Taking Your Business to the Next Level

Taking Your Business to the Next Level
 By: Cynthia Bullphoto

Taking your business to the next higher level can be a tricky process for even the most astute business pundit and is best undertaken with a sign that reads, Proceed with Caution! With smart guidelines, however, your business can reach its next growth plateau safely.

An article by Maureen Farrell and Mary Crane (http://www.forbes.com/) offers tips for growing your business and features the story of businessman, David Guernsey. Over 20 years ago, David Guernsey (Guernsey Office Products) took his retail office furniture business with $5 million annual revenues to over $25 million within five years. Along the way, he borrowed $8 million to expand his business and in 2008 boasted a $50 million top line.

Guernsey stated, "What I borrowed far exceeded my net worth. It was scary, but we needed a new level of sophistication to serve larger customers in order to grow.” Of the $50 million he said, "It’s tough to make all the investment on the front end, but when you need to grow, [sometimes] you can’t do it piecemeal.”

Business growth certainly sounds desirable, but it is rarely a simple process. Careful planning and attention to all aspects of your business must be maintained to achieve the desired goals. And you can always expect the unexpected to happen, whether it’s with your products/services, your personnel, or with accounting and related economic matters. Vigilance at every point is essential to maneuvering the steps to your target growth. Consider these…

11 Tips To Help You Safely Navigate Your Company's Growth

1. Plan a financial course that accurately reflects your cost projections. Initial growth is nice, but sustained growth is better and requires a solid approach with definitive goals.

2. Focus your energies on perfecting your product/service and building a solid customer base. Without customers, there is no business. The better the product/service and the means to promote it to existing and potential consumers, the better your customer pool and potential return on your investment.

3. Tell your story to attract investors. While you may not need investors initially, telling your story in a personable manner and creating associations with potential investors expands your range of future business options.

4. Establish an advisory board and build JV (joint venture) partnerships for their business expertise and for their contacts. Join similar, like-minded business groups and share ideas.

5. Become friends with bankers and other financial lenders in the event lean times negatively affect your business credit. An existing relationship sets the stage for collateral, competence and character, three areas of interests for financiers.

6. Set up critical systems like hiring and creating an employee handbook for job descriptions and daily responsibilities (especially needed in larger companies), an affordable employee benefits package, standardized operating procedures (SOP) stating company purpose and policies, and a back office with detailed accounting features that include spreadsheets and other tools for measuring and recording growth.

7. Hire professional management (particularly necessary when growth is well underway) and let them do their jobs. Their role is to oversee specific job duties while you concentrate on continuing to grow the business. As company leader, you ARE the business and your time is valuable for those responsibilities that only you can perform.

8. Expect and welcome change, whether adding or dropping new products/services, in record keeping, or in other areas. Growth denotes inevitable change that you must negotiate with each new issue.

9. Be prepared to risk serious capital when making gigantic growth, with a clear vision of how you will use it. Investment backers are averse to putting money into poorly planned proposals, but they will consider a well-organized and solvent one.

10. Consider expanding globally. Growth in today’s marketplace means competing for dollars in a global economy, and global exposure in a virtual arena can benefit most company’s products and services.

11. Periodically, reevaluate your entire business (products/services, management team, advisors, operations) to stay competitive.

Taking your business to the next level also entails improving business results using the latest data information, technology, and software. Upgrades will be necessary, either gradually or all at once, to keep up with growing business demands and to keep your name before prospective clients, so research and select the best systems for your company.


CYNTHIA BULL (http://www.cynrje.com/) is an internationally published writer and editor who helps international authors, marketers and speakers add greater value to their products through her top-quality writing, editing and transcription services. She is the author of How To Be A Medical Transcriptionist and Winning At Work While Balancing Your Life, a contributing author of Walking with the Wise Entrepreneur (Mentors Publishing House), cited in Make BIG Profits on eBay (Entrepreneur Press), and Managing Editor of Mentors Magazine Think & Grow Rich Edition. Cynthia has created over 200 book products in the past two years for her clients and, as mentor, helps clients reach their goals through her products, experience and genuine caring. Cynthia writes this feature article exclusively for the Association of Artisan Businesses (http://www.artisanbusinesses.org/), an organization dedicated to the preservation and promotion of the artisan industry.

Tips for Managing Your Cash Flow


When it comes to the health of your small artisan business – or any business, large or small – cash is king.

