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Are you throwing money at your problems?

are you throwing money at your problemsGrowing up, I constantly heard the old adage, money doesn’t grow on trees.” It’s meant to warn people that there is only a limited amount of money available to put to use. It’s easy to fall victim to the notion that any problem can be solved if you spend enough money on it.

But, what happens when you go so far down a road that you’re unable to see yourself out? Sometimes, it seems like the only option is to pay someone to guide you back where you belong.

Through personal experience, I know that this option can run you dry and ragged. Keep in mind that there are incredible consultants out there that have made major positive impacts in my company.  However, acting out of desperation can get you into some trouble if you don’t think things through.

Do you ever find yourself throwing money at your problems?

The Problem

Companies never seem to have enough cash (unless you’re Google or Apple). In addition to this cash shortage, roadblocks and problems seem to consistently pop up.

While it’s true that you have to spend money to make money, what if you find that you are continuing to spend money without seeing a comparable return? This is when we run into the problem.

Me

A few years ago, I had a big project that I was set on making a success. After a few months, my team had lost traction and we weren’t seeing any growth. Instead of doing the dirty work myself to find out what the real problem was, I hired a consulting firm to help us without vetting multiple firms.

When you find yourself in a hole, stop digging.

While trying to avoid making mistakes in troubled times, I found myself standing at the bottom of a hole.

Langley & The Smithsonian

are you throwing money at your problemsAviation started out as a hope and a dream to many. The Smithsonian Institution put forth a hefty budget in order to get recognition as the first to pilot an aircraft.

In the late 1880s through the early 1900s, Samuel Langley had been extensively researching aeronautics, hoping to be the first man to pilot an airplane. Throughout his career, he was set on progressing from flying planes un-piloted to him piloting the planes.

In 1903, the United States government, backed in part by the Smithsonian, awarded Langley a $70,000 grant to expedite his progress. That October, Langley and his team launched the first “heavier-than-air” aircraft with a pilot in the cockpit. There was so much excitement as many stood to witness the “first flight”. Within seconds of being catapulted, the aircraft took a nosedive into the water.

Two months later, Langley and his team once again failed as the aircraft toppled over the catapult launch pad into the water.

Langley researched, tested, destroyed a lot of equipment and exhausted the budget given to him by the government and the Smithsonian. He no doubt felt, as do many companies still, that if he threw sufficient resources at the problem he could arrive at a solution.

Sound familiar?

Ingenuity

Cambridge Dictionary defines ingenuity as “someone’s ability to think of clever new ways of doing something.” Oftentimes in the business setting, we find that the company is so focused on the mundane tasks of day-to-day operations that it fails to optimize and facilitate a creative environment.

Having ingenuity imbedded into the culture of a company is imperative for an organization to beat out its competitors. Apple didn’t become a $53 Billion (net income) business without having clever founders that defied the four walls encapsulating technology in the 1970s and 80s.

When you stop throwing money at your problems, ingenuity is required to adapt to be more forward thinking.

are you throwing money at your problemsThe Wright Brothers

9 days after Langley’s second failed attempt, the Wright brothers flew their plane 852 feet in 59 seconds. This became the first manned flight.

The difference between the success enjoyed by the Wrights and Langley’s failure… Budget.

Langley had an easier environment to work with, setting himself up for success. The Wright brothers did not have an easy environment that would help them better succeed. The Wright Brothers only spent $2,000 of their hard-earned money to create the first piloted aircraft capable of sustained flight. In comparison, Langley and his team at the Smithsonian spent the $70,000 grant and failed.

Because the Wright brothers were working on a shoestring, they had to rely on innovation and perseverance.   They had the same goal as Langley.  Money wasn’t the factor in their success, but their ingenuity and refusal to give up.

More money does not equal a greater chance of succeeding.

How You Can Avoid Throwing Money At Your Problems

In a panic because cash is tight or you’re facing problems? It could be that your basic unit economics are upside down.

There are three ways that you can avoid throwing money at your problems. Those include assessing your 1) profitability, 2) cash flow, and 3) unit economics.

#1 Assess Profitability

To stay in business you have to be profitable. So you’re making boatloads of sales. But is that revenue going to drop down to the bottom line? Or are you going to find that your revenue is tied up in your cost of sales and overhead?

When assessing your profitability, there are 2 metrics that you need to key into: return on assets and profit margin. If you find that these key items are turned upside down, you need some help.

Help can come in a variety of ways. To prevent you from throwing money at your problems, talk to your mentors, vet consulting firms before you sign the contract, use your internal resources to investigate and strategize solutions.

#2 Assess Cash Flow

I always say it… Cash is king!

If you run out of cash, default will be the ugly monster coming towards you. Start by unlocking cash in your business.

Another way to improve cash flow when in a tight spot is to analyze what collections ratios you are using, CEI or DSO. I’ve recently found that while they are both valuable for particular situations, using Collections Efficiency Indicator (CEI) is sometimes a better way to track your accounts receivable.

#3 Assess Unit Economics

Throwing money at the problem won’t change bad economics. Unit economics are the most basic function of a business.  Without good economics, you can’t make money no matter how much you sell.

Want to check if your unit economics are sound?  Download your free guide here.

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Designing an Internship Program

5 Steps to Designing an Internship Program

Internship programs are a great way for your organization to bring in new talent and fresh ideas with motivated and knowledgeable interns. Many companies offer internship programs for college students. Both the organization and the interns benefit from the value of an internship experience. Establishing successful intern programs involve several key steps that are simple to implement and maintain. Following are five steps to designing an internship program:

1. Planning your Internship Programs

The first step to designing successful intern programs is to plan ahead. Decide on your company’s goals and expectations for your internship programs. Do this by creating an internship job description, establishing intern responsibilities, and planning on internship projects. Setting an internship plan of action will facilitate the accomplishment of both your company’s and your intern’s goals and expectations. As an employer, you should decide on the conditions of your internship program. Establish clear terms for the intern’s work schedule and the internship time frame so that both the organization and the interns are in agreement for how long the internship program will last. In addition, determine whether your internship program will be paid or unpaid. Follow the Fair Labor Standards Act for more information about unpaid internship legal requirements.

