Become a Dataist – Transform Your IT

Super algorithms aided by bots with artificial intelligence are making it possible to harvest data from a large variety of sources. Social media, banks, online e-commerce businesses such as Amazon place tremendous value on data. Mergers and acquisitions, worth billions of dollars, are often guided by the quantity and quality of data that they bring to the table. This data allows a laser sharp definition of target markets, which can now be focused on a single individual. Customer targeting is made with precision that was not available even three years ago. Cloud based data storage has made it possible to store immense quantities of data, and then convert this huge flow of information into useful market insights. We are now fully immersed in the era of mass data.

The large multinationals are at the cutting edge of this movement, and have become prime movers in applying the harvested information to grow their market share. The potential for data is vast and it can transform any business. Marketing strategies, targeting, segmentation, and operations can all be made more productive and efficient through better data.

Small businesses must embrace data – But is the small business sector at a disadvantage in this data onslaught? They certainly don’t have the size and heft to gather and use data to the same extent as the large players. But they can surely establish a creative IT department that can organize their data flow better, and tap into the data banks of others. Government legislature is moving towards increased sharing of data so as to create a more even playing field for all. The European Union has taken a lead in this direction and is expected to draft regulations on this crucial matter soon.

Become good data flow managers– Small businesses must take up the challenge of modernizing their IT departments to compete in the global market with the big players. By transforming themselves into good data flow managers they can fuel their performance at every level. Not getting on the data bandwagon is no longer an option, it is a path to obscurity. But solely gathering data is not the solution in itself. The challenge is to turn this data into an actionable plan.

Obtain outside assistance – IT know-how can be leveraged by employing the services of outside experts who specialize in data utilization. This can offer a more competitive boost to small businesses unable to afford the top talent. In this age of specialization and global connectivity trusted IT consulting companies can be used as mentors and facilitators for small business. Empowering the IT department in this way should be part of every business plan.

The data loop – Access to mass data allows companies to keep up with technological transformation. This is accomplished by analyzing the volumes of data generated during design and production. Every company can, to some degree, convert their data into a continuous loop of useful feedback for improvement.

Match IT solutions to specific industry needs – This is a fundamental principle of marketing. Mass data optimizes this connection, and provides a much sharper image. IT departments must also learn to anticipate change in this age of rapid creative destruction and find a way to adopt to innovations like machine learning, 3D manufacturing, robotics and even cyborgs.

Check the cost benefit of IT investment – Most small businesses don’t have deep pockets, so the investment in IT must be tied to tangible results in sales and profit growth . It is important not to get caught up in the technological buzz, and incorporate changes without analyzing the cost to benefit. Leveraging the IT department with outside assistance, and introducing new software should be approached with care. Look for the best value by choosing potential IT partners that have a proven record of success, and bring the experience and skill sets that are well suited to your particular business.

Visionary Leadership And Strategic Management

Path To Visionary Leadership

 

Path To Visionary Leadership | Visionary Leadership And Strategic Management

PATH TO VISIONARY LEADERSHIP

Hello and welcome to the first in our two (2) part article series on the PATH TO VISIONARY LEADERSHIP. Without any further ado lets get started.

The questions that managers often ask themselves is: “What does it take to make the leap from being an efficient manger to one that can formulate a long term vision for the company”?

They may possess good people handling skills such as coaching and mentoring, have solid credentials for planning, controlling and implementing strategic plans, yet they realize that something is missing.

Vision is much more than just having good management skills and an MBA education. Managers without vision can successfully run an organization,  but they will find it difficult to take the company to the next level, or  have their company achieve market leadership in their industry.

Recognized visionaries, such as Steve Jobs, have an inbuilt, psychological facility for going where no one else has  gone. They are able to do that because they dare step over the imaginary line that stops others from making that quantum leap into a new direction.

 

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Most managers never take the courageous step over that line, which crosses over the mental barriers of historical precedents, tradition, established ideas, and perceived market limitations.

In order to break that limiting mind set, fear and failure thinking must be replaced by success thinking

 

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As a designated leader of an organization you must arrive at the realization that you can drive it further, expand products and services, and target exciting new markets. You must see that there must be a more successful way to operate the business.

It is then that you take the step and become more conscious of things that prevent you from being more successful.

Stepping bravely across those mental barriers is the path to visionary leadership. By unblocking those mental constraints that focus on fear of failure you can become more confident in your ability, more self-assured, and more successful.

There are certain fundamental principles that apply in making the transition to a more visionary leader. One of the key factors is making a paradigm shift.

