Financial, Goals, Leadership

growGrowing a business takes hard work, self-discipline, good team, good clients, leadership, and little bit of luck every now and then. Growing a business in a sustainable manner – by that I mean sustainable growth with profitability – takes structure as well. In every type of business, there comes a point where you, the owner/founder, simply can’t do it all any more, or can’t do it with your current team/organization. Structuring for Growth means taking the time to sit down and really plan out what your business and team will look like 3-5 years (or longer) out into the future, comparing that to what it looks like today, and developing the plan to bridge the gap.

Structuring your company for growth means a few things: Learning how to focus on the right things at the right time; Understanding how growth is likely to impact your company; and Identifying the leadership needs of your much larger organization.

In his book Navigating the Growth Curve, author James Fischer accurately describes the different areas of focus for businesses, prioritized depending on their current growth stage, calling them the Three Gates of Expansion. These gates are Profit/Revenue, People, and Process, and almost every challenge in a business is primarily the result of an issue in one of these three focus areas. Fischer also defines seven stages of growth, based roughly on number of employees, and recommends a priority order of focus based on your stage of development.

In the earliest stages of growth, the biggest focus needs to be on Profit/Revenue, as you can’t grow (or survive) without the cashflow to pay for it all. You hire your initial employees and develop your processes on the fly while you deliver your products and services as quickly and profitably as you can. Once you get enough business in the door, you utilize the team you have and begin developing some processes in order to create repeatability. You continue to grow and increase sales (and maybe profits) while adding staff to your current structure.

At some point in time during your growth, you will begin to realize that your current organizational structure simply can’t handle any more growth. More and more things are falling through the cracks, and you are often the only one there to pick up the pieces, being stretched thinner and thinner. Sometimes the signs are subtle, and sometimes they are not so subtle, but they are always there. When you see these signs, it is time to take a step back and rethink the structure of your business – from departments and product lines to leadership and management. Now is the time to get away from the office with your senior staff and trusted advisors to look into the future and define the structures necessary to sustain your profitable growth for the next 5 years.

Here are a few key concepts to think about when creating your new business/organizational structure: Span of Control; Leadership; Management; and Culture. Span of Control is the concept that it can become very difficult to manage more than 5-7 people effectively, depending on the type of work the team performs. Leadership becomes more important as you grow, as the bigger a company the easier it is for portions of the company to drift from the common goals and vision. Company leaders need to be cultivating the vision and developing other leaders within the organization to foster growth and development of people and products. Management is a completely separate skill set that needs to be present to oversee the larger number of team and the larger volume of production work being performed. Management skills range from supervision skills to performance management to statistical analysis depending on your industry. Last, but certainly not least is your Company Culture. When a company is small, it is easy to maintain your culture and follow your core values, even if they are unspoken. You tend to hire people who share your values at the time, but as you grow it becomes more important to define your Culture more clearly, and to talk about it more frequently across the organization.

Now that you are a growing business, set aside the time to step back and consider how well you are or aren’t structured for the growth you anticipate in the next 5 years. Identify your gaps now, and put concrete plans in place to address them before they have a negative impact on your company and you personally.

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Goals, Marketing, Sales

5 Ways to Increase Your Website’s Conversion Rates

By: Lina Calip

Increase-conversion-rates-04-14-151For a business website, it is critical to ensure as many conversions as possible. Converting a chance visitor into a loyal customer is the main goal of your marketing campaign, and there are a number of ways to ensure a rise in the number of conversion rates you enjoy for your business.

While an attractive website interface is important, there are certain efforts that you need to make to convert visitors into customers, with no time being lost.  The following are 5 ways to do so:

1.     Secure a Live Chat Service

Give your potential visitor the chance to enjoy prompt and knowledgeable answers to their queries regarding your products and services. That is a great way to grab their attention and ensure a high conversion rate.

Remember, current internet users want fast results, and if you won’t give them a prompt answering service, they will switch over to the competitor’s website.

2.     Images

Product images are a must to attract the attention of a chance visitor to the website, and ensure their conversion into a loyal customer. Besides product shots, images of people using them also adds a touch of trust and sincerity to your brand, making it relatable to your customer.

Relatable and inspiring images are a must to improve your website’s conversion rates.

3.     Videos

Adding a visual element to the website is a great way to attract and interest customers in your offered services. It offers the visitors the chance to enjoy an engaging experience, and promotes your offering through a pleasing and preferable visual format.

The videos on your websites can be introductory films of your entire portfolio of offered products, and can also be how to use guides for some of the most technical products you offer to your clients.

