Category: Finance & Capital

You’ve done it! You’re generating consistent cash flow month after month — you can predict exactly what’s coming in and exactly what’s going out.

For many business owners though, this is still a dream.

But, with a few tweaks to your current set up you can start to turn that dream into a reality.

Maintaining a consistent cash flow is a critical element of running a successful business — you need to be able to pay your bills and, more importantly, pay yourself! I come across too many business owners who do not have this crucial foundational system in place. As a result they’re on a constant feast or famine cycle … you know, some months they have a massive surge in income, and the following month they hardly have two pennies to rub together.

As well as being an inefficient way to run a business, it’s also very stressful.

You never know if you’re going to have a good month this month, and be able to pay your bills, or barely scrape by.

For these reasons I am huge fan of payment plans, both for making my own purchases in my business and for clients to pay me.

Why? 

Because it helps enormously with cash flow – which is crucial when it comes to the smooth running, and long-term success, of your business.

On the expenses side, I can easily budget for expenses. As a business owner you too want to be able to manage your own cash flow, i.e. the money going out of your business, not just the money coming in.  By taking advantage of payment plans when you sign up for any kind of business development program, you’ll know exactly how much is going out of your business each and every month. You’ll be able to manage your expenses much better — rather than a big lump sum going out in one month, you can spread the payments out over several months.

And on the income side, you can easily anticipate how much is going to come into your business every month, and make plans accordingly. And you’ll also be able to grab opportunities as they present themselves because you know your financial situation.

So know that you understand a little more how payment plans can help you, both as a business owner and service provider, today I’d like to share with you my five steps to increasing cash flow in your own business by utilizling payment plans.

1. Get a merchant account. I consider this a must-have for any business owner wishing to do business online or providing one-on-one services with clients. With a merchant account you can very easily accept all major credit cards without your clients and customers having to go via Paypal (this is a great option for a secondary payment processor). And, most importantly, you can set your client payments up for automatic recurring billing. Doesn’t that sound fabulous?

2. Offer payment plans. Again, this is a must-have for anything you sell costing more than $150. So this would apply to your products, programs, and mostly your one-on-one client services. How you choose to set up your payment plans is entirely up to you, but a good rule of thumb is to add between 10-20% onto the full pay price and divide that number by the required number of payments. For private client payment plans, you may want to approach that slightly differently, depending on the program and investment level.

3. Don’t stretch payment plans out too far. This is especially important for your group programs and one-on-one client programs. You want to ensure that when the end of the program is reached the client has made all of their payments. There is the danger that if you let payments go beyond the end of the program the client will feel that they’re paying for a program they are no longer a part of, and this can result in higher credit card declines.

4. Have clear payment policies in place. Talking of declines and other ‘uncomfortable’ payment issues, make sure you have a clear policy in place for how you’re going to collect on non-payers. How do you contact them, i.e. phone, email, certified letter, and how long do you leave it before making contact with them? Are you willing to go as far as handing things over to a collections agency?

5. Be aware of all the fees involved. Many business owners get stung by unforeseen merchant and shopping cart fees. Check out what fees are involved on your merchant account – there is usually a monthly account fee, a monthly gateway fee, and per transaction fees (which are usually a percentage of the transaction). And if you’re using recurring billing through your shopping cart, check out their recurring transaction fees too. If you’re using Paypal also be aware of their fees; on the surface it may seem a better deal than having your own merchant account, but dig a little deeper, and understand exactly what’s involved.

Increasing your cash flow by offering payments options is definitely a good way forward, both for you as the business owner and your clients. But do be fully aware of any costs and pitfalls involved so that you can plan and budget accordingly.

Dipping into the market is a great way to take control of your financial future. You can be a casual investor or a more focused active trader, but either way, you want to understand the trading process inside and out. Fulling getting the different because the NYSE, OTC markets and other exchanges is important on your journey to be a responsible financial citizen. When you learn how to approach the market with risk management in mind you can make it work to your advantage.

Any investor needs to start with a broker. Selecting the right broker for your needs is vital. Do as much research as you can about the brokers and find the one that fits your needs. Once you find the right platform, you then can research and select the company or financial instrument you want to put your money into. This is a vital part of the process. Let’s say you pick a security, like a stock or mutual fund, where you actually own the underlying asset.

