Business Tools Archives

The Circulatory System of Business Processes and How to Cut Down On Filing

You may be too young to recall the era before computers. Paper was the medium, and people the processors. In the 1960s even copy machines were rare, so offices had to rely on carbon paper. My elementary school used mimeograph machines that used some sort of magic blue ink that copied documents on a roller that spit out test sheets. I believe my blood pressure would rise if I smelt the ink today, bringing back memories of fifth grade math tests.

I recall tagging along with my mother to a governmental office like the California Department of Motor Vehicles. We would wait, and wait, and wait for someone to call our number. Upon arriving at our window, many times we would be greeted (I’m using that word “greeted” loosely) by a woman who looked like she was counting the days to her next vacation, eleven months away. She would hardly make eye contact and go through the mundane process that she will do seventy times that day. The required business form was to be filled out in triplicate separated by black carbon paper. It regretfully left an unwanted black tattoo on her thumb. She, and clerks like her, would always said the same incantation in order to make the carbon paper magic work. “Please press firmly so as to be legible on all three copies.”

The carbon paper was one of the time-saving tools that spawned in the 1950s. A business practice that relied on its product was the practice of shuffling the forms into filing cabinet folders, many of them never be touched again.

Though as archaic as this may seem, we still acquire clients who still practice it. I don’t mean they use carbon paper or mimeograph machines, but they still lug mountains of paper that contribute to the middle aged bulges of their filing cabinets.

Assuming you don’t have to keep hard copies for such things as required by government regulations and such, the advent of the computer along with a scanner should put an end to most of the paper filing practice. I don’t advise this change just to be technologically advanced, but instead to be more efficient. Business information moves faster than ever. The more time you save performing mundane processes, the more time you can focus on managing your business. Here is a suggested procedure that you can implement in your accounts payable process:

Paperless Accounts Payable set up: You need a few components to have an accounts payable paperless system.
1. An accounting software like QuickBooks that can attach files as part of its functionality.
2. A scanner, preferably one that can scan both sides of a document if needed.
3. A digital Accounts Payable folder (on your computer) to scan your bills and receipts.
Scan bills and receipts into folders: The first step is to scan your (approved) bills and receipts into folders that are located on the same computer as QuickBooks. They could be scanned onto other drives in a company network, but I like to see everything in the same place. You can create subfolders by: date, employee, or office location. Identify them by Vendor and invoice number. You do not want to duplicate functions like creating folders for jobs, or vendor names, etc. because that will be superfluous to QuickBooks’s functions. The paper receipt should be initialed and dated by the person before he/she scans it.
Dual screens work best: After scanning into your respective folders, bring your first bill up on a screen. Dual, synchronized screens work best because you can look at the bill as you process it. You may have to close the view when you attach it in QuickBooks, but not at the point of just entering the bill.
Enter the bill in QuickBooks: Follow the normal procedures of entering a bill in QuickBooks. We strongly recommend that you enter the job name and use the Class system to allow greater flexibility in reports. If you are entering a credit card remittance (receipt), you may go to the Bank menu and enter it in that menu to the specific credit card, unless you want to track the vendor on the credit card. In that case, you would use the bill paying function and choose “credit card” under Method.
Attach the bill or receipt to the Vendor Bills: As stated before, you may have to close the scanned item window, but attaching to QuickBooks is as easy as looking up the file.
Following the Bill Paying Procedures: Open the Choose Bill Paying and follow the procedures you have established.

We normally shred the paper receipts at this point, but if you want to hold on to them initially until you are comfortable with the system, then let your anxiety level be the barometer. If you follow this procedure and tweak it to fit into your specific business, you will have accomplished not only reducing the filing burden, but increase your flexibility to report on your business, the ability to drill down to the actual receipt for each expense, and more time to manage your business.

Strategy and the Exploration for the Non-Customers

I met with one of my clients and friends, Armen Alajian, co-owner of Artobrick. Now Armen runs this business with his brother, Vod with the respect and tradition of a family business that has been passed down to younger generations.

