One step that is often overlooked in managing the small business is forecasting Cash Flow. Even if budgets are created the critical step of translating the budget to a cash flow forecast is avoided. Why? Lack of time, lack of resources, and lack of knowledge regarding how are the most cited reasons. It often seems like an overwhelming process, even for accountants who are not focused on Management Accounting. However, this critical step that we provide for many of our clients is what has allowed them to reassess their business practices in time to make the necessary changes to keep them out of financial trouble.
Cash Flow forecasts are by definition rolling forecasts. I like to prepare a higher level 12 month cash flow forecast to see the larger picture and then a more detailed short term weekly forecast that runs for just as long as you reasonably can predict what will occur. That might be 4-12 weeks depending upon how quickly you collect your receivables and how predictable your sales are. I revisit the short-term forecast as often as necessary (daily, weekly, or monthly) depending upon the needs of the business and only reassess the higher level 12 month forecast if something has changed drastically.
1. In order to begin you need to know a few key facts about your business. The first is when you expect the revenue to come in. If you do not offer any terms and are paid up front, then your revenue forecast will be the same as your weekly sales forecast. If you do offer terms, then you need to continually keep a pulse on 2 items, the percent of your sales that are credit sales and your average days to collect your outstanding Accounts Receivable (A/R turns in financial terms). You will need to determine if these factors change significantly at various times of the year or if you can analyze them only occasionally. Initially I would look at them monthly to get a feel for what they are doing and how they are reacting to the economy. Besides being necessary for your Cash Flow forecast, watching these two numbers can also be an indicator of how your customers are reacting to larger economic events and what is happening in their businesses. Further, it can be an indication of whether you are being too lax in your own collection policy.
2. Secondly you need to do some analysis of your expenditures. You need to analyze when your own payments are due (how far ahead do you have to purchase to fill your sales demand, what percent of your inventory terms are prepaid, net 30, net 60?). Add to this the various weekly and monthly payments that are due such as payroll, insurance, rent, interest and loan payments, tax payments, distributions to owners, to give you a comprehensive layout of when your cash needs to be spent.
3. The third piece is your sources of funds outside of collections. If you have a line of credit that you can tap into or a loan you can draw upon, then you need to factor the limits of that into your equation.
Build a spreadsheet using all of these parts and I guarantee that you will more effectively stay on top of your cash flow needs. You will see the shortfalls before they occur. You will know how much cash you need to have each week and can then work on the various strategies to bring in cash more quickly, extend the time needed to pay your vendors, and plan your capital expenditures more wisely. Cash Flow Forecasting is one ore tool to allow you to run your business, not have it run you.
Showing posts with label entrepreneur. Show all posts
Showing posts with label entrepreneur. Show all posts
Tuesday, February 19, 2013
Friday, December 21, 2012
Rolling Forecast v. Budget
With many of our clients we have moved to a rolling forecast instead of the traditional budget model. Why? To be frank, we started with this method a few years ago because so many of our micro businesses just used the budget more as a forecast anyway. Many solo entrepreneurs and micro business owners make quick decisions and run their businesses a bit on the fly. The mention of a budget is a painful thought to some of them and one that they resist as unnecessary with all their heart. They did not use the budget in the traditional sense of controlling their spending each month but rather as a forecasting tool for looking at where they will be now that they already made a decision and spent the money.
While this method served our small clients, it has actually become critical with our larger small businesses. With the rapid changes in technology and the continual political and economic uncertainty, small businesses need to be able to adapt to changes in the business environment in a very short time. It is no longer a certainty that you will be able to turn to a bank or outside investment to shore up a temporary short-fall in cash, so having a better way to plan the future and having the agility to adapt is crucial to success.
The purpose of a Rolling Forecast is to be able to foresee risks and opportunities, adapt your strategy given those risks and opportunities, and assign resources in a continual planning mode. The model depends upon identifying the key drivers in your business. In other words, identify what might cause your plan to vary, how you will know it is deviating from your original plan, and what you need to measure to see the deviation. And the model also needs to incorporate a cash flow aspect in the rolling forecast, since cash flow will make or break your business. For some businesses, for example, the key drivers in your plan might be the dollar value of open sales orders as of a certain day of the month, the price of raw materials, the number of credit sales and the average accounts receivable days outstanding.
Once the drivers are identified, various forecast models can be built to predict expected, worse case, and best case scenarios. By using a rolling process, you are constantly looking at what your results were versus what you expected, and by using multiple predictive models you will have already planned ahead and assigned the resources to act quickly given your results.
While this method served our small clients, it has actually become critical with our larger small businesses. With the rapid changes in technology and the continual political and economic uncertainty, small businesses need to be able to adapt to changes in the business environment in a very short time. It is no longer a certainty that you will be able to turn to a bank or outside investment to shore up a temporary short-fall in cash, so having a better way to plan the future and having the agility to adapt is crucial to success.
The purpose of a Rolling Forecast is to be able to foresee risks and opportunities, adapt your strategy given those risks and opportunities, and assign resources in a continual planning mode. The model depends upon identifying the key drivers in your business. In other words, identify what might cause your plan to vary, how you will know it is deviating from your original plan, and what you need to measure to see the deviation. And the model also needs to incorporate a cash flow aspect in the rolling forecast, since cash flow will make or break your business. For some businesses, for example, the key drivers in your plan might be the dollar value of open sales orders as of a certain day of the month, the price of raw materials, the number of credit sales and the average accounts receivable days outstanding.
