Four ways to accelerate cash flow

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"Traditional methods to increase cash flow are not working," said Lisa Anderson, founder and president of LMA Consulting Group Inc. "When customers demand increased service and value, innovative strategies are required to succeed."

There are countless ways entrepreneurs can increase cash flow through supply chain improvements, but it's important to prioritize in a way that will drive results. "Resources are lean, so it’s vital to focus on what provides the best return on investment," said Anderson.

Here are a few strategies she says drive the bulk of results:

1. Inventory management

Anderson said the key is not only to reduce inventory but to do it while improving customer service. Otherwise, you lose valued customers. Each company requires a different approach, but, said Anderson, "After reducing inventory levels 40 percent or more in multiple companies in various industries, I've found that big picture areas were identical: people, processes, and systems."

2. Supply chain collaboration

Anderson shares some collaboration case studies: “We implemented vendor-managed inventory with a key customer, improving not only our cash flow but also the customer's. In another example, we partnered with suppliers and customers to develop innovative product and packaging that reduced cost -- increasing cash flow -- and improved performance. Lastly, we partnered with key customers and carriers to develop a transportation model that reduced freight costs -- increasing cash flow -- while improving service."

3. Know when to fire a client

Not all customers are good customers. "Negative profitability customers should be reviewed in detail. Is there a compelling strategy to keep them? Focus efforts on profitable customers," said Anderson. Similarly, if a few customers are tying up significant amounts of cash, try to improve the relationships.

4. Cost cutting isn’t everything

Even Anderson admits that cost reduction can’t be the sole focus in improving cash flow. “If you spent the same amount of time and energy on increasing revenue, you could be one of the companies to leapfrog the competition in the new normal."

Do you have expert advice to share? E-mail Kristen.

How I learned to stop working

A counselor once taught me three important things.

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Stop multitasking. It doesn’t help.

Many studies back her up in this, and it’s a frequent subject of time management and productivity articles like this one: “10 Ways to Multitask Better,” which is really about how to not multitask.

When we try to do several things at once, we just wind up doing them all poorly and taking more time than if we had done each in turn. Now, this does not stop me from tossing a load of clothes in the dryer before I sit down to write this. But instead of jumping up in the middle of my writing to see if the shirts are ready to hang, I will finish this first. Then I will get the shirts from the dryer and hope I don’t have to iron them.

Moving other things to the back burner -- especially if you’ve written them down so as not to forget -- lets you focus on the one thing that needs doing right now. And focus improves results.

Spend the last half-hour before bedtime doing something relaxing.

The counselor pinpointed my insomnia as the result of going full tilt until well after the last minute. Work a day job, come home, wash a load of clothes, cook the dinner, pay the bills, edit something, put a load of clothes in the dryer, write write write until my husband says “isn’t it bedtime?” and then remember the laundry and go hang it up.

Then I would go to bed with all the undone items on my to-do list banging around in my head, and wonder why I couldn’t sleep.

My counselor advised taking a half-hour to wind down. Have a cup of tea, read a book, knit -- OK, she didn’t say knit, but that’s what I do. It relaxes me. To make myself feel better about it, I include my knitting projects on my to-do list.

Some people call this building in margin. I call it Rest. Just as we need a Sabbath day once a week, I think we need some Sabbath time at the beginning and end of each day to Be Still. It has made my life slightly less stressful, and improved my sleep tremendously.

The third thing I learned from her: It’s not a disaster if the laundry doesn’t get done.

When to pay bonuses despite posting a loss

One of the many great things in Kris DenBesten's book SHINE is the account of how he surprised his employees one year by giving bonuses even though the company had posted a loss.

I thought of that this week because of two very different news stories. First, my colleague Adam O'Daniel at the Charlotte Business Journal reported that Bank of America's board awarded its CEO, Brian Moynihan, a $9 million stock bonus, even though the bank posted a $3.2 billion loss for 2010.


Then, Bloomberg reported that Lockheed Martin's CEO, Robert J. Stevens, asked the board to keep his pay where it's been for three years. The company won't award raises to any executives at the level of vice president and above, because although it did have a profit last year, the profit margin was too narrow.

Lockheed Martin's bonus policy "accounts for individual performance and the performance of the company, or business unit."

Lockheed Martin's policy makes sense. I, too, work for a company where bonuses are not issued unless financial goals are met. And BofA? What a crock. How do you award a bonus when there's a loss? If there's no profit, there can be no bonuses.

Then I remembered SHINE.

Mind you, there's a big difference between DenBesten's company and Bank of America, and it doesn't only have to do with how many digits follow the dollar sign.

BofA paid its executive bonuses because, as we have seen so often lately, that's just what banks customarily do. In the world of high finance, you don't withhold an executive's raise or bonus. It's part of that culture. Defense contractors and newspapers have a different culture.

And so, I think, do equipment companies.

When DenBesten handed out those bonuses, he was acting on his own principle of serving others. It's exactly the kind of radical step of faith we're called to take, especially when times are tough.

