1. Solving the Cash Flow Crisis
Presented by
Management DirectivesTM
“Helping America, One Business At A Time”

2. How should you evaluate a business ?
Accounting Systems effect on Cash Flow
Employee Productivity effect on Cash Flow
Job Costing & Estimating effect on Cash Flow
Sales & Marketing effect on Cash Flow
Cash Flow Effect on Profit
Lack of control systems and poor fiscal management in each area result in cash flow deficiencies.

3. Some other areas are seldom addressed . . .
Owner Equity Position
Owner Deferred Compensation
Owner Exit Strategies
Owner Retirement Options
Cash flow deficiencies have a permanent impact on ownership equity.

4. Begin with the basics . . .
Profit is a myth, cash flow is reality
Unprofitable businesses can survive by learning to manage cash flow
Profitable businesses will die if they do not learn to manage cash flow
Comprehensive and effective control systems must be in place in order to manage cash flow
Cash flow deficiencies are lost forever and cannot be recaptured .

5. Things they never taught you in business school . . .
Accounting systems are designed to calculate taxes as per government standards
Accounting systems only provide “after the fact” data that is useless to management
Management financial analysis is not taught in traditional business classes
Traditional accounting reports have little impact on the profitability of a business

6. So let’s get started with The Accounting Factor . . .
Profit & Loss Statements
Are designed along IRS guidelines and are not tools for effective management
Usually do not provide adequate information to run a business properly
Rarely provide statements in a timely manner that allows corrective action to benefit the business

7. Several other problems usually exist . . .
Accounts Payables
Cause/effect relationship with cash flow
Impact of trade discounts on cash flow
Impact on ability to purchase raw goods and materials
Impact on marketing & sales activities

8. More Accounting factors. . .
Accounts Receivables
Cause/effect relationship with cash flow
Aged accounts due to poor fiscal policy
Impact on financial and emotional stability of
the owner
Good Old Boy syndrome may be a problem

9. The Human Resource factor . . .
Employee Productivity
Operating Procedures
Insufficient Training
Lack of Incentives
Poor Supervision & lack of monitoring effectiveness
Manpower
High Turnover Rationale
Inadequate Hiring/Training/Promotion Policy
Lack of proper incentives
Inadequate Employee Benefits

10. The Sales & Marketing factor . . .
Products
Product Mix
Job Costing
Client
Demographics
Sales
Forecasting
Returns

11. The Inventory factor . . . Product Levels Inventory Turn
Inventory Methods
Security
Returns

12. Ownership/Equity factors . . .
Deferred
Compensation
Exit
Strategies
Retirement
Options

13. A look at the numbers . . .
If your bottom line is 10%, you will need additional sales of $500,000 to offset cash flow deficiencies of $50,000
If your bottom line is 5%, you will need additional sales of $1,000,000 to offset cash flow deficiencies of $50,000
Correcting cash flow deficiencies results in improved profits and enhanced ownership positions shown on both P & L and Balance Sheet statements.

14. How do you correct cash flow deficiencies?
Start with a comprehensive financial & organizational analysis of the business
Begin the implementation of a comprehensive P & E operating plan which involves Budget, Cash Flow, Break Even Analysis, System Controls (inventory, sales, receivables, payables)
Next follow with Estimating and Job Costing controls
Then, work on Organizational Development with job descriptions, evaluations and productivity analysis

15. Then your are ready to . . .
Review and develop a comprehensive Sales & Marketing Strategy
Depending on the size of the business, there may be a need for re-organization and retraining of key employees
And include development and implementation of employee incentive and comprehensive benefit plans, along with ownership equity issues

16. How do you get professional help at an affordable price ?
Do Nothing and keep bleeding RED
Find another CPA/Accounting Firm BAD Choice
Hire the BIG BOYS (George May, IPA, etc.) at $300+ per hour with their expense accounts you pay for
Are you ready to pay up front? They will expect it!
Hire a Business Mentor at a reasonable price, for a specific time, to customize and implement a comprehensive management control system AND teach you how to use it to manage your business more effectively

17. Management DirectivesTM
Who We Are . . .
Management DirectivesTM
“Helping America, One Business At A Time”
Over 50 years experience as Business Consultants
All client lists maintained in complete confidence
All work custom designed for individual applications
Affordable rates to accommodate hardship cases
Contact us today for an comprehensive analysis of your business