2.105 detours diagnostics 2016

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DETOURS and DIAGNOSTICS

REFERENCE GUIDE JAN 2016 EDITION

Business Problem Iden7fica7on And solu2ons for each

Copyright mwolf 2015. All rights reserved.

2016 EDITION

The Science of Small Business Management


2016 EDITION

WHAT’S NEW?

Debt-to-income form

Constant Audit navigation

Financial freedom Investment formula

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Safety First. Profit Second Maintain A Flat Organiza2on Achieve Financial Balance Lead From The Center Authen2cally

12 Guiding Principles of Kanketa

Make One Profitably Make One Error Free Make Many Efficiently Lead People. Manage Things.

Market For Poten2al Invite Rela2onships. Nego2ate Orders. Sa2sfy Every Transac2on Keep Customers For Life

Principles of Ownership

Principles of Production

Principles of Marketing


From the DETOUR pages, iden2fy the general business problem in red at the top. The Detour page contains the most common symptoms -‐ ways that the problem shows up. Each symptom is numbered.

The corresponding number on the CAPTURE PLAN pages suggests the Kanketa program that corrects the Detour

USING THIS GUIDE


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DETOUR: Business Issue Iden7fica7on

DIAGNOSIS: How the problem shows up

Corresponding CAPTURE PLAN For Course Correc7on


MATCH THE NUMBERS


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8 PRIMARY ISSUES

FACING A SMALL BUSINESS

Product Management

Production

Self-Leadership Velocity

Marketing

Sales

Customer Service

Customer Care

Supplier costs too high

Too much error

Untimely delivery

High fixed wages

Not enough new opportunities

Not closing quotes. Low margins.

Not meeting customer expectations

Disloyal customers


4 CHALLENGES OF THE BUSINESS OWNER

Structure

Finance

Business Leadership

Business Ownership

Confusion about responsibilities Lack of cohesion.

Too much spending in wrong places

Hierarchy. “Us. Vs. Them”

Low profitability. Low return.


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Goal Tending For Departmental Performance

In order to double revenues, triple net Income and quadruple the net value of a business

within 48 months, every department must contribute.

Kanketa observes the following performance expectations

for each department (Corridor) in the House of Value



THESE 8 PROVEN ACTION FORMULAS

LEAD TO A HIGH PERFORMING COMPANY

Take Action!


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Cost Containment: Reduce COGS % Inflation Rate X 2

Remain constant

No rise in cost percentage

Product Management

Production

Cost of Error Reduction: Reduce and/or permanently eliminate 3% cost of error against gross sales


Take Action!


Gross Revenue: Define, Identify and locate 85% of

Normal monthly revenue in new, 1st X prospect opportunities

($$ lead value)

Marketing

Sales

Margin:

Qualify, propose and contract 20% of all $$ lead value every month

For Departmental Performance Goal Tending

Take Action!


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Velocity

Cost Containment:

7% increased productivity per month (from waste reduction) with same resources until 90% total waste reduction is achieved

Cost Reduction: Reduce fixed wages by 8% per month to equally balance with performance pay

Leadership


Take Action!


Customer Service Gross Revenue:

Propose 15% of total orders entered to close an additional upsell of 3% In gross revenue

Customer Care

Margin: Increase last year’s Normal Margin by 5%

From 80% of last year’s customers with Value-Added services


Take Action!


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ì

BUSINESS PROBLEMS and their

CORRESPONDING SOLUTIONS (Detours and Capture Plans)


Notice of copyright.

Each of the following 72 Capture Plans contains a specific step-by-step prescription for solving its respective business problem as stated. Every Capture Plan has a first use date in 2012 and separately contains its own individual notice of copyright. All Capture Plans, with their copyrights, terms and conditions are also protected under the notice of copyright for this document. Kanketa is a registered trademark of the author.

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ì

PROBLEM STATEMENT

CAUSE DIAGNOSIS

CAPTURE PLAN REMEDY


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#1 “It isn’t my job.” Questions about job ︎ responsibilities︎#2 “I have no control over the company’s profit” ︎#3 End customers directly serviced by Back Office︎#4 “Who should I listen to? Who’s my boss?”︎#5 Unclear second in command in leader’s︎ absence #6 Reactive company to market whims.

