Cash for Impact

Seven Steps for Effective Cash Management for Your Business
By Ranka Cvetkovic

Did you know that 85% of new small businesses close down in the first year of operation?

According to a report conducted in an issue of USA Today, the statistical failure rate of small businesses in America is as follows:

In the first year of business 85% of small businesses close. The second year closing statistic is 70%. The third year in business shows a small improvement in staying power; 62% of businesses will stop working by this time. By the 4th and 5th year (respectively), 55% and 50% of businesses will be closed.

Tightly manage your cash to build your business.

The data for small business failure varies from country to country and from source to source, but the average statistical data of business failure in most western style economies is skyrocketing high!

When operations of new businesses are analysed, planning and management of cash flow is one of the critical areas that is quite often underestimated and therefore overlooked.

Let us be honest, clearly defining and implementing a professional Credit Management System is something that very few new businesses ever prioritize in their first year.

How well you do your debt collection can make or break your business!

Every business has different methods and issues with getting paid. So let us look at some of the key factors in running a successful Credit Control & Management System.

1. Taking time for proper financial planning, policies and procedures to get the business started and to keep it operational (Advance planning will save lots of time and money later).

2. Developing and defining Terms of (Business) Trade and Credit (Having in place clearly defined and written payment terms are a must for any business).

3. Developing procedures for credit checking of prospect customers/clients (These procedures will weed out potentially bad clients that you do not want and need in your business).

4. Having accurate and timely billings (The sooner your client receives your bill, the sooner the payment is due).

5. Sending Statements/Reminders on a regular basis (Regularity in sending payment reminders will bring stability in your cash flow. Do it every week if necessary).

6. Developing and implementing Debt Collection/Recovery procedures and techniques (Define & implement steps in following up bad debt).

7. Managing and controlling bad debt by outsourcing (Do not write off bad debt; instead use professional debt collectors and legal debt recovery options).

By making sure your business has all of these key issues attended to will ensure that you have access to enough cash flow to keep you going through the controlled growth stages of your business. Implementing these steps will allow you to keep focused on developing and improving your main product or service. Now, ask yourself, are you ready to make necessary changes in your Credit Control approach?

Is it worth putting extra planning, time and effort into your debt collection system? Once you answer honestly to these questions, you will know if you are ready to make the transition from a new small business to a financially successful small business!

http://easydebtcollecting.com
EasyDebtCollecting.com is a web based resource for businesses and individuals who are seeking to improve their business cash flow and get more in depth knowledge of debt collection policies and procedures. EasyDebt Collecting is managed by Ranka Cvetkovic, Principal of Ethical Dealings Co – a debt management and credit control consultancy business. Please visit our web site for more free tips on debt collecting.

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Technorati Tags: bad debt, business bad debt, debt collecting, debt collections, debt cure, debt management, small business

Another great article on bootstrapping, by another guest blogger. I couldn’t have said it better myself…so I didn’t! – TCW

10 Must-Know Tactics on Bootstrapping a Business

By Ronald C Spencer

It can be really challenging, but bootstrapping a business has proven time and again how great things can spring from absolutely nothing. Take

Bootstrapping is useful when money is tight.

for example Internet giants like Google, Facebook and YouTube – they were born in unlikely places like a garage and a bedroom. Other rags to riches bootstrapped businesses include not entirely online-based companies such as Whole Foods Market, Apple, and Nordstrom. So now you know that bootstrapping a business is never an impossible feat, but how do you do it?

Bootstrapping Tactic #1: Work For a Positive Cash Flow

Cash is an integral ingredient for a small business with limited budget to survive. Focus on generating positive cash flow so that you can pay your bills and buy little by little the things needed for the business.

Bootstrapping Tactic #2: Make Humble Sales Estimates

A conservative estimate is totally different from a humble one, in that the latter can be a mere fragment of the already conservative estimate but it is the more doable of the two considering the capabilities of the business.

Bootstrapping Tactic #3: Be Aggressive to Product Launch

The sooner you get your products out, the sooner you get cash inflows. Again, cash is essential, so do not wait to perfect your product. As soon as you come up with something functional, ship it. But be prepared to offer repairs and address complaints, and learn from those.

