Kathleen Allen

Cheat Sheet / Updated 12-09-2022

Prepared entrepreneurs learn as much as possible about their marketplace and what customers want. This cheat sheet helps you test new ideas and weed out the keepers from the also-rans. It poses key questions about your concept, the marketplace, the industry, and your team. It even shows you how to create a marketing plan, and more!

Cheat Sheet / Updated 04-27-2022

Before you earn an MBA (Master of Business Administration) degree, you can still apply MBA-level knowledge in your career: Be a better business manager by efficiently delegating responsibilities among your employees and successfully rewarding those who do a good job. Hone your design and marketing skills by creating an informative and easy-to-use business website and a brief but clear marketing plan.

Article / Updated 03-26-2016

Without a doubt, annual reports are at the pinnacle of corporate communication. The point of the annual report is to provide a summary of exactly how a company has performed in the preceding year, and to provide a glimpse of the future. Building a compelling annual report is a real art and science, and more than a few consulting firms are doing very well, thank you, by hiring themselves out to create reports for all kinds of companies. Annual reports are generally written for shareholders and other investors, although they are also required reading for lenders, banks, potential employees, and MBA students working their way through grueling accounting and finance classes. For the most part, annual reports are produced by public, not privately held, companies. Chances are, you won't see a private company's annual financial statements unless you're an owner. For most of the public, the annual report contains the only financial documents they are likely to see. It is, therefore, the best source of information for most people to determine the financial health of a company and to learn of any potential problems or opportunities. Reading an annual report can be a daunting prospect if you don't know exactly what you are looking for and where to find it. The good news, however, is that most reports are now standardized around a common model of nine key parts, making it easy to review any company's annual report once you get the hang of it. The final format of the annual report depends on the needs of a company, its industry, and any legal disclosure requirements. Regardless, an annual report contains a selection of the following nine parts: Letter from the chairman: The letter from the chairman of the board is the traditional place for a company's top management team to tell you what a great job it did during the preceding year and to lay out the company's goals and strategies for the future. It's also a great place to find apologies for problems that occurred during the year, which may or may not have been solved. Oops! Sales and marketing: This section contains complete information about a company's products and services, as well as descriptions of its major divisions and groups and what they do. By reading this section, you should be able to figure out which products are most important to a company and which divisions or groups are most critical to a company's success. Ten-year summary of financial results: Assuming that a company is at least ten years old, many annual reports contain a presentation of financial results over that period of time. This is a terrific place to look for trends in growth (or non-growth) of revenues and profit and other leading indicators of a company's financial success. Management discussion and analysis: This is the place where a company's management has the opportunity to present a candid discussion of significant financial trends within the company over the past couple years. Letter of CPA opinion: To be considered reliable, a company's financial statements have to be reviewed and audited for accuracy by a qualified Certified Public Accountant (CPA). In this letter, a CPA firm states any qualifications that it has with the financial statements. These statements can have great bearing on the reliability of the data or of management's assessment of it. Financial statements: Financial statements are the bread and butter of the annual report. This is where a company presents its financial performance data for all to see. At minimum, expect to see an income statement, a balance sheet, and a cash flow statement. Be sure to watch for footnotes to the financial statements and read them carefully. You can often find valuable information about an organization's structure and financial status that has not been publicized elsewhere in the report. For example, you may notice information on a management reorganization or details on a bad debt that was written off by the company. Subsidiaries, brands, and addresses: Here you find listings of company locations — domestic and foreign — and contact information, as well as brand names and product lines. List of directors and officers: Corporations typically have boards of directors — senior businesspeople from both inside and outside the organization — to help guide them and provide a broader view of markets and business environments than that seen by internal managers. Officers include the president, chief executive officer (CEO), vice presidents, chief financial officer (CFO), and so forth. Stock price history: This section gives a brief history of stock prices and dividends, showing upward and downward trends over time. Included is information on a company's stock symbol and the listing stock exchange, for example, the New York Stock Exchange or NASDAQ. Annual reports are the best tool that the public has to review the performance of companies. And most annual reports contain lots of useful information — information that you can analyze to get a sense of the near- and long-term health of the firm. The more often you read annual reports, the better you'll get at it. So now that you have all this terrific information, what should you do with it? Here are some definite musts when it comes to reading an annual report: Review the company's financial statements and look for trends in profitability, growth, stability, and dividends. Read the report thoroughly to pick out hints that the company is poised for explosive growth — or on the brink of disaster. Places to look closely for such hints include the letter from the chairman, the sales and marketing section of the annual report, and management discussion and analysis. Of course, it also pays to keep an eye on the company through the business press or analyst reports. Carefully read the letter of CPA opinion to be sure that the firm agrees that the financial statements are an accurate portrayal of the company's financial reality. Carefully read any footnotes to the financial statements. These footnotes often contain information about company assumptions that can be critical to a full understanding of the financial statements.

