Financial Education for the leaders

 

If you want to be on the top of the organization, you must become understand basic finance. Finance is critical in the successful running of an organization. The U.S. Small Business Administration organization reports that 50% of small businesses fail within the first five years of operation. In the book, “Small Business Management,” Michael Ames lists a number of reasons for these failures. Half of the reasons cited are related to finance, namely:

 

• Insufficient capital;
  
• Over-investment in fixed assets;
  
• Poor credit arrangements;
  
• Personal use of business funds.
  

 

Since business survival depends so much on the understanding of financial issues, that business leaders understand it is key to success. A lack of understanding can lead to poor decision making with regard to money, which may ultimately lead to the untimely demise of a business.

 

Finance Basics

 

At a very basic level, in your business there are two income flows. One is revenue (money coming in) and the other is cost (money going out). Revenue should not be confused with profit. Profit is the money that your business makes when you deduct cost from revenue. Revenues are not profit.

 

To achieve a profit, revenue must always be more than cost. Good business leaders will always be asking themselves the following three questions:

 

 
 

1. How can I increase revenue?
   

 

This can be achieved in a number of ways. Raising product or service price is one method. Businesses taking this approach need to be sure that their customers will pay the new price before doing this. Another common business approach is to raise Average Revenue Per Unit (ARPU). A unit is a customer. The idea behind this is to increase the amount of products or services that you are selling each customer, since it is usually cheaper to sell to existing customers than to find new ones.

 

1. How can I decrease cost?
   

 

Decreasing cost can be done by either cutting back or improving on efficiency. To cut costs you may choose to reduce staff, spend less on marketing or slash the company’s training budget, among other things. When you decrease costs by cutting back in any area, you need to be sure that you can continue to offer your customer a product or service that they will be happy with. Cutting back and losing customers at the same time is not the goal. Improving efficiency is a great way of decreasing cost. By looking at efficiency, you may find that you only need 2 people instead of 3 to achieve a goal, if the people work in a different way.

 

1. How can I improve cash flow?
   

 

Improving cash flow is all about optimizing when you take money into the business and when you pay it out. Good finance managers know that most bills can be paid up to 90 days without incurring penalties, and so they will pay at 90 days, in order to gain as much interest as possible on the funds. Conversely, they will chase clients to get money coming in much earlier than 90 days. The goal is to keep money in your account for as long as possible.

 

Examples

 
 

Here is what we have covered in top level with you earlier today:

P&L Statement

The Profit and Loss Statement shows funds coming in (revenues) and those leaving the business (costs). In this example there are two main revenue streams – that of tuition, and those associated with other related items such as course materials (books).

Costs are broken down into different sections. There are costs associated directly with providing the service. These costs include instructor fees, printing of course materials, renting of a classroom, and provision of food and accommodation to clients. Other costs include marketing and sales, salaries, utilities bills and more.

Revenues

1.       Revenue – Tuition

a.       Tuition Income

b.      Less: Refunds

c.       Less: automatic discounts

d.      Prior period adjustment

 
 

2.       Revenue – Other

a.       Books and Exams

b.      Travel

c.       TSA Testing

d.      Other

Cost of Operation

1.       Instructor

a.       Instructor: salary

b.      Instructor: T&E

 
 

2.       Books & Exams

a.       Books – price

b.      Book – shipping

c.       Exams – price

 
 

3.       Rentals

a.       Rentals – equipment

b.      Rentals – classroom

c.       Equipment shipping

 
 

4.       T&E – Client

a.       Client: food and refreshments

b.      Client:  Hotel

c.       Client: Airfare

General and Administration

 

1.   Marketing

a.       Advertising

b.      Annual licensing fees

c.       Seminar and conferences

d.      Printing

 
 

2.       Salary and commission

a.       Sales team – base

b.      Sales team – commissions

c.       Bank Charges

d.      Marketing team

e.      Tech Support

f.        Operation Team

g.       Accounting

h.      Executives

i.         Professional fees

 
 

3.       Operational cost

a.       Occupancy expenses

b.      Phone and internet

c.       Office supplies and expenses

d.      Computer supplies and expense

e.      Postage and delivery

f.        Dues and subscription

g.       Travel and entertainment

h.      Automobile cost

i.         Insurance

j.        Miscellaneous

Profit

 

Quote | Reading

“Not every reader is a leader, but every leader must be a reader.” – Harry Truman

About Harry S. Truman: Harry S. Truman (May 8, 1884 – December 26, 1972) was the 33rd President of the United States (1945–1953). As President Franklin D. Roosevelt’s third vice-president and the 34th Vice President of the United States, he succeeded to the presidency on April 12, 1945, when President Roosevelt died less than three months after beginning his historic fourth term.

