kenkaufmancfo-blog

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Are You Just Doing Curls, Or Are you Building real Strength?

Let me start by offering this disclaimer...I am not an exercise or weightlifting expert. I have, however, read enough material and listened to enough trainers and fitness experts to know some of the main do's and don'ts of lifting weights and general exercise. First, a little background and context so you can have the correct perspective on a conversation I recently overheard, hopefully empowering us to apply it many areas of our lives. One of the main rules of weightlifting is that you always begin a workout session with at least one main exercise (like bench press, squats, dead lift, or military press) that works several muscle groups. This effectively warms the body up and ensures strength is being built in a balanced, healthy manner. Then, you move into working targeted, specialized muscles (like biceps, triceps, calves, shoulders, or back). This allows you to focus on improving weaknesses or developing specific muscles that are important for a sport you play or the way you want to look. Balanced workouts among all of the muscle groups are strongly encouraged. An example would be to start with several sets and repetitions of bench press (which works many of the upper body muscles), and then do additional exercises that target the chest and tricep muscles. Then your next workout would hit another group of muscles like shoulders and back, or legs.

Next I need to make sure you know what curls are. Curl exercises target and work only the bicep, meaning they should usually be done after at least one exercise that targets multiple muscles (see image to the right). Yet many people bypass the core strength-building routines because curls make biceps bigger and more defined. And those are the muscles you flex when you look at yourself in the mirror, giving the appearance of overall strength and fitness. For more perspective on this subject, read this: Stop Doing Curls. With that background, here's a conversation I recently heard as two guys walked into a weight room:

Guy 1: "So what do you want to lift today?"

Guy 2: "Let's do curls. I like doing those, and I'm pretty good at them."

Guy 1: "Cool."

As they headed towards the dumbbells, I shook my head a little and then made a brief outline in my head for everything that I think went wrong in that conversation. Here's my list and what I think we can learn from it.

NO OBJECTIVE

What were these two weightlifters really after? Where do they want to be in 5 years, or even 1 year? Are they training for a sport, or do they have other fitness goals they are trying to achieve? I got the sense they really lacked an overall objective.

Whatever you are doing professionally, do you have an overall objective of where you are going and where you want to be in 5 years, or even 1 year? By taking some time to think this through and articulate it in writing, you are well on your way to achieving it. Failing to define it means you will likely not achieve it. Hard to hit the target when you don't know where it is, right? This can apply to any aspect of your life, especially if you feel like you are "spinning your wheels" in that part of your life.

NO PLAN

Without a clear objective, it was impossible for these two weightlifters to connect their daily activities to helping them move closer to accomplishing their goal. If their objective was to try and lift a certain amount of weight for certain exercises at the end of the year, then they could focus their daily activities on what will best help them accomplish that objective. With no objective and no plan, what they choose to do in the gym doesn't really matter. Interestingly, they could end up doing more damage than good if they continue to randomly select exercises without an overall plan and objective. They would create serious imbalance, gain no real strength, and even create the potential for serious injury if they always select to do curls. 

So, think about your life. Are you a dreamer, with lots of amazing objectives and goals for the future, but with no real, viable, plan to get you there? Or, do you love to plan out your days but without an overall vision or objective to guide your activities. Both scenarios are less effective in terms of building real strength (if you are a weightlifter) or making the most progress possible. 

CURLS OVER MEANINGFUL PROGRESSGuy #2 made an interesting comment about liking to do curls. Yet doing what we like is not always the most effective to help us accomplish our goals and objectives. If you are trying to stretch yourself to accomplish something, then it is likely that you have to do hard things. Often you have to learn new things and feel highly vulnerable in the process. Sometimes you have to do things you don't like to get where you want to go. But you're the one that picked the direction and objective, so it must be worth it!

ADDITIONAL THOUGHTObjectives may change occasionally, but plans need to be dynamic, always adapting and pivoting to best position yourself to accomplish your goals and objectives.

Originally posted 15 Aug 2013

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Short vs. Long-Term Results: How Do You Prioritize?

Whichever you are more focused on means you are likely neglecting the other. I am suggesting that an appropriate balance needs to exist between the two. It is not easy to balance, and once balance is achieved it will be fragile, sometimes swinging back forth on the pendulum several times daily.

Example: If you are losing money today, focused on how all of those losses are an amazing investment into your long-term future success, then you are likely neglecting some things you could do to improve your short-term performance and results over the next 3-6 months. How quick we can be to rationalize our long-term aspirations and neglect short-term "wins".

Example: If you are dialed-in on hitting your target this quarter with a laser-like focus, you are likely neglecting and potentially compromising your long-term prospects to maximize success.

What behavior does your corporate culture reward the most? Do you even try to maintain a balance between the two?

Here is a quick gut check. Make an honest, transparent investigation into your recent track record. If you always miss (or even fail to establish) short-term goals with the excuse that you will make up for it in the long-term, then you are likely a little too visionary and not tactically addressing short-term opportunities adequately. On the other hand, if you are always hitting your short-term goals but complain that you can never get to or complete your long-term projects, you are possibly sacrificing your future.

