Cash Flow Management

Need to Maximize Cash flow?

In these times of a tight economy and when growth is difficult to sustain it is important to stay on top of the company’s finances and to preserve cash.

Here are ways to maximize cash availability in the business.

1.     Track cash flow monthly.

Use a budget to track anticipated cash inflows and outflows so you can assess your situation and react to problems such as the loss of a key sale. This frequent monitoring allows you to delay discretionary payments if necessary.

2.     Monitor financial statements.

Review statements monthly and look for issues. Closely review key indicators of the business’ health including a variance in expected gross margin and inventory turnover.

3.     Work with customers and suppliers.

You can increase cash flow by offering discounts to early paying good customers and preserving cash by having suppliers help by extending payment terms.

4.     Chase the slow payers.

Owners need to be diligent pursuing overdue accounts. If you do not insist on collections you are financing someone else’s business for them.

5.     Protect working capital.

If cash is tight don’t pay for long term investments in equipment. It is better to use debt to finance these projects. Debt can be used to re-finance fixed assets to free up capital.

6.     Cut waste.

Make every effort to improve productivity, eliminate inefficient equipment and other sources of waste. Engage staff to get involved in developing solutions.

These suggestions may help improve that most vital business tool – cash flow. Agree?

Gerry@polarisgroupmc.com

Business Ethics

One of the more important attributes for small business success is practicing with carefully developed principles of high ethical standards. When practiced throughout the organization it becomes part of the image of the company and can be an important factor in overall success and how the community views the business.

In the research study, "Does Business Ethics Pay?" by The Institute of Business Ethics (IBE), it was found that companies displaying a "clear commitment to ethical conduct" consistently outperform companies that do not display ethical conduct.

The following are excerpts from that study that I believe merit consideration:

1. Be Trustful: Recognize customers want to do business with a company they can trust; when trust is at the core of a company, it's easy to recognize. Trust defined, is assured reliance on the character, ability, strength, and truth of a business.

2. Keep An Open Mind: For continuous improvement of a company, the leader of an organization must be open to new ideas. Ask for opinions and feedback from both customers and team members and your company will continue to grow.

3. Meet Obligations: Regardless of the circumstances, do everything in your power to gain the trust of past customers and clients, particularly if something has gone awry. Reclaim any lost business by honoring all commitments and obligations.

4. Have Clear Documents: Re-evaluate all print materials including small business advertising, brochures, and other business documents making sure they are clear, precise and professional. Most important, make sure they do not misrepresent or misinterpret.

5. Maintain Accounting Control: Take a hands-on approach to accounting and record keeping, not only as a means of gaining a better feel for the progress of your company, but as a resource for any "questionable” activities. Gaining control of accounting and record keeping allows you to end any dubious activities promptly.

6. Be Respectful: Treat others with the utmost of respect. Regardless of differences, positions, titles,ages, or other types of distinctions, always treat others with professional respect and courtesy.

Recognizing the significance of business ethics as a tool for achieving your desired outcome is only the beginning. A small business that instills a deep-seated theme of business ethics within its strategies and policies will be evident among customers. Its overall influence will lead to a profitable, successful company.

I believe there is merit in the values expressed in this study. Please let me know what you think.

Gerry@polarisgroupmc.com

Are you thinking of using a mentor?

Any business thinking about using a mentor to get back on track to the path they expect to lead to more success should spend time defining their current position and what their expectations for future success may be.

Here are some thoughts you may want to consider and a good mentor may help sort through these to get you on the right pathway more quickly.

1.     Where do I stand today?

How is my business positioned vis-a-vis competition and am I achieving my goals? Do I have clearly defined and measurable goals? You need to be able to clearly see today’s picture not only for an outsider who may be a mentor but so you understand your own opportunities to grow.

2.      What are the organizations strengths that facilitate achieving our goals?

The core strengths of the business should be reviewed to ensure you are capitalizing at the highest level achievable. Can the business grow further using these strengths?

3.     What weaknesses exist that inhibit growth?

Can you objectively assess organizational weaknesses that are roadblocks to success? They may be staffing issues, operational deficiencies, or capital shortages that slowdown growth potential. 

 

4.     Can you implement changes to achieve a higher plateau?

An examination of the earlier questions can help determine the focus needed to achieve the desired results. This alone does not solve the problem; the organization needs to be able to re-focus on new priorities and be able to cope with change. Strong management leadership is needed to ensure all levels of the organization buy in.

 

5.     Will a mentor help?

After completing the internal review it may be useful to have the support of an outside mentor that can be an additional objective catalyst to facilitate needed change. Often that additional viewpoint accelerates the pace to moving back towards the path that will allow the organization to fulfill its potential. If you choose a mentor for assistance be clear in stating  your needs then listen carefully to the mentors advice.

There are many mentors that might be used and I believe Lora Crestan is an excellent option for anyone in the Southwestern Ontario area. Lora can be reached at:

lora@loracrestan.com       

519.735.6820

www.loracrestan.com    

 

Business Management

Managing Change

Managing change in an organization is crucial if the business is to move forward with adapting any new structure or shift in business focus needed to realize its goals of growth and profit improvement.

Here are a few thoughts on areas management needs to focus on to implement and manage change in the organization.

1.     Responsibility.

Clearly management of change rests at the senior levels of the organization. Employees have the responsibility to try and accept and help implement changes which need to be communicated clearly so employees understand the purpose and how it impacts on their individual roles.