4.     Knowing the Audience

It is very important to understand that you need to attract the right audience and traffic to your website. You need to know who your target audience is, and only focus on attracting them to the website, instead of amassing a large traffic which cannot be converted into loyal customers.

5.     Opting For a Usability Testing

Opt to get unbiased reviews about your website from strangers, who will give you valuable feedback about the different features of your site. In this way, you can improve the business site to ensure higher conversion rates.

These 5 ways will help you improve the conversion rates on your marketing website considerably.

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Overcoming Good Enough-itis

By ActionCOACH Mark McNulty

Good can Never be Great

Many business owners find themselves in a similar place after a while – their business is doing pretty well and they are making a decent living, but there is something missing. They don’t feel as fulfilled at the office as they thought they would, and they feel like something is missing from the team. Everyone comes in, does their job, and takes pretty good care of the customers, yet the little things that would make it great never seem to get done unless you do them yourselves. When you begin to feel this, it most likely means you, your team, and your business have come down with a case of “Good Enough-itis”, where everyone performs just “good enough” to get by, but nobody excels.

What is needed in your business now is a focused effort to take every single team member’s performance up one notch. I refer to this critical business growth activity as creating a “Culture of Excellence”, and it is vitally important for getting you and your team out of the “good enough” phase that it is so easy to get stuck in. Excellence starts at the top, with focused leadership and dedication to the task being key to getting the improvements started and part of the new culture.

In order to begin down the path to Excellence, the most obvious first step is to define what excellence looks like in your business or practice. We begin with looking at each department or function of your business, and asking ourselves what it means to be excellent in each area. The key to success in this exercise is to look at excellence from three different perspectives – the team, the customer/client/patient, and the business itself. Allocate time for your staff and their teams to spend a couple of hours defining what excellence looks like for their area. Get the ideas out of their heads and onto paper so that you can consolidate the inputs from every area and perspective. Be sure that your definitions of excellence are outcome based, as excellence must be measurable and monitored in quantitative terms.

Once you have the inputs gathered, it is time to begin creating action plans to implement as many of the ideas and suggestions for creating excellence as possible. Since you can’t work on all of them at once, identify the critical few to work on first – the areas where achieving excellence will have an immediate impact on your customers and/or business results. Establish a regular progress review process (project management excellence) to ensure that you are not just implementing the ideas, but that systems are developed to provide for training, testing and measuring of new initiatives, and accountability for results/outcomes. Make sure that the purpose of each activity involved in meeting your client’s needs is unambiguously defined, and that it is clear to everyone the difference between good enough results and excellent results. Review every process to ensure that they meet not just your customer’s needs, but also provide your team with everything they need to be excellent at their assignments, and the means to be recognized for their successes.

Excellence comes from all corners of your business, and can show up by accident/chance, or it can be part of your plan to take things to the next level. Look around your business every day as you walk it, finding the success as it happens and encouraging others to seek it where it is lacking.

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Financial, Goals, Leadership, Marketing, Sales

Goal Setting – Divide to Conquer

By ActionCOACH Mark McNulty

Goal

The power of goal setting is well documented, and there are hundreds if not thousands of books and articles out there on the topic, so I’m not going to try to convince you here if you still need that. What I want to do now is share some of my Top Tips for creating a great plan that you can actually accomplish.

First and foremost, make sure that your goal-setting and planning includes both business and personal items. As a business owner, you need to be planning for balance in your life, so I would suggest starting with your personal goals. The categories to consider for personal goals are: health/fitness, financial, family, spiritual, education, and FUN! Never forget to plan to have fun. The categories for business are: sales, marketing, team, operations, finance, and products/services. Be sure to consider goals in each area.

The next step is to be certain to break up your sales goals into smaller chunks. Since you are in business, I am already assuming that you will have a sales/revenue goal (if you don’t we need to talk). Too many business owners just say they want to increase sales by 10% or some other generic number. My recommendation is to look at the components of sales and set targets for those items, which will result in a much bigger sales increase when you put them back together. For example, instead of increasing sales by 10%, let’s increase your number of leads by 5%, your conversion rate by 7%, and your average sale amount by 5%. Since these components of sales multiply together to generate revenues, you would increase your sales by 18% if you accomplished these three smaller goals.

Just as important as sales goals are your profit goals. I assume that the purpose of sales is to end up with a net profit at the end of the day/week/month/year, so why aren’t you setting goals and planning for profit instead of hoping for profit? There are two types of profit in every business – gross profit and net profit. If you don’t know the difference, call me quickly, as you may be losing out on a great opportunity to make more money! I have some clients raise their prices, sell a little less (and work a little less) yet make more money!