This is a process of casting old beliefs behind and using your inherent creative process to break new ground. Not everyone will become as successful as Steve Jobs, but making a paradigm shift is within everyone’s capability.

Shedding the old paradigms

 You know that you are physically different today than you were a year ago. You have only to look at a photograph or old video to recognize those  changes.

But even more important are the changes in your behavior and thinking process.  Some self reflection will allow you to rapidly assess that you currently think and act somewhat differently today than in the past.

The question to ask is whether that thinking has breached the old paradigms and allowed you to achieve greater success individually and for your company. Thoughts,attitudes, and actions should change with the paradigm shift.

Every time a new discovery is made, paradigms change. What we view as possibilities also changes because of the new discovery. Understanding the power of our mental paradigms can be a life-changing, dynamic concept that opens up new vistas of personal and organizational success.

Running the hundred meter dash under ten seconds was at one time thought to be impossible, but Carl Lewis proved that paradigm wrong.Within a few months of that new record others were able to break the ten second barrier with ease.  The result was that a new level of performance became accepted as possible.

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This concept impacts all areas of our life. When our belief system changes, our attitudes also change.
Paradigms not only influences our thinking, they actually control it. All of us view the world through strong beliefs and perceptions.
These perceptions explain to us just how our own individual worlds should function. Copernicus, Newton, Einstein, Edison broke away from the established thinking of their day that pervaded the field of science. Gates, Jobs, Musk did the same in business.You may never reach the stature of the these exceptional innovators, but shedding the old paradigms will at least broaden your horizons.

When basic assumptions were finally challenged by visionary individuals, others followed suit in expanding their present frame of reference.

History repeats this principle of paradigms over and over. It explains our successes as well as our failures. We limit or expand ourselves according to the way we think. Believe that you can and you will; believe you can’t and you won’t.

Your mental paradigm  powerfully controls your actions, feelings, behavior, and abilities. Your performance will not exceed the limits you unconsciously place on yourself.

 

Path To Visionary Leadership | Visionary Leadership And Strategic Management

Visionary Leadership And Strategic Management

Effective Communication Strategies

 

Putting pressure on yourself to go beyond your set mental paradigm causes stress, discomfort and disorientation. But those are good stresses to have. The old adage to think outside the box is inevitably controlled by your existing beliefs.

There is a positive aspect of our mental paradigms, though. Paradigms are useful to us. They help us to establish balance and stability in our lives.

They contribute to our feelings of comfort and security. When these paradigms are challenged we sometimes  become disoriented.

When our paradigms are threatened, or when we receive information that conflicts with our well-established beliefs, we usually react in these three ways:
 

  1. We completely shut out the information if it conflicts with our established paradigm.
  1. We aggressively attempt to attack its credibility.
  1. If somehow the evident truth of the new information forces a paradigm shift then we go through some discomfort, stress, and dissonance.

This feeling of discomfort opens the door to visionary leadership. Fear of the unknown or of reaching beyond our mental paradigms can at first be paralyzing.

However, we must push through our natural discomfort zone and look outside our current beliefs to expand the possibilities. It is then that we visualize and think creatively.

Join us next in part two (2) of this two (2) part article series as we discuss more on the PATH TO VISIONARY LEADERSHIP    (Coming Soon )

Communicating Effectively

Top Tips On Communicating Effectively

Effective Communication Strategies | Communicating Effectively

Hello and welcome to the first in our two (2) part article series on Effective Communication Strategies. Without any further ado lets get started.

COMMUNICATING EFFECTIVELY

The whole purpose of communication is to lead to better understanding between two or more parties. A conversation or presentation that those not result in understanding is unproductive. This in turn leads to even more misunderstanding, resentment, and dissonance.

There are many barriers to effective communication, and these barriers must be bridged in order to reach understanding. Some of these barriers involve lack of proper preparation, failure to see the need to communicate clearly, complacency in delivery of the message, lack of empathy toward one or both parties, prejudice, feeling of superiority, and impatience.

Effective communication includes both skills and attitudes. Skills include: proper articulation, eye contact, listening, paraphrasing. Attitudes encompass: empathy, rapport, and basic respect for the other person.

When communication problems arise, there often is a disturbing tendency to blame the other party instead of focusing on our own responsibility to establish the necessary criteria for understanding.

