Why Budget?

                   

Why Budget?

Of the hundreds of CEO’s I have coached over the years, we found that less than 3% of them made it a discipline to do an annual budget. That Was The Good News.  BUT after an Estrada Strategies coaching session, we discovered their budget was not a true operational budget that could provide each department manager with a set of clear financial goals.

SO….NOW WHAT?

First let me tell you that 100% of the fortune 1000 companies do annual budgets.  A common reason smaller business owners give for not doing a budget: “I don’t know how”.  Sound familiar?  Numerous business owners have no financial background and cannot read their own Profit & Loss, Balance Sheet or Cash Flow reports. A huge problem, because understanding and managing your finances is critical to the short term and long term survival of the business. There is hope and it lays within this simple statement, “Don’t do it alone”.

Another common response is: “I have never needed a budget before.”  OK….time for a useful story – but don’t take as a sales pitch for Estrada Strategies. I once had a client whose 150Million Dollar business had never, in 25 years, produced a financial budget. The CEO was proud to tell us that he never looked at his own financials. Weird? No. Typical? Yes. However, late in 2008 the CEO sought help to set up a budget for the New Year. His company was very IT dependent. The company needed new servers and computers, but were strapped for cash. Estrada to the rescue! Even in the early stages of the budget process, significant opportunities for overhead reduction were realized. Cell phones and gas cards exceeded $20,000 per month. As we reviewed the historical financials, line by line, and were able to reduce another $35,000 of monthly expenses that could be cut with very little impact to operations or employee morale. As a result, they had money for new computers, they built liquidity on the balance sheet and managed 2009 with a much higher degree of certainty and confidence. A fantasy story? Not-At-All.

So, what is the point of this article?  Doing an annual financial budget and managing from that budget is a critical “Discipline” for every business, regardless of size. And if you are honest enough to admit that you do not know how to create a budget and manage your business with one, then you are on the road to removing the veil that’s been keeping you from seeing the financial indicators that drive your company’s overall health and performance. Not to sound negative…but for you who would prefer to operate your business with your eyes closed (so-to-speak), try this: Get In Your Car, drive it on the freeway at 90mph and close your eyes for 3 minutes. “Why would I do that” you say. Excuse me for the arrogance, but if you run your company that way…..why not drive that way, you dare-devil you.”

Allow me to end on a positive note.

Your business can be healthy in a down economy all because you are willing to make the commitment and investment to make it so.

Want Help?  I’m available

Written by Ruben A. Estrada Founder / CEO Estrada Strategies Franchise Inc

“A national business coaching Franchise Company”

Ruben@EstradaStrategies.com  www.EstradaStrategies.com

A NEW LEASE ON LIFE

Very few people have been given the gift of having faced death and surviving to realize the profound impact that experience has on ones perspective, values, priorities and true purpose. I have been given that gift and, although while I was going through my battle with cancer, it did not seem like a gift, the outcomes prove it all to be true.
Now that I have been given a new lease on life, I MUST make the most of it. So, today going forward I will commit to use this tool, this Blog, to serve what I believe God wants me to do with this second chance. So, what is it I supposed to do you ask, well, enjoy the read;

My Three Causes

Those of you that know me know my passion for the success of the entrepreneur. Everything I have done in business has been to make an impact in reversing the horrific statistic of business failure. Over the years, however, and most recently during a bout with cancer, three significant overarching strategies have surfaced that are now anchors of my three causes. All three causes, when fully embraced and implemented by a cluster of regional businesses will be “Business accelerators” and will profoundly impact the economic conditions of a region. So, without further ado, here are my three causes.

Cause #1: Workforce Development

The problem:

There is no question that every business owner would like to have a better trained workforce. Too often new employees lack the basic skills for business; Skill like good communication, business writing, problem solving, critical thinking and even the fundamental of how to properly dress for work or work ethics.

In my region of the U.S., the County of San Bernardino, it is reported that 30% of our high school students will not graduate from High School. For those who do graduate, 12.2% will move onto a college education. When you put it all back together, that means that one of ten students pursue a college degree. The remaining 9 either join the military, learn a trade, enter the “System” (drugs, gangs etc..) or simply enter the workforce. Every business wants the college going employee but the numbers simply don’t work out. Business owners complain to educators about the quality of their output but the reasons that impact this output are far too great to address comprehensively. I have complete confidence that our educators are working diligently to address many of these factors. Nonetheless, the business community is screaming for a simple solution for improving the quality of the workforce and, if given a chance to contribute, they would gladly do so if the solution made sense.

The Solution

It is my humble opinion that the link between our high school output and the business community is our nation’s community college system. The obvious reason for this is that anyone can attend community college. And, they can take any class. An individual can learn a trade, take management or supervisory courses or take college prep courses. In addition, the cost of attending community college is still relatively affordable. In most regions, one can take a full load for about $1,000.00 per year. Unfortunately, even this cost of admission is still beyond the reach of many of our youth.

