Category plan cash-flow

Entries 33 Total

Small Business Failure – Reason: Management Control

Aug 28, ’07 12:41 PM
Author Stefan Töpfer (Editor) Categories Business Ideas, Development, Employment, Entrepreneur, Failure, Health Check, Lifestyle, Marketing/PR, Relationships, Sales, Small Business / SOHO, Start-Up, avoid growing pain, do a SWOT plan, do a reality check, do bookkeeping., do credit control, grow your business, handle problems, lower overheads, market and sell, motivate your staff, not to do it!, plan cash-flow, plan your business, recruit the right people, start-up in business

The typical scenario is you work hard all week, have no live and at the end of it all little money to show for it. This is often a sure sign of loss of management control in a small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses.

The small business health-check questions for this episode are:

  • Do I know what is going on in my business in all areas or have I abdicated some responsibility to staff? You can pick and choose what you do work-wise everyday, you can not pick and choose what you should know about and make decisions about – this is your business, not your staffs business – act like it.
  • Am I running my business or is it running “itself”? No business is running itself, other than into the ground!
  • Do you know how your cash-flow is doing? Done this one before, yet it always comes back to this, check it out.
  • Do you have an overview of your small business fixed costs and sales, are you happy with the situation? I guess you could always do better, but if you do not know the details you can not improve your situation.
  • Is your vision in line with your small business targets? You need a vision for your business, that will allow you to develop your small business strategy and plan, so you know where you are going – don’t just drift along.
  • Have you asked your staff lately? Have a power-meeting with your staff once a week, to see how they are feeling about your small business, last week or the next few weeks. It will motivate them and give you a new insight in how others see your small business.

The central message here is to be involved in ALL areas of your business ALL of the time – in a management capacity. When I hire people I always hire people who do something better than I, but you have to stay involved.

You can see other reasons for small business and personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants failures in my Health Check Category, if you can add to this list please do so, I would welcome your comments.

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Cost Cutting for Small Business – Payment Terms

Aug 24, ’07 3:37 PM
Author Stefan Töpfer (Editor) Categories Boomer Business, Business Ideas, Contractor, E-Commerce, Entrepreneur, Finance, Freelancer, Generation-Y, Home Business, Lifestyle, Outsourcing, Personal Business, Relationships, SOHO/SMB/SME/Micro, Self-employed, Small Business / SOHO, Social Entrepreneur, Sole-Trader, Start-Up, Suppliers, Virtual Assistants, avoid growing pain, bootstrap, do a reality check, do cost cutting, do credit control, find funding, grow your business, handle problems, lower overheads, outsource effectively, plan cash-flow, plan your business, recruit the right people, start-up in business, use online IT

There are two ways to get better payment terms from your suppliers – make sure you know what the pricing is and negotiate the payment terms last, without warning. Most businesses do not expect small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses to negotiate payment terms, so you have the element of surprise on your side – and it makes you look more professional.

Firstly there is the extended payment term, of 60, 90 and 180 days – see if your supplier will allow any of those terms. Even if they only give you 60 days, you can always go back after 3-4 month using this payment terms in which you have shown to be trustworthy. If it is declined and only 30 days are offered – because you have no history – then this is the perfect scenario of our second method.

Early payment discounts of 2% if you pay within 7 days. This is like a 24% p.a. discount on the invoice value, not a bad way to compensate for the overdraft interest charges from your bank.

Surly you supplier is interested in your business, and is not going to decline both offers – you win either way – if they decline, then look for a new supplier. Because you are not only helping yourself with your cash-flow, but theirs too.

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Small Business Failure – Reason: Cash-Flow

Aug 24, ’07 11:37 AM
Author Stefan Töpfer (Editor) Categories Failure, Health Check, Outsourcing, Small Business / SOHO, Start-Up, Virtual Assistants, avoid growing pain, bootstrap, deal with taxes, do a SWOT plan, do a reality check, do bookkeeping., do credit control, grow your business, handle problems, lower overheads, not to do it!, outsource effectively, plan cash-flow, plan your business, recruit the right people, start-up in business, use online IT

The first post in this mini series is related to this issue of cash-flow and so will be many that follow. Cash-flow is the central and most critical management objective for every small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal business.

