What Is Your Burn Rate?

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Burn Notice - Capital Burn Rate Computation - Business Life Expectancy Calculation - Douglas E. Castle

KNOW YOUR COMPANY’S CAPITAL BURN RATE

“It is imperative that your business be operated in accordance with a realistic budget that provides for coverage, in full, of your monthly capital ‘burn rate’.”Douglas E. Castle

The basic definition of Burn Rate (from the ever-notable and perpetually-edited Wikipedia) is as set forth below:

Burn rate is a synonymous term for negative cash flow. It is a measure for how fast a company will use up its shareholder capital. If the shareholder capital is exhausted, the company will either have to start making a profit, find additional funding, or close down.

The term came into common use during the dot-com era when many start-up companies went through several stages of funding before emerging into profitability and positive cash flows and thus becoming self-sustainable (or, as for the majority, failing to find additional funding and sustainable business models and thus going bankrupt). In between funding events, burn rate becomes an important management measure, since together with the available funds, it provides a time measure to when the next funding event needs to take place.

Some entrepreneurs and investors say that part of the reasons behind the dot-com bust was the unsound management and financial investor practices to keep the burn rate up, taking it as a proxy for how fast the start-up company was acquiring a customer base.

The term burn rate can also refer to how quickly individuals spend their money, particularly their discretionary income. For example, Mackenzie Investments commissioned a test to gauge the spending and saving behavior of Canadians to determine if they are “Overspenders.”

Aside from financing, the term burn rate is also used in project management to determine the rate at which hours (allocated to a project) are being used, to identify when work is going out of scope, or when efficiencies are being lost. Simply put, the burn rate of any project is the rate at which the project budget is being burned (spent).

In earned value management, burn rate is calculated via the formula, 1/CPI, where CPI stands for Cost Performance Index, which is equal to Earned Value / Actual Cost.

—————

Perhaps a better working business definition of “Burn Rate” can be found in the august annals of Investopedia, an excellent resource for business definitions:

DEFINITION of ‘Burn Rate’

The rate at which a new company uses up its venture capital to finance overhead before generating positive cash flow from operations. In other words, it’s a measure of negative cash flow.

INVESTOPEDIA EXPLAINS ‘Burn Rate’

Burn rate is usually quoted in terms of cash spent per month. For example, a burn rate of 1 million would mean the company is spending 1 million per month. When the burn rate begins to exceed forecasts, or revenue fails to meet expectations, the usual recourse is to reduce the burn rate (which, in most companies, means reducing staff).

—————

Sadly, neither of these protracted and elaborate definitions show us the true utility for knowing your company’s burn rate. According to the Douglas E. Castle explanation, “Burn Rate” means at least two different things and has several highly useful computations attached to it.

Firstly, your company’s Maximum Capital Burn Rate is the amount of money which you have available to spend per month over a given time frame in order to accomplish financial self-sufficiency or some other objective.

The perfect example would be in the case of a newly capitalized enterprise that had acquired $1,000,000.00 [this number was chosen arbitrarily] and had establish an 18-month time frame in order to be actively engaged in commerce at a profit with its new product. In this case, the Capital Burn Rate would be equal to the capital infused, divided by 18 months, or a Capital Burn Rate (actually “Maximum Capital Burn Rate”) of $55,555.56 per month.

Looking at this same situation in reverse, suppose the company’s management knew that it required $30,000.00 per month in order to sustain itself. It could then calculate its Capital Life Expectancy by dividing $1,000,000.00 by $30,000.00, or 33.33 months, after which the capital would have run out.

Secondly, your company’s Operating Burn Rate is simply the monthly fixed costs (in the aggregate) required in order to keep the company operating without incurring a loss. If your Operating Burn Rate ( based upon experience) were $20,000.00 per month and your company’s liquidity were a declining $1,000,000.00, your company’s Operating Life Expectancy would be $1,000,000.00 divided by $20,000.00, or 50 months.

The only way to reduce Burn Rate is to reduce or eliminate unproductive fixed costs.

Douglas E. Castle

Tags, Labels, Keywords, Categories And Search Terms For This Article:
Maximum Capital Burn Rate, Operating Burn Rate, Operating Life Expectancy, Business, Finance, Capitalization, Fixed Costs, Breakeven Analysis, Douglas E. Castle

NOTE: THE INFORMATION CONTAINED IN THIS ARTICLE SHOULD NOT BE CONSTRUED BY THE READER AS BEING LEGAL, FINANCIAL, TAX, ACCOUNTING, ECONOMIC OR INVESTMENT ADVICE. NO OFFERING OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY IS MADE HEREBY, NOR IS A SOLICITATION FOR THE PURCHASE OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY MADE HEREBY. THIS ARTICLE IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND REPRESENTS THE VIEW OF THE AUTHOR ONLY.

THIS ARTICLE IS COPYRIGHT 2014 BY DOUGLAS E. CASTLE, WITH ALL RIGHTS RESERVED. ANY REPRODUCTION, TRANSMITTAL OR DISTRIBUTION OF THIS ARTICLE, EITHER IN WHOLE OR PART, IS UNAUTHORIZED AND MAY BE UNLAWFUL, UNLESS FULL ATTRIBUTION IS GIVEN TO THE AUTHOR AND ALL IMAGES AND LINKS IN THE ARTICLE REMAIN INCLUDED AND “LIVE.”


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The Rule Of 72

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Rule Of 72 - Douglas E. Castle - The Braintenance Blog

THE RULE OF 72

By: Douglas E. Castle

=>A Method Of Estimating How Long It Will Take (In Years) To Double Your Money Using Compound Interest At A Given Rate.

=> A Method Of Estimating At What Rate Of Compound Interest It Will Take (In A Whole Number Percentage) To Double Your Money In A Given Number Of Years.

In finance, the rule of 72, the rule of 70 and the rule of 69 are methods for estimating an investment’s doubling time. The rule number (e.g., 72) is divided by the interest percentage per period to obtain the approximate number of periods (usually years) required for doubling. Although scientific calculators and spreadsheet programs have functions to find the accurate doubling time, the rules are useful for mental calculations and when only a basic calculator is available.

