Simple Ways to Sustain Small Business Cash Flow

I hope you enjoy this article by guest author Derek Goodman from Inbizability.com

It doesn’t matter what industry your business is in — if you don’t have money (i.e., cash flow), you can’t be successful. Cash flow essentially refers to the amount of cash that is flowing in or out of your company at any given time. And consistently dealing with cash flow problems will make it difficult to pay your bills, invest in your business, and move your business forward.

Though managing cash flow can be challenging, there are some simple strategies to make the process more efficient and less stressful. Fairway Business Advisors has listed a few of them below!

Form an LLC.

The business structure you operate under can play a major role in the health of your cash flow. Make sure your entity is working to your advantage. For instance, forming an LLC can help you save money and preserve your finances in the long term, thanks to tax benefits and liability protection.

Before you register your business, know this: LLC rules vary by state, so it’s important to check your state’s LLC guidelines beforehand. Failing to comply can leave you in legal hot water.

Hone in on your accounts receivable.

A lot of small businesses struggle to maintain steady cash flow because they are owed a significant amount of money from their customers or clients. If you’re dealing with unpaid accounts receivable, set out to collect them now.

Also, make sure you’re sending invoices promptly and giving your customers the option to pay electronically. And consider how you can encourage customers to pay their bills early, such as offering discounted rates.

Reduce costs and increase revenue.

One of the most practical ways to sustain healthy cash flow is to minimize your costs and maximize your revenue. Revisit your business expenses, and cut any that are completely unnecessary. For example, do you really need those magazine subscriptions for your waiting room or will your customers get along just fine without them?

Another way to reduce costs is to renegotiate terms with your suppliers. The key here is to develop and maintain a good rapport with each supplier. Once the relationship is established, ask your suppliers about getting discounts for buying in bulk, partnering with other businesses on large purchases, and/or paying for products early. If you find that you’re paying your suppliers too much and they are unwilling to work with you, it might be time to look for new suppliers!

Furthermore, strategize how you can increase revenue. Think of promotions and discounts you could offer to boost sales. Brainstorm new products or services you could bring to the table. And think of cost-effective marketing strategies that could help get your brand in front of new audiences.

Consider leasing equipment.

Finally, making big purchases on equipment can prove problematic when you don’t have steady cash flow. An alternative is to lease any equipment you need for maximizing efficiency in your operations. That way, you won’t have to deal with a large lump sum that puts your cash flow at risk.

Just make sure that you have the money to cover the lease payments. While leasing typically doesn’t impact your cash flow as much in the short term, failure to make payments can cause issues down the road.

Maintaining healthy cash flow for your small business may not be the easiest task in front of you, but it is certainly one of the most essential. Remember to evaluate your business structure and change it if necessary. Start collecting any unpaid receivables, and find ways to reduce expenses and boost revenue. Lastly, explore the idea of leasing new equipment to help you keep more cash on hand.

Fairway Business Advisors provides strategic growth planning, leadership coaching, financial analysis, and many other services for small businesses. To learn more about how we can help your business, please give us a call at (319) 389-9316.

Help, I’m Stuck!

Business owners, does this sound like you?

You started or purchased a business because you have a particular skill, aptitude or passion. Once into it, you find that you’ve really just acquired yourself a job handling day-to-day activities. You’re maintaining the website, you’re paying invoices, you’re dealing with customers, producing product; you’re doing it all. You find that there isn’t a hat rack in the world big enough to store all the hats you wear. You are working IN your business.

Sure, in the beginning, it’s reasonable to work IN your business. After all, you’re the only person you can rely on. Resources are limited. You can’t afford to pay someone to manage the day-to-day operations. Daily tasks soon take up the entire day.

After a period of time, you find that the business isn’t growing. “Why?,” you ask yourself. Nobody (meaning you) is working on creating new biz opportunities. Nobody (still meaning you) is performing the marketing plan that you created.

You realize that you need to un-tether yourself from some or all of the daily business tasks. Instead, you need to start focusing on strategic endeavors and make the business look more like what you had dreamed it would look like from the get-go. You want to be working ON the business. But where to start?

Here are the first two steps (it’s a continuous journey, not a destination).

1. Look at the team you have assembled. What, from the work you are currently doing, can you delegate to someone else? Are you a solopreneur or only have a couple part time team members? What can outsource?

2. Automate. What tasks can be automated? There are all sorts of software packages and apps that are tailor-made for relieving us of mundane-but-necessary daily tasks. Buy one or two of these to give you the freedom to do the job you SHOULD be doing.

I know…these solutions will cost money. BUT…don’t you believe in yourself enough to know that you will get an ROI on these investments? If you don’t believe, then who will?

Do these things and thrive.

Still not sure how to do this? Find a mentor to help you. I happen to know one.

