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Cycles

September 24, 2013 by

Cycles

The Equinox ceremony is over and fall is upon us. All businesses have cycles and being clear about the cycles of your business is important in how you plan and deal with said cycles. All industries have cycles and I would be surprised if you found that your business in not affected by these ever changing cycles.

So the ups and downs of cash flow can often be related to industry cycles even if remotely. So step back and look at your cash flow and see if some cycle is at play as part of your challenge. If you find some indications that indeed a cycle is at play then what can you do about it? I recommend some planning as absolutely necessary.

Nature in her wisdom created Seasons, the cycles of life if you will, for a purpose. These seasons are of course, natural occurrences, and as such are something we can get ready for and prepare accordingly. Fall is here; we pack up the summer clothes and get out the fall and winter clothes. No big deal, unless, you don’t have fall or winter clothes.

So planning for business cycles, whether seasonal or not, becomes one of your jobs as an owner of your business. In the retail setting these cycles are partially what drive business: holidays are where the money is made. But for most service businesses these holiday cycles are a nuisance rather than a gift. A business must put some cash aside from the good times to deal with the lean times. I know, too obvious, and yet often not done by the small business venture.

Does your business even have a reserve account for emergencies? Many a sleepless night can be avoided by following some fiscal discipline when times are ‘good’. Bigger small businesses have banking relationships or funding sources that may be helpful through tough times once or twice. But eventually even they have to plan better for cycles. To be successful the old adage still rings true: “It’s not how much money you make, but rather, how much money you keep that makes the difference.”

Keep on keeping on…

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A Job Well Done

August 12, 2013 by

Blog 13                                                                       81213

 

 

When was the last time you experienced ‘a job well done’?

What service or product was it? What was it about that service or product that made you think, “Wow, what a great …”

Can you pin point what it was that was so great? Maybe everything was great.

Friends and I went to a local restaurant, The Five Mile House, outside of Nevada City and had great service, great ambiance, a great meal, and great entertainment at a reasonable price. Each one of us was impressed and will return again…the highest rating a business can get indeed. Not only that, here I am telling everyone what a great time we had. It was so good I had to personally thank the Chef and owner before we left for the evening.

Now, take your business, whatever it is, and think like a customer. Would you give your business a “great” rating? Why or why not? Of course, we like to think everyone would be impressed with our business and its offerings but are you getting those kind of ‘thank you’ comments from clients?

If not, why not?

Surely, there are always improvements to be made, but once you have the right formula for success in your particular business then the business should be flowing and growing. If not then look close at what is going on. Ask your clients for their feedback and take it seriously.

Even with impeccable service and/or products businesses do fail. So looking at the bigger picture is paramount for all owners. Timing, market placement, a unique selling proposition, and clever marketing are also very important aspects of the business. Also, as we have gone into previously, cash flow is king.

The Five Mile House owner had to endure the past 5 year of bust to get to what looks like a profitable place in the crowded food service industry here in the Gold Country. But endure he has and now his hard work is paying off. The growth may be slow but slow steady will when the day in most cases.

Keep on keeping on…

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One Small Business Conundrum

August 5, 2013 by

One Small Business Conundrum

 

Those who know say a business has to grow if it is to survive. There may be some exceptions but I want to focus on the proposition of growth as a way to go.

I was fortunate to have been invited into a new business as a person “Friday”. I did whatever was needed from sweeping the floors to answering phones to stocking to testing electronics. Being a card carrying English major I was happy to have the second job. My main work at the time was in Public Relations. The new electronic business was started by a very bright Stanford graduate who knew his way around Silicon Valley just as it was becoming Silicon Valley. Anyway, the team assembled worked well together and sooner than I had expected I was helping in sales and then managing sales. The business was growing mostly in spite of itself just because we were in the right place at the right time with the right services—electronic recycling and distribution.

