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Will You Add? - Discover 10 Tips on How To Avoid Financial Disaster in Your Business
Whatever you are, be a good one Abraham Lincoln [1809-1865]There's a thread that runs through successful people. If you look at it very closely, you'll see that it's knowledge, belief and determination braided together and wrapped with emotion.In the late nineties, Pierre's girlfriend complained that she couldn't find Pez collectors online. So, he built a web site to help her. A website where collectors could buy and sell their collectibles. Today, the growth of Pierre's site, ebay.com, is nothing short of incredible.In 1998, Ellen Cagnassola decided to put the little glycerin soaps that she and her daughter made online for sale. It allowed her to stay home and be a full time Mom. Today, her products are sold through Marriott Hotels, Johnson and Johnson and are shipped worldwide.When Ruth got online, she realized that it was a lot of work trying to find ezine owners that accepted articles or advertising, and find out what their rates were, and what their subscriber numbers were. She started making a list. Her Directory of Ezines grew into a huge business that she later sold for a very nice profit.<
Make all payments on time. If this is not possible then negotiate revised terms with suppliers. Always avoid late payment of taxes, including VAT, NI and PAYE.
Negotiate acceptable credit terms with your customers, and enforce them as appropriate.
Take control of the situation and not be a bystander!
Avoid:
-unnecessary cost and waste through not acting proactively
-offering credit terms to customers who fail to meet their contractual agreements
-failing to take up credit references for all new customers
-offering substantially improved credit terms to customers who have purchased small but now suddenly want to purchase big
-expensive debt recovery agencies
-failing to communicate with your suppliers should you be unable to meet your payment commitments
-not meeting with your bank on a regular basis
5. Communicate
Do you communicate with your staff, customers, suppliers and other groups connected with your business? Do they know that you do in fact communicate?
How do you communicate? Meetings, letters, email, telephone or
I ran across an interesting article the other day originally published in a newspaper in Danbury, CT and posted on their online news feed at newstimeslive.com.The article deals with the practice of including address labels used by some charities as a part of their annual appeals. The writer, Fred Lucas, found that there is more criticism of the practice than there is support. Donors may send in a small donation more because of a sense of obligation than a genuine belief in the cause, only to find that their name is then sold to other charities. He found that most charities in his area do not use this form of fundraising, something the charity watchdog Charity Navigator calls, “phenomenally wasteful use of a charitable resources”. On the other hand, the representative of the Easter Seals campaign is quoted as saying, “a lot of testing has shown this to be a very successful program.”What I found ironic, wasn’t anything that was stated in the article itself, but the fact that when I viewed the site it was posted on, I was greeted by a banner across the top of the page offering me free smiley faced icons. Grant it, these banners are rotated
Your business continues to grow, new customers are gained, orders taken for the next generation of products that will secure the future of the business - or is the future clouded with some nagging uncertainty? The outlook is fine but things are not running as smoothly as they did a short time ago.
You took the decision to market your business more aggressively and since that time small distractions keep happening that cannot easily be explained but they need your attention to resolve.
Maybe all growing companies go through this phase. All these "little things" are resolved quickly, but there does appear to be more of them. You know, or hope, that no major surprises will adversely arise and hit your company.
But what steps can you take to give you greater comfort?
Working "on" the business rather than "in" it, has meant delegation of work to your staff. After all you cannot be with prospective customers and be talking to existing ones on day to day administrative matters. Your staff have been loyal, hard working and always done what you asked. They have worked their way up in the business.
Now, however, they are in positions where they must make decisions. Decisions that will impact upon you, your future, your wealth!
The important decisions are always referred to you, but it is the impact of all the small ones that could be catastrophic. So what action can be taken to give you some comfort?
The business cannot afford a full time administrative professional and there is not enough time for you to grow the business and run the day to day affairs. Help is required to understand the causes of some common failings within the business. An ‘early warning' system of impending problems that may create a financial disaster is necessary, so that appropriate action to eliminate concerns can be taken.
