Undercapitalizing the Business

Being Undercapitalizing the Business

Maybe you should've waited to order that red Ferrari after all...

When we review business plans for start-ups, cash is often estimated to flow in 3 months or even less. The reality is often somewhat different; we often find that real cash flow doesn’t start until 6, or even 9 months after starting the business. Obviously for retail businesses this would not apply, but if services and goods are being applied, then our standard rule of thumb is to double the period that the new owner is predicting for the commencement of regular cash flow. 

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If new entrepreneurs grossly underestimate the amount of time and capital necessary to reach cash flow breakeven, it causes many promising ventures to shut down prematurely. Be conservative with your financial projections and plan on having adequate funds when you launch to cover all sunk costs (including startup losses) until your company becomes cash flow positive.

It means that apart from the business costs, you also need to cover your personal expenditures such as mortgages, loans, every day living expenses and so on.

If you don't have enough savings to cover the required investment, it may be tempting to launch your startup under the assumption that you will be able to obtain additional funding at a later date. While staging investment has advantages (preserving the option to abandon, higher valuation and—therefore—less dilution, etc.), this strategy can backfire and leave you unable to get cash when you need it most or force you to negotiate with banks and investors from a position of weakness. It's often better to change the business model to bring required investment in line with available resources.

The moral is clear, unless you have a very generous benefactor to bankroll you through the cash flow weakness in start-up it is probably best to avoid extravagant expenditure on vanities – so hold off ordering the red Ferrari company car.

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Goal Setting for Dummies – Part Two

Goal Setting for Dummies – Part II

Review your values and goals and answer one simple question.

“Are you willing to do whatever it takes to succeed?”

If you answer “Yes I am”, then you are ready to take the next steps.

Look at each of your goals and one by one (take your time) write down what steps you can take to begin to move towards these goals.  They don’t have to be big things – any step in the right direction is a positive move. 

If you like take one goal at a time, it may well be that you have priorities. Please don’t think you will get there overnight, it is important you don’t become dispirited, if you take small steps you have to succeed, its impossible that you won’t.

(Jack Canfield (if you don’t know who he is, look him up!) says that if you do just 5 things every single day that take you closer to your goals you cannot help but hit them!)

Each day again write down what you have achieved on your pathway to success.

At the end of a week review your progress and celebrate, in whatever way you like with how you have succeeded during that week. NEVER, NEVER QUIT.

Always bear in mind that winners never quit and quitters never win. Remember Thomas Edison who failed 1000 times before he achieved his successful light bulb.

If you feel you need any further help in goal setting and achieving your goals, please do not hesitate to contact us at Transformance International – contact

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Benefit From a Fraction of Your Employees

You only benefit from a fraction of your employees’ potential value.

Your greatest, most expensive and ironically, most under-utilized resource are your employees. This is why Transformance is passionate about realizing the value of human capital in organizations. Employee costs may be as high as 60% of your expenditure as a business; doesn’t it make sense to obtain value from that investment? Unfortunately, many businesses only receive a small fraction of benefit. In many companies, only a handful of key leaders, managers and influencers are given a voice. The rest of their workforce has a limited opportunity to make a difference. 

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Employee underutilization usually increases the closer you are to the frontlines of a company. Frontline employees are often perceived to be less important than middle managers. However, they usually have the most value to offer. Their close proximity to the day- to-day action of your business gives them an ideal position to identify your company’s strengths, weaknesses, opportunities and threats.

 The classic example of an underutilized employee is the cleaner. They may be considered the “lowest man on the totem pole,” however they often have the best opportunity to identify waste and inefficiency. They walk the line, cleaning, sweeping and observing. They witness delays when a part is not connected properly upstream. They see the fatigue and frustration on workers’ faces as the day progresses. They remove hundreds of pounds of unnecessary waste and damaged product that could have been saved or reworked. I once went into a Mercedes showroom which was immaculate and ended up having to use the washroom – it was literally filthy and completely at odds with the Mercedes brand and philosophy. Just because it was out of sight, it doesn’t mean that it should be out of mind. An engaged cleaner would have resolved this.

So imagine the improvement in overall quality, job-satisfaction and cost-saving if you knew what “your cleaner” knows. Now, multiply the value of all the unreported, ideas, knowledge and insights of every employee in your company. The untapped value is enormous.

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When you don’t involve and leverage employees contribution the following happens:

·         Employees often do not feel connected to their company’s strategies.

·         Employees do not know what is expected of them.

