Happiness Is a Positive Cash Flow
When nonfinancial managers talk about "the bottom line," they're usually referring to profits. But knowledgeable financial people know that the real bottom lineand the key to a successful businessstarts with a positive cash flow. A company can have a healthy profit picture while it's in a near-terminal cash-flow position. Yet too often cash flow is not given the attention it deserves. These are steps you can take to remedy the situation:
- Monitor cash flow regularly and set milestones for corrective action.
- Line up sources of new capital before you need it.
- Manage receivables aggressively.
- Plan for periods of inadequate cash flow by synchronizing product introductions, hiring plans and research projects with periods of healthy cash flow.
And, whatever else you do, never fall behind on tax payments.
Nurturing Employee Growth
With unemployment at its lowest in decades, many companies are experiencing difficulty recruiting and retaining employees. Here's how one company, the Revere Group, a consulting firm in Chicago, managed to lower its turnover rate by encouraging its employees to grow professionally.
At the beginning of the year, each employee meets with his or her mentor, who is assigned by the company based not on title or tenure but on people skills and knowledge about the company and its industry. Together they map out the employee's career path in the company, determining the training necessary to achieve the goals that are set. Periodic check-ins keep the employee on track.
Tip: Don't select an employee's manager as a mentor; it's a potential conflict.
Trade shows may be excellent places to find new products, suppliers and customersbut they're equally good places to shop for a new job. Have you noticed how many of your employees change jobs shortly after returning from a trade show?
What to do: Consider getting eventhe next time your company has a booth at a trade show, take advantage of the opportunity and put up a help-wanted sign.
Challenge: Resist Rejecting This Idea Until You Try It!
The old adage "You learn from your mistakes" contains more truth than you imagine. While you probably would rather learn from your successes, life, unfortunately, doesn't work that way. Sometimes a mistake grows out of poor judgment or a factual error. Often it occurs when you try something new and it just doesn't work.
But how about those times when an "error" turns out to be a breakthrough? That may not occur often, but when it does, the rewards can be substantialalbeit unexpected.
Try this: Instead of following all the "rules" you've collected from years of experience, try breaking one of them just a little bit. Be sure, of course, you can handle the consequences of the broken rule. It might help to think of the rule-breaking as entertainment gambling: You go into a casino with $50win or lose, it's just entertainment.
If you can make it work for you, consider encouraging those you supervise to do the same. It may open some unexpected doors to innovation.
The JofA publishes a monthly collection of Golden Business Ideas and invites readers to contribute their favorites.
Send your ideas to Senior Editor Stanley Zarowin via either e-mail ( email@example.com ) or regular mail at the Journal of Accountancy , Harborside Financial Center, 201 Plaza Three, Jersey City, NJ 07311-3881.