However, one of the things that makes me proud to have them as a client is their aggressiveness to continue to test new ground. The latest is the “Ceramic Paintings” shown on this page. They brought an artist into their game to paint original artistic works on ceramics that can cover any size of walls and floors. Basically, Artobrick has merged the art world and the ceramics world. But what they don’t realize is they have increased their market space to the “unexplored” non-customers. This is a concept discussed in the Blue Ocean Strategy by Kim and Mauborgne.

Kim and Mauborgne lay out three tiers:

1st tier, “Soon-to-be” non-customers who are on the edge of your market waiting to to jump ship;

2nd tier, “Refusing” non-customers who consciously choose against your market;

3rd tier, “Unexplored” non-customers who are in markets distant from yours.

I would argue that these tiles will attract a 3rd tier customer who loves art. These customers may not consider installing bricks, but may consider installing a Jackson Pollack-type tile just for the artistic addition to their home or business. This attraction gives Artobrick a distinct advantage over other tile/brick manufacturers who cannot compete in this market space because they don’t have the strategy to see buyer needs.

The initial step for this to venture to be successful is for Artobrick to distinguish a buyer utility. Some companies do surveys or venture into a new concept slowly gauging buyer and market response. I don’t know if the brothers took this step, but assuming they did, the next step is to make a price easily accessible to buyers. Third, at this price point, can they make money? And lastly, what other hurdles can restrict the market roll out.

According to the Blue Ocean authors, if Armen and Vod get past these steps, then they can have a viable Blue Ocean idea where competition becomes irrelevant. All small and medium-sized businesses should take this approach in their businesses by thinking about the non-customer.

The Magic of Disney: Where Business Theory Does Not Have To Be Just Theoretical or Theatrical

Have you discussed something on a theoretical level with someone only to realize it was just mental calisthenics? In other words, did that conversation deal with the REAL world?

I came across a Harvard Business Review article, What is the Theory of Your Firm? by Todd Zenger that put teeth into strategic planning. His article discussed Walt Disney’s 1957 Theory of Value Creation in Entertainment (seen here).

As I studied this 1957 vision, I realized that it fit well into one of the major steps of strategic planning: the vision. As Zenger said, “It’s founder had a very clear theory about how his company created value, which was captured in an image held in the company’s archives.”

As a small business owner or an artist, how you can integrate this into your strategic plan resulting in a single sentence that projects a 10-20 vision using horizontal or vertical integration?

Using Disney’s map as a template, it seems his original core were films. However, I could have argued that the theme parks had risen as a second core. In any event, they complimented each other. Next Disney drew satellite profit centers like TV, music, merchandising, etc.

But the magic of Disney were the lines that connected the main core to the satellites. They were his animated characters. It is like the theatrical film was the heart, the satellite profit centers (or assets) the organs, and the connecting Disney characters the veins and arteries.

From this, Zenger imagined that Walt Disney’s theory (or vision) could have been, “Disney sustains value-creating growth by developing an unrivaled capability in family-friendly animated (and live-action) films and then assembling other entertainment assets that both support and draw value from the characters and images in those films.”

The interesting historical fact pointed out by Zenger is that the power of this theory was revealed within 15 years after Walt’s death when the core film machine shifted away from animation. The whole empire slowed to a crawl. In my words, the heart stopped pumping, anemia set in and the organs suffered. Michael Eisner took charge in 1984 as the surgeon and rediscovered the theory generating film greats as The Little Mermaid, Beauty and the Beast, and The Lion King.

Zenger laid out three “sights” of strategy that compliment our strategic planning sessions:

Foresight: Projects where the industry and customers are heading in 10-20 years. Our Opportunities step addresses these developments.
Insight: Theory must be company specific so as to discourage copycats. The Threats step questions the competition’s abilities to steal market share.
Cross-sight: The combining of assets and theory, or as I like to say, Praxis (marriage of theory and practice.) Many don’t see this, but accounting can play a large role in this implementation.

