SIX WAYS TO IMPROVE YOUR COMPANY'S CASH FLOW (Source: www.msn.co.uk)

One of the challenges of running a small business is dealing with the feast-or-famine nature. I'm talking not just about the flow of business, but also the flow of cash into and out of business. Here are six ideas for improving your small business' cash flow:

1. Bill promptly.

Ever find yourself so busy building your business and making deadlines that you don't get around to billing on a regular basis? You're not alone. One contractor I know sometimes neglects to send out bills for small home-repair jobs until he approaches the deadline for employer tax payments and realizes he doesn't have the cash to cover the payments due. If you don't already have a system in place, start (or assign an employee to start) billing on a regular basis. When taking on longer-term projects or clients, negotiate in advance for regular payments instead of allowing the amount due to build up until completion of a contract.

2. Create Incentives for faster payment to you.

Small business can sometimes significantly cut the time spent waiting for payment by offering a discount for quick payment. I've received bills from businesses offering discounts of 1% or 2% for payment within 10 days. If I was going to pay the bill within 30 days anyway, I'm likely to fire out a cheque right away to get that little extra discount. Good for my bottom line; good for the business' cash flow, too.

3. Avoid slow pay/no pay customers from the start.

The best way to avoid cash-flow problems because of customers or businesses not paying you is to weed those slow pays/no pays out before they become clients.

So, if someone is about to become a significant client or customer, do your homework. Ask for and check-out credit references. Call other businesses that have had a relationship with the client.

4. Use barter instead of cash.

You could reduce the strain on your immediate cash if you need goods or services from someone and can barter goods or services of your own in return. Note: This is not a way of cutting any tax bills- you're still required to report the value of the barter transaction on your tax return.

5. Trim your inventory.

OK, so you can't go to a "just-in-time" inventory management systems like many manufacturers have adopted. How about "just-in-less-time"? Money spent on inventory is money that isn't producing any interest or savings for you. Sometimes reducing inventory can be pretty simple. I've seen restaurants cut back on the size of their wine cellars, focusing on quality wines from a few regions instead of trying to be all things to all diners. If the customer still has good choices, it may not even matter that he has fewer choices than before.

6. Consider consolidating your loans.

I know it's often tough for small businesses to borrow money. But I'm surprised at the number of ways entrepreneurs do manage to borrow. One small business owner I know has only one employee, but has four different loans related to his business: an equipment loan, a car loan, a business line of credit and a business credit card.

If you also have several loans related to your business, review the rates and terms on each one. You may be able to consolidate two or more loans into a lower-interest account and improve your cash flow. I'm generally not a fan of stretching out loan payments, but if you're thinking of talking to a lender about consolidating existing loans into a new loan, you might look at taking on a longer-term loan in exchange for lower monthly payments.

COMMON SALES MISTAKES AND HOW TO AVOID THEM ...By Stephan Schiffman

Ask any successful salesman he will tell you that selling can be fulfiling, while to another selling is uninteresting and draining. The results they have commanded in sales must have formed the basis of their judgement. There are pitfalls in sales that must be avoided in order to see satisfactory results. Stephan Schiffman exposed the most common sales mistakes and how to avoid them:

1. Not being obsessed.

Maintain a commitment to work that encourages you to utilise everything at your disposal to get results. It is however important that you also love what you do enough to practice your obsession with discipline.

2. Not listening to the prospect.

Make your sales objective one targeted at helping the prospect to solve their unique set of problems and concerns. You must let the prospect speak about himself or herself and the information you receive as a result is invaluable.

3. Not empathizing with the prospect.

Make an effort to see things from the prospect's point of view. This will help you understand their problems and enable you make a better sale.

4. Seeing the prospect as an adversary.

See your prospect as a partner. You should strive to get the two of you working together to attain your goals and his goals. The prospect is not someone you have to outwit or outsmart. The best selling arises from win-win situation; you win if and only if the prospect wins.

5. Getting Distracted.

Giving the prospect all your attention will earn you his undivided attention. When you get distracted during a sale, you distract your prospect and thus throw the whole meeting into disarray thereby destroying the possibility of building an atmosphere of trust.