These rules apply to exponential growth and are therefore used for compound interest as opposed to simple interest calculations. They can also be used for decay to obtain a halving time. The choice of number is mostly a matter of preference, 69 is more accurate for continuous compounding, while 72 works well in common interest situations and is more easily divisible. There are a number of variations to the rules that improve accuracy. For periodic compounding, the exact doubling time for an interest rate of r per period is

,

where T is the number of periods required. The formula above can be used for more than calculating the doubling time. If you want to know the tripling time, for example, simply replace the constant 2 in the numerator with 3. As another example, if you want to know the number of periods it takes for the initial value to rise by 50%, replace the constant 2 with 1.5.

You can amaze your friends and colleagues by doing compound interest computations in your head (or on a napkin, if you require one).

For example, the amount of time that is required to double your investment at a compound interest rate of 4% would be 72/4, or 18 years, while the time required to double your investment at a rate of 8% would be 72/8, or 9 years.

As another example, the rate of compound interest required to double your money in 5 years would be 72/5, or 14.4%, while the rate of compound interest required to double your money in 10 years would be 72/10, or 7.2% per year.

It’s a very good system for quick and dirty estimates of time and compound interest. Use it, and enjoy it.

 

Douglas E. Castle

 

Labels, Tags, Keywords, Categories And Search Terms For This Article: Rule of 72, computations, investments, ROI, compound interest, doubling money, The Braintenance Blog, Douglas E. Castle, math shortcuts, financial calculations, Douglas E. Castle Blog, Rule of 69, Rule of 70, Rules of thumb, capital recovery, the Payback Method.

 

NOTE: THE INFORMATION CONTAINED IN THIS ARTICLE SHOULD NOT BE CONSTRUED BY THE READER AS BEING LEGAL, FINANCIAL, TAX, ACCOUNTING, ECONOMIC OR INVESTMENT ADVICE. NO OFFERING OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY IS MADE HEREBY, NOR IS A SOLICITATION FOR THE PURCHASE OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY MADE HEREBY. THIS ARTICLE IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND REPRESENTS THE VIEW OF THE AUTHOR ONLY.

THIS ARTICLE IS COPYRIGHT 2014 BY DOUGLAS E. CASTLE, WITH ALL RIGHTS RESERVED. ANY REPRODUCTION, TRANSMITTAL OR DISTRIBUTION OF THIS ARTICLE, EITHER IN WHOLE OR PART, IS UNAUTHORIZED AND MAY BE UNLAWFUL, UNLESS FULL ATTRIBUTION IS GIVEN TO THE AUTHOR AND ALL IMAGES AND LINKS IN THE ARTICLE REMAIN INCLUDED AND “LIVE.”


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Business Decisions: Intuition Versus Emotion – The Optimal Decision

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Intuition Is Our Highest Form Of Intelligence

Most leaders and commanders lead and make most of their important business decisions based upon an experienced “gut” — and only secondarily by a conscious analysis which is presented to them and processed by the rational mind. This “gut” is really intuition, which is the most powerful form of intelligence. It operates by analyzing multiple variables so rapidly we are not aware that the process is happening, and we just get a feeling — but this is not emotion. This “feeling” is not a feeling at all. It is our inclination based upon a rapid analysis of the facts and circumstances given a situation or presented with a choice.

Intuition becomes more powerful if it is acknowledged, respected, acted upon frequently and with greater experiences to draw from (i.e., maturity). As if it were a business decision muscle, exercise it more and it grows stronger, as will the likelihood our an increase in your ratio of good decisions to poor ones.

Emotion Is Not An Intellectual Or Analytic Process

Emotion should be minimized in the business decision process. It is a function of desires, fears, dreams and past programming in your childlike subconscious or reactive mind. It masquerades as a “gut feeling” or a hunch, but it can be differentiated from intuition by the former’s speed and force (like a kick in the head) compared to evaluative lead time in emotional processing. With emotion, you are reacting to either an attachment to a certain outcome, or to a deep rooted desire or fear conjured forth from your subconscious. Emotions tend to come to you, and to wash over you, while intuition strikes like a hammer.

In sum, you can develop your business decision making skills by 1) learning to identify and distinguish intuition from emotion and by 2) maximizing your use of intuition and the rational mind (which consciously analyzes facts and figures), and minimizing your emotional attachment or leanings toward any outcomes.

Douglas E. Castle for The Taking Command Blog and The Braintenance Blog

Labels, Tags, Search Terms And Keywords For This Article: The Braintenance Blog, The Taking Command Blog, behavioral psychology, industrial psychology, desires, fears, attachments to outcomes, decisions, business, subconscious, reactive mind, Douglas E, Castle, emotions, feelings, hunches, gut feeling, decision, intuition, intuitive decisions, analytic processes, consciousness, rational mind, factual analysis, situational analysis, management, self-growth, lead time, ubermind…

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OptumRx And United Health Group Think We’re Stupid.

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IT'S ABOUT THE NUMBERS...

OptumRx and its parent company think that they can merely pacify a few of the noisemakers and ignore the rest of the unspeakably abused herd. I don’t like when someone calls me stupid — Or worse, when they presume that I am… How about you? I’ve been assaulting them in the Court of Public Opinion, which means a great deal to me – It is marketplace justice — it is not bribed, bought or sold — and the sentence is carried out by the customers.

OptumRx has the worst customer service record of any of the firms within its industry in the entire United States! And since they do not care, we have to make them care.

OptumRx Victim Parody - Douglas E. Castle  - OptumRx Must Die

Here’s The Latest!

OptumRx Responds To Douglas E. Castle Via Twitter

@OptumRx Response To @DouglasECastle1 Dated December 21, 2013

My Response To OptumRx Is Dated January 29, 2014

THE CORRESPONDENCE RELATES TO MY POST “OPTUMRX MUST DIE

—————

NOTE 1: These people at OptumRx have all of the morality of monopolist-in-process Comcast (XFINITY) Cable, but in this mail in pharmaceutical racket, they are tampering directly with patient lives — literally. If you haven’t already done so, please take the Quick Survey by going to the hyperlink in the next paragraph.