Managing your cash flow – that is, making sure you have enough cash coming in to pay bills and yourself – is the cornerstone of creating a successful business model.

But the nature of artisan businesses often means cash coming in spurts, or sometimes not at all. So how can you keep cash flowing if the spigot has run dry?

Here are tips from financial experts on creating a successful cash flow strategy:

Want to Understand Cash Flow? Know Thy Budget First

You don’t need a crystal ball to project your future cash flow. You just need good data on what is happening in your budget today.
While there are many software programs available to help you create a budget, you can use a simple Excel spreadsheet or even a paper and pen to get started, suggests consumer finance expert Kevin Gallegos, vice president of Freedom Debt Relief, LLC, based Tempe, Ariz. (http://www.freedomdebtrelief.com/).
Gallegos suggests the following:

1. Add up all monthly net household income for a given month. If possible, look at the upcoming month and determine what you expect and/or know you will receive. As you move from month to month, you will likely start to see some patterns. "The key is to remain very conservative, especially at first,” says Gallegos.

2. Categorize your ongoing monthly expenses into fixed, variable and spending money. Fixed expenses, for example, are rent or mortgage payments. Variable expenses that are "must-buys” such as food, gas, medicine, savings, taxes (for those who are self-employed). Finally categorize your spending money (for unexpected expenses and entertainment). Add those up to understand your cost of living. "Make the emergency fund a part of the budget,” Gallegos advises. Aim to save for several months of your business and personal expenses.

3. Subtract expenses from income. That number is your bottom-line cash flow – that is, how cash is flowing into your life on a daily basis. This cash flow will determine if you have enough money to pay your bills and other expenses on time. "If it is negative or does not help you achieve your short- and long-term financial goals, do a ‘gut check’ and find a way to either increase your income or reduce your expenses,” says Gallegos.

Rev Up Your Receivables

If you always got paid the moment you made a sale, you probably would not have cash flow issues. However, in the real world, this does not happen and most likely you will have to wait to get your money several days – or even months – after the sale.
But there are ways to help get your money quicker – and help turn your receivables into cash, that in turn will help your cash flow:

* Ask for cash payments first, then give credit card options. "Many artisans ask at the point of sale, ‘Will that be Visa or Master Charge?’ which leads the buyer to those two choices,” says Larry Baumgart, principal at Advanced Business Appraisers of Portage, Mich. A better choice for your cash flow would be to say "Will that be cash?” instead. "This leads to the purchaser to thinking about a cash option first,” says Baumgart, which is better than paying a 4 percent processing fee and waiting for the money to be deposited into your account.

* Know payment policies ahead of time. If you sell to a gallery or retail store, make sure that you know the payment policy. Your cash flow management will be different if each piece is paid as it is sold – or if one check is cut at the end of the month. Don’t be afraid to negotiate for quicker payments to help with your cash flow, suggests Baumgart.

* Send out invoices promptly. As soon as a sale is made, mail or better yet, email an invoice. And don’t assume you have to offer payment terms, notes Tom Pryor, director of the Small Business Development Center for Enterprise Excellence of North Texashttp://www.sbdcexcellence.org/. "Instead, ask for cash before offering a 30-day invoice payment that ends up being 60-90 days,” he says. You can also offer discounts to customers who pay their bills immediately.

* Don’t write off slow-paying accounts. Instead of refusing to do business with a slow paying customer, you can instead offer a cash on delivery (c.o.d.) to speed up the process and keep your customer at the same time.

* Don’t confuse inventory with cash. While inventory can potentially be cash in your pocket, don’t count it as cash. If there is inventory that hasn’t moved in a long time, look for ways to get rid of it (in a sale, for instance) to liquidate that inventory to help generate cash flow.

Pare Down Payables

While you’re revving up receivables – do the opposite with your payables. That is, pay as closely as you can to the due date without incurring late fees.
For example, if your payment is due in 30 days, don’t pay it within 10. If possible, pay online on the 29th day (and make sure it is credited to your account that day). This will help you retain the use of your cash as long as possible. Use business cards judiciously and only if you don’t have to make payments until 25 days after the statement – then pay it in full.