6. Not taking Notes.

Taking notes send a signal to the prospect that you are there to learn about their needs and this encourages them to volunteer information. It not only helps you keep the prospect's needs in mind, it also improves your presentation in the sense that it shows that you are professional, organised and in control.

7. Failing to follow up.

Keep your contact fresh by making minimal investment of time and care to assemble a short thank you note. A neat, courteous and professional follow-up letter keeps your line taut just as a brief typed note serves as a tactful, professional reminder that can reinforce the positive points of your visit. Treating current and prospective customers like professionals worthy of respect is always good business.

8. Not keeping in contact with past clients.

Help clients to keep you in mind. If they have used your product or service before, they are likely to come to a point where they will need it again and are in a position to refer you so, just keep in touch, one professional to another in a way that is not intrusive or unprofessional.

9. Not planning the day efficiently.

You must be seriously dedicated to getting the most out of your day and planning ahead on a daily basis goes a long way in achieving this. Your success or failure in committing yourself to a daily schedule will have an impact on your overall performance as a sales person.

10. Not looking your best.

Prospects remember people who walk in the door looking sharp, they make instant positive impression and win the respect of their clients in those first few seconds that happen to be very critical.

11. Not taking the prospect's point of view.

A prospect is more interested in the benefit of your product or service than its features. Isolate how your product or service helps people and its tangible advantages over the competition, so you can apply it to the prospect's needs.

12. Not taking Pride in your work.

If you do not take pride your product or service, and the organisation behind it, you will not be successful. You should be enthusiatic about what you do.

13. Trying to convince, rather than convey.

You have an objective of conveying value and benefit rather than convincing your client. You are not there to change his mind or convince him but to convey to him why and how you can help solve his problems.

14. Underestimating the prospect's intelligence.

You know so much about your product but lack information about the problems of your prospect. Since you are there to solve his problems, the knowledge he has is of great value to you too.

15. Not keeping up to date.

Knowledge is power. Making an effort to understand what is going on in their industry will help you gain a broader outlook to the whole environment. You know that if your customers do well, you will also do well. Keep your eyes and ears open.

16. Rushing the sale.

Let the sales progress gradually. You should not expect to deliver the first order on your first sales appointment.

17. Not using people proof.

Being able to cite another business in the same industry that has had success with your product or service reinforces positive inclinations toward your company.

18. Being Fooled by "Sure Things"

A little enthusiasm is healthy but you cannot afford to spend hours day dreaming about the big sale. No matter how good things are on the horizon, daydreaming can lead you to complacency and on to outright self deception where you make a big deal of potential sales that are not even promising.

19. Taking Rejection Personal.

You must learn that rejection is not a personal affront or a reflection on you, your product or your company but a part of the overall cycle inherent in any day's work.

20. Underestimating the importance of prospecting.

A solid commitment to prospecting which is a crucial stage in the development of new customers is one habit that is very likely to ensure sales success. Learn to always keep something in the pipeline.

21. Not showing competitive spirit.

You are in a competitive market and your victory lies in gaining and keeping satisfied

EXPLORING THE VIRTUES OF ‘CO-OPERATION’ IN THE WORKPLACE

Business leaders of even large organizations today talk co-operation but promote and encourage competition through their leadership style, body language and reward system. Over the years, business organizations have been made to believe that competition within the organization and among the employees is a good omen for business development.  A situation where one manager/employee’s success meant the failure of others is typical of competition. This flaw in paradigm is responsible for many invisible problems in the workplace today. I am not saying everything is wrong with competition; it has its own specific time and place if it is healthy.

In the words of Stephen.R.Covey, author of The 7 Habits of Highly Effective People, ‘Interdependence is a higher value than Independence’. This statement displaces competition for co-operation (Collaboration) in the effective running of a business enterprise. The concept of competition adopted within a business organization has done more harm to businesses than good. It has ended up pitching many leaders against their peers in their own organization in a way that hurt the team and cast a shadow on the realization of the business’ corporate vision. Some individuals have already been scripted in the win/loose mentality from birth, when one child is being compared to the other and love and understanding is given or withdrawn on the basis of such comparison. When such individuals come into an organization where competition is celebrated they become a die-hard promoter of it both consciously and unconsciously.

