"That's the first place I am stumped," Colleen admitted. "Some of the tasks I know I should be doing, and some of the tasks I need to delegate."

"How are you going to make that decision?" I asked.

Colleen laughed. "I could keep all the stuff I like to do and give away the rest." She stopped. "But, that probably won't work."

"When you look at the list of things to do, the tasks that have been assigned to you, how easy is it to pick out the goals embedded in the list?"

Colleen looked at her notes. "Not so easy. It made a lot more sense in the meeting."

"You know you need to organize this list in some way. But you can't do that until you transform your notes."

Colleen looked puzzled.

"Look, the goals made sense in the meeting," I continued, "but to create an effective list, you need to transform your notes into a list of what by whens."

"I know how to say NO to new things coming up, but most of our troubles are from decisions we have already made," Byron confided.

"Each year, don't you review your decisions about what you will and will not do, including the cost structure for each of those decisions?" I asked.

"You mean, our budget?"

I nodded. "Yes, your budget. When you look at each budget item, whether it is a direct cost or an indirect cost, you have to ask this question.

"Is this absolutely necessary?

"If the answer is NO, get rid of it, dismantle it, idle it.

"If the answer is YES, move to the next question. What is the absolute minimum necessary to perform this function to our spec.?" -TF
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This conversation with Byron is essential. By this time next year, the US will be in the thick of a downturn. There is still time to adequately plan your company's scenario to adjust.

Note that if your industry is connected to residential housing, you are already in the thick of it.

Luis was not having fun. He remembered how difficult it was for the company to make payments on the third machine.

"Management is about making resources productive. This third machine is not productive. The floor space it sits on is not productive," I said.

"But we paid a lot of money for that machine, and our company cannot get out of its lease for this space. And what are we going to do if we need the machine?" Luis objected.

"Anyone can manage an idle machine. What are you going to do?" -TF

Luis began an aggressive calling plan to get his money collected, put holds on new orders for customers who were past due and began requiring deposits on large orders. Nothing happened at first. Luis stayed off kilter for the better part of two weeks. Slowly, he calmed. Payments began to come in, not enough to have a party, but enough to breathe.

"Management is about making resources productive," I repeated. The first thing to manage is capital. Next are your physical assets.

"Our building, our equipment?" Luis confirmed.

"The first decision is to decide what is necessary. You haven't thought about that since this company was a start up. Back then, you thought about it a lot. You outsourced some production until you could afford your own machine. Then you bought a second machine. You moved into a new building so you could bring in a third machine.

"Now, you can't keep the second machine busy. You tell me, what is necessary?" -TF

"Where's the money?" I asked.

Luis looked at me and squinted. "What do you mean, where's the money?"

"Look, you asked me to come here and help you straighten out this mess. Where's the money?" I repeated.

"That's the problem, there isn't any money," Luis replied.

"Yes, there is, there always is. Luis, the first resource a manager has to manage is capital. But before you can manage it, you have to find out where it is. Sometimes you think you know where it should be, but if that's not where it is, you can't manage it.

Sometimes your capital is tied up in a machine. Sometimes your capital is tied up in unbilled work in process. Sometimes your capital is tied up in Accounts Receivable. Once you find out where your capital is, only then can you manage it. So, where's the money?"

A raw nerve had been struck. Luis shuffled some papers on his desk. "It's here," he said, pointing to the third column in his AR aging report. "It's over 60."

"Well, now we know where it is, we can manage it." -TF