Six lessons for building successful virtual teams

The office of the future is no office at all. Many of us work from our homes, hold client meetings at coffee shops, and have a business address that’s a post office box. Without an office, we frequently rely on phone and e-mail to communicate with collaborators.

But Darleen DeRosa and Rick Lepsinger warn that the vision often falls short of reality. “Virtual teams” may be popular, but they’re not always successful.

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DeRosa and Lepsinger wrote Virtual Team Success: A Practical Guide for Working and Leading from a Distance to help businesspeople create teams across distances. They say too many companies treat virtual teams the same as teams that share the same location.

“Frankly,” says DeRosa, “that just doesn’t work.” Leaders who understand the different needs of virtual teams are the ones whose teams succeed.

DeRosa and Lepsinger’s company, OnPoint Consulting, studied 48 virtual teams to find the success factors of top performing teams. Surprisingly, 27 percent of the teams were not fully performing. The authors identified these pitfalls:

• Lack of clear goals, direction, or priorities
• Lack of clear roles among team members
• Lack of cooperation and trust
• Lack of engagement

The authors identify these points of success:

1. Focus on people. Compensate for the inherent lack of contact by supporting team spirit and trust.

• Develop a team web page where team members can get acquainted.
• Use communication tools like instant messaging, Facebook or Twitter to create a virtual water cooler.
• Build a collective online “resource bank” to share information and experiences.
• Create ways to virtually celebrate successes as a team.

2. No trust, no team. Task-based trust is one factor differentiating top performing teams. In virtual teams, trust seems to develop more readily at the task level than at the interpersonal level. DeRosa says trust “doesn’t simply develop because a team has been working together for a while.”

• Make sure teams meet face-to-face at least once early on to build relationships and learn about one another’s capabilities.
• Empower team members to make and act on decisions. Beware of micromanaging.
• Proactively manage conflict.

3. Soft skills are essential. Virtual teams that have been through team-building and interpersonal skill development activities perform better than those that have not. Selecting team members based solely on technical skills without considering interpersonal skills is a mistake.

• Include characteristics like effective communication and collaboration in the selection criteria.
• Use team-building sessions to strengthen relationships and create momentum.
• Assess development needs for team members and team leaders and conduct training on these areas.

4. Watch out for performance peaks. Teams who have been working together for more than three years tend to be more successful than teams working together for less time, but many teams peak around the one-year mark. After that, performance tends to level off or decline.

• Clearly define team roles and accountabilities.
• Review and refine processes regularly.
• Periodically examine the level of team performance. Collect feedback from various stakeholders to assess the team’s performance.
• Identify barriers to high performance and steps that can be taken to overcome these barriers.

5. Create a “high touch” environment. The technology that makes virtual teaming possible it is not a perfect substitute for human interaction. Arrange for virtual team members to meet in person at least once a year. “Virtual teams that invest in one or two such meetings per year outperform those that don’t,” says Lepsinger.

• Use electronic bulletin boards to create a sense of shared space.
• Choose communication technologies that are most appropriate to the task. E-mail is good for sharing facts, while conference calls are better for sharing ideas and plans.
• Use videoconferencing. Teams that use video technology outperform those that don’t.

6. Leadership matters. Leadership is the factor most important to the success of virtual teams. Virtual team leaders must be especially sensitive to interpersonal communication and cultural factors. “Organizations can avoid this performance barrier by selecting team leaders who not only have the necessary technical skills but also the soft skills required to effectively lead in a virtual environment,” says DeRosa.

• Set clear goals and direction and revisit these as priorities shift.
• Engage team members in developing strategy.
• Provide time for team building.
• Provide timely feedback. Be responsive and accessible.
• Emphasize common interests and values, and reinforce cooperation and trust.
• Create a system to easily integrate new team members.
• Teach the importance of conflict resolution.
• Celebrate team achievements and successes.

Lepsinger says, “organizations start virtual teams in response to an opportunity or problem without planning or proper follow-up—never a recipe for success.” DeRosa adds, “Better planning could dramatically improve their odds for success.”

Six key steps to working out customer service kinks

Author Maribeth Kuzmeski shares this anecdote to show that customer relationships are made or broken when something goes wrong:

While at a hotel, getting ready for a crucial business meeting, you turn on the hairdryer, but the power goes out. You call the service number and hear "Someone is on the way." After twenty minutes and two more calls, anxiety turns to anger, when a "service" person asks, "What do you want me to do about it?" Finally, the power comes back on, and a maintenance man explains it wasn't his fault and makes excuses about what went wrong internally. No one acknowledges or apologizes for your inconvenience.

Brian A Jackson | iStockphoto

“If a service recovery plan isn't understood by the entire staff, everything snowballs,” says Kuzmeski, author of ...And the Clients Went Wild! How Savvy Professionals Win All the Business They Want and The Connectors: How the World's Most Successful Businesspeople Build Relationships and Win Clients for Life. The hotel incident actually happened to one of her associates.

"If you don't have well-developed service recovery techniques in place, you'll lose the customer every time," she says. That leads to angry customers vowing never to return—and maybe decide to share their anger with countless others online.”