Once the drivers are identified, various forecast models can be built to predict expected, worse case, and best case scenarios. By using a rolling process, you are constantly looking at what your results were versus what you expected, and by using multiple predictive models you will have already planned ahead and assigned the resources to act quickly given your results.
Friday, October 26, 2012
Tips for a Painless Sales Tax Audit
I have just been through a Wisconsin Sales & Use Tax Audit with one of my clients and it left me with some tips for all of my small business client.
1. One of the first things you need to do when starting a business is to verify whether your sales are subject to sales tax or not. If none of your sales are subject to sales tax or all of your sales are subject to sales tax, then you do not have anything special to do. If some of your sales are exempt from sales tax, then you need to be sure that you have Exemption Certificates on hand. There is a penalty for claiming the exemption without having the Exemption Certificate from the customer. I recommend filing them alphabetically in a 3-ring binder and if you have the technology, also scanning them and attaching them to your customer record in your Accounting or CRM program.
2. The main area that is being audited lately is the Use Tax as more people are purchasing over the internet. An audit normally consists of an alphabetical sample over the past 4 years. For this reason, I recommend that you file all vendor invoices first by year, and secondly by Vendor in alphabetical order. If you have vendors that you purchase from regularly, they should have their own file. All other vendors can be filed under the first letter of their business name (a generic F file, for example). A normal accounts payable practice is to attach a copy of the check stub to the vendor bill when paid or to write the payment date, amount, and reference number, and account paid out of on the vendor bill if it is scheduled for electronic payment. Be sure that you obtain a vendor bill or receipt for all purchases since it will be assumed that you did not pay sales tax if you cannot produce a receipt. Filing by this method allows you to easily look up any inquiries for internal purposes and also allows you to easily pull the required sample (i.e., 2008 A-F vendors). If you are paperless, this same filing system is appropriate on your computer.
Vendor bills paid with a credit card cause an issue. Some people prefer to attach all invoices to the appropriate credit card when reconciling the credit card and then file the entire bundle under the letter for the credit card company. I prefer to mark on the vendor bills that they were paid by a particular credit card and then file them under the appropriate vendor file. This makes it easier to find a particular invoice as you can look directly in the vendor file and do not have to guess as to what month the purchase happened on the credit card.
3. The purchases that you need to treat with special care are all purchases for which you did not pay sales tax. This means that as each bill is paid, you need to check to see if you paid sales tax or not. If you did not, you need to verify that it falls within the law of items exempt from usage tax. If it does not, then you need to set those bills aside in a "usage tax" file and calculate the usage tax on them when you file your Sales & Use Tax Filing. In particular beware of the following:
If a business files timely Wisconsin Sales & Use Tax returns, the records must be retained a minimum of the 4 years open to audit (7-10 is often recommended for income tax purposes anyway). If Sales & Use Tax returns were not filed, then records should be kept for a minimum of 10 years. Exemption certificates marked "Continuous" should never be destroyed.
In Wisconsin there are pen the sample is extrapolated over the 4 years of the audit and interest is calculated at 12% annually on errors. In addition steep penalties can be assessed for failure to produce the documents or failure to use them correctly. If you have any questions related to what is subject to sales or use tax, be sure to ask your accountant for clarification.
1. One of the first things you need to do when starting a business is to verify whether your sales are subject to sales tax or not. If none of your sales are subject to sales tax or all of your sales are subject to sales tax, then you do not have anything special to do. If some of your sales are exempt from sales tax, then you need to be sure that you have Exemption Certificates on hand. There is a penalty for claiming the exemption without having the Exemption Certificate from the customer. I recommend filing them alphabetically in a 3-ring binder and if you have the technology, also scanning them and attaching them to your customer record in your Accounting or CRM program.
2. The main area that is being audited lately is the Use Tax as more people are purchasing over the internet. An audit normally consists of an alphabetical sample over the past 4 years. For this reason, I recommend that you file all vendor invoices first by year, and secondly by Vendor in alphabetical order. If you have vendors that you purchase from regularly, they should have their own file. All other vendors can be filed under the first letter of their business name (a generic F file, for example). A normal accounts payable practice is to attach a copy of the check stub to the vendor bill when paid or to write the payment date, amount, and reference number, and account paid out of on the vendor bill if it is scheduled for electronic payment. Be sure that you obtain a vendor bill or receipt for all purchases since it will be assumed that you did not pay sales tax if you cannot produce a receipt. Filing by this method allows you to easily look up any inquiries for internal purposes and also allows you to easily pull the required sample (i.e., 2008 A-F vendors). If you are paperless, this same filing system is appropriate on your computer.
Vendor bills paid with a credit card cause an issue. Some people prefer to attach all invoices to the appropriate credit card when reconciling the credit card and then file the entire bundle under the letter for the credit card company. I prefer to mark on the vendor bills that they were paid by a particular credit card and then file them under the appropriate vendor file. This makes it easier to find a particular invoice as you can look directly in the vendor file and do not have to guess as to what month the purchase happened on the credit card.
