Cash Flow(er) Part One

For startups, building positive cash flow can be a hefty challenge. Businesses are notorious for over-projecting sales and under-projecting expenses. Hidden costs are a given, and even a great idea may take its time to blossom. What to do?

1) Start with a plan and a budget. Fancy or no, planning can be a huge factor in how long it takes you to go from ramen to the Ritz Carlton. Having at least a basic business plan and budget may shave 6 months to a year off the time it takes to get your business from the red into the black.

2 ) Spend your money like it’s 1999. Learn to be frugal in both your personal and business spending. If there is cash in hand, whether yours or borrowed money, for some it can feel like a weekend in Paris.

Wouldn’t that big, shiny new planner make your business great? Time to swap the still-functional inkjet for a $500 color laser printer?

Okay…these things may be necessities for your business (or mine), but the main point is: Don’t make a purchase to make a purchase.

Sure…shopping can be fun, but if it made the difference between cutting loose from your day job in a shorter time frame or sooner finding the break even point for your business, you might reconsider how badly you need something.

3) Come and Get It vs. Go out and Get It. For many businesses, it can be so exciting to open the doors of a new venture that it might be hard to imagine the business not swamped with customers. New business owners often sit, wait and become anxious when their bank account is slowly or quickly dwindling, for customers to rush in and buy out their stock or enlist their services. If your business isn’t getting off on the right foot, there may be a number of easy to implement ideas that can things rolling.

Are there low-cost trade shows you can attend to get some pointers or inspiration?

Exhibiting at a local event, fair or festival (make sure the event is the right fit for your business) can be a great way to get exposure. Events can have a very wide range in cost. You want to test the waters, so try an inexpensive event that comes recommended by someone you respect.

Firstly, you may be able to sell your product or service at the event. Secondly, showing at a public event helps you to polish your act, get your lines down. Hint. The people that sit down, nod and smile don’t usually get much business and sometimes lose money at such events. If you wanna get out of that office chair and into the lush life, look people in the eye, say hello and make an honest attempt to connect with them. Sure, many will not care about you or your product whatsoever, but it is better to get accustomed to that up front, so that you develop the patience to find your true customer.

4) Marketing hero Seth Godin mentions worldview as being an extremely important factor in marketing and business success. A worldview is the perspective of an individual or group of people. Seth refers to worldview in regards to the marketplace, and how it is so important to find a good match between your product/service and your target market.

Case in point. Recently I was in a nearby town and stopped into a new restaurant that specialized in waffles. I talked with the owners for a while about their concept and found it interesting that they wanted to target the college crowd. Their town had some college students, but not in the numbers they imagined. The decor of the place looked more like a brightly lit ice-cream parlor than a joint that might pull in young hipsters. Clearly their business image did not match the worldview of their target clientele.

Seth makes a simple and powerful point. It is far better to market to people that already have an appreciation for your offering or to change your business to meet the worldview of the available customer pool. Many businesses lose the ranch by trying to change people’s worldview instead of meeting people where they are at.

Stay tuned………..

JB

Been There, Done That

One of the most useful talents you can nurture is the ability to connect with like-minded others and to make use of what you learn from them. Author and business guru Brian Tracy shares the fact that when he was just starting as a salesperson, he struggled to make sales. One day he came to the simple realization that by trying to learn more about how the best salespeople conducted business, his own track record was certain to improve. He was correct. His single decision to learn from experience became a stepping stone that delivered him from the sales floor to become an extremely successful author and entrepreneur’s guide.

While there are a lot of people willing to give you advice, listen most closely to those who have done what you intend to do or the closest thing that you can find. Someone out there has said that if you want to be happy, surround yourself with happy people. If you want to be successful, make connections with people that might be able to help you with some of the tougher questions that arise. Lots of veteran bootstrappers are generous with their time…..they may be more than happy to give you some guidance for the price of a cup of coffee or lunch.

In my own experience of this, I have received business guidance from some very qualified pros, yet some of the best advice I have received has been from other small entrepreneurs. Unless you are a potential competitor, there are bootstrap heroes out there who have walked in your shoes, and who would be happy to save you some time and money by offering a nugget of experience.