6 Detours Of Business Structure

Lack of Clarity

Diagnosis

PROBLEM STATEMENT

Copyright mwolf 2012. All rights reserved

1.  Build a House of Value 2.  Everyone contributes profit 3.  Balance pre-‐sale and post-‐sale 4.  Balance back office with front office 5.  Protect the Key Man 6.  Business Leader front and center

6 Practices of Business Structure

Maintain A Flat Organization

CAPTURE PLAN


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ì Problem Identification -‐ Structure WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN -‐ Structure IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Misconception of "Cost of Goods Sold”#2. Overspending in the wrong areas#3. “I can't see the hidden money.”︎

#4. “I don't know how much we need.”︎

#5. Not getting enough profit from each department of the company

#6. Misunderstood company value︎

6 Detours of Finance

Not Enough Money ‘Don’t have it. ‘Can’t Borrow.

Diagnosis

PROBLEM STATEMENT


1.  Balance the Margin 2.  Equalize the Budget 3.  Achieve Financial Balance 4.  Manage with Normaliza2on 5.  Monitor with a Scorecard 6.  Always know Debt-‐to-‐Income

6 Practices of Finance

Achieve Financial Balance

CAPTURE PLAN


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ì Problem Identification -‐ Finance WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN -‐ Finance IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Not all product touch points are considered ︎#2 Too much inventory. High carrying costs. ︎#3 Supplier performance is not accurately rated ︎#4 Incorrect costs create incorrect prices︎#5 Computer disparities: information vs. actual #6 Time to quote is too long.

6 Detours Of Product Management

Cost of Goods Too High

Diagnosis

PROBLEM STATEMENT


1.  Create a Value Stream 2.  Just-‐In-‐Time Inventory 3.  Manage the Supply chain 4.  Assure Inventory Record Accuracy 5.  Use POGO pricing 6.  Time to quote, Time-‐to-‐market

6 Practices of Product Management

Make One Profitably

CAPTURE PLAN


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ì Problem Identification – Product Mgt. WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN – Product Mgt. IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 There actually are enough opportunities︎

#2 Wrong information solves the wrong problem ︎

#3 You are blending in with your customers ︎

#4 The market is getting the wrong message ︎

#5 Looking for prospects in the wrong places #6 Do not understand the buyer’s process

6 Detours of Marketing

Not enough new leads - 1st time Opportunities

Diagnosis

PROBLEM STATEMENT


1.  Strategize by SILO 2.  Iden2fy the problems we solve 3.  Merge markets for differen2a2on 4.  Create the message 5.  Find three best pathways 6.  Execute the media plan

6 Practices of Marketing

Market For Potential

CAPTURE PLAN


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ì Problem Identification -‐ Marketing WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN -‐ Marketing IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 No formal process for managing error ︎

#2 Error is not accurately identified ︎

#3 The right things are not being measured ︎

#4 Error in analysis of measurement ︎

#5 Increasing size of like-errors #6 Same errors keep recurring

6 Detours of Production

Too Much Error Customer Error. Supplier Error. Production Error. Administrative Error.

Diagnosis

PROBLEM STATEMENT


1. Manage Error with DAMAIC 2.  DA -‐ Define and Assess the root cause 3.  M -‐ Measure conformance 4.  A -‐ Analyze varia2on with CEDAC 5.  I -‐ PDCA for con2nuous improvement 6.  C -‐ Fail proof The opportunity for error

6 Practices of Production

Make One Error-Free

CAPTURE PLAN


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ì Problem Identification -‐ Production WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN -‐ Production IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Buyer’s personal buying habits are ignored ︎

#2 Critical proposal information is missing ︎

#3 Misinterpreted desired results/outcomes ︎

#4 A “decision maker” is excluded ︎

#5 No buy-in prior to proposal︎

#6 Interests and positions are not separated

6 Detours of Sales A lot of quoting. Not enough closing.

Diagnosis

PROBLEM STATEMENT


1.  Push Me. Pull Me. (“Like”) 2.  7Qs (“Respect”) 3) Wave the magic wand (“Trust”) 4) Ignore the decision maker 5) Ensure the outcome 6) Nego2ate the order