T o perform this small business health-check, ask your self the following questions:

  • Do I have a written plan and cash-flow forecast for my business? As I said before, without it it is like driving with your eyes shut.
  • Am I efficient in achieving those aims? We often allow non-core issues and irrelevant stuff to “steal” our time, or we are so overwhelmed by work that we do not have the time to stand back and look at our small business – take the time and make those decisions.
  • Do you have a feel how my small business works financially? If not, you must be feeling uncomfortable most of the time, again take the time and feel better about your small business.
  • When did I plan and monitor my cash-flow last? You need to do this at least once a week or if something happens that is not in the plan. Check your cash-flow each time before you make a bigger purchase or hire staff which is not in the plan, you will quiet easily see if you can afford to do it or not.
  • How much reserves does my business have? The best peace of mind is when your small business has substantial reserves, do you have any or are you at least planning to get a 2-3 month reserve buffer?
  • Have I re-negociated my terms with my suppliers? What if your suppliers gave you 60 or even 90 days payment terms – put that in your cash-flow and smile, it’s instant reserve. You need to pay your suppliers on time, only then will they trust you enough to give you the extra long payment terms.
  • Am I chasing my clients for payment adequately? Do you know the average number of days you clients need to pay you? Give incentives – 2 % off if you pay within 7 days – try and keep your average well below 30 days. If you have not enough time to do credit control outsource it.
  • Do I need my overdraft? If you get better payment terms fro your suppliers and do a better job at credit control, you may not need your overdraft anymore, which will save you a lot of money. Don’t cancel your overdraft, but make sure you only pay for it when and if you use it – shop around. On those terms you should get an overdraft, even if you do not need it, so if something unexpected happens you got the cash-flow reserve.

The importance of your cash-flow situation can not be overestimated, as long as you can pay your bills you are in business - as the saying goes: Cash Is King!

You can see other reasons for small business and personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants failures in my Health Check Category, if you can add to this list please do so, I would welcome your comments.

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Small Business Failure – Reason: Fixed Cost

Aug 23, ’07 9:37 PM
Author Stefan Töpfer (Editor) Categories Failure, Health Check, Outsourcing, Small Business / SOHO, Start-Up, Virtual Assistants, avoid growing pain, bootstrap, do a SWOT plan, do a reality check, do bookkeeping., do credit control, grow your business, lower overheads, not to do it!, outsource effectively, plan cash-flow, plan your business, start-up in business

I have decided to write a little mini series on why small business and personal businesses, like contractors, freelancer, self-employed, sole-trader and virtual assistants, fail and how to find out if your small business is in danger, too.

In this first part, I would like to talk about fixed costs in small business. To perform a basic small business fixed cost health check, ask yourself the following questions:

  • Do I know where all the money is going every month? You should know where all your money is going at all times – if you don not know, it is important that you find out.
  • How comfortable am I with the current level of costs? Are you able to generate reserves in your small business, or is your business just making ends meet.
  • Are large parts of the costs for non-core business tasks and do I get value for my money? No matter how well your business is doing, you should never waste money – so if you can outsource do it, it will make you small business more focused and far more resilient and efficient.
  • Do I have a cash-flow forecast for my business? Having no cash-flow plan is like driving with your eyes closed – cash-flow planning is easy, and you will have a better feeling about your small business.
  • Are there any spending issues with business partners or colleagues? Are other people spending your money (?) and you can not control them – deal with it, sort it or get rid of them even if they are partners in the business, find a way or get help.
  • Am I in control of my spending or have I abdicated this function to someone else? Even if you have staff – outsourced of employed – doing your bookkeeping and organize the payments for you, you need to make the decisions of when your suppliers get paid, so you can control your cash-flow.

There are many more questions you could ask yourself, here I just wanted to get you going. If you have any more issues or are uncomfortable with any of your costs and answers to the above questions, then you should get some professional advice.

Running out of money is the reason most small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses, fail – not controlling your fixed costs is one of the main reasons for this.

You can see other reasons for small business and personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants failures in my Health Check Category, if you can add to this list please do so, I would welcome your comments.

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Small Business Checklist: Home Office & Home Business

Aug 23, ’07 10:01 AM
Author Stefan Töpfer (Editor) Categories Business Checklists, Entrepreneur, Freelancer, Green/Eco-Friendly, Home Business, Infrastructure, Lifestyle, Mobile Technology, MumEntrepreneur, Office - IT, Outsourcing, Personal Business, Relationships, Self-employed, Small Business / SOHO, Social Entrepreneur, Software as a Service, Sole-Trader, Start-Up, Virtual Assistants, Web Technology, WinWeb, Work/Life Balance, avoid growing pain, be eco-friendly, bootstrap, choose your office, grow your business, keep data safe, lower overheads, outsource effectively, plan cash-flow, plan your business, start-up in business, use online IT

As part of a bootstrapping exercise or a business start-up phase, working from home is a great way to work, so I thought of some points to consider when setting up your office, small business or personal business, like contractors, freelancer, self-employed, sole-trader and virtual assistants at home:

