Late payments culture damages small businesses

The Debt Collector (novel)
The Debt Collector (novel) (Photo credit: Wikipedia)

Since the crash it’s shocking to read about the late payments culture among the larger businesses and institutions who refuse to pay small firms on time. Companies and institutions preach the importance of small businesses as job creators but their accounting policies and departments don’t support this approach.

What is your experience with late payments by larger companies? How long do you wait for payment when your small business has delivered products and services in good faith? What are you doing about late payments before they crush the lifeblood from your small business? Continue reading “Late payments culture damages small businesses”

Not knowing the numbers can put your small business in financial jeopardy

Scotch pie showing inside contents. Purchased ...
( (Photo credit: Wikipedia)

Do you know the key financial numbers in your business? How well do you know them? If woken up in the middle of the night, could you give a pretty accurate estimate of where your business sits financially?

Without control over the financial and operational numbers in your business you really are operating blind. Knowing the numbers allows you to see potential problems before they occur. You can also operate and run your business with confidence knowing where you are going.

A report from Canada showed small-business owners were lacking in basic financial knowledge that could help them better manage their companies. The report said that while 93% of entrepreneurs surveyed did believe they have an average or even advanced understanding of financial management principles, 39% failed a 18-question financial literary quiz. About 57% achieved a score of 50% or less. With small businesses struggling to be profitable and competitive, this isn’t a good sign, said one of the people who ran the survey. Continue reading “Not knowing the numbers can put your small business in financial jeopardy”

Are you building up a cash kitty for challenging times in your small business?

Frankie Vaughan

My father who was a part-time jazz musician in his early years used to often sing this song “You’ve got to put your money in the bank Frank, you’ve got to have money to start”. Yes, you can’t start a new business or anything else if you don’t have money saved. But the real challenge is building up a cash kitty when you are running your business.

I recently came across a small business that was forced out of its premises because the landlord had increased the rent. The problem was that the small business owner did not have the cash to secure new premises and inform all its existing customers that they had to vacate their present premises. The result was that customers started making plans about obtaining alternative suppliers of the service that the business was offering. Whether this business will find new premises and bring along all their customers that they have built up over years is difficult to say. But the likelihood is that they have lost many customers and it will be difficult to rebuild their customer base that they had acquired. But there is another issue and that is that by not having cash reserves the business wasn’t even able to move all their fittings and equipment from their existing premises with a professional mover and had to rely on friends and family to cart the equipment out piece by piece over more than two weeks.

You know what it’s like with a small business, once family and friends know that you are a small business owner you are leaned on for all sorts of cash requirements. Children who need motor vehicles or education or even airline tickets home from faraway places. Extended family suddenly need money and lean on you for loans. Soon the business becomes a cash machine for many people and is unable to build up cash reserves.

Without cash reserves, you become extremely vulnerable and there is a strong possibility that your small business will deteriorate. Just think about it. If you don’t build up a cash reserve, where’s the money going to come from when you need to protect your business against a fierce competitor? How can you keep running the same business for years on end without improvements or even giving the inside and outside a coat of paint? Your business can also remain stagnant or trapped in that you are not able to do improvements or expansions.

We all know how tough times are at the moment. With a large strain on your cash resources, how is it possible to build up a cash reserve to make your business more resilient? How can you stop the drainage? How can you put an end to living from hand to mouth?

It all starts with making sure that you pay your business first before you pay anyone else. You need to set aside a small amount each month and put it into a cash reserve fund so that you can build up a cash kitty to tide you through bad times. Even very small amounts in the beginning will get you into the discipline of saving on a regular basis. You’ve got to start somewhere. Small amounts accumulated each month will eventually amount to something sizeable if you look over a period of a year. Do everything you can to build up a cash reserve in your small business so that when the time comes to protect your business, improve your small business or expand it, you have the necessary financial resources to do so.

Re-energise your business by better handling cash flow

Deep sea fishing from a boat in the Gulf of Mexico
Deep sea fishing from a boat in the Gulf of Mexico (Photo credit: Wikipedia)

Before the great tragedy in False Bay when foreign fishing vessels were allowed to trawl fish before they reached the bay, my father, Brian, ran a ski boat for sports fishing in the bay. In those days in the early 1970s the bay was teeming with fish. At times there were acres of yellowtail, bonito and snoek that entered the bay to feed and spawn.

