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FW29 - Management
1. Behavior
2. Day to day
3. Goal setting
4. Financial management
5. Delegate-control-reward
6. Do it yourself
7. Author
FW30 - Strategy


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FW29-MANAGEMENT

 

YOUR POSITION

Look at the map

MAP

60 days before opening.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


INTRODUCTION

All the MBA schools emphasize on leadership. Thousand of books are available in the US libraries on this topic. Sometimes it is said that you have to distinguish leader and manager.

Leaders develop a vision, are able to communicate, or to share their vision with other people. Leaders define goals and are creative. They invent new concepts. On the contrary, managers solve problems and exercise authority.

These distinctions do not apply to a small biz because you have to be both a leader and a manager! It's the real management.

Duration of the lesson: 1,5 Hour

Duration of external readings: 3,5 Hour

Duration of Do it yourself: 25 Hours

Total duration: 30 HOURS

Objectives:

Organization gives a static image. We shall turn it in a moving image in showing how to easily manage. Our objectives are:

-To prescribe you the best business behavior

-To show you how to set up objectives and manage their achievement.

-To show you how have the things done and not doing them.

By the end, you will discover the easy management rules.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


1-BEHAVIOR

A french proverb says that the clothes made the monk. It means that in society, everybody has a role to play and people who attend the comedy expect to recognize easily the role.

As a boss, you cannot behave like a hippy. As we have seen in the communication course be very careful about your look and your behavior.

11-Leader or manager

As we have seen in introduction biz gurus claim that you must be both a leader and a manager

Real life example:

I had known a very creative and pro visioning leader. Obviously, he had all the qualities that the biz schools recommend. Unfortunately, he was unable to be obeyed by his own secretary. Despite the vision, the company had gone to bankrupt within a very astonishing short period!

On the contrary, I had known many conservative boss who were very good managers. Unfortunately, they had no sense of humour!

It is not easy to be both a leader and a manager! The VCM model: Vision, Commitment, Management describes how these qualities must be mixed in a single man.

The real problem is that it is difficult to really connect all these qualities. For example, many creative person are solitary and don't want to deal with people. It means that the concept of leadership defined as above is quite impossible to meet in one single person.

So, we shall propose an empirical approach: What qualities must you have to succeed? These qualities are twice: You must be likeable because friendship is a key for a good salesman. In the same time, you must inspire authority because it is a core matter for a manager.

As a businessman is both a salesman and a manager, you must gather these two qualities! Look at the following drawing which illustrates this new approach.

External reading:

Go to www.ivysea.com . This leadership and communication center is an award public-service web site designed to foster the spirit of conscious enterprise and inspired leadership. A vast array of topics enable you to revise and complete the creativity and the visioning modules.

Go to www.eaglesflight.com. Click on "Harness leadership potential" and then on "Leadership articles"

Go to www.academicleadership.org. You will find here a vast array of articles and essays that go to the major issues of leadership faced by those in leadership roles.

12-Friendship

Regarding friendship , the real measurement is your ability to make friends. A good leader has many friends. As a result, these friends expand your own visibility and your own vision. Then you get a leadership statute in your community. You can rely on this statute to start your biz. It means also that the customers will look for your company.

In this matter, I invite you to go to the following site:

External readings

Go to www.dale-carnegie.com . Then click on site map and then on "dale carnegie's golden books" You can load and read these "golden rules" for free in your computer. It's the best lesson I have ever learnt on such a matter.

I have read these books 30 years ago and I had been highly impressed by the optimistic view of the author. It is a good reading for the entire personal development course.

13-Authority

No authority, no management. The first you have to do is to show your authority, for avoiding to use it too much. I mean that you have to keep your distance with the persons you employ. Always remember that you have to reward but that you have also to reprimand them if they do not fill up their job.

In such a situation, it's always a bad policy to make friends with people and worst to be familiar. Always be courteous but professional.

Down earth advice

It is said that a boss must share his vision with the employees: The vision should motivate people and improve staff productivity. Unproductive people in such a situation should leave the company spontaneously.

Be careful about this advice: In continental Europe, labor unions rally the unproductive people and counterbalance easily the boss vision. As a vision is subjective, it's easy to contest it and if you attempt to impose it you risk to be sued for moral harassment!

Do you discuss religious or political matters with your staff? No and you are right. In the same way, do not talk about your vision with your employees. Just ask people to do their job!