6 Practices of Sales

Invite Relationships Negotiate Orders

CAPTURE PLAN


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ì Problem Identification -‐ Sales WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN -‐ Sales IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Not all wastes are identified ︎

#2 Disorganization interrupts flow ︎

#3 Process flow is unclear ︎

#4 Customer Order irregularity exists ︎

#5 Downtime prevention procedures missing #6 No focus on reducing variation /step rates

6 Detours of Velocity Not delivering on time

Diagnosis

PROBLEM STATEMENT


1.  Components of Velocity 2.  Organize with 6S 3.  Level the load for JIT 4.  Design for con2nuous flow 5.  Prevent down2me 6.  Shorten the string with 10 wastes

6 Practices of Velocity

Make Many Efficiently

CAPTURE PLAN


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ì Problem Identification -‐ Velocity WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN -‐ Velocity IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Customer’s critical “musts” are missing ︎

#2 Customer demands over problem solving ︎

#3 Ineffective use of tradeoffs︎

#4 No upsell accountability or tracking ︎

#5 No fail proofing process for order details︎

#6 Too much time leeway allowed /unspecific ︎

6 Detours of Customer Service Unresolved Complaints

Not meeting Customer Expectations Diagnosis

PROBLEM STATEMENT


1.  Ensure the Critical Musts 2.  Negotiate The Tradeoffs 3.  Get It Right the First Time 4.  Deliver in Takt Time 5.  Be A Problem Solver 6.  When the Customer Says…

6 Practices of Customer Service

Satisfy Every Transaction

CAPTURE PLAN


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ì Problem Identification – Customer Service WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN – Customer Service IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1“Us vs. them” management approach ︎

#2 Inadequate employee attitudinal assessment ︎

#3 Mismanaged employee temperaments︎

#4 Pay is out of balance with performance︎

#5 Team dysfunction #6 Delayed necessary endings

6 Detours Of Leadership Low Productivity

Diagnosis

PROBLEM STATEMENT


1.  Displace HR 2.  Take people lnventory 3.  Promote Intrepreneuership 4.  Pay for performance 5.  Improve teamwork with PDCA 5.  Fired or fired up

6 Practices Of Self-Leadership

Lead People. Manage Things.

CAPTURE PLAN


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ì Problem Identification -‐ Leadership WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN -‐ Leadership IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Unmet necessary customer expectations ︎

#2 Service activities are out of sequence︎

#3 No customer performance ratings︎

#4 Incomplete STEEPLED S.W.O.T research ︎

#5 No barriers to exit #6 Poor survey questions. No follow up.

6 Detours of Customer Care Disloyal Customers

Diagnosis

PROBLEM STATEMENT


6 Practices of Customer Care

Keep Customers For Life

1.  Meet 6 necessary expecta2ons 2.  Add 5 WOW factors 3.  Rate customer performance 4.  Use a STEEPLED S.W.O.T 5.  Close all barriers to exit 6.  Survey for sustainability

CAPTURE PLAN


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ì Problem Identification – Customer Care WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN – Customer Care IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Low Productivity. Distraction. Wasted Time. ︎#2 Low/no accountability. Minimum results︎#3 No teamwork. Mediocrity. ︎#4 Overall confusion. No cohesion of effort. ︎#5 Stagnant growth. Company Is losing ground. ︎#6 Employees leaving for better opportunities︎ Fear-based organization. Employees hiding out. ︎

6 Detours of Business Leadership Reactive vs. Responsive

PROBLEM STATEMENT

Diagnosis


1.  Take Time to Lead 2.  Lead with Mission (alignment)

3.  Lead with a System (goal tending) 4.  Lead with Innova2on 5.  Lead with Communica2on 6.  Leading by Leing (Genera0onal Leadership

6 Practices of Business Leadership

Lead From The Center

CAPTURE PLAN


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ì Problem Identification – Company Leadership WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN – Company Leadership IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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#1 Company Is Undervalued #2. Not Enough Interested Company Buyers#3. Still too involved. Not Enough Personal Freedom. #4. Insufficient Earnings ︎

#5. Low Return On Assets#6. Too Much Cash Outlay. ︎

6 Detours of Business Ownership Low net profit. Low return.

Diagnosis

PROBLEM STATEMENT


1.  Know The End-‐Game 2.  Always Be For Sale 3.  Manage Remote 4 Hrs. a Week 4.  Live Off Of Profit 5.  Become a Bank 6.  Blow Up The Company For Profit

6 Practices of Business Ownership

Safety First. Profit Second.

