Sunday, January 17, 2010

The Top 10 Ways to Increase Your Cash Flow

Lack of cash flow - the Number One killer of small businesses! Here are some great ways to increase cash flow in your business. Put one or two ideas into practice and watch your cash grow!

1. Remove the Roadblock

Perhaps your customer's account is unpaid because their largest customer isn't paying or they've just lost a big account. Offer your customer the opportunity to make installment payments. You can arrange automatic payments from their bank account. This ensures you receive the payment monthly as agreed on.

2. Help your customer and in turn, help yourself.

Suppose your customer's normal supplier has equipment problems and won't be able to meet the deadline for a very important job. Connect your customer with someone you know who could help them out and you'll be helping your customer, your business contact and yourself! As their cash flow grows, they have more money to pay you!

3. Be persistent.

When you contact your customer ask when you can expect payment. Be persistent in calling your customer for payment while remaining pleasant. It will pay off.
Most of the collection issues I've dealt with have related to:
- Incorrect invoices
- Client not receiving invoice (I know what you're thinking, but it does happen more often than you think)
- Client didn't have payment date on their schedule
- Manipulating payment schedule (60, 90, 120 day delay) This one is what everyone thinks is going on, but does in only a fraction of collection cases. A simple friendly non-demanding call can usually do wonders.

4. Strengthen your credit policy.

Add a condition that an account at 60 days past due, is authorized by the customer to be charged automatically to a credit card the customer provided when opening their account. This eliminates past due accounts and gets the money in your account.

5. Monitor your customer's credit health.

Compare the customer's Days Sales Outstanding (total amount owed divided by the average daily sales. Assuming the customer owes $15,000, with average daily sales of $420, the Days Sales Outstanding would be 35.7 days ($15,000 / $420 = 35.7 days). This means, with a credit policy of net 30 days, some portion of their account is past due. Having an indicator of an account's status allows you to be proactive in collecting accounts on time.

6. Simplify billing.

Mortgage companies, insurance companies, private schools and health clubs have two things in common - a monthly bill to their customers and the option for the customer to pay the bill by automatic payment from their bank account. You can offer this service to your customers, too. It typically costs $2 to $4 per account to separately bill and collect on a monthly basis. The typical per transaction cost for automatic payments is only $0.30 to $0.50. Benefits are:
a) a cost reduction by at least half
b) a cash flow you can count on
c) time freed up from billing and collection for acquiring more customers, revenue, and profit.

7. Avoid waiting for checks to come in the mail.

Take the customer bank account information or credit card number over the phone instead of waiting for the promised check to come by mail. You can offer automated payments from your customer's bank account to pay their account in full or to make installment payments. Once the payment is authorized, you control when you're paid, rather than waiting for the check in the mail.

8. Identify debit cards to eliminate the credit card fee.

Credit card transactions have a fee of 1.5% to 2% of the ticket amount plus a per transaction fee of around $0.25. A sale of $70.00 would incur $1.65 in charges ($70 x 2% = $1.40 + $0.25 transaction fee = $1.65). In contrast, debit cards incur at most $0.50 per transaction. On this sale, you'd save $1.15, more than two times the total fees charged on those transactions identified at the point-of-sale as debit, not credit cards.

9. Get connected.

If you conduct business on the road, wireless technology makes having a credit card terminal with you a real possibility. You can process those swipe transactions at the point-of-sale, where the lowest rate applies (saving as much as 0.5%), keeping more cash in your account.

10. Eliminate bounced check headaches.

Wouldn't it be a relief if you didn't have to make calls to collect bounced checks? Most bounced checks are a result of a math or timing error on the customer's part. You can avoid losing a good customer to embarrassment by collecting bounced checks electronically. With a check recovery service, it is collected electronically through the U.S. banking system. You get paid the face value of the check upon collection. The customer who wrote the bounced check is charged a reasonable fee, set by state laws. And, best of all, no collection phone calls to your customers. Spend your time re-investing your improved cash flow to increase your business.

Monday, January 11, 2010

"Up the Creek Without a Paddle"

This is a story about my passion and purpose as a Business Coach. I might even say my rant. Yes, my pet peeve is about customer service, or really the lack thereof and the fact that it seemingly does not command the time and attention it deserves in so many Businesses today. While getting customers through the door or to your website is important and converting them to paying customers is vital to the growth of a Business, serving the customer so they become your raving fans for life is the most obvious and most overlooked component of building a successful Business. Over the years I have compiled some of the best and some of the worst customer service stories and how they have made me smile and tell the world and unfortunately more often, made me cry and tell the universe.

As a Business owner, can you think of a time when you were so impressed with the level of service you received in a Business you just had to run and tell someone right away? Maybe a few times! How about a time when the level of service fell way below your expectations and you have not returned to that establishment since? Was there even an opportunity for you to make your disappointment known?

Unfortunately the latter is more often the case. I am quite sure no one actually plans to fail; it’s more likely they simply fail to plan. In other words, what is in your heart and the vision you hold for your Business has somehow not been articulated to your staff on the front lines. How will they know? Only when you show them and tell them, leaving nothing to chance!