Many strategy books deal with similar concepts from different points of view. The important part is that without a vision (theory) a business just flounders hoping to fall into a lucky opportunity.

Learn from the Big Shots When Designing Your Business Strategy

I recall reading Bill Gate’s book in the early 1990s about a device that will come to the market that you can use as a phone, a personal computer, a device to buy merchandise, and many other useful tools. And, it would be the size of a pocket book.

I could not have imagined that an iPhone would be such a big part of my life in about 15 years.

Well, another harbinger may be here in Apple’s purchase of Beat according to Owen Thomas’s article, Apple Bought Beats because Music is Dying. The article discussed Apple’s purchase of this steaming software as a growth mechanism. Beats is trying to bring back the “album-like” experience, not the soup of individual songs. Young people are not being moved by random song by song and are abandoning music as we once knew it.

This actually rang true for me yesterday when my 15 year old daughter discovered the Beatles and requested a phonograph player for her birthday so she can play our old albums. She experienced a new concept, “the Beatles album” and the various messages the Beatles were trying to bring across in one tight two-sided package.

These concepts can help any business when conducting their business strategy. Stop, trying for the home run and focus on winning the game. Regardless if you are an accountant or an artist, your customer should be feeling the message of what you are trying to get across. Here are some suggestions:

Always put yourself in the customer’s shoes. You must be honest. What are they feeling? What attracts them to your industry? What are they missing from you and others in your industry?
Don’t repeat history just for the sake of history. We always did it this way is not a reason to keep a product or service. The big shots in your industry may help you with their publicity.
Discard services and products that don’t meet the customer’s needs.
Refine your short list of services or products.
Project your company strategy and see if these decisions match.
Project the financial needs to implement your strategy.

When a large player in your industry predicts a change, you should take note. If you had told me thirty years ago that a coffee shop would be one of the leading “fast food” franchises, I would have laughed. Little did I know that the public had a need to hang out with good coffee.

Learning for big shots can help you aim better with yours.

“Where There’s Smoke, There’s Fire” (But What if You Can’t See the Smoke?)

As a kid riding through the southern Sierra Madre, my uncle Jim Smith used to point to a brush fire in the distance and say, “Where there’s smoke, there’s fire.” Now to a kid, that seemed like stating the obvious, but as I grew older, I understood what he was trying to teach us.

That meaning of the adage was that sometimes you only see the effects of a problem and not the cause. The smoke, which has a lethal threat of its own, only signaled a more serious problem that had to be addressed. Sure, if the wind changed directions, then the smoke would not be blowing across our path, problem solved…right? Obviously not, the changing wind would just push the problem into another direction, maybe with more dire consequences.

Another type of signal may also indicate a good cause, or an opportunity. For example, if the brush fire smoke turned white, you would assume that the fire crews were getting the upper hand.

A McKinsey Quarterly article, Tapping the power of hidden influencer’s by Duan, Sheeren, and Weiss discussed at tool that social scientists use to identify sex workers and drug users can also help senior executives find the people most likely to catalyze, or sabotage organizational-change efforts.

Now this lines up real nicely to Jim Collin’s concept of “getting the right people on the bus” to enable a company to move forward before the strategic plan is in place.

Duan posses the challenge of how company leaders can identify certain people beforehand to harness these individuals’ energy, creativity, and goodwill that will benefit the company.

The article stated that, “One way we’ve found is “snowball sampling,” a simple survey technique used originally by social scientists to study street gangs, drug users, and sex workers—hidden populations reluctant to participate in formal research. These brief surveys(two to three minutes) ask recipients to identify acquaintances who should also be asked to participate in the research. Thus, one name or group of names quickly snowballs into more, and trust is maintained, since referrals are made anonymously by acquaintances or peers rather than formal identification.”

