Cash Flow Planning Strategies For Solo Entrepreneurs

You’ve heard it a million times – cash flow can make or break a business. Lack of cash flow planning is the reason why many businesses fail. In fact, many PROFITABLE businesses fail because of cash flow issues. Without adequate cash flow, you can’t pay your bills and you can’t make plans for your business.

So… what is cash flow planning? Cash flow planning is projecting your future cash inflows from sales, services, and loans, and comparing them to your future cash flow needs (suppliers, salaries/wages, loan payments, taxes, etc.). The difference between the two is your net cash flow.

Why is cash flow planning so important? Cash flow planning can help you identify problems down the road, and fix them before they occur. Cash flow planning can also help you make decisions such as should I attend that conference I’ve wanted to attend, should I buy the new computer I’ve been wanting, or do I need to work extra hard this month to avoid a cash flow deficiency next month?

The first step in planning your cash flow is knowing where you spend your money! Solo entrepreneurs need to have a good grip on both their personal and business spending, as most solo entrepreneurs rely on their business income to meet personal finance goals (i.e., pay the bills!). So, you should track both your personal and your business spending, although I recommend that you keep them separate (that’s a topic all by itself).

What’s the best way to track your spending? You can use pen & paper, spreadsheets, or an online accounting program. The best method for you is the method that you will actually use on a regular basis.

You should project your spending for at least the next 12 months so that you include annual and other periodic expenses. If you are experiencing a cash flow crisis, you should track & project your cash flow on a weekly basis, instead of monthly.

If you are an existing business, you can project your cash flow for the next year by reviewing your expenses for last year. If you are a new business, you will need to estimate your start up costs in addition to regular operating expenses.

Start up costs include inventory, legal expenses, advertising, licenses & permits, supplies, and many more costs that you may not have thought of. To research startup costs you should contact your local Small Business Development Center, contact a SCORE counselor, join groups of similar business owners, and read as many books or articles you can find on the subject.

To improve your cash flow, you should:

1. Complete the first 3 steps. You have to understand cash flow planning, track your cash flow, and project your future spending needs before you can improve your cash flow.

2. Create best and worst case scenarios and create appropriate responses to both scenarios. For example, if your best case scenario is to increase sales by 50%, how will you use the profits? Will you put the profits back into the company by investing in new equipment, training, etc.? If your worst case scenario is a drop in sales by 50%, how will you continue to cover your monthly expenses? By planning for the best and worst case scenarios, you’ll be ready for any situation.

3. When estimating your future income, realize that some people will pay late, and account for that fact in your projection.

4. Charge what you’re worth. Many businesses, especially service professionals, under-charge when they are first starting out. This is a great way to go out of business. Make sure you are charging what you’re worth, and remember you’re in business to make money, not to give your expertise away for free.

5. Watch your business spending. Focus on the value the item brings to your business, and avoid lavish spending (i.e., do you really need the fastest, newest computer available?).

6. Don’t hire until necessary. Consider using virtual assistants or temporary employees before hiring permanent employees.

7. Give incentives for early payment for products and services. On the flip side, chase down invoices the minute they’re late. Charge interest or late fees to encourage timely payments.

8. Update your cash flow plan regularly. Your cash flow plan will change frequently as your business grows. You may want to update your cash flow plan weekly when you first get started, then switch to monthly once you’ve got a good handle on your cash flow.

Remember – whether you are a new or growing business, your cash flow projection can make the difference between success and failure.

The High Cost Of Not Finishing What You Start

An unfinished goal is expensive. It drains your time, energy, and money.

I imagine that you, like other entrepreneurs and small business owners, are paying this exorbitant cost not just for one unfinished goal but a multitude of them.

We are so creative and have so many amazing ideas that it’s natural to want to do them all at once. Even those of us who are experienced at getting results in our business get caught up from time to time. 

Just yesterday, I sent my VA the files for a new special training program. This is very exciting for me because it’s allowing me to share the key principles of prospering in business and life with entrepreneurs who are ready to make more money, serve more people, and have lots more freedom in their business.

Yet, as much as I am celebrating this moment of accomplishment, I am also kicking myself because had I focused on this one project instead of the 10 other projects I’ve worked on over the past few months, this offer would have been up and ready to go on my site at the beginning of the summer.

So, by multi-tasking—trying to accomplish 10 goals at one time, I missed out on four months of serving the people who need this information the most. During this time, I also missed the opportunities to gain valuable exposure, and possibly generate new revenue, for my business

That’s a HUGE cost!