The last recommendation I have for you is to share your goals with others. Share them with your spouse/significant other, your team, your coach, your CPA, your banker, your financial planner, your peer mentors. The more people that know about your goals, the more they can ask you how you are doing with them. Peer pressure is one of the greatest forms of accountability, so the more people you share the goals with, the more help you will get to achieve them.

However you choose to implement goals and planning, the simple truth is that writing them down, reviewing them regularly (at least weekly, I prefer daily), and sharing them with others who can help you achieve them are the best ways to help you get everything you want in your business and your life.

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Goals, Leadership, Team

How to Hold Employees Accountable

By ActionCOACH Mark McNulty

 

Team of business people working together on a laptopOver the last three weeks, I have been asked multiple times, by frustrated business owners, how to hold people accountable for their work.  It is one of the biggest challenges, yet one of the most misunderstood concepts in the business world.  When I started asking people what they thought about the issue, I heard a lot of absolutes in their beliefs and approaches to accountability.  A common theme that arose was that most people seemed to think it was a “do what I ask/say or else” scenario, which I believe is the absolute wrong way to go about accountability.

The first problem with the “do what I say” approach is that accountability isn’t about doing anything!  Accountability is about achieving mutually agreed upon results/outcomes, not simply about completing a task (although completing tasks is obviously part of getting results).  You and your team should be working at how to be accountable for results, not just completing tasks.

The second problem with this approach is that most teams that I talk to simply don’t know how to be accountable.  They just don’t understand the concept, and their misunderstanding is often magnified by their leaders incorrect approach of “holding them accountable”.  What I have found over the years is that the best way to hold someone accountable is to teach them how to BE accountable.  If you have to “hold” them accountable or “call them on it”, then you have likely already lost the battle and will end up with the dreaded lose-lose situation instead of a win-win.

Teaching people how to be accountable will take some time, but it is always worth it because they will improve for you on a steady basis long before they get to owning their accountability.  The steps are fairly simple and straight-forward, just like most fundamentals of business.  The key is to decide whether you want to be a great task master or a great leader.

Step one is setting expectations for the results/outcomes you expect from each person.  Since accountability is all about outcomes, you have to clearly define what you are expecting.  The second step is the most obvious, but also the least utilized – you have to now share your expectations with your team!  The third step is the most important, and it is what makes accountability work – you have to get the employees commitment to achieve the outcomes you are requesting as their personal goal/target.  Without the team buying into the expectations, you will just be beating your head against the proverbial wall trying to hold them accountable to something they never agreed to do for you in the first place!  This might take a discussion or two, you may have to help them understand how they can achieve what you are asking, and you will need to ensure that you provide the tools and environment for them to succeed.

Now that you have defined the expectations, shared them and received a commitment from your team to perform to these expectations, it is time to start teaching them how to be accountable to their agreement.  Some people get it from day one, others take time and coaching, all need you to be a great leader for them.

Here are some of my favorite coaching methods for helping people to be accountable.  First, catch them doing well, even if it is just them trying.  Ask them how they are doing in relation to their commitments.  Ask them what help/support they need, what is preventing them from meeting their goals/targets/commitments.  The key to success is getting their participation in the discussions, so be sure to ask then listen.  If they don’t know, tell them it’s ok, and ask them what they think.  Ask them to recall what you talked about last time.  The key to all employee coaching is to get them talking so that they take ownership of their own development and success.  If they forget something, that’s ok, have them think back to the last time it was discussed, help them to do their own recall – don’t do it for them.

The bottom line for accountability is that “holding people accountable” is difficult to do, and establishes an adversarial relationship where someone wins and the other loses, while “helping people be accountable” is much easier and establishes a trusting supportive win-win relationship. 

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Financial, Goals, Leadership

Understanding Money in a Business

By ActionCOACH Mark McNulty

U.S. Coins and Paper MoneyWhen I talk to business owners about finances, the vast majority never talk about anything other than their revenues, or sales figures.  The same goes with goal setting, most prefer to focus on sales/revenue targets.  While obviously revenues/sales are important, that is only one form of the money in your business.  If your business is going to provide long-term financial benefits for you, the owner(s) (and if not, why are you going through the stress of owning a business), then you need to understand all four forms that money takes in your business.

Money in a business takes on four distinct forms – Revenue, Profit, Cashflow, and Equity. Let’s take a look at how each of these forms, and how they fit into your business.

