2007 Issue 11
Design A Logo That's Right
For You
Let Someone Else Do It
— Learning To
Delegate
A Vision Shouldn't Be A
Mirage
The Power Of Numbers:
Liquidity Ratios
 
Design A Logo That's Right For You
Attracting new customers and getting them to
recognize the benefits of using their product is
a perennial problem for SME business
owners. One basic brand element with the
capacity to attract attention and enhance the
way the public views your business is the logo
you use.
Developing an effective logo means thinking
carefully about two issues; the graphic image
that will work best for you and how to get it
translated into a good piece of artwork.
Coming up with an image begins by defining what
your business is about - what does it deal in
and how do you want customers to think of you? A
house is a natural logo element for a real
estate agent, a tree for a nursery. But images
can also represent concepts such as reliability
or growth (think of the associations of an acorn
or an elephant) and some firms might prefer to
foreground what they stand for rather than what
they do. Even an entirely abstract design might
create the right message for some businesses – a
young high tech company can use orbits or
geometric shapes to create a dynamic image.
To focus your thinking, summarize the message
you want to convey in a statement like: "We
are a construction firm specializing in low
energy, environmentally friendly housing."
Keep the statement simple. You don’t want to
include so much that you can’t hit on an image
that encompasses the core message you want to
get across. A simple and attractive logo has the
best longevity. Now think about the images that
might suit your description.
When you have a suitable statement worked out
and some preferred images, you’re ready to start
the design phase. To turn out a really good
design it’s usually best to call on the services
of a professional graphic designer. Because they
are familiar with a wide range of graphic
elements and with how to match them to the
aspirations of a business, they will also have
valuable ideas to offer in the way of an image.
Check out a number of designers and ask to see
examples of their work, especially logos they’ve
designed for other firms. If you like what you
see and they can demonstrate how their creative
solutions support both creative and business
objectives, you’ve found the right person for
the job.
Whether developing a DIY logo or working with a
designer, keep in mind the factors that will
influence its final usability and cost. Using
lots of colors, a rainbow for example, is going
to lead to expensive printing costs as well as
difficulties in reproduction. Keep the number of
colors to a minimum and you’ll save quite a bit
in the long run. If the logo is to appear only
on stationery it’s usually possible to reproduce
any colors you like. If, however, you’re going
to use it in newspaper or magazine advertising,
problems in reproducing colors can arise. As a
general rule, the easier the logo is to
reproduce the better it will meet your needs,
both now and in the future. What size will it be
reproduced? Some logos look really great on a
billboard but can’t be seen when reduced to the
size needed for a business card. The design has
to work in both large and small scales. Well
trained designers understand this requirement,
so if you're doing it yourself, you may want to
run your solution by a professional for a
critique.
If you’re designing your own logo stay away from
clip art or the dummy logos that come with some
program on your PC. Chances are pretty good that
someone else has already used them. You want a
design unique to your business, so these just
won’t do.
When you have everything worked out, go ahead
and develop several concept designs or get your
designer to come up with a number. That’s plural
– you’ll need to see several possible versions
of the logo before you decide on the one that
works best.
Even when you’re sure you have a winner, don’t
rush straight into having all your stationery
reprinted. Give the new logo a test run with as
many people as you can. Mock up some business
cards and letterhead with your new logo to see
how it works on these two important items of
stationery. Ask a range of people, including
customers, to take a look at it and give you
their impressions. If they all ask you “What
does it mean?” or comment on how the colors
clash, you need to rethink the design.
When you’re absolutely certain your new logo is
just right for your business, make it work for
you – display it on every item of stationery
your business uses as well as in your signs,
advertisements and other public touchpoints.
Every time people see the logo they should think
of your firm.
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Let Someone Else Do It —
Learning To Delegate
Almost every business owner has too much to do
and not enough time to do it in. And the
situation seems to get worse as the business
grows. But there is a solution – get your
employees to take some of the weight off your
shoulders by learning how to delegate
effectively.
Delegation is one of the hardest things to learn
because it involves relinquishing control over
certain parts of the business to other people.
In effect, you’re letting go of the reins and
giving someone else the job of driving the cart.
But as a business grows delegation becomes
essential. It’s the only way you can free
yourself up to concentrate on doing the jobs
where you add most value to the business as well
as finding time to work ON the business rather
than IN it by doing the planning necessary to
grow.
