Thinking Days …

Greetings from sunny (hot) beautiful Zion National Park!

That’s me with Milagro, my leggy chihuahua and partner in crime.

I’m off on a series of thinking days (another word for that is … vacation!) in Zion National Park. So this blog will be on vacation until the first part of August. I’m following in the footsteps of Bill Gates and taking some thinking time. What will I be thinking of? More tips and tactics for small business owners, of course!

I’ll leave you with one tip before my vacation starts in earnest:

Have you taken some thinking days lately? If not, might it be time?

Enjoy the enchantment of your small business, whether you are engaging in thinking days or building your queendom (or kingdom!).

Tags: thinking days, zion national park

Drum Up New Business from Clients with Shrinking Budgets

In these trying economic times, drumming up more business can be hard if you clients have shrinking budgets. Small business owners are finding that their clients, whether individual consumers or other businesses, are tightening their belts and reluctant to spend.

However, some small businesses are finding that they can capitalize on the current crisis by connecting with current clients in new ways, and by hooking up with new clients. Here are three trends to think about when it comes to dealing with your clients’ shrinking budgets.

1. Existing Clients are Open to New Ideas
In a world where everyone is looking for ways to cut financial corners, clients are open to learning about how to be more financially frugal, and from many new sources. One small marketing business sent its clients a short flyer listing “10 Tips for Frugal Marketing,” which not only offered great information but also alerted clients to some new inexpensive services the firm was offering. By wrapping the information about the new services into a list of useful tips their clients could immediately use, the marketing business generated an immediate positive image and some new business from existing clients.

2. Partner Up to Access New Clients
One spa owner decided to see if pooling marketing budgets with other local businesses could generate increased revenue for her own business. She teamed up with some local small businesses to offer a series of “Feel Good” workshops. The workshops offered consumers many ways to “Feel Good”–physically, emotionally, financially, spiritually, and even legally. Partner businesses included a law firm, an accounting business, a fitness gym, a nutritional consultant, a spiritual counselor, a banker, and even a private investigator. All the businesses cross-promoted the workshop series to their own clients, and attendees received coupons for free consultations and discounts. Overall, the businesses reported an average increase in business from the workshops ranging from 10% to almost 30%. Not a bad gain in today’s stingy market.

3. Go for the Big Fish
Even big firms that used to have large recurring marketing budgets are starting to scrutinize the individual line items on which they spend money. According to marketing firm TheEyeWorks, 60% of businesses have or will decrease the size of their marketing budgets this year. More importantly, over half the companies polled are willing to consider working with a smaller marketing agency if the agency could produce similar results.

The moral of this David and Goliath story is that this financial crisis may have evened the playing field for small businesses. The fact that large businesses are looking for ways to deal with shrinking budgets gives small businesses a shot at large accounts that might otherwise be out of reach.

When faced with the incredible shrinking budgets of your current and potential clients, don’t despair. Instead, think of yourself as the small business version of David, in the David and Goliath story. Then start talking to your current and potential clients in new ways. You may surprise yourself!

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Photo credit: DC Drum Circle

Tags: shrinking budgets, small business partnering

Why Small Business Owners Are Turning to MLM

In my last blog post I outlined two alternative and somewhat adventurous ways that small business owners are bring cash into their businesses, even in this cash-poor economy: factoring and creating multiple streams of income.

Factoring is a way for small businesses to generate cash by selling their accounts receivables for up-front cash. Creating multiple streams can take many forms, some of which I outlined in my last blog post. Each of these options has pros and cons, and each of these can increase a small business’ cash flow if implemented right.

Now I’m going to introduce a third option that is enticing many small business owners as a viable new income stream: MLM, also known as multi-level marketing or network marketing.

Why MLM and Why Now?
Many small business owners who had previously shunned the MLM industry are now joining in significant numbers. The question is, why now? Small business owners are habitually busy, so it doesn’t make sense that they would add another business to their already overloaded schedule. Yet they are, and for good reason.

1. MLM is Supported by Capitalist Big Wigs
Did you know that investing guru Warren Buffett owns several MLM companies, including Pampered Chef? Did you know that best-selling authors and well-known businessmen Robert Kiyosaki and Donald Trump wrote a book supporting this industry? In fact, Donald Trump believes in it so much he recently launched his own MLM company. The MLM industry, formerly the king of scams and schemes, has grown up and become a solid business proposition.