  1. Cost – you will save a lot of money and be very eco-friendly when you decide not to rent an office, this saving can be used in other areas of your business, like marketing, better web-site or better IT.
  2. Family – I suspect that many of you work from home because of your family, it allows you to be around when your kids come home from school or look after relatives, while still earning a living.
  3. Commuting – again a very eco-friendly approach and saves money and time. This time can be spend on real business activities. It certainly will enhance your work/life balance and make your small business or start-up more cost efficient form day one.
  4. Freedom – this may especially appeal to you if you like to work at odd hours, it will suit your lifestyle. Dress as you like it, so you will be more comfortable.
  5. Healthy – if you work in an office and one of you gets ill, soon all the others are down too – not if you work from home.
  6. Teamwork – chances are you need to work with other people, use online technology to collaborate with your colleagues and other team workers – they too may work from home.
  7. Domestic Life – you’ll be around when the plumber finally turns up or other trades people. You can enjoy your local life more – by having a social network in your village rather than at work – this could be the return of the local community.
  8. Small Business Infrastructure – use online technology to keep your data and work safe at all times without that you have to do anything, build your own virtual Small Business Team to timeshare professionals like yourself. Outsource to make your business more professional and scalable.
  9. Meetings – even bigger businesses use coffee shops to meet – they often have WiFi – so can you. Make sure you plan them well, so you can be efficient with your time.
  10. Eco-Friendly – you will only heat your home, no other workplace needs to be heated or air-conditioned, your energy efficiency goes up, no travel to work – so you reduce your carbon footprint enormously just by working from home.

You will need some pretty good reasons to go to an office and work. Especially for small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal business, you need to ask yourself if you can afford to miss out on all the above opportunities for your work and for your life?

I work from home over 90% of the time and only go to the office for meetings and I love every minute of this. I use social network communities like linkedIn to build my professional network, utilizing our online office, skype and other tools to communicate and work worldwide.

More and more of my friends work from home so we have nice “pub-lunches” locally, no traveling, less stress and a much better work/life balance – how is your work/life balance?

For more of my checklists see the Small Business Checklists category and as always please add to my list with your comments, tell us what works for you.

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Accounting and Accountants for Business Start-Ups and Small Business

Aug 21, ’07 2:04 PM
Author Stefan Töpfer (Editor) Categories Accounting, Outsourcing, Software as a Service, Start-Up, Web Technology, WinWeb, deal with taxes, do a SWOT plan, do a reality check, do bookkeeping., grow your business, not to do it!, outsource effectively, plan cash-flow, plan your business, recruit the right people, start-up in business, use online IT

I get many questions about bookkeeping and accounting for small business and start-ups, here are a couple of things you should consider before making your decision:

What do you want to achieve? Do you want to:

  1. Do you just want to collect your receipts and other documents and than hand it over to someone else?
  2. Are you happy to fill in a simple online forms and have the double entry done by an bookkeeper or accountant?
  3. Or do you want to do the accounting yourself and have the accountant prepare your tax-returns for you?

Each of these options is OK, as long as you do not relinquish all your responsibility to the other party when you outsource. You need to keep your books up-to-date, so you know where you small business is going and so you can make good and informed decisions.

If you are considering option 2. then their are products on the market that can help you, one of them is our AccountsOffice- Lite Edition ( currently still called CashBook), for a full tri-ledger accounting system you can use our AccountsOffice Standard Edition, both of the single user versions are free BTW.

For small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal business, the only way to go is online – I’m sure you think I would say that – but consider this.

You will need to get information fast – to make an urgent decision – how is anyone going to give you advice without up-to-date numbers on your business. There are other benefits to consider, but this one to me is the most crucial. Remember most small businesses fail because of bad financial decisions being taken, often based on false or out of date data.

What if your accountant or bookkeeper wants you to use an offline accounting system – do your business a favor find a new accountant, fast. Accountants are sometimes slow to change, they are also very often very busy people, but you should not worry about that, you need to worry about your business.

I wrote in the past about many accountants wanting to live in the past – that they are not interested in helping you plan your future. Michael Gerber in his book “The E-Myth Revisited” calls these type of business people “technicians” – I agree most of them are and very few have an entrepreneurial outlook in live.

So remember – no planning or no online accounting/bookkeeping for your small business – leave NOW! You owe it to your business.

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Vision, Strategies and Plans for Start-Up and Small Business

Aug 20, ’07 8:45 AM
Author Stefan Töpfer (Editor) Categories Development, Entrepreneur, Small Business / SOHO, Start-Up, do a SWOT plan, do a reality check, grow your business, plan cash-flow, plan your business, start-up in business

A lot is being said and written about Business Planning, but when you read the articles you often find it is not a business plan but a strategy plan. I have written in the past about business plans being not very helpful, one of the reasons is that before you do the plan you need to have a vision and strategy.