The bane of effective interpersonal communication and building a great winning team is competition. Competition explains why an individual will put his interest first in a team ahead of that of the organization. It is what engenders strive among professional colleagues. It promotes single and limited thinking (My good Ideas) as against corporate (Shared) thinking through brainstorming. It excludes others. Competition can destroy the hope of an organization realizing its corporate vision, as individualism can never achieve what is called corporate.

A higher and more desirable value for effective organizational operation today is Co-operation (Collaboration). Co-operation which can also be referred to as a win/win mindset, constantly seeks mutual benefits in all human interactions. Co-operation in a business organization creates a platform where team members feel good about decisions and feel committed to the action plan. The co-operation/collaboration paradigm views life as a co-operative, and not a competitive arena. The co-operation strategy when promoted in an organization will help every team member understand that the success of one person is not achieved at the expense or exclusion of the success of others.

Exploring the value of co-operation/collaboration for organizational success focuses on producing personal and organizational excellence in an entirely different way by developing information and reward systems which reinforced the value of co-operation. Rather than spur co-workers to compete with themselves in the same organization, co-operation breeds an atmosphere of trust required to effectively synergize different talents and skills to advance business goals.

Innovation thrives more on collaboration. Gone are the days when we used to think great ideas can only pop-up in some super individuals’ heads. All across the globe today, innovation comes alive and runs faster on the wheel of collaboration. Promoting co-operation in your organization will facilitate a win-win mindset among your people. Each one begins to think how the team wins, the teams think how the organization wins and the organization ensures that its people win in turn.

Developing a culture of co-operation in a business organization will enhance the focus of such organization to strive for or maintain an enviable leadership position in its industry. All internal forces and resources are easily marshaled to combat the uncontrollable external competition and threats.

The bottom line is this, the success of the whole organization is more important than any individual wins and relevance. Mind you, individuals are brought into the organization to help accomplish its vision, so nothing will help better than the co-operation strategy, a-joint-lifting of the organization to its dreamland.

3 POSSIBLE WAYS TO DO BUSINESS.

One of the earliest decisions you’ll have to make as a new entrepreneur is the legal one of deciding whether you want your business to be a sole proprietorship, partnership, or corporation.

If you are going to take the family lawn and go into the grass-cutting business, you don’t have to do anything. The mere act of getting paid for looking after your neighbor’s grass makes you a Sole proprietor. The advantage is that you are your own boss, and if the business turns into another General Motors, you own it all. The disadvantage is that you are all on your own (O.Y.O). You don’t have any partners to help capitalize the venture, scheme and plot with you about it, help you turn it into a success, and be right there beside you in good and bad times. As a sole proprietor you are also personally liable for all debts, and if you cut off a customer’s big toe while trimming his greenery, you can get sued for everything you’ve got.

As a sole proprietor you can do business under your own name (For Instance, Jonathan Services), but if you want to use an assumed name, such as Unbeatable Service, you’ll have to file a ‘’doing business’’ certificate with the appropriate authorities in your country.

 If you feel you’d like someone to share the load with you in starting up a business, you think about a Partnership. Under this arrangement, you and your partners are personally liable for the firm’s debts or for judgments if it is sued, but the responsibility for actually running the business can be divided anyway the partners wish. It’s asking for trouble if you don’t have a signed contract with your partners, one that spells out everything you’ve agreed on, from who puts how much in the venture, to who does what, to how the profits and losses will be divided .

If you are still not at ease with the unlimited-liability (Unlimited liability means that your liability is not limited to what you put into the business, it could affect your personal effects in case of a big loss) associated with sole proprietorship or general partnership, then you have an opportunity of incorporating. You could try protecting yourself by purchasing a liability insurance policy to reimburse you if you are held financially responsible for your business’s transgressions-but not its unpaid bills. You might even be able to get a general partnership to invite you in as a silent limited partner, which protects you against everything but losing your investment.

