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04/02/2013

Incorporate Barter Into Your Business Management

As an entrepreneur your affairs may not have made headlines, but that doesn�t mean that you don�t have to be any less zealous in your pursuit of continuing management excellence. The fact is, management excellence should never be viewed as the exclusive domain of large corporations. All businesses can be the beneficiary of solid management and planning. With this in mind, consider these strategies.

Start Your Budget At Zero

In most companies, budgets get built year by year, with owners and managers asking themselves, �How much should I add to the budget this year? Or (if the forecast is gloomy), �Should I subtract that 5% or 10%?� A more effective approach is called zero-based budgeting. It is markedly different in that it requires you to start the budget at zero, and justify every expense for inclusion in the present budget.

This way, instead of building on pockets of inefficiency, waste can be identified and rooted out annually. Many firms are surprised at how much deadwood they are carrying...thus draining the bottomline.

Downsizing

It is difficult to eliminate positions or people who have been with your company for years. But as a business owner, you must make these decisions based on performance and relevance � rather than on sentimental reasons alone. 

Remember, when you�re trying to downsize your business the overall productivity improves, thereby helping to ensure long-term viability. More productivity at a reduced cost translates into improvements in your competitiveness and profit margin.

Trading

Another engine for increased growth and productivity is barter. Used in a systematic, organized, and prudent manner the purchase of needed goods and services at your barter (variable) cost-of-doing-business will result in incremental sales that are dramatically profitable.

An important consideration to remember is this: regardless of how astute your management efforts are, you are always faced with three possible alternatives in your forecasting efforts.

1)    You are right on � you hit your forecasts.

2)    You are overly optimistic and over-produce.

3)    You are too conservative and under-produce.

In two out of the three cases you�re off the mark, and it will cost you. If you�re astute enough to realize that barter is a safety valve, you can utilize it to compensate for any forecasting errors, which is why smart management will include barter in their planning regimen.



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