Blog: What’s In Your Dictionary?
Word Games – Are these in Your Dictionary Yet?
Although I work directly with entrepreneurs, one of my major efforts is trying to help the inexperienced CEO, as a coach and mentor in what it takes to build and run a company when after the first round of cash is raised. There is a lot more to building a business than validating an idea and product and raising money. Actually many of the entrepreneur in startups are not familiar with most of these words, but it is necessary for a manager to understand to build a successful company. Once a year I like to put out this blog called Word Games. List has been developed from my experience from running companies as small as startups to one million dollars in revenue.
I don’t expect the reader to read through this, but I believe it’s worth keeping handy as it might be helpful to those going forward and upward.
Accountability – is similar to maturing when it becomes necessary to hold employees accountable for their performance. I used the expression for years, “Say what you will do” and “Do what you say.”
Advice and Consulting – needs to be understood as advice coming from all directions based on logic and motherhood alone can be harmful to the recipient, whereas consulting is advice that can be done within the system and with the resources available and usually is helpful.
Assumptions – the necessary foundation for any plan that forces the thinking out of what needs to be accomplished, and providing a basis for reviewing any changes that might be needed.
Balance Sheet – a powerful tool that often is not considered a part of the company’s arsenal – it is the vital signs of a company and provides a snapshot on the assets and liabilities and a foundation for running the company.
Benchmarking – And often underutilized tool that is a big help in the market planning
Burn Rate – covers the costs in place and the cash that would be needed to cover all costs in place monthly, and at times, if there were no income from the sales revenue.
Cash Flow – is the cash flow in the company derived from cash in and cash out and a timely projection of the Cash Flow is required to plan the future operation of the company.
Comfort – is required by those above you to provide the support needed and requires honest and timely communicators to develop the steps, trust and credibility, to get comfort.
Communications – requires sending and receiving and listening and falters whenever it is one way only.
Communication Above – is allowing those above you in an organization to talk to your people as long as they do not chew them out or influence their priorities resulting in unwanted change.
Controls – should be married to Delegation. Controls can be in the form of limits, reporting, and the definition of responsibility and authority.
Creativity – goes beyond imagination as it requires a solution within the resources and values of the system. A salesman can get the order if he pays the customers real estate taxes – dangerous imagination. A salesman can get the order if he takes the customer to an enjoyable museum – creativity.
Debt – comes in many forms of liabilities from the obvious bank loans to the subtle, vendors and suppliers’ deliveries without or delayed payment. An up to date Balance Sheet with an understanding of the various liabilities and help control debt.
Delegation – is the method to develop Trust to get away from an “I” culture. Delegation requires giving up responsibility but, to be effective, authority must go with the responsibility.
Elevator speech – a short speech to be able to pitch your idea or dream to raise money, build a team or sell customers in a few short minutes, or often within seconds. It should contain a market need and a match to meet each this need and a plan to penetrate the market.
Global Competition – used to be a foreign word but with the Internet and developing countries providing competition it is now on our shores and needs to be watched and factored into the company strategy.
Hands-On-Management – is operating within the systems and resources that are real and not to a text book – it is differentiated from micro management which is telling someone what needs to be done and also what to do it, whereas Hands-On-Management is telling someone what is needed and how the person can accomplish it and always be there to help if the someone stumbles.
IBITDA – relates to the cash available from a performance period before interest taxes and depreciation are taken into account – a useful number for growing companies and stakeholders who need to support the cash needs for growth.
Innovation – used to be bandied around like motherhood but as growth develops, markets and competitors get tougher and ‘more of the same” is no longer good enough. One way to think of innovation is taking something successful in another world and bringing it to the world you are in.
Litigation – a dirty word if you are on the receiving end. It enters into a company’s growth when the company becomes sizeable and is worth suing. Unfortunately, if you get sued you already have lost even if you win the suit.
“One Of’s” (inside) – important in growth and in planning the need for human assets – whereas senior staff may be capable of wearing several hats, further down in the organization the accounts payable clerk or the shipping and receiving clerk are just “one of” and if sick or quit could cause havoc with the overall performance.
“One Of’s” (outside) – as a company grows the personal relationships with customers may not work as there is a hidden person, “One Ofs”, who is part of the decision loop you never know even existed.
Outside Help – in the form of outsourcing and off shoring have become more visible in recent years. On good philosophy is to outsource everything you can but never your core competency.
Plans – are born to be changed and quite often the preparation of a plan is more valuable than the plan itself.
Planning – should not be a boring exercise as many see it, but treat it as a competitive exercise. Define it, then make it, and track it along the way.
Priorities – are what drives a company and should be reviewed constantly and reordered as necessary and provide the follow up path for making the plans a success.
Ratios – one use of the Balance Sheet depending on your view of the company. There are many useful ones. A quick ratio, which is cash and accounts receivable divided by accounts payable, is a condition of the near term cash viability. It better be greater than 1.0. A ratio of the total debt to the net worth can provide an overview of the company’s health and the ability to borrow money.
Robust Growth – is synonymous with both compromises and change and requires the culture to live within this environment.
Scalability – the practicality of growing at rates with a balanced organization and affordability. Beware the spreadsheet, wherein a nanosecond, tables can be created with little regard for human resources needed to support the financial numbers – it is easy to create tables showing the rate of revenue growth without the cost and resources tracking at the same rate but it requires strategic thinking to have a balance between revenue and resource growth.
Strategic Alliances — Partnerships can help for a startup to reach success quicker and with a lot less pressure, by filling in Forwards in the organization from the very beginning..for its from the start to fill in for its.
Strategic Goals and Strategy – are developed to meet the objective of the company and should not be mistaken for tactical goals, the tasks needed to get there.
“They” – is the invisible force that is needed to approve new and risky change and it is interesting in that it takes awhile for many managements in an autonomous situation in to realize “they” is sitting there and they can change and approve whatever is needed.
Vision/Mission – Vision has many definitions but I see it as the dream for the company where as the Mission is the basis for defining the Vision as a business and providing the foundation for a business plan. Example: Vision – To be the best, most profitable manufacturer of bathroom fixtures and to be recognized in bathrooms around the world as the “King of the Crapper.” Example: Mission – To provide premium innovative bathroom fixtures, utilizing a new technology for flushing, to the leading construction companies in the international market.
Would Be Entrepreneur – before starting to turn a dream or an idea into a company. It is wise before using friends and family money and working 80 hour weeks to make sure the company could be turned into a business wherein the founder, investors and team are rewarded for all the effort
“What Ifs” – are needed to be addressed if plans and agreements normally geared to success are blind to problems that might occur – and the “What If’s” anticipated what to do if problems do occur.
Working Capital – by definition it is Current Assets (including A/R and Inventory) minus Current Liabilities (includes debt to vendors and near term bank payments). It is gotten from the Balance Sheet – and there should be sufficient Current Assets on hand to cover the Current Liabilities, or there is a problem to be worked on. A company’s working capital may occasionally be undesirable but if it is never above zero, the company will never reach its full potential.