Busy is ok – but doing what?

Recently my great friend asked me to a Yankees game.  It was the fifth game of a playoff series with Cleveland and they had to win or their season would be over.  I hadn’t been to a game in years and the seats were right behind home plate, a little up so you could see – if you could pick any seats in the stadium you’d pick these.

The Bronx can take two hours to get to from here and we wanted to eat before the game so we left early.  Now I always have lots of things to do, and when I don’t get them all done, I get a little antsy.  And when I don’t get my priority work done, I feel behind like I wasted a day.  

These feelings are all self-imposed of course, because I don’t HAVE TO do anything really.  Nobody is going to scold me for not getting something done.  But I am self-motivated and self-disciplined.  And Prioritization is important.  I don’t fill my days with activities just to be busy. 

There are a thousand interesting and useful things I could do in my business, but if I made a list of all of them and put them in order of importance, (which ones will have the biggest impact on the future), I’d work on the top few and the bottom 990 will never get done (by me).

Anyway, we went to the game and I lost almost half a day from my plans, since my friend invited Marie and I to the Monday game just two days before, on a Saturday.  Well….we had a great time at dinner and went into the stadium and got a great table on the Delta level at about 6:15 for a 7:00 start.  At 7 it started raining.  We hung out until 9:30 pm waiting for the game to start with 50,000 other people, and they called the game off!  So we headed home.  Dang.  And got to bed late…which for me is another issue – I need my sleep.

So the next day, we had to go back for a 4:05 game.  Oh no.  Even earlier.  I’d miss another half a day.  Well…it was a great game and we got to see the Yankees win and go on in the playoffs.  We had a great time. (Sorry Boston fans – don’t hate me (Tom)).

But here is the point of all this.  Knowing I’d miss two half days, I focused on ONE THING both days and GOT IT DONE.  It was the most important thing.  What I put off was all the less important stuff.  And I felt like I had a good productive day in half the time because I completed key steps in my most important project.

So – what are you busy doing?  The most important things that will have a positive impact on the future?  Or busywork?

Wealth is not a zero sum game

Zero-sum means more for me means less for you.  But if I make more money it doesn’t mean there is less for anyone else, or that I have taken any money from anyone else, leaving them poorer.

If you create something that produces value for others, you haven’t made anyone’s life worse.  

You may make a lot of money, but you have not taken anything from anyone.

In fact, you have made lives better with your product or service – otherwise, they would not have bought it from you.

Let’s look at the reverse – if I create poverty in my life and for my family, does that make everyone else in society better?

Creating wealth only makes everyone better off.

Action produces information.

Recently I wanted to reduce the waste stream coming from my company to be more efficient and environmentally friendly.  I wasn’t sure what exactly we could do.  So I got up and went for a walk through just one of our warehouses, looked in dumpsters, and started asking questions of people. 

“What’s this?”  “Here’s my goal, do you have any ideas?” We walked and talked and I asked more questions.  And boy did we get some great ideas to implement to save cardboard and save pallets and save labor and costs.

When you have a problem and don’t know what to do about it, do something.

That something will reveal what you can or should do next.

If it’s a dead end, you now know, and can go another direction.

If it’s a little something, you can dig further to find more.

Action produces information.  It illuminates the next step which eventually produces answers.

Don’t know what to do?  Try things.  Take action.

Don't look at your email until…

Don’t look at your email until you have worked for an uninterrupted period (1-2 hours or more) on your most important project.

Prioritization – the master skill of high achievers.

A bad culture needs rules

If you build a great culture with your team, where people trust and respect each other, are helpful, are led well, etc. then you don’t need lots of rules and policies and policing.

Great culture is far better than great rules. 

Casting my little vote

It seems pretty crazy out there.  But I still get up each day and try to be a good leader using time-tested principles and good character.  The world needs good leaders.  It needs me, and you.

