Management Memos

Making Measurably More For You Since 1985

July 2016
 

Making Your Budget Work In Uncertain Times

Last month we looked at the strategic uncertainty all around us, and formulated a "cash first" approach to budgetting for 2016-17. Can you carry it out over the year ahead?


Implementing Your Budget In This Crazy Environment

It's easy enough to get the idea of a "cash-first" budget. Grappling with the idea of putting it into practice is more difficult, because it takes a firm resolve and definitive action.

Traffic JamIn the end though, managing to your "cash-first" budget is a simple matter of believing that you, as a manager, can change what happens.

Consider this .....
You normally buy your stock at the best price - well, that makes sense! - and that is when your supplier has a big offer running. When you take up the offer, you convert your cash into his cash, and you take stock off his floor. Now you have stock, but not much cash!

You did this get the best buy price, to give you the best profit - but that happens if, and only if, it all sells. You are at greater risk by acting this way - and in these uncertain times, risk is not a good idea. Your supplier has reduced their risk - and increased yours.

Now, consider the alternative ......
You buy a lot of stock at the special price, but less than you think you will need. Not a lot less, but just enough to make sure that what you do buy will be sure to sell. With your knowledge of your sales patterns you can do this really well.

Now, you have stock you will surely sell, and a very small risk you will get caught with excess stock at the end of the year. At the same time, you have conserved as much cash as was prudent, while still ensuring you can sell reasonable volumes at the usual and expected margins.

There are now two possibilities. Either you will sell it all and need more, or you will have some excess stock after all.

This is when you business plan is important. Buy the extra stock you need, and trade hard so that you sell it all. You're converting your risk into cash. Get it? Cash first! Treat any excess stock the same way.

What margin should you accept as a minimum to turn your stock into cash?

It is possible to work out just what margin you can tolerate before you start to lose money. it's a complex matter, and it's fully covered in the My Red Zebra Powerhouse Toolkit! The price depends on a great many factors, but it doesn't need to be a guess.

(continues)

 

Implementing Your Budget ...

That's when you need your 'My Red Zebra' Full Value Pricing Calculator. And that's a story for another day!

Full Value P{ricing


 

Time to Reconsider Windows 10

Principal Consultant

It's almost a year since Microsoft Windows 10 hit the street - and only few weeks before the free upgrade period ends. The Windows 10 upgrade experience has improved by leaps and bounds over that time, and as an operating system, it works pretty well.

The free upgrade created a stir, and the 'nay-sayers' had a field-day saying "better wait until the bugs get ironed out". Kindergarten simple really, but now it's time to get a reality check.

First, despite what is said about it being a DIY upgrade, it can be tricky and risky. Best to have it done for your business by someone who knows what they're doing.

Second, many of the disasters involved Windows 7 laptops. Their makers used fancy graphics drivers, with lots of add-ons to give a first-class experience to first time users. Most of these add-ons won't work on Windows 10, and the graphics drivers need a major update to cope with the new system.

What is significant here is that it is not the "Windows bits" that are the problems. They're not even the cause of the problems. It's the heavy handed Windows 7 'bloatware' that gets in the way of a smooth transition.

No matter how long you wait, these legacy problems from Windows 7 won't go away. Waiting further will just cost money.

It is true that Windows 7 will be supported for years to come, but new features we may need for business next year, or the year after, will depend on feature improvements in Windows 10. They'll never be available in older systems.

The operating system on your computer systems is not the main focus of a business manager, that's true. But then, we can't stand still in business either. There's been a year of updates on Windows 10 since its introduction, and it's looking good.

This is the time to move ahead, and future proof our own business systems - even if we need to get in a tech to smooth way ahead!

 

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Any advice, information or comment contained in this document is general in nature, and should not be relied on as the basis for any specific commercial, business, employment, or financial decision. Specific advice should always be obtained for each individual circumstance. Accordingly any advice, information or comment contained herein is for general guidance only.

 

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