Simple, don’t let them get old!

Well OK, I guess if I don’t have any old receivables I won’t need to know what to do with them, but how do I keep my customers from stretching out the terms of payment?

We are of the belief that cash is king in any small business. Big companies can withstand delayed payments or the bankruptcy of one of their clients that may result in the loss of millions of dollars. Small businesses don’t have that luxury. With small businesses, even a few thousand dollars can often mean the difference between survival and layoffs or closing the doors.

Here are 5 things you can do to help ensure your company doesn’t have any stale receivables:

1. Institute a 90-day cash flow projection that is reviewed and updated daily.
2. Do a credit check on your customers.
3. Ask for vendor references from your customers.
4. Accept payment via credit card.
5. Switch clients to pay by wire transfer vs. physical checks so you don’t have to wait for that “check that’s in the mail!”

The 90-day cash flow projection should become the most important management document in your company. It will give you a 3-month window to see if any “problems” are popping up. Your goal as the owner is to make sure that you have cash in the bank each of those 90 days. Now won’t that help you sleep better at night!?!?

Stop me if you’ve heard this one before. My partner and I are 50/50 owners in our business…UGH!

While most partnerships start out with the best of intentions (i.e. we want to split profits down the middle), setting up the ownership of the company can often mess with those good intentions. One of the keys for any successful business is someone has to be the one in control!

Most business partnerships will have ups and downs, just like any other relationship in your life. These fluctuations can have a detrimental impact on the business if someone isn’t able to make a decision because the other 50% partner won’t agree. A great clarifying question to ask when emotions begin to get involved is, “What’s best for the organization?”

Here are the top 3 things that can go wrong if someone is not in control:

1. No decision is made on key items because the equal partners are in a stalemate and so the progress of the business is hindered.
2. The employees are conflicted about who to listen to and follow because no one appears to have the authority, or worse, they’ll play the partners against each other much like kids do with their parents.
3. Animosity between the partners will filter throughout the rest of the organization which will have a negative impact on the culture of the organization and will lead to employee turnover and lethargy.

So how do you avoid these troubles? I’m glad you asked. Here are 4 things to keep in mind when setting up a partnership:

1. Make sure someone owns at least 51% of the business.
2. Use an operating agreement to cover topics such as how profits will be shared and how key decisions will be made.
3. Set up time to meet at least annually to review the policies of the business (if you’re a corporation you’re supposed to be doing this anyway).
4. Create a buy/sell agreement early on in the business (i.e. in the first couple of years) while the relationship is still good to set up a mechanism for a buyout to happen in case the partners have irreconcilable differences.

Like any good relationship, good communication is the key to a healthy and long-lasting partnership. As Ken Blanchard so aptly put it, “None of us is as smart as all of us,” and a good partnership will help you achieve your goals much faster and better than you can achieve them on your own.

“Dare to be great” is a great phrase! It has been running in my mind for many decades.

I believe it is the title of a book about Glen (Ted) Turner’s life or program; not sure which. I’m not a fan of Ted Turner. He’s the super rich guy who started CNN, married Jane Fonda and owns millions of acres in Montana I think; nor have I read his book. But I like the phrase, “Dare to be Great”! I like it a lot.

I like it because it’s a call to action. It challenges your comfort zone. It speaks to YOU! It speaks YOUR language. It is a highly personalized challenge. Great, like beauty, is in the eye of the beholder. I use that phrase myself often. It pumps me up and tells me to get off my duff. Let’s pick it up a notch Jack! Let’s do something BOLD!

I have met many business owners through out my life. Now that I am coaching small business owners on how to make their business better I am fully engaged with them. Most of the owners I have met get so immersed in the day to day running of their business that they don’t take the time to reflect on where they are taking their business. One of our favorite times during our coaching process is when we have the business owner develop and read a ten year vision for the company. They smile and feel good, even giddy, about their business when they are looking ahead that far. Anything can be accomplished in ten years. Feeling good about what you are doing and where you are going is fun. A leader who is having fun with work will transfer that feeling to all those who work with him.