NOTE 2: Been mistreated by OptumRx? Please help us by filling out a fast survey at the end of this article. http://douglasecastleblog.com/2014/01/05/optumrx-must-die-mailorder-pharmacy-monstrosity/ We need you! Thnx. #RF.  If we receive enough compelling, emotion-packed responses to our Quick Survey, I will send a petition to the leaders of all of the Regulatory, Legal And Consumer Affairs bodies having influence in such matters, and we’ll either 1) Put OptumRx up to the light of intense scrutiny and possible punishment (including the loss of the ability to conduct their feeble excuse for a “business,”, or 2) We’ll get them to mend their incompetent, fraudulent and depraved ways, and win their long-suffering customers better care and cash compensation for the hardship which they (WE!) have had to endure.

Below is the Twitter exchange between the ignominious OptumRx (and their publicly-traded parent company, United Healthcare/ United Health Group). They certainly enjoy control, and love the idea of calling a country-wide problem an “isolated Consumer Matter.

OptumRx Twitter Correspondence

It was my intention to get the full name, full title and a direct telephone line of an executive at either OptumRx or United Health Care (see above).

Instead, what I received from the cowardly, guilty pukes at United this afternoon within only minutes of my sending my Twitter terms was  simply a telephone voice mail from “Christine” (no last name, no title), from United Health Group’s Consumer Affairs Division indicating that she wanted to ‘help me resolve this issue‘, and that I could telephone her at 800-842-2656, press prompt 1, and then speak with her at her direct extension, which is 3042511. I’ll give her the opportunity to speak with me, but I smell a delaying tactic combined with a smokescreen. My suspicion is that I will have to speak with one of her titled superiors (with a last name, too), in order to settle this matter.

They are trying to insulate themselves from dealing with me directly.

I’ll not only keep you posted, but I’ll see to it that OptumRx, and its incredibly greedy, publicly-traded parent get their problems fixed an that things are made right — for all of us. And if you haven’t done it, take the Quick Survey (see the earlier part of this letter for the link) — if we get enough blood, bile and verifiable complaints — we will circulate a petition to all of the persons of influence at all of the agencies whose attention this may require.

Douglas E. Castle

http://DouglasECastleBlog.com and http://DouglasCastle.com

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This site is the Management Consultants' and Chief Reconstruction Officers' best all-industry guide to analyzing, diagnosing, devising a strategy, creating either an Action Plan or an Emergence Plan and overseeing and monitoring the successful implementation of either in order to ensure the client organization's optimal, sustainable profitability. These plans are always made scalable to accommodate the size and needs of the client, whether it is fast-growing young company with an aggressive and ambitious agenda, or whether it is an older, larger, well-established business which is experiencing problems or which is at a crucial decision making point in its evolution as an entity, and which requires sound advice (and often implementation oversight and assertive "hands-on" assistance in the form of a powerful third-party representative agent or a an expert in the art of negotiation as its appointed "point person") regarding its next steps. In the alternative, Douglas E. Castle is expert at helping fast-track, rapidly emerging companies to growth through acquisitions, mergers, licensing, branding and both domestic and international strategic joint ventures to access better, more efficient supply chain sourcing and to open up wider global markets to dramatically increase the scope of possible new revenue opportunities.


OptumRx Must Die! Mailorder Pharmacy Monstrosity – Quick Survey

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OptumRx Must Die. They Are One Of The Most Notorious Enterprises In The United States

Mail order pharmacies are supposed to be a more efficient way of getting medications to patients more easily, and at lower cost. They also allow the mail order firms (such as the notorious, odious, inept and malevolent OptumRx — formerly a loser called “Prescription Solutions” — later acquired by the much-maligned malignancy of a publicly-traded Healthcare Colossus known as United Healthcare) to use their best efforts to maximize their profits by sourcing all of the medicines through pharmacies located thoughout the United States which offer the lowest prices, and often the worst quality and service.

Note:  TAKE QUICK SURVEY at BOTTOM OF POST

It is safe to say that OptumRx has the worst consumer satisfaction and service record of any mail order pharmacy (or for that matter, of virtually any service business) in the history of the United States. Listing things simply, the imbeciles at OptumRx, including the first line of “representatives,” two levels of supervisors and the invisible or permanently vacationing executives:

  • Cannot ever seem to get medications delivered on time, regardless of the threat to the patient’s life;
  • Are too stupid to understand basic requests and give straight answers to direct questions;
  • Lie;
  • Threaten to hang up on customers who are irate because one of the unevolved cretins refuses (citing a non-existent law, or some cock-and-bull ‘company policy’ of convenience) to mail a refill of a controlled substance until the patient had run out of the medication totally, and then was told he’d have to wait for seven to ten days before he’d get his renewal in the mail!;
  • Tortured and tormented senior citizens who are helpless to deal for hours on the telephone between the flying monkeys operating OptumRX, their prescribing physicians, and the postal service;
  • Had people wind up hospitalized, at risk of permanent injury or death — these victimized people are primarily elderly or chronically ill and in need of constant, continuous medication, which OptumRx simply cannot or will not provide;
  • Send out the wrong medications, risking patient fatalities;
  • Fail to timely call patients when there are “difficulties” in filling their orders correctly, timely or in the necessary amounts;
  • Are never held accountable for the havoc that they wreak on the lives of the patients who must endure an endless series of phone waiting times, conversations with non-sentient creatures and their knuckle-dragging “supervisors.”;
  • Experience terribly inconvenient computer problems, outages, or upgrades when the volume of request traffic is at its peak — for example, at the beginning of the year… ;
  • Never show up as the demonic miasma that they are in the mainstream media, which is rumored to occasionally ‘bend a bit’ to accommodate Big Pharma, Big Oil, Governmental Institutions and Agencies, and [shockingly!] advertisers.