Article / Updated 03-26-2016

Being a manager is one of the most difficult — and potentially one of the most rewarding — jobs that anyone can take on in an organization. A successful manager must continuously improve systems and processes to make them more efficient, more effective, and less costly. Because the environment of business is always changing — new employees, new technology, new sources of supply, new competitors — managers always have to be alert to the need of restructuring their organizations to keep them competitive in the marketplace. As you work to design a better organization, be sure to consider the following factors. Division of labor The very first step in organizational design is assigning specific employees to specific jobs, called division of labor. In a one-person organization — say, a home-based public relations agency — only one person completes all the jobs that need to be done. The business owner types the letters, answers the phone, places advertisements for her business, designs promotional materials for clients, writes press releases, schedules clients for media interviews and radio and television appearances, does the accounting, pays the bills, and even takes out the trash! Once the owner of the public relations agency hires an employee, however, then she can make her operation more efficient through effective division of labor. The new hire can take on tasks that the owner is not so good at or that require a lot of work but don't generate revenues — perhaps typing letters and answering phones. This way, the owner can concentrate her efforts on the things that she is best at and that have a better cash return on the investment of her time. In his book, Wealth of Nations, Adam Smith made a very clear case for the division of labor. As an example, he used the case of a pin-producing factory. "One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them." According to Smith, through the division of labor, ten workers could produce approximately 48,000 pins a day, where a single person performing all these steps alone would be lucky to produce 20 pins in one day. Smith may have exaggerated his point just a bit, but it is essentially true: By assigning distinct, simplified tasks to individuals that are easily learned, productivity skyrockets. When you assign a specific job to an employee, ensure that The duties of the job are clear and the boundaries are well-defined. The job is not too complex or too simple for the particular employee. Employees are given the authority to execute their jobs without undue management interference. The job is kept interesting by varying tasks, goals, and approaches. Employees are well-trained to do their job. Although the division of labor has a time-honored place in modern business, today's most successful organizations are going a step farther — they are cross-training employees in the jobs of their coworkers. Employees who know one another's jobs are much more flexible, and the organizations they work for can be much more responsive to changing market conditions or to the challenges of competitors — or simply to fill in for an absent worker. Also, cross-trained employees often have higher morale than employees who aren't cross-trained because the varied tasks make their jobs more interesting. Departmentalization and cellular manufacturing In traditional organizations, after managers hand out individual jobs to employees, the managers then determine whether any jobs can be grouped together into logical divisions. So, for example, the managers group every employee assigned a sales-oriented task together with other sales-oriented employees to form a sales department. Employees who have an accounting function — whether payroll, accounts receivable, or accounts payable — are put together to form an accounting department. And so it goes throughout the organization. This method, however, is the old way of doing business. In a major blow to departmentalization, a new method of structuring manufacturing concerns by using manufacturing cells has broken down the organizational walls that led to massive production inefficiencies. Cellular manufacturing consists of closely linking work steps in a specific process. For example, if 20 work steps are involved in completing a piece of work (work in this case means making a product in a plant, or processing paper in an office), linking places the people and the machines they use next to each other in a work cell. In a traditional manufacturing organization these 20 work steps would have been accomplished in different functional departments spread throughout the business — sometimes in different buildings, cities, states, or even countries. Flexible work teams now comprise many functions within organizations, and some entrepreneurial-type businesses are not based on departments at all. Span of control Span of control refers to the number of employees reporting to a particular supervisor or manager. A narrow span of control consists of only a few employees; a wide span of control includes many employees. One manager, Peter, once indirectly managed a staff of more than 200 employees working at some 45 locations nationwide. If each employee had reported directly to Peter, his task would have been almost impossible. But narrowing the span of control made Peter's job feasible. Only four employees reported directly to Peter — three project managers and an administrative assistant — and each of the project managers managed a group of ten or more site supervisors. The tendency nowadays is to flatten organizations by widening the span of control and decreasing the layers of management (hierarchy), and by relying more on employee teams to take on many of the roles formerly performed only by managers. Why flatten an organization? The flatter an organization, the fewer layers of management. Less management leads to less bureaucracy and quicker decision making. The fewer layers of management, the more money available to spend on other, more productive activities (such as the company picnic — yum!).