CAPTURE PLAN


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ì Problem Identification – Business Ownership WRITE THE DIAGNOSES THAT CLOSELY DESCRIBE YOUR CURRENT ISSUES

MORE THAN ONE?

PRIMARY ISSUE:


ì CAPTURE PLAN – Business Ownership IDENTIFY THE CORRESPONDING CAPTURE PLAN TO THE DIAGNOSIS YOU HAVE DESCRIBED

MORE THAN ONE?

WHICH ONE?


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Safety First. Profit Second Maintain A Flat Organiza2on Achieve Financial Balance Lead From The Center

12 Principles Of Kanketa

Make One Profitably Make One Error Free Make Many Efficiently Lead People. Manage Things.

Market For Poten2al Invite Rela2onships. Nego2ate Orders. Sa2sfy Every Transac2on Keep Customers For Life

Principles Of Ownership

Principles Of Production

Principles Of Marketing

Copyright mwolf 2012. All rights reserved Copyright mwolf 2012. All rights reserved.

VELOCITY

KANKETA POWER PAIRS

MARKETING

CUSTOMER SERVICE

PROD. MGT.

PRODUCTION

SELF-LEADERSHIP

SALES

CUSTOMER

CARE

INCREASE REVENUE

WIDEN MARGIN

REDUCE COST

REDUCE COST WIDEN

MARGIN

INCREASE REVENUE

CONTAIN COSTS

CONTAIN COSTS

Departmental Impact

Copyright mwolf 2012. All rights reserved Copyright mwolf 2012. All rights reserved.

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ì Kanketa Problem-‐Solving Protocol

DEFINE the Problem Specific, Measureable IDENTIFY the Problem Using Detours and Diagnos2cs LOCATE the Problem On the Process Map ASSESS our Posi2on Cri2cal? Necessary? Helpful?

PROPOSE Solu2ons Align with Company’s mission? RESOLVE the Issue:

QUALIFY the Problem Achievable (resources) , Reasonable (priority), Timely

Predictable, Non-‐repeatable Outcome

FORMULATE a step-‐by-‐step list of ac2on items to create a permanent solu2on


Debt-to-Income

Debt-to-Income determines your bankability and overall corporate health.

DTI shows how much you earn to repay what you owe.

This is what your bank and your lenders are most interested in.

HOW BANKABLE IS YOUR BUSINESS

RIGHT NOW?


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CHECKING ACCOUNTS $ DEPOSITS IN TRANSIT $ SAVINGS ACCOUNTS $ ACNTS RECEIVABLE 1-‐30 $ ACNTS RECEIVABLE 31-‐60 $ ACNTS RECEIVABLE 61-‐89 $ FACTORED, NOT REDEEMED $ NON-‐CANCEALLBLE CUSTOMER PURCHASE ORDERS

$

LOANS RECEIVABLE – 1 YEAR OR LESS $

LOAN INTEREST – 1 YEAR OR LESS $

DEBT-TO-INCOME

INCOME

TOTAL INCOME: $ Copyright mwolf 2012. All rights reserved.

ACCRUED PAYROLL UNPAID WAGES $

ACCRUED PAYROLL UNPAID BENEFITS $

TRADE PAYABLES (Suppliers) $

NON-‐CANCELLABLE POs to Suppliers $

PRE-‐PAYMENTS FROM CUSTOMERS $

GENERAL& ADMINISTRATIVE PAYABLES $

UNRECORDED SHADOW PAYABLES $

CONTRA-‐ACCOUNTS (See defini7on) $

NOTES PAYABLE TO OWNER $

ACCRUED TAXES $

DEBT-TO-INCOME DEBT

TOTAL DEBT: $

ACCRUED MAINTENANCE COSTS $

CURRENT LOANS -‐ 1 YEAR OR LESS $

TERM LOANS – 1 YEAR OR MORE $

OTHER $


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ACCRUED PAYROLL UNPAID WAGES Employee Gross paychecks not cashed ACCRUED PAYROLL UNPAID BENEFITS Employee Vaca2ons earned