The key is to find the right balance and then discipline your organization to constantly evaluate and make adjustments as you go throughout each day, week, and month to stay on track with both. A good leader will sense when short and long term focus is out of balance and get things back on track. No easy solution; just hard work, discipline, and leadership to create the best overall result.

Originally posted 10 May 2013

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Know Your Channel

In an effort to keep entrepreneurs and founders as focused on their customers as their product or service, I have written a lot on the need for founders and entrepreneurs to know their customers intimately. Business models differ by industry and business, and, quite often, knowing your customer is not often enough. Sometimes there are several layers between you and the final user of what you make and/or sell. This is called a sales or distribution channel.

Here are a few of examples of sales/distribution channels:

A manufacturer of consumer goods sells their product to retail, big box stores through sales reps who call on those stores. Then those stores resell the products to their customers, the end users of the manufacturer's products.

A manufacturer in the United States sells their products to an importer in an international country. The importer then sells the products to dealers using their in-house sales reps, then the sales reps of those dealers sell the products to their customers, the end-users of the products.

A manufacturer "white labels" their product, meaning they put the name of another company or brand on their products, and they sell them to this other company. The other company then sells the products to their customers, usually people loyal to or very aware of the quality and reputation of this brand.

You make components that are just a part of a final product. You sell the components to a manufacturer who then sells his finished products to online resellers who then sell to their customers, the end-users of the final product.

You manufacture products that you sell directly to your customers, the end-users, who buy from various websites that you own and operate.

So, what is the structure of your sales/distribution channels? How many "layers" are there between you and the final end-users of your products?

Here are a few quick observations about channels:

The more layers in your channel, the more "hands in the pot". This means that each layer needs to add value to the process and expects to make money in return. The economics of your channel are critical to making sure your goods or services can be priced competitively based on your overall strategy.

If your business model does not clearly flesh-out your sales/distribution channel, then your business model is incomplete. This also applies to your business plan...a weakly defined channel strategy is a weak business plan.

You can execute more than one sales/distribution channel, but that adds a lot of complexity to your business. You will likely need to carefully maneuver through the politics of several industries as well as hire leadership to run each channel separately.

For startups, trying to launch more than one channel in the early days is nearly impossible. Analyze all of your channel options, find the one that you think is the best, and put all of your money and focus on that. Unless you have clearly selected the wrong channel strategy, this will afford you the most significant results.

Originally Posted 23 Feb 2013

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Don’t Hide Mistakes, Especially the Funny Ones

In recent weeks I have been thinking about humility and its role in effective business leadership. Being open about our weaknesses and recognizing and reminding others that we don't know everything seems counter-intuitive to many, yet it is often one of the main difference-makers between effective and ineffective leadership. 

David Williams, a very effective business leader and CEO of Fishbowl Inventory, posted the following on FaceBook this morning:

Dave wrote three leadership thoughts he's been contemplating. Do you see what #1 is? Show you're human, selectively revealing weaknesses. Yesterday I used my weekly email to all of the employees at Aribex to follow this advice (before I had even read Dave's FaceBook post) and share two embarrassing moments that reveal some of my many weaknesses while traveling earlier this week. For your enjoyment and amusement, here they are:

Embarrassing Moment #1

So, my first embarrassing moment came when I was speaking during the press conference announcing the donation of the 10,000th NOMAD handheld x-ray system to a humanitarian outreach group. I was sharing some details from a humanitarian mission one of the NOMADs went on to a small village in Panama (so that you can understand why this is so embarrassing, I need to make sure that you know that Panama is a small country on the south end of Central America…remember learning about the Panama canal in school? Apparently I forgot.). It is a compelling story with amazing photos of the village chief in a loin cloth carrying the NOMAD in a hard-shell case and all! But, here’s the problem…when I was speaking, I somehow combined three different humanitarian trips into one. I explained about the hand-dug out canoe that carried the NOMAD over 4 hours to a remote village, but then I said the canoe traveled the Amazon river (please note that the Amazon river runs through the middle of South America and never comes near the country of Panama) in Cambodia (Please note that Cambodia is not in Panama, nor is it anywhere near Panama, or even South America for that matter. It is its own country on the other side of the world about 11,000 miles away!). Not my most brightly shining moment, by a long shot. Luckily everyone was good spirited about it and they teased me mercilessly for the entire luncheon after the press conference. We had a good time with it.

Making the speaking gaffe at such an important press conference was gut-wrenching. I initially wanted to run and hide, hoping no one noticed. Instead, I sucked up my pride, took full responsibility for it, and I think it was actually very effective at helping me come across as human and approachable in front of a group of people I had never met before...and my employees got a great kick out of it, too.