Bootstrapping Tactic #4: Opt for a Lean Company Structure

It can be tempting to hire and hire, but with budget constraints and growth goals on the line, make do with the smallest, leanest team you can work with. And never waste supplies, energy and other resources – economy is a trait you can develop right from the start.

Bootstrapping Tactic #5: Find and Target a Niche Market

Even a large business with overflowing finances cannot be all things. As a small business, you can survive and thrive by finding a niche market with untapped needs, and then offer them a solution.

Bootstrapping Tactic #6: Sell Great but Buy Cheap

You do not have the means to run a large store or buy expensive furniture, so for the moment, bear with the functional stuff you can afford. However, do not be mediocre in offering products or services to your clients. Give them your best.

Bootstrapping Tactic #7: Get Personal with Customers

Personally serve your customers, and with a sunny attitude. If you want advertising that costs nothing but rewards you enormously – it is word-of-mouth. And if you are keen enough to follow tactic number six, then surely you get the costless publicity you need.

Bootstrapping Tactic #8: Be Conscious of Money Left

It can be disheartening to know the truth, but that truth can make you want to work harder. Know how much money you have in your coffers and estimate how many days that can last you. Unless you know and understand the extent of your budget limitations, you may not truly be able to pull through with bootstrapping.

Bootstrapping Tactic #9: Practice Creativity and Resourcefulness

Presently, almost every customer need has a wide array of solutions. And your best arsenal to outwit your rivals in an environment characterized by cutthroat competition is creativity. Be resourceful too – find ways to lessen your cash outlay without compromising product or service quality.

Bootstrapping Tactic #10: Borrow Money as Last Resort

Yes, you may borrow money but only as a last resort. Although getting external help might prove beneficial, in that it speeds up growth and operational activities, it is still very much feasible to grow the business debt-free.

Bootstrapping is a financially sound approach to starting and growing a business. Make it your goal to be cautious with spending and to find ways to run the venture without incurring debt.

Get help from SquadHelp ‘s large squad of entrepreneurs, marketing professionals and advertising experts to bootstrap your business effectively.

Article Source: http://EzineArticles.com/?expert=Ronald_C_Spencer
http://EzineArticles.com/?10-Must-Know-Tactics-on-Bootstrapping-a-Business&id=6530878

Technorati Tags: bootstrapping, bootstrapping a business, bootstrapping tactic, business marketing, small business

Use a website builder to establish an online presence.

I know there have been many blogs and articles about the subject of establishing an online presence as a business owner. But I think the topic demands additional coverage here. Why? When I attend networking or other business events, I still get business cards with no websites and email addresses like xxyy@gmail.com or companyname@yahoo.com. In this day and age, that looks so unprofessional!

I remember when I engaged with my first interim CFO services client. He needed help developing an investor approach, then executing on that approach. I had only been operating full-time for a week (having just left my job) and didn’t yet have a company bank account, website, or email address. Fortunately for me, a business acquaintance referred him to me or else I may have lost the client.  Why? What  caused the prospective client to  balk? I submitted a proposal with my personal contact information and personal checking account number!  The client called the person who referred me (I sat on the Advisory Board for that person’s company) to get assurances that I was a legitimate business. The acquaintance called and told me the concerns. I had to show my information in the Wharton School of Business database. The client (prospective client at that time) had liked what I had to say but I didn’t pass muster when he did his due diligence. Why? When he saw the proposal with my personal information he went online to look for me.  And he couldn’t find me!

I had to scramble to set everything up. In two days I opened a company bank account at a community bank (I’m still with them), bought a domain name and webhosting, and created an email address. Using a website builder program (I actually used Yahoo! Sitebuilder at that time), I used a template to put up 3 pages on my new website. I then utilized my new business email account to send a revised proposal with only business contact and checking information included. The good news is that client accepted the “revised” proposal and went on to provide me with great startup revenue so I was in the black  the first month.

When my acquaintance referred me, he didn’t say “She’s new. Cut her some slack.” He said, “I highly recommend her. Her company can give you just what you are looking for.” So the client thought I had been in business for some time. And that worked in my favor. I almost blew it by not having the external presence which substantiated that.

