Why was Pareto an excellent time manager?

It would surprise most people to know that the Pareto Principle has applications that go far beyond time management.  In fact Vilfredo Pareto, for whom the principle is named, merely described the income distribution of Italy; he observed that 80% of the total wealth of this country is held by only 20% of its total population.

It is the great business management legend (yes, he is still alive today) Joseph M. Juran, who actually proposed this principle.  He discovered that the 80-20 rule held true for many other things apart from business management. Read more

Using a scorecard

Introduce a scorecard to give you an early warning system that all is not well.

Businesses of all sizes, be they large corporations or a newly-established small business, spend a considerable amount of time and effort developing well-thought out strategic plans that work to pave the way for their business’s success.  Yet, many of them fail to reach their goals.  

Frequently, it is because they are unable to measure their performance accurately and, therefore, only realise something is wrong when it is too late.  

Using a scorecard is a great way to improve the process of measuring your business’s performance.  A scorecard is a set of performance measures that are categorised according to the different performance aspects of a business.  Scorecards vary immensely in their appearances, content, and intricacy.

Some will include a dashboard that covers the broader performance goals of an enterprise and then expands them into more detail.  Others are colour coded to make it easier to scan through them.  

Using an automotive supplier as an example, one of the strategic performance goals in the dashboard of its scorecard may be “market leadership through building quality cars”.  Two performance metrics that contribute to the achievement of this goal may be “the percentage of reduction in annual warranty expenses” and “the percentage of reductions in car recalls”. 

When structuring a scorecard, it is important that you correctly identify what performance metrics are critical to the success of your business and need to be included in the scorecard.  If you answer the question well, the scorecard can make for an extremely tangible and concrete way to define success.  

In general, two types of performance measures should be included in your scorecard; those that account for the achievement of current operational goals and those that account for the achievement of future goals.  The best thing about scorecards is that they allow business leaders and managers to quickly understand how their business is performing overall and to identify if there is a performance gap in a particular area.  

Because they are structured to reflect performance across several business areas, when there is a lag in one area, it will stand out clearly.  This, in turn, allows the business manager to react immediately and solve the problem before it becomes too big to handle.  

If you are an entrepreneur with a growing business, constructing a scorecard will help you to better understand what functions of the business you need to work on to ensure that your business continues to do well. For those of you who are interested in assessing the current performance of a business, read my article “Discover 7 Common Causes of Cash Flow Problems in your Business before it is Too Late”.

Discover 7 Common Causes of Cash Flow Problems in your Business before it is Too Late

Cash flow provides the necessary fuel to propel your small business forward. Cash flow problems can lead to an insolvent business structure and are a leading indicator of a failing business.

Here are 7 of the most common causes of cash flow problems in small business and solutions to help you avoid them:

1. Lack of Payment Term Discounts
Waiting for a customer to pay once you have delivered a product or completed a service can cost your business valuable money. Offer your customers a term discount such as 2% net 10, or 1% net 5 in order to encourage them to make their payments quicker to receive a discount.

2. Lack of Tracking
Tracking your business results is crucial to its overall success. Install tracking systems in the areas of your business where you can improve cash flow such as inventory management, supply ordering and procurement to reduce waste and improve turn around times.

3. Failure to Perform New Client Credit Checks
Ensure that your new clients have credit checks before your business ships out product to avoid an untimely payment or a payment default from a business with a poor credit history.

4. Lack of Credit Insurance
Failure to have credit insurance, especially when working with customers internationally, can cause the business to lose substantial cash flow if the customer is slow to pay or defaults. International customers are also more challenging to take financial action against. To learn more about how to handle bad business debts, read my article called 5 Ways to Handle Bad Debts.

5. Slow Product or Service Turnaround Times
Shorten the delivery times of your products or services to your customers to maximise the level of potential profit.

6. Taking Cash Instead of Credit
Change your business structure to where your only methods of payment are credit cards or online banking systems to decrease the wait time for business payments by check.

7. Failure to Leverage Factoring or Inventory Financing
Failure to leverage these financing solutions when your business is producing or manufacturing a product or service for a client, can cause the business to suffer a short term cash flow problem. Consider leveraging factoring for the customer’s order or inventory financing for the required purchase of inventory to product their product or service to help your company’s short term cash flow problem.

Learning from these 7 common cash flow mistakes and applying the relevant solutions will help your business to improve cash flow and avoid potential insolvency. For more information on how to improve your cash flow, read my article called Proven Tips to Improve your Cash Flow.

