Think Daily for Businesspeople Messages

February 22, 2018

Be the leader of the company you WANT to have

Larry Janesky: Think Daily

If we keep thinking, acting and talking like the leader of the company we are, we will never become the company we want to be.

What would the leader of the organization you WANT to be, learn, say, and do?

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February 21, 2018

Leader – Central Communication Switch?

Larry Janesky: Think Daily

If you have set up your organization so all (a lot, most things, too many things, the “important” things) have to come through you, then you have put yourself in a place of importance, but you’re not leading well.

Training and empowering others to do the jobs (yes, even the important ones) and letting them do it, is the mark of a good leader. 

Being the center of the universe doesn’t scale, and will only wear you out, and chase away superstars.

How do you stack up on this?

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February 20, 2018

"A leader's gotta lead!"

Larry Janesky: Think Daily

Many leaders are the owner of their company, so they can get away with being a poor leader without getting fired. If you are the leader of your team, you’ve got to do the job; that job is to lead others to give their best, while accomplishing the goals of the organization.

Are you doing that?

1) Bring out the best in others.

2) Accomplish the goals of the organization.

Comment with the orange button!

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February 19, 2018

Economics – "Equilibrium"

Larry Janesky: Think Daily

Equilibrium is where the supply curve and demand curve intersect. The interaction between buyers and sellers determines the price of a product or service.

Buyers compete against other buyers for goods. Sellers compete against other sellers.

Incentives push the price toward the equilibrium price. If the price is too high, buyers have an incentive not to buy, and buyers get scarce. Sellers now have an incentive to lower their prices.

If the price is too low, buyers have an incentive to buy and are plentiful, and sellers have an incentive to raise their prices as their products are in high demand.

A contractor is slow in the winter and has an incentive to lower his prices just to keep busy. In the summer, he has more work than he can handle so he raises his prices, taking only the most profitable jobs.

Can you see the prices in your business moving at times toward an equilibrium based on supply and demand incentives?

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February 16, 2018

Economics 101 – The Demand Curve

Larry Janesky: Think Daily

The demand curve shows us that as prices go up, the fewer people want a product or service, and as prices go down, the more people want it.

When computers were $5,000, there wasn’t a huge market for them. But as prices came down, people wanted more of them.

When gasoline went to $4.50 a gallon, people drove less and bought small fuel-efficient cars. Then oil went back down to $2.10, and people don’t care – “fill ‘er up!”

Solar panels are expensive still. But as the price goes down, more people want them.

The Demand Curve – as prices go down, demand goes up.

How has the demand curve been in action over time in your business?

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February 15, 2018

Economics 101 – The Supply Curve

Larry Janesky: Think Daily

The supply curve says that as prices go up, more suppliers can and will have an incentive to produce and sell a product. As prices go down, the fewer suppliers can produce a product at that price, and the less incentive they have to do so.

Let’s think about oil as an example. Oil is cheap to get out of the ground in places like Saudi Arabia, at about $2 a barrel. In other places like Alaska, it costs $10 to $15 a barrel. In other places like the Gulf of Mexico, it may cost $25 a barrel. 

So as prices go down, fewer producers can produce the product at that price, and they stop producing. This reduces supply and makes the price go up again. As the price goes up, producers start producing again. As supply goes up, the price comes down.

How has this supply curve been in action in your business?

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February 14, 2018

Own Thy Home

Larry Janesky: Think Daily

For most Americans, when they retire, their biggest asset is their home. It has appreciated a lot since they bought it and if they have borrowed against it as the value went up, they have a lot of equity in it. This equity in their home is often their retirement money.

What about your place of business? Do you rent it or own it?

There are reasons not to buy it, such as – you are growing and will need more space soon, you don’t want to tie up capital to pay a down payment, or you really aren’t sure what the future will hold.

However, if you are going to occupy a building anyway, you may as well own it and build equity with each payment, instead of paying rent to a landlord who builds the equity for themselves. If this is right for you, in 20 years you’ll own your facility and it alone can be a source of value for retirement, even if you don’t sell your business.

The key to successful commercial real estate investing is to have a good tenant for the long term. If you are one, you may as well be your own tenant and start building equity.