2. When Cash is Tight, MLM is Inexpensive
In this cash-poor economy, an MLM business has one of the lowest startup costs and overhead of any business. Rather than buying a franchise or investing in other companies, many small business owners are joining MLMs and operating these businesses in their homes, which keeps the overhead low and increases their tax advantages. On average, small business owners are spending $350 to $500 to start their businesses, and roughly $200 to $400 per month the run it. Although it may not produce income right away, most who consistently work their business earn a passive income, over and above their expenses, within 6 months to 2 years.

In this economy every penny counts so even a small income stream will pay off. Did you know that last year 91% of foreclosures could have been prevented with $500 additional income per month? Plus, according to Dun and Bradstreet, 95% of all businesses close because of lack of cash. Many small business owners are realizing that investing in an MLM business is a smart investment for the near future.

3. MLM Helps You Claim Additional Tax Advantages
Sometimes cash comes not in the form of greenbacks, but in the form of taxes that you or your business don’t have to pay. Most small business owners are in a catch-22 when it comes to taxes. They are damned if they make a profit, and damned if they don’t. For instance, one shopkeeper earned a good profit one year, but ended up paying huge taxes on her take-home pay to the IIRS. To prevent that, the next year she increased her business expenses by hiring an employee to mind her store while she took more time off. Her net after-tax income was the same in both years. It doesn’t seem fair, does it?

Many small business owners are caught in the same situation, but they can change that by starting an MLM business in their homes. When a small business owner owns and operates an MLM out of her home, she can hire her children (7 years or older) to work in her MLM, and claim that child’s wages (translation: allowance) as a tax deduction. She can claim additional square footage in her house for office use and deduct that from her taxes. She can deduct her commuting miles between home and business round trip. She vastly increases her ability to deduct certain kinds of expenses, which ultimately means her take-home paycheck, after taxes, is much larger. Now isn’t that a creative way to generate dollars?

The Conversation is Just Beginning
There are a lot more advantages than can be listed here for small business owners to start their own MLM businesses. This is just the start of the conversation. MLM isn’t the same scammy industry it used to be, just as the economy isn’t the goldmine that it used to be.

If you own a small business and you are looking for a way to create a new stream of income, consider MLM. These days, an open mind can lead to a healthier checkbook. To learn more about how MLM can create a new income stream for you, consider these resources:

Educational webinar
Free consult
Phone chat with a warm body
Read the MLM blog

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Photo credit: lunch chat

Tags: MLM, multi-level marketing, network marketing

Alternative Ways to Avoid the Cash Flow Crunch for Small Businesses

In my last few blog posts I’ve highlighted different ways that small business can increase their cash flow, with strategies that vary from bartering with other companies to turning away slow/no pay clients. Here’s a list of those blog posts in case you want to know more about ways to bring more cash into your small business:

3 Ways to Beat the Small Business Cash Flow Crunch
3 More Ways to Beat the Small Business Cash Flow Crunch
4 Ways to Decrease Small Business Overhead and Increase Cash
Small Business Cash Flow - Collect Early or Don’t Collect at All

In this blog post, I explore some more adventurous alternative ways that small business owners are discovering for avoiding the cash flow crunch.

Adventurous Ways to Avoid the Cash Flow Crunch
The methods I discussed in my previous blog posts are fairly common sense and standard; ask any good accountant and you’ll get some, if not all, of these suggestions. The two methods I cover in this blog post are less standard, and you may or may not have heard of them. Even if you have heard of them, you may not have considered them as viable options for you. But with the economy being the roller coaster that it is right now, you may want to keep your options open. So what are these two adventurous options?

- Factoring
- Creating Multiple Streams of Income

Here’s an overview of these two options so you can start wrapping your mind around them.

Factoring
The word “factoring” doesn’t give you much detail about this option, but it can give your business a boost if you are suffering from constipation in the cash department. With factoring, you sell your accounts receivable to a factoring company, which is usually a bank or a commercial finance company. When you sell your company’s receivables, you get cold hard cash. It is then up to the factoring company to collect cash from the clients who owe money.

The good news is that factoring is becoming more popular and more possible for small business. Previously, if you small business owned less than $10,000 in accounts receivables, a factoring company would not consider working with you. These days, factoring companies are willing to be more flexible. According to the president of one factoring company, only three percent of all small business that are eligible for factoring are even aware that this is an option to generate cash for the business.

