Tips To Ensure a Positive Cash Flow

One of the leading causes of business failure, particularly among small businesses, is poor cash flow planning.  It is imperative that a business have sufficient cash on hand to pay bills, meet emergencies and to invest back into the business to ensure growth.  Knowing that you will have lean months when sales are slow is an important aspect of planning in terms of putting money aside, but it isn’t the only thing you can do.  You can also:

1.         Aggressively collect accounts receivable.  If you have a customer who has not paid on time, you need to follow up and secure payment.   The longer you wait, the more difficult it will be to collect.  In fact, studies have shown that after 90 days, the chances of collecting an account drops to 72%, down from 94% after 30 days.

2.         Periodically review your pricing.  Ask yourself if you are charging too little or too much.  Research your competitors.  Do you offer more value?  A customer will pay any price for a product/service as long as they are convinced that they are receiving value. 

3.         Establish a line of credit.  Approach your bank and see if you can establish a line of credit to be used during times of emergency.  In the long run, a line of credit with a bank is a lot cheaper than credit cards should you find yourself in a cash crunch.

4.         Increase sales.  Sure, it’s always easier said than done, but it can be done.

5.         Open an interest bearing account and deposit daily.  Sweep accounts and interest bearing checking accounts may not produce a high yield, but 2 or 3 percent interest is better than nothing.

6.         Renegotiate your lease.  Most leases come up for renewal on an annual basis.  Approach your landlord with the idea of temporarily lowering rent payments during months when business is slow.  If vacancies are high in your area, your landlord may prefer a reduced rent payment to no rent payment.

7.         Hire more part-timers.  If you need support staff, consider hiring part-timers.  Unlike full-timers, you are not required to pay benefits, and they are generally more flexible in their work schedule hours.  Additionally, if you need to lay off staff in slow months, it is a lot easier to lay off a part-timer in comparison to a full-timer with benefits.

8.         Don’t overpay on quarterly taxes.  If you think your income will drop this year, do not pay taxes based on last year’s numbers.  Work with your accountant to ensure you have an accurate estimate.  If you’ve already overpaid on your quarterlies, ask for a quick refund (IRS Forms 4466 and 1138).

9.         Read the fine print in your equipment leasing contracts.  Get an option to cancel written into your equipment leases that allow for cancellation due to closure.  Don’t get suckered into contracts with an evergreen clause.  These are clauses that allow a contract to continue unless you give 30 day notice.  These are difficult to cancel and the expiration date is hard to track.

10.       Brainstorm with staff.  Your staff may have great suggestions for cutting additional expenses.  At your next staff meeting, ask for their input and ideas. 

When a Business Makes a Grand Exit

How many times have you heard the words, “do you have a plan?”  Regardless if you are just starting out or have been in business for a while, chances are someone has asked you this question.  Knowing how important a business plan is to success, you probably already have one in place that you revisit periodically.  But, do you have a plan for that day when you leave your business?

You’re first reaction is probably something along the lines of, “that won’t come anytime soon.”  It’s a typical reaction, but not necessarily realistic.  Why, you may ask?  Because we aren’t necessarily talking about retirement here; we’re talking about having to leave because of often uncontrollable factors such as dissolution of a partnership, a divorce, long-term disability or even death.  These events aren’t things that we expect or plan to happen, but often do, and when they do, it often throws not just our personal lives in disorder, but the life of our business as well.

Common sense dictates that if you had a plan when you started your business, having one to end your business in just a wise decision on the part of any business owner wanting to ensure that the legacy of their business.  Having an exit strategy accomplishes several important things.  First, it minimizes any hassles and heartache that a business in transition may occur when it looses its owner.  Secondly, it protects your personal interests.  Finally, it allows you to make difficult decisions and explore a variety of options while still calm and rational and not suffering under the influence of the event that is facilitating your departure.

There are a variety of ways in which you can exit a business; which one you choose depends largely on what fits with your goals.  Ask yourself if you are interested in: 

• Retiring?
• Starting a new business or venture? 
• Building and selling your business for a sizeable profit?
• Passing the business on to a younger family member?

Once you’ve decided on your goals, you’ll be able to select a method of exit.  Possible forms of exit include:

• Selling a portion or all of your business.
• Passing it to a family member in such a way as to minimize estate taxes.
• Selling it to an Employee Stock Ownership Plan (ESOP).
• Going Public.
• Liquidating.