·         Employees do not know how their performance will be evaluated.

·         Employees feel isolated from the decision making process.

·         Employees feel supervisors can arbitrarily prevent or slow their promotion.

Your objective should be to replace an “us versus them” culture with a culture that creates generations of leaders. When possible, you should adopt a policy of hiring new employees at the bottom and promoting existing employees to the top. You should replace subjective annual reviews with ongoing mentorship that assesses an employee’s performance in a completely fair, open and democratic way.

At Transformance we love the concepts of coaching and mentoring, and all successful companies have these two great pillars in place.

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What happens when hit a bump in growth

What happens when hit a bump in growth?

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You know the situation, something is not right. Your business growth has plateaued. Your value proposition still works, but you lose old customers as fast as you gain new customers. You mistakenly attribute this loss to normal customer attrition.

You are trying to increase your marketing engine harder but sales remain flat. The economic climate does not really encourage you to spend more of your cash on marketing, with little hope of return.

You add new products. You target new customer audiences. You experience short-term increases in sales but it is not the breakthrough you hoped for. Sales fall, then rise and then fall again. You feel like you are on a treadmill. It is exhausting. You settle into your new normal. 

All of your time and energy is devoted to keeping your house of cards standing.

One of the obvious things you can do is look to your existing customer base. Can you sell more products and services to them, or are you just relying on a single sale, based purely on new customers and new business?

Can you put together an attractive offer that will make them either repurchase or buy an additional product or service?

Do you know if your customers are satisfied with what you sold them? If they are, what are you doing to increase their connection to your business so they are the road to becoming loyal customers and advocates? Moving on from this, are you in a position to seek active referrals and recommendations from existing customers and if you do that how are you going to reassure your existing customers that you are really going to look after their referrals? Are you going to recompense your own customers for those referrals?

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 The point I am trying to make is this – if you new business acquisition from new customers is slowing or becoming costly to attain, then look to cross selling to your existing customers and consider a referral or member get member program.

Customer retention and customer development are not just for large corporations.

Start as you mean to go on.

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Terrence Robinson and Mike Walters

Terrence Robinson and Mike Walters join forces for Transformance

Terrence Robinson needs no introduction to NFL and sports fans. Following a rewarding football career that started with a Cowboys Scholarship to Oklahoma State University, he moved on to Pittsburgh Steelers, Atlanta Falcons and the Seattle Seahawks. He then spread the fame and excitement of NFL to Europe playing for Dusseldorf Rhein Fire in Germany. One thing was always clear Terrence, was not just and athlete he was a born leader.
All good things change and when the game was over, Terrence moved on to become a successful business entrepreneur. In summary he is a Star Athlete, Star Leader and a Business Rock Star.
However Robinson knows the power of having the right coach to take performance to the next levels. Terrence was recommended to take a look at Mike Walters and they started working together during 2012. Mike had previously just focused on Corporate Consulting and Coaching having worked for many of the world’s biggest brands like: GM, Amex, Visa International, Mercedes, Audi and many more. Over the last 2 years he has majored in Personal Performance, helping many individuals achieve change; real change that leads to success.
Terrence realized two things – Mike Walters was the real deal and secondly that coaching individuals and business owners was something that Terrence really wanted to do.
Terrence said

“I had the privilege of meeting Michael Walters through a mutual acquaintance. I found him to be extremely sincere, personable and driven by a desire to help business owners and individuals like myself strive to reach higher points imaginable through his transformance and life coaching canvas.  For what he's helped me to accomplish personally, professionally and financially over the past several months there can't be another soul out there that can perform like he does.  Since working with Michael my further interaction with him has solidified the fact that he is not only a very intelligent businessman and life coach but a man of integrity and truly enjoys what he does.  The products he is introducing into the market are top notch and destined to help business owners and individuals across the globe find success in their personal and business lives.  I highly recommend Michael Walters and his life coach transformance program and strongly encourage you to take a look at what he's doing to change the lives of business owners and individuals with an approach that's unheard of.”
As well as his personal business success, Robinson has also majored on health and wellness (www.terrencerobinson.com). The synergy between Robinson and Walters means that their programs will help individuals, business owners, executives live active, healthy, fulfilled and efficient lives at the same time as achieving greater personal success. It goes without saying that their programs will also be highly effective at the Corporate Level.

Both are really excited about the venture and look forward to helping as many people as possible achieve lasting success and live life to the max.

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www.transformanceinc.com