Kuzmeski offers these tips for service recovery:

1. Recognize and truly understand your customer's situation. Provide individual care. People with children have very different needs from busy businesspeople. Train your customer service people to recognize key differences and adjust responses accordingly.

2. Make sure what you're saying is happening is really happening. Customer service is more than following a script. "When the hotel guest made the second call, it's likely the front desk representative didn't check to see where the maintenance man was," says Kuzmeski. "Taking the time to locate him would have gotten the guest the service she needed."

3. Be specific about how the problem will be handled. Let the customer know what will happen and when. The more information customers have, the less anxious they feel.

4. Complaint number two is an emergency. Most people can forgive one mistake, if it’s addressed promptly. A second complaint calls for emergency mode. If you want to keep your customer, you must take care of the problem immediately.

5. Make sure the service philosophy permeates the business from top to bottom. The hotel in the anecdote is part of a chain with a rewards program for repeat customers. When the guest called to complain, the rewards people understood the inconvenience and tried to make it up to her by offering additional rewards points. "They hadn't properly trained their onsite staff,” Kuzmeski says. It’s crucial that everyone understand the customer service plan and be able to solve problems.

6. Don't assume customers will give you a second chance. If a customer takes the time to call you about a problem, you are lucky. You don't always get a chance to make it right. Often, customers just move on. And the real concern is that it takes only one dissatisfied customer to create a public relations disaster. Dissatisfied customers have created blogs and YouTube videos sharing their tales of bad service with the world.

Kuzmeski says customer loyalty is achievable, “but you have to have the service chops to take care of them. Make your customers and your relationships with them a priority—always! When you do so, you can create clients for life."

Hiking up recovery mountain

If your business, like so many others, is still hurting, you may wonder what the economists are thinking when they talk about our economy being in recovery.

According to the National Bureau of Economic Research, the recession ran from December 2007 to June 2009. If we've been in recovery for a year and a half, why does it still feel like a "recession" to so many?

It's important to understand what economists mean when they speak of "recession." If you graph them, periods of growth, or expansion, are rising lines leading to peaks. Periods of contraction, or recession, are descending lines that lead to troughs.

The GDP, one of the main factors in measuring economic growth, has been rising since June 2009. Though that growth was sometimes small, the numbers were positive, as opposed to the negative numbers seen during the recession.

So why does recovery seem so crummy?

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Imagine you're climbing a mountain. When you reach the peak, you stand in the bright sunshine and can  see for miles.

Then you fall. You roll down that steep slope for a year and a half. You land in a valley. Bruised, but not broken, you stand up. That mountain behind you now blocks the sun. You're in shadow.

You can't go back the way you came. Ahead of you is another mountain -- maybe not as tall as the one you fell from. It has a shallower slope. You begin climbing. Slowly, surely, you ascend. You leave the valley floor behind. But the next peak is still far away, and you are still in shadow.

In The Great Reset, Richard Florida compares the 2007-2009 recession to earlier ones. "Recovery from both the Long Depression of the 1870s and the Great Depression of the 1930s -- the First and Second Resets -- took the better part of two or three decades."

He says forecasting where we'll be once the present crisis is history would be like predicting "the full flower of postwar suburbanization from the vantage point of Franklin Roosevelt's inauguration day in 1932."

Florida goes on to identify the forces "that will almost certainly power a real Great Reset and a more sustainable new way of life." I have yet to finish this book, but I suspect Florida's observations will be instructive for all of us as we climb through this long recovery.

And as we go, let's remember that we have a mighty counselor who climbs with us out of the valley. "The people walking in darkness have seen a great light; on those living in the land of the shadow of death a light has dawned." — Isaiah 9:2

Disney center provides help for businesses

I attended a talk recently by Jerry Ross, executive director of the Disney Entrepreneur Center in Orlando. He said that just as businesses need to cut costs to deliver more profit to the bottom line, nonprofits need to reduce costs to deliver more services. That’s what the participants in the DEC have done.

By sharing overhead costs and support staff, the organizations that make up the DEC are able to do more for their clients. That also makes the DEC your one-stop shop for a variety of business help:

• Bookkeeping
• Business planning
• Certification
• Finding capital
• Insurance
• Marketing

Service providers based at the DEC include the Hispanic Business Initiative Fund, Central Florida Urban League, National Association of Women Business Owners, Service Corps of Retired Executives. The University of Central Florida is a major partner, offering its business incubation program and the Small Business Development Center. Orange County Government and the U.S. Department of Commerce are also participants.

The DEC hosts a variety of low-cost seminars, as well as one-on-one counseling and networking opportunities. Take a look at the calendar to find events that meet your needs. Services are available for all sorts of businesses, not just small startups.

The DEC is presently located at One Landmark Center in downtown Orlando, but will be moving in April to Fashion Square Mall. Ross expects the center will have a grand opening event in May. He said the reason for the move is primarily to reduce costs. An added benefit for the center’s clients -- who are also trying to cut costs -- will be free parking.