Where do you want to take your company? Is it bold and exciting? Are you having fun? “Dare to be Great”!

Why do so many business owners express a simple solution for what is almost always a complex problem?

For example I can expect to hear one or more of the following ‘solutions’ during a discussion with with a business owner talking about the state of their business.

All I need are:

1) better people
2) more sales
3) more cash or
4)more time and my problems will go away.

I’m convinced this is a method for them to dream about a better place. Like winning a $300MM Power Ball Lottery. Life would sure be great “if only” one or more of those events happened in my business.

The problem with that kind of thinking is that the owner now feels the big business problems for the company have been “framed” and eventually one or more of these ‘solutions’ will just happen and the problems will go away. The owner usually can’t explain how or when these ‘solutions’ will come about, indicating lack of knowledge or experience to actually solve the problems of his business.

The reality is there are few simple solutions to improve the operations and financial performance of a business. All business problems involve a mix of product/service, marketing/sales and administrative/people issues that have to be identified, sorted and considered to come up with the best solutions.

The simplest solution to fixing any business is: “Improve Profits”. Who can argue with that? Now how the heck do I do it?

One of the toughest questions for an owner to answer is “How do I know when the next generation is ready?”

Transitioning a business to a new owner is a very difficult and time consuming process once the new owner has been identified, but how do you know that new owner is ready to take the reigns?

A key ingredient for knowing when the next generation is ready is when that next generation begins to step into the leadership role within the organization so that everyone in the organization now begins to look at that person as opposed to looking to you for the answers. One of the biggest components of leadership is to provide direction for the organization. If a leader is able to clearly and succinctly define a direction for the organization that is both understandable and exciting, people will want to follow.

Many transitions in private companies include the current owner being bought out over time, very often with these funds coming from the business itself. Because of this, if you’re the current owner, you will not be willing to give up the reigns to the next generation until you have utmost confidence that the company will not only survive, but thrive under that new leadership (you will be putting your money where your mouth is after all!). Here are the top 4 things you should look for to to know the next generation is ready:

1. the next generation can summarize in 1 minute or less where the business is going in the next 10 years and do it with enough passion and excitement to get both you and the employees pumped up about it.

2. the next generation is able to articulate a coherent plan for how the organization will continue to generate sales for the company’s products or services.

3. the next generation should be given the chance to show they are able to hire and retain good people and when the need arises that they are able to let go of people who are underperforming.

4. the next generation can present the company, which will include presenting the most recent financial statements of the business.

While you will never know for sure if the next generation is ready until they actually take over, if these four things are all present, you as the current owner will have a significantly higher likelihood of having a successful transition to the next generation.

Does customer service start once someone becomes a customer or does it start upon first contact with that person?

A common frustration I have as a consumer, whether it be in business or my personal life, is when a company whose product or service I’m considering purchasing is not very responsive. I’ve found this to be a particular problem when it comes to professional service providers.

I have had more unreturned phone calls or emails than I care to recall from these supposed “professionals”. And oh by the way, I consider no response to be within a couple of days of contact. Aside from true emergencies (e.g. illnesses & deaths) or someone being on vacation, I find it unacceptable for someone not to return a call or email.

I’m not talking about cold calls or blast emails, I’m talking about someone you’ve met or been introduced to, or better yet, someone you know but maybe haven’t contacted in a while. If someone is this unresponsive before I’ve become a customer or before I’ve introduced them to a potential customer, how responsive should I expect them to be after I become a customer. I can’t pinpoint if the root cause is that:

• people like to give off the impression that they’re so busy, or
• they are just out of control, or better yet
• they are so detached from the real world that they have lost touch with the fact that they’re no better than anyone else!

One of the things we strive to live up to in our business is to return phone calls and emails within 24 hours, even if it’s to say “I don’t have time to talk right now or give you an answer, but I did receive your message and can we talk on this day or that, etc.” This simple courtesy helps prevent confusion or frustration in a relationship.

It seems pretty simple to me and goes back to things you probably learned from your parents and kindergarten teacher about being polite and having manners. If you have good manners in business, I guarantee you’ll be recognized by your customers for having great customer service.