How to Maximize the Value of How to Maximize the Value of

Your Client, Inc.Your Client, Inc.

Why do you Care??Why do you Care??

Business is an investmentBusiness is an investment 1st or 2nd largest 1st or 2nd largest

personal investment you personal investment you havehave

Someday you may want Someday you may want to sell itto sell it

How to Maximize Your How to Maximize Your CompanyCompany’’s Values Value

Plan for Success Plan for Success

Hire/Have Great PeopleHire/Have Great People

Be Financially SavvyBe Financially Savvy

Utilize Value DriversUtilize Value Drivers

Planning for SuccessPlanning for Success

Over time a company achieves Over time a company achieves three different resultsthree different results from: from:

– NO PLANNINGNO PLANNING

– POOR or PARTIAL PLANNINGPOOR or PARTIAL PLANNING

– SUCCESSFUL PLANNINGSUCCESSFUL PLANNING

Planning for SuccessPlanning for Success

How are we organized toHow are we organized to– Achieve the company Achieve the company purpose?purpose?

– Deliver value to the customer?Deliver value to the customer? Three primary functions must Three primary functions must

work well in every successful work well in every successful companycompany

Three Primary FunctionsThree Primary Functions at every Company at every Company

Sales & MarketingSales & Marketing

Revenue, Sales Bids Made

per day, wk, mo Bids Won

per Bids Made

Get Work Do Work Get Paid ($)

OperationsOperations

•Variable Cost (COGS)•Labor Cost•Material Cost

•Job Tracking•Revenue•Cost•Profit

FinanceFinance

•P&L•Balance Sheet•Cash Flow•A/R, A/P•Fixed Cost (Overhead)

Must organize to do all of these successfullyMust organize to do all of these successfully

Hire Great People Hire Great People (corrollary-have great people)(corrollary-have great people)

How??How??– Improve your Improve your

interviewing skillsinterviewing skills Weakest skill in owners & Weakest skill in owners &

managersmanagers Easy to improveEasy to improve

– Interview all the timeInterview all the time Will increase skillsWill increase skills Will find great people Will find great people

randomlyrandomly

Hire Great PeopleHire Great People Ask the Right Ask the Right

QuestionsQuestions– 3 things you can 3 things you can

always learn in an always learn in an interviewinterview

Job related skills and Job related skills and experienceexperience

General intelligence General intelligence and aptitudeand aptitude

Personality and attitudePersonality and attitude

Hire Great PeopleHire Great People

General Intelligence and AptitudeGeneral Intelligence and Aptitude– ““Tell me how you go about making Tell me how you go about making

important decisions?important decisions?””

Personality & AttitudePersonality & Attitude– ““Describe the best boss you ever Describe the best boss you ever

had.had.””

20 Best Interviewing Questions20 Best Interviewing Questions– Including Taboo questions you canIncluding Taboo questions you can’’t ask.t ask.

Have Great PeopleHave Great People

Define the JobDefine the Job– What am I responsible for doing?What am I responsible for doing?

Hold them accountable for the JobHold them accountable for the Job– What did I get done?What did I get done?– Employees should be able to answer Employees should be able to answer

the question: Hthe question: How do you know you ow do you know you did a good job?did a good job?

Pay for PerformancePay for Performance– Who contributed to the company Who contributed to the company

success?success?

Be Financially SavvyBe Financially Savvy Can you answer the Can you answer the

following:following:– What is your businessWhat is your business’’s s

Gross MarginGross Margin??– How much How much Working Working

CapitalCapital does your does your business have?business have?

– What is your businessWhat is your business’’s s Breakeven PointBreakeven Point??

If so, consider yourself If so, consider yourself financially savvy!!!financially savvy!!!

Be Financially SavvyBe Financially Savvy

DonDon’’t have to be a t have to be a financial wizardfinancial wizard

Learn what they are Learn what they are and how to read an:and how to read an:– Income StatementIncome Statement– Balance SheetBalance Sheet– Cash Flow Cash Flow

ProjectionProjection Manage the Cash Manage the Cash

Conversion CycleConversion Cycle

Cash Conversion CycleCash Conversion Cycle

Customer Order

Use mtl & labor for Customer

Order

Pay for Mtl & Labor associated with Customer

Order

Receive Cash from Customer

Deposit

Invoice

Pay Payroll/BillsCollect

Be Financially SavvyBe Financially Savvy

Value DriversValue Drivers

My businessMy business

ModifyModify

Mea

sure

Mea

sure

ModifyModify

Mea

sure

Mea

sure

Value DriversValue Drivers

Why?Why?– It improves It improves

performanceperformance

Hawthorne EffectHawthorne Effect Primary - pay Primary - pay

attentionattention

Secondary EffectSecondary Effect Set Visible GoalsSet Visible Goals

Tertiary EffectTertiary Effect Compensation tied to Compensation tied to

GoalsGoals

Impact of Value DriversImpact of Value Drivers

40%

50%

60%

70%

80%

90%

Week 1 Week 3

Tech 1 Tech 2 Tech 3 Tech 4 Dept Ave

What can I measure?What can I measure? Short ListShort List

– People/Asset UtilizationPeople/Asset Utilization # of hours used / # total hours available# of hours used / # total hours available

– Sales of Product or ServiceSales of Product or Service By employee per week, month, quarter, yearBy employee per week, month, quarter, year

– ProductivityProductivity Gross Profit % - good overall measureGross Profit % - good overall measure Aged Receivables (% over 30, 60, and 90 days)Aged Receivables (% over 30, 60, and 90 days)

What are the trends?What are the trends? From last week, last month, last year??From last week, last month, last year??

Develop the Business Plan around achieving Develop the Business Plan around achieving the most important Value Drivers the most important Value Drivers

What can I measure?What can I measure? Short ListShort List

– People/Asset UtilizationPeople/Asset Utilization # of hours used / # total hours available# of hours used / # total hours available

– Sales of Product or ServiceSales of Product or Service By employee per week, month, quarter, yearBy employee per week, month, quarter, year Sales / Net ProfitSales / Net Profit Sales / Sales TargetSales / Sales Target Warranty Claims / Sales (Warranty % of Sales)Warranty Claims / Sales (Warranty % of Sales) Days Sales Outstanding (DSO)Days Sales Outstanding (DSO)

What are the trends?What are the trends? From last week, last month, last year??From last week, last month, last year??

Develop the Business Plan around achieving Develop the Business Plan around achieving the most important Value Drivers the most important Value Drivers

You Create Your businessYou Create Your business ’’s s ValueValue

Plan Well & Have Great People

Be FinanciallySavvy

ValueDrivers