieved.

The seven-step approach to time management shown here is a process designed to enable you to regain control of your time, your business and your profits. The objective is to have you be in control of what is going on in your business, not be controlled by it. By following the process outlined, you will dramatically increase your knowledge of your business as well as become a more effective time user. Of all the assets of the business, time is the most critical and yet the most often wasted, and time is nonrenewable. You can always raise more cash or hire another person, but time must be spent wisely - once gone, it is gone. You never get another chance at using it. Very simply, your profits are a function of your ability to control and effectively manage the limited time resources of yourself and your staff.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS06) FINANCING - The Six Steps
Use and abuse

You must have adequate funds to enable your business or SBU to begin operation, expand operations, or even to continue operations. Funds are needed for a variety of purposes, and they must come from somewhere. The fact that funds are needed is the simple part; where they come from is another matter altogether. Understanding this problem is just as critical for managers in larger operations as well. Funds are finite - once used for one purpose, they cannot be used for another, and so projects must compete for a share of what is frequently a finite budget.

The purpose of this topic is to explain the various types of financing needed for different purposes by most small businesses or subgroups and to identify the different sources of these funds. Different types of funds come from different sources. You must know how much you need of each type before you can start looking for places to get it. Because there is a specialized vocabulary that bankers and other financing intermediaries use in talking about their profession and needs, a glossary is included of the more frequently encountered specialized terminology, simply because you must be familiar with these terms before you can talk intelligently with the suppliers of funds, or compete with the internal allocation of budget.

Analyzing your business or SBU needs for different kinds of financing and identifying the sources is seen as a six-step process. It provides you with an opportunity to objectively review your business operation and your business plans. It may help you realize that some of your ideas or desires are inherently infeasible or perhaps would be more productive if refocused.

By carefully analyzing your financing needs and expressing them in an objective way, you can avoid problems caused by inadequate capitalization, excessive debt, poor use of the powerful tool of credit (both trade and other debt), and panicky borrowing attempts which either fail or can make you fail. Good financial management follows from a clear understanding of how and why money takes different shapes and fills different purposes in your business. Good financial management leads to a better and more profitable business.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS07) HUMAN RESOURCES - The Seven Steps
The right personnel for the right reasons

The correct employees, properly motivated, properly trained, are the most powerful asset that a business can have. The effective use of this asset really determines how well the non-human assets can be used. The best plant will not be productive unless the people in it are. This is especially critical for small businesses. Small businesses simply cannot afford to have the wrong people, meaning anyone other than the right people, working for them. As a small business or department within a larger organization, you can’t afford to absorb the inefficiency of one or two wrong employees. The cost here is not only their own non-productivity, but also the more insidious cost of their counter-productivity. These "wrong" workers negatively affect the efficiency of your other employees and your own productivity as owner or manager.

There is a simple cure for most personnel problems - make sure that you have the right employees properly trained and motivated. Simple as this cure is to state, it is not so simple in application.

Although the process is a straightforward one, the difficulty for most is in developing a willingness to allocate the time to cure the problem. The lack of willingness stems from a low regard that many smaller businesses, along with their larger counterparts, hold for personnel functions that are often seen as purely clerical activities. This couldn’t be further from the truth and the impact can be particularly severe for a small firm or department. It is the productivity of people that is the primary determinant of profitability in most firms, small or large.

The seven-step process described in the learning workbook shows how you can avoid most of the commonly observed people problems. People are a critical asset, a critical resource within your business. Make sure that this resource is used to its maximum advantage. The process that is described is one that you can implement in your own business to achieve this objective.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS08) INVENTORY CONTROL - The Five Steps
Inventory control = Profit control

Many businesses have too much of their limited resource, capital, tied up in their major asset, inventory. Worse, they may have their capital tied up in the wrong kind of inventory. Inventory may be old, worn out, shopworn, obsolete, the wrong sizes, colors, or there may be an imbalance in inventory between different product lines, all of which lowers the total appeal of the total operation. You must have the right goods for your market.

Like many other facets of managing your business or department, achieving the ideal inventory goal is not an exact science. That happy goal should always be kept in mind. It will be reflected and worked toward in your constant study of your market and the buying habits of your customers.

Inventory control is a process of careful and thoughtful inventory management. There are no hard and fast rules to abide by, but rather some extremely useful guidelines to help structure your thinking. It is important to stress that this is not just a job for the bookkeeper or accountants, but is one of the key management functions, and one that all too often is relegated to clerical status much to the detriment of the business.