2. Internship Program Orientation

Establish internship orientations before your interns start their internship programs. Intern orientations introduce the interns into the company and ease the interns’ transition into the workplace. Company cultures vary across organizations. Internship orientations enhance interns’ awareness of the company culture, introduce your interns to the company and to other employees, and offer an inside look into the workplace environment. It is important for you to clarify in your orientation the internship program policies and procedures and to address the interns’ initial questions or concerns. Interns will work better for you and your company if you offer them insight into decision-making processes and organizational culture. In addition, organizations should develop intern training plans during the intern orientation process to help the interns identify, develop, and learn the skills that will be necessary to excel in the internship program.

3. Intern Supervision and Mentorship

Provide internship program supervision and mentorship throughout the internship experience. Coordinate a designated employee to be the intern programs supervisor. Most interns are new to the workplace environment, so organizations should offer direction and support to maximize interns’ productivity. However, it is also important to offer interns autonomy and responsibilities. If the interns don’t know how to do something, you should instruct them to go and figure it out. The interns will improve their skills and learn to problem solve on their own. Young interns are high on energy and are excited to learn new things. Give the interns meaningful and internship responsibilities and projects with foreseeable deadlines in order to build a sense of task accomplishment and completion. This will motivate the interns to think outside the box and bring fresh, creative ideas into the organization.

Communicate and meet with the interns regularly to review progress and plan ahead. Communication is the key to building trust between the interns and the employers so that the interns can effectively make progress and accomplish tasks. Interns are eager to receive affirmation that you are pleased with their work. Mentor and support the interns to maximize the interns’ potential and to maximize the value of the internship program for both the organization and the intern.

4. Internship Program Problems

Prepare for internship problems or issues ahead of time! Things might go wrong, so it is important for you to create back up plans for urgent issues. Identify problems early and designate someone to get involved to create effective and easy to implement solutions.

For example, if interns are overwhelmed or intimidated by a task or project, offer them the support and guidance to come and talk to you about it. If the interns have any questions or concerns, make it clear that there is always someone in the organization to be their internship supervisor. Internship mistakes are bound to occur during the internship experience. Turn interns’ mistakes into constructive feedback and learning. You don’t want your interns to lose confidence in their abilities or motivation to do things. Learning from mistakes leads to improvement and lays the foundation for future success.

5. Internship Program Mistakes

Avoid these common intern program mistakes:

– Some employers do not communicate, offer feedback, or provide support for the interns. They seem to throw their interns into the deep end and then expect them to figure out a way to survive on their own. Internship communication and mentorship are vital to instilling interns’ dedication to their work. If you do not communicate or offer feedback, how can interns feel confident that they are doing a good job?

– Another intern program mistake is that the organization provides the interns with busy work rather than meaningful internship projects. Do NOT establish internship programs for “cheap labor.” Instead, design internships to bring in new perspectives, ideas, and skill sets to enhance your organization. An effective internship program will have value for both the interns and the organization.

– There are some organizations that push the interns into a corner and segregate them from other employees. If full-time employees do not know the first name of the interns, the interns become demoralized and feel like outcast within the organization. Employers should introduce the interns to other employees and invite them into some meetings so that the interns feel like they belong. When you encourage dedicated interns to be involved and active within the organization, it leads to increased intern productivity and creativity.

Determine which candidates are the right fit for your company by downloading our 5 Guiding Principles For Recruiting a Star-Quality Team.

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Common Problems in Charts of Account

Accountants are often great at, well, accounting, but tend to get lost in the detail, preferring to count expenses down to the paper clip level instead of focusing on what truly matters for a company’s profitability. Nowhere is that more evident than in the chart of accounts they create. What are some common problems in charts of account? Let’s dive into it below

Common Problems in Charts of Account Design

Here’s a look at the common problems in charts of account and some recommendations for improvement:

Too Many General Ledger Accounts

Often when using QuickBooks or Peachtree accounting software the number of general ledger accounts grow over time. Usually the person entering the data is not a trained accountant. When faced with an accounting entry not specifically described by an existing general ledger account, they will often set up a new account. It is especially easy to do in QuickBooks.

Too Much Detail in Selling General and Administrative Expenses

Similar to the problem mentioned above, often the person maintaining the general ledger is a detail oriented employee. This trait is both a blessing and a curse. The theory goes as follows: If a little detail is good then a lot is better! In order to get more and more detail on the general ledger they set up new general ledger accounts. In the end they are counting paperclips with numerous accounts with less than a thousand dollars charged to them….”

If you want to add more value to your organization, then click here to download the Know Your Economics Worksheet.

Common Problems in Charts of Account

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Common Problems in Charts of Account

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What Will the Fed Do?

The Federal Open Market Committee is expected to announce a third consecutive cut in the federal funds rate today. Equities were up early, but have fallen to near their open in advance of the announcement which will come later today. What will the Fed do?

What Will the Fed Do?

It would seem that the Fed is anticipating a slowdown in economic growth. The global economy is working through the problems in the credit markets. Furthermore, the meltdown in securities backed by subprime and adjustable-rate mortgages (ARMs) creates these problems. In addition, the anticipated impact of expected significant declines in home prices (US and UK) created these problems.

What Will the Fed Do

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