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Bob Meyer
 

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Move Into 2001
With Barter In Your Planning Efforts

What will it take for today's smaller companies to be tomorrow's stars? Excellent new products and services, of course. But also strong-willed founders who in the true entrepreneurial sense will refuse to take no for an answer. Ones who will sacrifice time and energy for their company's success.

Equally important, it will take outstanding management along with the implementation of a series of cost controls to stabilize a company's finances as it fulfills its potential. It also calls for creativity and the embracement of new, proven concepts.

Those who have been keeping up with business news, know that some of the most esteemed names in the corporate community have learned the hard way that maintaining a sharp focus on the bottomline is of critical importance.

Smart Management

As a small business, your affairs may not have made headlines, but that doesn't mean 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 coupled with information. Keeping this in mind, consider these strategies.

Start Your Budget At Zero

In most companies, budgets get built year by year, with managers asking themselves, "How much should I add to the budget this year or next? Five percent? Ten percent? 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 managers to start their budget at zero and justify every line, every component for inclusion in one's budget. This way, instead of building on pockets of inefficiency, waste can be identified and rooted out annually.

A zero-based budget is compatible for any size business. When small businesses engage in zero-based analysis, many are surprised at how much dead-wood they are carrying.

Positions that were created and people who were hired at different times to meet different needs, but have since lost their relevancy, are still on the books. And they may be 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--rather than on sentimental reasons alone.

Remember, when you're trying to downsize your business, the overall productivity improves, 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 marginal cost-of-doing business will result in incremental sales that are dramatically profitable.

One other 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...so you can't fulfill all the orders, losing valuable cash sales.

In two out of the three cases you're off the mark, and it will cost you. If, however, you're aware enough to realize that barter is a safety valve, you can cover the two misses, which is why smart management will include barter in their planning efforts.