I would like to share a funny, not so funny story about trying to buy a paddle for an ocean kayak in a popular Oceanside resort town on Vancouver Island. Now to fully appreciate this story you must understand something, we are in the surf, kayaking, canoeing, boating Mecca of North America. A friend of mine recently purchased a couple of surf kayaks and unfortunately one of the paddles did not make the trip with us. We thought no problem, will just stop in to one of the many shops in the town and buy one.

The first was a surf shop with boards hanging from the ceiling and related accessories everywhere, except paddles. When we approached the clerk at the till after waiting to speak with a staff member for over 10 minutes, we were told they did not sell them and he had “no idea” who would. All of this was said without lifting his head and not making eye contact with us. We thanked him for taking so much of his time to help us out and that we would certainly tell all of our friends about the great service offered at his shop.

Do you think he was the owner of the shop? Do you think he was ever shown how to treat a customer who comes in to buy something? Do you think there was an employee training manual for him to follow for situations like this?

So off we go to find another shop where things certainly would get better, we hoped. Bingo, we find a place that rents kayaks. Certainly they would sell or maybe rent us a paddle. We walk in, say hello to the mature women behind the desk, explain our situation and ask would she be able to help. Without looking up from the book she was reading, she told us a tour was out at that time and they had no paddles in the shop. She said there might be some down on the dock in a locker but it was a long way to the water, could we check back in an hour. When I asked if I could run down to the dock and check for myself, I was given a look over her reader glasses like the one you would get if you had just committed a felony. I then asked if there was any other place we could find a paddle. We were told there wasn’t any other place in town that could help us out. We later found about six other shops that rented or sold kayaks, just not on the day we were looking.

The story continues to get better, well, that is if you have the sense of humor I do, not so much if you are normal. We press on going from shop to shop and it starts to feel like a skit right out of Laurel and Hardy. We now have over two hours of time invested and day light slipping away, but still no paddle. One shop showed four paddles in inventory, but alas the computer was lying. Another had 25 or 30 kayaks resting along with their paddles but apparently they could not be separated for fear of kayak paddle anxiety I suppose. They would only rent us the kayak and the paddle together. I’m starting to look around for a mirror to see if I have a sign on my head that says “don’t give this person whatever he is looking for”.
So as a Business owner, let me ask you this.

How would your staff represent you in this situation? What separates you from your competition and keeps customers feeling valued and appreciated? When challenges come up in your Business, has your staff been empowered to make the right decision that serves the customer and builds your brand and goodwill? Or, are you leaving your customers with the feeling they are “up the creek without a paddle”? Is there congruency between what your vision and mission are and what your staff are saying and conveying to the public? How easy is it for customers to do Business with you?

Start today to create your operations and training manual. Knowing that most Businesses don’t have one, don’t delay, start writing today!

Tuesday, January 5, 2010

What Exactly is a Professional Business Coach?

Some time in 2009 I wrote a post about what is a professional business coach. Since a new year has begun and the old is fading quickly (we hope!)I thought it might be a good idea to start off this year with that same article. Business coaching is not as confusing a profession and the title might suggest, but I hope the following will clarify the difference from life coaching, executive coaching and career coaching. So here it is, once again.

A professional business coach is an expert in various areas and processes of business. In practice, a coach takes the time to understand the owner’s business completely and provides systematic development strategies that help the owner reach his or her goals. A business coach works to develop the whole business on a continuous basis, in contrast to a consulting engagement where expertise is typically focused on a specific stand-alone issue. A good business coach is a skilled mentor in the development of areas such as leadership skills, marketing, sales training systems, development of customer service systems and human resources, as well as financial analysis and intelligence.

Business coaches engage with, among others, new ventures and businesses having difficulties. A coach can prove highly effective in proprietary businesses, especially when the management is planning to expand, achieve yearly objectives, or sort out day-to-day problems. They also work extensively with business owners who are quite successful. These owners invest in coaches to help them achieve and maintain even greater successes. Many well established businesses find working with a business coach to be a highly profitable investment with an incredible Return on Investment. In fact, a study conducted by Michigan-based Triad Performance Technologies, Inc. cites an average 10:1 return on investment in less than one year!

As well, fast growing businesses need to constantly recruit new employees and acquire sufficient capital to support this expansion. Very often, expansion creates problems related to workforce management, resource allocation, and delegation of authority and responsibility. Over time, these problems can escalate and start to seriously affect productivity and profits along with the competitive advantage the business had in the first place. The owners of these fast growing enterprises often have little time to manage the recurring, daily problems. A business coach can address these issues as well as work with the owners to enable them to prioritize their objectives and allocate time and resources to each component of productivity in proportion to their relative contributions.

Businesses that have failed in the past and are starting out fresh can also greatly benefit from professional business coaches. These trusted advisors can assist in identifying and breaking free from inefficient management practices, and create positive new ones. A business coach can also offer a fresh point of view and an unbiased opinion about the business as well as provide competent strategies and tools. In fact, many failed ventures occur because the owner, such as an electrician or IT specialist, has great technical skills related to the product or service they sell, but limited business and financial skills. A business coach works with these owners to assure they have the requisite knowledge and savvy for sustained success.

Working with a coach is challenging, exciting and focused. A professional coach’s goal of fostering dynamic, continuous progress creates incredible business momentum. Combined exhilaration and remarkable success!