Cash for Impact

A little something different:

Alton Brown is hilarious

Thanks for the guest post by Jo Levy

I love Alton Brown! I think part of it is because he went to the University of Georgia just like me but the other part is because he’s just so darn smart, it’s really interesting watching the man cook. He hosts a show called Good Eats on the Food Network which I love because they take one topic like, say, bread and show you how to do everything you ever need to do with bread. He talks about leavening and yeast and all that and shows you a few god basic recipes too which I find really helpful. He’s got this weird science component which is hilarious because he’ll interact with people dressed in costumes and huge cardboard cutouts and stuff- it makes it so my son who is only 6 will actually watch the show with me! Anyway, I know it’s silly because it’s just a cooking show and guys aren’t supposed to like those but I really enjoy it and would even say it might be my favorite show on my www.Direct.tV satellite.

Technorati Tags: Alton Brown, direct.tv, food network, satellite tv

Technorati Tags: mezzanine fund, Michigan, SBA, SBIC fund, small businesses

As a retail business owner, how do you acquire your customers’ information? Texting.ly is a mobile marketing application and service that lets you send text messages to your customers via the Internet. It enables you or a member of your team (such as a marketing rep, customer service associate, or an assistant) to communicate with your customers’ mobile phones via the web. It’s relatively easy to do. First, you set up a Texting.ly account. Then you select a keyword. Finally you promote your campaign.

Initially you don’t need to have your customers numbers. To entice your customers to provide you with their numbers (i.e., This is the promotional campaign), you place ads in local papers or magazines or hand out flyers or simply have a large flipboard advertising display. You’ve probably seen the ads but may not have paid them much attention. I recently went to the mall and signed up for alerts from a clothing store. What grabbed me? The advertising board display immediately outside and beside the entrance that said, “Want 20% of off your order today. Text XYZ to 12345.” Now I get alerts whenever the store is having a sale or other special offer. It’s pretty cool. I get the texts about 3-4x per month. That’s not bad at all. From the consumer viewpoint, such mobile marketing applications are definitely easy to use.

Through the promotional campaign you obtain the phone numbers of your customers. (You can’t text if you don’t have a number to text to. Duh!) There’s the answer to how you acquire your customers’ information.

Why is this important in a finance-oriented blog? One of the ways to finance your business is through operational cash flow. Operational cash flow is  generated through sales. One way to increase your sales is to acquire more customers. And one way to decrease your cost of sales and thus, increase your gross profit, is to reduce the costs of acquiring your customer. Mobile marketing applications like Texting.ly help you do just that. They help you gather your customer data then communicate with them. If you’re not sure what to do, you can always start with a survey. Who knows better what they want than your customer?

I’d love to hear your experience using Texting.ly or similar applications. Write and let me know.

Technorati Tags: acquire customer information, mobile marketing, mobile marketing application, Texting.ly

Get Motivated! Business Seminar is coming to Northeast Ohio. I believe this seminar travels around the country so check the website, www.getmotivated.com to see when it’s coming to a city and venue near you. I’m working on a project in Akron, Ohio so I’ll be attending the one in this area. Details are as follows:

Get Motivated! Business Seminar

Wednesday, May 11, 2011

8:00 am – 4:45 pm

Quicken Loans Arena

One Center Court

Cleveland, OH 44115

Again, the website is www.getmotivated.com.

Technorati Tags: business seminar, get motivated

As you know we’ve been snowed in here in Atlanta. I decided to use the time constructively and watch the new show on Bravo called “Tabitha’s Salon Takeover“. (Ok, I’m not sure how new it is but I just discovered it on Monday!) I watched 4 or 5 episodes. Bravo was having a bit of a Tabitha’s Salon Takeover marathon. (Are they trying to compete with those Law & Order marathons on A&E? I digress.)

I think the show is excellent. It provides a clear prescription Rx for ailing businesses. Tabitha, a stylist and successful salon owner herself, visits hair salons around the country taking one week per salon to effect a turnaround on the ailing salon business. Hair salons are selected from the numerous salon owners who write in and request her help. Tabitha essentially parachutes in (figuratively, not literally – since this IS reality tv, I must be clear), assesses the situation from all sides, recommends a course of action and implements. All in one week.