Revenue is the first form of money in your business, and it is created by your employees.  The primary job of your employees (including when you are wearing your employee hat) is to generate revenues by performing work to create or sell products and services.  Revenues are easy to track and to establish measurable goals.  Too many business owners stop thinking about money after setting their Revenue goals.

Profit is the second form of money in a business, and comes in two forms – gross profit and net profit.  Profit is what is left over after expenses, first Cost of Goods expenses (leaving gross profit) which is then used to pay Overhead expenses leaving net profit.  It is the job of management to plan for and create Profit in a business.  This is one of the least planned for results in a business, yet it is probably the most important for the long term health of a business.  Every business should be focused on maximizing the amount of profit it generates, as without it the business cannot continue to grow and achieve its mission, whatever that might be.

Cashflow is the third form of business money, and can be simple in some businesses and extremely complex in others. Cashflow is exactly what it sounds like – how money flows through the business.  Cash comes into a business when products and services are sold, creating Revenue, which is used to pay the business expenses, with the leftover cash (Profit) then used to buy/create more products to sell.  Different businesses/industries have different cycles of Cashflow, depending on how long you are given to pay your suppliers and how long your customers take to pay you.  Owners are responsible for planning and managing the Cashflow of a business, taking into account the timing of both the inflows and the outflows, ensuring that there is always sufficient cash available to sustain operations and growth.

The fourth and final form of money in a business is Equity.  Equity represents the actual dollar value of the business, and is the responsibility of the owner wearing her Investor hat.  In addition to paying the bills and providing yourself with an income, you need to be thinking like an investor, building Equity in your business so that your business has value when the time comes to retire.  Studies show that the vast majority of owners of closely-held businesses do not have adequate savings to retire, so they need to build the Equity in their business in order to be able to sell it for a sufficient amount to pay for your beach retirement house.

When planning for 2015, I want you to set goals for both Revenues and Profits, make sure you have a firm grasp on the timing and adequacy of your Cashflow, and that you have at least 3 strategies in place to increase your Equity in your business.  Do this every year and you will grow in a sustainable, lower stress manner than you ever thought possible, and when it comes time to move to your beachfront retirement home, you will be able to pay for it with the value you built into your business.  Have fun!

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Goals, Leadership, Team

The Power of Effective Meetings

By ActionCOACH Mark McNulty

business meetingWhether I’m talking to my friends who work at big companies, or the ones who work at or own smaller businesses, I typically hear one of the following complaints: “too many meetings” or “not enough meetings”.  When I ask those in the “too many” camp a few more questions, what I typically learn is that the problem isn’t really too many meetings, the problem is that the meetings aren’t very effective, and are considered a waste of time by most attendees.  When I talk to the owners of small businesses in the “not enough” camp, I typically hear that they are trying to avoid the “death by meeting” environment of big companies, but often at their own expense.  The reality is that effective, informative meetings are required and actually desired to grow any business, big or small.  How else do you expect to communicate and coordinate efforts amongst team members and/or departments?

There really aren’t any secrets to effective meetings, as there are dozens of books and seminars and workshops on how to run effective meetings.  The basic concepts include having a published agenda (standard if possible), starting on time, ending on time, etc…  So if it is so easy, why do so many people and businesses struggle with them?  While I am sure there are lots of reasons, I have always focused on one basic principle – ineffective meetings come from ineffective leaders.

Here are three simple keys to leading effective meetings that will help you to get more done in less time and energize your team before, during, and after your meetings. These are in addition to the “Effective Meetings 101” concepts I mentioned above

The first key is to make sure that there is a very clear, specific objective for the meeting.  Not just a reason for having the meeting, but a very clearly stated and agreed upon objective or result that you desire for the meeting.  Even for a general staff meeting, where the objective seems obvious, there can be a higher purpose to the meeting, something that even ties back to the Vision and Mission of the company for instance.

The second key is to start every meeting with the first agenda item (remember, a published agenda is a cornerstone of effective meetings) a recap of what went well since the last meeting.  Each person should be prepared to share their (their teams) biggest win(s) since the previous meeting. We are all very good at focusing on problems, and spend a great deal of our time focusing on what went wrong.  As leaders, we need to remember to get our teams to focus on what went right, and to recognize the successes they have, big and small.  If time allows, the natural follow-up question for any win should be “And what did we learn from that?”.  We usually remember to learn from our mistakes, but what about the power of learning from our successes?