Why is nothing being done? Isn’t there an injustice that should be addressed by numerous consumer advocacy organizations, both private and government-funded (in all fairness, some are taking some action, albeit feeble), Insurance regulatory agencies (perhaps the Commissioner of Insurance), Health organizations, Eldercare advocacy groups….

Just Google search OptumRx and you’ll find a plethora of complaints, horror stories, and legal actions – one group, ConsumerWatchdog.org is sponsoring a class-action suit against OptumRx and perhaps its parent. Better still, Google (without the quotes) such goodies as “OptumRx + complaints,” “OptumRx + evaluations,” “OptumRx + customer service,” OptumRx + lawsuits,” “OptumRx + reviews,” or  “OptumRx +fraud.”  You’ll get names, telephone numbers and endless tales of woe. Following are some hints of the sentiment regarding this “wonderful, cost-saving, service-providing, polished turd bastard offspring of  United Healthcare:

http://reviews.gethuman.com/customer-reviews/OptumRx-formerly-Prescription-Solutions-Inc/

http://www.consumeraffairs.com/rx/prescription_solutions.html

“This pharmacy is horrible and lies to customers. I ordered medication for my mother on 12/20/2013 and was promised it would be delivered by Jan 2nd, 1014. I had called them after noticing their website said the order was unprocessed. Instead it is now Jan 3rd and the website still shows the order as unprocessed. I called again and after being put on hold for 5 minutes, the rep claimed that the Dr.’s prescription fax had only arrived today. This was an emergency order and I had ordered a week’s worth of “intermediate” medication for her based on the arrival date promised by Optum Rx. Do I have any authority to sue them if their inability to get medication out on time affects her health adversely?” – Carol of Seattle, WA on Jan. 3, 2014

And how about this review from an insider at OptumRx?

“Was a customer service advocate for OptumRx. The main concern in the company was numbers, not service. Doing additional work to make sure a member got his/her medicine in a timely manner was last on the list. You are not allowed to do additional follow up, which made members have to call back multiple times, which was unnecessary. I can totally relate to the irate callers and their situations.

I was terminated because of an irate caller with a situation beyond my control. Placed the member on hold after going back and forth with her about her order. Because she hung up and had to call back, complained and said I was rude. I was terminated, mind you I never had any problems with the service I provided, no attendance issues, always helping. None of that mattered. Two thumbs down for OptumRx.” – Jane of Artesia, CA on Jan. 3, 2014

Indeed, these people are receiving horrific reviews everywhere you turn. Do you enjoy charts, graphs, pictures and visual aids when it comes to ratings and performance? Sure you do! Here y’all go:

Consumer Affairs Ratings For  OptumRx

Please refer to LINKS4LIFEALERTS for more healthcare-related information.

I personally believe that we, as customers of this institution of depraved indifference to human suffering, should issue a petition citing our grievances, and upon its completion (we’d need at least 1,000 names of actual victimized patients who are registered voters) which should go to all of the following persons at the following organizations:
President Barack Obama, The White House;
The President And Members Of The Board Of Directors Of OptumRx;
The President And Members Of The Board Of Directors Of United Healthcare;
The Respective Commissioners Of Insurance Of Every State;
The Chief Information Officer Of The Federal Trade Commission
The Attorney General Of The United States Department Of Justice
The Secretary Of The United States Department Of Commerce
The Chief Information Officer Of The Department Of Health And Human Services
The Director Of The Federal Bureau Of Investigation
The Chairperson Of AARP, and perhaps some other persons in positions of influence as well as widespread publication (via release) of the petition to the printed and televised media.

I would not propose this approach if I thought that there were any other means of obtaining relief from this uncontrolled and unconscionable abuse. It will not be resolved by hordes of abused and injured individuals putting their individual stories up on the Internet.


BEFORE WE PREPARE THE PETITION, PLEASE TAKE THE FIRST STEP AND FILL OUT THE FOLLOWING QUICK SURVEY.

Please take a few moments to answer this Quick Survey. We will be posting the results to this website and to the social media at regular intervals. It is our objective to get no less than a total of 1,000 responses ASAP. After that, if my Public wants that Petition, it will be drafted and sent all over the country.

http://douglascastle.polldaddy.com/s/have-you-had-experience-with-optumrx

Douglas E. Castle

—————

Here is some additional commentary regarding OptumRx and its deplorable service, courtesy of Contextly:

https://app.contextly.com/sites/douglasecastleblog/?page_id=662&author=1&edit_snippet_id=#easyXDM_linker_channel_provider

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D.E.Castle's Daily Business Advisory Wrap-Up.
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This site is the Management Consultants' and Chief Reconstruction Officers' best all-industry guide to analyzing, diagnosing, devising a strategy, creating either an Action Plan or an Emergence Plan and overseeing and monitoring the successful implementation of either in order to ensure the client organization's optimal, sustainable profitability. These plans are always made scalable to accommodate the size and needs of the client, whether it is fast-growing young company with an aggressive and ambitious agenda, or whether it is an older, larger, well-established business which is experiencing problems or which is at a crucial decision making point in its evolution as an entity, and which requires sound advice (and often implementation oversight and assertive "hands-on" assistance in the form of a powerful third-party representative agent or a an expert in the art of negotiation as its appointed "point person") regarding its next steps. In the alternative, Douglas E. Castle is expert at helping fast-track, rapidly emerging companies to growth through acquisitions, mergers, licensing, branding and both domestic and international strategic joint ventures to access better, more efficient supply chain sourcing and to open up wider global markets to dramatically increase the scope of possible new revenue opportunities.


Running Behind? You’re Mismanaging Time And Tasks

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The Myth Of Multi-Tasking.

 

 

 

 

 

 

 

 

 

 

 

I’m guilty! I am so backlogged with tasks that my Native American name (no offense to any member of any Native American tribe actually out there in Indian Country) should be “Running Behind.” Mismanaging my time and tasks is obviously a problem from which I suffer. Just imagine if a company were comprised of individuals, just like myself who were managing their time and tasks like a bunch of weasels on treadmills? Or like a one-armed paperhanger? Or like a glassblower with the hiccups? [Had enough? Well, I’ll stop now. But remember: My blog, My rules.]

