Tag Archives: Confidence

How Do You Plan Spending – to Backlog or Sales Forecast? Five Suggestions

Situation: A company had several huge orders last year but ended the year with a low backlog. Sales forecasts are rosy, but acceptance of proposals and initiation of work is hard to predict because the company’s products are just a piece of much larger projects with variable timelines. How do you plan spending in this environment – conservatively to backlog or more aggressively to the sales forecast?

Advice from the CEOs:

  • It is important to understand the magnitude of difference between spending under the two scenarios. For example, if a conservative spending plan means major cuts to product lines or business compared to the more aggressive plan, then analysis and what if scenarios are more complex,
  • What are the company’s cash-flow and debt situations. If you are cash-flow positive with little debt, this increases flexibility. Another consideration is the company’s attitude on debt.
    • Be wary of the healthiness of an unused credit line. Companies have seen unused credit lines cut and accounts cleared when they have started using the lines after a long dormant period.
    • Exercising the credit line may increase flexibility.
  • Look at your approach to forecasting and spending. How far out do you forecast? How effective have past outgoing forecasts for several quarters been, and what confidence can do you have for the next quarter, the quarter after, and the quarter after that?  If you are reasonably confident one quarter out, you can plan spending on this. If you can adjust spending relatively quickly this gives you more leeway.
  • Establish leading indicators to improve future forecasts.
    • What is your win/loss record on proposals, and a conservative estimate of what this ratio means for revenue?
    • Other examples include sales calls to new customers versus new key customers won, and similar sales metrics. These metrics can help to govern expectations based on sales forecasts.
  • If your sales team is not performing, look at changes to sales management. This may wake the team up and prompt them to go the extra mile for contacts and contracts.

Key Words: Forecast, Backlog, Spending, Planning, Cash-flow, Debt, Credit Line, Confidence, Indicators

What are Best Practices for Emergency Preparedness? Three Guidelines

Situation: Local and world events continually remind us that both nature and events are unpredictable. At any time we may have to deal with emergencies including water, fire, earthquakes, and the possibility that we or our employees may not be able to get to or communicate with our offices for a period. It is prudent for all of us to have plans in place that will enable us to deal with emergencies. What are best practices for emergency preparedness?

Advice from the CEOs:

  • You must have an extensive business continuity plan. This includes:
    • An outline of potential situations that you may face in your locations, potential losses associated with these situations, and plans for responding to each.
    • Redundant remote data back-up.
    • Manufacturing continuity planning.
    • Personnel contingencies.
    • Alternate vendor and service arrangements.
  • Drafting a full emergency plan takes time and work. However, it is essential. Start simply:
    • Look at the obvious risks in your locations.
    • For each, develop your back up or continuity strategy and start to put it in place.
    • Let the list of contingencies grow with time as you recognize more risks.
    • Start this exercise NOW.
  • Once you have a plan, drill the plan. Make sure that your people know what to do in each case so that if something happens they are prepared. It is amazing how this can build the confidence of your employees that they will be able to handle emergency situations.

Key Words: Emergency, Preparedness, Plan, Best Practice, Continuity, Data Back-up, Contingency, Confidence

Micromanage – Me? Four Observations

Situation: The CEO is concerned about the performance of both the company and individual employees. The employees are good, but there are many minor details of day-to-day operation that the CEO feels are important. How involved should the CEO be in the details of the business?

Advice from the CEOs:

  • The answer to this question depends on you.
    • What is your own priority on the use of you time?
    • How much do you want to be involved?
    • How confident are you in the people whom you’ve hired?
    • Are you comfortable delegating?
    • Do you want to stay small or scale and grow?
  • The good and bad of involving yourself in details:
    • The Good Side – communicates that you are willing to roll up your sleeves and do what it takes to get the job done.
    • The Bad Side – don’t do your employees’ jobs for them.
      • This is demotivating and communicates a lack of trust in their abilities.
      • If the workload is so demanding and the benefit so great, then secure additional resources to enable employees to get the job done themselves.
  • More broadly, remember the lesson from many business gurus – you increase the value of your company by getting the “U” out of your bUsiness. You may enjoy the detail of the business. However, do not let this interfere with your long term objective of having others doing the “doing” while you mature your role as manager and leader.

Key Words: Manage, Leadership, Delegation, Confidence, Growth