I know that this advice is quite the contrary of those you find in biz books. You have to understand that these books are dedicated to executive of big corporate's and not to small biz boss. Of course, a young executive is very often involved in some complex plan to climb in the hierarchy. He has to make friend with the boss secretary, he has to give a good and friendly image, he has to flatter everybody!

It's not your situation! You have nobody to flatter and you don't care about climbing in the hierarchy! You are just the boss. Your own authority is the only thing you have to care about.

You have constantly to check that your authority is respected. Make test to check it and do not take it easy. If your authority is going to be contested, be sure to get troubles with everybody.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


2-DAY TO DAY MANAGEMENT

Do not expect to properly organize your biz if you are not yourself a very well organized person. In organizing yourself, always ask the following question: How shall I organize myself to bring value to the customer. You do not organize for your convenience or pleasure. You do not organize to please the staff. You organize for the customer.

Real life example:

A lot of managers give a sad example : confused timetable, office encumbered with papers, disorganized activities, no singleness of mind, inability to keep schedules, sustained attention for insignificant matters while important ones are forgotten, urgent works carried out at the last minute, appointments to several persons for different interviews at the same hour, etc.

I have observed that these defects were frequent among the managers appointed by favoritism in the public sector and who were working with the taxpayers money. On the contrary, you will rarely observe such defects among the real businessmen who are working with their own money.

21-Time management

I will only focus on six crucial theorems or postulates ( in fact down earth advice), that you could learn by heart and immediately apply:

1-Devote 80% of your time to important and urgent matters and 20% to accessory ones.

It looks obvious but it's worth to repeat it!

2-Do urgent things first.

Whatever important or accessory matters may be, they are sometimes urgent (for example: sending your income tax form within the required time before additional charge).

3-Start with the most unpleasant task and carry them out quickly.

Among the unpleasant task, you will find all the papers to fill up for different administrations. Regarding income tax and so on, fill up them carefully or give the job to an external lawyer.

As for others feed back, take the habit to fill up quickly. When you lack an information, do not lose your time in searching it in your files. Do not leave an empty case, because the administration should be happy to send you back the paper in asking you to properly complete it! Just write anything which could look reasonable and send the paper.

4-Set up a time allowed to each task and respect it

Do not be perfectionist.

5-When you begin a task, do not interrupt it as long it is not completely finished

An interrupted work is less effective and take more time than when it is done continuously.

6-Have a daily, monthly, yearly planning.

Communicate this planning to your staff

No daily planning = a wasted day.

22-Phone management.

Most of people recommend to have a voice mail and to return the calls in the evening or the next morning. I don't agree with that because people do not like to wait so long and notably your customers.

So I suggest that you open your phone on the early morning for example between 8 PM and 9,30 PM. It enables people who have urgent matter to call you. Then you put your voice mail from 9,30 PM to 5,30 AM. At 5,30AM you take the calls and you return them until 7 AM. Then you put the voice mail until the next morning.

As for the email, check you box twice a day.

23-Meeting management

In a bad organized company, meetings are too often a loss of time for you and for the persons who attend. You have to carefully organize and plan your meetings:

-There are some common rules:

Every meeting need a preparation. In any situation, you chair the meeting. Never arrive in advance. It's a good thing to make people waiting a little (no more than fives minutes).

You will have three categories of meetings:

231-Weekly meetings:

They are dedicated to follow up the company and sometimes to deal with some urgent problems. For urgent problems, you can organize a meeting at any times within a short announce. Otherwise, indicate to your staff that you will hold a meeting each week, on monday for example at ten o clock.

Choose a day convenient for everybody. Do not put the meeting early in the morning or to late in the evening! Only invite those who need to attend.

Beginning the meeting, indicate a duration: starting time and closing time. Ask someone to take note. Firstly, read the minute of the previous week. Do not allow people to chat or to come in late or to leave before the end of the meeting except if they ask permission for a real reason. By the end of the meeting, set up next steps and tasks to do.

232-Communication meeting:

It means that you have something to communicate to your staff or to other people. For example, it can be a meeting for your sales force. As the audience is larger, you can need a micro and a podium.

You have to prepare you for the speech. Visualize it and train yourself several times. Never read your notes, never recite your speech, never get off the subject. Avoid to enter in too much details.

Avoid computer, slides and transparencies. If it is necessary, use paper board or have a person to assist you for moving transparencies and preparing the meeting. A boss does not use such equipments. You have to command. A slide or a transparencies does not command! Rely on your note content, your voice tune and your look.