Here are my mistakes in terms of time and tasks allotted:

1) I have failed to delegate those tasks that I could have given to others. I’ve clearly taken on too much for myself;

2) I am multitasking instead of rotational tasking – in the case of the former, I use a peripheral focus on a number of things and perform very poorly – in the case of the latter, I focus on one task for a limited time (using a timer on my computer desktop), then proceed to the next task….it’s an installment approach to keeping from burnout while accomplishing everything on my to-do list;

3) I have unrealistic expectations of myself;

4) I am obsessed with control and not even interacting with other persons around me — how could I ever be an effective manager;

5) I am so enmeshed in my own personal tornado that I can’t possibly be paying any attention to the larger picture of my position in the company or project and the changes in the environment around me (a fire, a meteor shower, an invasion by an “Occupy” group.

The Solution? I’ll Sum It Up:

  • Delegate;
  • Rotate tasks – don’t multitask;
  • Switch tasks at regular intervals;
  • Take frequent brief breaks — walk around and see what is happening;
  • Stop beating yourself up if you don’t finish everything on time, or if you fail to complete all of your tasks — in industrial and behavioral psychology, we know that your general mood, your work environment, and your feelings about your own perceived “shortcomings” are more damaging to you and to the company.

If you’re not managing yourself, emotionally, physiologically and in terms of time and tasks, you will damage a precious Human Asset and Reduce the Collective Creativity and synergy that make a company’s output far greater than the sum of the respective outputs of the individuals who comprise its employees and contractors.

Jugglers Make My Best Managers - Just Kidding....

Douglas E. Castle

Some more material, courtesy of REPOST (I would, in particular, take a long, hard look at the last entry; I wonder if there might be some confusion between cause and effect:

Solo Developer Time Tracking And Invoicing System
Unique Visitors to Your… — Jul 08 2013
Solo Developer Time Tracking And Invoicing System Product Review This is a tool for solo freelance developers guaranteed to improve client satisfaction. Turn clients into repeat customers. Product…
Trend Micro Expands Risk Management Portfolio—Media Bulletin
PR Newswire — Jun 29 2011
Trend Micro real-time threat management solutions improve breach protection, reduce time-to-discovery, minimize containment costs and combat advanced persistent threats CUPERTINO, Calif., June 29,…
New Project Management Software Integrates Scrum and Cmmi Level 5
SBWire — May 09 2011
Helsinki, Uusimaa — (SBWIRE) — 05/09/2011 — Task Trimmer has released version 4.7.6 of The Guide, a software that automates intellectual work. Version 4.7.6 contains a completely new Scrum process…
Husbands With More Masculine Chores Have More Sex
NewsLook — Jan 31 2013
Video News by NewsLook A study shows married men who spend more time doing traditionally female chores have less sex than men that don’t do as many of those chores. Jen Markham explores if the…[Author’s Note: I’d better finish up here so that I can kill a bison and drag it home to my cave so that I can share it with my wife. Red or white wine with bison? Anyone know?]
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D.E.Castle's Daily Business Advisory Wrap-Up.
Skim It. But DON'T MISS It.
This site is the Management Consultants' and Chief Reconstruction Officers' best all-industry guide to analyzing, diagnosing, devising a strategy, creating either an Action Plan or an Emergence Plan and overseeing and monitoring the successful implementation of either in order to ensure the client organization's optimal, sustainable profitability. These plans are always made scalable to accommodate the size and needs of the client, whether it is fast-growing young company with an aggressive and ambitious agenda, or whether it is an older, larger, well-established business which is experiencing problems or which is at a crucial decision making point in its evolution as an entity, and which requires sound advice (and often implementation oversight and assertive "hands-on" assistance in the form of a powerful third-party representative agent or a an expert in the art of negotiation as its appointed "point person") regarding its next steps. In the alternative, Douglas E. Castle is expert at helping fast-track, rapidly emerging companies to growth through acquisitions, mergers, licensing, branding and both domestic and international strategic joint ventures to access better, more efficient supply chain sourcing and to open up wider global markets to dramatically increase the scope of possible new revenue opportunities.


Sunk Costs: Watering Dead Flowers – Emotion Versus Business Logic

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Sunk Costs - Emotional Attachments Which Cause Us To Continue To Invest Despite The Apparent And Growing Losses.

 

 

 

 

 

 

 

 

 

 

 

 

Sunk costs are wasted, and often recurring expenditures on a purchase, program, idea or business campaign which, by all rational means is either dead (unproductive) or doomed to failure, Yet we persist in throwing good money after bad either because our emotions or egos want so badly too prove our initial ideas right, or because we have invested such a significant sum that we are irrationally thinking that a few more dollars might “turn it around” – or, as my British friends call it, the “in for a penny, in for a pound,” mindset.

Sunk costs are emotionally unaccepted losses. They represent the triumph of Human psyche over sound business policy. If you have some of theses fiscal black holes embedded in your budget you are going to compromise your subsistence, and possibly miss out on opportunities (the Opportunity Cost is the “if only we could have”: cousin of the Sunk Cost); you will need an objective outsider to identify them for you, and to help you to allow logic to triumph over fragile sentiment. In my practice I’ve disliked having to undertake this repair the most — I invariably have to be as much of a psychologist as a restructuring or strategic planning consultant.

The best way to avoid these anchors to business failure is to learn to draw two lines:

1) What is the absolute maximum you’ll spend, without exception. Limit your fiscal exposure by a rule established early in the game; and,

2) What is the maximum time that you are willing to wait to see a definable, quantifiable result.

If you can establish and live by these two parameters, you and your business will have a far better chance to survive and thrive. I would much rather establish these policy guidelines for a growing company than to have to walk blindfolded through a minefield of voracious pet projects.