My father covered the costs of running his ski boat because he had been fishing for many years and was able to come back with reasonably sized hauls. Even though the price of fish was low in those days he was able to pay for petrol costs, licence fees, bait and tackle purchases, maintenance and repair of the Land Rover, boat and trailer and purchase odd new equipment such as a fish finder. A big cost that had to be covered was when he took the boat out into the bay and caught no fish. These fishing trips had to be financed from any surplus from previous good catches. Continue reading “Re-energise your business by better handling cash flow”

An early warning system for your business before it hits the danger zone

(Copyright © 2014 by Chesney Bradshaw, all rights reserved)
(Copyright © 2014 by Chesney Bradshaw, all rights reserved)

I was travelling from Cradock through to Aliwal North in the Eastern Cape when the radiator warning light came on. Unfortunately there was no water in the radiator water reservoir. After stopping, we’ve filled the radiator with water from fresh drinking water bottles and were able to resume our journey.

Just imagine the drama and inconvenience if the car didn’t have an early warning indicator light on its dashboard to give a heads up that the water had run out. The result would have been that the engine would have overheated and could be seriously damaged. Being many kilometres away from the nearest town would have involved hiring a tow truck. The delay to our journey would have also met additional cost for an overnight stay in a bed and breakfast outlet in the nearest town.

All this damage, inconvenience and cost was prevented by an early warning system.

Do you have an early warning system in your small business? Continue reading “An early warning system for your business before it hits the danger zone”

Simple ways to make your small business fail

Courtesy of Wikimedia Commons
Courtesy of Wikimedia Commons

During the time before the large commercial fishing boats decimated the shoals of snoek, yellowtail and bonito in False Bay, we were able to make good money from a ski boat in the bay. The crew that we selected for fishing would pull their own weight and help us to produce catches that were big enough to pay for the boat’s running costs.

On occasion we would take out what we called a “day-tripper” which was someone who had a deep interest in fishing but when they actually tried to fish they were not successful. But we usually kept an eye on the naturally talented fisherman who could become part of the permanent crew. Continue reading “Simple ways to make your small business fail”

How knowing the difference between intelligence and information can profit your business

English: Garry Kasparov vs Viswanathan Anand W...
Garry Kasparov vs Viswanathan Anand World Championship match. (Photo credit: Wikipedia)

Idea Accelerator started out as one blog post twice a month two years ago. Since then the demand for independent business intelligence has grown with visitors to the site doubling compared to a year ago. A few months back I increased the frequency of posts on Idea Accelerator to daily. Some days are slower than others but visitor numbers reach new records – viewers tripling on some days.

I’ve now published close to 250 posts and will keep the daily frequency for the time being depending on demand and my business commitments. Continue reading “How knowing the difference between intelligence and information can profit your business”

How much pain can you take before you act on your cash flow?

English: Fish seller in Kalk Bay, Cape Peninsu...
Fish sellers in Kalk Bay, Cape Peninsula, South Africa (Photo credit: Wikipedia)

One Christmas morning not too long ago I was walking after church with my children in Kalk Bay when I came across an old friend who I had fished with on the wooden commercial fishing boats when I was growing up. He looked in a bad way. One leg of his denim jeans was ripped. He had a gash on his big toe. His face said it all: he had a dreadful night alone on Christmas Eve.

I shook hands with my old fisherman friend and wished him Merry Christmas. We spoke briefly about fishing. There was a promise that someday we’d fish again on one of the commercial boats that go out from Kalk Bay hunting for yellowtail and snoek. Continue reading “How much pain can you take before you act on your cash flow?”

Don’t let this happen to your small business

English: Apalachicola, Fla., July 20, 2005 -- ...
FEMA photo/Andrea Booher (Photo credit: Wikipedia)

An iconic politician is auctioning off her silver tea set and other items to pay off a debt she owes to a school. A bus company faces liquidation if it does not repay a multi-million loan to its bank. A small business owner receives a red final notice for an overdue account from a debt collection agency – with grave warnings about loss of directorship under the companies act and sequestration.

A sign of the times. Consumers and businesses are finding it hard to pay back their debts as tough economic times continue without any end in sight.

The statistical release of February 2013, “Statistics of liquidations and insolvencies”, makes for concerning reading. A total of 271 liquidations were recorded in February 2013, showing a year-on-year increase of 35,5%. Continue reading “Don’t let this happen to your small business”

Starting your business is hard enough … and then you get this

Just think about it: you can come up with a new idea for a business that you are passionate about. You get excitedly busy implementing your idea, trying to break into a highly competitive and crowded market. The idea you started with doesn’t seem to be working as well as you thought it would and through innovation you get things on the right track. That’s what every rookie entrepreneur wants to see and experience – their initial business idea transformed into a viable product or service, making money for them and their family. Continue reading “Starting your business is hard enough … and then you get this”