2.     Involvement.

            Management should involve employees in the changes – it is never a good idea to just          
              impose change from the top.

3.     Understand

Knowing where the organization is and understanding where you want to be at a specific time, why, and what steps are needed to achieve the goal are all critical steps. 

4.     Plan.

The organization must develop a plan that is achievable if management is going to be credible. The plan should set out stages for implementing change in phases that are not only achievable but measureable. 

5.     Communicate

This stage cannot be overly stressed. Clear communication of objectives, involvement of people, at the early stages, and enabling of employees will facilitate involvement and buy in for the company.

It is obvious to most business owners that people matter. Sometimes however the organization gets lost in plans and processes rather than facing the difficult and more important people issues. Making the initial steps to involve the entire organization starting at the top will help achieve success.

I’m always happy to hear your thoughts.

Gerry@polarisgroupmc.com

Business Communication

Sharpen Business Communication

Communication is at the core of all our relationships, both business and personal. Business communication must be aligned with the pace of our new world, or it is ineffective. We’re at the mercy of our warp speed digital communication that bombards us with messages we often did not ask for and are irrelevant to our business activity.

Here are some important tips to improve communication and break through all that digital noise and allow us to reach the intended audience.

v Pitching for Business?

-        Ask the right questions by understanding your customer’s needs.

-        Communicate professionally. Make sure written communication is proofread and has an appropriate signature. Make sure phones are answered professionally and people speak articulately.

-        Schedule and prepare well. Make sure you provide potential clients with adequate uninterrupted time to speak. Prepare an agenda and share it before the meeting so all parties can prepare.

-        Communication is a two way street. Express your ideas clearly but be sure to listen. Silence can be a powerful communication tool.  Ask good questions to show your interest and involvement with the customer.

-        Follow-up in writing. Give your customer an overview of the meeting and ask for feedback.

v Customer Service

-        Quality products should be supported by equally strong communication with customers.

-        Make your customers feel they are a priority in your business.

-        Make sure if problems occur they are addressed and fixed.

-        If miscommunication seems to be the source of the problem use a different method; make a phone call to replace email. If the issue requires more than a few sentences to explain, call and speak with the customer personally.

v Networking

-        Communicate confidently. Firm handshakes, eye contact, and smiles are important communication signals.

-        Have a 30 second “elevator speech” that presents an effective first impression.

-        Speak in a relaxed way that makes your audience comfortable.

 

Work on refining these communications skills to maximize your opportunity for success. That is my take on the subject. What is yours? Let me know.

gerry@polarisgroupmc.com

 

 

Business Networking

Networking – Keys to making it work

 

 

 

Having a network of business peers and associates can be invaluable in developing new business, sharing business issues, developing relationships and expanding exposure of your business.

Here are a few keys that may be of value:

v Use networking to gain visibility but be sure to give back to those who may help you.

v Set goals when networking.  Are you attending to learn? To make contacts? Or to make business connections.

v Show your leadership skills by leading discussions and stimulating conversation.

v Follow-up. If you meet new prospects or contacts be sure to make a follow-up call to indicate your pleasure in meeting the person and try to set a date to exchange further ideas.

 

If you extend efforts to become more involved with a variety of networks there can be a significant payoff in terms of developing  new business opportunities and contributing to others without jeopardizing your own business goals.

Look for different groups to join that can enhance your business. Take no opportunity to network lightly – expand your knowledge base.

Please let me know what you think.

gerry@polarisgroupmc.com

 

Business Problems

Problems facing small business

 

External problems

External problems are countless, including the state of the economy, the high cost of insurance, taxes, red tape, health & safety, lack of bank lending, competition within Canada and from abroad, and the list just goes on. Many of these issues are beyond control of the individual business so we will focus on internal problems.

Internal Problems

Cash

Finding it and managing it. There is never enough. Fast growing companies can outgrow available resources. Underperformers can’t acquire cash.

Leasing vs purchasing can lesson stress while commercial loans, credit cards and overdrafts are expensive. Care is needed to protect the business’ overall credit rating.

Lack of a Clear Plan

Many businesses don’t know how to plan. Lack of a plan aggravates the cash problem by wasting cash chasing tempting diversions; it is wasteful to throw money at problems hoping for a quick fix. Equally important is revising your plan according to changing economic and business conditions and to ensure your survival in a recession.

Ineffective Leadership

This issue takes many forms. It is frequently in the form of depth of leadership. The owner of the company is too hands-on and a) does not concentrate enough on his primary role as a leader rather than a manager; and b) fails to enlist support of competent managers and staff or through recruitment and outsourcing. This may cause the company to stop growing and eventually could lead to failure.

Sales/Marketing Competence

This leads back to planning and leadership. Many businesses have not defined what their USP is. Don’t try to compete in conflicting areas, such as lowest price and highest service. One lowers revenue and the other adds to costs. Part of the planning process for a product should include a clear answer to one question, “why should they buy from me?”

Lack of Execution

This may be the largest issue facing small business. This lack can be in a number of forms including:

-        Poor execution of strategy

-        Failure of new product development

-        Owners spend only minimal time on strategy

-        Poor communication of strategy to employees

-        Lack of performance measures and little performance analysis

 

These are some of the problems from my viewpoint. What do you think?