Douglas E. Castle

 

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D.E.Castle's Daily Business Advisory Wrap-Up.
Skim It. But DON'T MISS It.
This site is the Management Consultants' and Chief Reconstruction Officers' best all-industry guide to analyzing, diagnosing, devising a strategy, creating either an Action Plan or an Emergence Plan and overseeing and monitoring the successful implementation of either in order to ensure the client organization's optimal, sustainable profitability. These plans are always made scalable to accommodate the size and needs of the client, whether it is fast-growing young company with an aggressive and ambitious agenda, or whether it is an older, larger, well-established business which is experiencing problems or which is at a crucial decision making point in its evolution as an entity, and which requires sound advice (and often implementation oversight and assertive "hands-on" assistance in the form of a powerful third-party representative agent or a an expert in the art of negotiation as its appointed "point person") regarding its next steps. In the alternative, Douglas E. Castle is expert at helping fast-track, rapidly emerging companies to growth through acquisitions, mergers, licensing, branding and both domestic and international strategic joint ventures to access better, more efficient supply chain sourcing and to open up wider global markets to dramatically increase the scope of possible new revenue opportunities.


Cure “Cash Crunch”: Increase Cash Flow And Liquidity

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Cash Flow's Thin - Feeling Boxed In - Douglas E. Castle - DouglasECastleBlog.com - cash crunch

A temporary cash crunch situation is something that occurs in the ordinary course of business in most every organization, especially when the business is of a seasonal nature or when the businesses is in a rapid stage of growth, i.e., inundated with purchase orders but without sufficient cash to fill them and to also pay recurring expenses. But if a cash crunch situation is chronic, a diagnosis of the reason must be made, and appropriate actions must be taken. This article will give you the ability to do both.

Bear in mind that when I speak of revenues, I mean total sales, both as computed on the cash basis and the accrual basis, but when I speak of expenses, I actually mean cash outflows of every nature. Throw away the accounting and auditing textbooks for just a bit so that we can deal with bare bones economic reality. Also by current, I mean as either generated or paid in the ordinary course of operations.

Preliminary Feasibility Analysis:

Most every enterprise experiences a period or periods of cash crunch, especially if those businesses are either seasonal or rapidly-growing companies which are generating purchase orders, but do not have adequate cash to fill them while still meeting their obligations, such as payroll, occupancy and the like. There are remedies for both of these situations because they are either predictable or can be financed with short-term debt to enable them to either withstand the “tight season” or to let their cash flow catch up with their market demand.

If cash crunch is chronic, and is an ongoing problem, there is something wrong with the business on a fundamental level. Either revenues are too low, or current expenses (outflows — remember that we’re using lose terminology here) are too high.

If the expenses or outflows are not truly for operations but payable to a lender in the form of , for example, a short-term self-amortizing debt where the payments are large and swollen with principal, the lender may be negotiated with to arrive at an interest-only loan with a provision for a rollover of the principal at the end of its term (optimal for maximizing utilizable cash flow), or possibly a longer amortization period where the payments are lower, conserving more cash flow for operations.

Sometimes a business is improperly capitalized and it requires equity to be infused in order to retire debt. Many businesses which have good fundamentals need to de-leverage themselves by retiring existing debt with equity. This is appropriate unless the equity is used to cover current expenses.

The test is this: If you deduct the debt payments from the total current outflows, and you subtract the number obtained thereby from the revenues, the resulting number should be positive. This means that the business is not properly capitalized, but is probably fundamentally sound. These companies are good candidates for refinancing.

If the number obtained is still negative, then it is highly likely that the business is fundamentally unsound, either due to its core purpose, mismanagement or some improper assumptions which have gone uncorrected for too long. Revenues can be increased by increasing sales through better marketing and sales, or by increasing prices if the market will tolerate this.

When certain food or beverage prices are suddenly increased, a restaurant may hike up its prices  and say, for example that “due to the increase in the cost to us of coffee, we are sorry to have to raise the price per cup to $2.25. If the market tolerates this it is a wonderful strategy, especially if done in steps, or if accompanied by a re-packaging or the product or service to somehow differentiate it from what it was previously. The perception of added-value tends to justify an increase in price.

The other possibility is more difficult, and the prospects less pleasant: You may have to negotiate with your employees (or terminate some of their positions), cut back on the use of your contractors, or re-negotiate costs with your vendors. Vendors can often be persuaded to reduce their charges by 1) indicating that the situation is temporary, and that they’ll receive a premium after you’ve reached a certain sales level or after a certain amount of time has passed or 2) an incentive wherein the vendor participates in either your revenue when you’ve reached a certain threshold, or in you company’s ownership (this is an example of a partial vertical integration strategy).

The acid test of  the fundamental soundness of any simple business model is this: If debt service is eliminated, do revenues exceed current expenses. Put more realistically, without considering debt, do your revenues (where the earnings process is complete and they are either in the form of cash or accounts receivable) consistently exceed your ordinary current operating outflows including product (inventory purchases as required) or service purchases? If not, can they be restructured to fit the aforementioned  parameters? If the answer to both questions is “no,” your business model is fatally flawed, and that must be dealt with — we’ll discuss this at another time.

If you increased your sales volume, increased your prices to customers, eliminated any idle personnel, negotiated with your suppliers, and gotten your bank loan replaced with equity, then you still may be suffering because your customers are not paying you on a timely basis, while you’re paying your vendors promptly.

If your average days to payment on your accounts receivable is 55, and your average days to payment of your current expenses is 35, that 20-day discrepancy can be killing your business, depending upon your profit margins. Sadly, you can’t pay your vendors with your receivables. There are two things to be done to eliminate that 20-day discrepancy:

1) Collect the receivables faster; and

2) Pay your vendors more slowly.

That gap between average days that your business waits to collect its receivables, and the average days its takes to pay its vendors must be reduced to zero, or to a negative number.

You can collect your receivables faster by offering some of your less creditworthy customers less credit, and giving some of your better, faster-paying customers more credit. You can offer early payment incentives or cash payment discounts. You can collect partial payments in cash. Use some imagination. Any of these approaches alone or in combination will cut that 55 days significantly if you focus on achieving this.