3. The purchases that you need to treat with special care are all purchases for which you did not pay sales tax. This means that as each bill is paid, you need to check to see if you paid sales tax or not. If you did not, you need to verify that it falls within the law of items exempt from usage tax. If it does not, then you need to set those bills aside in a "usage tax" file and calculate the usage tax on them when you file your Sales & Use Tax Filing. In particular beware of the following:
- Internet purchases from out of state companies
- Purchases from companies that are normally exempt from tax due to manufacturing or resale but are being used for a purpose different than the reason for the exemption
- Fixed Asset purchases. Each one of these was looked at separately (no sample was taken).
If a business files timely Wisconsin Sales & Use Tax returns, the records must be retained a minimum of the 4 years open to audit (7-10 is often recommended for income tax purposes anyway). If Sales & Use Tax returns were not filed, then records should be kept for a minimum of 10 years. Exemption certificates marked "Continuous" should never be destroyed.
In Wisconsin there are pen the sample is extrapolated over the 4 years of the audit and interest is calculated at 12% annually on errors. In addition steep penalties can be assessed for failure to produce the documents or failure to use them correctly. If you have any questions related to what is subject to sales or use tax, be sure to ask your accountant for clarification.
Wednesday, April 25, 2012
Why Do Your Customers Keep Coming Back?
Why do your customers come to you for the first time and why do they keep coming back? Understanding that basic question is crucial to the continued growth and success of your business. The question is first asked when you are initially planning your business to help you create your focus and determine your branding and marketing strategy. Understanding what sets you apart from your competitors is what enables you to target your first clients.
This question needs to be asked continually throughout the life of your business. Once those first several customers are hooked, you need to ask them what brought them to your business and what is important to them so that you are sure that you are focused on the right things. Listening and adjusting to this answer is what leads to return customers and bountiful customer referrals. Once you know this answer, then you can integrate it into your sales pitch to ensure that you continue to attract new business.
It is also critical in other areas of business management as well. I am working with a client at the moment on restructuring their incentive pay system. While attempting to design a pay incentive program which accomplishes the operational objectives that we are striving for, we also need to keep the customer service question at the top of mind. We can't have people control costs at the expense of not providing to customers that very thing that is most important to them so we need to incorporate that into the incentive program as well.
Why do your customers come to you for the first time and why do they keep coming back? Understand this and you will thrive!
This question needs to be asked continually throughout the life of your business. Once those first several customers are hooked, you need to ask them what brought them to your business and what is important to them so that you are sure that you are focused on the right things. Listening and adjusting to this answer is what leads to return customers and bountiful customer referrals. Once you know this answer, then you can integrate it into your sales pitch to ensure that you continue to attract new business.
It is also critical in other areas of business management as well. I am working with a client at the moment on restructuring their incentive pay system. While attempting to design a pay incentive program which accomplishes the operational objectives that we are striving for, we also need to keep the customer service question at the top of mind. We can't have people control costs at the expense of not providing to customers that very thing that is most important to them so we need to incorporate that into the incentive program as well.
Why do your customers come to you for the first time and why do they keep coming back? Understand this and you will thrive!
Thursday, April 7, 2011
Speed of Trust and Small Business
I had the opportunity earlier this week to attend a webinar hosted by the Institute of Management Accountants (IMA) of which I am a part. The speaker was Stephen Covey talking on the Speed of Trust. As with everything I study which is intended for global business, I like to ponder how the same concepts can be applied to small business. This topic, in particular, had some very concrete applications especially to others like us who are in service businesses.
One of the main points that Stephen Covey asserts is that trust is more than a social value. Rather it is has an economic impact as well. As trust increases, the speed at which work gets done increases and the cost decreases. According to Covey, trust is a function of 2 things: Credibility and Behavior. He cites 4 Cores of Credibility. The first two, Integrity and Intent are related to whether people trust our character. The second two, Capabilities and Results, are related to whether people trust our competence.
Without understanding the theory that Stephen Covey proposes, I have observed scenarios working with clients where we can accomplish a lot in a short period of time if we are trusted because we are not having to meet continually to explain every step and have everything approved. This increases the speed of our success with clients and therefore reduces their bill. A lower bill makes our services feel even more valuable to our clients and they recommend us to others thus increasing our income. That perfectly describes the Trust Dividend cited in the Speed of Trust.
Applying this to the small business service providers, we can increase the speed at which our clients trust us by:
1. Making sure that our actions speak as loud as our words to our integrity.
2. Declaring our intent. Clients are not going to think that things should be done our way just because we say so. We need to explain the why behind what service we want to do and why it is important to them. This shows them that we are actually looking out for our clients and not just trying to make money off of them.
3. Continually staying on top of the latest changes and trends in our field. For Susan as a CPA and myself as a CMA we are required to complete 30 hours of continuing education each year. Even if that is not required in your field, be sure that you are staying relevant.
4. Making sure that we provide the results that we promised. Deliver our best on time every time. Keep our commitments.
I recommend that people everywhere read Stephen Covey's best selling book The Speed of Trust to gain even more insight on how you can increase your own Speed of Trust within your organization and with all of your stakeholders.
