Business Cash Management Essentials

Many aspiring entrepreneurs go into business because they have a product or a service they feel strongly they can offer that will in some way be better than what is currently available to their potential customers. Either they will have more reasonable pricing, personalized customer service, a higher quality product, more convenient hours, highly effective marketing or some other “edge” over the competition. And in many cases, the entrepreneurs are correct and their fledgling business grows as sales increase. This would seem to be great news and promise success to the small business, but unfortunately there is more to staying in business than just providing a quality product or service. Cash management is the absolute key to the short and long-term success of any business venture, be it a one-man operation or an international corporation employing thousands.

The trap entrepreneurs often fall into is thinking that expertise in their chosen field and a decent sales volume are enough, and that cash flow will be there as long as they are busy. A majority of failed businesses can point to mismanaged finances as the primary reason for their demise, even in cases where sales are booming. So why is it that a business making sales and keeping busy is at risk of failure, and what can a business owner do to minimize their risk even when finances and accounting are not their forte?

First, let’s understand the basic problem. Sales are absolutely essential to maintaining a successful business. But why aren’t they “enough”? There are several factors that weigh in:

  • Inventory – some businesses require large outlays of cash to purchase inventory, which may or may not be sold quickly, tying up large quantities of cash that sit on the shelf or warehouse floor and gather dust.
  • Receivables & Payables – if credit customers take longer to pay than the business takes to pay its outstanding bills, a cash shortage could become a real problem; a balance between receivables and payables scheduling is essential to proper cash management.
  • Capital Expenditures – large outlays of cash for assets such as equipment, vehicles, real estate or technology can be important for business growth, but pose a cash flow problem if they are not managed properly.
  • Pricing – goods and services need to be priced so that not only the cost of the sale is considered, but the business overhead is also taken care of and a profit margin is included. No business can be maintained by losing even small amounts of money on every sale; a business that has to cut prices that far is doomed to failure.
  • Sales Cycles – some businesses are cyclical or seasonal, or they ebb and flow based upon factors outside their direct control.Assuming the sales and receivables will always “be there” during the lean times is a huge mistake that can have dire consequences; business owners need to maintain a cash buffer to see them through lean times; whether those downturns are planned or unexpected.

So how can a business owner minimize their exposure to cash shortages? Following are some general guidelines for keeping track of your cash and protecting your business.

  • Plan your cash flow at least 6 months in advance to make sure you have the cash to meet your business needs, including payroll, estimated tax payments and general operating expenses.
  • Use your bank balance as a tool in planning, but don’t mistakenly think of it as actual, usable cash. “I must have money, I haven’t run out of checks yet” isn’t a good strategy for cash management. Always remember that your bank balance fluctuates dramatically as bills are paid, assets are purchased and invoices are collected.
  • Think about your business and try to establish a few signals of the ebb and flow of sales. Depending upon what business you are in, it could be the size of your phone bill that lets you gauge how sales are going, or it could be the number of packages out the door each day, or the mileage driven by your delivery trucks. Obviously this is different for each individual business but knowing what the signals are without having to analyze a monthly or quarterly financial statement every day could be a good tool for being proactive and avoiding cash crunches instead of having to react to crisis situations.

Your banker may be able to provide assistance in the form of tools you can use to keep on top of your cash management situation. Some cash flow management products and services offered by many banks that can be helpful include:

  • Sweep accounts -these can be used to provide overdraft protection and can be set-up to leave only enough cash in your checking account to handle the needed outlays for the day; your remaining balance can be moved into investment accounts so the money remaining in your account is making money for you.
  • Credit lines can be used in cases where you need a quick cash outlay but know you will have the cash to cover the expenditure shortly. Banks appreciate advance planning, and will be more likely to set up a credit line for your business or offer a loan if you have a clear plan for where the money is going and how it will be recouped.
  • Electronic payment tools such as ACH direct debits, wire transfers and remote deposit capture help you ensure that payments from your customers are in your account as quickly as possible, while you can better manage and schedule payments to your suppliers.

The best business cash management tool you can employ is information. Know when you need to spend cash and how much you need to spend. Know how much your customers owe and when it is due. Keep on top of overdue payments and do not let slow-paying customers continue to obtain goods and services on credit. Be aware, and don’t get caught with bills to pay and no cash with which to pay them! Cash flow isn’t a boring accounting function. It is the lifeblood of your venture. Give it the required attention.

Investing in Omaha Foreclosures With the Help of Omaha Foreclosure Listings

Information about foreclosures in Omaha, the largest city in Nebraska State is easily found in Omaha foreclosure listings in the media. Persons wanting to make a good investment in Omaha may find Omaha Foreclosure listings invaluable as foreclosures are selling for very steep discounts.

Investing in Omaha foreclosures confers several benefits other than the steep discounts.

Omaha is located in the American mid west, on the banks of the Missouri river. In the last century, Omaha rose into prominence because of Omaha stockyards, once the world’s biggest stock yards and its meat packing industry. The economy is sound with plenty of employment potential. Omaha is home to five Fortune 500 companies like Con Agra foods and Berkshire Hathaway. The latter is headed by Warren Buffet, the man ranked often as the richest person in the world. First National Bank of Omaha is the biggest privately held bank in America.

Today Omaha has a diversified economy with stress on skill based jobs. In 2009, it was counted as the top ‘Big Bang for the Buck’ city in the nation by Forbes magazine. It was also rated as number one on ‘America’s fastest recovering city’ list. The economy also greatly benefits form tourism with annual College World Series and the city based Henry Doorly zoo attracting the most visitors. A number of important landmarks have also been designated as official historic places.