A manager who tries to do everything alone is a
candidate for high blood pressure and frazzled
nerves. With their energy and concentration
dissipated across a dozen jobs only they can do
"properly", they also run the risk of producing
inferior work and losing customers.
According to Gerard Blair, author of Starting To
Manage: The Essential Skills, delegation is
“primarily about entrusting your authority to
others. When you delegate, you give someone
authority to act and react to situations without
constantly referring back to you”.
To illustrate his point he sketched the example
of a cleaner instructed to empty bins every
Tuesday and Friday. If the bins overflowed on
Wednesday, too bad – you would have to wait
until Friday for them to be emptied again since
that was the instruction.
If, however, you had told the cleaner to empty
the bins as often as necessary to maintain
health and cleanliness in the area, you would
have delegated authority to the cleaner to
decide when the bins needed emptying.
Delegation involves more than just assigning
someone a job - it means empowering them to use
their intelligence and make decisions about how
and when the job should be done. Some managers
feel they will lose control of their business if
they allow anyone else to make decisions. But,
as Blair notes, this need not be the case.
“If you train your employees to apply the same
criteria you would yourself (by example and full
explanation) they will be exercising your
control on your behalf. And since they will
witness many more situations over which control
may be exercised (you can't be in several places
at once), that control is exercised more
diversely and rapidly than you could exercise it
yourself.”
The sort of jobs you might delegate includes
those which you can easily teach or explain to
others, and any job in which an employee has
more experience or knowledge than you.
Don't make the mistake of delegating only the
boring or routine jobs. If they must be done,
distribute them as evenly as possible while
spreading the more interesting jobs generously
as well by matching specific projects to
specific employees with the capability of doing
them. This way your employees will remain keen
and motivated.
Employees will naturally be more enthusiastic
about a responsibility or task if it's something
they love to do or want to learn more about.
Once you have delegated a task, really leave it
to the person you have chosen to do it. Peering
over their shoulder and making constant
suggestions or criticisms will only intimidate
them and negate the discretionary power you
supposedly delegated to them. Let them know they
can approach you, or someone you designate with
the appropriate experience and knowledge, any
time they have problems and then let them get on
with the job.
That doesn’t mean you relinquish all
responsibility and control. As a manager you are
responsible for the final outcome so you need to
set up a formal reporting mechanism, preferably
based on some relevant key performance
indicators (number of items produced, number of
substandard items turned out, etc.) that allows
you to stay in contact with how things are
going.
While delegation may sound scary, properly
implemented and with the understanding that
short term errors will result in long term
gains, it will take off some of the pressure and
provide you with more time to get the important
things done
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A Vision Shouldn't Be A Mirage
A "vision" is defined as "An image of the
future we seek to create", or, in other
words, who and what we want to be. Individuals
can be so motivated by a compelling vision of
what they want to achieve that they take fate in
their own hands and move heaven and earth to
attain it. It can work the same in the
organizational context – a business’ vision can
be the unifying and motivating force that lets
employees know where the business is going and
generates the enthusiasm to keep them working
towards it. It can be a signal to customers too,
about what they can expect from your business.
A good vision statement is a sentence or short
paragraph consisting of two to four sentences or
a number of bullet points. McDonald’s has a very
precise vision statement:
"McDonald's vision is to be the world's best
quick service restaurant experience. Being the
best means providing outstanding quality,
service, cleanliness, and value, so that we make
every customer in every restaurant smile."
But don’t be deceived by the apparent simplicity
of that statement, developing a good vision
statement is based on a lot of preliminary hard
thinking. Here’s the basic process.
- Make separate lists of the following things that
might suggest ideas for the vision statement:
- Products/services: what you do and how well you do it
- Technology: in some businesses creative use of technology forms the core mechanism of reaching
their vision
- Employees: good employees are vital to achieving business goals and many vision statements
include a reference to the value the business
places on respecting their team
- Customers: customer focus and customer service are absolutely pivotal to achieving business
success so they always get mentioned in a vision statement
- Your values and philosophy
- Your vision: how you see the business in the future
- Pick out the most important points.
- Obtain input from other people: A vision can be
a highly personal thing and in some businesses
the personal view of the owner becomes the
vision. But for employee buy-in purposes
brainstorming with them can work best. It can
then draw on the imagination and intuition of
many people, providing they all share similar
interests in the organization and have
sufficient knowledge to project it into the
future. Keep the ideas realistic – a vision
statement must be achievable as well as
inspirational.