How to write the perfect headline for your next ad

What’s the most important part of any ad or sales letter?

The headline, of course.

What’s the hardest part to get right?

The headline.

That’s correct. The headline will make – or break – your ad and it’s the toughest part to write. Until now, that is.

Instead of struggling to create a headline that will get you the action you need, what if you could simply answer 4 simple questions and press 1 button to get 100 killer headlines? And… wait… what if it only took 17 seconds?

That’s okay. I didn’t believe it either until I saw this amazing software in action. Check out this online video to see Shawn Casey actually create 100 superb headlines:

We’ve all struggled to create great headlines. Some work. Most don’t. What an exercise in futility. You can waste so much time and energy. And who can afford to hire a copywriter. Forget it.

That’s why I was so excited to discover this software. Anyone can create killer headlines – no experience necessary.

You’ll experience new feelings of calmness and control as open the software. You’ll enjoy the simplicity of entering short answers to 4 easy questions. You’ll be astonished as you push 1 button and create 100 killer headlines.

And the best part is… you’ll love the results you get when these new headlines get your ads the response you deserve.

So…

Stop struggling with headlines.

Stop settling for mediocre results.

Stop doing things the hard way.

Grab your copy of this software now and enjoy new success.
 

Secure your data before you lose it!

It seems that every month, a news bulletin or newspaper article reports either a major data security breach at a corporation or government agency or a new computer virus has emerged.

As recently as December 2007, a New Zealander was subject to an FBI investigation on world-wide cyber crime which also resulted in Dutch authorities imposing strong penalties on companies using his malicious software.

Managing data security is unavoidable in today’s business environment and is a critical task for many.  But what has all of this got to do with the small business owner? 

Perhaps the cost of your laptop or your office personal computers does not amount to that much in the grand scheme of things.  Have you ever stopped and wondered how long it would take to replace the data that you stored on them; or what damage losing customers’ sensitive data would have on your business. 

I recall an ex-colleague at a large, international accounting and consulting firm whose laptop was stolen from his car.  He stored valuable information about several blue-chip clients’ projects he was working on his hard drive.  Not only did he lose the only copies that the firm had (which meant that weeks of work was lost) but he potentially put the firm at serious risk of bad publicity and losing major clients.           

How well do you protect your computer hardware and data?  How much would it cost to replace them?

The following are just a few tips to help protect you.

1. Use Anti-Virus software and keep it software up-to-date.  Hundreds of new viruses are discovered each month. You are not just protecting yourself when using virus software, but also others you communicate with.  

2. Always use a Firewall – A firewall is an “internal lock” for information on your computer.  Many computer operating systems already have firewalls installed and you must activate them.  There are many other firewalls available to download or buy that help you secure your computer. 

3. Learn the risks & rules associated with sharing files or your internet connection.  You can be exposed to danger via e-mail, file-sharing, a broadband connection or a wireless connection

4. Disconnect from the net when idle.  If you’re not using your net connection, (when you go to bed as an example) turn it off. It’s much harder to hack your computer when it is not connected.  This is especially important if you have a high-speed connection.

5. Use strong, unique passwords and don’t share them with anyone & back up your data frequently

6. Take immediate action if you think you have been hacked or infected by a virus  and contact your ISP

Protecting your information can be a major deal for a small business owner but using the proper tools can ease the burden significantly. Such efforts will dramatically reduce the chance of a major security breach and also the costs and damage to your company’s reputation that such an event causes.

Let’s put tax cuts in terms everyone can understand.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. “Since you
are all such good customers,” he said, “I’m going to reduce the cost
of your daily beer by $20.”Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could
they divide the $20 windfall so that everyone would get his ‘fair
share?’

They realized that $20 divided by six is $3.33. But if they subtracted
that from everybody’s share, then the fifth man and the sixth man
would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s
bill by roughly the same amount, and he proceeded to work out the
amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings)

The sixth now paid $2 instead of $3 (33%savings).

The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings.

“I only got a dollar out of the $20,”declared the sixth man. He
pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back
when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get
anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine
sat down and had beers without him. But when it came time to pay the
bill, they discovered something important. They didn’t have enough
money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how
our tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up anymore. In fact, they
might start drinking overseas where the atmosphere is somewhat
friendlier.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

An excerpt from:  David R. Kamerschen, Ph.D. Professor of Economics University of Georgia