Month: July 2015

How financially fit are your managers?

Most people in management, start their careers as specialists and high-achievers from within the business. Their potential is obvious, so they are promoted through the ranks. But, being an amazing and innovative engineer or a big-hitting sales person does not mean that you will naturally be a great leader.

Many career paths just do not provide the necessary exposure to managing people, budgets and to understanding the nuts and bolts of business that are essential to becoming a successful manager.

From the outset, managers are expected to be decision makers and leaders, this is a heavy burden to carry when you do not have the necessary commercial awareness to understand the full implications of the decisions that you are making.

Becoming financially literate and commercially aware should be one of the first development needs addressed by all managers.

Managers need to understand how a business makes its money, manages its cash, maximises its profits and how each person, role and function can positively influence business performance.

Managers need to own a fundamental foundation of financial literacy, or an understanding of the financial statements and an operational understanding of how they can best use this financial information to make decisions that positively impact on the success of the business.

Being commercially aware is the difference between being able to read and understand financial statements and being able to read, understand and interpret this information to make informed business decisions.

When commercial awareness is embedded in an organisation, its managers begin to ask more informed questions.

Questions that take into account the impact of potential decisions on different parts of the business and also how the outcome of their decisions will finally impact upon the company’s financial performance and results.

  • Has the cost of production gone up? If so, why?
  • Have we changed our pricing model? If so, how has that affected our margins?
  • If our production unit costs have gone up, can we better control our production processes or service delivery?
  • Is there a way to produce a greater product volume at the same cost?
  • Can we raise prices, yet still provide value to the customer and remain competitive?
  • Are we creating value for our shareholders?

When questions become more informed, the right decisions can be made.

Brightbolts are specialists in helping managers and organisations raise their levels of financial literacy and commercial awareness. Our suite of customisable Finance for Non-Financial Managers eLearning courses are used by leading global organisations to equip their managers with the skills, understanding and acumen needed to be financially fit and ready for the challenges of running successful businesses.

Or contact us, to see how we can help you and your organisation….

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Do you have what it takes to be an entrepreneur?

To avoid recession, the world needs successful entrepreneurs. But how do you know if you’re an entrepreneur?

Answer our questions to find out if it’s something you should think about…

Are you an ideas person?
One of the characteristics that set entrepreneurs apart from the rest of the population is that they’re curious and open-minded. They’re always looking for new ideas and innovations that make life better or make things work better; they’re not merely selling goods and services, they’re selling dreams and chasing the rainbow.

How financially savvy are you?
Business cannot live on ideas alone. If you don’t also have an understanding of costs and benefits, profit and loss, of the bottom line, then you’re in for a very short entrepreneurial career. Every decision can have financial repercussions and though you don’t need to be an accountant or a financial manager you do need a basic but thorough financial education to make sure that your business doesn’t collapse merely because you didn’t monitor your financial position or manage your cash flow.

Will you provide passionately great leadership?
Steve Jobs of Apple showed that passion is one of the essential ingredients for entrepreneurs. They have an inner demon to succeed and they need to be able to inspire, motivate and encourage the whole team. At the same time, the strengths and weaknesses that you may possess as an entrepreneur won’t cover everything you need to be able to do in business. One of the most important attributes is to be able to gather good people around you who you can work with, who will share your commitment and who will complement and balance your talents.

Can you manage change?
Every business is about change. Change can be about everything from products and services, facilities and technology to customers and employees. Successful entrepreneurs thrive on change and can often drive it to take advantage of a new opportunity. Change is therefore positive – except when it’s not. If you don’t manage change then it’s a disaster. It makes sense therefore to acquire some basic skills, in areas such as project management, which will help you plan and manage change yourself or know enough about it to delegate it to someone else so that your project is implemented properly.

Do you have bounce?
Do you remember those kids toys where you pushed them and they would bop back up again? That’s the kind of attribute that you need to have to be an entrepreneur. Often you’ll be pushing the envelope while others around you will be trying to hold you back. You’ll need to be able to take on constructive criticism and ignore destructive comments. Entrepreneurs can accept failure and use it as an opportunity for learning.