- List some positive words – words of aspiration
and inspiration for your statement.
You now have the raw material for writing up
your vision statement.
Select your most important words and combine
them into one sentence or develop a number of
sentences and put them into one short paragraph.
There are no hard and fast rules about creating
a vision statement, either as to exactly what
they should contain or how they should be
developed. What is basic to the process is to
take your time so as to be very clear just what
the things are that the business does aspire to
and to phrase the result in a positive and
inspirational manner. One good paragraph can
describe a wide range of things – your values,
services and what the business will look like.
It is the pursuit of this image of success, what
success will look like, that really motivates
people to work together.
Don’t think the process stops with having
developed the statement. Its real purpose is to
enthuse employees and keep them on track. Even
if they have been part of the development
process there is an ongoing need to remind them
of what the vision is. There is a personal
responsibility as well. To be truly successful
your visionary attitudes (such as providing
superior customer service) have to be reflected
and communicated in what YOU do and way YOU do
it.
It may seem like stating the obvious, but a
business that has a vision of where it wants to
go is much more likely to get there than one
that does not.
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The Power Of Numbers: Liquidity Ratios
Your balance sheet contains important data that
enables you to interpret trends in the overall
performance of your business and reveal emerging
problems. The way to unlock this information is
to use ratio analysis. A number of ratios have
been developed that analyze different aspects of
a business – liquidity, solvency, efficiency and
profitability being the main ones. In this
article we’ll look at the most common liquidity
ratios, others we’ll discuss in later ADVISOR
issues.
Liquidity ratios relate to the ability of your
business to quickly generate the cash needed to
pay your bills. This makes these ratios of
interest both to you (since the inability to
meet your short term debts would be a problem
that deserves your immediate attention), to your
creditors and to lenders if you are seeking
funding.
Current Ratio:
this ratio gives an indication of whether your
business has enough current assets to meet the
payment schedule of its current debts with a
margin of safety for possible losses in current
assets, such as inventory shrinkage or
collectable accounts. The current ratio is the
standard measure of any business' financial
health.
Formula: total current assets / total current
liabilities
Example: a company has total current assets of
$100,000 and total current liabilities of
$75,000.
Current Ratio = $100,000 / $75,000 = 1.33
The result indicates the company has $1.33 of
current assets for every dollar of current
liability (1.33:1). The rule of thumb is 2:1 or
better.
Generally speaking if the current ratio is too
small a business will encounter problems in
paying bills as they become due. On the other
hand a current ratio that is too high may
represent excessive cash balances, excessive
inventories, or excessive accounts receivables
consisting of many slow accounts. A financial
ratio can be a guide to actions you need to
take. For instance, if you decide your current
ratio is too low you may be able to raise it by:
- Paying some debts
- Increasing your current assets from loans or other borrowings with a maturity of more than one year
- Converting non-current assets into current assets
- Increasing your current assets from new equity contributions
- Putting profits back into the business
The Quick Ratio (aka Acid Test Ratio)
takes the current ratio one step further for
companies with substantial inventory to indicate
how well they can cover short term liability
with current assets minus inventory value.
Inventory is eliminated because it represents
that portion of current assets that are most
difficult to liquidate rapidly into cash.
Formula: (total current assets – inventory) /
total current liabilities
A business with a large quantity of slow moving
inventory would not be signaled of this by their
current ratio but it will certainly be evident
in their quick ratio calculation.
The rule of thumb is 1:1. A lower ratio
indicates illiquidity. A higher ratio may imply
unused funds. Apart from its importance to you,
it can be used to evaluate the financial health
of potential customers since it also indicates
whether a business can pay off its debts
quickly. A firm with a low quick ratio may be
more likely to delay payments because its assets
are tied up elsewhere.
Ratios are also very useful for making
comparisons between your business and other
businesses in your industry. For example,
comparing ratios can indicate whether your
business is holding unusually high inventory or
collecting receivables more slowly than
comparable organizations. These comparisons
provide insight into areas where your business
could improve its operations.
For more information on how ratios work and to
arrange to have them reported discuss them with
your accountant. There is a wealth of financial
ratio analysis tools available for analyzing the
different operations of a business, not just
finance. Regular reporting of a judiciously
chosen set will turn your raw figures into "real
world" performance measures that will give you a
handle on managing the business more
effectively.
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