If you must be late on a payment, be honest with the vendor, suggests Baumgart. "Many people will be flexible on payments if they know that the payer is struggling and needs a break, but only if the artisan calls ahead of time and discusses it with them,” says Baumgart. "By not calling, the vendor or person that is owed the money usually feels that they are being cheated and they tend not to want to work with the debtor.”

What To Do When Cash is Short

If cash is short and creditors are hounding you the first thing you might think to do is to get an outside job somewhere, even part-time, to make ends meet. But think carefully before you do that, says Baumgart. "These part time jobs can be a creative distraction for an artist,” he says. Instead, think of ways you can improve cash coming in through alternative venues that are related to your artisan endeavors, such as selling your products on the Internet.

"You have to experiment to see what works for your type of product. EBay may work for some products, while others may not sell as quickly,” says Baumgart. Explore alternative sales outlets in your community, such as using your products as fund raisers for local schools or churches, where some proceeds would go toward supporting the non-profit – but some cash will go into your pocket.
The best advice to making sure you are not stuck with cash flow problems is to plan ahead and sock away three to six months in cash for your personal and business expenses, says Julie Murphy Casserly, an independent financial planner and author of The Emotion Behind Money (http://www.emotionbehindmoney.com/).

"It’s not a matter of if a shortfall will happen, the question is ‘when,’” says Casserly.

Gallegos agrees and adds: "The idea of socking away half a year’s expenses can induce mild panic,” he says. But it can make the difference between surviving cash flow problems and going under because of them.

But before you write this bit of financial planning wisdom as impossible, consider what it means: a little nest egg will keep you prepared for any unexpected loss – be it a downturn in sales, the economy, an illness, or any other emergency. And it will keep your cash flow flowing in a positive direction.


MARCIA PASSOS DUFFY (http://www.backporchpublishing.com/) is a freelance business writer based in New Hampshire and is a member of the state’s artisan and business organization, NH Made. Marcia’s articles have appeared on Yahoo Finance, CNBC, Bankrate.com, NFIB.com, Smart Business Magazine, The New York Times Lifewire, The Weather Channel, among others; she is the author of the book, Be Your Own Boss. She also publishes two online magazines, Home Office Weekly.com (http://www.homeofficeweekly.com/) and The Heart of New England.com (http://www.theheartofnewengland.com/). Marcia wrote this feature article exclusively for the Association of Artisan Businesses (http://www.artisanbusinesses.org/), an organization dedicated to the preservation and promotion of the artisan industry.

Tips for Managing Your Cash Flow

By: Marcia Passos Duffy

Loans & Financing for Small Businesses

How to get the money you need to build and sustain your businessphoto
By: Michael Sanibel


Many businesses have found it more difficult to obtain financing since the bursting of the credit bubble in 2008. Banks and other lending institutions have tightened up their lending policies, and there are more hurdles to clear to get loans approved. Some banks may require a formal business plan before considering your loan application with the goal of reducing their risk. This article will suggest possible actions to improve your chances of obtaining loan approval.

U. S. Government programs

A popular myth is that the U. S. government offers grants to start or expand small businesses. The reality is that most grants are awarded to nonprofit groups, academic institutions, and government agencies at the state and local level. They are typically focused on doing things for the public good, rather than private enterprise. Depending on the state, there may be economic development grants available that have been passed down from the federal government. In most cases, the purpose of such grants is very restrictive and will not apply to your specific business. Therefore, grants are rarely a viable financing option.

The Small Business Administration [http://www.sba.gov/] does not make loans directly, but guarantees loans for start-ups and operating small businesses. On March 2, the president signed legislation that extends the window to March 28 for the SBA to provide small business loans with special features of the American Recovery and Reinvestment Act. The SBA will guarantee 90% percent of loans (up from 75%) and will waive loan fees that ranged from 2% to 3.5%. The extension authorizes the higher guarantee levels through March 28, 2010 for certain SBA loans, and the fee relief is available until the additional $1.8 billion funding is exhausted or September 30, 2010, whichever comes first.

Key factors for commercial loan approval

As a small businessperson, your character is on the line since you will be the one to spend the money and repay it over time. The lender will assess your trustworthiness through a variety of methods such as personal references, credit history, educational background, and prior business experience. They will also look at the amount of personal capital, both time and money, that you have already invested in the business. Capital indicates confidence in your business and that you have a vested interest in its success. The lender will also evaluate your net worth, equity value of the business, and cash flow in order to determine your ability to make loan payments.

