Save Money Today, Big Money Tomorrow

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Information about Save Money Today, Big Money Tomorrow

Published on May 8, 2009

Author: tomstocker



To unlock cash in today's environment really takes creative thinking. The simple "cab driver" advice you hear on a regular basis isn't all that helpful You need to find and fix systemic problems that drain cash day after day. Read on for techniques I recommend.

Save Money Today, BIG Money Tomorrow by Tom Stocker Preparing for tomorrow will save you decisions (when there are a number of money today. We’ve all problems identified) are based on perceived heard the big three “cab savings rather than a disciplined analytical driver” advice for approach. Doing proper analysis takes increasing cash flow, effort, but in the end you will be reasonably increase collections, assured of working on the problem costing stretch payables and you the most or opportunity that can provide monetize inventories, but the highest return for the effort. In some here is a flash for cases I’ve been given the “yea but” answer it you…none of them work very well in will cost too much or take too much time or, today’s economic conditions, for obvious or or… reasons. So, how can you increase your cash flow? Think continuous improvement Doing the analysis will allow you to know by fixing systemic problems. You pay for what you can afford to work on and will them in your business processes every hour allow you to calculate the ROI you will of every day. My team of advisors focuses generate. Most importantly it will allow you on this concept like a laser. The quickest the ability to prioritize what to work on way for an advisor to justify why we’ve when. Just ignoring the analysis and been hired is to pay for ourselves within the working on the easiest problem first take first month or two. So what should you look resources away from making monetarily for? meaningful corrections, especially when easy problems will net little or no savings. Many companies have discovered the power of “lean”. Lean techniques derive from the Continuous improvement projects need to be Toyota Manufacturing System and began in a priority in this economy. Companies not manufacturing companies. However, it can doing well make all the news headlines, but and is equally successful in the service the reality is the majority of businesses in sector and administrative functions for any this country are doing relatively well. Yes, type of company. Anywhere there is everyone is cautious, a prudent strategy to process is a candidate for lean techniques. ensure long term success. But growth All you need to begin is the attitude and strategies should include the ability to understanding that continuous improvement deliver what you promise, faster, more will save real dollars real fast. However, it economically and better than your takes root-cause analysis and prioritization competitors, no matter what your size. to get the most meaningful savings opportunities first. Cost reduction can be a growth strategy if it is continuous improvement. Some of the How do you do that? Use real problem- improvements you should make may be solving metrics to point the way. I have intangible. But they should not be rejected found many companies don’t have a real until the analysis is done. Productivity isn’t disciplined approach to problem solving. always tangible. How long does it take to Many process improvement prioritization process an order? If you could get it done 10 Larkspur Road, East Greenwich, RI 02818 401-451-9799

faster, what else will that person have time Goldratt. It was first published in 1984 and to do? Intangible. If the order can be is in its third revision (2004). It is a quick processed faster, how much sooner can that read and I have found Eli’s concepts of order be filled and an invoice processed? constraint theory to be current and adaptable Intangible. If that order is produced faster, to any type company. It doesn’t go far how many more orders can be enough as lean, but it is compatible with accommodated by your business without lean techniques and illustrates the results adding additional resources or capacity? you can get. Intangible. If you are able to accommodate So the bottom line is my recommendation more customer orders, how many new not to ignore the intangibles. By now you or customers (who have heard about your someone you know has made significant game-changing lead-time) can you cutbacks in staffing, or have done things to accommodate? Very tangible. The reduce staffing costs. Keep in mind the increased sales are real variable work still needs to be done. In non- contribution, a very good thing as you now production/manufacturing areas, what have more sales without increasing overhead adjustments have been made? If the or administration and more sales to spread remaining resources are expected to pick up that overhead over. REAL dollars fall to the the workload without changing the process bottom line. you had in place before your reduction, chances are you have an opportunity to This concept is not new. A very good book make process changes that can yield real to read is “The Goal” by Eliyahu M. cash savings. Look for them. To join our email list to receive articles monthly on topics important to private business owners or to comment on this article visit our company website at About the author; Tom is the Managing Director of Owner’s Edge, LLC, a strategic planning advisory and consulting firm for small and mid- market businesses. Contact Tom directly at 401-451-9799 or Owner’s Edge, LLC is a business advisory and consulting firm specializing in helping business owners work on their businesses. The Firm works with both growing and underperforming small to mid-market companies. For more information about how we can help you drive operational excellence visit our website at ©2009 Owner’s Edge, LLC All Rights Reserved. No part of this document may be reproduced without the express permission of the author. All registered trademarks mentioned in this document are the property of their respective owners. Additional articles written by Mr. Stocker can be found on our website in the “publications” page: Owner’s Edge, LLC 10 Larkspur Road, East Greenwich, RI 02818 401-451-9799

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