One of the main points that Stephen Covey asserts is that trust is more than a social value. Rather it is has an economic impact as well. As trust increases, the speed at which work gets done increases and the cost decreases. According to Covey, trust is a function of 2 things: Credibility and Behavior. He cites 4 Cores of Credibility. The first two, Integrity and Intent are related to whether people trust our character. The second two, Capabilities and Results, are related to whether people trust our competence.
Without understanding the theory that Stephen Covey proposes, I have observed scenarios working with clients where we can accomplish a lot in a short period of time if we are trusted because we are not having to meet continually to explain every step and have everything approved. This increases the speed of our success with clients and therefore reduces their bill. A lower bill makes our services feel even more valuable to our clients and they recommend us to others thus increasing our income. That perfectly describes the Trust Dividend cited in the Speed of Trust.
Applying this to the small business service providers, we can increase the speed at which our clients trust us by:
1. Making sure that our actions speak as loud as our words to our integrity.
2. Declaring our intent. Clients are not going to think that things should be done our way just because we say so. We need to explain the why behind what service we want to do and why it is important to them. This shows them that we are actually looking out for our clients and not just trying to make money off of them.
3. Continually staying on top of the latest changes and trends in our field. For Susan as a CPA and myself as a CMA we are required to complete 30 hours of continuing education each year. Even if that is not required in your field, be sure that you are staying relevant.
4. Making sure that we provide the results that we promised. Deliver our best on time every time. Keep our commitments.
I recommend that people everywhere read Stephen Covey's best selling book The Speed of Trust to gain even more insight on how you can increase your own Speed of Trust within your organization and with all of your stakeholders.
Wednesday, February 23, 2011
Helping Partners to Remain Friends
It has been an interesting few weeks as we have been working with a couple of clients who are severing partnerships and going their own way. Overwhelmingly we notice the problems that arise when you do not obtain legal help in setting up a partnership or a multi-member llc and you do not have the proper operating agreements in place.
These are the typical scenarios: Best friends decide to start a business to promote a shared dream. No thought is given to how the business will be managed if one of the partners develops health problems. A husband and wife form a business together, trusting each other completely. No thought is given to what would happen with the business in case the couple divorces. For too many businesses, the llc is formed by filing the Articles of Incorporation, but the set-up stops there. The operating agreement is the important next step after filing the Articles of Organization to form the LLC.
Businesses are started with excitement and good intentions. Part of the up-front set-up, however, needs to be a detailed operating agreement including the solutions for the worst-case scenarios. The following lists some of the topics to be covered in the business operating agreement:
1. Who are the members of the LLC (that's right, member is the correct terminology)?
2. What did each member contribute to the business?
3. What are the requirements for a new member to join the business and how will the price be determined?
4. What are the requirements if a member wishes to withdraw from the business?
5. What will happen if a member becomes mentally or physically disabled. For what lengths of time?
6. If a member withdraws, how will the buy out price be determined?
7. How will duties be separated and/or shared?
8. How will disputes be resolved?
9. How will profits, losses, and distributions be split among members?
10. What will happen in case of a divorce in a Marital Property State like Wisconsin? Do you have the proper documents and signatures in place so that you do not end up in business with your partner's ex-husband in case of a death or divorce?
These are just the building blocks of an operating agreement. They can be as detailed as you think helpful. As in all things related to business, planning up front saves you a tremendous amount of grief in the end. Agree on the solutions up front and you will save yourselves a lot of heart ache later.
I invite you to share your lessons learned if you went into business without an operating agreement and ended up with problems later on.
These are the typical scenarios: Best friends decide to start a business to promote a shared dream. No thought is given to how the business will be managed if one of the partners develops health problems. A husband and wife form a business together, trusting each other completely. No thought is given to what would happen with the business in case the couple divorces. For too many businesses, the llc is formed by filing the Articles of Incorporation, but the set-up stops there. The operating agreement is the important next step after filing the Articles of Organization to form the LLC.
Businesses are started with excitement and good intentions. Part of the up-front set-up, however, needs to be a detailed operating agreement including the solutions for the worst-case scenarios. The following lists some of the topics to be covered in the business operating agreement:
1. Who are the members of the LLC (that's right, member is the correct terminology)?
2. What did each member contribute to the business?
3. What are the requirements for a new member to join the business and how will the price be determined?
4. What are the requirements if a member wishes to withdraw from the business?
5. What will happen if a member becomes mentally or physically disabled. For what lengths of time?
6. If a member withdraws, how will the buy out price be determined?
7. How will duties be separated and/or shared?
8. How will disputes be resolved?
9. How will profits, losses, and distributions be split among members?
10. What will happen in case of a divorce in a Marital Property State like Wisconsin? Do you have the proper documents and signatures in place so that you do not end up in business with your partner's ex-husband in case of a death or divorce?
These are just the building blocks of an operating agreement. They can be as detailed as you think helpful. As in all things related to business, planning up front saves you a tremendous amount of grief in the end. Agree on the solutions up front and you will save yourselves a lot of heart ache later.
I invite you to share your lessons learned if you went into business without an operating agreement and ended up with problems later on.
Thursday, December 23, 2010
No Need to Budget!
