To do so, we need to think in terms of financial pro formas first, however.
What is a pro forma?
Think of it as the “imaginary set of financial expectations.”
A good businessperson doesn’t “just happen” to make money when growing a company. There is a lot of science (e.g. management science) to it.
You basically can build a kind of operating plan for a company in advance.
A buddy of mine (who does a lot more – and larger turnarounds that the one’s I’ve done), has all of his people in one business unit working on budgets between now and New Years. He’s pressuring them to come up with an operating plan for 2015 so he won’t have to “self-fund” company losses this coming year.
You don’t hear much about that from the critics of capitalism. But then again, there are parts of reality that just ignore in ultra-liberal dream-land. But the money in lean years has to come from somewhere and that’s why the line “owners equity” goes both up and down. More downs that ups is a very, very bad thing.
These budget crunchers will, of course, come through as requested, or they will be hitting Monster.com shortly, looking for a new place to work. Hard how the world works, but the world’s a hard place.
One of the other realities about work is that most employees do what they want to do if management isn’t looking. And management’s job is to look all the time. That’s what business systems and management accounting springs from.
That’s because people (quite naturally) do what is fun and enjoyable at work. They often skip doing the necessary and unpleasant. Speaking of which, if you want to become an exceptionally successful person, all you really need to do is perform the tasks that you most dread – especially those that you outright hate – first thing before doing any of the fun stuff.
People who have been successful in Life (take my buddy Gaye up at www.backdoorsurvival.com, for instance) didn’t just accidentally get that way. It all starts off with understanding time management, doing the hated things first because they are incredibly important, and then getting the fun stuff done. Almost 40-years ago, she introduced me to William Onken’s bookings on time management.
In fact, Amazon still has the book Managing Management Time: Who’s Got the Monkey? And it’s one of the best deals in self-improvement out there.
Getting back to the pro forma point, a company should know in advance how sales will go in the coming year, or at least roughly so. When we know how many sales will come in, we know how much product will be needed. Once we know that, it’s not brain surgery to figure out how many people it will take to make that much product. And how many people in accounting to bill for and collect payments, and how many people in shipping, and so forth.
People don’t run their lives quite like that, but it wouldn’t hurt to look at it this way, once in a while:We each hold (secretly, or otherwise) or own “product” that we’re looking to build.
Everyone has a different product. Elaine and I get along so well because we’re all about collecting memories and doing in life. Adventure is the stuff we like, new experiences, not reruns.
So when we sit out in the sun room on Christmas afternoon, it’s to kick around the important questions like “What should we do for a big adventure this coming year?”
We have come up with a couple. For one, we will be doing a lot of traveling. We would both like to do Niagara Falls. Do the Queen of the Mists or whatever that boat is called. We would also like to go hopping around the northern ties of states. Neither one of us has been west of Milwaukee in Wisconsin, for example.
Then we’d like to get up to Canada, since Grady (chief cook and code-pounder) of the www.nostracodeus,com project is up there. And, I’ve never been up to Edmonton, where by older sister lives. So that’s on the list.
And then Gaye and Survival Hubby and Elaine and I have lots of projects to discuss so that will mean another trip to Washington State, and while we’re there, it will be kid-time, and so forth.
The point I’m circling around to is this: That (to us) is sort of like the “sales” we’d like to have in 2015. Now we need to figure out how to get there. It will cost money and so there’s a work angle that has to be followed through. Or, we will dump some savings to make that happen. See the note on podcasting down the page a bit.
It turns out that while companies have simple formulas that can give you an idea of how they will work in any given year, so do people.
Sales minus costs of goods sold minus overhead should give an idea for a company. But with people, different terms are needed.
I was thinking about those terms this morning, and I’ve got some ideas.
In place of “sales” I would put “dreams and aspirations.” Everyone gets up in the morning with a fresh batch of those. You have dreams and goals for today, and it’s the progressive realization of the small goals that work you toward the bigger ones. Fair enough.
The “cost of goods sold” part of a pro forma might be two line items. First, you need the tool to make your dream come true. If you’re a musician, it might be that new Stratocaster, or if you are a traveler, it’s the air fare and hotel. That’s basically the cost of the “goods” you’re trying to make in life. Sure, there will be other things, too, like time to practice on the Strat, for example. But that’s the “goods” of your business.
It’s the overhead we have the toughest time with: For most, it’s work. And work takes time, and that time-taken is away from our dreams of what we would rather be doing.
I got to thinking about overhead yesterday morning. It was cold (33F) and clear, with only a slight wind from the south, so I took my brother-in-law up for a while in the old Beech so Elaine could sleep in. She loves to go flying, but not when it’s cold out.
It was a marvelous flight, which had not appreciable downsides that I could think of. I have a dream (flying adventures is the equivalent to sales). The analog to “cost of goods sold” was the airplane had been acquired and was well-practiced. There was plenty of overhead, in terms of other things I could be doing that might be a better use of my time, but I minimized that Overhead to zero (at least in my own mind) so that by the time we did our third, perfect, full-stop landing using less than 600-feet of runway each time, I had a marvelous “profit” for the day and it wasn’t but 9:30 AM when we got home.