Article / Updated 03-26-2016

A budget is nothing more than a written estimate of how an organization — or a particular project, department, or business unit — will perform financially. If you can accurately predict your company's performance, you can be certain that resources such as money, people, equipment, manufacturing plants, and the like are deployed appropriately. Kinds of budgets When it comes right down to it, you can budget any activity in your organization that has a financial impact. Two of the most common budgets are Cash budget: An estimate of a company's cash position for a particular period of time. Operating budget: A business's forecasted revenues along with forecasted expenses, usually for a period of one year or less. Line items in your operating budget may include: Labor budget: The total labor cost to be expended for a set period of time calculated by taking every person in an organization, department, or project and multiplying the number of hours they are expected to work by their wage rates. Sales budget: An estimate of the quantity of goods and services that will be sold during a specific period of time. Production budget: A forecast thatstarts with the sales budget's estimates of the total number of units projected to be sold, then translates this information into estimates of the cost of labor, material, and other expenses required to produce them. Expense budget: An estimate prepared for travel, utilities, office supplies, telephone, and many other common business expenses for a given period. Capital budget: The total costs and maintenance fees planned for your company's fixed assets. The best kind of budget is the one that works. You can choose from three key approaches to developing a budget: Top down: Budgets are prepared by top management and imposed on the lower layers of the organization. Top down budgets clearly express the performance goals and expectations of top management, but can be unrealistic because they do not incorporate the input of the very people who implement them. Bottom up: Supervisors and middle managers prepare the budgets and then forward them up the chain of command for review and approval. These budgets tend to be more accurate and can have a positive impact on employee morale because employees assume an active role in providing financial input to the budgeting process. Zero-based budgeting: Each manager prepares estimates of his or her proposed expenses for a specific period of time as though they were being performed for the first time. In other words, each activity starts from a budget base of zero. By starting from scratch at each budget cycle, managers are required to take a close look at all their expenses and justify them to top management, thereby minimizing waste. Each has its advantages and disadvantages, and each approach can work well, although the pendulum is clearly swinging in favor of the bottom up approach. Budget tricks of the trade Budgets provide a kind of early warning system that, when compared to actual results, can inform you when something is going wrong that needs your immediate attention. When your expenditures exceed your budget, you can do several things to get back on track: Review your budget. Before you do anything else, take a close look at your budget and make sure that the assumptions on which it is based are accurate and make sense in your changing market. If your market is growing quickly, you may need to adjust up your estimates. Sometimes, it's the budget — not the spending — that is out of line. Freeze spending. One of the quickest and most effective ways to bring spending back in line with a budget is to freeze expenses such as pay raises, new staff, and bonuses. Postpone new projects. New projects, including new product development, acquisition of new facilities, and research and development, can eat up a lot of money. However, if you are too zealous in curbing spending when you need to develop new products or services to compete, the result can be disastrous for the future growth and prosperity of the company. Lay off employees and close facilities. This is the last resort when you're trying to cut expenses. Although these actions will result in an immediate and lasting decrease in expenses, you also face an immediate and lasting decrease in the talent available to your organization. Productivity and morale of remaining employees may also suffer.

