Yesterday we looked at some reasons for low or negative cash flow. A company with paid-up Debtors can still have low or negative cash flow. Here are some other aspects of your business to look at.
Yes, we’ve all seen the advert – how much Stock On Hand to you carry? Holding excessive stock is simply tying up funds, and again you have the compounding interest problem described in yesterday’s article. Review your stock levels and move more towards ‘Just In Time’.
Negotiate payment terms with your Suppliers that match your expected income pattern. For example if your Supplier allows 30 days to pay, and your firm has seven then the chances are that you can be paid in time to pay them. If the terms were the other way around then you are carrying interest costs for at least three weeks. (Of course you may also consider setting your own terms to be equal or less than the shortest terms your Suppliers offer).
Under what circumstances do you offer credit? Is there a minimum purchase expectation? What about a Credit Check? A simple procedure of asking for an introduction to two or three current businesses where the prospective Debtor already has an account will go a long way to reducing the Bad Debts before they get started (especially when you ring and ask about the history of on-time payments). You can also ask for proof that the referrer Company really exists – request some information (such as ABN or equivalent), the company website URL, or where you can see a current advert for the referrer business.
You can also encourage on-time or even early payment by offering incentives. That can be a discount for on-time payment or a gift of high perceived value and low cost (such as movie tickets assuming you buy in bulk). Offering a discount delivers $1 of benefit to your Debtor for $1 of cost to you. Offering a high perceived value gift can deliver $1 of benefit for maybe 50c cost to you. A gift can also be some of that slow-moving stock that nobody wants to actually pay for!
What hints, tips and tricks do you have that you would like to share that will help improve other’s cash flow?
This is the third in a series of four articles on why projects ‘stall’.
Sometimes there are a few key stakeholders who don’t seem to care much for the idea. They can be family members, close friends or work colleagues – in each case you value their opinion and in this case they don’t give you ‘enough’ support for the great idea you have had. Not enough RESPECT.
They may not oppose the idea, it’s just that they do not wholeheartedly support it, or if they actually do, they haven’t told you!
You get discouraged, and maybe you feel like abandoning the project altogether? After all, if you’re the only one who cares – why bother?
This will naturally lead to a failed project, a situation that will not serve any of the Stakeholders. As such, it is to be avoided of possible.
The good news is it can be, and our members will be able to read how.
Have you felt like throwing in the towel on a project? Under what circumstances?
Tip 9. Did you ever spin round and round till you fell over as a child? Or hold your breath for as long as you could? What activity did you try to break the world record at? They all might sound quaint, but there are some in business who still try to break records every day. Are you one of them?
Some records are good to break – most sales, best service, biggest tips and the like. Some – like the most consecutive days at work, or longest day, or continually ‘winning’ most hours in a week are maybe not so good.
There are times when extended work hours are beneficial, but if they become the norm then something is wrong with that business, and it is getting worse. I can say that without fear of contradiction because when one person spends to many consecutive hours, days or weeks at work their productivity suffers. They spend longer achieving less.
They may work harder, or at least put more effort into the job, but the Law of Diminishing Returns says that their RESULTS are reducing.
The solution is simple – make sure that you take appropriate breaks. That means at least taking a real lunch break during the normal working day, not working seven days a week (well, not for more than two or three consecutive weeks anyway, and then only if circumstances demand it), and taking a holiday every year.
You’ll come back to work refreshed, and capable of far more than if you never went away. One millionaire I know says he couldn’t possibly achieve everything he schedules in a year if he worked for the full 12 months, however he finds it easy to complete in ten months! His two months a year break recharge his batteries and his effectiveness more than compensates for his time away.
One last thing – the same is true for your team members too!
Tip 10. Be adaptable. Everyone has heard that “Failing to plan is the same as planning to fail”. Having spent many years as a Project Manager I agree with that.
There is one thing, though – a General once said “No Battle Plan ever survives the first skirmish with the enemy”. In other words almost as soon as the plan is put into action, something unexpected happens. That’s usually true for business projects as well.
Having a good plan means that you actually understand your objectives, resources and time constraints well enough to react in an appropriate way to get the plan back on track. Not having a good plan means just guessing about what to do next.
Whatever you intend to do, make a plan, and document it. Then be prepared to modify it, sometimes on the fly as circumstances change due to external events.
Have you experienced a plan falling to pieces? Were you able to recover? Let us know your story!
Much has been said and written about networking. Most of that is made up of techniques, what to do under different circumstances. This document takes a slightly different tack and instead looks at the basics of networking, more ‘what’ to do rather than ‘how’ it needs to be done.
Getting the right ‘what’ will allow you to develop far more effective ‘how’s. Starting with the right ‘what’ means that you are heading in the right direction, anything else means that you are rowing your boat away from the finish line!
So what IS networking? The answer to that is it is probably different things to different people. Regardless of why you network, you must understand that networking is not a different kind of sales call. You do not attend a networking function to close a sale, instead you attend to open a relationship.
Networking is getting to know people, and letting them get to know you. It represents a way that you can demonstrate your business purpose and principles, how you treat your customers, your attitudes, your abilities and how productive you strive to be.
Be prepared to give your knowledge away for free when you network, and give it away with no expectation of a sale. You are establishing your credibility, not making a sales presentation.
You will get sales from the effort, just not necessarily from the person you are talking to. If you demonstrate your industry knowledge and your personal values then you will make an impression, and eventually you will reap the reward. It may be because the person you spoke to now wants to buy what you sell, or it could be that someone they know needs it.
This is the Law of Reciprocity acting on your behalf. You give value and then that value will return ten-fold. All you need to do is kick the process off by attending networking functions, and let yourself become well known.
It isn’t just turning up and finding someone to talk to though. You need to have specific goals when you network. Some people set networking goals in terms of the number of people they want to establish a connection with, and whilst that’s a great start, there is more to networking than that.
Let’s take a look at what makes a good network and then we’ll take a closer look at the goals you need to set.
A good network isn’t measured by its size alone. Some people have a very strong relationship with 30 or 40 people, and that’s all the network they need. Others have networks of hundreds, perhaps thousands and still don’t have what they need.
You need people who will bring you opportunities, people who will advice or mentor you to get the best out of those opportunities. You need people who will finance those opportunities that stack up. You need people who can manage existing opportunities, and people who will work on the opportunity, both of which allow you to look for the next one – and keep an overall watchful eye on the current crop.
You also need raving fans who will tell everyone about how good you are at what you do, and you need people who will support you with some kind words and appropriate sympathy when things don’t quite go as planned.
Finally, you need some people just like you who are on the same path – to share experiences with, to inspire each other and to provide you with the right ‘grounding’.
Imagine for a moment that you had every one of these positions covered except a Financier. You would struggle to launch any project that you couldn’t personally fund. If nobody brought you new opportunities you would only have those that you directly started. No project managers means you would have to look after them all.
Can you see that your ‘network’ has to be more than just a list of names?
Try this little exercise. Using your own titles for the different roles (Financier, Project Manager, Peer etc) make a list of at least three people in your network that perform that role. One person can have more than one role, although you should minimise multi-role people where possible.
Do you have all the bases covered? If not, what roles do you need to improve? What can you do to find the right people and add them to your network? What WILL you do?
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