Flicking through my eight year old's third grade books, there it was, in black and white. A small business mantra, Third Grade style.
I was intrigued, not for the fact that the small business owners I work with don't know this stuff. After all, it was aimed at Third Graders!
Rather, it was a good elementary run down of what needs to be successfully linked to "properly satisfy the needs and wants of the population".
I wondered how many of us really take the time to think through the links and what they mean for our businesses.
Here's what kids are taught in Third Grade:
1. When a person or company wants to produce goods or services, they first need to find out if there is a demand or market for the product or service.
2. The next thing they need to do is to find out the availability of the goods or services.
3. Then they need to get the equipment and labour force together.
4. Suppliers of materials need to be contacted and business arrangements made.
5. Once the goods or services are ready for sale, the company or person has to find places to sell and advertise their goods and services.
Funny how we get can caught out not by making the process of doing business more complicated than it probably should be.
It might just pay us small business owners to regularly refresh these five points in our minds. Then, we might just make it through to Fourth Grade!
All success,
Margie
Monday, February 28, 2011
Monday, January 31, 2011
Cash flow success
Even profitable businesses can go bust if you don’t have cash in the kitty to pay for things. Often it’s all about timing. But the timing issue is why cash flow rates right up there as one of the biggest stresses of small business.
So how can you guarantee your cash flow success?
I spoke with management expert Graham Godbee about this while writing The Small Business Success Guide. He thinks the best way to protect your business from crashing without cash is to do a cashflow forecast. Simply, you work out how much cash - petty cash and cash in the bank - your business has on hand.
There are some good cash flow forecast templates available online. I like a cash flow forecast template from the NT government in Australia for its simplicity.
Step 1
“You can include some cash equivalents like short term bank bills you own (not borrowings) and maybe some publicly listed shares that can be readily liquidated,” says Godbee. Write it all down.
Step 2
Then look at how much cash it takes to keep your business actually operating on a daily or weekly basis. The timing will depend on when major cash flows (both in and out) are expected in your business.
Godbee tells the story of a firm that pays its workers each fortnight. It should make its cashflow periods two weeks apart: “If it uses monthly periods, it may find it does not have the cash to pay wages one pay day in the middle of the month.”
Step 3
Then “ask yourself some basic questions about your future: what if you increase your sales; what if customers delay payments; what if you expand and buy some new equipment; what if costs rise; what if sales or prices fall; and so on? If you are in dire straits, it’s imperative that you work out where you’re at in terms of your cashflow.”
Step 4
As well as looking at how much cash is in your bank account, Godbee says it’s wise to look at things like the investments and assets that you can easily liquidate if you had to, and how much is left in unused lines of credit. “Are additional borrowings possible and sensible (possibly not on both counts if the company is in severe distress)?” he asks.
Put together an accurate cashflow forecast and it’ll take a lot of the stress out of your operation. “If you want to stay in business, if you want to impress your bank manager and if you want to keep your personal assets, then do your cash flow forecast!” suggests Godbee.
So how can you guarantee your cash flow success?
I spoke with management expert Graham Godbee about this while writing The Small Business Success Guide. He thinks the best way to protect your business from crashing without cash is to do a cashflow forecast. Simply, you work out how much cash - petty cash and cash in the bank - your business has on hand.
There are some good cash flow forecast templates available online. I like a cash flow forecast template from the NT government in Australia for its simplicity.
Step 1
“You can include some cash equivalents like short term bank bills you own (not borrowings) and maybe some publicly listed shares that can be readily liquidated,” says Godbee. Write it all down.
Step 2
Then look at how much cash it takes to keep your business actually operating on a daily or weekly basis. The timing will depend on when major cash flows (both in and out) are expected in your business.
Godbee tells the story of a firm that pays its workers each fortnight. It should make its cashflow periods two weeks apart: “If it uses monthly periods, it may find it does not have the cash to pay wages one pay day in the middle of the month.”
Step 3
Then “ask yourself some basic questions about your future: what if you increase your sales; what if customers delay payments; what if you expand and buy some new equipment; what if costs rise; what if sales or prices fall; and so on? If you are in dire straits, it’s imperative that you work out where you’re at in terms of your cashflow.”
Step 4
As well as looking at how much cash is in your bank account, Godbee says it’s wise to look at things like the investments and assets that you can easily liquidate if you had to, and how much is left in unused lines of credit. “Are additional borrowings possible and sensible (possibly not on both counts if the company is in severe distress)?” he asks.
Put together an accurate cashflow forecast and it’ll take a lot of the stress out of your operation. “If you want to stay in business, if you want to impress your bank manager and if you want to keep your personal assets, then do your cash flow forecast!” suggests Godbee.
Sunday, November 14, 2010
The small business Every Day's a Holiday strategy
Question: which days of the year do small business owners make the most of their time?
Answer: the days just before they go on holidays.
We all know the fenetic feeling just before you leave to go on vacation. So much to get through, and so little time. You've got a huge list. There are staff or outsourcers to organise. Orders to be put in motion. Contingency plans for who's going to make decisions while you're away. Because this time you've decided you really are going to switch off your phone.
The thing is, we really should make every day an 'I'm going on holidays' day. Here are a few ways I'm trying to make this happen:
* Write the list like I really have to get it done.
* Prioritise my time as if I only have a few hours left before I walk out the door for a couple of weeks.
* Chunk down my remaining time into 10 minute blocks. The sense of pace and achievement is amazing.
Happy holidays!
Margie
Answer: the days just before they go on holidays.
We all know the fenetic feeling just before you leave to go on vacation. So much to get through, and so little time. You've got a huge list. There are staff or outsourcers to organise. Orders to be put in motion. Contingency plans for who's going to make decisions while you're away. Because this time you've decided you really are going to switch off your phone.
The thing is, we really should make every day an 'I'm going on holidays' day. Here are a few ways I'm trying to make this happen:
* Write the list like I really have to get it done.
* Prioritise my time as if I only have a few hours left before I walk out the door for a couple of weeks.
* Chunk down my remaining time into 10 minute blocks. The sense of pace and achievement is amazing.
Happy holidays!
Margie
Subscribe to:
Posts (Atom)