Execute, Execute, Execute

A business coach that I hire once told me that I needed to spend less time in learning mode. He suggested (to put it lightly) that I needed to get out there and start DOING. I had the baseline knowledge to get started and I would fill in the gaps by screwing up along the way. Now this seemed to be a terribly uncomfortable way to go about it, but I had paid him for his advice so I complied and got into the game. Alas, he was right!

Fast forward to now…I have talked to numerous business owners that spend time on webinars, reading books and learning from every source possible. The are constantly learning to get ready to go do it one day.

My observation on this behavior is that many business owners are simply not good at execution. Planning? Check. Preparing? Check But it’s scary when we are not totally sure about what to do, so we just keep preparing-to-do. In many cases, the cautious attitude has worked, to a degree. They are still in business, aren’t they? They are, indeed. But are they thriving? Isn’t that why we started our businesses in the first place (that and a healthy lack of respect for authority, but that’s an article for another day)?

So strap on your gear and get after it. It’s GO TIME. Execute, Execute, Execute.

Reduce Stress in Your Business

As if our stress levels have not been impacted enough by Covid risks, stupid government shutdown decisions and overall market uncertainty, I find that businesses can cause undue stress within their own organizations. Stressed out leaders often lead to stressed out employees (and vice versa). Here are some ways by which we, as business leaders, can reduce overall organizational stress.

  1. It is critical for leaders to create very clear expectations for their team members. Nothing is more frustrating, for an employee, than working hard at doing their job (as they see it) only to find out that the company is disappointed in their performance. I’ve been guilty of this. I recently had an employee that was not doing what I wanted them to do. As I investigated the situation, it became clear that I did not set detailed enough expectations as part of their job description, process instructions or their training. That’s on me. Having corrected that situation, now if the employee does not perform, it’s on them (as long as I am giving consistent feedback to them).
  2. This leads us to the second way we can reduce stress levels: Ensure that we have efficient and effective feedback/communication loops. Our team members want to feel valued. And, if we are leading well, we want their feedback, too. More eyes, ears and brains on a particular task almost always delivers better results. Plus, it makes our team members feel like they are making a difference. This has been called elsewhere “creating a community.” Who doesn’t want that?
  3. One of the more challenging, yet worthwhile, tasks is to make sure we have the right people doing the right jobs. While it’s pretty much a given that our businesses will be more successful if we hire good people, making sure the job in which we place these good people is the right job for them is like turbo-charging their performance. Imagine a football team with a great quarterback that plays offensive tackle while the tackle plays QB. They are still great players but they are not being utilized optimally. The team is going to struggle. It’s the same in business. Get to know your team members so that you can put them in positions to be successful.
  4. Finally, build great systems in which your team members can excel. We can set clear expectations, and have great communication with them while having them in the perfect postions for their skillsets. However, if we don’t have systems and processes in place to ensure clarity and consistency of their results, we won’t be much better off than if we did none of these things. People need structure. Period. A lot of people will say that they thrive in an unstructured environment. These people, however, simply create their own structure within which to work. Not everyone can do that. It’s incumbent upon us, as leaders, to ensure that we have good processes and systems to help ensure our team’s success.

With these four situations addressed, stress will be down, business results will be up and leadershp burnout will be minimized.

Do Something

I remember back in 1978 when I was playing high school football, we ran a play where I pulled from my tight end position and led the wingback (yeah, that was a position back then) up the sideline. On this particular occasion, I hesitated to throw my block on the D-back because I didn’t want to miss. It was a close game and I didn’t want to screw up.

Well, that hesitation WAS the screw up. A linebacker caught up to the play and sent me flying which allowed the D-back to make the tackle for only a short gain. Had I made my block, it would have been a long-gainer. From the sideline I could clearly hear my coach yelling: “Rasmussen, do SOMETHING, even if it’s wrong.”

He was right. Instead of throwing the block, I did nothing and the play got blown up. Had I thrown the block, I had a decent chance of making it (I’d done it before). It wouldn’t have taken much to spring the runner; just a little contact would have done it. It’s a lesson I have kept all these years.

In working with business owners, I find that they often get into the same mindset. They don’t want to screw up, so they get vapor locked and do nothing. When I work with them, they often know what they should be doing, but they just need “permission” to make the move. Heck, they even sometimes have trouble deciding whether they should hire me. Yes or no….decide.

If you are a business owner, don’t get analysis paralysis. Make the best decision you can with the information that have and get moving. Either yes or no. It feels difficult at times, but it really is just that simple.

Businesses Have a Life Cycle, Too

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I have had the opportunity to be involved, one way or another, with a lot of businesses throughout my career. While they were all different, there are still some big-picture similarities between all of them. One set of similarities resides in the stages of each business’ life cycle.

They all, at some point, start out in the entrepreneurial phase. It’s in this phase that each business vies for Viability. The owner(s) pour their heart and soul into the business trying to make it reach and surpass the break-even sales level. The owners work IN the business almost exclusively.

