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Maximizing Value - "Turning Goodwill into Cash" - Without Selling. |
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Real-World Description of This
Category Thru the eyes of Walt: Turning your goodwill
energy into cash is the title of a talk I
give to introduce EOS. Below is a quick summary of the talk: The best description of goodwill I ever heard was from the managing partner of a big eight accounting firm in Washington DC who described goodwill as the energy stored in your business. Goodwill is the sum of all your decisions - good and bad. From these decisions you have built up energy, energy you have built up year after year. When companies or people buy businesses they pay cash for this goodwill energy. If that is so, then what is preventing us from getting that cash now? Your stores of Goodwill Energy can be harvested now and turned into cash, all we have to do is become aware of the forms of goodwill energy so we can actually recognize it and then align "things" to get our goodwill energy to do some work and yield some cash. A quick 10th grade physics reminder. Energy is the ability of matter or radiation to "Do Work" in the form of motion, mass or charge. Cash: So, let's start with what we want CASH, and understand how CASH has energy... "Cash flowing" is like the water that flows in the river and turns the big waterwheel - the motion of the water is energy that is converted to work via the waterwheel. It is the same with cash flow. How about cash as mass. A big ol mass of cash, a big ol pile of cash in the bank has energy, energy you can use to borrow against, to leverage upon. And Cash has a charged energy of sorts, pay your bills fast and it says: " I am strong, I take quick pay discounts or I appreciate your services, thanks! Or it can throw off negative energy, I have no money, I pay slow, I do not appreciate your services... Inventory: How about another current asset on the balance sheet. Inventory. Over the years, if you are an inventory company you have made countless decisions about inventory, that took energy, goodwill energy. We talk about the energy of inventory motion with terms like turns, gmroi, if inventory is moving and turning it has energy... just sitting there, well - make it liquid, make it flow, turn it to cash. How about the mass of inventory? Your width, your huge selection, the depth of your inventory this has energy, are you telling the right people about this? Also mass can be leveraged for working capital/cash. How about the charge of your inventory? Is it hard to find? Does it solve a unique solution... how is it strategic, who have you told about it? Your Office: How about the energy in your office, your corporate offices. You put to tons of energy into this environment via decisions that is goodwill. Are you harvesting this investment? Motion, how is the flow of communication in your office? Is your office loud or quiet, does information flow as well as you envisioned when you first moved in? Mass, mass is located somewhere, are you taking advantage of the location, of the signage, of the looks neat....? Are you keeping the showroom lights on at night so people can window shop, see in? Moths to a flame. Charge - certainly your office gives off a charge... think about a friend who has a cool office... does that send a charge to employees, clients, customers, vendors. Are they attracted to leave their cash with you? Your Capacity - you have worked hard to build capacity in your business. What % of your capacity are your squeezing for extra cash? How about the capacity energy you have locked up in that "Football customer", you know, the one you use 30% of your capacity and make no money on, you just football the cash, hand the cash off from your customer to your vendors, employees, suppliers... football. What if you dropped him back and took part of that capacity to make money - cash? How about all the cash you have locked up in the mass of things to support this football customers inventory, people, warehouse, talents. What kind of charge is it giving off, to employees, to potential m and a partners. Does footballing look like an offensive or defensive position. What vibe is it pulsing? good or bad? Is it cash flow energy that allows you to do do other things or is it a drag? Your Workforce - How about all the energy you have put into building your workforce over all of these years... all the decisions, all the weekends worrying all that is goodwill, harvest it! Workforce motion energy... are they all rowing in time? Are you focusing this energy? Are you applying it's direction and force? How about the workforce mass, do they all have their left shoulders against the wheel making it go counterclockwise or are half laying their right shoulder against the wheel pushing clockwise? How about the charge of your workforce? Do they smile at the customer, at themselves, at vendors, at the community.. is the charge positive or negative... believe me it is not and can not be both. Your People Talents - this is different and similar to workforce - you have spent years getting the right people into your organization... are you nurturing their talents? The motion of talents - are talents being passed along. The mass of talents - are you applying the talent at the right point... are you delivering the right talent, at the right time in the right spot with the right tools to exercise the maximum from the talent you have taught - goodwill! This is hard work, and it is easy to take path of least resistance... but you have goodwill stored in the talents of your people. Do you have more