This method lays out four principles to tap the power of hidden influencers:

1. Think broad, not deep.

2. Trust, but verify

3. Don’t dictate—cocreate

4. Connect the dots.

These are good points, but the challenge is to implement them. Too many management level persons set a strategy in place, but delegate it to others to implement. A detailed implementation plan must be designed with weekly communication and accountability. Even though you know “where you are going,” you still have to steer the car and add fuel. Stepping up as a leader is one thing, delegating and managing the tasks to the individuals you identified is another.

If you don’t execute your strategic plan with the right people, you will see smoke. And that smoke could be a raging fire that can cripple the whole process. This process discussed in article helps a manager to see the smoke of a fire that has not yet taken place. However, once the project has begun, all those involved should be diligent to spot smoke from a distance.

Strategic Planning: Can you Imagine a Shop Selling an Affordable Dress Designed Specifically for a Person’s Body Type? It May Be Just Around the Corner.

When I was a teen (1970’s), the coolest place for car alarm systems was Ross Stereo located on the West-side of Los Angeles. Ross developed very custom systems tailored to the car and the owner’s specifications. My cousin, Bill, tried out one of them. Ross showed my cousin a Cadillac whose motor was running, windows down, and doors locked. Ross told my cousin to drive it away. My cousin accepted and got into the car, and shifted it into “drive.” Immediately, the engine shut off, the windows went up, the doors locked, and the alarm sounded leaving my cousin helplessly trapped in the car. A “custom crook catcher.”

This kind of product customization had only been available to those who can afford to pay for it. Things are changing, though. Gandhi, et al, article, How technology can drive the next wave of mass customization discusses how mass customization is really close for the individual. For example, can you imagine buying a shirt that is made to fit your body type?

Gandhi writes, “We believe the time for widespread, profitable mass customization may finally have come, the result of emerging or improved technologies that can help address economic barriers to responding to consumers’ exact needs in a more precise way.”

The operative words are “profitable” and “mass.” Sure, you can customize most anything, but in a profitable way for the masses? This was only a dream a short time ago.

Another example is one shown to me by Doctor Lester Silverman of Look Optometry in Manhattan Beach. Dr. Silverman showed me a set of frames that can be immediately customized for a prescription. The use of such frames could be for a vacationer who has lost or broken their glasses. The patient would need an emergency replacement pair but are leaving on the bus in a couple of hours. Now, these are not your designer frames, but just a temporary pair that Dr. Silverman would create using a machine in his office. As far as your designer glasses, he told me that there are so many different frames and patient requirements that this kind of in-house manufacturing is not here, yet, but the trend has started. But the day is probably not far away where most designer frames can be customized while you wait instead of sending the order to a lab, that will return them in a week.

The problem has always been cost,but Gandhi proclaims, “Mass customization has the potential to help companies increase revenue and gain competitive advantage, improve cash flow, and reduce waste through on-demand production.”

The technology is here in many situations for mass customization. 3-D scanning is an example.

In your strategic planning sessions, you should identify the trends as “opportunities.” When you develop your strategic plan, you should always look 10-20 years in the future. If you are a small– medium sized business, you are most likely not going to develop these technologies. (If you do, then your strategy should be designed for a rapid expansion.) However, your strategy should be tailored for growth.

Back in the early 1950’s Admiral Television manufacturer took a chance and sponsored Sid Cesar’s comedy show. Their strategy was to sponsor a show that would help promote this new form of entertainment in the home. The problem with their strategy is that they did not anticipate the massive demand for televisions. They were forced to stop sponsoring Sid Cesar’s show because they needed the resources to build new television manufacturing plants to meet the demand for televisions. Our first television was an Admiral (blonde wood finish).

Obviously there are two areas you must examine: Increased value to customer and control cost of customization. According to the article, the aspects that must be considered are marketing, sales, product/service development, operations, supply chain, and IT infrastructure.