Another factor is the business assets that may be pledged as collateral to secure the loan. These might include real estate, facilities, equipment, accounts receivable, and inventory. Banks don’t want your assets but they may want insurance, especially if they have never done business with you before. If you don’t need a large sum of money, you may be able to get a signature loan, but be prepared to pay a higher interest rate to offset the added risk.

The lender will evaluate current and forecasted business conditions, which is the type of information that would be included in a business plan. This will be based on such factors as the competitive landscape, current liabilities, existing customer base, and the external economic environment. This will be accomplished in light of the purpose of the loan and its predicted impact to your business. For example, if you are using some of the money to purchase additional equipment to expand your business, that will be incorporated into the sales and revenue forecast. It all boils down to your ability to pay, and convincing your lender that you are a reasonable risk.


Rather than mailing in your loan application, meet personally with your chosen banker and present a professional image that will instill confidence and a favorable first impression. When assessing risk, some bankers place as much emphasis on you as they do on your business. If you come to the meeting unprepared and unorganized, they will notice. This checklist is a summary of talking points you should have in writing and on the tip of your tongue:

Business Plan. This helps, but if you don’t have one, be prepared to discuss the nature of your business and why the loan is needed. If the bank uses business codes in its loan processing, make sure the code is applicable to your business. Some banks use an automated credit scoring program which removes subjectivity by relying on established financial algorithms. Find out if your bank uses such a computer model, and discuss the implications before submitting your loan application.

•What you plan to do with the money. Talk specifics, not generalities. If you are buying equipment, have a price list available that shows what you are buying, cost per item, and delivery schedule. If the loan covers your rent for the first six months, have a copy of your lease. If you say it’s for "general operating expenses,” you will probably be asked for more detail, so be prepared.

Credit report. While the bank will obtain this independently, you should review it in advance to make sure it’s correct. You can get one for free, and it will enable you to address any concerns that the lender has based on what they may have already seen.

Personal financial statement. Your net worth is a solid measure of risk should your business not become profitable as soon as expected. Bring a list of your current assets and liabilities. The unencumbered assets might be considered as collateral for the loan.

Past tax returns. Bring your personal returns for the past few years, or your business returns if you have any.

Expertise and experience. The importance of this can’t be overstated. You want to demonstrate to the lender that you have a thorough understanding of your business and have what it takes to run it successfully. Many lenders, especially the smaller community and specialty banks, rely as much on their gut instincts as they do on the raw numbers. Explain how you will manage the money as though it’s your own, and show them your budget [http://www.artisansmonthly.com/2010/03/budgeting-for-small-business.html] to prove it.

If your loan is disapproved

You have the right to know the specific reasons why your loan was denied. If it was because of a poor credit report, ask for a copy of the specific report(s) referenced in the rejection notice. If you find errors or omissions, get them corrected by the credit bureaus and put the lender on notice in writing. If the lender relied on appraisals, interviews, or outside experts in making the decision, ask to see those inputs. Find out if there is anything you can do that will shed additional light or provide a positive influence. If you still believe that your loan was disapproved without proper justification, ask to escalate the matter to senior bank executives. If that fails, review your preparation checklist, see if you can strengthen and improve it, and consider applying to a new bank.


Michael Sanibel (http://www.michaelsanibel.com/) is a freelance writer specializing in business, finance, law, science, aviation, and political analysis. He graduated from the United States Air Force Academy and is also licensed to practice law in California and New Hampshire.

Budgeting for Small Businesses

Budgeting for Small Businesses
Why budgeting is essential to your business successphoto
By: Michael Sanibel


Every business, regardless of size, needs a budget. Before your business can make money, you need to determine how to wisely spend the money you have. Creating a detailed spending plan enables you to track and analyze your monthly expenses, cash flow, and the revenues needed to expand your business. It’s important to get this roadmap committed to paper so that you can gauge performance against financial parameters that you create. Your budget should reflect reality, not a set of unachievable objectives that are cast in stone.