Once profitable, the business goal becomes to emerge from the rest of the pack and get noticed as a provider-of-choice. Credibility is the goal of this stage. Necessarily, the owners begin to work ON the business more and more.

The third stage of a business’ life cycle is when the business becomes an established member of its community or industry. Here, Stability is watchword. Owners may be working almost exclusively ON the business at this point. Often times, this is that stage where the owners gain from some introspection and reach out to valued mentors and coaches to seek help on the next steps. Nothing wrong with that. None of us knows everything.

The fourth stage often happens when the owners get ready to sell the business or are simply tired and go into auto-pilot mode. This is the erosion phase where the growth stops and the business often shrinks. This is know for its Vulnerability.

Now, just because a business has become vulnerable does not necessarily mean the end is in site. It’s actually a “fork in the road.” The owners (either original or new owners post exit) have two choices: 1. Keep riding the current path and ride it to the end, or 2. They can look for new opportunities to re-grow the business. This might be new products/services, an acquisition by which to add volume or diversify. Perhaps an infusion of new leadership is in order. The options are many and only a thorough analysis of the situation (along with a lot of prayer) will reveal the best path forward.

If you are in phases 1-3, enjoy the grind and keep your eyes on the horizon. If you have hit Vulnerability, don’t despair. You have options other than simply letting it die. Remember the grinding stage. Take a deep breath and dig back in. I’m in this stage right now. I choose to fight!

How to Experience More Success and Less Stress as an Entrepreneur

A Guest Article by Chelsea Lamb of businesspop.net

Being your own boss and setting your own stage for success can be the most exciting and rewarding way to make a living. However, being an entrepreneur is also really hard, and being personally responsible for the success or failure of a company can add stress to your daily life. If you’re aware of the risks and still want to make the jump to entrepreneurship, there are ways to prepare that will help lay a path to success and reduce the everyday stress that comes with it.

Setting Your Goals

When it comes to entrepreneurship, the best place to start is figuring out what you want your business to be. Some people come into it with a lifetime of passion for a certain industry, while others need to take time evaluating what they enjoy and are good at. Once you determine what kind of products or services you will provide, you’ll need to narrow your target audience to a niche. Figuring out these factors will help you know what kind of funding you’ll need (if any).

Determining a Business Structure

This part of entrepreneurship is not particularly riveting for most people, but it’s important nonetheless. The business structure you choose will affect how the government taxes your profits, how protected your personal assets are, and how you will go about your long-term plans for the business. Many new business owners go with a sole proprietorship, because it’s the simplest structure overall. Other common business structures include a partnership, limited liability company (LLC), S corporation, and C corporation.

Hiring a Web Developer

You’re probably aware that in today’s world, a good website for your small business is a must. While there are many website platforms that offer free services these days, making your site stand out among the competition may require a little more effort. For most businesses, this means hiring a web developer to tackle creating a professional online presence.

One of the better solutions is hiring a JavaScript developer. Making good use of JavaScript can significantly boost your ROI and impress a wide range of customers. Also, JavaScript is mobile-friendly, so the look and function of your site will be consistent across various devices (e.g., computer, tablet, smartphone, etc.).

A professional JavaScript developer can make your site more dynamic and showcase the products you want to push the most. However, choosing the right expert is critical to ensuring you don’t waste your money, so make sure that any candidate you’re considering is proficient in the following:

Utilizing Payroll, Time and Attendance, and HR Solutions

At some point—whether it’s when you’re starting your business or down the road as you add employees—you will likely need help in the areas of payroll, time and attendance, and HR. As G & A Partners explains, outsourcing can be your best solution in this regard. Otherwise, shuffling tax tables, sorting HR rules and regulations, and even time tracking can become unwieldy prospects, when your time and energy would be better spent on other tasks.

Creating a Workspace

It’s more common than ever for entrepreneurs to work from home. It not only saves money on office space, but it also comes with ultimate flexibility and freedom, and it doesn’t require a commute. If you’re willing to put in a little extra effort to stay motivated and focused on your work, then setting up a comfortable workspace at home that inspires productivity is likely to be your best option. Just be sure to get everything you need to stay comfortable and productive, such as a quality chair and desk, as well as any supplies and decor you need to fulfill your tasks and distinguish the area from the rest of the home.

Starting your own business won’t be easy. But you can put yourself in a position to succeed and mitigate stress by establishing clear goals, choosing the best structure for your business, and investing in a professional website. Finally, be sure to set up an adequate workspace at home, and consider HR solutions to make your operations more efficient.

If you’re having difficulty getting started or your business hasn’t prospered as much as you’d like, it’s time to seek outside guidance. Fairway Business Advisors can help your business succeed by offering coaching in strategic planning, leadership, financial analysis, process improvement, and more.

Photo Credit: Burst