All businesses are different. However, 10 tips on how to avoid financial disaster that are useful in all businesses are:
1. Control your Business
Be sensible, practical, but above all else know what is happening in your business. So often owners think they know, but through a lack of understanding, the use of incomplete or inaccurate information, wrong or ill-timed decisions are taken. Some business owners opt out completely and take no decision at all.
Control your business by ensuring that:
- good management and accounting systems are in use
-if you do not understand the "numbers" seek help - be trained!
-all information on which you base your decisions is accurate, if in doubt have the data audited
-short and long term goals have been set
-financial information is prepared in a timely manner and at regular intervals
-all management information is reviewed in a timely manner and when necessary corrective action taken
2. Be honest and realistic in your decision making
If the data upon which you are taking business decisions is suspect, the business decision making process is suspect.
Further remember what you are in business for - to achieve your goals, your vision. Your goals will be more difficult to achieve if the quality of the data used to base decisions upon is suspect.
Discipline yourself to:
-write off bad debts immediately
-write down the value of obsolete or slow moving stock in the Balance Sheet
-record incomes in the correct accounting period
-record expenses in the correct accounting period
-be honest in all financial matters
-accrue for known future non-recurring items of cost and income that relate to the current period
-remain focused and take decisions that only support meeting your goals
3. Reconcile your Cash
Know your cash balance at all times. Cash is the lifeblood of your business. Do not let it drip away in waste.
Forecast your cash flows on a regular basis and be in control and manage your cash position.
Conserve all cash and recognize the dangers of:
-spending cash on items that are not necessary in meeting the goals of the business
-buying new when second hand would suffice
-structuring incentive schemes to sales instead of cash and profit
-creditor chase letters and writs may indicate cash outflows not recognized in your forecasts
-a "cheque in post" and post dated cheques mentality may further lead to errors in forecasts
4. Pay on Time - Receive on Time
Make all payments on time. If this is not possible then negotiate revised terms with suppliers. Always avoid late payment of taxes, including VAT, NI and PAYE.
Negotiate acceptable credit terms with your customers, and enforce them as appropriate.
Take control of the situation and not be a bystander!
Avoid:
-unnecessary cost and waste through not acting proactively
-offering credit terms to customers who fail to meet their contractual agreements
-failing to take up credit references for all new customers
-offering substantially improved credit terms to customers who have purchased small but now suddenly want to purchase big
-expensive debt recovery agencies
-failing to communicate with your suppliers should you be unable to meet your payment commitments
-not meeting with your bank on a regular basis
5. Communicate
Do you communicate with your staff, customers, suppliers and other groups connected with your business? Do they know that you do in fact communicate?
How do you communicate? Meetings, letters, email, telephone or
It’s a sunny morning and you’re sitting in your office. With a cup of hot coffee by your side and memories of your last holiday still fresh in your mind, even if you say so yourself, today at least, life is sweet.You take a sip of new blend coffee and then feel a rush of cool air and a movement catches the corner of your eye. As if from nowhere there is now an impeccably dressed stranger sitting in the chair opposite. Sure you're surprised; you didn’t hear anyone knock and just as you are about to say something he begins in a calm and measured voice.‘Here's the deal’‘I am going to advertise your product on a billboard at the busiest junctions in every city of the world.'‘I will tell you how many people see this advertisement and I will tell you their age, nationality and gender.'‘I will tell you what they think of your product and in many cases I will give you their contact details. While they are reading the billboard I will make it possible for them to view your website and, if they feel the urge, make a purchase.'‘I will have all this ready in two days and it will cost you less than a small advertisement in you
Now, however, they are in positions where they must make decisions. Decisions that will impact upon you, your future, your wealth!
The important decisions are always referred to you, but it is the impact of all the small ones that could be catastrophic. So what action can be taken to give you some comfort?
The business cannot afford a full time administrative professional and there is not enough time for you to grow the business and run the day to day affairs. Help is required to understand the causes of some common failings within the business. An ‘early warning' system of impending problems that may create a financial disaster is necessary, so that appropriate action to eliminate concerns can be taken.
