Let's Get Down to Business...

More Pushing and Pulling

Choosing whether to "push" production or let it be "pulled" has all sorts of implications. 

The attachment describes an application of making one of those strategic choices.  I think you'll be surprised by it. 

The second page compares the two approaches by examining their core assumptions, methods and issues.  Organizing the ideas in this way is sometimes helpful.

• Download pushpull_strategies.doc 

The Sixth Week's Study Guide: Organization or Management, which comes first??

Here's your Study Guide for the Course's Sixth Week.

This is interesting stuff and will be what keeps you busy when you're climbing the ladder to the Executive Suite.

• Download Sixth Week Study Guide

Learning to Love Budgeting

A big part of the Business Plan Project's Final Submission is putting together a cash-flow budget for your business. And getting started sooner is better than later.

Doing this requires input from every team member. It will also put your business to the ultimate test: can it operate profitably? Are you ready to find out the answer?

This post appears in two categories: "Week 5" and the "Business Plan Project: Final Submission."

For openers, here are my lecture notes and PowerPoint slides.

• Download Budgets (Week Six)

Note: You'll actually prepare two budgets (twice as much fun): a capital budget (includes every cost from inception through grand opening) and an operating budget (includes everything after grand opening through stabilization and maturity).

To help you do all this, you'll need an Excel spreadsheet.  Coming soon (just a few more lines), you'll find a link to just what you're looking for.

When this file opens, you'll see that it's already full of great-looking numbers. The "trick" to having fun with your budget is "over-writing" the numbers in this spreadsheet with your own numbers.

Notice also that most the cells in the spread sheet are "protected."  As you work with it, you'll see that you only have to enter the key assumption of your financial model.  Pay attention to the instructions in the spread sheet and start thinking about the questions you'll be answering.

Here's what you've been waiting for:   Download Capital and Operating Budget Spreadsheet (2013-14) 

 

The trick to having fun with your Budget is "overwriting" the Example with your numbers.  And all you have to do is follow the instructions and enter the necessary data.  Of course, you've got to make the right strategic choices if there's going to be a happy ending.

You'll notice the "suggested format" tracks the order of a "Statement of Cash Flows."

That's on purpose. At this stage, it doesn't make sense to prepare an Income Statement or a Balance Sheet if your business doesn't have a positive cash flow.

Likewise, you've got to work out your capital structure: what are the sources and uses of funds that you'll be needing and using? What's the "mix" of funding that makes your business perform? The best answers to these questions come from analyzing your cash flows.

The best way to start is to "fool around" with the sample budget. Look at the formulas and relationships. See how they link together.

To start on your budget, plug a few numbers into the blank budget and watch what happens. Don't load in everything at once and expect it to work right the first time out of the box. Take your time and be patient.

Also, don't hesitate to change labels or expand or delete the budget to suit your business's needs. If you do, don't de-link some relationships or formulas.

Finally, there's a post also in the "Business Plan Project: Final Submission" category ("Don't Get the Budget Blues") that is mandatory reading for your team's CFO. It's got some trouble-shooting ideas that might be helpful. Enjoy!

The Fifth Week's Study Guide

Our Fifth Week (and the start of our Sixth Week) pairs up Ethics and Budgeting.

They may be the oddest of Odd Couples.

Both are essential ingredients though.

Nothing will stop a promising career faster than not doing the right thing.

And you can count on every presentation you make being interrupted by that annoying question, "What's your budget look like?"

To get started, here's this week's study guide: Download Fifth Week Study Guide

 

Ethics and Business: Can they do the tango?

Were Enron's accounting gyrations the cause or an effect of what happened? How did things get so out-of-control?

The finger of blame is usually pointed at Enron's off-balance sheet machinations or their accountant's conflicts of interest. But aren't these symptoms of something larger? Are they really what brought Enron down?

What was the "disease" that made so many people at Enron act so badly? Why didn't someone yell, before it was too late, "We've got to change and start doing the right thing!"

Did the problem at Enron also start with the letter "E?" Did their values and culture put ethical considerations in second place after financial gains? How was that allowed to happen?