“I have never made enough money to need a budget.” I heard a variant of this comment at least three times this month. I want to dispel this myth. If you are ever to get ahead in life, EVERYONE needs some sort of budget. Before my daughter went away to school this fall I sat down with her and we looked at the money she had saved, what other sources of income (i.e. jobs) she might have coming in, and developed a budget for her to follow. Since her finances are simple, we set her up on Mint.com so that she could easily track her spending versus budget.
Tracking expenses and budgeting needs to be done at EVERY level of income in order to get ahead in life. I have seen people not able to make ends meet on $20,000 of income, on $50,000 of income, and on $100,000 of income.
The discussion of setting a budget for small businesses often leads to the discussion about personal budgets as so many micro entrepreneurs’ personal and business financial positions are intertwined. People don’t track personal spending and don’t set personal budgets and therefore they rebel against these tools for their business as well.
If you are ever going to succeed, you need to be purposeful in what you do. Planning and budgeting is a tool for being purposeful and not just letting your financial position unfold. It is the difference between controlling your destiny and letting it happen to you. This is true in both the personal and the business realm.
People don’t track expenses and use budgets because it is not a FUN activity. It requires self-discipline. I am a financial analyst and have utilized these tools my entire life and I still grumble every time I sit down to work on my family finances. The feeling is universal! However, the rewards are great!
People don’t like budgets because they fail to account for surprise expenditures and they don’t have savings to fall back on. The key is to make savings a priority with each paycheck so there is an emergency fund to dip into if necessary. Be creative if necessary to come up with the extra. My husband always empties the change out of his pockets at night and does not put it back in his pockets in the morning. Early in our marriage I used to scoop up that change and that was the beginning of our savings.
So here’s the quick technique in a nutshell. It is nothing that you haven’t heard before, but it is a dose of common sense and perhaps brutal reality.
1. Discuss as a family your goals and priorities for this year, for five years, for long-term.
2. Stop using credit cards to pick up your extras. Credit cards should only be used with careful foresight and should be paid off in full every month. Using them to shore up your lack of income only leads to worse financial problems.
3. Track all of your expenses so that you understand what each member of your family is spending money on.
4. Write down your monthly income.
5. Decide what portion of your income needs to be put into savings (emergency fund first, then short-term and long-term goals) and make that happen. This is a key point to your budgeting success! There MUST be some surplus somewhere to cover the unexpected. You CANNOT say that there is nothing left for savings. Savings must come BEFORE your expenses.
6. Make sure that your savings + expenses are not greater than your income. You will only continue to dig a deeper hole if you spend more than you earn. If savings plus expenses are greater than income then you need to make some changes (and the answer is NOT to cut out savings):
a. Take on a temporary second job until you reach your goals of paying off old debt or building up the initial emergency fund.
b. Cut your expenses. This could simply mean cutting out your daily coffee or cigarettes, but if things are really tight it could mean making tough choices about where you can afford to live and what you have and what activities your kids participate in.
Make the changes necessary to live within your means, to manage your finances with purpose, and to get ahead in life. 2011 is your year!
Tuesday, November 23, 2010
Giving Thanks leads to Small Business Success
In this week of Thanksgiving, I want to take a few minutes to reflect on Giving Thanks in the context of running a small business. I recently acquired two new motivational posters to hang in my office along with my business Vision Statement. These are visual reminders about the reason that I am in the business I am. Both of the motivational posters have a line in them regarding being thankful.
In a customer focused business model, who are the people that you should be conscious about thanking?
Thank your customers. Thanking your customers not only shows your appreciation but makes you approachable so that you can build a relationship with your customers which will keep them coming back. This relationship also allows you to ask for feedback in order to keep your company focused on your customers’ needs.
Thank your vendors and subcontracted service providers. Let them know that you appreciate the role they play in providing the services and products which allows you to run a successful business. Cultivating strong vendor relationships creates a win/win situation and allows you to provide better service to your customers.
Thank your employees. Let your employees know that they are an integral part of your team. Allow them the opportunity to shine and contribute to your business success.
Thank your business acquaintances. Drop a note of thanks for providing a referral or for sending a good article which you were able to apply to your business. The best way to encourage the continuation of behavior that you appreciate is to genuinely provide some positive reinforcement. A thank you is just that.
Thank your partners. They are the ones in the daily grind with you and they are often the last ones thanked for their efforts.
Thank your family and friends. Every successful entrepreneur has people in their lives who patiently endure long hours and endless conversations about work and who pick up the slack in our personal lives. Be sure to thank them for the effort.
Thursday, September 30, 2010
10 Tips for Working a Room
Networking is an essential part of every Marketing Strategy. Learn how to do it well and make it a productive use of your time.
1. Plan ahead. Put not only the event on your calendar, but block off time the following day to follow up and connect with the people you met.
2. Prepare. Dress appropriately, wear your name tag (on the right side!), have your business cards ready, plan your introduction.
3. Brush up on your small talk. Know the main news topics and have a few anecdotes, interesting books or articles, something on your reading list in your head.
4. Put on your smile, practice a good handshake, and remember to be focused on one person at a time. People want to talk to people who are pleasant and have a welcoming attitude.