A complete business plan should consist of of three parts:

  1. Vision – is the first step in the “entrepreneurial” process, it does not talk about sales, turnover and cost. It talks about a vision for the “whole” business for the future – 10 to 20 years ahead – it is the long-term goal, view or ideal that drives you small business or business start-up.
  2. Strategy – the strategy is the articulation of your vision for your small business in which you put down the practical steps by which your small business is to achieve your vision, based on your current situation. The “strategy” plan has a 3-5 year time horizon.
  3. Plan – your plan is only concerned with the next 12 month and is a “tactical” plan of how your small business is going to achieve your strategy.

The Vision & Strategy planning is also refereed to as corporate planning and looks at the business ( including small business) as a whole – it is not a plan for, rather than about the whole organisation. It is often said that only bigger business does this kind of planning – that is utter rubbish – you do it when you set up your small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses, as well – you have a vision. You may not write it down in a formal way, but you a have a vision and a strategy to achieve this vision:

….. I’m going to be the number one melted cheese pie producer in the world, I’m doing it by using my mum’s secret ingredient…….”

or

“….. I’m going to be the best IT consultant in the world by given the best customer service anyone has seen……”

or

“…… I’m going to be the biggest start-up and small business infrastructure provider in the world, I’m going to do it by offering unrivaled software and 24/7 support at the lowest price possible and combine it with real live services for the small business and the business start-up community ….” oh, hang on, no sorry that one is gone already ;-)

I think you should write yourself one of those sentences and then do a 12 month cash-flow based on this, if you then add a SWOT (Strength, Weakness, Opportunities and Threats) analysis to your plan – your are ready.

Even if you have already started your business – remember most businesses get started accidentally – it is never to late to get a piece of paper and write your vision and strategy down, it focuses the mind. Look at it every time you find it hard to make a decision – it will help.

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Small Business and Start-Up Efficiency

Aug 18, ’07 11:25 AM
Author Stefan Töpfer (Editor) Categories Development, Failure, Outsourcing, Small Business / SOHO, Start-Up, avoid growing pain, bootstrap, do a reality check, grow your business, lower overheads, market and sell, outsource effectively, plan cash-flow, plan your business, start-up in business

When I talk here on my blog about outsourcing, bootstrapping or in my company to my fellow directors about more profit, sales, customers and all that with less time, then I’m really talking about improving business efficiency.

I even often misleadingly use the word “grow”, when I really mean efficiency. I’m not one of these people who thinks, that every business wants to grow in size – no, in profit, turnover and efficiency – YES! In todays networked world it is possible to “grow” your business virtually and increase your efficiency at the same time – rather than “grow” your fixed cost structure and decrease efficiency.

Here I just want to talk about which steps one might take to a more efficient small business:

  1. look at you business critically and understand what your core business is
  2. focus on your core business and objectives, do not waste time with non-core activities – outsource those
  3. re-evaluate work processes, remove non-value-add activities, work out how to do that
  4. re-evaluate your outsourced activities, are you getting a professional and efficient service
  5. check your clients perception of your small business, ask for feedback

The drive for efficiency is an continuous effort in every business, not only small and start-up businesses, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses. It is this kind of thinking that will determine success or failure of your small business venture.

How efficient is your business – to think about that is a much more fascinating way to spend some “free and quiet time”, than watching television – it’s more exciting and rewarding too.

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Small Business Checklist: Business Costing

Aug 15, ’07 6:46 PM
Author ideasdemaon Categories Business Checklists, Finance, plan cash-flow

Do you know what your overheads and variable costs are in your business – have every worried about that? If you have then you must keep up-dating your costing every few month, as they will change as the business grow and changes. Here are a few things to look out for:

  1. Yearly costs – like insurance, spread them over 12 month and add them to your monthly cost estimate.
  2. Bank charges – easy to overlook, you may notice your banker never talks about these, check an compare them.
  3. Fixed costs – rent, rates, utilities bills, make sure you add these to your monthly out goings.
  4. Time – do you know where and on what all the time in your business is spent – you should – time is money.
  5. Bad debts – look at your past performance, come up with an average monthly figure and mark your products and services up accordingly.
  6. Buying – keep control of your spending, make one person sign off on all purchases, ideally that person should be you.
  7. Keep up to date – update your cost sheet on a regular basis.
  8. Mark-up – make sure you review your mark-up on a regular basis to protect your margins.
  9. Budget – create a budget and put it in your cash-flow.
  10. Cash-flow – compare your cash-flow fore-cast with the actual numbers on a regular basis and learn from it, it’s not about being spot on, but about knowing what happened so you can control it.

The more you know about where your money goes, the easier it is to figure out how to optimise your capital usage for maximum business benefit.

Many small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses, fold because they don’t look after the money.

For more of my checklists see the Small Business Checklists category and as always please add to my list with your comments, tell us what works for you.

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