All businesses are different. However, 10 tips on how to avoid financial disaster that are useful in all businesses are:
1. Control your Business
Be sensible, practical, but above all else know what is happening in your business. So often owners think they know, but through a lack of understanding, the use of incomplete or inaccurate information, wrong or ill-timed decisions are taken. Some business owners opt out completely and take no decision at all.
Control your business by ensuring that:
- good management and accounting systems are in use
-if you do not understand the "numbers" seek help - be trained!
-all information on which you base your decisions is accurate, if in doubt have the data audited
-short and long term goals have been set
-financial information is prepared in a timely manner and at regular intervals
-all management information is reviewed in a timely manner and when necessary corrective action taken
2. Be honest and realistic in your decision making
If the data upon which you are taking business decisions is suspect, the business decision making process is suspect.
Further remember what you are in business for - to achieve your goals, your vision. Your goals will be more difficult to achieve if the quality of the data used to base decisions upon is suspect.
Discipline yourself to:
-write off bad debts immediately
-write down the value of obsolete or slow moving stock in the Balance Sheet
-record incomes in the correct accounting period
-record expenses in the correct accounting period
-be honest in all financial matters
-accrue for known future non-recurring items of cost and income that relate to the current period
-remain focused and take decisions that only support meeting your goals
3. Reconcile your Cash
Know your cash balance at all times. Cash is the lifeblood of your business. Do not let it drip away in waste.
Forecast your cash flows on a regular basis and be in control and manage your cash position.
Conserve all cash and recognize the dangers of:
-spending cash on items that are not necessary in meeting the goals of the business
-buying new when second hand would suffice
-structuring incentive schemes to sales instead of cash and profit
-creditor chase letters and writs may indicate cash outflows not recognized in your forecasts
-a "cheque in post" and post dated cheques mentality may further lead to errors in forecasts
4. Pay on Time - Receive on Time
Make all payments on time. If this is not possible then negotiate revised terms with suppliers. Always avoid late payment of taxes, including VAT, NI and PAYE.
Negotiate acceptable credit terms with your customers, and enforce them as appropriate.
Take control of the situation and not be a bystander!
Avoid:
-unnecessary cost and waste through not acting proactively
-offering credit terms to customers who fail to meet their contractual agreements
-failing to take up credit references for all new customers
-offering substantially improved credit terms to customers who have purchased small but now suddenly want to purchase big
-expensive debt recovery agencies
-failing to communicate with your suppliers should you be unable to meet your payment commitments
-not meeting with your bank on a regular basis
5. Communicate
Do you communicate with your staff, customers, suppliers and other groups connected with your business? Do they know that you do in fact communicate?
How do you communicate? Meetings, letters, email, telephone or
The best you can do when dealing with customers in your business is to always keep in your mind how you would want to be treated if you had the same situation or if you were going into someone else's business and buying from them or had an issue with product or services.I have had 18 years in business dealing with people on a personal basis and the best thing you can do if you get into a sticky situation is to try and work things out and make the customer happy as long as its nothing totally unreasonable, even if you end up not making money on this one situation for instance, It will end up paying off for you in the end in other ways.If your customer emails you with questions always try to reply as soon as possible, even if you are unsure of the answer immediately try to reply to acknowledge the message and then find the answer and most importantly follow up...also the same thing applies if they callMost customers are lost due to non communication, at that point they feel that you don't care enough to contact them and they will go elsewhereCommunicating with your customers is EXTREMELY IMPORTANTAlways try to retu
Control your business by ensuring that:
- good management and accounting systems are in use
-if you do not understand the "numbers" seek help - be trained!
-all information on which you base your decisions is accurate, if in doubt have the data audited
-short and long term goals have been set
-financial information is prepared in a timely manner and at regular intervals
-all management information is reviewed in a timely manner and when necessary corrective action taken
2. Be honest and realistic in your decision making
If the data upon which you are taking business decisions is suspect, the business decision making process is suspect.
Further remember what you are in business for - to achieve your goals, your vision. Your goals will be more difficult to achieve if the quality of the data used to base decisions upon is suspect.