It is sooo easy to set up your website using a website builder. You can always hire an IT firm or web developer later to build out a state of the art website with high transaction or other capabilities. The important thing is to get online now! Reserve a domain name, get a webhosting service, set up your email addresses. Then use a website builder or template to build your website. Do it now! It will only cost you ~ $5- $20 per month depending on the service. The low end is the equivalent of 2 Starbuck coffees.

In this day and age, many people vet companies using the Internet. If you don’t have an online presence, people – prospective clients – may question your legitimacy like mine did. Or if you have a physical location, you may miss out on all the referrals your website could provide. Please, please, please, get a business email address with your domain name, i.e., dave@abccompany.net. and use a website builder to establish a basic web presence. Note that some website builder templates have built-in functionality that grows with you so the template may serve your purpose for some time.

Technorati Tags: business email, online presence, use website builder, website builder

Do you need some additional ideas on how to benefit from partnering? Here are a couple of suggestions regarding the topic. I’ll cover this topic more in detail later this month or next.

1. Marketing Partner: If you wish to expand your marketing budget, but have not been able to directly access growth capital to do so, partner with another entity that already has a presence in the markets you’re pursuing. Seek a partner for which there will be mutual benefits for both parties. i.e., They may be able to offer a broader product line to customers by incorporating your product, and you’ll be able to drastically cut marketing costs.

 

2. Strategic Partner/Strategic Investor: Find a strategic investor – a corporation that could benefit significantly from your business or service offering or your growth. Who owns some of your competitors in the market? Approach a few of them with which you think you share synergies ? Don’t think there are any strong synergies with any of the larger companies you identified? Perhaps there are those from which you could benefit from other potential contributed resources besides money? (Note, strategic means that there is a significant connection driving the relationship besides money.)

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Here is the 2nd half of the discussion on the relationship between bonding and finance. (See last weeks posts for Part 1.) This discussion is obviously meant for construction companies.

Technorati Tags: bonded receivables, bonding and finance, construction company

A Good CFO Can Make a Difference in Your Bottom Line
By Jacqueline Cao

If you’re looking to take your business to the next level, hiring a CFO might be just the thing to put your business on the map. The word CFO stands for “Chief Financial Officer” and this is the individual who is delegated to managing the financial side of a business. CFOs usually have obtained degrees in accounting, finance or business management and in many cases may have an MBA. A CFO plays a key role within a company and has a lot of input in regards to a company’s strategic planning. Many CFOs have excellent leadership skills since they often manage professionals and in some cases even teams. The CFO often works very closely with the CEO and as a result it is very important that these key individuals work well together.

The CFO is the head of a company’s finance and accounting department and generally oversees the accountant and controller. A CFO’s duties may consist of developing and analyzing the yearly budget, implementing complicated accounting and financial systems, making financial reports to higher management, analyzing financial data in-depth, building relationships with funding sources such as banks, identifying of equity for business expansion, exit planning consulting and advising the CEO.

The majority of new and small businesses do not have a CFO on staff. General bookkeeping duties are usually dealt with by the owner or a clerical worker. Expansion and growth often leads to a more complex financial situation. As a business makes more money there may be financial questions and accounting issues which will require the expertise of a CFO. A CFO can also very useful if a company is offering an IPO or is involved with mergers and acquisitions and can also assist with complicated audits.

A lot of smaller business start-ups do not have the means to shell out out a six figure salary for a full-time CFO and will choose to utilize interim CFO services. This allows small business owners and entrepreneurs to utilize the skills and services of an experienced financial executive on a part-time or hourly basis without having to shell out a hefty salary. Outsourcing this position to the right individual can really help take a business to the next level.

The CFO has the capability to make sense of complex financial data in order to maximize profits and make the necessary strategic and key decisions to take a company to the next level. A great CFO can affect a corporation’s profits and ultimately the bottom line. A good competent Chief Financial Officer can optimize your cash flow and accelerate your business’ expansion. If you are looking to grow and expand your business then you might want to consider utilizing CFO services in order to give your company the tools required to be the best on the market.