The diverse cultural scene of Omaha consists of a range of museums, performance venues and musical heritage. It is home to the Omaha Community playhouse, the largest community theatre in the U.S. The Omaha Symphony orchestra and Opera Omaha are some of the finest in the nation. Museums like Joslyn Art museum and Omaha children museum attract the crowds. The annual Blues, Jazz and gospel festival of Omaha celebrates local music as does the Omaha Black Music hall of Fame.

The Henry Doorly zoo counts as one of the top zoos in the world. Omaha has a rich musical legacy of rhythm and blues and jazz. It also has a nascent hip-hop scene. City of Omaha oversees six regional parks like Dodge Park. The city boasts of 100 miles of trails for bicyclists, hikers and pedestrians.

Omaha has also an active sporting and educational scene. It hosted the 2008 Olympics swimming trials. Ice hockey is a favorite sport in Omaha. There are 11 colleges and universities here with leading ones like University of Nebraska and Creighton University. In 2008, Kiplinger’s magazine named the city number 3 among US cities to ‘live, work and play.’

Omaha foreclosure listings are useful to get an idea about foreclosed properties in the city. You can get hold of Omaha foreclosure listings in local newspapers, realtor’s offices or county clerk’s records. Also online resources include realty websites and the websites of banks and servicers. Subscribing to online Omaha foreclosure listings is ideal as they provide up to date information on foreclosures.

Small Business Management

Running a small, start-up business has it share of ups and downs. When I launched my company nearly nine years ago, running my own small business has been both rewarding and challenging. It has enabled me to establish greater balance in my life as I have reduced the administrative burden that corporate America places on each of its employees and replaced it with more time spent on developing content for my clients.

Given the choice, running my own small business is the best option for me at this stage of my life. I can work out of my house, see my kid on a regular basis, focus my work effort on content, rather than administration, and yes golf a tad. That being said, I am asked continually by others “what is it like to be in business for yourself?” as they contemplate the leap from corporate to sole proprietorship.

While it is not for everyone, here are some of the points of consideration that one should mull over before making the jump to starting your own small business:

One Stop Shop: One of the benefits of being a small business owner is the autonomy of “calling the shots”. You are the boss and clearly can steer your company as you see fit. Many think they relish this set-up but in reality, when it comes to being the self-motivator that is required to be successful – the “guy” to go to – lots fall short. Before you read any further, ask yourself if you are cut out to be the “go to guy”. If not, you can save yourself a lot of time and frustration. Simply stay in the corporate world.

Develop A Business Plan: So, why is business planning so crucial? In a word, it provides “clarity”. Investing time to develop a plan provides precise clarification of the company vision. In addition, it provides a mechanism to gauge the results of the business and provides the foundation for future growth plans. In the long haul, it enhances the company valuation through fiscal responsibility, which provides the story of opportunity to any future investor or employee. Business planning is one-part strategy and one-part tactics – but where the sausage actually gets made is in the execution. Execution comes in the hard work necessary to carry out a plan and the accountability for your activities by tracking them.

Understand Tax Burdens: Regardless of the political rhetoric surrounding the tax code and its impact on small business, the fact of the matter is that these entities are levied with a myriad of taxes. I am shocked by how many budding entrepreneurs fail to understand the taxes that small businesses pay. My company has essentially one of the easiest business operating models that a small business can have. I invoice a few clients per month; receive a few checks a month; pay a few bills a month; and have very little inventory and/or depreciation of capital assets. Despite that, my tax return was 84 pages last year. Filing as an S-Corp, my outlay on taxes is between 25% and 39% of federal taxes; North Carolina state income taxes ranging from 6.0% to 7.5%, social security and medicare (twice as a matter of fact for employer and employee) of 15.3%, so nearly 50% of all income goes to taxes and fees.

Replicate Yourself: Given the fact that you are a one stop shop, a small business owner needs to replicate themselves wherever possible. Tools such as social media and the acceptance of telecommuting through online collaboration have enabled small business owners to be in many places at one time. In order to be successful, small business owners need to tap these tools to maximize their exposure to potential clients as well as reaching customers outside of their immediate trade area. Prior to these tools being readily available, my business was limited to the state of Illinois (where my company was originally based). Since I have utilized these tools to replicate myself, I have had clients in thirteen different states.

Navigate Third-Party Challenges: A small business owner wears many hats and relies on third-party entities for key alliances. When Go Daddy had their website and email server outage in September, roughly 5.3 million small business websites and emails were knocked out. Small business owners rely on these support companies and at times, are held captive when issues arise. While my company does not conduct a lot of commerce via my website, many small operators lost online revenue due to the outage.

Be Wary Of Scams: Lastly, where there is a small business owner, there is a criminal waiting to prey on the unsuspecting operator. In fact, this past week, I received a letter from a group claiming to represent the State of Illinois. Having been in business nearly nine years, I am keenly aware of all of the annual expenditures that my company pays. As an Illinois corporation (operating in North Carolina), I received a letter stating that I needed to send in a $125 fee for my “Annual Minutes Records Form”. I didn’t recall ever doing this, and when I contacted my CPA, he shared the following press release with me:

In short, starting and running a small business may be the best decision you may ever make. Having the facts in advance of that decision are critical to ensure that you are positioned for success. Once you fully vet your decision-making for starting your small business, the rewards can be amazing…