-‐ not taken CURRENT TRADE PAYABLES Owed to Suppliers -‐ 1 year or less NON-‐CANCELABLE P.Os to Suppliers Orders that must s2ll be paid PRE-‐PAYMENTS FROM CUSTOMERS Work not yet done GENERAL& ADMINISTRATIVE PAYABLES Monthly opera2ons, Office, Plant, UNRECORDED SHADOW PAYABLES Loans to friends and family CONTRA-‐ACCOUNTS (Informal commissions due to Vendors)

Self-‐directed payments to preferred Vendors

NOTES PAYABLE TO OWNER Recorded or unrecorded ACCRUED TAXES FED, STATE, all

DEBT-TO-INCOME DEFINITIONS

ACCRUED MAINTENANCE COSTS Coming due for delayed repairs

CURRENT LOANS -‐ 1 YEAR OR LESS Bank

TERM LOANS – 1 YEAR OR MORE Bank


D-T-I

$ DEBT $ INCOME

MONITOR DEBT-TO-INCOME MONTHLY

For every $1.00 of debt you have (right number), you also have $_______ (left number) to pay for it

: 1 WHAT IT MEANS:

DIVIDE TOTAL INCOME BY TOTAL DEBT

DEBT-TO-INCOME


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PREVIOUS DTI:

KANKETA QUARTERLY IMPROVEMENT GOAL

THIS DTI:

INCREASE DTI BY .10

EXAMPLE

DTI IMPROVEMENT: .10

1.26: 1

1.36: 1

DEBT-TO-INCOME


“SEEDLING”

YOUR DTI POSITION

STARTUP

CRITICAL RECOVERY

NECESSARY RECOVERY

ORGANIC GROWTH

GROWTH BY ACQUISITION

TRANSITION

EXIT

A Concept! No significant income. A Hobby

Cash poor. Could slip into bankruptcy

Fix before attempting to grow

Grow from within with existing resources

Consider buying a company

Ready to Exit. Successor not identified.

Implementing Exit. Succession in progress.

Small income.

Monthly margin between $3k and $10k

DEBT-TO-INCOME


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“SEEDLING”

SUGGESTED POSITION FOR YOUR DTI SCORE

STARTUP

CRITICAL RECOVERY

NECESSARY RECOVERY

ORGANIC GROWTH

GROWTH BY ACQUISITION

TRANSITION

DTI Less than 1.00:1

DTI 1.10:1 to 1.24:1

DTI 1.25:1 to 1.49:1

DTI 1.50:1 to 1.99:1

DTI 2.00:1 to 2.49:1

DTI 2.50:1 to 3.99:1

DTI 1.00:1 to 1:09:1

BANKABILITY

DTI 4.00:1 +

EXIT


HOW BANKABLE ARE YOU?

Unsecured Business Bank Loan:

Typically 40% of your Net Income

1.56:1 DTI EXAMPLE

Bank Loan: 40% X .56 cents of income = a loan of .22 cents for every $1.56 of income

DEBT-TO-INCOME


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TOTAL INCOME: $120,000 MINUS TOTAL DEBT: $ 50,000 DEBT-‐TO-‐INCOME RATIO 2:4:1

INCOME ($70,000)

X 40%

= $28,000 UNSECURED BUSINESS LOAN

HOW BANKABLE IS YOUR BUSINESS RIGHT NOW?