Present the point, support it, sum up and close. Count about ten minutes and no more. Answer question at the end and group several questions calling for only one answer.

233-Social meetings:

It includes for example cocktails of new year, greetings of external participants and so on. Remember that every time people are in a meeting, a little speech is expected from you even if it has not been scheduled.

In this case, you have to speak just like if you were improvising and in a cheerful way. Most of the time, you stand up with a glass in hand and people gather around you in an informal circle.

Of course, you have to prepare you for the speech and to repeat it several time because it is a difficult exercise. When you begin, breathe at large. It will give you confidence. Never put your hands in your pocket. Just put your hand cross on the stomach: it's a peaceful posture and it enables you to lift your hand for underlining a fact and then to go back easily to your former position. Avoid to walk or to move in speaking.

Anyway be short: two or three minutes are sufficient.

234-Official meetings:

Sometimes, you can have to deliver a short speech in a formal manner. In this case, establish a writing text and read it very slowly. You could then give this text to people who require it. Act in this way, when you have an important message to deliver to the press.

235-Toasts:

Ending an official dinner, it is usual to deliver a little speech and to address toasts. In this case you have better to write your text but you must not read it. Be short: No more than one minute.

It is always the host who opens the toasts. If he says nothing, of course do nothing. If it's you who invites, at the end of the dinner click on your glass with a fork to call for a silence. Then, either you stay sitting if it is a small audience, either you stand up if it is a large one and you deliver your speech and toast.

In foreign countries, check the habits with you embassy.

24-Social management:

Being a boss you can be invited to many external events such as charities and so one. If you say always yes you will lose a bit of time. So when you receive such invitations just ask yourself the following question: "Is it useful for my biz or my image: yes or No" Of course if the answer is yes, go to the events.

If you can't decide because you are not sure, ask yourself the second question: "does it please me: Yes or No". If the answer is yes, go to the event.

As a boss, try to be at your office the longer time possible. Do not past your time in having lunch or in chatting in saloon! Take the habit to ask the suppliers to hold meetings at your office. As for the customers, it is polite to hold meeting at their office if they ask it.

To gain time and avoid the traffic jam and the parking, try to have a driver. If you have the choice between a secretary and a driver who also could be your body guard, choose the driver. It will be more useful since you do all the secretarial work by yourself with your computer.

External readings:

Go to: http://peerspectives.org . Click on "Building and inspiring an organization". Then click on "Time management", "Meetings", "Presentation and presentation skills"

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


3-GOAL SETTING

Everybody say that a manager has to set up objectives or goals. It's good but I will go further. I assert that you have only one goal: Bring value to the customer.

Unfortunately, you will observe the common following trends:

1-Any structure tends to produce complexity.

2-Any staff tends to measure its work with the volume of paper produced

3-Any executive tends to measure his competency with the complexity of procedures he invents

Facing these trends, a good boss must ask the following question :

" What does it bring to the customer? How does it cost? If the answer is evasive, your reaction must be immediate."You do not know, neither do I! Suppress this task !"

31-One goal and no more

The value you bring increases in return your profitability. As the profitability is the most tangible sign of the value you bring, it means that you must always increase your profitability, years after years.

In this context, you have not fifty goals depending on your mood. You must have on unique and constant goal: Increase the profitability.

Real life example:

This demonstration seems obvious but I can assure you that many people even in the business circles disagree with it. In this case, I usually ask them what are the goals of their business.

Most often, they present a shopping list with five to ten objectives! That is to say no real goals at all. Then, I usually say " If I was working in your biz, I would be unable to understand for why I am here (except to get a salary!) and what I am supposed to do. Moreover, I expect that if I'd ask you these questions, you would be unable to answer me!"

An objective of profitability is measured by the return on equity (ROE). We have studied this notion in a former module : If you have invested $10,000 and if you get a profit of $2000 at the end of the year, your return on equity amounts 20%. If you plan an objective of 30% the following year, it means that you must gain 10 points during the year.

We shall give you a practical example of how to proceed.

32-Case study

Let us take the data below:

- Your turnover is $20 000.

- Your production costs reach $18 000

- Your profits are therefore $2 000

To increase the profits from 2 000 to $3 000, supposing that your sales prices remain constant, you can either increase sales or increase your margin per unit sold by decreasing your production costs.