It’s not a cost I pay often, but it sure stings when I do.

How about you? What are your unfinished goals costing you? Is it a price you want to keep  paying?

By the way, if you want to check out new free program, here’s the link:  http://www.beneciaponder.com/teleclasses/ 

7 Step Plan To Get Going With Networking

Whether you’re an introvert or an extrovert, feel like you have the gift of gab or just don’t know how to make small talk, networking know-how is very important for your business success. There is a notion in business that I believe most of us subscribe to that says “all things being equal, people will do business with and refer business to those they know, like and trust.” And the key to this is obviously being able to develop relationships.

Think of networking as the cultivation of mutually beneficial, win-win relationships. In order to be win-win, there must be GIVE and take (notice the emphasis on give). Networking shouldn’t be viewed as “events” where you go to sell your business. When effective networking is taking place, the parties involved actively share ideas, information, resources, etc.

Ok, so you know that you should be networking because it is one of the most cost-effective lead generation activities when used wisely, appropriately and professionally. But, maybe that seems easier said than done. Here’s a seven step plan to really get going with networking for your business.

1. Check out several groups to find the best chemistry and perceived value. Most groups will allow you to come and visit at least a couple of times before you have to join. Go and ask around to find out why others have joined and what value they get out of belonging.

Resist the urge to just go join the Chamber of Commerce simply because everyone tells you that’s what you need to do. If that’s not where your target group can be found, then you might just be wasting a considerable amount of time (and money).

I’m not telling you not to join the Chamber. Just be clear about what you’d like to get out of this or any other group. If it’s to find prospective clients or referral sources, then you need to be networking where those resources can be found.

2. When you find a group or two, join and go to all the meetings you can. Don’t go just once or twice expecting things to happen and then if they don’t quit. Building mutually beneficial, win-win relationships will take some time.

The contacts you make need to constantly see your face and hear your message. Continual contact with others over time will open up opportunities for you to go deeper and learn more about each others thoughts, ideas and capabilities in regards to your respective businesses.

Know, like, and trust generally only happens over time. Being regular and persistent will pay off.

3. Get involved – be visible. Do as much as you can to make yourself more visible within the organization. Volunteer to help with meetings, be on committees, or become a leader or board member.

Being involved does a couple of things for you and your business. First, you’ll get more opportunities to establish connections and get to know some of the contacts you’ve made even better. Secondly, the higher the visibility you have in the group, the less you’ll have to work to make new connections. Instead, as new people come into the group, they will likely seek you out because they view you as a leader within the organization.

4. Keep your circles of contacts informed. Don’t just assume that running in to someone once a month (or even once a week) will cause them to start doing business with you or sending it your way. You need to let them know what’s going on when you’re not at that particular group in order to inform and educate them.

Send them invitations to your events or open houses. Send them email or letters to share big news or success stories, especially anything of relevance to them or those in their networks of contacts. If you believe that you have valuable ideas, information and resources to share with others, then doesn’t this just make sense?

5. Work at GIVING referrals and sharing valuable information. That’s right, you need to be willing to GIVE before you get. That means you need to get to know other members and what makes a good prospect for them. What kinds of information might you have access to that could be useful to them?

You may initially think you don’t have much of value to share with others (besides your business and what you provide). Part of the key to getting good at giving is to not make assumptions. For example, don’t assume that some basic resource (e.g., a web site) that you’re aware of is familiar to someone you might be talking to just because they are the “expert” in that field. Be willing to ask if they know about the resource and ready to share if they don’t.

Want to get better at actually giving referrals? Here’s a simple question to ask someone you’re connecting with. “How am I going to know when I meet a really good prospect for you?”

Just the fact that you are willing to explore giving will elevate your know, like and trust factor.

6. Focus on Quality, not Quantity, Quantity, Quantity. It’s not necessarily about the number of connections you make, but about the quality of the ones you do make. Are they mutually beneficial, win-win relationships?

Quality connections will be identifiable because all involved parties will be actively sharing ideas, information, and resources. Yes, it is true that you need to spend some time and effort getting to know the other person(s) and what’s important to them. But, you also need to be clear and actively thinking about what information or resources you want and need.

Staying in touch with and following up with a smaller number of quality relationships will generally be much more productive than trying to follow up with a larger number of superficial contacts.

7. Be persistent, but be patient. The goal of a networking event shouldn’t necessarily be to come away with prospects every time you go out, but to come away with great connections. Networking usually takes time to get the relationships developed and nurtured.

