3 Ways to Beat the Small Business Cash Flow Crunch

What do 90% of business failures have in common?Lack of cash.Cash is king. According to Dun and Bradstreet, 90% of business failures happen because of poor cash flow. In today’s fragile economy, maintaining a strong positive cash flow for your small business is more important than ever.Cash Flow Basics for Small Business
Well, duh, right? Any high school economics student can tell you positive cash flow is important to a small business. But knowing about cash flow and keeping a positive cash flow for your business are two different things. So what do you need to consider when it comes to your business’ cash flow? Three factors affect cash flow:- Accounts Receivable (cash flowing into your business)
- Accounts Payable (cash flowing out of your business)
- Overhead Expenses (a subset of accounts payable)In this article I give you three ways to increase the cash flow into your business.3 Ways to Increase Cash Flow into Your Business
If you accounts receivable records look good, your business cash flow should be good, right? Wrong. A positive accounts receivable column only helps your business if you can convert your receivables to cash. Your business’ accounts receivable is a listing of money owed to your company. But being owed and having cash in hand are two different things. So how do you turn accounts receivable into cash faster for your small business?1. Bill Promptly and Accurately
Another “Duh!” suggestion, but you might be surprised at how many small business owners are guilty of neglecting regular and prompt billing, viewing it as another paperwork hassle that goes on the back burner. If your small business doesn’t bill promptly, start now. Assign an employee to handle this task if necessary. When working on long-term projects, arrange to bill monthly for work-in-progress and ask for a deposit before you start the project. Also, be very careful and detailed in your billing. Nothing strains a good business relationship like billing errors. Review your bills for errors and omissions before sending them out.2. Avoid Slow or No-Pay Clients
You might be amazed at the kinds of clients who are slow to pay, or totally delinquent. According to Dun and Bradstreet, the worst slow-pay offenders are large businesses, those with 500 employees or more. On average, these businesses take 62.7 days to pay up, more than 4 weeks past normal 30-day terms. Here’s the other shocker: the most common no-pay offenders are clients who owe $500 or less. Apparently, these clients feel that this amount of cash is insignificant, and don’t feel guilty about not paying up.Before you take on a new client or extend credit to a client, do your homework. You can do a credit check on all new clients using an outside agency, or request credit references and do your own checking. Another option is to call other businesses that do business with your client to learn whether the client pays on time. If the potential client turns out to be the slow/no pay type, don’t take them on. In lean economic times it may seem crazy not to accept all the business you can get, but clients who don’t pay up can seriously and negatively affect your cash flow. Not only will you wait endlessly to get paid for goods and services already delivered, but you will also spend a lot of internal resources tracking delinquent accounts and chasing your cash. The best policy is: “Just say no!”3. Plan for Fast Cash
There are two ways to get your clients to pay up sooner. First, you can negotiate short payment terms when you contract with a client. These days, many small businesses are asking for and getting “net 15? terms. See which if your clients might be open to these terms. Second, if you’re not comfortable asking for “net 15? terms, you can offer clients a discount for early payment. Offer a one to two percent discount for paying within 10 days. While you’ll be losing a little cash to the discount, you’re overall cash balance will be a lot healthier.These three simple strategies for cash flow management can be the difference between your small business operating in the black or becoming one of the business in the 90% failure bracket.Do you have your own unique ways of preserving or increasing the cash flow into your business?

Best Business Opportunities for Small Businesses – A Quest for the Holy Grail?

Finding the Best Business Opportunities for Small Businesses is often thought of as being almost as difficult as the quest for the Holy Grail. While there may be a certain amount of truth in this view of things some up-front research and planning usually helps to get going with a reasonable degree of success.The best business opportunities are often derived from the simplest of profitable business ideas but unfortunately not all of them are feasible. In fact, a large number of business ideas are doomed to fail because of the lack of business skills on the part of the new business owner. In most instances there would have been a much better chance for success if the new business owner had taken the time to follow a small business course or some kind of structured setting designed to plan out precisely how a new business can and will succeed.Owning your own business can be exhilarating but at times it can also be quite difficult and downright frustrating. You can however make the choice to spend a little bit of effort and learn the ropes by following a small business course. Taking this very important first step will help to make the entire process of building a new business much easier and it will also offer a particularly critical element i.e. organizational skill.Starting from scratch and getting to the top owning your own business can be an almost insurmountable task. It is essential that you have everything planned out from a business feasibility study through to a well-ordered business plan that will be your blueprint to help you keep on track as you grow your business.Doing a small business course can also be the perfect solution for a business owner looking for more profitable business ideas to take an existing small business to the next level. Even if you have done quite well during the first stage of owning your own business, business expansion requires additional skills that are best learned up front if you want to avoid the bad mistakes that others have made. One of the most important issues is that the best business opportunities for expansion often require additional capital. Any business owner who has been in this situation and had to try to get a small business loan to support this expansion will agree that funding is almost impossible to get without a good business plan to support the application.Being successful owning your own business is really a matter of motivating yourself enough to keep a positive mindset that leaves little room for self-doubt and discouragement. Now, no one is saying that keeping a positive attitude is the secret to success but when you really sit down and think about it, you’ll soon realize that it has a lot to do with driving yourself towards your goals and staying on track.Many people unfortunately lose touch with their goals when things become too difficult but, if you learn how to plan to succeed you’ll discover that it is a strong element in motivating yourself to not give up on your business dreams. A small business course provides a great opportunity to learn plenty about self motivation, goal driving tactics and much more about the change in mindset needed to truly succeed with almost any business. Some may even go as far as to say that you would have a hard time making the most of even the best business opportunities for your particular situation without the help offered by a small business course.All in all, owning your own business will require many steps to be taken and taken correctly including designing that all too important business plan. You will without doubt be amazed when you find out that success can happen when you learn how to plan to succeed. The best business opportunities are really simple to find if you take the right approach to developing your personal business skills.