How is Your Cash Flow? Step 5

Step Five: Believe in yourself What does belief in yourself have to do with keeping track of your numbers and using a cash management system? Everything! Believe in yourself enough to be real with your business decisions, your stated goals and information shared with your staff. Managing your cash efficiently will help you sleep deeply at night and give you the confidence to move your business forward with integrity. You will discern whether you can honestly afford to hire that next employee, sign a lease agreement or take money out of the business for your own personal needs. Last, but not least, when you believe in yourself, others will believe in you. You will attract better clients, employees and vendors. And yes, your cash flow will be heads above other companies that lack sound business practices. Your fiduciary responsibilities having been met or exceeded will help you take your business to a whole other level of success.  

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How is Your Cash Flow? Step 4

Step Four:  Keep Your Staff in the Loop Staff can and will be more effective if they know the parameters of the company needs – whether it’s how to correctly price a project, what is needed to bring the project on time and to spec, or how their performance can affect their future compensation and longevity with the firm. When staff understands with certainty what your expectations are for them, they will be more motivated, feel more trusted and help you create a company culture that everyone can enjoy.  That culture should be one where everyone is on board for achieving company goals.  They recognize that meeting goals is a must, not an option. If you feel your approach to cash management is lacking in some way, ask your key people for input. Some areas to ask include: Pricing How to achieve better quality sales How operations can be improved to help the bottom line Definitely get your bookkeeping staff involved.  Rather than them holding back recommendations related to matters that could affect cash flow, help them to understand that it is beneficial for them to share all of their expertise pertinent with the company.

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How is Your Cash Flow? Step 3

Step Three: Be Consistent. All too frequently companies set up procedures and systems that go unfollowed. This happens for a number of reasons such as the system is too cumbersome or takes too much time. An unused system, or one that is used inconsistently, will invalidate your work as well as make it much more difficult, if not impossible to achieve great results. Inconsistency leads to other issues too, such as your ability to pay employees and vendors in a timely fashion. It can also affect the business’ ability to deliver products and services to clientele. These types of situations could negatively impact your credibility with your clients, employees and vendors as well as damage your business credit. It is far better to block-off the time regularly in the calendar to correct deficiencies in the system as well as to implement the system to its greatest level of effectiveness. If uncertain on how to develop or implement such a system you can consult the internet, books on business cash management or utilize a qualified business coach. Note:  There is a significant difference between cash management and cash flow. Positive Cash flow is having more than enough to pay everything that’s due and some extra.  Negative Cash Flow is when you have less than what you need or you are left with less net than the last period.  Cash comes in from sales, lines of credit, even credit cards, as well as investments and the sale of assets. Cash goes out to pay for operating and direct expenses including, but not limited to payroll, taxes, interest and cost of goods, in addition to principal debt service, and the purchase of assets.   CASH IN is all you have available.  CASH OUT is all you need to pay in the period.  It…

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How is Your Cash Flow? Step 2

By Valerie Cardenas Step 2: Use a Cash Projection  & Management System Use a system that can project your REAL bank balance into the future for ten or more weeks.  Think of what this could mean for you in the way of peace of mind.  A system that predicts cash balances will give you the insight to know exactly what must be collected in the way of receivables as well as what additional sales must be made.  This system will tell you what fixed and variable expenses will be covered while paying you as the business owner, paying your taxes and more.  Another benefit:  you will be working toward increasing your cash on hand which typically increases profitability. Using a system would greatly reduce or even eliminate the potential of having to tell vendors and even employees that their paycheck or payment will be delayed.  Not only does this reduce stress, it builds credibility too.   Your credit will improve. Your employees will feel more secure. Plus, you will have cash available to deliver your services and/or products as promised which will lead to more satisfied clients and referrals. One method I recommend is using an Excel Worksheet that shows weekly incoming and outgoing funds.  Most accountings systems, while they do a good job showing actual cash flows (based on receivables, payables, etc.), do not easily convert to the flexibility desired in cash management projections. Using a system like I suggest here will allow for a variety of real life situations where your accounting system won’t, such as clients who pay early or late. When using Excel or a similar spreadsheet program, shifts in dollar amounts can be easily adjusted to imitate real life as to when monies will be collected and expenses can be moved forward or backwards depending on current…