You will therefore entrust your manager in charge of sales with the task of increasing sales from 20 000 to $25 000. Since $20 000 of sales produced a profit of 2 000, it means that $25 000 will guarantee profits of 2 500. You will therefore increase your return on equity from 20 to 25%. You have already gained 5 points by adjusting sales.

At the same time, you will entrust your task manager in charge of production with the task of decreasing costs by 2.5% Your production costs, which were $18 000 before the increase in sales, are now $20 500. A decrease of 2.5% therefore leads to savings of $500 and your profits increase from 2 500 to $3 000, in accordance with your objective.

By acting on these two ways, you increase your chances of gaining 10 points and achieving your objective.

Be very precise in fixing goals: Do not say "I would like", Say "I want you report me that the task is achieved before to morrow morning at ten!"

This example shows that when you choose the good goal, management becomes easy.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


4-FINANCIAL MANAGEMENT

Setting up budgets is a core task for any real manager and it needs a bit of authority. To establish a budget means to decide what amount of money should be allocated to each function of the company.

The budget is normally prepared in the beginning of the year for the year to come. Then, the money you have budgeted will enter in the monthly cash flow projections. It means that regarding expenses, the budgeting decisions you have taken at the beginning of the year are reflected in the cash flow projections.

Of course, you cannot allocate money if you do not know the cost of each function. This knowledge is coming from the cost accounting.

Down earth advice

Never delegate the power to allocate the money. Follow carefully the budget preparation and execution.

41-Expenditure budget

To establish a budget means to decide what amount of money should be allocated to each function of the company: What amount for the salesmen, What amount for the production, What amount for the management of the group: Secretarial, rent, papers etc.

411-Salesmen budget

The salesmen must have a budget. They must know how much can be spent to win sales: Travel expenses, phone etc. If you increase the salesmen budget by 10 %, you must be assured that the sale will increase by the same percentage. To appreciate the evolution of sales, you have two tools: Sales prices and sales volume variance.

Sales price variance: It is given by the following formula:

Actual sale price - Previous sales price* Actual quantity sold = sales price variance.

Let 'suppose your actual sale price is $8. Your previous price was $12, and the quantity sold amount 500. It means that your sale variance is: $8 - $12 = -$4 * 500 = -$2000.

Volume price variance: It is given by the following formula:

Standard sale price * (actual quantity sold - budgeted quantity) = Sales volume variance.

Let's suppose your unchanged price is $8. The actual quantity sold is 500 while the budgeted quantity was 800. Your volume variance is: $8 * (500 - 800) = -$2400.

These two tools enable you to evaluate the salesmen results. In the first case (price variance) and as long as the fall in sales does not exceed $2000, the salesmen do not bear any responsibilities. On the contrary, there is something to elucidate in the second case (volume variance). The salesmen must:

-Explain why

-Find solutions

If your sales decrease and the budget increases, change the salesman!

412- Production budget

As variable costs will increase proportionally with the production, the budget allowed to the production must be adapted to the production:

Production + 10 % = Budget + 10 %

Production — 10 % = Budget — 10 %

The variations observed in report to the equations above can be explained by:

-Increase or decrease of prices on raw materials (petrol, spare parts).

-Augmentation or drop of salaries for the production staff (hand workers, foremen, engineers). If the sale, and by consequence the production drops, it is absurd to increase salaries. If this augmentation is imposed by the Government, you must immediately reduce your staff (always have in mind the Possibility Production Frontier).

Once again, you can use two tools: the purchase price and volume variance (it's the same as the sales price and volume variance) and the efficiency variance which can be used for machinery:

Budgeted or standard oil spent by the machine - actual quantity spent * cost of a liter of oil = efficiency variance of the machine.

413-Management budget: fixed costs

Fixed costs are not proportional with sales and production.

They are decided once and for all.

Once decided, this budget has no reason to increase.

Nevertheless, because of inflation, this budget will increase over the years.

So, if your sales are falling, this is where you must cut first!

414-Control and profitability methods

You must also have the control over the execution of these budgets. Make a follow-up of your budget every third month.

Your control panel is quite simple:

 

Sales decide the level of production. The sales and the production budgets must move in the same direction. Any imbalance is irregular.

If any imbalance appears, do not wait until the end of the year to make adjustments:

Change the salesmen, Freeze salaries, Reduce the groups’ management expenses.

If you produce several products and one of them becomes an element of loss, stop the production of this product immediately.

Invest the money you have liberated in the production of other products or reduce in the same time these expenses. Abolishing a source of loss means making a profit.