When preparing your exit strategy, you’ll need to figure out how much your business is worth.  A professional business appraiser or attorney may be able to help you come up with a number.  Also determine upfront what each stockholder is to receive and draft a legal document that outlines the split.  Furthermore, be sure that you have a clear line drawn between what constitutes your personal assets and your business assets.  This is sometimes difficult, but extremely important, depending on how you structured the business.  Again, seek professional guidance for what works best for you.

When all is said and done, you’ll find that an exit strategy actually provides you with greater freedom to make decisions about your business and your personal goals.  They are an excellent planning tool for any business.

Identifying Opportunities

“Success always comes when preparation meets opportunity”
~Henry Hartman

Change happens.  It’s a given, particularly in business.  If its not your market, it’s your customers’ needs and preferences, or the technology and equipment you use, or your sales channels, or the way you deliver your products/services.  It can sometimes prove to be scary when potential threats materialize, but also rewarding when new opportunities present themselves.  Therefore, it is always important to periodically step back and evaluate your business to ensure that you are addressing those threats, but also grabbing those opportunities.

Identifying potential opportunities can sometimes prove difficult.  Occasionally, we are also too late in seizing an opportunity before its time has past.  One way you can ensure that you are spotting opportunities as they arise is to follow trends that will affect your business. Try to identify the trends that are affecting your business now, and over the next 12 months.

Other ways to identify opportunity include:

Evaluating your existing customers to attract new customers.  Do you know why your customers choose to buy your services and/or products?  Have you historically used more than one method for attracting and securing those customers?  If so, take a look at the different ways used and see if one has proven more successful than others and attempt to duplicate it to attract new customers.

Hold on to your existing customers.  Explore opportunities that will generate or increase a higher level of sales among your repeat customers. You might consider offering new products, or versions of products, or upgrades of your existing service.

Expand your current customer base.  Are there customer groups that you do not sell to currently, but who you believe would benefit from your products/services?  Make a lit of the characteristics that made this group distinctive, for example their age, gender, race, occupation, income, hobbies, membership of clubs and associations, etc. Then, identify the benefits that your products or services could provide to these individuals. 

Using your uniqueness.  Its difficult to take advantage of your opportunities if you offer the same products/services at the same prices and in the same way that your competitors do. There must be something about your business, products, or the way that you market your service that sets you apart.  Identify what that is and learn to use that uniqueness to your advantage.

Pursue partnership opportunities.  Often, working with another business that offers complementary services or products to your own can prove both beneficial and profitable.  By partnering with others, you can open the doors to opportunities for your business that you may otherwise be unable to develop due to a lack of resources or money.  These “piggyback” style marketing relationships are becoming increasingly more popular, and can help businesses develop opportunities more quickly.

Discovering Your Target Market

Target market is a phrase that is thrown around frequently.  In simple terms, it is a segment of the market that is the strategic focus of your business.  Being able to effectively identify who is part of your target market is important if you are developing a marketing strategy and campaign and you want it to be successful. 

Prior to creating your marketing plan, you need to be able to answer two essential questions: (1) what is your target market and (2) what does your target market want and/or need that you can provide?  If you are able to answer both these questions in great detail, then you can begin drafting your marketing plan.  If you have doubts or lack the details, you need to back up and do a little homework.

Who Is My Customer?

You need to recognize who your customer is because the objective of your marketing efforts is to concentrate on those customers most likely to buy your products and services.  Therefore, you need to start by describing exactly who your customer is.  Are there certain characteristics that your target market shares?  Do they fall into a particular age category?  Gender?  Socio-economic class?  Occupation?  Do you know which customers spend the most time and money with you?  Why do they do that?

Be Precise

When creating your prospective list of customers, you need to be as precise as possible.  Make sure that you are able to identify them in specific demographic or geographic terms.  If you can’t, you will have a hard time in determining which channels will be the most effective in reaching them, i.e. television, radio, internet, newspaper, etc.

Give Them What They Want

This is often a difficult area.  We think we know what our customers want, but unfortunately we often fail at finding out what they really want and/or need.  You need to be able to give them exactly what they want or need in a convenient and affordable way if you expect them to buy what you are selling.

Quality versus Quantity

More is not always better when it comes to developing prospects.  Buying leads lists is one prime example of this.  If you haven’t taken the time to truly identify who your customer is, buying expensive marketing lists are often a major waste of money.  Most of these lists are outdated to begin with and are typically only as good as the information you put into them when generating.  Having a quality list of leads increases your ability to convert them into sales tenfold.  So, shift your thinking from quantity and focus on the quality angle of building your list.