talented people than your competitor? That is mass, make sure customers know! Is the talent promoting their talent for the good of the company. Is there a positive attitude to growing one's talents inside your organization? Or are you wasting this free form of energy? Your Customers - How about the energy you have built over the years, day in and day out with your customers? Motion: Repeat customer, loyalty, there is energy there. Are you maximizing repeat order size - are you rolling from one engagement to the next, casting forward, generating cash flow? Mass: Do you have some really big hitters that you can boast about? how about the number of customers... do you own a significant percentage of the market? How are you leveraging all the good decisions to drive more profitable business? Charge: are your customers happy? are your customer relationships strong. if so, are you asking them for assistance, what if you did get just a few to help you land that next big deal, would it yield cash? Your Proven Process - How about the energy stored in your proven process, in your company's DNA... when you started you knew you had a better way. You have put tons of energy into your process decisions, are you milking and refining them for cash? How is the motion? Do you continue to make improvements, to eliminate friction? Are they clear so everyone moves in the same direction? Are you squeezing cash from friction free processes? Mass, are you even aware of the potential impact your processes can have on quality, consistency, are you leveraging your corporate DNA to scale, to simplify, to yield cash? Charge, are your processes followed by all or just most? is there resistance from staff to follow the proven ways? is this robbing energy? robbing cash? Your Company Know How - Finally, how about your company know how? All the on the job learned know how. Does it have motion? Certainly - it is walking around locked behind the eyes of your long tenure employees... Why isn't that know how being passed down via a master apprentice program, why don't you have mentor relationships set up? You have spent countless hours learning, deciding and tweaking know how. Now teach - pass it along to squeeze more cash. Mass: is the know how written down, recorded somehow, if it is not written it does not exist. Do you have a method to capture and record know how - solutions to problems made everyday by the organization. If it is written down you can share it, the more who share it and know it the more cash you can make. What is the charge? Are people hording know how 'cause they are afraid of being replaced... are you running an organization that is not open and honest or one of fear.... if so, think about how much energy you could harvest if the attitude was opposite. Energy = cash. How do you know available goodwill energy exists in your organization? Here are some symptoms Control - or lack there of, you are feeling like the yearly organizational "to do" list is never being completed... the day to day is in charge, you are so focused on the day to day that you are wasting your ability to build more goodwill. Profit - Specifically, your sales are growing but the bottom line is not keeping pace. You have friction that is robbing your organization of it's goodwill energy... Profit = cash, right? People - If you ever feel you are not using a person to their full potential or if a person is holding the team back... are there people who say we do it that way because we have always done it that way? If so, you are wasting the goodwill energy you have worked so hard to build. Trying Lots of Stuff - One person described it as banging around a dark room looking for the door. This is a clear symptom of goodwill energy, you have excess to burn groping in the dark.. You must harvest by focusing. Hitting the Ceiling - the feeling of being stuck, hitting the ceiling can exist on the organizational level, departmental level, product level, individual level. You have to have energy to keep bumping against this ceiling... over time it will rob your organization of it's goodwill energy... If you feel stuck and are trying then you have energy. We have ways, to guarantee that your break through your ceilings. If you have any of these symptoms we can help, we specialize in getting cash out of your goodwill. It is not easy for you but it works. Do we or do we not fit?: We attack this one head on in EOS, driving operational traction. TAB will make you get off your proverbial tail, Smart State will force you to challenge your plans. What we do not do. We do not come in, "study your business" and then hand you a report on how you can do this, we come in and teach the methods, implement the EOS Process so you and your team can harvest cash from your goodwill indefinitely. What position we play if we fit: Implementer, coach, facilitator What heavy lifting do we do for you in this category? We assume the role of co-captain, we play the bad cop, we call it like we see it, the ball is hard. We will not pull punches in our journey together, all tools will be learned, understood and used. This is our promise. You will end up with a more effective open and honest organization that will deliver results = cash. Other reference Notes: . |
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| We specialize in discrete, real world, measurable, optimization, using methods and processes practiced and proven by thousands of companies coast to coast, not just in our backyard - The Triangle |
| Contact: walt@smart-state.com 919 345 6079 |
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copyright walt brown and company 2007 |