Three of the that companies’ main players (myself and two others) decided we could go start our own company because the owner was getting more insane each week. And so we did leave and managed to catch some of the same good timing of the markets.

Like most business cycles we had to weather the ups and downs of the electronic industry boom and bust juggernaut. But mostly we grew the company because: 1. We recognized that we needed help, 2. We didn’t want to continue to work 80 plus hour weeks. 3. We could share the wealth and work less, that is, we had a budget that would support hiring support staff.

That was many years ago and I have had the opportunity to start other businesses…smaller businesses mostly and learn that good ideas do not always equal success. Timing and teamwork are more important than ever.

As a small business you need to have a vision of where you want the business to go but perhaps even more important you must know 1. That there is a market for what you want to offer, 2. That you know who will buy and how much they will pay for your offer. 3. And that you must know you will not get there alone…you will need help and you will need to budget for that help.

To grow the service or product you offer must have a future…there must be evolution inherent in your plan to survive. Evolution is the natural order of life. Chaos happens but eventually order comes out on top. So consider the long view when considering your business plan.

Take a look around, notice who has survived the longest in your niche. Notice what they have done well. Some lessons can be learned without spending money. Ultimately you will spend money to make money, so do so wisely by getting help before you need it.

Keep on keeping on…

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Business Principles…some suggestions

July 25, 2013 by

Greetings from the Mt Shasta. I’m reviewing some issues for upcoming blogs. Does your company (do you?) have a list of principles by which you stand for in the running of your business?

Try these on for size and or create your own is you don’t already have some.

Business Principles 

1 We operate our business with integrity and that being of service will be profitable.

2. We accumulate cash reserves; we pay ourselves and our workers and vendors on time.

3. We take responsibility for our business commitments and obligations and remember that we are in charge of the professionals that work for us.

4. We maintain clear and orderly financial records.

5. We have clear knowledge of our overhead, operating expenses, pricing and profit, accounts receivable, accounts payable and all of our assets and liabilities.

6. We have a business plan, and goals and visions for ourselves and our business.

7. We place all agreements in writing.

8. We budget our time realistically and focus our work time on generating revenues.

9.  We value our goods and services and price them accordingly.

10. We are willing and able to ask for help when we need it. And we are at peace with ourselves and allow our business to grow and expand harmoniously.

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Money and You

June 30, 2013 by

Cash flow is king

It’s said that money is the blood of a business. But it takes blood, sweat, and tears to start up, run and succeed. If you are the one who started the business then you are the one ultimately responsible for making sure that cash is flowing. Of course, we mean flowing in and out and in again. That whatever you call your business it must become a money making machine. That means you have planned how when you will get to a positive cash flow. However, what often happens is most entrepreneurs woefully underestimate the amount of funds needed to get to the profit side of the equation.

Whether you say you are ‘shoe stringing’ it or getting backing from a bank you will wind up short because you just can’t plan for everything…as in, you don’t know what you don’t know. So now you wind up not paying yourself, maybe you have to tell your investors you need more cash or worse tell your life partner you’re out of money. I’ve done all three over the years and pushing the limits of your relationships with your partner and family is by far the toughest situation which I hope you wont have to go through.

Spending money to make money is for most businesses the way it works. Some exceptions exist in the service business world but even then if you are to build your service business you will need to spend money for infrastructure and help at some point. So you must plan to make enough capital to include set backs and growth.

Here’s the deal, planning to make money works out better than hoping to make money. Does this mean business plans are a must? Not in every case however, having a business plan will help keep you focused in those rough times that will happen. Plans do and should change when they need to. Being flexible is important; knowing when and how much flexibility is called for however, is more of an art.

I recommend you plan to earn 2 to 3 times more than your overhead. Do you know what your true overhead costs are and will be in the near future? What kind of business you are in will make a huge difference in what your net should be. But as a rule, you need to be aggressive and reasonable at the same time.  Remember this, it’s not how much money you make, it’s how much money you keep.

Keep on Keeping on…

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