5. Position yourself. Notice the flow of traffic and position yourself in a place that allows you to see who is coming and going and to be seen by others. You are not having a romantic dinner, so do not allow yourself to disappear into the corners of the room.
6. Know your goal. It is never my goal to gather as many business cards as possible. Instead, I make a point of meeting 2-3 new people and having a meaningful conversation with them and then reconnecting with 2-3 people that I already know.
7. Be customer focused. Ask questions about them. Get a conversation going, not a one-way monologue. Try to identify their needs. Figure out how you can help them.
8. Don't monopolize their time. 10 minutes is plenty of time to have a discussion and move on politely.
9. Introduce people. Everyone is at a networking event for the same reason, so introducing people is another way of being helpful. Think of yourself as a host in this respect.
10. Follow up with your new contacts. Connect on social media, set up a lunch, follow through immediately on any promises that you made. Meeting someone new is the initial goal. It is the follow up that begins the process of building a meaningful relationship.
Anything you would add to this list?
1. Plan ahead. Put not only the event on your calendar, but block off time the following day to follow up and connect with the people you met.
2. Prepare. Dress appropriately, wear your name tag (on the right side!), have your business cards ready, plan your introduction.
3. Brush up on your small talk. Know the main news topics and have a few anecdotes, interesting books or articles, something on your reading list in your head.
4. Put on your smile, practice a good handshake, and remember to be focused on one person at a time. People want to talk to people who are pleasant and have a welcoming attitude.
5. Position yourself. Notice the flow of traffic and position yourself in a place that allows you to see who is coming and going and to be seen by others. You are not having a romantic dinner, so do not allow yourself to disappear into the corners of the room.
6. Know your goal. It is never my goal to gather as many business cards as possible. Instead, I make a point of meeting 2-3 new people and having a meaningful conversation with them and then reconnecting with 2-3 people that I already know.
7. Be customer focused. Ask questions about them. Get a conversation going, not a one-way monologue. Try to identify their needs. Figure out how you can help them.
8. Don't monopolize their time. 10 minutes is plenty of time to have a discussion and move on politely.
9. Introduce people. Everyone is at a networking event for the same reason, so introducing people is another way of being helpful. Think of yourself as a host in this respect.
10. Follow up with your new contacts. Connect on social media, set up a lunch, follow through immediately on any promises that you made. Meeting someone new is the initial goal. It is the follow up that begins the process of building a meaningful relationship.
Anything you would add to this list?
Wednesday, March 3, 2010
Are You Concerned About the Integrity of Your Financial Information?
Every once in awhile a situation arises which reminds me of the reasons why Susan and I were compelled to start E&S Entrepreneur Advisors, LLC. This week I encountered one of those situations: a situation that happens over and over through no fault of the service provider, but which greatly impacts the small business owner.
If you bring your information to your tax accountant in a reasonable time frame (not March 31!) and your tax accountant immediately suggests filing an extension, then that might be a flag to you that your books are not in good order. If your tax accountant is asking you a lot of questions and indicates that they will have to make quite a few adjustments, then that is another flag that your books are not in good order.
Tax accountants are extremely busy from the beginning of the year until tax time, especially the smaller CPA firms and Single-Person Tax Providers. They do not have the time to be straightening out your books. They file extensions and then put your information aside until they do have time later. And, depending on the tax accountant's demeanor, they may never tell you that you are accounting for things incorrectly. Remember, the tax preparer's main focus is on taxes.
In the meantime, many small business owners are frustrated and overwhelmed. They end up incurring late penalties on their other year-end government reports and operating 6 months into the following year, at a minimum, with poor financial information. They are not comfortable with the integrity of their financial data.
If you are in this situation, give us a call now to set up a Free Consultation. We will straighten out your accounting situation and put procedures in place for you so that you have the vital information at your fingertips each month in order to effectively manage your business and make timely business decisions.
If you bring your information to your tax accountant in a reasonable time frame (not March 31!) and your tax accountant immediately suggests filing an extension, then that might be a flag to you that your books are not in good order. If your tax accountant is asking you a lot of questions and indicates that they will have to make quite a few adjustments, then that is another flag that your books are not in good order.
Tax accountants are extremely busy from the beginning of the year until tax time, especially the smaller CPA firms and Single-Person Tax Providers. They do not have the time to be straightening out your books. They file extensions and then put your information aside until they do have time later. And, depending on the tax accountant's demeanor, they may never tell you that you are accounting for things incorrectly. Remember, the tax preparer's main focus is on taxes.
In the meantime, many small business owners are frustrated and overwhelmed. They end up incurring late penalties on their other year-end government reports and operating 6 months into the following year, at a minimum, with poor financial information. They are not comfortable with the integrity of their financial data.
If you are in this situation, give us a call now to set up a Free Consultation. We will straighten out your accounting situation and put procedures in place for you so that you have the vital information at your fingertips each month in order to effectively manage your business and make timely business decisions.
Thursday, January 21, 2010
4 Keys to Setting Goals for your business
It is the beginning of a new year and it is time to set new goals for your business for 2010. Setting goals is an important part of continuously improving your business. It allows the business owner and their employees to be proactive rather than reactive in their dealings. The specific goals for 2010 should align with the long-term strategy of the business. Below are several keys for setting business goals.