JB

Pencil Me In…….

Calendars….continued.

As early in business life as possible, create a schedule for important recurring activities such as paying bills, taxes, filing applications, vehicle registration renewal, client appointments, whatever will make your life easier. I can honestly recommend this practice as I am trying to get myself back there as we speak!

Microsoft Outlook is a great tool for this (and is available on nearly all IBM compatible machines with some version of a Windows operating system). You can also buy some form of calendar book or create your own custom calendar pages. Pdfcalendar.com is a website that lets you customize calendar pages and print them out. Amongst other features, they offer twelve weeks on one calendar page, which can help you to plan quarterly. While it is generally expected that you will log (and keep) your most important appointments and deadlines, I find it especially useful to note recurring obligations like credit card payments and application deadlines. At first when you have a small pile of paperwork to deal with, it is much easier to pat yourself on the back for an organizational job well done. When the pile gets thick and muddy, your well-honed scheduling chops will prove to be invaluable.

Once you have to dig out your mud boots to take on paperwork, you may find yourself paying late fees or having missed out on important opportunities to participate in workshops or events. Another advantage to maintaining a log of commitments is that you know what is coming at a glance. Is there a particular month when all of your insurance renewals come due or membership dues pop up?

Now……..assuming you do manage to keep it all together, the REAL reason you are doing this is that when you least expect it, forgotten expenses or commitments suddenly emerge. By being aware of and planning for both recurrent and one-time activities, the sudden arrival of important looking mail won’t be as likely to raise your blood pressure.

ps. A shredder won’t actually get rid of your parking tickets.

JB

H E L P ?

As a startup, everyone wants to give you some friendly advice. Sometimes it is informed, sometimes not. It is usually easy enough to separate the wheat from the chaff when it is coming from family, friends or acquaintances. When you are given advice from professionals, and you haven’t had a lot of experience dealing with accountants, lawyers, or business advisers, it can be a bit more difficult to discern how helpful or potentially harmful (even if well-intentioned), the proposed guidance may be.

Someone once offered what may or may not have been a joke…..starts to seem funny until the implications are digested. Ready? “What do you call the person who graduates last in their class at medical school?” The answer? Doctor.

There are a lot of folks with credentials. Now which one is the best for you? Don’t worry too much if you don’t have a lot of experience with the type of specialist you need. Ask around. Who do you know and trust that has experience with that type of professional? When you find a good prospect, ask for references and call the names you get. You might even get lucky enough to find someone young, earnest and eager to make good in the world that will work very hard to earn your respect. In the end, trust your gut. How does it feel to talk to this person? Does what they say or how they interact with you feel right? Do they seem like someone that will have your company’s best interest in mind?

Don’t feel awkward if they aren’t right for you. Some professionals charge a lot for their services, and the last thing you need as a startup is a big bill for a service that may not even help you.

On the flip side, a talented and enthusiastic professional could save you a lot of headaches. Strike up friendships with other people who are or have been in your shoes. The more of these people you get to know, your network of qualified professional contacts will have multiplied exponentially. (AND you’ll have a better outlet for your entrepreneurial war stories than your dog or significant other).

JB

Bootstrap Startup First Draft

So you wanna start a business, grow carrots, turn Mom’s taxi into a limousine service? Write it down. It doesn’t matter how small you start. Write it down.

As simple as this sounds, so many budding entrepreneurs try to keep it all in their heads or talk about how amazing their business will be once they decide to get rolling. The easiest way to get rolling is to w r i t e i t d o w n.

White Heron TEA began on paper about six months before I ever had a business license or dollar one. By writing a first draft of your prospective path to self employment, you are solidifying your ideas into usable form. You can then elaborate your ideas into a timeline, checklists, goals and dreams that you can use to build a business that will support your lifestyle (or give you a better one.)

Not feeling ready to write a full business plan or don’t know what one looks like? Not to worry. Start where you are. When you get closer to formally starting a business, you will want to learn more about writing a business plan. For now, get your thoughts on paper or at least into a Word document.

Once you start talking to banks, accountants and other business professionals, expect to be asked about your plan.

JB