The third key for leaders is to remember that the biggest value of the meeting may not actually be the meeting contents, but the process you take your staff/team through before, during and after the meeting.  Of course the contents needs to be relevant and meaningful, and related to the objectives of the meeting, but quite often the more important value comes from the process your staff must go through to prepare for the meeting.  Personally, I have found that the process of sitting down to prepare my list of wins/successes for the week to be a very uplifting and motivating activity, and feedback from the dozens of teams that I have taught this key reveals that they experience the same.  By mixing the good in with the bad and ugly, leaders can send the message that they are all about building their staff/team, not breaking them down.

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Customer Service, Financial, Goals, Marketing, Sales

Growing Your Business by Word of Mouth

By ActionCOACH Mark McNulty

 

profitWhenever I talk to business owners about how they are growing their businesses, four out of five quickly respond “word of mouth”.  If you have read any of the latest marketing books, especially those targeted towards start-ups and small businesses with tight (or no) marketing budget, they all jump on the word of mouth bandwagon, but often without going into enough detail to help make it really work.

At the seminars and workshops I teach, I often ask a follow-up question, something like “how many referrals do you get a week”, or “who is your best referral source”.  Too many business owners don’t know the answer to these questions, and that is why their businesses aren’t growing fast enough.

When helping business owners to grow via referrals, we have to look at the dozens of different referral/word of mouth strategies and choose the ones that make the most sense for them.  Here are my Top 3 favorite referral strategies, in no particular order.

The Personal Ask Strategy – This referral strategy is the simplest, yet many owners are afraid to use it.  It involves directly asking your clients/patients for referrals when you complete your interaction with them.  I teach my clients to look their client in the eye and simply ask them to refer their friends and colleagues, because you are trying to grow your business through referrals and you want to fill it with people just like them!  Hand them two business cards at the same time and watch the magic start to happen.

Referral Rewards – This strategy requires you to have a system to track your referrals (you should have this for every marketing strategy you use), so that you can thank the referrer for sending you a new client.  There are multiple ways to thank people for referrals, and they all work.  You can send a hand-written thank you note, a gift card, a credit on their account, etc…  People often refer once to test if you care enough to thank them – when you do, they send the rest of their family and friends.  Be sure to tell your clients if you plan to use tangible rewards as an incentive – incentives don’t work if you don’t tell anyone.

Testimonials – This strategy again actually requires you to communicate with your customers.  When a client has a great experience, and goes out of their way to thank you or a member of your team, ask them if you can use their experience as a testimonial about your business in your marketing.  I have never been declined when I ask.  In the current digital age, you can collect testimonials in many ways – email, social media, video, or in person.  Always ask for permission to use the testimonial in your marketing, particularly if you want to use their name (which makes the words much more powerful).  Testimonials should be on your website, your facebook page, and in your brag sheet that you use to market your goods and services.

Here are two other critical things to think about when planning the implementation of your referral strategies.  First, you must track where your new customers are coming from, which means you have to train your team to always ask and then to record the answer in your customer tracking system.  Second, when asking for referrals, focus on your A and B customers – the ones that you really like, that are a great fit for your business.  You want more customers like them, and people tend to work with and know more people just like themselves.

In order to make word of mouth marketing work – and it does work – you need to be organized, have a system, and consistently follow through on any promises you make to your customers in return for their recommendations.  

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Customer Service, Financial, Goals, Leadership, Marketing

Help Your Customers Find the Benefits of Buying From You

By ActionCOACH Mark McNulty

handshakeI’ve recently begun working with some high-tech businesses who are selling premium products and services to their clients.  One of the most common issues I find in the marketing strategies of high-end (higher quality, higher price) businesses is the tendency to talk about the features of their products and services.  While this issue is particularly common in technology, I see it in construction, medical, HVAC, and just about every other industry as well.  The problem with this approach is that Features are all about you, your company, and your product, while your customers are far more interested in the Benefits they receive when they buy your product.

Every business owner I have ever met is proud of what they have created, whether it is a product, service or combination of the two.  They often speak proudly of the features they have created for the benefit of their patients/customers/clients, yet they miss the opportunity to attract more customers by making the features the focal point of their marketing communications.  When you are standing in front of a prospect, either literally or virtually in your online store, the thought going through their head is commonly called WIIFM – What’s In It For Me?

When you focus on the features of your products and services, what you are really doing is focusing on yourself, and what it is you think you do that is so important to the world.  What your prospects are looking and listening for is evidence that you have been thinking about them, and that your business makes their life better in some way by providing them with meaningful benefits.  Here are two of the most common traps and some suggestions for avoiding them.