But the safest way to avoid being impoverished by your business going belly-up is to incorporate. This way if things turn sour, all you lose is what you’ve sunk into the business. You home, car, and other personal assets cannot be touched by your company’s creditors, or by those who hold judgment against you. One way your private property can be seized is if you’ve agreed to be personally liable for your company’s debts, something most banks will insist upon if you are just starting in business and ask for a loan.

  As you get closer to starting a business of your own, the fear of being isolated and lonely may begin worrying you, as it has so many others. A good way to quickly allay this fear is to join a support group of other business people in your community where you can find people of like minds. Such association will help in no small measure in getting you through this cradle stage of your business.

7 CRITICAL SKILLS FOR SUCCESS IN THE 21ST CENTURY.

 

Every age is marked with its distinctive features. Some decades ago it was the industrial age where manpower was required to accomplish most business tasks. The situation is however, different today-the Information age where Mind power is required more than Manpower to deliver results.  The huge opportunities available to mankind in this 21^st century were never in place decades ago. The uniqueness of these opportunities is defined by the myriads of problems enclosing them. Exploring these challenges for our benefits require some critical skill sets.

Contrary to believe in some quarters, great rewards still abound in this age! It’s only that they are received by individuals who can marshal relevant critical skills to deliver effective business solutions in real time. The success model I developed for this century is R=f (S_p).

Where:

 R=Reward, S_p=Problems’ solution. The reward you get is a function of the problem you solve. The 21^st century like no other is about result. This clearly explains why organizations tie compensation to performance.  Let’s take a look at a number of these skills:

EFFECTIVE COMMUNICATION SKILLS: There has never been need for effective communication in business and leadership more than today. Communication becomes effective if you are able to get your message across, sending the right signals that you’re saying what you mean and that you mean what you say. Understanding the point you are making should not take special effort on the part of the person you’re talking to. The heart of effective communication in this century is LISTENING. Listening skill is such a critical skill that can facilitate smooth and effective communication. Excellent listening skill entails listening with empathy—seeking to clearly understand what’s being said per time before speaking. This is clearly a shift in paradigm from what it used to be when people ‘listen’ just for the sake of giving a response and not to understand. What makes communication effective is not just speaking but deep listening. This skill is learnable.

INTRA AND INTERPERSONAL SKILLS: Deals with what meaning you attach to situations and circumstances around you. One rule for good intra and interpersonal skills is ‘Never you underestimate anyone’. The way you relate with others will determine how they respond to you. Treating everyone with utmost kindness is a critical skill require for success in this century. Anyone with good set of values can be outstanding in intra and interpersonal relationship.

EMOTIONAL INTELLIGENCE: Do you know that 80% of why you succeed is attached to your emotion. In the face of constant rush and hustle that characterizes today’s business environment, you should be able to hush yourself and analyse situation before taking decision. The major keys to unlocking emotional intelligence include: Self-Awareness, Self-regulation, Motivation, Empathy and Social skills. Success in this 21^st century demands a high score in emotional intelligence (EQ).

NEGOTIATION SKILLS: Life does not give you what you want; it only surrenders to you what you negotiate. Life in its entirety is about negotiation. You can negotiate your way to success. The key ingredients required for developing this vital skill include:

Power- Assess the power to close the deal.

Information-Arm yourself with the right set of information.

Time- Have the time to negotiate. Negotiation is not best done in a hurry.

FINANCIAL INTELLIGENCE: This is premised on three major factors---

·         Your ability to know that money can work for you and not you working for money.

·         Your ability to reduce cost and take calculated risks in investment.

·         Your understanding of the Value of money.

EXECUTIVE INTELLIGENCE: This simply connotes common sense and not any special type of skill. The truth is everyone can deploy common sense at will but not all of us do so. Executive intelligence zooms in on your ability to analyse situation properly in a bid to finding appropriate solution. Here are four key ingredients of executive intelligence:

·         How you accomplish a task;

·         Working with and through people;

·         Judging Oneself;

·         Your ability to adapt to situations accordingly.