You might even get a line of credit up to some percentage of your “acceptable” accounts receivable,  factor your receivables, or utilize single invoice financing in order to get that number down a great deal further. Often the real cost of factoring or similar arrangements is about equal to what you might sacrifice if all of your customers took advantage of a discount for paying in less than 30 days.

To eliminate turning a simple article into a doctoral dissertation, suffice it to say that slowing down payments to your vendors requires some diplomacy, some negotiation, and some creativity — but then, if you are in business in these times, you must have an abundance of creativity.

Quick, Easy Metrics:

1) Your average collection days on your receivables (it’s a weighted average) should equal or exceed your average payment days on your current bills;

2) Your average collections days on your receivables divided by your average payment days on your current bills should be equal to or (hopefully) greater than 1.0;

3) The value of all of your cash and all of your receivables divided by the amount of your current bills should always be significantly greater than 1.0 (i.e., no contribution margin). While this is not a measure of cash availability, it is a measure of your gross profit on sales. The bigger the dividend produced by this computation, the greater your basic profit margin and the greater the contribution of your sales to ultimately cover fixed overhead.

The idea is to avoid a cash crunch (assuming that your basic business concept is fundamentally sound) by collecting and hoarding as much cash as you can, and holding off on the payment of bills as long as you can. Remember:  If you business is sound, a cash crunch crisis is a phenomenon only created by bad timing. And it’s quite curable.


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D.E.Castle's Daily Business Advisory Wrap-Up.
Skim It. But DON'T MISS It.
This site is the Management Consultants' and Chief Reconstruction Officers' best all-industry guide to analyzing, diagnosing, devising a strategy, creating either an Action Plan or an Emergence Plan and overseeing and monitoring the successful implementation of either in order to ensure the client organization's optimal, sustainable profitability. These plans are always made scalable to accommodate the size and needs of the client, whether it is fast-growing young company with an aggressive and ambitious agenda, or whether it is an older, larger, well-established business which is experiencing problems or which is at a crucial decision making point in its evolution as an entity, and which requires sound advice (and often implementation oversight and assertive "hands-on" assistance in the form of a powerful third-party representative agent or a an expert in the art of negotiation as its appointed "point person") regarding its next steps. In the alternative, Douglas E. Castle is expert at helping fast-track, rapidly emerging companies to growth through acquisitions, mergers, licensing, branding and both domestic and international strategic joint ventures to access better, more efficient supply chain sourcing and to open up wider global markets to dramatically increase the scope of possible new revenue opportunities.


If Detroit Were My Turnaround Client

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Expenditure  Reduction Apparatus

IF DETROIT WERE MY TURNAROUND CLIENT

If only Detroit were one of my Turnaround Business Clients (sigh), either the bankruptcy might have been avoided, or its method of conducting its “Municipal Business” might have been radically changed some time ago.  There should have been much more oversight, checks and balances in all aspects of management, and operation, financial and forensic audits by a competent independent third party firm on a short notice basis. But then, the sad aspect of the public sector is that is by no means as accountable, or as interested in its investors (the taxpayers), as would be a simple medium-sized company.

When you combine poor accounting (and a lack of individual accountability), a lack of variance analysis, a lack of integrity in leadership, the absence of a formalized budgetary review process, the informality of fiduciary authority and a plethora of useless contracts for services and purchases that were not of benefit to the client [in a business they either call that “Other People’s Money” (OPM), which doesn’t really have to be accounted for directly if there’s enough of it (and who is keeping count as the nectar pours through the sieve? And more importantly, who knows what the total available capital for expenses and expenditures actually is?), or, in the worst case breach of fiduciary duty, fraud and embezzlement.

Goodness, if taxpayers realized that they were really shareholders, with the right to demand an accounting, a reconciliation, and an explanation of any ‘treasury leakage’ either through negligence or through political favors paid for at the expense of the populace. — DEC at 1Turnaround.

What follows is my curating and rather extensive and opinionated commentary regarding an article which I found in my inbox from Scoop.It!, a wonderful source of excellent articles and opportunities to really get a grand view of the topics which interest me, and are of crucial importance to my clients.

       

Editorial: What Detroit’s crisis can teach others Avoiding bankruptcy requires confronting crises early, focusing on taxpayers and making realistic promises

                                                                   From [original article source]                                                                                               www.thesilentmajorityus.com                                                                                       –

Detroit News: Detroit’s fall into bankruptcy is being pitched as a cautionary tale for governments at every level. And while there are extraordinary circumstances unique to the Motor City, there are…

Douglas E. Castle’s insight, as Curator:       

I am in full accord with the writer’s point of view as it concerns Detroit, specifically, and as it concerns all businesses and organizations which have fiduciary responsibilities. Sadly. election politics as well as organizational office politics tend to bring out some unsupported or unsupportable promises which ultimately will become perceived as lies. In any business or organizational structure (For-Profit and Not-For-Profit) you cannot make empty promises, as they will cost you all of your negotiating power (based largely in credibility), and possibly your career when the truth comes out.

Let’s assume that we are following a sensible business protocol, and that we are responsible to the Board, our colleagues, our employees, our customers (or constituents), our creditors and our investors. A methodical approach must be undertaken — it is sad that these politically-oriented individuals don’t examine the financial position and projections of the governments or businesses which they are trying to get the opportunity to lead prior to embarking on their campaigns.

A general rule to start with is that you cannot ever make a promise which is unconditional, especially if it is dependent upon the promises of others (grants, investments, lots of new business revenues, a technological breakthrough and the like). Make fewer promises of good and plenty, and more commitments to fixing problems at their source to ensure safety, stability and success.

Aside: Not to ridicule anyone at the federal government level, but you can’t make inferences to “getting out of debt by increasing borrowing,’ or balancing the budget and helping businesses by increasing taxes on the poorer and middle classes and reducing services to them as well!

Never make a commitment that you do not intend to keep, and that you do not have a plan (a method) to keep. Exaggerate costs and the length of estimated completion or delivery time frames – it makes it easier to be a hero.