So here is the simple solution. Think of a day when every business within a community college district, funds one dream for one student for one year for $1,000.00. That’s it. If every business within the community college district where I live were to fund one dream, we could promise college to over 30,000 students. That is 11,000 more than currently attend the college. In fact, the business owner can fund a dream of an active employee, or the child of an employee. So, if we, the business community, are sincerely interested in improving our workforce, then a simple solution is to financially assist one student at a time to attain higher education. We win, the student wins and the community wins. (Fund a Dream is a formal program offered by Chaffey Community College)

Cause #2 Business Acumen

The problem

It is reported that better than 85% of all new business startups will fail by year two. Yet, in the year that this statistic was reported, 2000 – 2001, 100% of the net U.S. job growth came from small business. During that same year the census revealed that one of the major contributors to business failure is a lack of business acumen amongst entrepreneurs. In fact, that Census reported that only 22% of new entrepreneurs had a bachelor’s degree or equivalent. Of the Hispanic or Black entrepreneur only 11% had a bachelor’s degree. Now, this is not a degree in business, mind you, this is a degree in anything. So, what does this mean? Well, it means that the majority of our entrepreneurs was not taught critical thinking skills, problem solving skills, research or disciplined study skills, or peer group learning skills; all of which are critical in business. I argue that a lack of business acumen should NEVER be a contributor to business failure! Think of it this way. When an employee loses his/her job what do they do? They get another job. When an entrepreneur loses their business what is the impact? This entrepreneur has maxed out their credit cards, pulled all equity out of their homes, borrowed from friends and family only to lose it all. LIVES ARE RUINED! FAMILIES ARE BROKEN APART! MARRIAGES ARE SHATTERED! I argue that if you can teach the business owner HOW TO properly run their business and surround that business owner with a group of like-minded entrepreneurs to share best practices, then the success rate of small business will be significantly impacted. In fact, I have evidence of this within the clients whom are members of an Estrada Strategies training/coaching program. Think of it this way, as a business owner you don’t know what you don’t know, and, if you can fix the business owner, then the business will fix itself.

The Solution

I kind of let the cat out of the bag in my closing statements of the problem above. I know beyond a shadow of a doubt, that business owners whom are taught business rules, systems and leadership principals, and are coached to apply what they have learned, will profoundly alter the success course of their business. In addition, given the opportunity for a business owner to share their biggest challenges with a room of their peers, often another business owner in the room had faced a similar challenge and can share how they resolved it. So, if every business owner, or decision making executive, belonged to a group of like-minded executives who met on a monthly basis to enhance their business acumen and to share their best practices, and were coached on how to properly implement what they have learned, the success rate of small business will be significantly improved. In every business community there are several programs for a business owner to engage; Programs like Estrada Strategies CEO Club, or Vistage, TAB or others. I have seen firsthand the success rate of business owners who are attending such groups and find it difficult to comprehend why ALL business owners do not embrace this simple concept.

Cause #3: Regional Economic Ecosystems

The Problem

Far too many businesses and municipalities are spending millions of dollars outside of their region. In all my years as a CEO Coach, I cannot tell you the number of times, when in a coaching session and while looking at a client’s trade payables, I found myself asking a client “Why are you purchasing that out of state? I know of someone just up the road who can do that for you.” I put the two business owners together and they create local commerce. Or, during a business networking event, I see business owners meet up with other local business owners and create local commerce simply because two owners met in person. It blows my mind to see a local business, or municipality, ship their monies out of the region to save 3% to 5%. Do we realize the negative impact we are having on our own communities by doing so?

The solution

Well, the solution is quite simple. Every business and municipality spends no less than 75% of all their trade payables within the community where they reside. Can you imagine what this could create? Just think of it. More dollars are spent within the region. Local businesses are more successful and hire more employees. Those employees spend their monies in the local communities where they live and as a result generate more tax revenue for local government. In turn, local government can reinvest in infrastructure, public services and programs to further assist their residents and businesses. This is creating a Regional Economic Ecosystem. Image a system where each community is self-sufficient and a total commitment to retaining wealth is forefront of all significant business decisions. In addition to this is the commitment from business to employ local residents who in turn keep their payroll dollars local.

Now imagine with me for a minute, a day when in every region or community, every business owner and decision making executive, deploys all three of these simple principals. A day when every business funds one dream for one student, when every business attends a group of their peers to further enhance their business acumen and when every business and municipality spends no less than 75% of their dollars within their region. Can you imagine with me the impact this will make for that region. When combined as three concurrent strategies, local economies will become self-reliant and business success will be a matter of degree not survival.

You have a CHOICE!

Maximizing your Web Presence

In today’s rapidly changing world of technology it is easy for business owners to get lost between SEO (search engine optimization), Social networking, Blogging, and Website management. Far too often, when coaching a client I learn that they are confused as to what to spend their time and resources on and often find them doing nothing. No Social Networking strategy in place, not changing their SEO plan and worse of all, no clear strategy for their web sites. “Far too many strategies to learn about and work on while still running my business” is what I hear from the business owner. “What should I do?” I am asked.