NETWORKING SKILL: Networking has suddenly become an essential skill required for success in this age and time. Some often say ‘’your net worth is a function of your network’’. This saying validates the importance of networking skill in this century. I once learnt from a network marketing expert that the distance between any one and the president of U.S or the President of your country is 6 persons away. In other words, network with 6 persons and you might have access to the President of your country.

 

EARN MORE WHILE YOU WORK LESS

There is a saying in the corporate world: ‘’don’t make yourself irreplaceable. If you can’t be replaced, you can’t be promoted’’. As an entrepreneur, this is still true. Let’s think of ‘’ being promoted’’ as earning more and working less. You can raise your prices, but until you can remove yourself from being directly involved in doing the work that generates the income, there’s always going to be a limit to how much you can earn, and it can only increase very slowly.

Passive income on the other hand, is the income that does not require your direct involvement. Some kind of passive income you may be familiar with include: Owning rental property, royalties on an invention or creative work, and network marketing. If you want to earn more, work less, and have a decent retirement, you have to start creating income streams that do not require direct involvement. Whether you’re just starting your business or you’ve been running it for a while, the sooner you start thinking about how you’re going to shift your business model to create more passive income, the sooner you can achieve personal financial freedom. Let’s look at two basic types of passive income, and a third type of income that, while technically not passive, is a key strategy for earning more and working less.

RESIDUAL INCOME

Residual Income is revenue that occurs over time from work done one time. Some examples include: An insurance agent who gets commission every year when a customer renews his policy; a network marketer’s income or direct sales rep’s income from her direct customers when they reorder product every month, An aerobics instructor who  produces a video and sells it at the gyms where she teaches; A marketing consultant who creates a workbook and sells it in e-book format on the internet, A photographer who makes his photos available through stock photography clearing house and gets paid a royalty  whenever someone buys one of his images; A restaurant or retail owner who has grown to the point of hiring a trust worthy manager. As you can see, there are many different ways to generate residual income across a wide variety of businesses. It may be recurring income from the same customer or the sales of a product to new customers. It may require no personal involvement whatsoever, such as an e-book sold on a website, or it may require some personal interaction such as the insurance agent calling the customers to remind them about their renewal and ask them if they want to change any of their coverage. Often, it’s something that you can delegate to an assistant. Note that this is different from merely recurring income. Recurring income may still require your involvement to earn the income, e.g., a coach or consultant on a monthly retainer, or a caterer who delivers lunch every Monday to the local school board. While this ‘’Active recurring income’’ offers welcome stability, it also tends to tie you down, and you still have limit on your earning capacity based on your own personal production capacity.

LEVERAGED INCOME

Leverage income leverages the works of other people to create income for you. Some examples of leveraged income include: An e-book author selling his book through affiliates who promote the product; A network marketer who builds a downline and receives commissions on the sales made by people in his downline; A general contractor who makes a profit-margin on the work done by sub-contractors, Franchising your business model to other entrepreneurs (the ultimate leveraged income). Again, there are many different models in many different businesses. The key is that you are making money off other people’s labour rather than primarily your own. Note that leveraged income may or may not also be residual income. When you combine both, that’s better.

ACTIVE LEVERAGED INCOME

This is a term I use to describe income that requires your direct participation, but that you can make more money by having more people involved. This generally involves a one-time event, such as: A seminar or class; a conference or convention; concerts and dance recitals; raves and other parties. Although these require your direct participation, your earning potential is much higher than if someone were just paying you a direct hourly rate. Fill a room with 1,000 people paying you $5,000 each and you can cover your facility cost, promotional cost, and staffing fees and still have a nice chunk of change left over.

APPLYING IT

Now is the time to think about how to apply this in your business. Can you create a product that people will buy over and over again? Can you engage others to sell your product? How could you make money off the works of others?

                            This article is culled from The Guardian’s Executive Brief.