In terms of examining, monitoring, course-correcting and maintaining or improving the  enterprise (whether it is government or non-government, For-Profit or Not-For-Profit), the protocols are universal.

Of course, in the case of all-too-many governmental subdivisions and entities, there is tremendous complexity, inadequate supervision, and labyrinthine accounting, authorization and record keeping. There’s too much capital, and too many persons with access to it, without proper oversight. A large number of seemingly trivial expenses and expenditures can eventually accumulate into a cavernous loss. This waste (being kind with my choice of terminology) is taxpayer money — in private enterprise, the shareholders would be taking the company’s management to court for this type of abuse. They would be speaking of breach of trust, breach of fiduciary duty, diversion of funds, fraud and possibly embezzlement.

I believe that Detroit is the first host organism to fall victim to an epidemic , and that municipal bankruptcies will be hooping up like crocuses in early springtime. And we’ll get closer to the truth about the extent of the federal deficit and the value of the U.S. dollar, fresh off of the press. That’s a scenario for The Global Futurist Blog to paint.

But then, I’ve gotten off of my focus. Let’s return to a standard fiduciary management protocol where each individual in the chain of command or hierarchy structure is responsible — truly responsible — at every level:

1) If a responsible individual sees or suspects a problem, it must be reported immediately to the appropriate persons of supervisory authority;

2) That person of supervisory authority should follow through with vigilance and persistence to see to it that the problem is solved before it wastes any more money and before it worsens;

3) The problem must be expediently fixed, and noted as such – after all, every minute of loss is a drain on profitability and solvency;

4) If there are too many systemic problems, and the organization’s current financials as well as its proformas (always have worst-case, realistic-case forecasts handy; they should be created frequently as assumptions and conditions change; they are a powerful management tool, and an early warning system) are not looking good, senior management must gather the right experts, both from inside of the organization and from senior management’s “A” list of outside professionals, and;

5) Re-examine the organization’s entire business model in terms of S.W.O.T. analysis, critical path dependencies analysis, and possible displacement (or antiquated assumptions) analysis. Look to prune your sunk costs and nonproductive recurring costs;

Note: From this point forward in my discussion, I’ll address this issue as if the business (even if it is the business of running a municipality) were yours, and that you were the executive ultimately in charge.

6) Reconstruct the organization’s business model with the help of the assembled expert committee, create a realistic, turnaround reconstruction plan, promulgate it to all of the involved and affected individuals, as well as to all other parties doing business or trade with the organization. Let them know of the changes, what the time frames really are, what sacrifices or compromises they will have to make lest the team effort fail (Note: If you’re a charismatic, credible, strongly committed leader, you will convince every individual, from the board room down to the janitorial staff that they are each, and all, partners in the the success of the business, and that necessary sacrifices may have to made to bring stability and better results for the benefit of all). Take a serious tone, especially when asking for sacrifices and compromises. Make everyone feel like a stakeholder and an employee or an agent of help;

7) Work the new plan to the letter, diligently, faithfully and without deviation. Report to all of your “partners” frequently as results come in and new forecasts are made. Your diligence, conscientiousness and candor in terms of reporting frequency and transparency will be appreciated and might make potentially hostile parties feel more like allies in a group project and a united effort. That latter is the effect for which you should strive – it justifies the sacrifices and compromises…and to make it even more potent, be certain that the C-Suite occupants, senior executives and the directors make visible meaningful sacrifices as well. You don’t want to look like a “too-big-to-fail” company that the U.S. government just bailed out [grin];

8) Demonstrate by variance analysis (projected versus actual results) how you are actually achieving the goals set forth in your turnaround business plan, and how you have converted waste and losses to a positive, potentially distributable fund balance;

9) From that positive pool of hard-won cash, reward all of the parties who have cooperated in the effort (at a sensible level,and not just to the senior most executives and directors, but to all of the participants, sacrificers and compromisers who have made it possible. Everyone enjoys a participatory celebration of success and a feeling of having participated in a victory…everyone! The object:

Demonstrate in distributable dollars and cents that the tough cuts have paid off in terms of solvency, stability and a positive cash flow. A great leader (as opposed to a basically attired career politician) rallies his forces for a job successfully done, reminds them that their efforts need to continue, and also reviews the victorious results of the variance analysis — show them how inflows have increased and how outflows have decreased. Make them all feel like stakeholders.

10) Promise to continue on course, and to remain vigilant and practical, as well as honest and tough. Continue to restructure and turnaround the business periodically with a “no sacred cows” and a zero-based budgeting approach. These techniques and tools work.

Douglas E. Castle  http://DouglasECastleBlog.com

Contact The Curator  https://getglobaledge.wufoo.com/forms/k7s0a7/

View DOUGLAS E. CASTLE’s profile on LinkedIn at   http://www.LinkedIn.com/in/douglascastle  ;

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Perspective Is Wisdom - Large
D.E.Castle's Daily Business Advisory Wrap-Up.
Skim It. But DON'T MISS It.
This site is the Management Consultants' and Chief Reconstruction Officers' best all-industry guide to analyzing, diagnosing, devising a strategy, creating either an Action Plan or an Emergence Plan and overseeing and monitoring the successful implementation of either in order to ensure the client organization's optimal, sustainable profitability. These plans are always made scalable to accommodate the size and needs of the client, whether it is fast-growing young company with an aggressive and ambitious agenda, or whether it is an older, larger, well-established business which is experiencing problems or which is at a crucial decision making point in its evolution as an entity, and which requires sound advice (and often implementation oversight and assertive "hands-on" assistance in the form of a powerful third-party representative agent or a an expert in the art of negotiation as its appointed "point person") regarding its next steps. In the alternative, Douglas E. Castle is expert at helping fast-track, rapidly emerging companies to growth through acquisitions, mergers, licensing, branding and both domestic and international strategic joint ventures to access better, more efficient supply chain sourcing and to open up wider global markets to dramatically increase the scope of possible new revenue opportunities.