Название: Tireless
Автор: Kim Lorenz
Издательство: Ingram
Жанр: Управление, подбор персонала
isbn: 9781641464314
isbn:
Remember when we laid out our original profit and loss pro-forma statements? The ones we completed at 4:00 AM after working through the night? Those statements had forecast first-year sales at $700,000 while showing a small profit. Though many business schools spend time teaching cash flow—the life and death of any business—the schools often fail to show the difference between a profit and positive cash flow. “Cash flow” is simply the amount of money you have coming in compared to the amount needed to pay bills. The majority of business purchases and sales are on credit. The inventory we have to pay for is due to be paid before we have sold it and collected the money, which creates a negative cash flow when growing. While on paper, the new company could predict a profit, the pro-forma numbers can rarely predict cash flow adequately. Cash flow has many determining factors, such as inventory management, financing terms, and so much more. Many profitable companies fail for lack of cash flow, which makes them unable to pay their debts on time. Cash is the lifeblood of growth, and it is of utmost importance to understand.
As it happened, our first-year sales exceeded $1,450,000—over double our plans! The second year we forecast $1.8 million, and sales came in at $2.2 million. With third-year sales exceeding $3.3 million, we were growing at 50% annually, far exceeding what our cash flow generated and causing greater borrowing and dependency on the bank. Though we never had a negative profit year, the profit was still not enough to keep up with cash needs, increased inventories, and increases in account receivables.
We were heading for trouble at this growth rate in such a competitive, commodity-like business.
3 Note: This was prior to the use of cell phones.
Chapter 4
But That’s the Way We’ve Always Done It
Henry Ford once said, “Obstacles are those frightful things you see when you take your eyes off the goal.” Everyone faces obstacles at different times in their lives, but it is how they are dealt with that makes the difference between success and failure—both in our personal lives and in business.
Thomas Carlyle says, similarly, “Nothing stops the person who desires to achieve. Every obstacle is simply a course to develop their achievement muscle. It’s a strengthening of their power of accomplishment.” How you handle a crisis or significant setback defines your character and resolve.
In business, we face challenges every day. Our characters develop in how we react and face them. You know that in your lifetime, you will experience difficult times, and most are not predictable. Think through how you might handle the loss of a loved one, or some other possible personal or work-related obstacle. Maybe you lose your job, or a parent or loved one dies. These things happen. We cannot control everything. It is only you who can decide to be strong, accept the current circumstance, and rationally think through what can be changed. No matter how hard we strive to separate our personal and business lives, each has an effect on the other.
The new venture was growing, and growing fast. We were always on the go and busy. The business was expanding, requiring more equipment and employees. With an additional location in Alaska and another in Washington, our store count was up to four, with more in planning. A mere two years into this business, our growth was still far exceeding our plans or expectations. Both John and I had had more work than we knew what to do with. Twelve-hour days were short days then. Leaving the house by 5:30 AM, returning home after 8:00 PM was normal.
The manufacturing plant was running smoothly thanks to John, who now had a crew of full-time employees helping him. More service trucks had been purchased, and the drivers were hired and trained to manage customer needs. Commercial tire salespeople had been hired to grow that side of the business, and additional office staff was hired to handle the paperwork, billing, HR, and accounting.
Everything seemed to be running successfully.
One of the key success drivers and part of the original vision shared by both John and I was that our competition was simply selling tires. We were focused on educating our customers on the total cost of their operations and how we could reduce that cost with them. We taught our sales and service personnel to understand the customers’ business well and act as their consultant, or even an inside employee.
Though it was true that every customer needed tires in their business, that was not all they needed or wanted. In an effort to save money across the board, our customers (much like any customers of any business) wanted to make sure they were getting the best price. We all love a good deal, don’t we? So, what if you could educate the customer that proper management of their tires—managing the retreading and inventories better—would save them thousands of dollars a year? We wanted to show the customer how to reduce the needs for different sized tires by standardizing the size used, reduced inventory, spares, and space. We also wanted to show the customer that they did not need to have a tire employee on staff with all the associated wages, insurance, taxes, and liabilities because we could do it for far less overall cost. What if we could educate them about the whole process regarding how a company buys tires and retreading and also save them a huge amount of money every year?
There are a couple of humorous stories that relate to how decision-makers view salespeople, especially when those salespeople can save the company money. Saving money does not involve just buying a product for less. There is much more to be saved through improving efficiency, productivity, and long-term change improvements. It is the salesperson’s job to help buyers understand that.
One comic that comes to mind is an infantry field General fighting the enemy with swords and arrows shown above. A salesperson stands before the general with the clear solution to his problem, but the general cannot be bothered with “solutions,” as he has a battle to win (he is super busy). The salesperson clearly has not demonstrated his ability to solve the general’s problem and create efficiency through improvements!
The other anecdote relates to quality, and goes like this: when a customer buys a low-grade product, they feel pleased when they pay for it because they believe they have saved money. However, they are then displeased every time they use it because it is of a low-grade. But when a customer buys a well-made article, they feel extravagant when they pay for it but well-pleased every time they use it because of its quality.
In the business of selling commercial tires, it is the same. In fact, it is the same in almost any business today, including high tech. Think about this: in past years, companies continually added and upgraded their data and computer servers in order to maintain their systems, accounting software, data storage, and manage growth in their business. Today, it’s as easy as opening a cloud drive that exists across platforms, which can be used as needed without the massive investments in space, equipment, and maintenance. “The cloud” represents a way to outsource data storage at significant savings, as well as adding flexibility for growth and needed changes in operations. When we started our company, trucking firms had been employing people to take care of the tires on their trucks. If managed properly, we could reduce their daily needs, and the customer could eliminate the position and its related expenses.
The “old way” of doing business is constantly changing in every industry. In the case of our new venture partnership, at the time we started, many of the tires were about the same and price was the main selling point. Every company sold essentially the same product; the only difference was who made it. Many buying decisions, as today, were based on personal relationships with the salesperson. People deal with people. Often, purchasing decisions were based more on personalities than what made better sense for the customer.
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