The issues obviously are specific to hair salons such as how to cut or frost hair. However, many of the issues apply to any retail business – cleanliness of the work environment, level of reception, customer service, etc. And a significant number of the problems apply to any ailing business: effective vs. ineffective management styles, employee training or lack thereof, low employee morale, poor follow through, insufficient IT support or antiquated software systems, etc.

On the show Tabitha follows a methodology. She conducts an assessment where she first observes the behavior of everyone in the salon from cameras the employees and owners don’t know are there. Next, she views portions of the tape with the owner and asks him/her/them what he/she/they think the issues are. She then introduces herself to the staff and holds a staff meeting the following day where she gets employees’ input on the issues at the salon. Sometimes the owner(s) and staff agree on the issues. Sometimes their opinions are highly divergent. Sound familiar?

I think Tabitha’s Salon Takeover shows business consulting at its best. Sometimes business owners need someone else to come in and assess problems and their causes. When a business encounters difficulties, small business owners often spend so much time down in the trenches they cannot elevate themselves up to see the forest for the trees. And again, sometimes the owner(s) is/are the problem.

Tabitha’s Salon Takeover states that it follows these steps: 1) Clean up management (notice this is first!); 2) Re-fresh staff. It also injects new life into the business with new customers 3) via a day spent doing marketing and PR. 4th: The show spends 2 days renovating/re-freshing the work environment. 5th: Tabitha focuses a great deal on providing great customer service.

I’m quite sure many others besides business owners watch this show. It has a lot of entertainment value. (How many entrepreneurs do you know who like to be told they’re doing things wrong or they are one of or the main problem? That right there makes for certain drama!) However, I think the show provides an EXCELLENT view of what goes wrong with businesses…and how to fix them and get back on track. And perhaps be even better.

So I highlyrecommend you check out Tabitha’s Salon Takeover. Even if your business is running smoothly, you’ll pick up a few helpful hints…if not for yourself, then for others.

Due to the Thanksgiving holiday, we are taking the remainder of the week off. Look for the next post on Monday, November 29. I hope you enjoy the holiday with your friends and family. Don’t eat too much! Happy Thanksgiving!

For those of you who seek angel financing, here is additional information to guide you in your pursuit. It’s not a how-to this time. It’s more of an explanation.

Angel financing is NOT your friends and family. Friends and family are who you approach BEFORE you pursue angel financing. However, angel investors can come from or through your attorney, banker, CPA, fellow business group member or other business associates you know.

Your friends and family aren’t as concerned about how your Buy-Sell Agreement is structured or about dilution of their shares. They typically want to help you and benefit in the process. You go to them sometimes before you even have your product or service market ready. They invest in YOU moreso than the company.

When you hear people speak of “Series A” or “Series C”, it refers to the stage of financing. Angels do care about dilution. They are investing in YOU and the product or service. (Note that the management team is the MOST important concern. A great management team can build a good company with a so/so idea or product but a mediocre team with a great idea or product will usually crash and burn.) An angel investor is taking a risk and want to make sure his/her level of return is commensurate with that risk. So a “Series A” is the first round of angel financing (i.e., not your funds or your family or friends’ funds). “Series B” will be the 2nd round of angel financing. By this time, you may have engaged venture capitalists. “Series C” is the 3rd round of financing, and this round is often venture capital or private equity, depending on the industry.

As each new round occurs, the equity is diluted. You may or may not have new investors in each round. Many angel investors, especially those with more sizable assets such as a fund or a group or a very wealthy individual, will inject additional funds into a venture that they like when they believe it is doing as well or better than they expected.

Keep in mind that if you need to raise hundreds of thousands of dollars and opt to pursue angel investors, you will need to give them a 30-50% return, depending on the stage of your company when you engage them. So you must intend to scale to a multi-million dollar company fairly rapidly. If you intend to raise millions, you obviously envision your company being worth $100 million or more sometime within the next 7-15 years. That’s the only way you could give the angels the returns they seek.

But don’t despair if you aren’t in either category. If you only need to raise $100,000, then you can provide an expected return with revenues in the $500,000 – $1 million range in the next few years, assuming 20% or higher net profit margins.