“In its brief 232 years of existence, there has been no incubator for unleashing human potential like America.  Despite some severe interruptions, our country’s economic progress has been breathtaking.  Our conclusion: never bet against America.” – Warren Buffet, 2021 letter to shareholders

When it comes time, I will be in line to cast my vote.  I want things to get better.  I’m working for it, and I’m betting on it.

Magic words

Tell three people they are doing great and that you appreciate them today.

You’re a smile machine – and smiling people do better!

The "Spread" – Encore!

For those subscribers who don’t deal with numbers, you must be getting bored by now.  My apologies.  Usually my messages are short, but sometimes I do a lesson that is longer.  

Tomorrow it will be shorter…I promise.

So in my first “Spread” message, I mentioned something about how much he Spread should be.  That’s up to you and what you feel comfortable with for your kind of business.  Let me just share a bit more.

I have a 5 million dollar business where I keep the Spread at $600,000.  If it goes below that, I get nothing.  If it’s above that, I take money out.  

I have a 24-million-dollar business where we keep the spread at 1.2 million.  We think that’s safe for us.

I have a $150 million dollar business where we keep the Spread over 10 million (not including inventory).

If you have a $ 300,000-a-year coffee shop, you should pick a number to keep your spread at and not take any money out unless the spread it is over that number.  Leaders eat last.

Sleep well my friends!

The "Spread", part 3

Cash + Receivables – Payables = Spread

If for some reason my accountant can’t give me financials in time, I at least get the Spread numbers.  They are super easy to get.

Your Spread will vary perhaps quite wildly if you measure it each week.  This is because many suppliers send you their bills each month.  So at the first week of the month, your payables will be highest.  So it’s best to measure it the same time each month to compare it to last month.

In some businesses, it may make sense to measure the Spread AND another number such as “Spread including Inventory” if your business has lots of it and if it varies.  So that would be the Spread + Current Inventory. 

I don’t do this for my service businesses.  They have inventory but it is not a huge component of the business and while it may vary from month to month some, over long periods like quarters, it stays relatively constant.  I will do this for my supply businesses though because we are all about inventory.  

In other businesses you may find it helpful to measure “Spread + credit line balance” if you have a credit line that goes up and down.  That would make a lot of sense.

For me, I’m old-fashioned.  If I owe money, I don’t take profits.  I don’t like debt.  Sure, it’s a tool that some businesses need, but the more you use it the more you are at risk and beholden to others.  I can delay gratification for my peace of mind and freedom. And, I have hundreds of other people to think about.

Knowing my Spread lets my little pea brain understand and hopefully sleep well at night, knowing what the financial performance and output of my businesses are.

If you don’t measure it and chart it out monthly, start now.

The Spread.  The end.  

Has this been helpful?  Comment with the orange button.

"Spread" part two – Chart it out

Cash + Receivables – Payables = Spread.

Measure it regularly each month.  Did it go up?  Did it go down?  Why?

You have to be able to explain it.  If you can’t, you don’t have a good handle on your business.

Make a chart (your bookkeeper/accountant would love to do this for you).  Update this chart each month.  I use a green line for cash, a yellow line for receivables, a red line for payables, and a blue line for the spread.  I also put a brown line for sales for the month.

I have a lot of companies.  When I get my financial statements for the month, the first thing I look at is the Spread chart.  It’s like a summary I can understand RELATIVE to the past in seconds.  I’d do this even if I had only one company.

The first couple months you have this chart it is useful, but it becomes much more useful as you get many months and years into it.  You can see where the numbers are compared to historical norms or this time last year.

Remember, when you take money out of your business as profits, it brings the Spread down.  So does being unprofitable and losing money.  Whether you take money out of your business or not, does not change the net profit on your P&L, or how much you need to pay tax on.  It’s just being safe about your cash management.  If you are out of cash, you can’t pay anyone and it’s game over, everyone goes home.

More on the “Spread” tomorrow – Part 3!