Overuse of industry jargon – The biggest problems with jargon are that everyone uses it and not everyone outside the industry truly understands it.  When you use jargon, you make yourself appear like a “me too” business, using the same language that everyone else does. Me too businesses can’t charge a premium, and most often get stuck competing on price, as their customers don’t appreciate (understand) the value your features provide.

Overuse of details – Business owners are often quite proud of what they have done, and often communicate what they do with long lists of detailed features and useless (from a consumer perspective) facts, some obvious and some not so obvious.  Marketing your business with a list of features misses out on the opportunity to achieve what marketing is all about – educating your potential new customers on what you do for them.

The good news is that the fix for these mistakes is fairly simple.  The first step is to read through all of your communications and ask yourself “So What?” about every single feature of your services.  If you can’t come up with a compelling answer to a simple question about your features, then you can remove them from your marketing.  The simple question?  Why should I care about that?

The second step is to rephrase every statement you make about your products to be customer/user centered.  You must help your customer find their unmet needs satisfied by your marketing to help them become buying customers instead of distant prospects.  One of the easiest ways to do this is to use the word “you” or “your”, or some variation of these.

It is easy to get overly excited about what you do, and the temptation is to want to tell your customers all about it.  While a few might care (your family maybe), what most of your customers really want to know if how your product benefits them, so be sure to always put yourselves in their shoes.  Remember that your marketing isn’t for you – it’s for them.

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Financial, Goals, Leadership, Sales

What To Do When Cash Gets Tight

By ActionCOACH Mark McNulty

 

U.S. Coins and Paper MoneyAs an intelligent, high performing business owner, you already know that “Cash is King” when it comes to running your business, right?  Well, in my experience, too many business owners focus too much energy on Profit and Loss (P&L), and not enough on Cash.  It should never come as a surprise that you are low on cash, and you should always be able to predict (within reason) your near term cash position, and have strategies to improve it if the plan puts you too short.

The first step is the one too many businesses skip, and that is having a budget based on cash flow, not just the P&L.  This means adding in all the things that you pay cash for that aren’t reflected in your P&L, the most common of which are bank loans and any regular (or irregular) draws you take to pay yourself.  I’ve worked with businesses that showed tremendous profits, but were going broke because they weren’t paying enough attention to the draws the owner was taking to pay personal bills at home.  No matter how much he took out, his profits never suffered – it was like magic!

If you find yourself in a cash crunch, the time to act is NOW (really it was last month, but it’s too late for that), and the activities to focus on are those that can find and conserve cash now as well.  I recommend a 6 week cash flow plan that shows what you expect to bring into your business in cash each week, and shows what you should be paying out to creditors, vendors and employees each week.  This will give you the true cash situation for the next 6 weeks and highlight when and where the shortfalls might be.

Now that you have a plan, you need to work on strategies for both areas – cash inflows and cash outflows.  If you are cashflow negative, you need to look at what bills can be delayed, which can be partially paid, and which truly must be paid (utilities to keep the building open, for example).  If you are short cash, know your vendors, talk to them, tell them your situation and ask for their help.  If you are a good customer of theirs, they understand the ups and downs and will likely work with you.  Do not try to mislead them – that rarely goes well short term and really hurts you in the long term.

Once you have done what you can with your cash outflows, it is time to look at cash inflows.  We start with your accounts receivable – who owes you money, and when do you expect to be paid?  Can we accelerate the payment schedule in some way?  Who is overdue on their account, when was the last time they were called?  Do everything you can to speed up the receipt of payments already owed to you.

The last thing to work on is increasing sales – and this is where you need to be strategic.  I was recently working with a company in a cash crunch, and the CEO went on a sales trip to try to drum up business.  The only problem is that the prospects being called on the type of customers that will take months to get setup, will pay the slowest, and will be the least profitable.  While they are good for the long term as they can help get volume up which will eventually lower some costs, they are not going to help you now.

The key is to know which sales channels/products/services/markets are both the most profitable for you, and are the shortest sales cycles.  The shortest cycles are often not the strategic accounts that will get you where you want to be in five years, but if you don’t work them now you might not be here in five months!

Cash management is like every other aspect of your business, you need to have short-term, medium-term, and long-term strategies.  When it comes to sales and revenues, be sure that you don’t focus too much on the long-term items at the expense of generating the cash you need right now, or in 3 months.  Put your cashflow plan together this week – before it is too late to prevent your next sleepless night.

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