Article / Updated 03-26-2016

Every business, whether it has 2 employees or 2,000, has meetings as a regular part of getting things done. Although employees can communicate with one another in an organization in many different ways, business meetings — if they are conducted the right way — can be incredibly effective and efficient. Meetings are not only one of the most important ways for employees to communicate within organizations, but they're also the way that teams get their work done. Although individual team members work on tasks outside of meetings, team meetings give members the opportunity to come together to determine the team's goals, its plans for achieving its goals, and who will do what — and when. Take a close look at what makes meetings tick and find out how to conduct better business meetings. The good news (and the bad) about meetings We've all experienced more than our share of both good and bad meetings. What makes some meetings terrific, while others are simply the pits? Employees benefit in several ways when a meeting is well run. Here's the good news about business meetings that fall into this category: Meetings are empowering. Meetings are a great way to communicate. Meetings develop work skills and leadership. Meetings are morale boosting. Unfortunately, meetings are prone to fall into nonproductive pitfalls. Here's the negative side of meetings: Meetings may not have focus. Companies have too many meetings. Attendees may be unprepared. Most meeting time is wasted. Although this bad news may seem bleak, there is hope. For each of these problems, and for the many other kinds of problems that often plague business meetings, solutions are available. You simply need to be open to changing the way that meetings are conducted in your organization. You may even need to take on a leadership role, if necessary, to make your meetings work better. Eight ways to make meetings better Everyone has suffered through far too many meetings that took up far too much time and accomplished far too little. Unfortunately, this sad state of affairs has happened so often that you may find yourself becoming numb to the fact that your meetings aren't as good as they should be — and could be, if you just had some way to fix them. Help is close at hand! You can make your meetings better, and you don't have to tolerate meetings that accomplish little or nothing. The power is within you, whether you are a meeting leader or a participant. Do you want to find out how? Here are some time-tested techniques to ensure better business meetings: Be prepared. Meetings are work, so, just as in any other work activity, the better prepared you are for them, the better the results you can expect. Have an agenda. An agenda — a list of the topics to be covered during the course of a meeting — can play a critical role in the success of any meeting. It shows participants where they are going, but it's then up to the participants to figure out how to get there. Be sure to distribute the agenda and any prework in advance. By distributing the agenda and prework before the meeting, participants can prepare for the meeting ahead of time. As a result, they will be immediately engaged in the business of the meeting, and they'll waste far less time throughout the meeting. Start on time and end on time. Everyone has suffered through meetings that went waybeyond the scheduled ending time. That situation would be fine if no one had anything else to do at work. But in these days of faster and more flexible organizations, everyone always has plenty of work on the to-do list. If you announce the length of the meeting and then stick to it, fewer participants will keep looking at their watches, and more participants will take an active role in your meetings. Have fewer (but better) meetings. Call a meeting only when it is absolutely necessary. Before you call a meeting, ask yourself whether you can achieve your goal in some other way, perhaps through a one-on-one discussion with someone in your organization, a telephone conference call, or a simple exchange of e-mail. As you reduce the number of meetings you have, be sure to improve their quality. Include, rather than exclude. Meetings are only as good as the ideas that the participants bring forward. Great ideas can come from anyone in an organization, not just its managers. Roy Disney, vice chairman of the Walt Disney Company, tells a great story that illustrates this point perfectly. Says Disney, "There's an old story about Walt from the early days when we were making short subjects — really just a collection of gags. Every week, Walt had a gag contest, and everybody was free to enter — the winner got $5, which was a lot of money during the Depression. And who kept winning, week after week? The janitor. You see, it's not about who's the boss. It's about who's got the best ideas." Maintain the focus. Meetings can easily get off track and stay off track. The result? Meetings do not achieve their goals. Meeting leaders and participants must actively work to keep meetings focused on the agenda items. Topics should not include the results of the latest football game, or who had lunch with whom, or who's driving that shiny new Porsche. Whenever you see the meeting drifting off track, speak up and push the other attendees to get it back in focus. Capture and assign action items. Unless they are held purely to communicate information, or for other special purposes, most meetings result in action items, tasks, and other assignments for one or more participants. Don't assume that all participants are going to take their assignments to heart and remember all the details. Instead, be sure that someone has agreed to take on the job of record keeping. Immediately after the meeting, summarize the outcome of the meeting, as well as assignments and timelines, and e-mail a copy of this summary to all attendees. Get feedback. Every meeting has room for improvement. Be sure to solicit feedback from meeting attendees on how the meeting went right for them — and how it went wrong. Was the meeting too long? Did one person dominate the discussion? Were attendees unprepared? Were the items on the agenda unclear? Whatever the problems, you can't fix them if you don't know about them. You can use a simple form to solicit feedback, or you can simply informally speak with attendees after the meeting to get their input.