Use a Sounding Board

Finally, before running with that marketing plan you’ve created, test it out.  One of the most common mistakes made is failing to test out your assumptions on a sampling of your target market.  By taking a little extra time to conduct a survey or questionnaire of a small portion of your target market, you can avoid wasting your time and money.  It may take a little longer to kick off your campaign, but it will be well worth it in the long run.

Time Management Re-assessment

If you have tuned in long enough you should have come to the realization that managing your time is extremely important.  In fact, it is among the top 5 reasons a small business owners make it or bust.  So if you haven’t gasped the concept as of yet, it is time; time management is a big deal!  With that said let us assume that you have created a plan to manage your time.  That you have times allotted each week to train clients, marketing, relationship development, and business affairs (ie accounting, payroll, bill paying, etc).

What happens when you add another client?  Take on a new project? Or an unforeseen event pops up?  Have you developed the skills and commitment necessary to adjust to such situations? Obviously the addition of a new client is a good thing, taking on a new project can be seen as a good thing and certainly there are unforeseen events that are good things.  So, the question becomes how can you fit the new events into the plan?  It is because of reasons previously listed and other that you need to re assess the time management plan.

Here is how I approach the re assessment component of the time management plan.

1. The last week of the preceding month I take some time to evaluate my progress and prepare for the following month based on a couple of factors.  What did I and didn’t I get accomplished in the current month. What do I need to accomplish for the upcoming month.  When I am developing the plan I am using the template of the previous month to set things up. 
2. Once I have the basics set up then I re-assess my progress on a week to week basis.  Generally speaking I evaluate the week’s production on Friday before the end of the work week.  Then on Sunday morning I make the any needed adjustments to the upcoming weeks schedule.
   
3. Finally on a daily basis I am fine tuning the schedule.  Each day I have a to do list of what needs to be accomplished.  The list is broken down into 3 or 4 categories depending on the day.  For example: clients, marketing, follow up, business development.  99% of the time everything business related I can fit into the 4 listed categories.

It is important that you adhere to a the schedule and avoid situations when possible that get you off track.  There are obvious situations that will pull you in another direction such as; a child getting sick or hurt, a pet getting sick or hurt. Having the plan in place will help you quickly get back on track when those types of situations arise.  However, for the other situations that may arise you need to ask yourself, is this important enough to derail me from the goals and objectives I have set for myself?

Think of the time management plan in terms of a plan you have created for a client to achieve their results.  The effectiveness of the plan you have created will be dependent upon the client’s ability to adhere to the plan.  When you notice there are struggles you tweak the plan to keep the client on track. You become an excuse eliminator. You need to maintain the same mentality when it comes to your business and time management plan.  The better you can adhere to the plan the more productive and effective you will become.  The more productive and effective you become the more time you will have to enjoy your life.  Remember your business should support your life.

Mind Set

Through my years of experience as a coach, trainer, athlete, and parent I have dealt with the issue of mind set on a daily basis.  My journey on the path to improving my own mindset came approximately 13 years ago when I went through a tough personal decision.  The decisions that followed lead me to down a path of self doubt, low self esteem, and questioning life as I knew it.  I have never been one to sit around and sulk for long periods of time but found myself with out motivation and direction for the first time in my life.   Something had to change.  I started by going to the library and meandering through the isles of books.  One book jumped out at me:  NO EXCUSES!

This book started me down a path of understanding the importance of cultivating a positive mindset.  I mention cultivating because it is truly an on going effort.  You can never get away from continuing to seek out ways to maintain and improve the mindset.   We are all prone to moments where we give into the dark side.  Moments where we are far more; negative in our thoughts, spiteful in our actions, or just down right rude. Cultivating a positive mindset will help us better identify the moments that are pushing us over to the dark side and permit us to take corrective actions or in the case you are on the dark side to recognize the destructive nature and take the appropriate actions to return to a positive mind set.

Since my digesting of the information presented in the book NO EXCUSES! I have been enlighten through may additional resource such as Think and Grow Rich, The E-myth, The Laws of Success, How to Win Friends and Influence People, If you don’t’ know where your going how will you know when you get there, and many others.

