20 Powerful Principles to boost your bottom line IMMEDIATELY By Bob Vitamante, SCORE Counselor and Chairman of Santa Barbara Chapter of SCORE

GOALS/Promises FOR TODAY (ambitious, risky, gutsy) Learn insights to change how you: – View your business as the owner – Measure its success Walk away with ideas to increase Your Bottom Line starting today 2

It’s okay to disagree! 3

You, the audience, will help dictate Direction & Scope This will be interactive Where are you in your personal business cycle – Stage of business: concept only? Starting? Running? – Employees – Goals: Have them? Are a beginning, not an ending. They will change over time. Who are you? – Entrepreneur or Leader? Key manager? Sole worker? 4

First, a little about me Well known companies SelectRemedy Temporaries Pinkerton’s, Inc. Olsten Temporary Services Columbia Pictures Industries KPMG, Peat Marwick CPA’s Not-so-well known companies RJ Vitamante & Associates TickerBuddy.com 3D Shopping.com Royal Cigar Society BAC Trading MLM’s: HUB (Humanity Unites Brilliance); Rexall Pharmaceuticals 5

Principle #1 Know thyself  Strengths  Weaknesses  Special skills & Talents  Passions  Likes  Dislikes Questions: Have you done a self assessment? Are you applying it in your business? 6

Principle #2 Know thy (Personal) Goals What are your personal goals for work or business – To lead or to follow? – To work alone or with others? – Inside or outside? – Creative expression? – Contribute to society? – Make a living for self and family? – Very little stress? Safety? – To build? – To get rich? By when? 7

Principle #3 Know thy (Business) Goals [aka Your Bottom Line] What results do you want? – Must be specific – Must be actionable and measureable – Must be time bound – What is your business cycle - Daily? Weekly? Monthly? Why? What needs do you want fulfilled? If you don't know where you are going, you'll end up someplace else. Yogi Berra 8

Principle #3 ( cont’d) Some Examples of Personal Bottom Lines: A specific income stream/salary A business expressing who you are, with money as a secondary concern A sustainable business that can grow & build value A ‘get rich quick’ technology play A ‘fix it and sell it’ play A business to grow and give to family members in one year, in three years, at some other future time A business that does ‘good’ in the community 9

Principle #3 (cont’d) What’s your Personal Bottom Line? For 2013 For Beyond 10

Principle #4 Need Help figuring this out? Get a mentor! Who or What is a Mentor? Some History 11

Principle #4 Characteristics of a Mentor Real life experience Subject matter expertise Demonstrated achievement Cares about you and your growth Objective, neutral Honest and open, and knows their limits Solution oriented Can meet you where you are; been there, done that 'Reduced ego' - Limited personal investment of 'self' Big picture oriented 12

Advisor comparison guide 13

Principle #5 Follow your bliss Know who you are and want to be How does it fit with your skills, talents, passions, etc. 14

Principle #6 Be true to yourself 15

Principle #7 Define your role, realistically Start at the top - Entrepreneur or Leader? – Dick and Mac McDonald Worked hard and made a good living – Ray Croc Bought the Franchise rights Took little from the business Hired the best Creation, Production or Administration? – You need all of them! 16

Principle #8 Do the right thing, personally What are you now doing that you should do: – More of? – Less of? – The ultimate test – what will move the business forward toward Your Bottom Line 17

Principle #9 Hang tough 18

Accountants may hate this! Balance sheet (B/S) does not show true value P/L ‘bottom line’ has very limited use – Doesn’t indicate earnings potential or sustainability – Is easily/readily misleading – Can create a false sense of calm or alarm – Can be useful with some important ‘tweaks’, but proper timely interpretation is a ‘must’ – Does not measure Your Bottom Line 19 Principle #10 Seek the truth (about performance), and it will set you free ( financials have limited value for measuring achievement)

Principle #10 (cont’d) ( financials have limited value for measuring achievement) Some examples of financial data that can be misleading B/S: – High or low cash balances or receivables – High or low customer deposits & trade payables P/L: – Investments treated as expenses – Staff training – Addition of staff and Recruiting costs – New supplies and equipment – Advertising and PR programs – Timing for recurring expenses, such as insurance, workers comp, taxes, property taxes, incentive payments, 20

21 Sept Rev10000 Expenses product cost5000 salary3000 liability ins1000 rent1000 supplies1000 advertising3000 Assoc dues2000 Total exp16000 Profit (loss)-6000

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23 Sept Rev10000 Expenses product cost5000 salary3000 liability ins1000 rent1000 supplies1000 advertising3000 Assoc dues2000 Total exp16000 Profit (loss)-6000 Add backs salary3000 liability ins1000 advertising3000 supplies Normalized P&L2000

24 SeptAug Rev Expenses product cost salary30000 liability ins10000 rent1000 supplies10000 advertising30000 Assoc dues20000 Total exp Profit (loss) Add backs salary30000 liability ins10000 advertising supplies Normalized P&L

25 SeptAugSep-12 Rev Expenses product cost salary liability ins10000 rent1000 supplies advertising Assoc dues20000 Total exp Profit (loss) Add backs salary liability ins10000 advertising supplies Normalized P&L

Principle #10 (cont’d) ( financials have limited value for measuring achievement) Some cures begin with Proper analysis of B/S & P/L: Cash is king: collect more frequently, pay less frequently The trend is your friend: compare current period to prior months, prior year months, budget, competitors Eliminate (or separate out) distorting items and owner’s compensation (in its full glory) What to measure and when: key metrics Identify items of continuing value in the context of your goals, and ‘suck it up’ Increase income and reduce expenses – in a word, Negotiate Create the story of your performance each period – explain what’s happening against ‘goals’ 26

Principle #11 You can’t manage what you don’t measure Peter Drucker Define Your Personal Bottom Line Change your measures of success Plan the necessary steps, such as: – Hire two sales persons – Purchase new equipment or software – Add X number of clients Measure attainment of the plan 27

Principle #12 No man is an island John Donne Who’s on your team? Staff? Family and Friends? Professionals – CPA’s, Attorneys, etc.? Mentors? Board of Advisors? Investors? 28

Principle #13 Put First things First Crawl before you walk, walk before you run… Develop your idea as a concept Identify the things required to make it happen Ask your mentor for advice 29

Principle #14 Focus, focus, focus Daily question – are my activities today moving the ball forward What you focus on will grow, positively or negatively What am I avoiding – Deal with it. Ask your mentor for advice 30

Principle #15 – Lead by example 31

Principle #16 The Team The right skills for the right roles Hire the best you can, and invest in them Where do you fit in What do you love and what do you hate What will make the difference 32

Principle #17 Place a value on failure 33

Principle #18 A chain is only as good… 34

Principle #19 Alignment is a ‘must’ 35

Principle #20 The Systems Must have certain disciplines to enable repeat performance Results must be tested – Spartan training – Demonstrated results 36

To Summarize Our focus today was on: – New, broader measures of success – Your role – Your business priorities – Your planning, goal setting, etc – Your staff – Your external team – Mentors 37

Thanks for your attention Good Luck! 38