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‘Where’s the Money Gone?’ traces the learning of a typical business person named Mike. Mike believed that to be successful he just needed to make a profit.

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7 Tips on Small Business Cash Flow

By on January 28, 2010 in Small Business Cash Flow

Good cash flow is the life blood of any small business.

Without it, business owners struggle constantly to find enough resources to keep the business going while at the same time putting food on their table at home for their family.

So what are seven good tips to help you keep the cash moving in your business?

  1. Get a weekly copy of your bank statement – Many business owners do not ever review their bank statement and leave it up to their book keeper to do all this for them. As a result it’s ‘out of sight – out of mind’ when it comes to the awareness of cash and they only look when a crisis occurs.
  2. Review your invoicing procedures – If you are not efficient in getting invoices out to customers then you’re unlikely to get money back from them efficiently. You send a message to your customers with your invoicing procedure so if it is haphazard or late your customers are likely to take the same attitude to paying you.
  3. Review your terms with your customers – What terms do you sell on? Do your customers adhere to those terms or just pay when they feel like it? When was the last time you checked the actual terms in your business or reviewed them with your customers?
  4. Clean out old inventory – Many business owners hate the pain of dealing with old inventory because it usually represents a mistake that was made which can be hard to own up to. As a result the inventory builds up and ties up money in something sitting doing nothing. Have a sale or look for a different channel to sell surplus or excess stock into and you’ll be happier with the money back in your bank.
  5. Review your payment procedures – Do you have a disciplined and formal method of paying your suppliers. Is it a matter of paying when you have the money or when suppliers ring up OR are there particular days of the week or times in the month when you make payments? Do you time your payments with receiving money from your customers?
  6. Review the terms for your suppliers – When was the last time you negotiated terms with your suppliers? Do the terms with your suppliers match the terms you give your customers. If you buy on 30 days and sell on 60 days then you will always have a cash flow deficit particularly if your business is growing strongly.
  7. Don’t focus solely on making a profit – most business owners are completely focused on making a profit until they run out of cash. This means focused on the costing and pricing without considering their working capital and how the money flows in their business. While making a profit is important, having money in the bank is more important because when there is no more money you’re broke!!

What’s your experience with cash flow?

I’d love to hear your feedback or further tips you’ve found useful.

Video

Do you have a small business retirement plan?

By on January 26, 2010 in Melbourne Vlog Tour

To be able to retire from your business you need to be able to separate yourself from it.

Today we look at three important points of separation that you need to achieve before you will be able to successfully retire from your business.

The Vlog series comes from One Sherpa an online global membership community dedicated to helping small business owners succeed and prosper.

The series is filmed on location around Melbourne, Australia and answers questions commonly asked by small business owners.

This video is filmed from the Melbourne Casino, Melbourne and answers the question ‘Do You Have a Small Business Retirement Plan?’

Where Can I Find Good Business Plan Help?

By on January 21, 2010 in Business Plan

When you hear the word business plan, who is the first person you would associate with business plans?

For many small business owners it is their accountant.

In fact most small business plans are prepared for the purpose of getting finance rather than for running the business and if this is all you want then your accountant will likely be the best place to get help.

However, if you want to use your business plan to help run your business then your accountant may not be the best place to start.

Business plans that are to be used to actually run your business must be developed from a different angle.

They’re not primarily focused on getting money but making money.

This means that you need help from people who can help you generate money rather than borrow it.

You will find that mentors, coaches and business advisors are more focused on helping you generate money.

Find someone who really understands how you interact with your customers and understands how the money works in your business.

Remember that customers are the primary source of money entering your business and as a business owner you need to make sure that it doesn’t disappear as fast as it arrives.

Good business plans must focus on these two primary aspects

What’s your experience on finding good business help?

How long did it take you to find it?

Video

How do I develop a business plan?

By on January 19, 2010 in Melbourne Vlog Tour

Most people who go into business have some sort of business plan setting out how they intend to succeed (even if it’s not formally written out).

Unfortunately many fail to achieve anywhere near the level of success they hoped and planned for.

Today we look at three parts of a business plan that you must get right if you are going to have a successful implementation of your plan.

The Vlog series comes from One Sherpa an online global membership community dedicated to helping small business owners succeed and prosper.

The series is filmed on location around Melbourne, Australia and answers questions commonly asked by small business owners.

This video is filmed from the Melbourne Aquarium and answers the question ‘How Do I Develop a Business Plan?’

What’s the Simplest Way of Creating a Business Plan?

By on January 14, 2010 in Business Plan

There is a very famous quote from Kelloggs that says:
‘The simple things in life are always the best.’

In a previous post I talked about using a business plan template which is often the simplest way to go.

However, even if you are using a template you need to think about your plan in two parts and make sure that they both are compatible with each other.

Your business plan will contain WORDS and NUMBERS and they both need to tell the same story otherwise your business plan will be flawed.

So when you do a business plan, who prepares the words and who prepares the numbers?

Often the words are prepared by the business owner and the numbers are prepared by their accountant to make things look good!

As the business owner you must understand the overall numbers in the business plan because it is you who will have to achieve the plan.

Make sure that you understand the overall numbers, not just the sales figures, but the key expense items such as product costs, people costs, marketing, distribution and administration costs.

You should also clearly understand important figures like how much inventory you are holding and how much your customers are likely to have outstanding with you.

So when you stand back from your business plan do the numbers really demonstrate what the words are saying?

The simplest and best business plans make sure they do.

What’s your experience of trying to get the words and numbers to work together?