 

Here is what I have learned:

• Don’t ignore issues.  When you ignore issues they begin to eat at you and the more you ignore or procrastinate the less likely you are willing to deal with the issue as time passes you just hope it goes way.  The truth is, it isn’t just going to go away.  It will come back to haunt you.  So dealing with issues or at least addressing issues in a timely fashion will save you.
• Have Direction.  Know what it is that you want to accomplish.  What do you intend to accomplish as a result of your career?  What do you intend to accomplish this year? Month? Week? Day?
• Have a Plan.  This goes hand in hand with direction.  The plan provides the means to stay on course and headed in the desired direction.
• Read something Positive everyday.  Take 30-60 mins each day.  Preferable before you go to be to read something positive.  I have personally found that when I consistently do this that my creativity increases and I am more keenly aware of the opportunity that surrounds me.
• Partake in an active outside of your career.  You need a break from the day to day functions of the job.  Taking time to pursue hobbies or other outside interests serve as a means to recharge your mental batteries.
• Listen More and Speak Less.
• Challenge Yourself.  Try something new, don’t get comfortable, push the envelop and step outside of your comfort zone.
• Spend time with others who are successful.
• Be humble.  Admit when you have made a mistake and own your actions
• Most importantly take time to enjoy life

EXECUTION

The word execution can conjure up a wide variety of thoughts. Today I leave you with two:

• If you can not create a plan to carry out your goals then you will have literally sent you business to the executioner.
• If you can create a plan to carry out your goals then you will have put your but business on the path to success.

I’m sure the vast majority of use would prefer to create a plan that allows us to meet our goals. So with that in mind let me speak to the masses.

If you are interest in gaining 100 new clients over the course of 1 year you would need to do the following:

• Speak with 1,000 prospective clients (this is based on the previous article “NUMBERS”) over the course of 12 months
• That’s 20 prospects per week (I gave you two weeks off for good behavior)
• That’s 4 prospects per day (for an a five day work week)

Do you think you could speak to 4 new prospects each day if you knew it was going to allow you to reach your goal?

Great here’s what you do:

• Take out a sheet of paper
• Create the following columns:
• Name
• Email
• Phone #
• Area of Interest
•  For each day of the week (Monday-Friday) write the numbers 1-4 on the left.

Set a goal right now to meet 4 new prospects everyday.

 I have one more thing to leave you with, did you know if you could grow your business by 10% each month over a 12 month time period you will more than doubled your current business. No joke! Do the math!

Standing Out in the Crowd

Standing out in a crowd may not be the goal of most individuals, but in the realm of business, it is the goal. The ability to make your business stand out amongst a sea of competitors can often prove frustrating. However, if you truly want your business to survive and thrive you need to be able to articulate what makes your business unique to potential customers. How do you do that?

There is a variety of ways to differentiate your business. Here are just a few suggestions to explore:

Start by looking at your products and services. Do you offer a unique product or service that your competitors do not? Differentiating yourself in the fitness industry can sometimes prove challenging, given the multitude of approaches and products out there, but it is definitely not impossible. Also, think in terms of the experience you bring, or any areas you may specialize in that others may not.
Carve Out a Niche. We can’t be all things to all people, and trying to, can often sink a business. If you are especially successful in working with one or two particular client segments, and have generated great results, then think about specializing in those areas with that client demographic. Often, you can create your own niche by looking for holes in the products and/or service offerings of your competition. Have they failed to address a specific problem? If they have, find the solution and then use your competition to point out the differences.

Make an offer they can’t refuse. Another great way to differentiate yourself is to put out an offer that may garner you a little notoriety. For example, offer a money-back guarantee or the first month of membership free. While making an offer customers can’t refuse is a great way to differentiate yourself, be sure that you deliver what you promise. If not, this unique approach will prove useless and could irreparably harm your good reputation.
Offer outstanding customer service. The fitness industry is a very customer-service oriented industry, but unfortunately, many businesses often overlook this important selling feature. Outstanding customer services – the kind where you go above and beyond for your clients – will generally provide the best word of mouth advertising you will ever encounter. If you can give your customers more than you promise, more than they expect, then you definitely have a unique way of standing out from your competitors.

Once you have pinpointed what makes you stand out from the crowd, you will need to communicate that difference to your customers. Be sure to that all of your advertising and promotion efforts clearly communicate this to your intended audience, and more importantly, be sure that you remain consistent and committed to that message. Keep in mind that you are building a brand, and it will take time. If you wonder off point or head in another direction, thinking the approach isn’t working, when all it needed was time, you may potentially harm your business.