Solving the Cash Flow Crisis Presented by Management Directives “Helping America, One Business At A Time” A Division of Champion’s Choice Training Institute

How should you evaluate a business ? Accounting Systems effect on Cash Flow Employee Productivity effect on Cash Flow Job Costing & Estimating effect on Cash Flow Sales & Marketing effect on Cash Flow Cash Flow Effect on Profit Lack of control systems and poor fiscal management in each area result in cash flow deficiencies.

Some other areas are seldom addressed... Owner Equity Position Owner Deferred Compensation Owner Exit Strategies Owner Retirement Options Cash flow deficiencies have a permanent impact on ownership equity.

Begin with the basics... Profit is a myth, cash flow is reality Unprofitable businesses can survive by learning to manage cash flow Profitable businesses will die if they do not learn to manage cash flow Comprehensive and effective control systems must be in place in order to manage cash flow Cash flow deficiencies are lost forever and cannot be recaptured.

Things they never taught you in business school... Accounting systems are designed to calculate taxes as per government standards Accounting systems only provide “after the fact” data that is useless to management Management financial analysis is not taught in traditional business classes Traditional accounting reports have little impact on the profitability of a business

So let’s get started with The Accounting Factor... Profit & Loss Statements Are designed along IRS guidelines and are not tools for effective management Usually do not provide adequate information to run a business properly Rarely provide statements in a timely manner that allows corrective action to benefit the business

Several other problems usually exist... Accounts Payables Cause/effect relationship with cash flow Impact of trade discounts on cash flow Impact on ability to purchase raw goods and materials Impact on marketing & sales activities

More Accounting factors... Accounts Receivables Cause/effect relationship with cash flow Aged accounts due to poor fiscal policy Impact on financial and emotional stability of the owner Good Old Boy syndrome may be a problem

The Human Resource factor... Employee Productivity Operating Procedures Insufficient Training Lack of Incentives Poor Supervision & lack of monitoring effectiveness Manpower High Turnover Rationale Inadequate Hiring/Training/Promotion Policy Lack of proper incentives Inadequate Employee Benefits

The Sales & Marketing factor... ProductsProduct MixJob Costing Client Demographics Sales Forecasting Sales Returns

The Inventory factor... Product Levels Inventory Turn Inventory Methods Security Returns

Ownership/Equity factors... Equity Deferred Compensation Exit Strategies Retirement Options

A look at the numbers... If your bottom line is 10%, you will need additional sales of $500,000 to offset cash flow deficiencies of $50,000 If your bottom line is 5%, you will need additional sales of $1,000,000 to offset cash flow deficiencies of $50,000 Correcting cash flow deficiencies results in improved profits and enhanced ownership positions shown on both P & L and Balance Sheet statements.

How do you correct cash flow deficiencies? Start with a comprehensive financial & organizational analysis of the business Begin the implementation of a comprehensive P & E operating plan which involves Budget, Cash Flow, Break Even Analysis, System Controls (inventory, sales, receivables, payables) Next follow with Estimating and Job Costing controls Then, work on Organizational Development with job descriptions, evaluations and productivity analysis

Then your are ready to... Review and develop a comprehensive Sales & Marketing Strategy Depending on the size of the business, there may be a need for re-organization and retraining of key employees And include development and implementation of employee incentive and comprehensive benefit plans, along with ownership equity issues

How do you get professional help at an affordable price ? Do Nothing and keep bleeding RED Find another CPA/Accounting Firm BAD Choice Hire the BIG BOYS (national consultants) at $300+ per hour with the big expense accounts you pay for Are you ready to pay up front? They will expect it! Hire a Business Mentor at a reasonable price, for a specific time, to customize and implement a comprehensive management control system AND teach you how to use it to manage your business more effectively

Who We Are... Management Directives “Helping America, One Business At A Time” Over 50 years experience as Business Consultants All client lists maintained in complete confidence All work custom designed for individual applications Affordable rates to accommodate hardship cases Associate Offices in San Antonio, Waco, Phoenix Call today for an comprehensive analysis of your business