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How is Your Cash Flow? Step 1

By Valerie Cardenas Step 1:  If You Can’t Measure It, You Can’t Manage It. Understanding the old adage that cash flow is “King” and “Queen” and knowing your business numbers inside and out will assist you to make effective business decisions that can lead to improved cash flow. Cause for consternation can be thinking that your cash balance in the checkbook should be the same as the Profit and Loss (P & L) net profit.  While your true cash balance is reflected on your Balance sheet, it is not reflected on your P & L because it is only one component of your cash flow.  Cash flows are affected by Accounts Receivable, Inventory, Accounts Payable, Capital Expenditures, Borrowings and Debt Service and Other Timing Differences. Some questions you can ask yourself that may uncover undesirable items that have an impact actual cash balances: Is your pricing in line with your fixed business overhead, regular expenses, and desired cash for growth and profit margin? Who are your largest customers and are they paying on time? What percentage of your total revenue relies on those customers? What is the cost of managing your high demand customers? Are they worth keeping? Are you overpaying for services whether it is employees, independent contractors or vendors? Do you know your payroll and corporate tax numbers so they can be paid on time and still meet other goals? With a good understanding of your numbers, you will enjoy more confidence, peace of mind and more income to the bottom line!  

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Set Your Goals from the Inside Out

Genuine goal setting is the first step toward positive, deliberate action. Although goals are often imaginative and visionary, they are always a prelude to action, a track to run on, a course to take; they are never a substitute for reality. They are an expression of your noblest qualities; they are an exercise of your desire for personal leadership – the desire to be a bit better today than you were yesterday, and the determination to be even better tomorrow. To set optimally effective goals, you need standards to follow. It is like playing basketball: you need to know the object of the game and the rules; otherwise, you would not know whether to run with the ball, kick it, throw it, or roll it. For your goals to have the magnetic attraction that draws you toward them and propels you toward success, follow these principles of goal setting – these “rules of the game”: 1. Your goals must be your own personal goals. It is obvious that you are more likely to accomplish goals you choose for yourself than those urged upon you by others. But your goals must also be “personal” in the sense of “private.” If you know that your goals plan will be seen by someone else, you may tend to distort it to impress others instead of to satisfy your real needs. Unless they are based on your own internalized values, your goals will have little or no meaning, no appeal and no value. 2. Your goals must be stated positively. Your mind functions through mental images; you literally “see” through the mind’s eye a picture of each thought. A goal expressed negatively eliminates a mental image, and the mind cannot picture a void or a vacuum. Take a simple illustration. You may say, “I’m…

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Grasp the Role of an Effective Leader

While no two leaders possess exactly the same personality or leadership style, effective leaders generally have many of the same characteristics. They frequently a contagious enthusiasm for life, a genuine concern for others, an enhanced clarity of purpose, and a firm commitment to the achievement of worthwhile, predetermined goals. The magnetic force of effective leadership is a tool which draws on the ability to arouse in followers a desire to be like the leader – or to possess some of the admirable qualities and personality traits seen in the leader.  Effective leaders bring out the best in their team members. To do so, they employ leadership traits which can be divided into three major areas: attitudes, behavior, and people skills.  How You Think Goal direction. Effective motivational leaders define clearly the goals they want to reach, visualize them vividly, and work toward reaching them with intensity of purpose. Self-motivation. Never feeling compelled to wait for someone else to tell them what to do, effective leaders rely on their own decisions and actions. Self-motivation propels leaders into purposeful and productive action. Insight and judgment. Determined, effective leaders apply their general intelligence and common sense to the task of learning what works, and what does not work. This trait, practiced efficiently, allows leaders to move ahead without wasting time before making a decision or taking action. Competence and action. Effective leaders face problems and do something about them. They often find themselves in new or unfamiliar situations without guidelines to follow or established patterns to give direction. They are forced to devise creative new paths to their goal, new methods for attaining their purpose, and new ideas for achieving success. Leaders know that some ideas and actions will prove unworkable. Effective leaders rebound from temporary setbacks, risk trying the next creative idea…

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Become Better, Do Better, Be More Productive