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February 13, 2018

"Chart of Accounts"

Larry Janesky: Think Daily

An “account” is where you’d record all the transactions relating to a company’s assets, liabilities, owner’s equity, revenue and expenses. Each of these accounts can be divided into sub accounts to show these transactions in whatever level of detail you wish.

All the accounts together are part of the “general ledger.” How the general ledger is broken into individual accounts is referred to as the “Chart of Accounts.”

The five main categories of the Chart of Accounts that appear on your financial statements are:

Balance Sheet – Assets, Liabilites, Owners Equity

Income Statement (P&L) – Revenue, Expenses

Your accountant uses a numbering system for these accounts, but the account numbers typically do not appear on your Income Statement or Balance Sheet. For example, Assets are any account beginning with a 1. Liabilites are accounts beginning with a 2. Owner’s Equity accounts begin with a 3. Revenue accounts begin with a 4, and expense accounts begin with a 5, 6, 7, etc.

Your chart of accounts can be expanded to show what you want, or simplified by collapsing accounts together.

For example, your Asset accounts on your Balance Sheet may be –

Assets

Current Assets

   Cash

   Petty Cash

   Accounts Receivable

   Notes Receivable

   Inventory

   Prepaid Insurance

   Prepaid Deposits

   Prepaid Other

Fixed Assets

   Buildings

   Machinery and Equipment

   Vehicles

   Computer Equipment

   Furniture and Fixtures

Accumulated Depreciation

So let’s say you’re looking at your financials and you see that you never have any “Notes receivable.” To make your financials simpler, you may ask your accountant to get rid of that account.

Let’s say you also notice the “Pre-Paid Other” has something in it but you don’t know what it is. Ask. Say you find out it’s mostly rent, but occasionally she has something else in there too. You may ask your accountant to name an account “Pre-Paid Rent” so you can see that each month, and still have the “Other” account for miscellaneous.

Let’s say you see a lot of assets under vehicles. You want to see more detail so you ask for two accounts – one for trucks and one for cars.  

You see, you can and should make the chart of accounts work for you. Make it show you what you want to see, but not so many accounts for every little thing that it gets too complicated. Your call!

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February 12, 2018

Where the Balance Sheet is Blind

Larry Janesky: Think Daily

While the value of assets is shown on the Balance Sheet, your most valuable asset is not.

Can you guess what it is?

It’s your people. Trained and experienced people are not shown at all on your Balance Sheet. If you have them, and a healthy positive culture they work in, it is of great value.

Let’s say things are rolling along great and your customers are being served well by your wonderful experienced employees who know their jobs and want to be there. Now let’s say on August 31 they all leave the company. On August 31, your Income Statement says you made a healthy profit in August, and your Balance Sheet has grown a bit from the month before. But what are the chances that September will be any good?  

Slim.

Develop your talent. Train them. Motivate them. Don’t de-motivate them. Have contests and keep score on what is most important for their performance. Help them succeed at your company. Make them feel like winners.

Without good people, you’re done. A leader is not needed without them.

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February 9, 2018

Total Liabilities and Equity

Larry Janesky: Think Daily

At the end of your Balance Sheet, it will say “Total Liabilities and Equity.”

This is Total Liabilities plus Total Equity. I recall long ago I said, “what do I care about these two added together?” Well, remember, the Balance Sheet IS Assets = Liabilities + Owners Equity. So this means that your total assets have to equal liabilities plus owners equity.  

That’s why they call it a “Balance Sheet.” The two sides have to balance.

If your Balance Sheet is “growing,” it means that the number the two sides are balancing at is a higher number than the year or month before.

If Assets = Liabilities + Owner Equity, then Assets – Liabilities = Owners Equity also.

To create more Equity, we need to add to our assets while adding to our liabilities at a slower rate, or reduce our liabilities. If we take less money out of our company than the company earns on its Income Statement, that will do it too.

Do we want to increase our equity? If we want the company to be worth more, we do. In the end, if we sell our company, the buyer will look at your Balance Sheet to see the overall health of the business. At the same time, they don’t necessarily want your assets, they want the profits they produce.

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