EXAMPLE

DEBT-TO-INCOME


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Month 1 DTI: ___ . ___ : 1

Month 2 DTI: ___ . ___ : 1

Month 3 DTI: ___ . ___ : 1

Month 4 DTI: ___ . ___ : 1

Month 5 DTI: ___ . ___ : 1

Month 6 DTI: ___ . ___ : 1

Month 7 DTI: ___ . ___ : 1

Month 8 DTI: ___ . ___ : 1

Month 9 DTI: ___ . ___ : 1

Month 10 DTI: ___ . ___ : 1

Month 11 DTI: ___ . ___ : 1

Month 12 DTI: ___ . ___ : 1

DTI YEAR 1 DTI YEAR 2 Month 1 DTI: ___ . ___ : 1

Month 2 DTI: ___ . ___ : 1

Month 3 DTI: ___ . ___ : 1

Month 4 DTI: ___ . ___ : 1

Month 5 DTI: ___ . ___ : 1

Month 6 DTI: ___ . ___ : 1

Month 7 DTI: ___ . ___ : 1

Month 8 DTI: ___ . ___ : 1

Month 9 DTI: ___ . ___ : 1

Month 10 DTI: ___ . ___ : 1

Month 11 DTI: ___ . ___ : 1

Month 12 DTI: ___ . ___ : 1


Month 1 DTI: ___ . ___ : 1

Month 2 DTI: ___ . ___ : 1

Month 3 DTI: ___ . ___ : 1

Month 4 DTI: ___ . ___ : 1

Month 5 DTI: ___ . ___ : 1

Month 6 DTI: ___ . ___ : 1

Month 7 DTI: ___ . ___ : 1

Month 8 DTI: ___ . ___ : 1

Month 9 DTI: ___ . ___ : 1

Month 10 DTI: ___ . ___ : 1

Month 11 DTI: ___ . ___ : 1

Month 12 DTI: ___ . ___ : 1

DTI YEAR 3 DTI YEAR 4 Month 1 DTI: ___ . ___ : 1

Month 2 DTI: ___ . ___ : 1

Month 3 DTI: ___ . ___ : 1

Month 4 DTI: ___ . ___ : 1

Month 5 DTI: ___ . ___ : 1

Month 6 DTI: ___ . ___ : 1

Month 7 DTI: ___ . ___ : 1

Month 8 DTI: ___ . ___ : 1

Month 9 DTI: ___ . ___ : 1

Month 10 DTI: ___ . ___ : 1

Month 11 DTI: ___ . ___ : 1

Month 12 DTI: ___ . ___ : 1


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Central repository for all money activity

Operating Budget: Income and expenses

Balance sheet (what you own, what you owe)

Cash flow: when to spend, what to spend

Investment monitoring

You are your own CFO financial manager

CONSTANT AUDIT

GOAL: 2X 3X 4X 10X

2 X -‐ Double revenue 3 X -‐ Net Income 4 X -‐ Net Value of the Business in 48 months

10 X -‐ Double return on profit investments

in ten years

with a monthly income for life

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The 2x 3x 4x ROADMAP

The 2x 3x 4x ROADMAP

Major sections

Revenue

Money in The door

2X

Net Income

Money

you keep

3X

Profit

What you can invest

for a lifetime income

4X 10X

Time

Spent in your

business

Value

What your

company Is worth

Debt

Money you owe

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Valuation

Create a baseline Starting point for each section

Same or different start dates for each section

Results will be proportionate

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2X 3X 4X goal ends in the 4th quarter of year 4

Your investments continue

Financial freedom - year 10

2X

Revenue

Money in The door

Weekly bank

deposits

pay bills 2X month

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3X

Net Income

Money

you keep

What the bank

measures you by

debt

Debt

Money you owe

Debt is good.

It just must be

managed.

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Work week

Time

spent in your

business

Goal: 4 hours a week …

except by choice.

Business Value

What your company is worth at any moment

4X

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10X

Profit

What you can invest for a lifetime of

income

Self funded

Today’s Performance

Owner’s “Scorecard” For decision making

Daily, weekly, monthly business performance

Money control. Become your own bank

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One 8 ½ X 11 sheet Contains all finance Up-to-the-minute error-free decision-making No computers necessary Adjust once a year

Never lose a dime - except by choice

Owner’s “Scorecard”

Net profit:

available money for reinvestment

available savings

owner’s monthly available spending cash

controlling tax exposure - weekly

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Investment tracking Profit

What you can invest

for a lifetime income

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The Science of Small Business Management