The five steps of inventory control are designed to help you think systematically through the process, but the final decisions are the result of your good judgment, not the product of a mechanical set of formulas. The constant process of managing your inventories will pay the large benefits of increased sales and increased profits, worthwhile goals to work towards.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS09) MARKETING COMMUNICATIONS - The Nine Steps
How much and why?

It really isn’t a question of whether or not to use advertising and promotion - you must. The important questions to answer are: what is the corporate communication message or messages, how to advertise and promote effectively, how much is needed, what media to pick, and when. An effective corporate communications program uses advertising and promotion as the link between a business and its potential customers. A business must communicate its ability to satisfy needs to that segment of the population that has those needs. Many smaller businesses follow a one-shot, touch and go, unplanned advertising policy, which is almost sure to guarantee the waste of the advertising dollars or P/R efforts that are being spent in this way. Needed here, as with every other aspect of COMMON SENSE management, is a plan with goals, objectives, and self-assessment.

Your communication needs and capabilities can be carefully evaluated and a framework established within which you can make the best decisions for your business. The creation of an effective communications program is a systematic process. It is described in this learning workbook as a nine-step framework to help you first establish a communication policy and then create a methodology for its implementation. The result will be an identification of ways that you can make the most of your businesses advertising and public relation’s potential, turning what is often a problem into the huge benefit for your business that corporate communications through advertising and promotion is supposed to represent.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS10) CREDIT & COLLECTIONS - The Five Steps
Easy to put out, hard to get back

Not the credit you use, but the credit you provide to your customers - how much, to whom, and under what circumstances. Traditionally, credit in various forms has been used by businesses to stimulate sales, broaden their customer base, encourage additional purchases and generally facilitate other marketing activities. Properly controlled, credit can increase sales and bring in a steady stream of well-satisfied customers. Handled in a slipshod manner, however, it can cause an over-investment in accounts receivable, large bad debt losses, and even eventual failure of the business.

Many smaller businesses find that the selective and sensible use of credit is very helpful in building their business. They enthusiastically and aggressively use various credit techniques as an integral part of their marketing activities. Others feel they can get along very well without financing their customers and only do so reluctantly when they have to. Whether you fall into the first or the second category, broadening your understanding about the techniques available will improve your ability to use them to your advantage. Using them to your advantage means improving your profitability, and that’s the bottom line.

Credit can be an important tool, but like any tool, to be effective it must be used correctly. We present a five-step approach that you can follow in controlling credit to your maximum benefit in your own business. Good tools, used properly, increase profits.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS11) STRATEGIC ANALYSIS - The Five Steps
The sum of the parts equals more than the whole

SWOT is the heart of Strategic Analysis. SWOT analysis is the process of carefully inspecting the business and its environment through the various dimensions of Strengths, Weaknesses, Opportunities, and Threats. Strengths are the companies core competencies, and include proprietary technology, skills, resources, market position, patents, and others. Weaknesses are conditions within the company that can lead to poor performance, and can include obsolete equipment, heavy debt burden, poor product or market image, weak management, and others. Opportunities are outside conditions or circumstances that the company could turn to its advantage, and could include a specialty niche skill or technology that suddenly realizes a growth in broad market interest. Threats are current or future conditions in the outside environment that may harm the company, and might include population shifts, purchasing preferences, new technologies, or an increase in competition. As with most of the concepts presented in COMMON SENSE, SWOT in of itself will not give specific answers. Instead, it is a way to organize information and assign probabilities to potential events - both good and bad - as the basis for developing business strategy and operational plans.

Strategic analysis is presented here as a five step methodical process that will help to organize information and aid in planning. The key planning tools of SWOT include MBO and MBE. Management by Objectives (MBO) requires that each group or area of activity establish specific goals and objectives, which the group then commits to achieving. As long as the group has the required resources, then it is reasonable to expect them to achieve the goals. Management by Exception (MBE) works with MBO and comes into play when outcomes start to differ from expectations. At that time, the differences are brought to the attention of top management, and new strategies are evolved to deal with the change. Together, and through the process of strategic analysis, they help to form the strategic plan.

Available in workbook or handbook format as follows:

• US SBA SMLS Workbooks
• SML Handbook

(CS12) KNOWLEDGE MANAGEMENT SYSTEMS (KMS) - The Six Steps
Turning people, process, and technology into knowledge

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