Embarrassing Moment #2

My second embarrassing moment came at the security check at the airport in Knoxville later that day. Some of you know I’ve been nursing a calf injury for over a month. One of the results of that has been that my calf muscles tighten up and become very painful when I spend a day on my feet. My physical therapist recommended that I use a rolling pin to “massage” my calves by placing my leg on the rolling pin and then rolling my calf over the edge. It is actually extremely painful, but helping me make progress to overcome the injury. I am supposed to perform this exercise two times per day, so I took a rolling pin with me in my carry-on bag on the trip. The TSA agent that saw it in my bag when it went through the scanner didn’t like it. They pulled me and my bag to the side, had me open the bag, and they searched through it until they found the rolling pin. I was very embarrassed…after all, who carries a rolling pin with them in a carry-on at the airport. Mike Heyn, Director of Sales and Marketing at Aribex, saw it all happen and was seriously considering denying any association with me. The security agent waved it around a little bit, then had a small conference amongst his co-workers. I caught quite a few “suspecting” glares from them and some of the other passengers. Finally the security person returned and told me I would not be allowed to carry it onto the plane—it could be used as a weapon and they would not allow it. Now I am out a rolling pin, I can’t keep up with my physical therapy regimen, and my wife isn’t thrilled about me using hers…I guess I’m in the market for a new rolling pin. Let me know if you know someone who can help :-)

In today's world of leadership, transparency and humility (I can't imagine these two existing independently in a leader) are critical ingredients for leadership success.

Lessons Learned:

When you make a mistake or a weakness is inadvertently revealed, resist the urge to try and cover it up or inaccurately sustain within others a sense that you are perfect or invulnerable.

When you make a mistake, swallow your pride and laugh at yourself. I've found you actually get over it a lot quicker, and people respect you more for it.

Don't try to take a rolling-pin on an airplane!

Originally posted 31 Aug 2012

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The Dichotomy of Leadership

Yesterday's presentation by Dr. Tim Clark at the annual joint event sponsored by four entrepreneur and business-centric groups in Utah highlighted one of the greatest challenges of leadership, and really why many struggle to be great leaders. You can read the twitter feed under hashtag UVEF.

Among other things, according to Dr. Clark, identified the two main jobs of leaders. Job #1 is to maintain the status quo, keep everything running smoothly, and maintain the existing business. Job #2, on the other hand, is to disturb the status quo, to push the organization to new, innovative levels. Finding people that are good at just one or the other is tough enough, but someone who can prioritize and fulfill both roles are the leaders who have the greatest impact and add the most value.

Originally posted 24 Aug 2012

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How Much Capital Do You Need

When the bank asks why you need that high of a limit on your line of credit, or when you want to do a little scenario planning to make sure you'll have enough resources to handle growth, I recommend you turn to a ratio called Days Working Capital (DWC).

Here is what you'll need:

Accurate balance sheets for the past couple of years. These need to be prepared on an accrual basis.

Validated assumptions about how your growth or shrinkage impacts changes in all of your current assets and current liabilities. This includes accounts receivable, inventory, accounts payable, prepaid assets, short-term debt, deferred revenue, etc.

Validated assumptions on your revenue and profit/loss for the forecasted period.

Forecasted capital expenditures (CAPEX) and other investments for the period.

Now, let's jump into the seven steps to know how much working capital you need.

1. Calculate DWC historically. The formula is actually quite simple. Multiply your working capital (from your balance sheet subtract your current liabilities from your current assets to find your working capital) by 365 days, then divide that total by your annual sales revenue.

(Average Working Capital x 365) / Annual Sales Revenue

Do this for the last 24 months, making sure to annualize sales revenue. The result is a decent historical range of your DWC. It might look something like this:

2. Benchmark your DWC to others in your industry. Once you understand how your DWC has worked for the last two years, compare your findings with industry averages. DWC is not commonly published, so you'll likely need to apply the same formula to the financial information available for your industry and competitors.

3. Determine an acceptable range within which your DWC may fluctuate given your best and worst case scenario projections (OPTIONAL BUT RECOMMENDED). To be done as accurately as possible, this next part requires the use of a financial model for your business, complete with full balance sheet modeling. If you do not have that, then you can merely estimate based on your industry averages and your own historical performance. Based on the chart above, your have experienced a 2-year low DWC of 36 and a 2-year high of 62.

If you do have a financial model, plug in your best and worst case scenarios in terms of growth, slower/quicker customer payments, and "sticky"/lean inventory. Then you can use the low and high scenarios from what you think will actually happen, whereas you will be handicapped by the assumption that nothing material in terms of your working capital cycle will change if you are only able to use historical information.

4. Subtract net CAPEX (add back any financing used for the CAPEX) and planned investments from today's working capital balance. Next you need to analyze any future draws on working capital outside of your normal operations (for purposes of this post, I will assume our analysis will just comprise the next 12 months). This will include a subtraction of working capital funds used to fund CAPEX and other investments during the next 12 months. Your calculation should look something like this:

Working Capital Balance Today     minus CAPEX not financed, or net CAPEX     minus other investments Working Capital available for next twelve months

5. Add anticipated profit margin or subtract anticipated losses during the period to your working capital balance today. Whether or not your business is earning or losing money will have an impact on working capital as well. For the coming 12 months, either add your estimated profits or subtract your estimated losses to derive your estimated working capital available for the next 12 months. For this post, we will assume this equals $500,000.