Financial freedom Investment formula

Section 1: DESIGN Why this? Why now? 4X set up. Goal setting

Section 2: DEVELOPMENT Asset planning Strategize by SILO

Section 3: IMPLEMENTATION Asset accumulation

Section 4: MANAGEMENT Instructional guide

Kanketa Capture Plan for Financial Independence

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ü  A plan ü  Your Constant Audit scorecard

ü  Your in-state operating company

ü  A tax-free (Wyoming) management company (LLC)

ü  A management company checking and savings account

ü  Routine (monthly) asset accumulation

ü  A weekly data collection method

ü  An accurate money management system

ü  A formal legal asset transfer process

Components necessary for financial freedom

How much income per month do you need? (may be adjusted later)

Monthly U.S averages (single person)

•  Rent or mortgage •  Utilities •  Transportation •  Food, household •  Clothing •  Entertainment •  Insurance •  Other

$

$ $ $ $ $ $ $

X 12 months

($ 200) ($ 500) ($ 300)

($ 500) ($ 700) ($ 300) ($1,100)

$ ($ 3,800)

After taxes

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DOUBLING YOUR INVESTMENT

72 divided by % interest you charge =

number of years to DOUBLE your money

72 divided by 7% = 10 years to double your investment (7% divided by 12 months = .058% per month)

72 divided by 10% = 7 years to double your investment (10% divided by 12 months = .083% per month)

72 divided by 18% = 4 years to double your investment (18% divided by 12 months = 1.5% per month)

COMPOUND INTEREST

1/3 from investment category 1 = pre-tax 15% for 10% avg. net



33% divided by 3

11% pre-tax average all categories

7% + after tax average net income

Average taxes = 30% at redemption

+ +

= =

$6,000++ /month after tax… for life FREEDOM !

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Year 1 Balanced asset portfolio Valuation determined your asset baseline and balance for your asset portfolio

Year 2 Investments Assets are in place. Investments are in all categories. Begin to accumulate.

Year 3 Accumulation Assets begin to show good growth

Years 4-9 Management Quadrupled business value, with continuous asset growth

Year 10 Asset Depletion Buy a camper. See your travel agent.

A Plan

Accumulation

T A X H A R V E S T S E C U R E

100 %

S E C U R E

R I

S K

15%

R E I N V E ST

9%

9%

SHORT

LONG

SHORT

LONG

SHORT

LONG

SHORT

LONG Harvest without

Depletion

Goal: 7% overall average after-tax interest earning level

FINANCIAL FREEDOM

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6 suggested Investment vehicles 6 strategies for cash sources

Tax-deferred hybrid fixed annuity state tax-free management company

current cash loans up to nmm x 2 x .67

60-day unsecured funding

up to $5,600

(add to tax deferred Roth IRA)

term asset leaseback Private placement life insurance

federal tax reduction

tax -State

tax -Fed

reinvest - short

reinvest - long

retained - short

retained - long

Stock market – aggressive risk

Tax deferred Roth IRA Hedge fund breakage

Stock market – med risk

current cash

current cash

Breakage (after error)

FINANCIAL FREEDOM INVESTMENT STRATEGY

NEEDED FOR PORTFOLIO MANAGEMENT

1.  Access to all company documents, operating agreement, etc.

2.  Maintained asset records 3.  Transaction documents (transfer and loan agreements) 4.  Stock broker (selective) 5.  Eventual investment vehicles:

Hybrid fixed annuity Private placement life insurance Roth IRA

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Make a pie. Begin with the crust Secure the outer edges first.

Then fill in with the tasty stuff.

Build your portfolio inward from the perimeter

1. Invest for long term / Mgt. Co. = (hybrid fixed annuity)

3. 2.

7. 8.

6. 5. lease Loans PPLI 12.5% r e I n v e s t d

r e I n v e s t

L O N G

S H O R T

Retained Long

Breakage Fees

RISK S E C U R E

4.   Retained long term Private Placement Life Insurance

Retained Short

H E D G E

S E C U R E

S E C U R E

Low

High

S E C U R E

back

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TOTAL 4-PART BUSINESS STRUCTURE

A FINANCIAL FREEDOM PLAN PRODUCTS /SERVICES (supply)

A MANAGEMENT SYSTEM

A MARKET (demand)

ì JOIN US – For Quarterly Problem Solving

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