Written by Jacqueline Cao California CFO, CFO Services

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Technorati Tags: cfo services, interim CFO, interim cfo services

Here is a narrated powerpoint presentation I created that explains the relationship between a construction company’s financial statements, especially the balance sheet and net income statement, and the ease or difficulty in procuring and maintaining bonding. This presentation is for construction companies and related entities…and those that serve them (such as accountants and accounting firms).

Technorati Tags: bonding and finance, construction company

How do you track and manage your company’s proverbial (or actual) cash register? Do you do it manually? Do you throw all your receipts in a box and hand them to your bookkeeper or accountant on a monthly (egads!) or yearly (Oh, I think I’m going to pass out!) basis? Or do you track everything in a software program or online on a daily (yeah!) or weekly (good enough) basis?

Cash Register

Your accountant, controller or CFO (or perhaps you, if your business is small or if you really like crunching the numbers yourself on occasion like I do), hopefully uses accounting software such as Quickbooks or Peachtree or, if you are larger, Hyperion Financial or J.D. Edwards or some other software as your company’s cash register. If not, I STRONGLY recommend you/they start doing so immediately. I have been engaged by companies with over $5 million in revenue that did not use an accounting software program. These are the best ways to track your business revenues, expenses, and cash flows. It’s much, much easier to find and correct errors when you use an accounting software program like these or one of the newer online services than when you do it manually or even use Excel. (Don’t get me wrong. I love Excel and use it often. But it can get tedious if you use it to manage your company finances and you have more than 5 customers projects. My personal favorite for tracking a small company’s financials and performance is Quickbooks. It is very user friendly and has software packages for small and medium companies ranging from a few thousand in revenue to $30 million or more in revenue.)

Any of these financial / accounting software packages run and track your company’s accounting and financial transactions and performance.  Okay, I’ve had a few old school (i.e., highly change resistant!) people tell me they like to use cash registers or adding machines instead. I’m NOT talking about cash registers that one uses to ring up a sale. They use them in a way similar to how we used to use typewriters. To them I say this: Let’s say you want to add up the cost of a number of items and give that summary to an employee. This is informal. I typically would just use a mini cash register or adding machine to do this. Then I can tear off the sheet and give it to the employee. Or let’s say you are a service business but you offer books or other productized services for sale at conferences, seminars, etc.  Then you can take your beloved cash register with you and use it to ring up sales.

Obviously, if you have a retail business, you still use cash registers. If you are not already doing so, you can tie your cash register into your Quickbooks or other software program using point of sale (p.o.s.) software. I won’t go into what that entails now, but suffice it to say p.o.s. software allows you to automate  your sales and product tracking and communicate your inventory needs with minimal human intervention. P.O.S. software enables your cash register to do most of the work. If you are a retail enterprise and are not tying your cash register into a p.o.s. system, please, please do so as soon as possible. Once a p.o.s. system is set up and running properly, it will save you significant time and money. In addition, the data it summarizes will really help you make good strategic and tactical business decisions.

In summary, make sure you use an accounting software system that fits well with your company’s billing methodology and complexity. Make sure, if you are a retail business, you tie your physical cash register to your accounting software program using a p.o.s. system. And if you are not a retail business but you still love your cash register or adding machine, by all means continue to use…informally or for special occasions!

Technorati Tags: accounting software program, cash register, p.o.s. system, Quickbooks

401K Changes: Here is an excerpt from the article, “A Sense of Disclosure: New 401(k) rules pose a challenge to small and mid-sized companies” written by David McCann for CFO Magazine.

———————————————————————

“CFOs at small and midsize companies should monitor new 401(k) plan disclosure requirements. There are several new or forthcoming rules, and one in particular — ERISA Section 404 (a)(5) — could cause headaches. Plan fiduciaries have new obligations that carry substantial penalties and are likely to impose new costs.

Under that new rule, plan sponsors must (for plan years starting on or after November 1, 2011) prominently show on participants’ quarterly statements the administrative costs for running the plan, and on annual statements any investment-related fees.

This fee is NOT the fee your company pays the 401(k) administrator which, of course, is higher for smaller companies. This is the fee that the participants – the employees – pay the fund to manage and invest their money. For more information about the change, click on the article link.