A basic part of human nature yearns to achieve, to accomplish, to attain – to do better in the future than in the past. Through the ages, philosophers, poets, heads of state, commanding generals, businesspeople – leaders of all types – have tried to light the fires of enthusiasm and kindle the flame of motivation to glimpse the heights they might reach, the happiness they might enjoy, and the depths of reward they might gain from using more of their potential. The term, productivity, captures the essence of this human pursuit of becoming better and doing better. Productivity, in fact, has earned recognition as the key to personal and business progress, success, and survival. Productivity Defined Since improving productivity is vital in today’s competitive world, a clear understanding of the term productivity is essential. Productivity is defined by some from an economic standpoint. Others take a management viewpoint, while yet others look at productivity from other perspectives. A simple definition that applies to all businesses and individuals is that productivity is the measure of how efficiently goods and services are delivered. Productivity in a broad sense is concerned with the overall effectiveness of getting things done. In a narrower business sense, productivity is doing what it takes to make more money. From a personal perspective, productivity enables you to earn your income. Overall, productivity means making more from your available resources; it means investing time in tasks, activities, or responsibilities that provide a high return to your organization and you. Productivity is determined by working on high payoff activities, and high payoff activities mean spending time doing the right thing, in the right way, at the right time, and for the right length of time. When you spend your time on high payoff activities, you will be more productive. You…

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Delegate to Succeed

A manager’s primary responsibility is to get work done through other people, and the single most effective technique for achieving this purpose is delegation. Effective delegation is the act of giving someone else the responsibility and authority to carry out an assignment or to represent you or your organization in a specific role. In addition to sharing responsibility, delegation involves communication and training. When teamwork is at its best, effective delegation occurs. Practicing the art of effective delegation is a vital tool in your development as a leader and manager because of these key benefits: 1. You improve your personal time management, leveraging your energy and ideas. 2. You provide motivational and development opportunities for others on your team. 3. You maximize the interests, strengths, and contribution of others and increase the team productivity. 4. You make use of a valuable yet easily overlooked training tool – delegation! The definition of delegation can be expanded to include sharing of responsibilities with team members, other managers, or anyone with whom dividing responsibilities is appropriate and logical. The concepts used for traditional delegation apply with some modification when sharing responsibility. For example, some tasks within your work load may best be accomplished by counterparts of yours. Certain individuals may have special skills or knowledge, information, or relationships that make it more effective for them to complete the work. Keeping in mind the overall goal and being willing to share responsibility, as well as the credit, increases your success as a manager. Effective delegation multiplies your efforts many times over by using the time, knowledge, experience, and creative power of other people. Effective delegation frees you for the planning, problem solving, and tracking required to build a more productive organization. Types of Delegation Choose carefully the team members to whom you delegate specific…

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Reshaping Attitudes about Productivity

–  Consider these time use practices that affect productivity and see how attitudes are involved. Because actions come from attitudes, increasing productivity may require reshaping some of the attitudes that now dictate how you use time. Consider these time use practices that affect productivity and see how attitudes are involved: Concentrate on high priority activities. The quickest and most effective route to increasing productivity is to spend time on tasks that advance important goals. Make certain you spend your time on work that really matters; otherwise, you may be completely consumed by trivial details. Hours may be spent solving problems that can be solved by others. Respond to concerns expressed by various team members through empowering them to solve their own problems. This approach saves you valuable time and gives others the opportunity to develop commitment, a sense of ownership, and skill to solve significant problems. Help others spend their time on their high priority activities, and concentrate your time and effort on high priority activities that lead to the achievement of your goals. Exercise self-discipline. Self discipline enables people to stay focused on a task and work on it until it is complete. Establish your priorities and then refuse to let distractions, interruptions, or happenings of the moment destroy your concentration. Discipline yourself to give tasks only the amount of time and effort they truly deserve from you, or delegate them to other appropriate team members. Either alternative requires thoughtful evaluation and consideration – and conscientious self discipline. Perfectionists especially must learn to exert the self-discipline to delegate selected jobs to someone else who may not do the job quite as well as they would but who can still meet essential quality standards. How else will another learn to perform this job? In such cases, perfectionists must learn to…

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