1. Goals should be relevant. That is, they should be something that somehow ties into your strategy.
2. Goals need to be actionable and measurable. It is not specific enough, for example, to state a goal of improving customer service. You need to understand how to improve customer service and state your goal in those terms. For example, an acceptable goal for improving customer service is to reduce project turnaround time by 3 days. You will then need to track and measure past and future project turnaround time.
3. Goals should have a timeline assigned to them. If the timeline is a longer period of time, the goal should also have benchmarks. For example, if the goal is to increase sales by $40,000 by December of 2010, then you might set a quarterly benchmark of $10,000 to track your progress toward the goal.
4. Goals should be reasonable. Goals that are completely unattainable serve no purpose toward improving your business operations. They only lead to frustration.
Obviously goals are usually focused on generating greater profits so they are often developed in the areas of customer service, sales, improving operational efficiency, and improving employee competency.
Check back next week when we blog about various items related to goals and operations that are useful for the small business owner to measure and track.
1. Goals should be relevant. That is, they should be something that somehow ties into your strategy.
2. Goals need to be actionable and measurable. It is not specific enough, for example, to state a goal of improving customer service. You need to understand how to improve customer service and state your goal in those terms. For example, an acceptable goal for improving customer service is to reduce project turnaround time by 3 days. You will then need to track and measure past and future project turnaround time.
3. Goals should have a timeline assigned to them. If the timeline is a longer period of time, the goal should also have benchmarks. For example, if the goal is to increase sales by $40,000 by December of 2010, then you might set a quarterly benchmark of $10,000 to track your progress toward the goal.
4. Goals should be reasonable. Goals that are completely unattainable serve no purpose toward improving your business operations. They only lead to frustration.
Obviously goals are usually focused on generating greater profits so they are often developed in the areas of customer service, sales, improving operational efficiency, and improving employee competency.
Check back next week when we blog about various items related to goals and operations that are useful for the small business owner to measure and track.
Tuesday, January 5, 2010
Tips for Effectively Managing Employees
Entrepreneurs often find themselves thrown into the new roles of Employer and Manager, often for the first time in their lives. Bogged down by the other pressing tasks involved in running a business, many entrepreneurs do not give the role of Manager the proper focus that it requires. The reality is that poor management can destroy your business. Today I offer you a mini crash course on what I believe are the most important tips for being a good manager.
When I graduated from college and entered corporate America I asked my brother for some advice and this was his response: “Treat everyone, from the lowest man on the totem pole to the CEO, with respect. You never know who is going to be your boss some day.” I took that advice to heart and found that it served me well in my early days in the plants and then later as I became a manager.
On a practical note, what does it mean to respect your employees? It means understanding that your employees are individuals and taking the time to get to know them on a personal level, letting them know that they are important as human beings. It means that you understand that your employees are people with a variety of learning styles. As a good manager, it is your job to learn how to identify those learning styles and adapt your message to meet those styles. It means that you understand that your employees are thinking people capable of adding great value to your organization if you allow them the freedom to do so. It means the simple things, like showing up and working side by side with them when there is a problem, speaking politely with your employees even if you have an issue to resolve, being willing to pitch in and do the very jobs that you are asking your employees to do when times get tough, and following the same rules that you ask them to follow. If you don’t want your employees to leave early, for example, then don’t leave early yourself. Showing respect to your employees is the fastest route to gaining your employees respect as their leader.
In addition to respecting your employees, clear and complete communication with your employees is a must. By this I mean face to face communication giving your employees a chance to ask for clarification, as well as consistent reiteration with written communication. Communication requires a two-way exchange of information. Murphy’s law states that “if anything can be misunderstood, it will be misunderstood.” Clearly communicating your mission, objectives, and how it affects your employees is an important step in motivating your employees.
Finally, my favorite book on management is a book by Roger E. Allen, Winnie-the-Pooh on Management, given to me by my mother when I was promoted to my first managerial job. Despite all of the management seminars that I have attended and management books that I have read, I still go back to this book for the basics:
“A good leader will always try to make the project that she wants worked on seem to be exciting…That is really part of motivating individuals. Everyone will try to do a better job when they feel that the project is exciting and significant. By being part of something that is important, individuals will feel that they are important—everyone likes to feel that way.”
“Encourage and praise those who are working with (you)…living up to the good opinion that someone we respect has of us is a strong reason to do a good job.”
“(A good leader) treats individuals as individuals…He gives credit to others…An effective leader’s goal is to make his people look good.”
“(Give your employee) an important task to do—many managers delegate only unimportant or minor tasks, which is unfair to those they manage…(Don’t) tell him how to do it… let him decide how to accomplish the task …giving subordinates a chance to learn and develop their own skills and abilities… A manager has to learn that when she delegates, those she delegates to may make mistakes…By making mistakes you learn how to do things right, and you are not afraid to try new things. Delegation…allows managers to multiply their efforts.”
After all, multiplying our efforts is the whole reason for hiring employees to begin with.
Please share your tips on being a good manager in your small business.
When I graduated from college and entered corporate America I asked my brother for some advice and this was his response: “Treat everyone, from the lowest man on the totem pole to the CEO, with respect. You never know who is going to be your boss some day.” I took that advice to heart and found that it served me well in my early days in the plants and then later as I became a manager.