Don’t approach networking as a scary proposition or a necessary evil for being in business. Take the pressure off yourself and really focus on how you might be able to connect with someone you meet. Focus on them first and look for ways to be useful to them. As you become known as a connector you’ll eventually be ready to reap what you sow.

Are You Ready To Outsource?

Do you run your own small business and try to do it all yourself? Why? Shouldn’t you spend your time doing what you do best- whether it is selling and marketing, customer service or making decisions on how to grow your business?

An entrepreneur tries to juggle many balls each day, but sooner or later one of them is going to be dropped. A smart business owner will realize that she can’t do everything because there are only 24 hours in a day.

Too many business owners spend their time doing what they are not very good at simply because they don’t know how to go about finding someone to do that job for them.
This is most true in the area of business bookkeeping. Unless you are extremely organized and enjoy working with numbers, then maybe you need to outsource this job.

Where do you start? Ask your accountant for referrals. Obviously you don’t need a full-time person to do your books, so your best bet is to look for someone who wants to moonlight at a part-time job. There are also bookkeepers with their own small business who are looking for clients. If you don’t have any other employees, this situation will work best for you because you can pay them as a subcontractor instead of an employee on payroll. However, you will need to give them a Form 1099 at year end for tax purposes. But, since they are accounting experts, they can help you with that task too.

You should interview your prospective bookkeeper just as you would if you were hiring him/her as an employee. Ask for a resume and references, and check them out. Since this person will be handling your confidential records, you want someone who is trustworthy.

Depending on your location, you should expect to pay between $15 and $50 an hour for a bookkeeper. Don’t necessarily hire the one who offers the lowest rate- remember you get what you pay for. The more experienced person will cost you more, but will provide valuable input and suggestions to streamline your business that will wind up saving you money in the long run.

Since this person will be working closely with you in your business, you should feel comfortable with him or her. If you have any reservations about this person, go on to the next candidate.

While the selection process may take a while, it will be worth it later. Take your time to find the perfect bookkeeper, and in a few months you’ll wonder how you ever managed to run your business before you hired one.

And, once you’ve used this strategy to hire a bookkeeper, use it to find professionals to help you in other aspects of your business.

When you have a strong support team, you can become even better at the things you do best!

6 Tips for Keeping Your Cool When Clients Get Hot

The client is NOT always right, but he sure like to think he is.

I’m sure you’ve had a time or two—probably more—when you’ve wanted to blow up with a client. We’ve all been there. We’ve all had a client who is constantly changing their expectations. One who refuses to abide by the agreed upon terms of service. One who is downright obnoxious and rude.

How do you react to these clients?
Here are 6 ways you can maintain your composure and uphold your professional reputation.
1. Be assertive – not aggressive or passive. My definition of assertion is simple: “Say what you mean, mean what you say, and don’t be mean when you say it.” Let this rule guide your conversations with all clients and you will always be confident, cool, and in control AND you’ll always be professional.

2. Speak more slowly. You’ll be amazed at how much more clearly you can think and how much control and confidence you experience when you consciously slow down your rate of speech. Speak slowly and methodically when your emotional triggers are launched and you’ll maintain poise during difficult conversations.

3. Wait 1-2 seconds before responding. Responding immediately to difficult or tactical clients could result in you saying something you’ll later regret. Before you respond, take a deep breath, wait at least 2 seconds, and think about the best response and the best approach.

4. Take a time-out. When you sense that your buttons have been pushed, take a break. You can tell the client you need to put him on hold while you review a file, or whatever excuse sounds good at the time. The point is to get away from the client for a few seconds so you can re-group.

5. Use positive self-talk. I’m going to sound like Dr. Phil on this one, but I’m quite serious. Instead of saying to yourself, “I don’t get paid enough to put up with this ____.” Say something more positive like “This guy really needs my help.” Thinking more positively helps you respond more positively and professionally. Negative thoughts lead to negative words, and it spirals into a very negative situation.

6. Show your power before you use it. Often, a subtle suggestion of your “power” is far more effective than the outright use of your power. As a business professional you may have the power to terminate a phone call. You could say to your client: “If you don’t stop yelling, I will terminate this call.” But, believe it or not, you are far more “powerful” if you say, “I want to help you, but when you yell and cut me off, you make it difficult for me to work with you.” The latter statement demonstrates your power and your message most definitely gets across. The former statement uses up all of your ammunition and won’t usually diffuse an irate customer.

These incredibly simple tips will position you to keep your cool when clientss get hot!