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July 17 - July 23, 2020
Team members should share a “stuck” even if they don’t think there’s anyone on the team who can help them resolve it. Verbalizing the issue is likely to spur unexpected action to help them.
Anytime somebody goes two days without reporting a constraint, you can bet there’s a bigger problem lurking.
challenge the team member who reports, “Everything is fine!”
Important as they are, conversations about bottlenecks shouldn’t be allowed to drift into problem-solving.
You want to tap the collective intelligence of the team for 30 to 60 minutes on one or two important topics.
Five minutes: Good news. Start each weekly meeting with five minutes of good news, both personal and professional.
Sharing professional good news creates a positive start to the meeting and helps generate momentum — good news begets good news.
The personal good news keeps the team connected at a human level, lets everyone express gratitude, and normally resu...
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10 minutes: The priorities. Review the status of the Red, Green, and Super Green priorities
30 to 60 minutes: One or two topics. Focus the team’s undivided attention and collective intelligence on a key topic or two.
Many CEOs also send out a weekly one-pager to all employees updating them on the status of the #1 priority and other significant developments inside the company and the industry.
In great companies, you find just the opposite: a senior team that’s rested and relaxed while the balance of the staff is on fire as they work to capitalize on the ever-increasing opportunities facing the business.
One of the biggest mistakes a CEO can make, in the spirit of transparency and openness, is to share important changes and information with all the employees before briefing the middle managers and supervisors.
Great companies, by choice, keep three to 10 times more cash reserves than their competitors,
Bill Gates, from the very beginning, mandated that Microsoft always keep a year’s worth of operating expenses in the bank.
Greg Crabtree, author of Simple Numbers, Straight Talk, Big Profits! 4 Keys to Unlock Your Business Potential,
Cash is the oxygen that fuels growth.
John Mullins published a new book that Verne endorsed, titled The Customer-Funded Business: Start, Finance, or Grow Your Company with Your Customers’ Cash.
Victoria Medvec (check out her powerful online “High Stakes Negotiation” course at scalingup.com),
Fortune Small Business article Verne wrote titled “Finding Money You Didn’t Know You Had.”
when you improve profitability, it improves cash
Harvard Business Review article by Neil C. Churchill and John W. Mullins titled “How Fast Can Your Company Afford to Grow?”
The best part about improving your CCC is that it usually results in your business pulsing faster, which is better for the customer.
Greg Crabtree’s highly readable book, Simple Numbers, Straight Talk, Big Profits! 4 Keys to Unlock Your Business Potential,
If the #1 weakness of growth firms is marketing, the #2 problem is accounting.
in a gross margin or profitability that is mediocre. It’s the less profitable parts of the business that tend to suck up most of management’s time and attention.
what is strategic about losing lots of money
Brenneman’s Harvard Business Review case study on the turnaround of Continental Airlines.
A fundamental responsibility of leaders is prediction, and they need both frequent quantitative data and qualitative feedback from the market to make the right calls.
Thomas A. Stewart’s classic book Intellectual Capital: The New Wealth of Organizations.
compensation and distributions to the owners can distort the true picture of profitability.
Revenue is vanity (and the weakest number) when it comes to your P&L.
Instead of obsessing about revenue, shift the internal discussions to generating gross margin, the real top line of the business.
Gross margin doesn’t get enough respect.
It’s actually THE most powerful indicator of an effective sales team, a differentiated strategy, and real growth.
refine your strategy to maintain enough differentiation and uniqueness in your offering that you can hold your line on pricing
the #1 driver of profitability — labor efficiency
three segments of labor efficiency we want you to focus on are: • Direct labor efficiency: gross margin dollars divided by direct labor cost • Sales labor efficiency: contribution margin dollars divided by sales labor cost • Management labor efficiency: contribution margin dollars divided by management labor cost
Contribution margin is defined as gross margin minus direct labor.
Limit the amount of labor added so you don’t drop back below 10% profit.
Don’t underestimate how many of your employees would like to cut back to four days a week.
Once a company is on the road to 15% profitability, as defined by the Simple Numbers formula, it faces additional cash-flow challenges.
Force #1: Taxes Know how much you owe in taxes throughout the year to avoid the annual tax day surprise.
If you do not pay any taxes, you either have not created any wealth or you have cheated, and both scenarios are bad.
Force #2: Manage Debt Debt is generally not your friend. If not managed properly, debt will enslave your business and keep it from reaching its full potential.
Force #3: Core Capital Target Meeting your core capital target means having two months of operating expenses in cash, after you have set aside money to pay your taxes and assuming that you have nothing drawn on your line of credit.
Force #4: Harvest Profits by Paying Dividends Once you have set aside taxes, paid off your line of credit, and met your core capital target, you can safely take your after-tax profits in the form of a distribution or bonuses to employees.
“The Power of One” refers to the benefit to cash flow if a 1% or one-day change is made to each of the 7 levers that affect it.