On a practical note, what does it mean to respect your employees? It means understanding that your employees are individuals and taking the time to get to know them on a personal level, letting them know that they are important as human beings. It means that you understand that your employees are people with a variety of learning styles. As a good manager, it is your job to learn how to identify those learning styles and adapt your message to meet those styles. It means that you understand that your employees are thinking people capable of adding great value to your organization if you allow them the freedom to do so. It means the simple things, like showing up and working side by side with them when there is a problem, speaking politely with your employees even if you have an issue to resolve, being willing to pitch in and do the very jobs that you are asking your employees to do when times get tough, and following the same rules that you ask them to follow. If you don’t want your employees to leave early, for example, then don’t leave early yourself. Showing respect to your employees is the fastest route to gaining your employees respect as their leader.
In addition to respecting your employees, clear and complete communication with your employees is a must. By this I mean face to face communication giving your employees a chance to ask for clarification, as well as consistent reiteration with written communication. Communication requires a two-way exchange of information. Murphy’s law states that “if anything can be misunderstood, it will be misunderstood.” Clearly communicating your mission, objectives, and how it affects your employees is an important step in motivating your employees.
Finally, my favorite book on management is a book by Roger E. Allen, Winnie-the-Pooh on Management, given to me by my mother when I was promoted to my first managerial job. Despite all of the management seminars that I have attended and management books that I have read, I still go back to this book for the basics:
“A good leader will always try to make the project that she wants worked on seem to be exciting…That is really part of motivating individuals. Everyone will try to do a better job when they feel that the project is exciting and significant. By being part of something that is important, individuals will feel that they are important—everyone likes to feel that way.”
“Encourage and praise those who are working with (you)…living up to the good opinion that someone we respect has of us is a strong reason to do a good job.”
“(A good leader) treats individuals as individuals…He gives credit to others…An effective leader’s goal is to make his people look good.”
“(Give your employee) an important task to do—many managers delegate only unimportant or minor tasks, which is unfair to those they manage…(Don’t) tell him how to do it… let him decide how to accomplish the task …giving subordinates a chance to learn and develop their own skills and abilities… A manager has to learn that when she delegates, those she delegates to may make mistakes…By making mistakes you learn how to do things right, and you are not afraid to try new things. Delegation…allows managers to multiply their efforts.”
After all, multiplying our efforts is the whole reason for hiring employees to begin with.
Please share your tips on being a good manager in your small business.
Tuesday, September 22, 2009
Social media for the small business owner
We just attended the New North’s Best Practices Panel Discussion about Social Media. The speakers were Heidi Strand, co-owner of Blue Door Consulting; Dana VanDen Heuvel, the Marketing Savant; and Margie Harvey, VP of Human Resources at Miles Kimball Company. Here are a few practical pointers taken from these experts to help the small business owner or entrepreneur get started on your social media journey.
First you need to develop a social media strategy. How will social media fit into your overall marketing strategy? What do you want to achieve from your social media interactions? Are you hoping to improve brand awareness or do you want to increase your sales? Once you have determined your goal, you need to consider who your customers are and where they are in the world of social media. You do not want to be concentrating on developing a Facebook Fan page if your customers are not on Facebook. How do you know what social media outlets your customers are using? Ask them. It can be as simple as that. While you are considering who your customers are currently, also think about whom you want them to be in the future. Good social media work can help pull in an entirely new customer stream.
Make sure that your foray into social media starts small. Chose one tool to begin with and focus on mastering it. Spend the time making sure that your content is relevant, useful and well executed, but don’t spend so much time trying to refine your efforts that you don’t get the job done. As Heidi Strand quoted, “Perfection is the enemy of done”. In the quick fire world of social media, some imperfection is expected and tolerated.
The final thing to remember is that you must commit some time and resources to your social media interactions to make them work. Schedule regular time into your week to blog, tweet, LinkIn or write your online newsletter.
If you are in the New North region, considering attending these quarterly presentations because they are always relevant and worthwhile.
First you need to develop a social media strategy. How will social media fit into your overall marketing strategy? What do you want to achieve from your social media interactions? Are you hoping to improve brand awareness or do you want to increase your sales? Once you have determined your goal, you need to consider who your customers are and where they are in the world of social media. You do not want to be concentrating on developing a Facebook Fan page if your customers are not on Facebook. How do you know what social media outlets your customers are using? Ask them. It can be as simple as that. While you are considering who your customers are currently, also think about whom you want them to be in the future. Good social media work can help pull in an entirely new customer stream.
Make sure that your foray into social media starts small. Chose one tool to begin with and focus on mastering it. Spend the time making sure that your content is relevant, useful and well executed, but don’t spend so much time trying to refine your efforts that you don’t get the job done. As Heidi Strand quoted, “Perfection is the enemy of done”. In the quick fire world of social media, some imperfection is expected and tolerated.
The final thing to remember is that you must commit some time and resources to your social media interactions to make them work. Schedule regular time into your week to blog, tweet, LinkIn or write your online newsletter.
If you are in the New North region, considering attending these quarterly presentations because they are always relevant and worthwhile.
Subscribe to:
Posts (Atom)
Posts