 

List of Communication Strategies | Communicating Effectively
Effective Communication Strategies
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There is a strong connection between successful communication and respectful cooperation. When there is mutual respect, guidelines and techniques for communication are less important because the parties will have a strong desire to create mutual understanding. But, when this is lacking, even a command off the best techniques of communication will not help bring about understanding. This is not to say that techniques are not necessary. It is important to master them, but at the same time to remember that creating a cooperative and open environment is essential.

Effective communication is as much the result of a positive attitude to communication as it is of methods and techniques. Communication effectiveness is dependent on three main factors that can be broken down as follows:

a. Seven percent (7%) depends on the words we use.

b. Thirty-eight percent (38%) depends on our tone of voice.

c. A fully fifty-five percent (55%) depends on non-verbal body language and physical gestures.

The surprising realization for most people when looking at the three factors of effective communication is the predominance of body language. We often spend most of our time on the text of our presentation and totally forget about assuring that our tone and body gestures have the desired effect on the listeners.

Voice modulation is an important part of the delivery. There is nothing less attention destroying than a presentation delivered in an awkward monotone. You do not want to put an audience of one or more individuals to sleep. Raise and lower your voice to suit the contents of the text.
This is not difficult to do, just pick out the passages that you really want the listeners to fully grasp and both slow down and raise the volume slightly.
This is true if you are speaking to a larger audience at a company meeting or to just one subordinate.

Understanding the enormous consequences of body language should be a huge motivation to improve this element of communication. Standing or sitting in a straight but not rigid position, making confident but not overbearing eye-contact, preventing yourself from showing the outward signs of discomfort such as sweating or fidgeting, can be readily mastered.
Become aware of your own body language traits and work on correcting them by practicing in front of a mirror or a friend who can provide immediate feedback.

 

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Communicating Effectively

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The skills part of effective communications can be broken down into five basic factors. The more you understand and practice these techniques, the more skilled you become.

However, you also must be always aware of the emotional backdrop and make certain that it is advantageous to the communication process. Your personal approach should be positive and seek the best possible outcome for both parties, as well as the organization.

Effective Communication Strategies Communicating Effectively

Join us next in part two (2) of this two (2) part article series as we discuss more on The Five Key Factors In Communications

 

 

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Best Financial Ratios For Small Business

Performance Ratios For Small Businesses

Performance Ratios For Small Businesses | Best Financial Ratios For Small Business

 
Welcome back to our part three (3) and final part in this three-part article series on the Use of Financial Ratios For Small Businesses. You can go back to part one (1) here and Part two (2) here.

Total Debt To Net Worth: Total Liabilities ÷ Net Worth

This ratio expresses the relationship between capital contributed by creditors and that contributed by owners. It expresses the degree of protection provided by the stockholders for the creditors.

The higher the ratio, the greater the risk of being assumed by creditors.  A lower ratio generally indicates greater long-term financial safety.
The effect of long-term (funded) debt on a business can be determined by comparing this ratio with the Current Liabilities to Net Worth Ratio. The difference will pinpoint the relative size of long-term debt, which can burden a firm with substantial interest charges.

Total liabilities shouldn’t exceed net worth (100 percent) since in such cases creditors have more at stake than stockholders.

 
 

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Operating Ratios

Operating ratios are used to assist in the evaluation of management performance. These consist of the following key ratios:

Percent Profits Before Taxes ÷ Tangible Net Worth

This ratio expresses the rate of return on tangible capital employed.  While it can serve as an indicator of management performance, it should be used together with other ratios.

A high return, normally associated with effective management, could suggest an undercapitalized firm.  Conversely, a low return, usually an indicator of inefficient management performance, could reflect a highly capitalized, conservatively operated business. Profits before taxes may be zero, in which case the ratio is zero.
% Profit Before Taxes ÷ Total Assets

This ratio expresses the pretax return on total assets, and measures the effectiveness of management in employing the resources available to it. It is also called the rate of return on investment, and it shows how efficiently a firm manages resources.

It is different from the Return On Equity more money is available for dividends and/or reinvestment in the firm. This ratio can be used to compare the performance of investment in a company compared with other investment opportunities.

If this ratio varies considerably from the industry average, a detailed examination of the composition of the assets and a closer look at the earnings figure is warranted.

A heavily depreciated facility and a large amount of intangible assets or unusual income or expense will cause distortions of this ratio.

Total Assets Turnover:  Net Sales ÷ Total Assets
This ratio is used to measure the sales generated by each dollar of assets. A high asset turnover is preferred. A low turnover could mean that the firm requires more assets than a firm with a high asset turnover or that the firm is not using its assets in an efficient manner.