6. Reverse the DWC formula to solve for working capital. The next part is my favorite. By using a little algebra we reverse the forumla to solve for total working capital required, meaning the amount of working capital we think we might need during the next 12 months given our various scenarios. Here is what the formula looks like:

(DWC x Annual Sales Revenue) / 365

For illustration purposes, let's suppose my annual sales revenue is projected to be $5,000,000. With a DWC as low as 36, my working capital required would only be about $493,000. If my DWC grew to 62, then I would need working capital of about $850,000.

7. Subtract your estimated working capital available the period from your various working capital required scenarios to determine your cash need or excess. In the lowest working capital scenario, you would not need any additional cash during the next 12 months. ($493,000 - $500,000 = -$7,000). This seems to be cutting it pretty close. If your growth is concentrated in just a couple of months, you have some key customers take a little longer than usual to pay, or you have any other negative hits to your working capital, you likely will need more cash. In our highest required working capital scenario, we could need as much as $350,000 ($850,000 - $500,000 = $350,000). Since this analysis only looked at the high and low examples, it is very likely that the cash needs for your business during the next twelve months will fluctuate somewhere in-between.

Conclusion Besides just using a single variable of DWC to run various scenarios, you may also want to run a few scenarios at different sales revenue levels and make appropriate adjustments to the rest of your assumptions as appropriate. Once you are done, you'll be able to clearly and confidently articulate exactly how much additional cash flow, if any, you need to keep your business properly capitalized.

Originally posted 18 Aug 2012

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2 Laws of Social Media

In preparation for a presentation I did yesterday about why and how people should use LinkedIn more, I thought about the governing laws that drive the why and how of my participation in social media. Here's what I came up with: 1. Social Media is just one medium to establish and build REAL relationships. Many of the people to whom I am connected and with whom I communicate through social media are people I have met face-to-face. In many instances, they are people I associate with often in real life. The concept of buying followers that I don't even know feels uncomfortable, like paying people to be my friends. I would never do that. Everything I do on social media is to build relationships, mostly by trying to help and add value to those I'm connected to. After all, that's what friends and real business connections do, right? 2. You are the CEO of You, Inc. I am surprised at how many people shy-away from having a an online presence. Some are humble, others afraid of the unknown. Whatever the reason, it does not discount this one point - you, and only you, are the most qualified expert on the subject of you. If you don't represent, then you're leaving a wide open space for others to do it for you. Or, even worse, little or no online presence could render you irrelevant altogether. Every strategy or tactic as it relates to social media needs to adhere to these two rules. If they do, then you're on the right track!

Originally posted 8 Aug 2012

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3 Must-Haves for NBA Coaches & Entrepreneurs

I listened to Jacque Vaughn, the new head coach of the Orlando Magic, talk about the three attitudes he needs each of his players to have. He's been handed an interesting group of players, and he made himself very clear about what it will take to succeed on his team. I think his list applies to entrepreneurs and CEOs of most companies I know. 1. Want to be thereThis is more than showing up at work and putting in the bare minimum time and effort. Employees who want to be at work create a contagious positive inertia that rubs off on co-workers and customers. 2. Want to be coachedSure, we all want to hire people who bring skills, education, and experience that make them effective. But learning the ropes of the new company, its' policies and culture, take time and regular feedback from leadership. 3. Want to be greatThis is my favorite of the three. Employees with personal motivation and drive to excel will always try to find ways to contribute and add value!

Originally posted 30 Jul 2012

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Why the Recession is a Great Time to Start

It seems like a lot of what the US media has to say about the economic turmoil throughout Europe portrays the doom and gloom of several countries and an entire continent on the brink of total destruction. One result of this perception is that I've heard many entrepreneurs in the United States express fear and trepidation about expanding their businesses into Europe. Regardless of everything we read, hear, and see, there are still hundreds of millions of people throughout the European region. They all have needs, and they are still consumers deciding where to spend their money. Some have less money than they did before, some have more, and some have about the same. They still need to eat, have access to shelter, get on the internet, purchase vehicles, and so much more. Many domestic and international businesses are still prospering there. 

If you have no sales in Europe right now, then all you need to do is get one customer and you will have grown your European business. If you add far more value than you charge for your goods or services, and if you have localized marketing and a sales/distribution channel that adds value to all parties, then it may be time to set your fear aside and realize Europe still represents a great opportunity to grow.

The big companies are spending a lot of time and resources on developing the emerging markets, where they claim all the potential growth will be. For them, this is accurate. They have penetrated as deeply as they can in Europe and other more developed nations, and they don't stand a chance to increase their market share as significantly as they can in markets that are in rapid expansion, like China. For a small business with little to speak of internationally, Europe still represents a strong market opportunity. Don't buy into the hype.