In a company producing three products:

 

Profit

A:

+ 10

B:

+ 5

C:

- 6

Total profit:

+ 9

The quickest and most economic way to increase general profit is not to increase the sale of A and B but simply to abolish C.

 

Profit

 

A:

+ 10

 

B:

+ 5

 

Total profit:

+ 15

instead of 9

Always remember this maxim: Not profitable = stop the production

42-Capital budgeting

A certain amount is to be granted to the different sections of your company every year to acquire different equipments which are to be paid off over several years: Machines, vehicles etc.

We are talking about a Capital budget. These budgets are easy to prepare and to follow up.

Preparation: You ask at least three suppliers to make an offer, and you calculate your budget.

Follow up: Your budget should be the same as the best offer you have received.

Best offer: Less expensive with the same or better qualities and delivery dates as the others.

The real difficulty consists in deciding to make the investment or not. You have studied that with the previous course FW 28.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


5-DELEGATE-CONTROL-REWARD

51-Delegate:

You do not do things. You have things done.

You can delegate under 3 conditions: your staff must be honest, trained and motivated. These 3 conditions being supposed gathered, you must delegate.

Any delegation gives an area of authority and a lot of goals to achieve. Once, you have delegated a goal and an authority on one person, do not interfere in his business. For example, the sales manager knows his job. He is responsible for using the budget you have allocated him. He has to organize himself.

In order to reach their objectives, the task managers need means. You must therefore allocate them a budget (see above). A budget represents money or staff. Since you asked the sales staff to increase sales in the previous example, you will probably have to allocate them additional means.

52-Control:

A good manager must be intuitive in order to perceive that something goes wrong and to rectify it before it worsens. He must require management control data regularly. A good manager is also a good supervisor.

You must regularly monitor the level of objectives reached. You must follow up this objective every trimester and every semester. In order to gain 10 points by the end of the year, you must gain 3 by the end of the first trimester, a cumulated total of 6 by the end of the second, and so on. Remember that any objective must be measurable and therefore measured.

The task manager must account for his progress by means of management control charts drawn up every month, every trimester and at the end of the year. Do not wait the year end to monitor his progress.

53-Reward

Three situations can arise in meetings when you examine the management control charts:

If the objective has been reached, nothing to say or do.

If the objective has been exceeded, give a reward with bonus or stock options.

If the objective has not been reached, discuss the problem with the task manager. If his budget has been used correctly, give him another chance for an extra trimester.

If, at the end of this period, the result is still poor, Fire him and recruit somebody else.

As you can see, if you have chosen a good staff and set up clear goals, management becomes much easy and can be summarized by the following drawing:

It is not always possible to establish ideal conditions. In practice, things can be more complicated but keep this model in mind to guide your action.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


Lesson summary

Once your corporate is well organized, take the command of the biz and behave as a leader.

A biz leader must be friendly with the customers and respectable with his employees. His personal authority is a core matter. He tries constantly to increase the value to the customers. He shares this objective with his executives and he delegates.

The budget is normally prepared in the beginning of the year for the year to come. It means to decide what amount of money should be allocated to each function of the company: Sales force, production, management and back office.

The sales and the production budgets must move in the same direction. Any imbalance is irregular. If any imbalance appears, do not wait until the end of the year to make adjustments!

If you produce several products and one of them becomes an element of loss, stop the production of this product immediately.

For checking that the objectives are reached, he must control by himself the big figures. In case of poor results, he does not hesitate to reprimand and he is happy to reward when the objectives are surpassed!

Following these advices and standing close to them, management is easy. It relies on the capacity to make up sound decisions and to organize with authority.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


DO IT YOURSELF:

1-Regarding friendship, we ask you to apply to all the organizations located around you and which have some close or far connections with your expected business purpose. Fill up the applications forms, go to the meetings and begin to make friends.

Do not hide that you expect to establish a business. You can find here some future customers, suppliers and partners.

It's difficult to set up a time but such a task could require about 20 hours within one month.

2-Try to follow right now the advices regarding your time management. Every morning set up the goals and tasks of the day.

Exercise you to deliver several short speeches in different circumstances. Choose a predictable occasion ( for example a birthday) and prepare you intensively for your speech in looking in a mirror and in hearing your voice on a magneto phone. Count about 5 hours for 5 exercises.

1. Behavior 2. Day to day 3. Goal setting 4. Financial management 5. Delegate-control-reward 6. Do it yourself 7. Coaching


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