Budgeting is important for one-person businesses since the tools available will help you run your business effectively, and save you time and money. Some of the advantages are:

• It will install discipline in how you do your job and manage your time
• Setting realistic goals will help you to focus on doing the right things to achieve them
• You will see how you are doing financially every month, and if you are turning a profit
• You will know if your expenses are higher or lower than expected, and use this information to control future expenses
• You can track your supplies and use the information to estimate reorder quantities and timing
• Helps you decide to raise or lower advertising expense, or if other investments are needed to sustain and grow the business
• Provides data for establishing next year’s goals
• Use the data to flag problems, find alternative courses of action, and head off bigger problems downstream
• Provides central source of information for income tax preparation

Budgets can range from the very simple to extremely complicated, but the important point is to devise one that works for you. For a one-person business, a spreadsheet may be all you really need.

The detailed forecast and budget

The forecast represents your projected receipts and income based on expected sales. It’s usually a good idea to create this first, since it will require you to prepare an assessment of the complete business picture. If you have historical data from previous income statements, that can be used to formulate your forecast. If this is the initial forecast and you already have a formal business plan, you can update the forecast information contained in that plan. If you are starting from scratch, the sales will be the estimated value of your retail product or services. It is the total price of goods sold and is commonly known as gross revenue. Spread the sales forecast by month and account for changes in demand caused by holidays and other events that will drive the actual amounts.

The budget is your estimated spending plan, and ideally this would be time-phased by month for at least the next year. You are essentially translating your business into finite numbers that represent the projected expenditures displayed in your income statement. The expenditures are a combination of your fixed and variable expenses.

Fixed expenses are often referred to as overhead and remain relatively stable over time. These include rent or mortgage expense, taxes, depreciation, insurance, loan interest, telephone, equipment rental, and building maintenance. Variable or operating expenses generally rise or fall as a function of sales volume, and include labor, commissions, payroll taxes, travel, materials, supplies, equipment maintenance, advertising, and shipping. Create a separate line item in the budget for each expense category.

Measuring actual performance

Once your forecast and budget are completed, the real work begins. At the end of each accounting month, compare your forecasted sales versus booked sales. Also compare your budget versus actual costs incurred. Analyze the variances, both positive and negative. If expenses are higher than expected, is there a valid reason for this? Are there ways to reduce expenses that exceed your budget? If the additional expenses produced greater sales volume, perhaps it’s time to revise your budget and plan for those additional costs. If you haven’t seen a corresponding increase in sales, why not? If your expenses exceed revenues, you are operating at a loss and you don’t want to wait until the end of the year to discover this.

Analyze every element of cost and determine the cause of each variance, and whether corrective action should be taken. This constructive analysis will be worth every minute of time spent doing this. The goal is to make adjustments in real time that can help improve your overall performance. The keys to successful implementation of this strategy are discipline and attention to detail. This is how you catch problems early and find ways to either solve or work around them before they grow into something unmanageable and detrimental to your business.

Budgeting tools

There are free tools available to assist you with this process such as those provided by Microsoft Office (http://office.microsoft.com/en-us/templates/TC011589561033.aspx). There are also more sophisticated computer programs available including Budget Maestro (http://centage.com/products-overview.htm), Cognos TM1 (http://www-01.ibm.com/software/data/cognos/products/tm1), and Microsoft Dynamics (http://www.microsoft.com/dynamics/en/us/products/forecaster.aspx). Programs like these will assist in developing and presenting the operating data needed to successfully manage your business.

The mention of these tools does not constitute an endorsement by the author or publisher of this article. The intent is to expose you to a few available options, but you are encouraged to do your own research to find the software that suits your specific business model. There is no point in paying for features that you don’t need, and many such programs offer a free trial.

Bottom Line

A budget is a critical element of successfully managing your business. It will tell you the amount of sales needed to meet your financial targets, how much money you need to spend to achieve those targets, and how much money you have to fund the business. A budget will help minimize risk by alerting you to changing demand and economic conditions.

While this may seem like extra work for the small business owner, today’s automated tools allow you to track your business performance with very little effort. Excel-based spreadsheets are free and easy to use, and the software programs can provide even more insight into financial indicators such as return on investment and cash flow. Once you have established your performance review routine, you will find it beneficial to analyze data trends and establish benchmarks for the future. It’s helpful to use a program that will automatically plot your monthly data on graphs so that you can see trends in real time and adapt to the changing economy. Use what works best for you and helps you run your business more efficiently and profitably.


Michael Sanibel (http://www.michaelsanibel.com/) is a freelance writer specializing in business, finance, law, science, aviation, and political analysis. He graduated from the United States Air Force Academy and is also licensed to practice law in California and New Hampshire.