Are you driven?
Look at any entrepreneur and you’ll see that they tend to be energetic, obsessional, competitive, risk takers and love to take the initiative. They’re the kind of people who think nothing of working all the hours in a day and live off stress and the unexpected.

Do you put the customer first?
Successful entrepreneurs know that their business is nothing without its customers. They are the ones who will buy what the entrepreneur has to sell and keep the business alive. Entrepreneurs must orientate the business around satisfying customer needs and desires. In this way they produce goods and services that sell.

Entrepreneurial links:

  • The Entrepreneurs’ Forum was created by a group of North East England’s leading business people to create a group of individuals who could share ideas, knowledge, inspiration and opportunities in a confidential environment.
  • The Entrepreneurs’ Organization (EO) is a global network of more than 8,000 business owners in 40 countries. Its purpose is to enable entrepreneurs to learn and grow from each other.
  • Innovators is an Innovation Exchange™ who’s object is to allow corporations worldwide to discover, partner with or invest in innovative young start-ups and entrepreneurs.

Finance for Non-Financial Managers eLearning

Let us help you improve your chances of success with our off-the-shelf and customisable Finance for Non-Financial Managers elearning.

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Profitability

What is profitability?

There are many ways to explain and understand profitability. It tells you if you made or lost money on business processes. It provides a picture of your earnings and what you spend to achieve those earnings. It tells you if your total revenue exceeds your total expenses. Put simply, profitability is your bottom line. Any number of measures or factors can improve your profitability such as reducing costs or improving productivity or developing new products and services. Moreover focussing on profitability need not compromise cash flow if measures taken are thought through.

Tips to improve your profitability

  • Stay focussed on your strategic objectives.
  • Emphasise to employees the importance of profitability.
  • Understand what drives profitability and use KPIs (key performance indicators) to assess and monitor it.
  • Don’t get involved in activities that do not contribute to your objectives.
  • Plan using accurate and detailed information.
  • Involve stakeholders in the planning and decision making process.
  • Ensure targets are smart and properly budgeted.
  • Monitor the effectiveness of plans and then review results.
  • Act upon lessons learned and factor likely changes into plans and modify strategy accordingly.
  • Benchmark your business against others and other parts of your own business.
  • Streamline administration and production processes where possible.
  • Reduce costs through efficient buying, choosing the right supplier, comparing suppliers regularly.
  • Minimise wastage not only of stock but of systems and employee time. See our tips on stock control.
  • Ensure your finance facilities continue to be competitive.
  • Review regularly and cut overheads such as insurance and energy bills.
  • Manage assets efficiently by selling unnecessary ones and leasing out those you use periodically.
  • Communicate with all stakeholders using a range of efficient strategies.
  • Instil in employees the importance of maximising the value and not just the volume of sales.
  • Analyse your customer base regularly.
  • Monitor any discounts offered to customers on a regular basis.
  • Centre efforts around the most profitable customers and consider selling them premium, complementary or new products.
  • Find new customers who are similar to your existing top customers.
  • Favour cheaper techniques like networking instead of paid advertising wherever possible to increase sales volume.
  • Focus on profitable products by improving the product mix.
  • Review pricing policies periodically to take account of economic changes.
  • Raise prices selectively or overall but try to trial price changes.
  • Analyse your markets, stick with profitable ones and consider going into news ones.
  • Ensure that the cost of extra sales people or of going into new markets is balanced by extra profit and not just extra revenue.
  • Run an efficient recruitment policy; use subcontractors during busy times.
  • Initiate training policies that bring and keep managers and employees up to the latest standards.
  • Reduce staff workload and labour costs through technology.
  • Assess how you can reduce expenses you pay out for employees.

Profit Margin Widget

Click on the image below to open our interactive profit margin flowchart widget.

Adjust the values for sales price, cost price, volume and fixed costs and dynamically see the impact on your own profit margin %.

Profit Margin Widget

Profit Margin Takeaway Infographic

Click on the button below to view our Profit Margin Takeaway Infographic

[button href=”http://www.brightbolts.com/resources/takeawaydemo/profitMargin_infographic_01.pdf” target=”blank”]View an example[/button]

Finance for Non-Financial Managers eLearning

Let us help you improve your own profitability with our off-the-shelf and customisable Finance for Non-Financial Managers elearning.

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