It was a bigger profit than I expected, too. Especially on the first landing, down before the sun was actually lighting the runway. It was early twilight. As a result, all the colors were blurred on the ground, yet there was glare from the sun as we were coming down. It was then that I learned a few things about my dependence on a well-painted centerline. The centerline at KPSN is now all but gone and there are not signs of “the numbers” to speak of either.
But you see how this works out: Dream, tools, overhead, and takeaways. That’s what life is about.
“Fine, so why mention it the Day After Christmas?”
Simple answer: Because it dawned on me again, as we pulled back into the driveway after flying, how many projects and how much maintenance there is to do around the house.
And that’s where one of my “New Year’s Revolutions” will be focused this year. There are only a couple of “biggies” that I need to focus on. But just like the petulant employees who don’t want to do the important stuff, I’m as guilty as the next person of “doing what I like” instead of “doing what’s required or important.”
Thus, while we work in January, I’ll be focused on lots of projects around here, but they will be mostly dual-purpose projects. It’s time, for example, to rotate through some of the freeze-dried foods and restock.
As long as we’re doing that one, it will be a dandy time to clear out the storage room. It could use a new air conditioner, probably half of what’s out there could go to Goodwill, and so forth.
Even the landscaping it getting this “new look.” We’ll be putting down ground cloth and over it will go 3-inches, or more, of pea gravel. That will end running the mower on that side of the house which will reduce dust that gets kicked-up. It will also end the several-times every season of pressure-washing the HVAC unit to keep it operating at top efficiency.
What it comes down to is recognizing that everything we own comes with some sort of maintenance price-tag applied to it. If we remodel the kitchen, there will be fallout and slop from that into other areas of life.
We want to open up a bit more land, so that will involve a 55-gallon drum of diesel and plenty of hours on the tractor. And burning some brush piles and on and on the lists go.
Most of those sound like fun, if the most exciting thing you do is go to a gym today. But you spend 8-hours on a tractor and do it for a week, throwing in hours of chainsaw work and burn pile supervision, and it’s a proper ass-kicking.
So that has me back to thinking like a manager again. How can I leverage people who might enjoy such a thing, because after doing it for 10-years, it loses just a bit of pizzazz?
When an item moves from the “fun memories” column into the “required maintenance column” it’s probably time to get rid of it. Or at least change the business process around.
So that’s what’s going on for us this Boxing Day.
You can have ANYTHING YOU WANT in Life but you can have EVERYTHING. And sooner, or later, once mastered, most things move into the “Overhead category” where various kinds of maintenance are required.
You don’t need to build a bookshelf for the Kindle books (we have maybe 200 titles) and that’s before we get to all the Gutenberg.org free online eBooks. But even the Kindle isn’t without maintenance. Like changing the battery, for example.
So that’s where my head is this Boxing Day: Do I want to make more shelves, for more books, or do we vow 2015 is all electronic?
And will there be enough savings there to free up time for other “management projects” like going to Niagara?
Meantime, I’ll b e calling my son today to ask him when he’s coming to visit. He’s enough of a “city boy” that spending a week on the back of a tractor and clearing brush sounds like an adventure. The first few years, it is.
And that’s how we each manage our personal profit and loss statement.
Important Reader Notes
OK, here’s the thing. I am considering (with the studio all built now) the idea of “publishing” UrbanSurvival as a podcast every morning. It would be available around 9 AM Central time.
There’s a marketing question here, since bandwidth costs money: How much a day/week/month/year is an audio podcast of UrbanSurvival worth, or is this something I should just do as a freebie for Peoplenomics subscribers?
Your thoughts are welcome.
Yes, I read all comments that are submitted.
No, they do not appear “instantly.”
Each one is read and approved. I probably got backed up over the holiday.
See previous remarks about managing the personal P&L.
I should be caught up by noon today on everything. Although some Adderall might help, there are so many distractions around here…
Yes! I added a column on the right side menu so you can find recent comments.
Be sure and check back around lunchtime today because we got a really interesting reply on the antigravity topic and so we’ll roll with that as soon as I have time to review it…
The Hardest Choice of the Day
Since it’s 6 AM and I (remarkably) am hungry, it’s time for the day’s toughest decision. What’s for breakfast. I take about 15-minutes of free time between the “Coping” section and the “news” part many mornings.
Usually it’s my “breakfast sandwich”: A sourdough English muffin, slice of ham, hunk of cheese melted on it, and a scrambled egg on that, with a half glass of milk. One tablespoon of 64% semi-sweet chocolate morsels for dessert and a final half cup of coward’s-caff.
This morning, there’s leftover turkey and stuffing: All fits in my 4-minute prep time window….choices, choices, choices.But if that’s as bad as the decisions are going to get today, I guess another year has been wildly successful.
Still, keeping the body’s 37.2 trillion cells happy is a damn-fine reason to collect cookbooks, vitamins, and get plenty of sleep.
Write when you break-even if you’ve stayed awake this far….