Originally posted 5 Jul 2012

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Why Accredited Investor Requirements Don’t Measure Financial Sophistification

With all of the excitement about the JOBS Act and the legalization of selling equity in private companies to unaccredited investors, I have to ask the question: Does qualifying to be an accredited investor really qualify someone to make better investment decisions than someone that is not? Here is the definition of an accredited investor: he/she makes more than $200,000 per year or has a net worth of more than $1 million, exclusing personal residence. I have met a lot of people that meet this requirement that have and continue to make horrible investment decisions. So why are income and net worth the only requirements? Probably because just about any other requirement would be too hard to measure. The accredited investor requirements are exclusionary. Before the SEC Act of 1933, anyone could sell and buy stock in any company to anyone else. The income and net worth threshold set by the 1933 Act exclude some who are probably really smart, but the Act takes the position that it's better to exclude them and only allow those with money to lose to be accredited. It's faulty logic, and it is at the core of the CrowdFunding movement. In January of 2013, when equity and debt-based CrowdFunding become legal, unaccredited investors will no longer be excluded from buying stock in privately-held companies that crowdfund. Unaccredited investors will have annual limits they can put into crowdfunded companies, but at least they can get into the game.

Originally posted 18 Jun 2012

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The Slingshot Business Strategy

At Yesterday's UVEF luncheon, Ryan Caldwell of MoneyDesktop shared an idea that was really powerful and relevant to everyone in the room. It's a business strategy, and the context and analogous manner in which he presented resonated with everyone in the room as one of the main take-aways. When the space shuttle flies to the moon, it doesn't pick the straightest path to get there. It uses the earth, the largest point of leverage, or gravity, to slingshot itself to the moon more quickly and using less fuel. This means that the space shuttle doesn't actually head toward the moon when it launches. But when it slingshots around the earth, it is on a direct course. This concept has so many business and personal applications, and it has been a big reason why MoneyDesktop has gotten traction. They started by beginning to approach some of the 14,000+ banks and credit unions in the U.S. But Ryan quickly realized that they are slow to make decisions, late to adopt new technology, and clueless when it comes to how software can make things better. His research found a much better point of leverage around which he could slingshot into all of the banks...through the software companies that build and run the online banking portals the banks use. The main point of the slingshot strategy has a few elements to it. First, the best way to get to who you think your customers are is not always a straight line. Second, research the industry and all of the players to find your greatest points of leverage. Third, find the entrenched players, the massive parties that are too big and encumbered to change. Fourth, use those entrenched players, their mass, their inability to innovate, and their slow decision-making abilities, to slingshot yourself to your customers. Fifth, execute. It still takes a lot of work, and you need to continually pivot your trajectory, speed, and direction all along the way to make sure you hit your target! Here are some of the tweets that tried to capture Ryan's comments: @_KenKaufman: U may have to move a different direction first to get where u want to go #uvef #slingshotspaceshuttle @izattapps: Leverage large entrenched players as partners. Key to capturing large user groups quickly. #uvef @RyanCaldwell @_KenKaufman: Find a planet u can slingshot around...where can u get the most leverage, even If it's not the most logical first step #uvef #slingshot @utahguy: Ryan Caldwell, @MoneyDesktop, use the gravity of entrenched players to achieve a slingshot affect. #uvef @izattapps: Path to market depends largely on which players you align with and which ones you don't. #uvef @izattapps: Not always the direct path is the best path. Long way around can leverage partners to get 10 times as much done with 1/10 the effort. #uvef

Originally posted 15 Jun 2012

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It’s Less About Software and More About Using it Correctly

About a month ago a business owner asked me this question: "Is QuickBooks the best for me?" After asking a few questions, I realized he wanted some reassurance that he wasn't missing anything about his business and how he could improve it. His business is doing less than $500,000/year and QuickBooks is certainly an adequate accounting program for that size of business, but what stuck out to me is that he was asking the wrong question. Rather than trying to determine if he had the right software, he should have been more concerned about if he was using it adequately. If you drive a manual transmission 5-speed car but you never shift higher than second gear, you're not getting the best performance and results from your vehicle. It's the same with accounting software, or any other software for that matter. Software does not run itself. The people who interface with the software, who input information and export information and reports, they are the ones who run the software and determine how effective it is for the business. Having appropriate software is certainly required for success, but far more businesses fail to use the software they have correctly, maximizing its ability to help the business be successful!

Originally posted 10 May 2012

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Lessons Learned from 3 Successful Entrepreneurs

I was part of a great event last week that featured 3 entrepreneurs. Each shared three of their top lessons learned during the process of starting, developing, and growing their enterprises.

Thanks BizVision's Shawn Jones, Rimports' Jeff Palmer, and OrangeSoda's Jay Bean, the content was top notch. Here are some of the highlights from the Twitter feed for the event...all found under the hashtag #uvef.

Tweeted by @BNMadsen:

Bizvision gets repeat & referral biz from customers; very little other marketing.

Bizvision advantages: low price, lean & flexible, low risk upfront.