SEC Changes regarding fan funding: Apparently the SEC (Securities and Exchange Commission) is reviewing SEC rules that currently prohibit similar behavior to obtain equity investors.  If you want this rule reversed, perhaps you should write to the SEC as 150 others apparently did. For more information, read the article Crowd-Funding Websites Eye Shift.

Budgets or Rolling Forecasts: As with your business plan, as a cash management cfo you need to regularly check performance against actual and whether or not your assumptions about the industry, your market, and the next steps for your business hold out. All of these affect your budget and this review process should be done on a quarterly basis. The headline in the article, “Let It Roll: Why more companies are abandoning budgets in favor of rolling forecasts” by Russ Banham (from CFO.com), uses the term ‘abandon’ but the more appropriate word would be ‘amend’. We’re talking about a change from a more rigid traditional budget approach to a flexible budget approach. Good article. Check it out.

Technorati Tags: 401k small business, cash management cfo, crowd-funding websites

I read a great article in the June 2011 issue of Inc. magazine entitled “Best Business Bargains“, pgs 103-106. (Yes! I am a big fan and have been a subscriber for ~six years.) The writers took a look at a number of different options for procuring products and services at reduced prices. Or for obtaining services that may typically require a human being – such as telephone services – for a fraction of the human staffing price. (Okay, I think I’ve been watching too much I, Robot, Terminator, and other movies that feature active, non-human entities. Can you tell?)

Inc. article

Here are some of the items that I think are superb business finds and great ways to stretch your business budget. For the other items and the writers’ witty synopsis, you’ll have to buy the magazine. These are great, value-based business bargains for any manager or business owner or, as the article says, “self-funded entrepreneur” aka bootstrapping entrepreneur. Bootstrapping? This article is what you are looking for. Finally, what good is cheap if you have to keep replacing it or you have all kinds of service problems? Many entrepreneurs and business owners and any self-respecting cash management CFO want to get the maximum bang for their buck.  They, we want value. That’s what these suggestions offer.

Craigslist. Okay, this is one of my FAVORITES. (Perhaps, now that the Oprah show is gone, I should start a “Tiffany’s Favorite Things”. However, you’d have to purchase the items on my list yourself. Not as exciting? Oh well, just a thought.) There are many things you can do with craigslist but for the purpose of this article, the focus is on obtaining used office furniture. Many companies that go out of business or reduce their footprint sell their office furniture on craigslist. And they typically sell it cheap because they want to be rid of it quickly. Need chairs? bookcases? cubicles? desks? Visit the craigslist site for your city.

VistaPrint. I’ve used them for several years. I need to be an affiliate (do they have them?) with as many times as I have personally recommended VistaPrint to others. VistaPrint is an excellent source for business cards. The paper and printing are both high quality. You can get 250 cards for under $30 before shipping and handling. By joining their email list and taking advantage of periodic offer, I usually get my cards for as much as half of this amount.

Weebly. Okay, this one I had NEVER heard of until I read the Inc. article. I will definitely try them out this week. Where were they when the business association I head was creating its first website? They were there. I just didn’t know about them. Anyway, according to the Inc. article, Weebly has “professionally designed templates that you can customize with a simple drag-and-drop interface. Plus Weebly will host a basic site for free.” Weebly is a web hosting entity that allows you to set up and host a basic website for free. Can’t get much cheaper than that. So if you have a new website you wish to get up and operating, Weebly could be your answer.

Plum Benefits or Working Advantage. Again, these are two I never  heard of. At the previous firm where I was an interim CFO, our bank provided similar services. These services offer employee discounts to events such as amusement parks, sporting events, and even movies. Per the Inc. article, “Sign up for free…and you will get a monthly e-mail with discounts for your employees.” What a great way to beef up your employee benefits at minimal cost!

That’s all for now. Again, check out the Inc. article, Best Business Bargains, for the other suggestions I didn’t cover here that offer additional tips to stretch your business budget.

Technorati Tags: bootstrapping entrepreneur, business bargains, craigslist, self-funded entrepreneur, stretch your business budget, weebly