In any event, in strategic planning and implementation you should always keep one eye on the horizon and the other on the step in front of you.

The Vertical Integration Strategy of a Christian Publishing Company is No Fantasy

A business acquaintance, Steve, recently purchased a small Christian publishing company from Jeff, another business acquaintance. Now both of these individual are pillars in the Christian “speculative” publishing world: Steve, a top agent in fiction, and Jeff, a man of many talents both inside and outside publishing companies. “Speculative fiction” includes such genres as fantasy, science fiction, etc. as opposed to general fiction written by likes of Hemingway. (Christian “speculative fiction” is a very small part of the publishing market with very loyal followers. Some of the novels have found their way into the entertainment industry like the Lord of the Rings.)

I have not spoken to Steve about his business strategy for purchasing this company, but this development can be a good example of how vertical integration works. Again, since I have not spoken to him, this article will be pure fiction as to strategic motivations.

Vertical integration is a style of growth executed by moving up or down the “supply chain” within a particular industry. A good example in the big corporate world is Apple’s iPhone. Originally, Apple created computers. These computers, among other things, could play music… other distributors’ music. The portable CD craze was winding down (and always breaking), and Napster just got crushed in July ’01 for its platform of providing free (illegal) music downloads onto computers.

When the Ipod was unveiled in October 2001-2003, vertical integration played an important role. Not only did Apple provide the device to play music, they moved up the chain to distribute the music that played on it through the ITunes store. Thus, eliminating any inter-company, inter-industry issues. They had achieved vertical integration. Today, almost every musician, small or large (including myself), distributes their music on iTunes. The iPhone was just an expansion into a complementary industry.

In regards to Christian publishing, the question is, how will Steve use this vertical integration to gather market share? Though, we can only speculate, I would start with a strategy session of consumer needs. The speculative Christian genre can be an advantage because large publishers may not want to divest resources from their money-makers (non-fiction books). A method that Steve could utilize is the Blue Ocean Strategy. This particular strategy focuses on creating a relatively non-competitive environment by challenging consumer demand assumptions. Is the speculative fiction publishers providing attributes that consumers do not want, and are there some attributes that the speculative fiction publishers ignoring?

Financial Rhabarberbarbar (“Rubarb Barbara” in German) and How to Navigate the Financial World’s Terminology

Do financial terms seem like another language to you? Check out this link for a little play on German words for a real brain-teaser https://www.youtube.com/watch?v=gG62zay3kck .

If you struggle with financial terms, and don’t have time to take business classes, there are some resources that you can grab quickly.

Investopedia: www.investopedia.com/dictionary. This site explains a wide range of business terms if you are looking for a quick definition. It is organized alphabetically for easy research.
Business Dictionary: www.businessdictionary.com. This dictionary carries more weight than just a list. It also displays terms as used in certain financial areas.
Periodical and Media Sources: Popular periodicals also have joined the group of educating the public. www.theguardian.com/business/glossaryatoz. www.washingtonpost.com/wp-dyn/business/specials/glossary/index.html www.money.cnn.com/services/glossary/a.html just to name a few.
Desktop Table Books: There are books that write about terms and concepts in more depth. The Book on Business from A to Z, The 260 Most Important Answers You Need To Know, speaks about different concepts from Accounting to Z-Score. (I wrote the chapter on Accounting). This book, like others, is also available as E-books.

These sources can help you understand terms and concepts, so you can ask more intelligent questions in your personal and business transactions.

So in business, just as in movies, don’t be ignorant of terminology. I had to check “Never rub another man’s rhubarb!” said by Jack Nicholson as the “Joker” in Batman.

Be an “Opportunist” and Put the “O” Back in SWOT

Did you ever catch a baseball at a professional baseball game. I had attended Dodger games since I was a kid, and never even got close. The odds of catching a ball changed depending on where you sat. However, no matter how great the odds were, I would bring my ball glove. Nothing came close, except when I became a father.