Many new businesses aren’t sure what they should charge for their goods and services. Sometimes existing businesses encounter similar problems when introducing new products or services that are distinctly different from their current offerings.

So what should you charge for your goods and services? How do you determine what is the best price? Before I go on, first let me state that it’s not necessary to get it right on from the beginning. Know that it’s not necessary to hit the right price from day one. Remember there is no such thing as perfection, so relax. Second, grossly undercharging for your services can be very dangerous. Undercharging is more dangerous than overcharging. It’s relatively easy to come down on price if you encounter a lot of resistance. You can give a customer a discount for buying in bulk, paying in advance, simply being a great customer. You get the point. But how do you say, “Oh, by the way, I need to add to that price.”? NOT! Won’t happen. When you do something like that, you drastically reduce your credibility with your customer. And this is the opposite of providing great customer service and ensuring customer satisfaction.

To help you decide what to charge, determine what your competitors are charging. Obtain a price list from their website or a distributor’s website. Or, if the price list is not readily available, pose as a customer and call and request one. If you feel this is dishonest or you have to provide too much information to obtain the pricing, then find competitors in other geographic areas and contact them. You will not be a threat to them since you are not competing directly. Who knows? You may end up with a potential partner or a company that you can refer business to when the customer is outside of your geographic area or area of expertise.

Sometimes business and trade associations have pricing information. Ask them. If you provide a product or service to the government, winning bids are public information. Go online and search by NAICS code and key words for your good or service. See what pricing was included in those bids.

The information provided above primarily pertains to business-to-business transactions. If you provide a consumer-focused good or service, the competitor information is readily available. Go out and look at the prices at stores that serve your demographic. Go online and do the same. Check out what’s selling and for what price on ebay.

Competitor research is key to setting pricing. Who cares what your cost structure is? Obviously, you do but the market should determine the price not what you need to break even. Determine the price from market data, then calculate how much you need to sell in order to break even. Then put a structure in place to go do just that.

I’ve been away for a while but now I’m back and intend to be more consistent than ever. What can I say? The summer months make me want to get outside and away from my computer. I am an energy conservationist so it also gets a bit warm here in the house during the day with just the fans whirling. The outdoors beckon. I’ve also been traveling. Spent some time vacationing in Boston, the Berkshires and Cape Cod. If it wasn’t for the snow and freezing cold weather, I may consider a move to Boston! Also pursuing and analyzing other opportunities has taken up some time. But I’m back! I like to write and also like helping other small and medium business owners find solutions to their finance and management issues. So, if you have a question, please send me an email at twright@tocafamily.com. Or simply post the question to the blog. If it’s appropriate, I’ll gladly address the issue in this blog.

In my next posting, I’ll provide some of the advice I gave to a start-up health food manufacturer regarding where and how to access expansion capital. The advice I gave them may just help you determine what you should do next.

I’ll write soon….

Small businesses (and larger businesses, too) are often looking for ways to save money. Sometimes the cash crunch can cause many entrepreneurs and business owners to stop thinking creatively about solutions to their cash flow problems. Issues weighing on the mind seem to cause one’s brain to freeze up and spend 90% of the time focusing on the issue and 10% on the solution. This, of course, can lead to frustration and desperation. So I’m here to help you think clearly about what to do to help your business find more cash flow for its day to day operations. (And thus mitigate your stress levels!)

If you own a business that has more than one location, determine how much income each location generates. If one or two locations generate 70-80% of your business, strongly consider closing the other locations. You will save the overhead costs for that location (rent, utilities, etc.). If you really believe you need that location despite not obtaining much business from it, consider establishing a mobile venue or partnering with another business that has a location near the one that you may close. You may be able to make use of their office on an occasional basis or rent a small area in their warehouse – whatever your company needs. Saving on overhead helps you convert more of your costs from fixed to variable. Variable costs are much easier to manage than fixed costs, especially when cash is tight.

If you keep inventory, make sure what is primarily stocked in your inventory is what is actually selling. Inventory takes up space that you can make better use of if there is no turnover of that inventory. Most products have a shelf life. Therefore, if portions of your inventory are not moving and the lack of movement is not due to poor marketing or selling on your part but due to a drastic drop in demand for those items, sell them at a deep discount to clear it out.