Monday, January 21, 2019

Continuous Process Improvement

I use the terminology Continuous Process Improvement (CPI) a great deal. The words are somewhat self-explanatory, but it is easy to think of processes in terms of tools. However, CPI is a mindset, not a toolset.

CPI becomes the overarching influence in your business; a culture under which you operate. It helps you balance resources and determine the strategies for the optimal use of those resources. It is a disciplined way to operate.  Don't let the term discipline fool you; operating with a CPI mindset will embolden your passion and entrepreneurial spirit. And the mindset of CPI is contagious.

Because it affects everyone in the business, it takes time to fully land this mindset. But when employees and stakeholders find that the environment is more productive, when they feel part of something bigger than themselves, when they feel part of a collaborative environment, they buy in quickly.

Continuous Process Improvement is rooted in the Toyota Production System. The term for it in Japan is Kaizen. On a Toyota production line, an employee who sees something faulty in the process can pull the Andon Cord to stop that portion of the assembly line. That's when supervisors go to that station and discuss the problem and countermeasures to the problem. Plans are thus formulated with a big contribution from the employee who has their hands on the problem. This process is the basis for some of the most reliable cars around.

So that is Continuous Process Improvement in a nutshell. It is really about clearly identifying problems and formulating countermeasures.

Think about the implications Kaizen has for your business!

Thursday, January 17, 2019

Your Business - Cash or Accrual

Many business owners don't understand the difference between a cash basis of accounting and an accrual basis.  This is one of the first things QuickBooks asks; are you cash or accrual basis.  The IRS asks this as well.  So lets define both.

On a cash basis, revenue is recorded when you receive money, and expenses are recorded when you pay out money.  A cash basis doesn't account for money owed to you or money you owe.  On the other hand, an accrual basis records revenue when you issue an invoice, and records expenses when the expense is incurred.  An accrual basis accounts for money owed and money you owe before a cash transaction takes place.

Bottom line is that an accrual basis gives you a much better, more timely view of your finances.  QuickBooks software handles all of the behind-the-scenes stuff associated with an accrual basis.  It tracks Accounts Receivable and Accounts Payable for you.  Setting things up correctly in the software is essential.

So lets talk about the operating side of your business and how this all relates.  If you offer credit terms to your customers, collecting monies on a timely basis is always an issue.  Every business needs liquid cash in order to operate, and "chasing you money" to keep cash flowing seems to be a problem for many businesses.  In that respect, some small business are reluctant to take debit or credit cards for sales due to the percentages charged by institutions for the service.  My advice?  Use whatever means possible to get money into your checking account sooner rather than later!  The cost of "chasing your money" generally exceeds the percentage charges of accepting cards.

Think of your business as a system.  If you don't have cash, you can't pay vendors.  Not paying vendors results in the inability to get product for sales.  Not having sales decreases your cash available.  The cycle of business activity requires cash in order to operate.  You can show a high amount of sales and net profit and can be cash-starved at the same time.

As easy as QuickBooks software makes it for you to set it up properly, you still need to understand some of the setup requirements and how they relate to your business.  Getting a business professional to help you can make the process easier.

Saturday, January 5, 2019

Shoebox Bookkeeping

Be honest.  How many of you small business owners throw receipts and invoices in a shoebox, then wait for your accountant to sort through and organize your finances?  I've seen it many times!  There are solutions.

QuickBooks software is some of the best accounting software on the market.  Which brings up some  issues.  I've seen untrained business owners buy QuickBooks and try setting up the software themselves.  This usually ends up with less than stellar results, and some business owners just give up.  The processes of setting up a usable Chart of Accounts, entering list information, and setting up all the other software parameters specific to your business can be daunting.

The goal is to have software parameters set specifically for your business so that the information you get from QuickBooks is timely and accurate.  This usually requires setting up processes outside the QB software that enhance your business.  An important software suite for many business owners to learn is Microsoft Office.  QuickBooks allows reports to be exported to Excel.  This can be extremely useful.

Another process to consider is paperless records.  Scanning and shredding paper records is much easier and more secure now that cloud computing is prevalent.  Also, functions like emailing invoices can be done inside QuickBooks.  Setting backup protocols enhances the security of your records.

Most business owners simply don't have time to set up these functions.  That's where I can help.  As a short-term consultant and teacher, I can handle setup, training, and deployment.  I then hand the functions over to the business owner.  This is more affordable than you might think.

I'm retired and operating my small business on a pert-time basis.  I don't want extended contract work.  That's how I keep your costs to a minimum.  Contact me for more...

Quick Links:
 Mike Sporer   mdsporer@empoweru1.com   (570) 906-4573   www.empoweru1.com

Small Business - The Backbone of America

Think about how small business has built America.  Small business forms the foundation of the American Dream!  And even with the competition of corporate chains, it remains possible for the small guy to compete.

Northeastern Pennsylvania has an abundance of small towns.  Dunmore, Old Forge, Luzerne, Scranton, Wilkes Barre and other surrounding towns all have thriving small businesses.  These small businesses compete on price, and the service you receive from the proprietors is personal.  

This blog is especially geared to the small business in Northeast Pennsylvania.  I have 40 years of experience.  I've been a CFO/COO in a small career technical school, and over the years worked with many small businesses in NEPA.  I operate a small business myself, Empowerment Solutions, specializing in issues facing businesses and nonprofits. I've taught QuickBooks classes geared toward contractors, retailers, small shops, and family-owned business in NEPA.

You will see articles in this blog about accounting issues, receivables, payables, marketing and outreach, customer relations, and Continuous Process Improvement (CPI).  CPI is built on the Toyota Production System and applies to all types of businesses.  CPI is my specialty.

Most importantly, I offer these services at affordable rates.  No need to spend a fortune.  I am not a long-term consultant; instead, I teach you and move on.

Check out my website for more...…  www.empoweru1.com