Quote | Reading

“I can’t imagine I could become the person I am now without books. Books became synonymous with freedom. They showed that you could open doors and walk through.” – Oprah Winfrey

About Oprah Winfrey: Oprah Gail Winfrey is an American television host, actor, producer, and philanthropist, best known for her self-titled, multi-award winning talk show, which has become the highest-rated program of its kind in history. She has been ranked the richest African American of the 20th century and beyond, the greatest black philanthropist in American history, and was once the world’s only black billionaire. She is also, according to some assessments, the most influential woman in the world.

Quote | Reading

“The man who does not read good books has no advantage over the man who cannot read them.” – Mark Twain

About Mark Twain: Mark Twain was an American author and humorist. Twain is noted for his novels Adventures of Huckleberry Finn that has been called “the Great American Novel”, and the Adventures of Tom Sawyer. Twain was very popular, and his keen wit and incisive satire earned praise from critics and peers. Upon his death he was lauded as the “greatest American humorist of his age” and William Faulkner called Twain “the father of American literature”.

Should sales managers be selling while they are managing a small team?

Typically, sales managers are former salespeople. They are familiar with the sales job, and their reports feel comfortable because their manager has done the same job before. Remember, leadership is a balancing act.

A sales person’s mission is to serve the clients and the company, but a sales manager’s mission is to serve the clients, the company, and the salesperson. A sales manager’s job is consist of four key domains: hiring the salespeople, training the sales people, evaluating the sales people and growing the business.

Should we hire experienced or inexperienced sales people?

I had a meeting with my sales management team earlier today to discuss if we should focus on hiring experienced or non-experienced sales people.

It is our finding that non-experienced people are comparatively loyal, adapts to the organization culture easily. On the other hand, the experience produce result immediately, requires lesser training and quickly adapts to the selling process.

Quote | Change

“Your success in life isn’t based on your ability to simply change. It is based on your ability to change faster than your competition, customers, and business.”

— Mark Sanbor, Bestselling Author

About Mark Sanborn: Mark Sanborn, CSP, CPAE, is president of Sanborn & Associates, Inc., an idea studio dedicated to developing leaders in business and in life. Mark is an international bestselling author and noted authority on leadership, team building, customer service and change.

.

Microsoft interviewed NetCom President & CEO, Russell Sarder

Microsoft Interviews NetCom Information Technology about the Current and Future Impact of Microsoft Certifications on Companies and their Employees

New York, NY – July 15, 2010 – Today Microsoft interviewed NetCom President & CEO, Russell Sarder to discover the business impact and real-world perceptions of Microsoft Certifications for organizations and their employees. As a long-time Microsoft Gold Certified Partner and leading Microsoft training provider, NetCom painted an accurate picture of this impact.

In summary, the interview showed that as Microsoft Certifications continue to evolve to more closely align with job roles, the demand for certifications from both individuals and companies is on the rise. The biggest factor behind the increase is that IT Professionals and Managers recognize the practical benefits these credentials offer in terms of organizational productivity and professional resourcefulness.

Sarder notes that feedback from NetCom Educational Consultants regarding Microsoft Certification indicates growing interest. “We used to have to invest a stronger effort to promote certification, but recently, many individuals know they want it and that’s how they start the conversation with us,” he says. He believes there are several reasons for this trend. Human resources managers often tell NetCom that they search for certification credentials when they review resumes on online job boards; without the proper certification, a candidate’s visibility is minimal. Also, Microsoft Certification clearly validates a person’s claim to a certain level of expertise that might otherwise be doubtful, especially when new technologies are involved.

Quote | Teamwork

“All your strength is in union, all your danger is in discord.” – Henry Wadsworth Longfellow

About Henry Wadsworth Longfellow: Henry Wadsworth was a commanding figure in the cultural life of nineteenth-century America. Born in Portland, Maine, in 1807, he became a national literary figure by the 1850s and a world- famous personality by the time of his death in 1882.

He was a traveler, a linguist, and a romantic who identified with the great traditions of European literature and thought. At the same time, he was rooted in American life and history, which charged his imagination with untried themes and made him ambitious for success.

Create new habits

	Create new habits
	Setup your daily goals (top 3) in the morning
	Keep your inbox empty
	Wake up early, go to bed early
	Work on one task at a time
	Keep your desk clean
	Read 1-2 Hrs per day
	Exercise 10 – 30 minutes daily
	Eat healthy food
	Stop smoking

 

Create new habits

View more presentations from Russell Sarder.