Then one day, I was walking down the steps behind home plate with a Carnation frozen shake (my favorite Dodger concession) in each hand. Before reaching my family, I heard the crowd cheer above me when a foul ball hit the upper level. The fans failed to catch it letting it escaped down to my level about twenty steps above me. As I turned, I watched a baseball bounce down the steps toward me. To heck with the malts, I dropped them splattering on the ground and fell to one knee to field the grounder like I was taught in Little League. My opportunity had come and I was ready.

Most small and medium-sized businesses probably don’t prepare a strategic plan. If you did, you would probably include a common tool: SWOT. The SWOT tool looks at your company’s “Strengths, Weaknesses, Opportunities, and Threats. Many companies usually list the SW, and T. But opportunities? That can be tough. The probably with this is that companies only look to their existing markets, and not leverage their product or expertise in other markets.

Take music for example: Songwriters and producers are banging their heads on the wall trying to get a share of a shrinking market. Yet, they don’t realize that they may have the tools to use music in a different way. Take Song Pong, for example. Song Pong is a music based social media game allowing users to communicate through music. The players can pose a challenge, share favorite songs, or deliver dedications. Song Pong utilizes personal music libraries and the 26 million song in the iTune store.

Now, I am not saying that you should not pursue your passion, but sometimes your passion can be an opportunity that you have not discovered. Michael Gorton, owner of the Song Pong app focused on the connectivity of music instead of producing its content.

So, how do you start? You start by looking at the needs of the public. Start with what you are producing and what is needed. Discard with is not needed and us the tools of what is left to inquire into several new markets.

Is Classical Music a Victim of a Red Ocean Strategy?

I like classical music, even some operas. I cried when I saw Paul Potts sing Nessum Dorma. That is why I was saddened when I read Why Classical Music is Imperiled–Sort of by Chris Farrell. Mr. Farrell cites several examples of operas, orchestras, and philharmonics who are either struggling or have failed financially. He claims:

“Classical music shares a problem afflicting all entertainment these days: fierce competition for eyes, seats, and dollars. The video-game industry has evolved in recent decades into a multibillion dollar industry far removed from its early Pac-Man days. On Sunday, Americans could choose to spend their evening at a concert, a book reading, a lecture, or watching the much-anticipated final episode of Breaking Bad (let alone Sunday Night Football.) By this light, the take-away is how healthy an historic art form is in the 21st century.”

Chris argues that classical music isn’t a dying industry, but caught up in the digital age where so many entertainment options are at our fingertips. He mentions a number of classical musicians who have ventured outside the genre.

To look at external factors for a business failure is not the cause of the failure itself. The failure is the lack of a strategic plan. Strategic plans are created with a vision that encompasses outside factors, like the changing digital industry. Instead, what business do in these situations is just change the inflight movie in a plane that is running out of gas. Sure, when businesses fail to strategize they create some “feel good” plan within their current strategy which ultimately postpones the inevitable.

The Blue Ocean Strategy by Kim and Mauborgne discuss a similar industry, the circus. The compare Cirque du Soleil and Ringling Brothers. Ringling Brothers took the traditional strategy, which was the traditional circus. Cirque, on the other hand, measured the value that they offered the public and eliminated some, while enhancing others. In creating their new strategy, and new show, Cirque emerged in an uncontested blue ocean, and left Ringing Brothers in a red ocean full of competing sharks who offered the same antiquated value to the customer. These sharks competed on price and values that the customer didn’t see relevant, like big names, animals, and three rings.

On the other hand, Cirque, designed a new show based on values that the audience appreciated, e.g., a new type of venue, themes, and music.

The ironic part is that Cirque not only took a major market share from the traditional circus, but absorb market share from other industries like; movies, plays, and yes classical live music performances. In other words, the pain that the operas and philharmonics are feeling is due in part to innovative companies like Cirque who have been successful crossed markets by realizing what the audience really wants. That is something that the classical industry must do if it is to survive.