If the ratio is less than the Industry Average, this means the company is simply not generating a sufficient volume of business for the size of the asset investment.

Sales should be increased, or some assets should be disposed of, or both steps should be taken.

 

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Best Financial Ratios For Small Business
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Conclusion

These are the key ratios that a small business or any business, for that matter, should keep a close track of and fully understand the implications.

It is important to compare yourself to your industry.  It is even more important to monitor your own progress.  Improvements in indicators – even an improvement of a tenth of a percent will show management what strategies are working and how to capitalize on their strengths and minimize their weaknesses.

 

 

Business Management Skills Blog | Business Management Ratios For Small Businesses

Methods of Managing Change In An Organization

Business Management Ratios For Small Businesses

Business Management Ratios For Small Businesses | Important Financial Ratios For Small Business

 

Welcome back to our part two (2) in this three-part article series on the Use of Financial Ratios For Small Businesses – today we will continue with part two (2) . You can go back to part one (1) here

Accounts Receivable Turnover Ratio:   Net Sales ÷ Receivables

This ratio measures the number of times Accounts Receivable turn over in one year.  The greater the turnover, the shorter the time period between sale and the collection of cash.  If a company’s receivables are turning slower than the rest of the industry, an examination of the company’s collection procedure and quality of receivables should be closely examined.

This ratio may also be misleading if the company’s cash sales represent a large percentage of total sales.  Keep in mind that this ratio does not recognize cash sales.

Inventory Turnover Ratio:  Cost of Goods Sold ÷ Average Inventory

This ratio measures the number of times inventory is turned over during the year.  High inventory turnover can indicate better liquidity or superior merchandising.  Conversely it can indicate a shortage of needed inventory for sales.

 

Key Financial Ratios For Small Business

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Low inventory turnover can indicate poor liquidity, possible overstocking, obsolescence, or in contrast to these negative interpretations a planned inventory buildup in the case of material shortages.

When the inventory figure is zero, the quotient will be undefined and represents the best possible ratio.

This ratio is considered a significant indicator of the efficiency of operations for many businesses.  This ratio is used to measure the speed with which inventory was being sold and replenished during the past year. As a general guideline, a high ratio suggests an efficient inventory system.

 Payables Turnover Ratio:   Cost of Sales ÷ Trade Payables

This ratio measures the number of times that trade payables turn over in one year. The higher the turnover, the shorter the time between purchases and payments.

If a company’s payables turn over more slowly than the industry, the company may be experiencing cash shortages, disputing invoices with suppliers, enjoying extended credit terms or deliberately expanding its trade credits.

 Working Capital Turnover Ratio:   Net Sales ÷ Net Working Capital

 Working capital (current assets minus current liabilities) is a measure of the margin of protection for creditors. It reflects the ability of the company to finance current operations.  Relating the level of sales generated by the operations of the company to the working capital supporting these operations, measures how efficiently working capital is employed. 

A low ratio may indicate an inefficient use of working capital while a very high ratio may signify overtrading and a vulnerable position for creditors.

 This relationship indicates whether a company is overtrading or conversely carrying more liquid assets than needed for its volume.

Each industry can vary substantially and it is necessary to compare a company with its peers to see if it is either overtrading on its available funds or being too conservative.  Companies with substantial sales gains often reach a level where their working capital becomes strained.

 Fixed Assets To Net Worth:    Net Fixed Assets ÷ Net Worth

Net Worth is defined as Retained Earnings plus Current Year to Date Earnings plus Capital Stock. This ratio measures the extent to which stockholder’s equity (capital) has been invested in facilities and equipment (fixed assets). 

A lower ratio shows   a proportionately smaller investment in fixed assets in relation to net worth, and a better “cushion” for creditors in case of liquidation.

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Similarly, a high ratio would show the opposite situation. The presence of substantial leased fixed assets(not shown on the balance sheet) may deceptively lower this ratio.

The portion of net worth that consists of fixed assets will vary greatly from industry to industry, but generally a smaller proportion is desirable.

A high ratio is unfavorable because heavy investment in fixed assets indicates that either the concern has a low net working capital and is over trading or has utilized large funded debt to supplement working capital.

Also, the larger the fixed assets, the bigger the annual depreciation charge that must be deducted from the income statement.  Normally, fixed assets above 75 percent of net worth indicate possible over investment and should be examined with care.

Joint us in the conclusion of this three (3) part article series Performance Ratios For Small Businesses

You can go back to part one here – Use of Financial Ratios For Small Businesses.

 

 

 

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