Eliminate waste; save a company! Quite often that’s enough. Although the benefits are finite, they can be significant if the elimination of waste is vigorously attacked. Over the next several weeks we’ll cover the waste waterfront, hitting on the big four.
The first, the waste of cash, is prevalent in almost every mis-managed company. A vigorous Priority objective can generate a significantly sized one-time lump of “free” cash in 90 days or so. Then on-going cash management is the next topic. Had anyone observing Enron, including the 100’s of employed auditors, checked into the relationship between ongoing corporate net cash balances and reported operating income, their fraud would have been uncovered much earlier. In order for me not to get fooled when I go into a new company, I developed a relatively simple but highly effective tool, which I named the Liquid Balance Sheet. It enables me to cut through all the vagaries and misleading possibilities inherent in accrual accounting, and see what’s really going on. Next week you’ll see how this works. These next three categories will be covered in subsequent weeks.
The third category is the waste of expenses, through inefficiencies or through unnecessary processes.
The final category is perhaps an unusual one, the waste of a leader’s credibility. I’ll discuss how that happens, the impact of it, and how to prevent this waste that, unlike some of the others, once lost stays lost.
Tightening up all these areas can head off failure and radically improve financial performance. Click into the upcoming blogs for more details.