Discipline yourself to:
-write off bad debts immediately
-write down the value of obsolete or slow moving stock in the Balance Sheet
-record incomes in the correct accounting period
-record expenses in the correct accounting period
-be honest in all financial matters
-accrue for known future non-recurring items of cost and income that relate to the current period
-remain focused and take decisions that only support meeting your goals
3. Reconcile your Cash
Know your cash balance at all times. Cash is the lifeblood of your business. Do not let it drip away in waste.
Forecast your cash flows on a regular basis and be in control and manage your cash position.
Conserve all cash and recognize the dangers of:
-spending cash on items that are not necessary in meeting the goals of the business
-buying new when second hand would suffice
-structuring incentive schemes to sales instead of cash and profit
-creditor chase letters and writs may indicate cash outflows not recognized in your forecasts
-a "cheque in post" and post dated cheques mentality may further lead to errors in forecasts
4. Pay on Time - Receive on Time
Make all payments on time. If this is not possible then negotiate revised terms with suppliers. Always avoid late payment of taxes, including VAT, NI and PAYE.
Negotiate acceptable credit terms with your customers, and enforce them as appropriate.
Take control of the situation and not be a bystander!
Avoid:
-unnecessary cost and waste through not acting proactively
-offering credit terms to customers who fail to meet their contractual agreements
-failing to take up credit references for all new customers
-offering substantially improved credit terms to customers who have purchased small but now suddenly want to purchase big
-expensive debt recovery agencies
-failing to communicate with your suppliers should you be unable to meet your payment commitments
-not meeting with your bank on a regular basis
5. Communicate
Do you communicate with your staff, customers, suppliers and other groups connected with your business? Do they know that you do in fact communicate?
How do you communicate? Meetings, letters, email, telephone or
In the quest to increase results from marketing, companies tend to focus on tactics. They worry about creating a better brochure, upgrading the website, or running a new ad campaign. However, often the greatest leaps in marketing effectiveness come from focusing on how it all ties together. Here are three steps for business leaders to improve their marketing effectiveness by fine-tuning their marketing processes.1. Know what you need.Marketing's main job is to feed the sales force with nice, warm leads. Step one towards better marketing is to understand how much and what kind of food they need.The "how much" is easily answered using basic math. Start with your sales goals and work backward. You'll need to answer the following questions:* What is our annual new business revenue goal? * How many new customers does this represent? * What percentage of qualified opportunities do we actually close? * What percentage of leads actually become qualified opportunities?Using this information, you can determine how many new inquiries your marketing must generate in order for the sales team to meet their goals
-record incomes in the correct accounting period
-record expenses in the correct accounting period
-be honest in all financial matters
-accrue for known future non-recurring items of cost and income that relate to the current period
-remain focused and take decisions that only support meeting your goals
3. Reconcile your Cash
Know your cash balance at all times. Cash is the lifeblood of your business. Do not let it drip away in waste.
Forecast your cash flows on a regular basis and be in control and manage your cash position.
Conserve all cash and recognize the dangers of:
-spending cash on items that are not necessary in meeting the goals of the business
-buying new when second hand would suffice
-structuring incentive schemes to sales instead of cash and profit
-creditor chase letters and writs may indicate cash outflows not recognized in your forecasts
-a "cheque in post" and post dated cheques mentality may further lead to errors in forecasts
4. Pay on Time - Receive on Time
Make all payments on time. If this is not possible then negotiate revised terms with suppliers. Always avoid late payment of taxes, including VAT, NI and PAYE.
Negotiate acceptable credit terms with your customers, and enforce them as appropriate.
Take control of the situation and not be a bystander!
Avoid:
-unnecessary cost and waste through not acting proactively
-offering credit terms to customers who fail to meet their contractual agreements
-failing to take up credit references for all new customers
-offering substantially improved credit terms to customers who have purchased small but now suddenly want to purchase big
-expensive debt recovery agencies
-failing to communicate with your suppliers should you be unable to meet your payment commitments
-not meeting with your bank on a regular basis
5. Communicate
Do you communicate with your staff, customers, suppliers and other groups connected with your business? Do they know that you do in fact communicate?