Article / Updated 03-26-2016

Technology affects practically every entrepreneurial venture, and savvy entrepreneurs know which tech resources to turn to. You use technology to help determine what to sell, how to sell it, where it's selling, and who's buying it. To keep on top of technology, browse these Web sites periodically for helpful information: Wired.com: Find articles on what’s happening in the world of technology. Slashdot.com: See tech information before it hits the newsstands. CNN.com Technology: All of CNN’s great tech resources, including archives of its popular technology TV shows. CNNMoney.com Small Business: Great online articles about businesses that use technology to get ahead. ZDNet: Everything you ever wanted to know about e-commerce, even technical help. CNET: Home of tech news, auctions, hardware and software reviews, helpful hints, Internet tools, and Web building tools. Free Websites Directory: Ratings of free hosts on their reliability, features, ease of use, speed, and size.

Article / Updated 03-26-2016

Thorough entrepreneurs test their product ideas before they begin manufacturing. Even if you're in love with your idea, ask yourself the following test questions, which compel you to look closely at these areas: the product or service; the market it'll enter; the customers in that market; your finances; and your team. Product/Service What are the features and benefits? What product development tasks must be undertaken, and what is the time line? Is there potential for intellectual property rights? How is the product or service differentiated from others in the market? The Industry What are the demographics, trends, and life-cycle stage of the industry? Are there any barriers to entry? What is the status of technology? What are typical profit margins? The Market/Customers What are the demographics of the target market? What is the customer profile? Who is the customer? Who are your competitors, and how are you differentiated from them? Which distribution channel alternatives are available, and which customers will be served by them? Finances What are your start-up capital requirements? What are your working capital requirements? What are your fixed-cost requirements? How long will it take to achieve a positive cash flow? What is the break-even point for the business? Founding Team What skills and experience does the founding team bring to the venture? Are the major functional areas of the venture covered by the founding team? What is the nature of the gap, and how will it be filled?

Article / Updated 03-26-2016

For entrepreneurs, an effective marketing plan is crucial. Entrepreneurs need to determine who's going to buy the product and how to let those customers know that you have what they want. Creating a marketing plan is manageable with these steps: List your options. Brainstorm all the possible ways you can make customers aware of your business and what you're offering. Get ideas from customers, suppliers, other business owners, books, magazines, and Web sites. Think like a customer. Put yourself in the customer's position. What does the customer want to see in your business? Scrutinize the competition. What makes your competitors successful? What are their marketing strategies, and how can you improve on them? Where do your competitors fail to satisfy customers? (That's your niche.) Analyze your options and rank them. Scratch options that don't meet your customers' needs or are not feasible at this time. Rank your choices and start writing your plan.

Article / Updated 03-26-2016

Entrepreneurs develop business ideas all the time, but how do you know when to pursue one further? Some entrepreneurs have a hard time screening product ideas, but you can do it very quickly by answering a few simple questions. You’re on the right track if you answer "Yes" to the first three questions and very positively to the final two: Am I excited about this idea or opportunity? Do others also think it’s a great idea? Are there people willing to pay for what I’m offering? Why am I the person to make this happen? Why should I go forward with this idea or opportunity now?