Then you need to choose how to make the order. You can either pick a limit order, where you instructor your broker to buy the security at a specific price, so it will not be executed until the the price of the security reaches the price that is specified in the order. Or you can go with a market order, where the trade is executed as quickly as possible by the broker.

When you are dealing with stocks on the OTC markets, you want to stick with limit orders. That gives you more control over the trade. OTC markets are inherently more risky than other, larger exchanges, because the companies are smaller, less subject to financial disclosure regulations and more prone to the financial hype machine. It is prudent to approach these markets carefully.

After the order is place, the broker dealer puts the order through a number of internal steps to make sure it is executed properly. The broker can either place the trade and back it with their own funds, try to find another broker to take on the deal or change the quote on the trade. If the broker needs to change the quote, it can get hairy. There is usually no central exchange that oversees this process.

Once the trade is agreed upon by the broker, other brokers or the owner of the security, the entire trade must be settled. That means that the funds must be delivered to the owner of the security and the security must be delivered to the buyer. That entire process is the responsibility of the broker/dealer. That is why selecting the proper broker is so vital, especially if you are in the OTC markets.

Starting out as an investor, whether you are trading your own funds or trying to become an active day trader, can be an intimidating process. It makes sense to find a trading education site that allows you learn strategies and techniques that help manage the risk inherent in trading. The risk is always going to be there, no matter what. Understanding and accepting the responsibility of risk management is part of being a trader.

Along with paper piles, budget and Cashflow is another area that can be a huge source of overwhelm and frustration! 

And I bet the very title of this article made you think twice about reading it ?

In your corporate days you would have had a bookkeeping/accounting department that took care of all of this for you – they paid the invoices, they tracked the receivables, they tracked the income, and they told you the bottom line!

Now that you’re running your own business you are also the Chief Financial Officer, and it can be very overwhelming.  However, it needn’t be… let me share with you three simple steps that you can put in place to manage your budget and Cashflow.

But first, let’s start with what is a Cashflow projection?

One important area of your Financial Management System is that of a Cashflow projection.  Put simply, a Cashflow projection shows whether your anticipated income will be able to cover your expected (projected) expenses and this report is very beneficial to you in your business.

It is an annual report and, if set up correctly, will show you how cash will flow through your business throughout the current financial year.  I’ve been using a Cashflow report in my business for many years and find it invaluable.  Just recently the chance to participate in a high-profile teleclass series came up, and because I have my financial systems in place, I knew straightaway that it was something I could take part in!

Step 1 – Create Your Cashflow Report

This is very easy to do using a spreadsheet.  Create a column that lists all of your expenses, i.e. office supplies, legal & professional fees, membership, advertising etc. and a column for each month of the year.  You will need to create formulae that will tell you your total income, total expenses, and subtracts the expenses from the income, and also carries forward any amounts from month-to-month.  This is so you can see how your finances are ‘flowing’ throughout the year.

Step 2 – Input Your Data

Taking your financial data from your bookkeeping system input your actual income and expenses, and list any projected expenses in the appropriate row/column.  Your Cashflow report will now show you at-a-glance any time periods for which you will need to be especially aware of.  For example you may have a lot of expenses in one particular month so you’ll know that the previous month you’ll need to make sure that you have the funds kept back in your bank account to take care of those upcoming expenses.

It will also show you if you can afford to make an investment in your business, whether that’s signing up for a new service or membership club, taking out an advertisement, or buying new equipment.

Your Cashflow projection can also be used as a budget planner.  You can plan out when annual memberships are due and put those in ahead of time.  You can also add in an amount for when your taxes are due.  This will provide you with a really good feel of how cash is flowing through your business, month after month, throughout the year, and you can also tell how much you can take off for owners draw, but still leave enough to cover the anticipated expenses.

Step 3 – Schedule In The Time

Now that you have your Cashflow report in place, it’s important that you update it regularly so that you can stay aware of how cash is flowing through your business, and take any actions necessary so that you have enough to cover all of your anticipated expenses.

I recommend scheduling in at least 30 minutes once a month to update this critical financial management report.

A Final Thought…

Having an annual Cashflow projection will provide you with all of the information you need so that you can keep on top of your business financially and know where you are.

If you have a bookkeeper taking care of all your financial records for you, ask them to prepare your monthly Cashflow report for you.