Bizvision lesson learned: #1 = partner model (drive development), experts in their verticals, best "salespeople".

Bizvision lesson learned: #2 = customize/scale (started by building a platform not a site), build w/future in mind.

Bizvision lesson learned: #3 = stay lean: keep expenses down, outsource before hiring/buying equipment, focus on actions/plans.

Rimports financing through Zion's First Natl Bank - great partner.

Moms are best customers and marketers for Rimports.

Scentsy is biggest Rimports' competitor and biggest evangelist for product at MLM, Rimports sells for less at retail.

People are our most important resource; invested from the core - Rimports.

Honesty & integrity are core values - vol dealt w/82 out of 155,000 units - cost $1/4M - cemented partnership with Walmart.

Rimports mantra: there is a way.

Rimports - keep offerings fresh each quarter.

Tweeted by @Kisstixx:

Honesty and integrity in business will take you far never compromise that.

There are no barriers just challenging opportunities!

Choose a strategic investor that has your same vision, passion, and drive @mcuban

Tweeted by @aboytodd:

Lesson #3 at #bizvision "stay lean"

Shining referral for Zion's bank from rimport's Jeff Palmer.

People are best investment. Lesson learned at rimports.

Partnerships and alliances are the greatest asset for growth at rimports.

"There's always a way." the maxim of Jeff Palmer at rimports.

Rimports awarded product of the year by Walmart in 2011

Tweeted by @jpilmer:

PRICE is easy to copy. Low risk and flexible are not and better differential advantage.

Bizvision says stay lean

#Rimports on deck w $120M revenue at #UVEF. They love #ZionsBank as parter. 18-65 year old women target. They know the customer.

People are our best investment at Rimports. Give people autonomy. Key motivator.

#OrangeSoda on deck at #UVEF. Avg customer only $500. The key seems to be the niche focus and knowing the market.

Mobile Search is key to SEO of future per #OrangeSoda at #UVEF . Heads up #entrepreneur.

Tweeted by @thisiscoalition:

Innovation is driven by pushing the envelope.

Love the recognition that partners drive the business of BizVision.

Tweeted by @BCookson:

Build platform rather than just site.

Tweeted by @LynnDavid007:

Business financial management is a lot like personal money management. Stay Lean--don't spend unnecessary money.

"I have two words for funding: Zion's Bank." --Jeff Palmer. A simple statement, but can be crucial advice for a new entrepreneur.

Some strategic investors will not have the same vision, passion, or objectives as you.

Social networking is going mobile dramatically.

Tweeted by @dagrani:

Yay for rimports to listen to women to drive sales. Women are responsible for majority of sales.

Rimports manages growth through hiring great people. Gives them a task and then walks away. Trust is key.

Tweeted by @kindallpalmer:

There are no barriers, only challenging opportunity.

Be innovative. Build what you need instead of buying to stay on top.

Tweeted by @bryanbostrom:

BizVision does not have clients or customers, but Partners.

People are your best investment. -Jeff Palmer, Rimports USA

When adversity surfaces, think, "There is always a way."

Only spend your time and resources building a product that will make you the best in the biz in your space. Outsource the rest & save.

Tweeted by me...@_KenKaufman:

Focus on calling those who pay you partners, not customers or clients.

Customer service can always be a point of differentiation.

Customize and scale...build the platform, not just a website. Build with the future in mind.

Stay Lean. Cyclical business allows them to shift on the fly.

Rimports likes having MLM competitors because they evangelize the concept at almost twice the cost.

Invest in People.

Honesty is integrity.

There is always a way. It's up to you to find it and then make it happen.

Some strategic investors will not have the same vision, passion, or objectives.

Decide what technology to buy vs. build. Stick to your core business.

Know your customer and how u can best solve their pain points.

Focus all product development efforts on how u can best serve your customers.

Originally posted 14 May 2012

[kenkaufmancfo-blog]