How do you communicate? Meetings, letters, email, telephone or
Online employee time clock service (a web-based application) is an entirely different system from the usual employee time clock system that records employee arrival and departure times by manually entering work hours in a database or sending reports to an accounting staff. By using online employee time clocks to record work hours, an industry can track time more efficiently and allow extra time for constructive activity.Online employee time clock service can be accessed through websites. A username and a password are given to protect personnel information. The data is recorded on an online form and recorded. In essence, an employee clocks in and out. Online employee time clock service includes all the standard timesheet and hourly rate entry functions, project tracking abilities, as well as automatic salary calculations and comprehensive time and cost reporting. Some online employee time clocks can even feed directly into a check writing software program for automatic check processing (to be verified and authorized by the employer every pay period.) This can be a valuable time-saving measure, in that it will take the accountant less time to proce
Make all payments on time. If this is not possible then negotiate revised terms with suppliers. Always avoid late payment of taxes, including VAT, NI and PAYE.
Negotiate acceptable credit terms with your customers, and enforce them as appropriate.
Take control of the situation and not be a bystander!
Avoid:
-unnecessary cost and waste through not acting proactively
-offering credit terms to customers who fail to meet their contractual agreements
-failing to take up credit references for all new customers
-offering substantially improved credit terms to customers who have purchased small but now suddenly want to purchase big
-expensive debt recovery agencies
-failing to communicate with your suppliers should you be unable to meet your payment commitments
-not meeting with your bank on a regular basis
5. Communicate
Do you communicate with your staff, customers, suppliers and other groups connected with your business? Do they know that you do in fact communicate?
How do you communicate? Meetings, letters, email, telephone or other? Are your communications understood and interpreted in the manner that you intend? All too often much communication is not effective.
Consider all management and financial information that is prepared by a business. All too often there may be a cursory read, then filed and not acted upon.
This form of communication is expensive to prepare and no benefit is derived.
Organize yourself to:
-attend regular internal and/or external review meetings with staff, customers and other stakeholders alike
-chair meetings in a constructive manner and follow an agenda
-avoid a "talk shop or blame" culture
-listen to others
-encourage feedback
-engage an "open door" policy
-ensure action points are recorded, designated to individuals and followed up
6. Re-engineer your processes
Frequently business systems remain unchanged for long periods, become outdated and fail to satisfy the demands of a changing business environment.
This shortcoming is often found in administrative as well as manufacturing processes. Over time processes cease to be appropriate, are tweaked to accommodate changing environments and result in inherent waste.
Review and benchmark your processes to avoid:
-unnecessary work that does not add value
-work duplication that constitutes waste
-stand alone systems - integrate wherever possible
7. Involve your Employees
Often it is quoted that employees are the greatest asset of a business. But also it is found that in some organizations employees are not always respected, involved with or empowered to participate in the decision making processes of the business.
Train your staff and delegate responsibilities:
-in a controlled manner
-involve the appropriate staff in decision making
8. Maintain High Customer Service Levels
Retaining customers is hard, winning customers more so. During a financial crisis, your customer service level may be adversely impacted. Be proactive and agree with the customer an acceptable level of service that will meet the needs and expectations of the customer during the period of concern.
Customers are more discerning and expect all service to be right first time, do not surprise them by falling service levels after failing to communicate your changed circumstances to them. Be proactive and manage the situation.
Take remedial action when adverse trends are recorded in the following areas:
-delivery times
-customer complaints
-customer returns
-warranty claims
9. Provide an adequate Capital Structure
An expanding business may require additional funding to sustain growth. Ensure that there is the potential to raise long term funds for the business, to enable financial stability and long term planning to materialize.
Examine the following sources of funds:
-increase share capital
-leasing
-hire purchase
-business angels
10. If all else Fails seek Expert Help
If you are unable to quickly resolve your problems - seek HELP. But seek help BEFORE the situation becomes a catastrophe. Time is money, and catastrophes are costly! Financial management consultants, banks and solicitors are examples of organizations that can help you.
The sooner remedial action is taken, the sooner normality is resumed and it will almost certainly be more cost effective.
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