Well, I have always played by the simple rule of “Begin with the end in mind”. How does that apply to this situation you may ask? Simple; the end with any and all of the strategies above is to drive traffic to your web site. It was reported recently that 80% of all purchases included the buyer visiting the sellers web site, be it a restaurant, furniture store or car dealership. I do it. My wife and I are driving down the road and I get the craving for some Susi. I turn on the Google Places finder on my Andriod and look for Susi Restaurants in the area. I check out their web sites from my phone and quickly select the one I want to eat at based on what I see. I may have selected the worse of all restaurants, but they had a good web site. So I tell my client, “Let’s take a good look at your web site. Then we will design the plan to drive traffic there.”

First of all you must decide what you want your web site to be. There are three general types of web sites and one of them will be best suited for your business. Your job is to decide which of the three your business needs then build you web design and strategy around it. Here are the three;

1. Customer Focused: This web site is rich with tools and information for Customers to access when doing business with you. It may have industry or trade specific information, company credentials and certifications, product or service use videos and a “log in” for customer to check on their order or history of purchases. Although these web sites may have access for new visiting potential customers to get more information, or even make a purchase, the overall strategy of the site is to serve a current customer base. A good example of this is any of the Verizon web sites. When visiting their site one will find hundreds of links for “How to” with Verizon; however, on these same customer service pages Verizon is advertising their newest phone, new service packages or other special deals.

2. Resource or Information Focused: Some web sites exist simply to offer information or to be a resources, or repository, of specific information. They do not have very little customer benefit information nor do they have a sales component to then. They are primarily a place to go to learn something specific about a company, organization or industry. As you are reading this you may be thinking to yourself, “Why would Ruben even mention this type of site strategy. I am a for profit business that needs customers and sales, not a “Resource” company.” Here is why. Far too often when visiting a customer’s web site we discover that the site does a great job providing information about the company history, its accomplishments and credentials. There are pages after pages of “how we do this” and “How we do that”. In fact there may even be a full page just about the owner. Nice head shot, great bio and fascinating story. Good INFORMATION about the company and an excellent RESOURCE if someone was doing a autobiography of you and your business. But when it comes to customer service or driving sales to your business, “who cares about your bio”?

3. Sales: A web site designed to drive sales, or leads, to your business answers this question on the home page; “what was the visitor thinking when they typed in the key search words to find me?” For example, if I own an auto body repair shop and someone types in “Auto body repair” I can pretty much assume they have been in an accident, are a bit distressed, maybe even hurt or angry and want rapid response. So I may load the top of my home page with the words “CALL US AT 909.444.2222 FOR GUARANTEED 5 MINUTE RESPONSE”. Then I would follow that with more information that caused the buyer to trust my business capabilities focusing on prompt service, ease of transaction then our capabilities. A Sale’s focused web site has “Contact us” buttons flashing on every page. Local phone numbers are easily visible above the fold on every page, not hidden in the top ribbon or below the fold where the visitor has to scroll down to find it.

So, beginning with the end in mind here means to build a web site strategically designed to serve your desired visitor, not to server your ego. If you are still lost as to what to do next after reading this article, get some guidance by calling a professional business coach at EstradaStrategies.com.

Conducting an SEO session with a local manufacturer in South El Monte.

Everybody has Core Values

Do you realize that your employees spend more conscious, human interaction hours at work than they do at home? And that each employee, when you hire them, brings their own set of core values with them into your work place? Combine these two facts and consider what could happen if you hire an employee who possesses a set of core values that conflict with yours? Too often we interview from a position of desperation. We just lost a key employee and need to replace them quickly with the best qualified individual. However, we consider work experience, skill and knowledge as our benchmarks for who qualifies rather than “do they fit our culture?” as the leading indicator. To that end, we often find our self making a bad hiring decision without even knowing it.

So here are a few questions for you to consider as your reflect on the “Bad” employees your company has hired in the past. (By the way, I don’t believe there are any bad employees, just bad hiring decisions).

Question 1: Are your Core Values documented. If not, why not?

Question 2: If yes, how do you communicate your values throughout your organization?

Question 3: What happens when an employee acts inconsistent with your established Core Values?

“GREAT QUESTIONS” a business owner once told me. Then he followed up with “What the heck are Core Values”. Well, I guess I probably should have started with that. For some reason I assume every leader in business already knows this stuff, but that simply is not true. I guess that’s why companies like Estrada Strategies exist. To help the average business owner increase their business acumen and thus, increase profits in their business.

Core Values define how you treat the Human Element within your business. Modern academia may call them Guiding Principles or a Policy Statement; All different ways of saying the same thing. Core Values are beliefs that govern how you treat your employees, customers, vendors, the business and the community you serve.

Although I only provided a very brief definition I believe you have enough to “do something with”. So I ask what you are going to do? If nothing, then you just wasted 5 minutes reading this article. If you want to do something about defining your Core Values but just don’t know how to get started, give us a call and we would be glad to help. Estrada Strategies Franchise Inc, the nation’s most powerful network of CEO Coaches. You can find us at www.EstradaStrateies.com.

Written by: Ruben Estrada, Founder Estrada Strategies Franchise Inc

For those of your in Business, here is an article I wrote for a local newspaper, http://ping.fm/mI11t

The San Bernardino Sun ran an article on my Cancer condition. Check it out here http://ping.fm/2is51