To MBA or Not

Introduction Based on some recent chatter on the subject, I am going to chime in on why pursuing and earning an MBA degree was one of the best decisions I ever made for my career. I realize there are lots of opinions, theories, and even some studies on this subject, and its clear that an MBA is not for everyone. One of my favorite articles about this topic, along with the debate of pursuing college education vs. entrepreneurial opportunities, was written by @_AlexLawrence and it is worth your consideration: Should I stay or should I go. I will write this post similarly slanted toward entrepreneurial career paths. I do not intend this post to be any more than my anecdotal experience and opinion. The MBA degree was right for me, and here's why. You Get What You Put in The amount of value extracted from the MBA education is directly proportional to how much each individual student puts into it. The best part of my education was when I allowed it to push me the furthest from my comfort zone and inspire me to change and grow. I attended the University of Georgia, well-known for its entrepreneurship program. I signed up for as many entrepreneurship classes as possible, and I was not disappointed. Within the first three weeks we had to form into teams and come up with a business idea to pitch to real-world investors and entrepreneurs. Every three weeks thereafter, on a Friday, we had to pitch to a new set of investors and entrepreneurs, and our professor expected significant improvement between each 3-week period. After the second of these presentations, I was feeling pretty good about my team, our business idea, and the plan we were building...until I returned to school the following Monday morning. In my student box was our draft of a business plan with notes covering the margins and every available white space on each page. These notes were not pointing out our amazing skill and insight...rather they constructively ripped our plan and model apart. On top of the plan was an audio cassette tape sporting our team name. When the tape ended 45-minutes after I started listening to it, I felt as if I had been cut to the very core. Our professor pointed out every major and minor flaw and problem with our plan and presentation, and most of it was directed at me. But I only had time to mope for a few moments until the other side of the audio cassette began to play! I had two choices. I could be angry and coast through the rest of the class, or I could take every piece of constructive criticism, analyze it, and figure out how to make myself, our presentation, and our plan better. Those who know me can likely guess which option I took, which was the latter. I went to work and felt like we made significant progress when we went in front of the next group of "judges" just three weeks later. But the following Monday morning I found a similarly marked plan and audio cassette tape in my box. But this time our professor's voice only filled the tape halfway through the second side. Now that's progress! After an entire semester of this rigorous improvement process, I was a changed person. But it was only because I made the choice to fully engage. What I got from this class and the rest of my MBA experience was directly proportional to what I put into it. We went on to win several business plan competitions and a slot in the grand-daddy of them all, Moot Corp. My attitude toward my MBA education probably had something to do with why I was voted by my fellow classmates as student of the year. The speech I gave at graduation teaches some of these principles...feel free to read it here: Ken Kaufman Speech at MBA Graduation - Servant Leadership. MBA Education Without the Degree I am convinced that you can learn most of the MBA curriculum from books and other programs that boast the ability to teach the MBA material in 90 days, a month, or I think one of them even promises the timeline of 5 days. There are plenty of executive series and lectures that can fill the need to learn. Not to mention that the school of hard knocks has taught a lot of first and second-time entrepreneurs more than most newly minted MBAs can hope to learn from their entire corporate or consulting careers. MBA Degree is About Opportunity You see, in my opinion, an advanced degree's greatest value is in the opportunities it creates (notice I said degree and not education). I felt that the MBA degree would open up more opportunities to do the things I wanted to do with my career than if I didn't have one. Anyone considering an MBA needs to weigh that question in their minds, and realize that an MBA from some schools does not create as many opportunities as an MBA from other schools. If you always plan to own your own business and your customers don't care if you have an advanced education, then the MBA degree itself will likely not add much value to you. But if you invest yourself into the education, I have no doubt you'll gain great value. And that's the key...the education can be gained from many different venues, but the degree cannot. MBA Degree and Education are Meaningless Unless You Can Perform Early in my career I was hired by an entrepreneur who started his company twenty years earlier after dropping out of high school. His company had grown to over 500 employees, an amazing success story. On my first day he asked me: "So what do you think you and your advanced education can teach a high-school dropout about running a business?" That was the moment my MBA education and degree came full circle. I realized right then and there that everything I learned and the fancy degree on the wall helped me get the job but would be worthless if I didn't help this company grow and improve. My reply was simple: "Well, it seems like I have a lot to learn from you and your success." And I did. Conclusion - Investment in Yourself Early in my studies and career in finance I heard many people talk about the greatest investment most people make is in their home. I could not disagree more. The greatest investment people can make is into themselves...their education, experience, etc. And I'm not talking about the fancy ROI calculation where you figure out how much more money you can make a year because you earned an MBA. I'm talking about the person the MBA experience helps influence you to become. Is your perspective broader? Are you more able to make a positive difference in your relationships? Are you more empowered to add value wherever you decide to commit your professional time? That's the real "ROI" of the MBA.

Originally posted 14 May 2012

[kenkaufmancfo-blog]