Now for the bad news. As with any finance option, you pay a price for getting cold hard cash. The average fee is 5% per month of the total receivables amount, and the factoring company may not accept receivables with payment terms of longer than 90 days. In addition, you run the risk of angering clients if the factoring company resorts to harsh measures to collect their cash. Factoring gives you a definite cash option that you may want to consider, depending on how strapped your small business is for greenbacks.

Creating Multiple Streams of Income
Popularized by Robert Allen and other authors, the creation of multiple streams of income is the new frontier for entrepreneurs and small business owners. Whether this means becoming a shareholder in other companies, creating a new line of electronic products that can be digitally delivered, or doing pure investing, these days small business owners are gathering income streams from diverse markets for financial stability.

The bad news is, of course, that in a cash-poor economy you might not have cash on hand to invest in real estate or other companies (the whole goal being to bring cash in, not spend it).

The good news is that you have other assets that you might be able to convert into alternate streams of income, aside from what your small business currently brings in. For instance, as an entrepreneur you have knowledge, experience, skills, and talent. These intellectual assets are all inside your brain and, for you, free for the taking. The question then becomes, how can you turn those assets into products you can sell for an additional stream of income? Additionally, can you turn one of your company’s physical products into a digital one? Here are some of low-cash sweat-equity ways small business owners are cashing in on multiple streams of income. They are using their own knowledge plus the intellectual and physical assets in their small businesses to sell:

- educational DVDs, CDs, and ebooks
- memberships to websites and webinars
- online consulting (fixed price for a fixed job)
- networking events to match businesses with each other
- affiliate programs

Does this spark any ideas in your brilliant mind as to how you might turn your own or your small business’ assets into a new stream of income?

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Photo credit: jungledrumsonline

Tags: cash flow, factoring, multiple streams of income, small business

Small Business Cash Flow - Collect Early or Don’t Collect at All

Did you know that the longer you allow your small business accounts receivables to age the less likely you are to get paid? After a while, the money your clients owe you can start to seem like a bad dream: tragic, but something that happened a long time ago. Like you, your clients probably have pressing issues to handle on a daily basis, like firefighting, and don’t have the time or cash to settle old debts.

Waiting is Bad for Small Business Cash Flow
According to the Commercial Agency Section of the Commercial Law League of America, the chances of your small business getting paid decrease dramatically the longer you wait to get paid. Here’s the breakdown of your probability of getting paid (I’ve rounded the number to make them easier to read):

When due: 98%
1 month late: 94%
2 months late: 85%
3 months late: 74%
6 months late: 58%
9 months late: 43%
12 months late: 27%
24 months late: 14%

Are you starting to get the picture? Waiting is bad, bad, bad for your small business cash flow. The moral of this story is: get paid early or don’t get paid at all.

Need Cash Flow Help for Your Small Business?
In the coming posts I’m going to feature some unusual ways that some small business owners are using to improve their cash flow. But before you dive into these solutions that are a little out in left field, consider some of the more traditional ways to plus the cash flow leaks in your small business by reading these recent blog posts:

3 Ways to Beat the Small Business Cash Flow Crunch
3 More Ways to Beat the Small Business Cash Flow Crunch
4 Ways to Decrease Small Business Overhead and Increase Cash

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Photo credit: hand out

Tags: accounts receivable, collections, Small Business Cash Flow

Small Business Cash Flow: Understanding When the Crunch Happens

In the last few blog posts I’ve talked about ways to reduce the cash leaving your small business and increase the cash coming in. In other words, these are all methods to shrink the cash flow gap.

I just read a case study (on the Business Owner’s Toolkit website) that gives a really interesting perspective on the cash flow gap. This case study profiles a small business that makes custom furniture, and tracks the cash flow in and out of the business as the owner creates a custom dining room table.

A picture is always worth a thousand words, and the bar graph that goes with the case study is priceless. It tracks, over the duration of the job (67 days), both the cumulative cash flow and the company’s check register. You can easily see where the cash flow crunch occurs. It happens over and over again, with the cash flow going negative on day 13 and not hitting the black again until day 67. Ouch! That’s 54 days of operating in the red.

This case study really gives you a picture of why cash flow is so important to a small business, and how easily your business might be operating in the red even if your accounts receivables look healthy. Read the whole case study here, and then take a look at your own small business’ cash flow picture:

Case Study: The Cash Flow Gap

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Photo credit:  Cash flow

Tags: cash flow gap, small business