Did it start first with everyone "looking the other way" when someone "fudged" their expense account instead of saying, "That's not right." How was it allowed to fester unchecked for so long and to get so bad?

We're going to spend some time trying to figure out what's the "right thing" for you and your organization. One safe bet is you and your organization won't always agree on what's "right" for every "thing."

To get started, here are my lecture notes and PowerPoint slides:

• Download Ethics (Week 6)

If a Business is more "Accountable," will it be more "Responsible?"

Just when the memories of Enron’s ethical and financial meltdown were starting to fade, the current financial and economic mess breathed new life into the debate about corporate social responsibility. Heads are rolling and earnings are Wall Street’s least favorite holiday color – bright red.

Calls for investigations are mounting and it won’t long before a CEO is seen on the evening news taking a “perp walk.” For the moment, the loudest cries are, “See, we told you big business wasn’t to be trusted. More and tougher laws are needed to make those corporations act responsibly.”

Before picking sides in what many call the ultimate imponderable (can corporations be responsible?), let’s pick apart some of the terms and rhetoric being hurled around.

The "Efficient Grease" Hypothesis

On the continuation page is an article from the April 29, 2010 issue of The Economist.  It asks whether there's a positive return on investing in a bribe.  Do a few dollars or euros discretely slid into the hand of a flinty-eyed bureaucrat get things done?  Or does it just open to the door to more haggling and delay?

Or does it make more sense to invest in a "good reputation?"  Is that a source of "positive" competitive advantage?  In a digitized age where anonymity is protected, how do you get and keep a good reputation?  Enjoy.

How do we do the "Right Thing?"

Maybe it's just my sensitivity to the subject, but some days it seems like no business can operate ethically and every headline exposes some "new" and more unseemly behavior.

Why can't our businesses behave the way they should?

An easy question to ask - and one that certainly should be frequently asked - but thinking about how to answer it leads to more confusion and frustration.

Who decides whether a behavior is good or bad? Who's the "they?" How do you define a "good" behavior versus a "bad" behavior? Are all "good" behaviors always "good" or are they sometimes "not-so-good?"

Our usual response is for Congress to enact a new law, regulation or rule, proclaiming, "This will fix the problem and make businesses behave the way they should."

This usually lasts just long enough for the lawyers (and business managers) to find some loopholes and ambiguities big enough for truckloads of even worse behaviors.

How do we do the "right thing?" Is the right thing following every rule or is it making wise choices? Here's a short lecture by a scholar of psychology and economics (do they go together?) about how choices get made and could get made in our modern society. Enjoy.

Extra-Credit and Makeup Policies: A Little Clarification

A frequently-asked question is, "Can extra-credit points be earned?"

The answer is No and Yes or, "It depends."

There are no extra-credit opportunities for individual students.  No points will be awarded for work outside the course's scope. 

There is, however, an opportunity for the Teams to earn extra-credit points by entering the "Elevator Pitch" competition during the Tenth Week.  To learn more, check out the "Elevator Pitch/Extra-Credit Championships" category.

Another question that may be asked even more frequently is, "Can I make up a quiz or examination that I missed?"

The answer is Probably Not. 

The general rule is the Course's schedule will be strictly enforced.  Exceptions may be granted but only for documented circumstances beyond the student's control that prevented the student from being present for the quiz or examination. 

Note that exceptions are just that - exceptions.  In most instances, you won't get a chance to make up a missed quiz or examination.  You may - there's no guaranty - get to make up a quiz or examination if (1) you were absent for a reason that you couldn't anticipate or control and (2) the circumstances that caused the absence are satisfactorily documented.  An example might be hospitalization.  In such a situation, you would be required to produce written proof that you were, in fact, hospitalized.  

Keeping Score

I assume you will also be responsible for tracking the points you earn during the course. 

This Blog doesn't have a mechanism that allows individually secure access.  So I can't post your scores here.

Likewise, we don't use the University's on-line system because it isn't reliable (remember a couple of terms ago when it crashed and mountains of data vanished).

But that doesn't mean you can't, and shouldn't, check in to make sure our score cards match up.  Do that by simply sending an email asking for a status check.  As Reagan said to Grobachev, "Trust, but Verify."

Keep smiling.