Financial institutions are critical organizations that have an important role to play in the economy. Such institutions include commercial banks, savings and credit societies as well as investment institutions and together they help individuals, businesses and other organizations use their finances properly. Before such institutions came to the scene, individuals and business didn’t have a secure place to store their excess cash and this caused a lot of chaos. There were no licensed lenders at that time as well and this resulted in a lot of exploitation. Financial institutions, therefore, brought a lot of order in the financial sector and this article takes a look at some of the roles such institutions play in the economy.

1. Holding cash deposits.

Individuals and businesses with more cash than they need at a given time can use financial institutions like banks to store the extra cash. Commercial banks provide individuals and businesses with a safe platform to store their cash and other valuables and this has gone a long way to reduce the instances of insecurity. Walking around with a lot of cash or having it stored in a drawer in the office makes individuals and businesses a target for burglars and by offering them a safe storage solution, financial institutions have enhanced the safety and security of people, organizations and their money. The institutions have easy cash withdrawal mechanisms and this allows the individuals and the organizations to access their cash reserves when they need them.

2. The provision of credit facilities.

Sometimes, individuals and business enterprises may not have all the resources they need to start new ventures or to finance business expansion. This, however, is not a challenge anymore since there are financial institutions that offer cash advances to their members. All you need to do access such facilities to prove that you can pay the advance back and the institutions will offer you as much cash as you need. Loans have helped launched multi-million dollar businesses and this speaks to the power of credit facilities. If you are looking to secure a loan for your personal or business needs, you’d be wise to shop around so as to find the agencies with the best rates. Click here to find out more about what you need to find the best loan company for your cash advance needs.

3. Offering investment advice.

Most financial institutions have an active investment desk for advising their members on the best ways invest their cash. Investment is one of the best ways of ensuring the financial future for both individuals and businesses but without the right information, people and businesses may lose all their cash by picking un-bankable investment options. Financial institutions are aware of the best investment options for businesses and individuals and they would gladly share this information should you visit their investment desk.

Conclusion.

Financial institutions play an important role to play in improving the lives of individuals and business entities and above are some of the ways they go about doing that.

Article Contributed by Hannah Whittenly

Shows such as Shark Tank have brought the concept of pitching a product or service to investors right into our living rooms. While your next pitch is unlikely to be broadcast on national television, it could still be a significant event for yourself and your business. Let’s take a look at some tactics that may increase the odds of making a successful pitch and getting an investment.

Prove Demand for the Product

Few investors are going to give a company money unless it has a track record of sales. To give yourself the best chance of success, sell your product for at least a year to show that there is interest in it. Showing that there is demand for your product may make your company more appealing as a whole. This may enable you to get better terms from investors such as more money in exchange of less equity.

Showing that there is already demand for a product may also reduce the amount of work an investor may need to put in. The harder an investor has to work to make your company successful, the more equity that they will want in exchange for their time and effort. However, if all an investor needs to do is make a phone call to a connection in the retail space to make a lot of money, you may not have to give up as much.

Get Manufacturing Costs Down

A fiscally healthy company is generally one that can keep its costs in check. Ideally, a company that is seeking investment either has a distribution channel or is close to finding one. Getting connected with a company that has products like a powder feeder can make the manufacturing process more efficient. Efficiency in manufacturing may make it easier to produce a larger number of goods in a shorter period of time, which will keep costs per unit to a minimum.

Know Your Key Figures

When making a pitch to an investor, you should have your key financial and other figures memorized. Ideally, you will know what it costs to make an item, how much it is sold for and what your profit margins are. Potential investors may also want to know about labor costs and other figures that may be relevant to your industry. Not knowing these figures or providing incorrect information may make you look unprepared or simply not good enough of a business owner to partner with.

Know Who You Are

It is important that you understand who you are as a businessperson. It is also important that you know what your company is as a brand. Typically, investors are looking for a quality person to partner with as much as they are looking for a profitable brand to do business with. When making your pitch, be clear about what your vision is for the business and how you plan to get there.

While there is no harm in taking advice if it is given, do not create the impression that you are asking an investor to develop your business plan. Furthermore, do not create the impression that will say whatever an investor wants to hear just to get a deal done. In most cases, it is better to keep looking for investment capital as opposed to partnering with someone who doesn’t share your vision.

When pitching to investors, preparation is key. Be sure to practice your pitch multiple times in front of a mirror or in front of others. That will make it easier to simply tell the investors what they need to hear in a professional and knowledgeable tone. Hopefully, this will increase the odds that an investor will like your pitch and agree to invest.