Review of The Lean Startup

While reading The Lean Startup by Eric Ries, I found I underlined many sentences and wrote many notes in the margins. Before I tell you the most valuable nuggets I learned, first let me give my review: it is an outstanding book! If you want to or already have started a business, you need to read it. If you agree that the definition of business model is the most scale-able and repeatable way to get customers to pay you for your product or service, then you'll want to read this book more than once. Now, on to some of my key take-aways. Entrepreneurship is a form of management, one that focuses on doing the boring stuff over and over again, following a system, or process, that follows the steps of building, measuring, learning, tweaking, and then repeating this process as quickly and diligently as possible. The traditional balance sheet and profit and loss is almost useless in the startup phase. The balance sheet and its various ratios are meaningless, and the profit and loss (or really the loss statement since most startups lose money at first) reveals no new, timely information to the entrepreneur. Lean startups call for more frequent and timely numbers that measure progress in the context of experimentation, learning, and key drivers of success. Evaluating what we learn from our experiments leads us to one of two conclusions: pivot or preserve. Either it didn't work and needs to be changed or it did work and we need to keep doing more of the same. Running one test, or experiment, at a time is no longer acceptable. It breeds a culture of politicians and salespeople lobbying for the success or failure of the experiment. Running hundreds of tests at a time (how Ries describes Intuit) allows for everything to move at the speed of the experimentation system with "shift-on-the-fly" results. The goal of every startup should be to test every one of the assumptions they have made as quickly possible. The "go and see for yourself" principle challenges all entrepreneurs to get to know their customers intimately and understand the core reasons they want to buy. A Minimum Viable Product (MVP) does not have to be a working prototype. It can be something as simple as a basic survey or landing page with basic information and calls to action. It might even be a video of the concept. The key is to experiment on and test your assumptions as quickly and inexpensively as possible. I love the concept Ries calls "Wizard of Oz testing". Rather than build out a product that is perfectly automated at the beginning, you can make it appear that your website is automated but actually is being run by humans. This allows for quick and inexpensive experimentation to take place long before investing in something that you'll likely need to scrap later. "New customers come from the actions of past customers." Those are some of the more important points I learned or re-learned from Eric's book and perspective. The book is well worth the read, and every business that has any desire to innovate can add value to their innovation process by implementing The Lean Startup principles.

Originally posted 21 May 2012

[kenkaufmancfo-blog]

Professional Brawn, and Why You Need Some

In a recent interview, I was struggling to find a term to describe someone who had worked their entire career on building up a strong foundation of knowledge, contacts, successes, and failures; someone who had learned a bunch about being successful in business the right way, who knew how to build and foster mutually beneficial relationships, and who was humble enough to still hunger to learn, change, adapt, and evolve. And, someone who was anxious to bring others with them on their journey, to teach them, train them, mentor them, and ultimately be replaced by them. How do I sum all of that up into one term? And out of my mouth came brawn. But that sounded like only brute force, the roll-up-your-shirt-sleeves and get the work done element that would result in physical brawn, and neglected giving credit to all of the intellectual and emotional prowess required for everything mentioned above. So I put the word professional in front of brawn and thought I might be onto something. Whatever you call it, we all need it, and we all hope everyone we hire has at least some of it.

Originally posted 16 April 2012

[kenkaufmancfo-blog]

Fixed Cost Coverage Ratio

It’s been a long day with lots of customers interacting with your team and buying many of your products and services. Your staff seemed busy and you felt productive. But did your business actually move forward or backward? Did you win or lose today? Here is the main number you should track every day in your business to answer these important questions. THE FIXED COST COVERAGE RATIO The number of times your business covers its fixed costs each day is the how you determine if you win or lose, and that is called the Fixed Cost Coverage Ratio. In order to derive this critical number, you need to calculate your daily sales volume and divide it by your break-even volume. I will explain how to figure this out for your company. Variable Costs You need to start by determining your variable costs. Variable costs change based on your daily sales, and they are expressed as a percentage. This usually includes materials, direct labor, and staff wages that are paid based on production. On average, let’s assume this number is 30% for your business. This means that for every $1 in collect-able sales you produce, you pay $0.30 to the variable parts of your business. Contribution Margin For the sake of this article and the example below, I will assume that the variable cost percentage subtracted from 100% equals the contribution margin, or the percentage of every dollar of collections that is left after paying the variable costs to cover the fixed costs. In this example the contribution margin is, therefore, 70%. Fixed Costs Now we need to discuss fixed costs. Fixed costs do not change, regardless of your daily sales volume, and they are expressed as a flat dollar amount. This usually includes your rent, insurance, salaries and wages not tied to production, utilities, marketing, etc. I suggest business owners include all of their compensation in this number, regardless of what the compensation might be called (i.e. salary, dividends, guaranteed payment, interest, etc). Let’s assume your fixed costs are $50,000 per month. Break-Even Calculation To determine break-even, we need to divide the fixed costs by the contribution margin ($50,000 divided by 70%), which equals about $71,500 of monthly production required to pay your variable costs and barely have enough left to cover your fixed costs. This means you did not make any profit during the month. To be more specific, if your business is open 20 days per month, you need to produce $3,575 per day to break-even. But hopefully you didn’t decide to own your business just so you could break even. The goal is produce as much more than $3,575 per day as is possible. The Ratio The concept of the fixed cost coverage ratio is to determine how many times your production each day can cover your fixed costs. By dividing your daily production by the break-even, you will know your ratio. If the ratio is one, then the business is being run at break-even. If the ratio is above one, then you are profitable. If you drop below one, then you lost money that day. For example, if you sell $5,363 in a day, your break-even coverage ratio is 1.5 ($5,363 divided by $3,575). This is a good, profitable day. If the next day you only sell $3,225, then your break-even coverage ratio is 0.90, meaning you lost money that day. Conclusion Empowered with this daily metric, you no longer need to wonder how you did each day. I recommend you revisit your variable and fixed costs quarterly to make any appropriate adjustments to your calculation. As you improve this ratio, you’ll find your cash flow and profitability increase significantly.

Originally posted 10 Apr 2012