Retail management seminars, Small Business expert, retail speaker

Join us in these
social media

Social Links Slideshare Twitter Facebook Social Media Linkedin Socail Media YouTube Twitter Social Media You Tube

Want to share or save this page?

Share/Save/Bookmark

 

 

Retail Management, Retail expert, retail keynote speakers Sign up for e-ret@iler, small business help, small business advice
Profits Plus Solutions for Small Business
Retail Expert speakers Retail Management training seminars

 
(If you like this article and wish to pass it along to someone else, please use our on-line form)

  Looking out of the bucket

Seeing opportunities within challenges

When I was a college student, I remember taking a psychology course in which case studies with laboratory mice were often given.  Scientists would observe mice performing various activities and would then change something about their surroundings.

As the mice would react in different ways, the scientists would then relate their behavior to the ways we humans act and interact.  One of the studies that I well remember was a situation of putting a mouse in a bucket of water and watching him swim.

The variable factor in this study was the height of the water in each of the studies.  With the first study, the bucket was only partially filled; there was no way for the mouse to see anything but water and the sides of the pail.  With each of the mice placed in this environment, they would swim for a while and would then give up.  (Yes, the mouse was pulled from the pail before he drowned.)

With the second case study the level of water was much closer to the top of the pail.  As the mouse in this situation would swim, he had the opportunity to stretch his neck and look over the edge of the bucket.  From this vantage point, he would see an area where he could move about freely - if he could get out of the bucket.

With each of the mice in the second case study, they would never stop swimming.  The conclusion drawn by the scientists was to say that when the mouse could see an objective or reward, he would continue to work.  If the mouse could not see these same two items, he was more apt to give up.

While you may not think that we humans and lab mice have anything in common, I had the opportunity recently to find the opposite to be true.  Driving across a Tennessee interstate recently, I found myself to have been in a rain storm for some five hours.  I reached the point where I had decided to simply take the next exit and find a motel for the evening.

However, as I made a preliminary stop at a gas station, I asked the driver of a tractor trailer truck about the weather.

He was driving in the opposite direction, and told me the rain had started only some 25 miles further towards my destination.  With that information, I immediately got back in the car and continued my journey eastward.  I did finally drive out of the rain, but it was more like 125 miles before it ended.

Why did I change my mind, get back in the car, and continue my driving?  I think it was for the same reason that the mouse continues swimming.  I now had the opportunity to see the goal before me, and it was inspiration enough to cause me to continue driving.  But when I had reached 25 miles, even though it was still raining, I drove on anticipating that I would soon see the end of the rain.

How do laboratory mice and truck drivers relate to retail? Too often, I hear the story from a retailer about their concern for the future of their business.  Perhaps they have just experienced a couple of months with less than anticipated sales.  Sometimes, it is a concern for expenses that have exceeded their budget or a checking account that is not as large as that business needs.  Each in their own right are cause for concern and sleepless nights by the business owner.

If a business owner is of the opinion that his financial sheets are information of a historical nature, there is a way that these financial statements could be turned to become a vision of the future.  They can become the proverbial "peep over the edge of the pail".

If you are adept with any of the computer spread sheet programs, gather your last 12 monthly financial statements and within an hour, we will be looking into the future and seeing a very accurate forecast of what your next 12 financial statements will look like.

Start with the cash on hand from the first balance sheet.  In the same sequence as it appears on your profit and loss statement, enter the numbers from the statement.  The next step is to enter the changes to items on the balance sheet that affect your cash on hand.  This would include your paying for inventory, and the changes in your accounts receivable.

This is done because the change to accounts receivable affects the amount of cash you have on hand.  You will also need to make entries for your purchase or sale of assets such as computers and fixtures.  If you have paid down the principal amount on a loan, or received cash from a loan, then these figures are also entered.

When you make the entries and create an ending balance, the total of this column of numbers will represent your end of the month cash on hand.

Take this figure, make it the beginning cash balance for the next month, place it in the next column and you are ready to begin the exercise for the next month.  As you complete the figures for 12 successive months, you will have the template which will allow you to make a very accurate projection of your business.

As you look at what occurred 12 months ago, what do you think will be different this year?  Where will your sales be?  What expenses do you think will be different?  Make these entries and watch as the spreadsheet begins to change from that of being a history of your business to that of being an accurate forecast of your next year.

You may see for the coming year that you become more profitable and will want to consider purchasing additional inventory.  Then again, you may find that you are going to experience a couple of months later in the year where you are going to have a cash shortage.

This cash flow chart will not make the problem go away, but most business owners would rest easier knowing the depth and duration of the cash shortage.  This, as well as seeing how well your business can do, can provide the inspiration just like that provided by the Tennessee truck driver.  And, just like we saw with those laboratory mice who were trying to get a look out of the bucket. 

If you would like to send this article to someone you know, please use this form to forward this page:

Your Name: E-Mail:
Friend's Name: E-Mail:
Security Code:

This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Copyright Notice

Profits Plus Solutions, Inc.
PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179