Managing your business’ cash is not something you should think about every once in a while. You must manage it every single day because cash fuels your business. It’s your business’ lifeblood. On a daily basis you should check how much money your business took in, how much it spent, and the status of your receivables. If you don’t do all of these things, you risk being blindsided by a cash shortfall, which could cripple your business.
If you don’t have the time to manage your business’ cash day to day, give that responsibility to someone who has the skills to do it and who you can trust to do it well.
Many new businesses do not pay enough attention to cash management because they are overly focused on generating sales.
There are several aspects to effective cash management. For example:
- Use credit applications to figure out to whom you will extend credit and how much credit you will extend. Ask each of your customers to complete a credit application and then evaluate the information on each application using a credit scoring process.
- Make timely billing a priority. The quicker you bill, the faster you will get paid and the less likely that you will have a problem with cash. Although a lot of businesses invoice once a week, I recommend that you invoice every day.
- Understand how your customers handle their accounts payable and what you must do to ensure that they pay you as quickly as possible.
- Monitor your accounts receivables on a daily basis and do not let bad debt accumulate. Even one past due account can have a big impact on your business’ financial health.
- Use an electronic accounting system. If you don’t have one, get one!
- Manage your credit relationships with your carriers as aggressively as you manage your shipper relationships.
A client reached out to me about performance issues within his team and I want to share it with you.
He owns a freight brokerage business that employs 10 brokers. Overall, he has a good team and his business is growing, so they are on the right track. However, he has some employees who have spotty performance when it comes to sales and customer service. He feels these people could be successful so he wants to help them get their performance up rather than letting them go.
Does this sound familiar to you? Maybe you have experienced a similar situation with your team.
This is a very frustrating problem for managers. Since the performance is spotty, it implies that sometimes they get the desired results and other times they fall short. Since you are having some success, we can assume that your employees will be successful if they follow your process and make the appropriate effort.
At TranStrategy Partners, we recommend using the following 4 step approach to helping your employees meet your performance standards:
Set Expectations. Create clear expectations for what you expect in terms of results. Also, communicate the processes for getting those results. When you set expectations, it is important that your employee understands exactly what you mean. If possible, have them articulate the direction in their own words (active listening). Sometimes, things that seem simple and direct in our heads are far less clear to the listener – this is especially true if you are an expert and they are a newbie.
Job Specific Training. A properly developed training program is a great way to communicate the goal and the processes needed to reach the goal. Ideally, your training should improve your employee’s attitude, skills and knowledge. Developing the right attitude about the goal and the approach is key. The right mental attitude will motivate your employee to gain the skills and knowledge necessary to succeed. Skills training will allow your employee to learn the specific skills needed for the job, like phone skills, customer service skills, TMS skills etc. Knowledge training refers to broader learning and practical understanding of a topic like supply chain, truck sizes, or industry best practices.
Inspection. After you have communicated your expectations and provided training, the next step is inspection. People do not always do what you expect, but they usually do what you inspect. Follow up with your under-performing broker to ensure they are doing exactly what you asked them to do. After a while, they will realize you are inspecting their work, which will compel them to follow the process. Inspect their work until their performance improves then reduce to periodic inspections to prevent backsliding into old habits.
Recognition and Reviews. The last step in the process is recognition and reviews. Schedule a review with your underperforming broker and discuss their performance. If they are back on track, encourage their progress and if they are still failing, determine the cause and take action. If you see your employee following the process and getting results, give them a little casual praise like “good job” or “attaboy.” Be careful with praise and recognition – it should always align to performance. Too much or too little can send the wrong message.
“Everyone knows my tactics, but no one knows my strategy,” attributed to Sun Tzu in The Art of War*
This got me thinking how many business leaders in the third-party logistics industry (myself included) spend too much time focused on the business tactics of our competition.
Then we try to copy those tactics in our own company, hoping against all evidence otherwise, that they’ll make us wildly successful.
We try to create high pressure/high volume sales teams where we’ve never had them because that seemed to work for (insert competitor’s name here).
We want to have the most intensive website, with videos, flashing graphics and all, because (insert competitor’s name here) has one and they’ve grown more than 50% each year for the last three years.
We want to copy the most sophisticated incentive based compensation system used by (insert competitor’s name here) in the hopes that it’ll make star performers out of our average employees.
But copying tactics used by the competition will not make your business successful. Your business will be successful when you have a clear mission, a well thought-out strategy, and then using the tactics that support your strategy and, most especially, have meaning for your customers.
Your Mission is a statement of purpose, what you are in business to accomplish. Your reason to exist at all.
Your Strategy is about the long term direction of the company. It’s about the resources you’ll have, the markets you’ll serve, your competitive advantage, and the expectations of your customers.
Your Tactics are how you do what you do. In the longer term it is how your processes and technology are deployed. On a daily basis it’s about everything from how you open the office in the morning and answer the phones to how you qualify carriers and collect your money. Every one of your tactics should make it easier for your customers to do business with you, and if they don’t you must change them as soon as possible.
Whether you’re starting a new business or your existing business needs a change, start with a clear Mission. Take the time to create, and stick with, a well-reasoned Strategy, and then create your own identity in the marketplace with the Tactics that flow from this process.
* The more accepted translation of this quotation is “All men can see the tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” Sun Tzu, The Art of War.
You can raise your business game today. Your Mission and Strategy are unique to your company, but the specific tactics you use are pretty common.
As we approach the end of the year and our celebration of Thanksgiving, I wanted to express appreciation to all of our clients, to our colleagues, to our friends and to our industry – an industry that embraces the challenges of growth, of change, of technology, of talent acquisition and of diversity to create a pathway to success.
This past week, I had the privilege to attend the Women In Trucking (WIT) Accelerate! Conference in Frisco, TX. With over 800 attendees (60% increase from 2017), there was an energy and a spark(le) to the conference. Over the last 11 years, the mission of WIT has been to encourage the employment of women in our industry, to promote their accomplishments and to limit any obstacles faced. The sense of empowerment and forward movement was palpable throughout the conference.
From the steady rhythm of the speed networking session to the reception events to the integrated expo, attendees had the opportunity to reconnect with colleagues and make new connections. Every conversation served to strengthen a relationship and build the foundation for great work in the future.
Unlike other conferences that celebrate only the few, Accelerate! is a celebration of all – drivers, directors, recruiters, salespeople and owners alike. There is a true sense of community and that community is driven by collaboration.
Education and Development
The core of the conference is about development – from sessions and breakout topics (for individual knowledge gain) to affiliate member tools and services (for business development). Growth and advancement are key points to a fulfilling life and career.
For us, at TranStrategy, we were excited to celebrate the first graduates of the WIT Professional Development Certification (PDC) at the conference. Designed with and for the association, the PDC is a 30-course curriculum across Leadership, Success and Personal Brand development. Delivered online and on demand, the program helps the learner to build skills, to look from a more strategic viewpoint at their business and career and to foster growth and empowerment for themselves. The benefits are received by both the individual and organization.
Congratulations, again to Bonnie Supan, Erin Turcotte, Susan Collins and Ellen Voie.
I had a colleague ask where I was this past week and when I told him that I was at the WIT conference, he stated that we should have a Men in Trucking conference. Shaking my head, I just had to say, “for a hundred years, that has been called the ‘Trucking Industry’.” The point is inclusivity, not exclusivity.
As we understand and encourage the power of diversity, across race and gender, the industry becomes stronger more adaptable to the changes on the horizon.
It is a privilege and an honor to be a part of the movement and the vision of Ellen Voie and WIT.