Category Archives: Business

Tips to Choose the Right Franchise

Franchises are appealing to new entrepreneurs who want the reduced risk of a proven product or service while still being their own boss. They can get support from the parent company or fellow franchisees to ensure success. The hardest decision, though, is which franchise to join. How do you choose?

Even if you have a general idea of the industry you want to work in, there are numerous options in a variety of price ranges within each industry, leaving you the task of sifting through dozens of websites and information packets to find the one that’s right for you. Business News Daily spoke with franchise industry experts and franchisees to aid you in the process of selecting a franchise to buy.

Questions to ask yourself
If you have no idea where to start, you’ll want to begin by asking yourself a few broad questions that will place some parameters on your franchise search.

What are my personal goals?
Everyone has different motivations for wanting to become an entrepreneur. First, start off by asking yourself what your goals are, said Dan Martin, president and CEO of franchise consulting firm IFX. Do you want to make money, spend more time at home or take an entrepreneurial step in your career?

“By figuring out your actual goals, you will be able to determine what franchise is a good fit to help you meet those goals,” Martin said.

What role do I want to play in the business?
There are two types of franchisees: Absentee owners, who hire staff to manage the business on a day-to-day basis, and owner/operators, who are directly involved in running the business.

“Many franchisors offer a hands-on opportunity, [whereas] others offer more of a management opportunity,” said Rhoda Olsen, CEO of Great Clips hair salon franchise. “The key question [franchisees] need to ask themselves is what they see themselves doing on a day-to-day basis. Do they really want to do a specific job every day? Do they want to lead an organization? Do they want to manage managers?”

What is my investment budget?
Franchise costs vary greatly, depending on the industry and specific business model. While some upfront fees are less than $10,000, others can be upward of $1 million. Terry Powell, founder and CEO of franchise business coaching company The Entrepreneur’s Source, said prospective franchisees should weigh the initial investment against their expected return, along with their income, lifestyle, wealth and equity (ILWE) goals.

“Opening a food franchise will have a much higher investment than a home-based, business-to-business franchise, simply due to the amount of equipment and inventory necessary to start the business,” Powell said. “It’s up to the prospective franchisee to decide how much they would like to invest and what will help them achieve their goals, both short- and long-term.” [See Related Story: 40+ Franchises for Every Budget]

Do I have basic business skills?
Although some franchises do want their franchisees to have industry experience, what’s more important to them is that a franchisee have the basic business know-how and entrepreneurial drive to succeed.

“We want franchisees who understand the art of marketing and the need for sales” [rather than experience in our particular industry],” said Tom Wood, president and CEO of the Floor Coverings International franchise. “We want franchisees who are focused on customer service and ways to increase transactions,” he added. “Good-quality franchisees are hard to come by.”

What to look for
Once you’ve narrowed down the field and business model you’re interested in, it’s time to choose a specific franchise. To help you narrow down your list, our sources advised looking for the following attributes in a company.

A strong support system for franchisees. “Since you are buying into an established brand that works best when the model is followed, there should be ample support through every stage of your franchise, since they should know how to guide you.” – Jeff Salter, CEO, Caring Senior Service

A great corporate staff. “[Ask yourself], ‘How is it to work for the franchise owners? What kind of people are they?’ It’s important for franchisees to meet … the corporate staff. That face-to-face interaction is huge. You have to have a connection.” – Andrea McGinness, chief operating officer, WineStyles Tasting Station franchise

Investment in your potential. “When interviewing with Hungry Howie’s Pizza, I participated in a series of tests to determine if I was entrepreneurial-minded and if I had the ambition to grow with the company. It was their interest in not just their personal, monetary gain, but in my vision that incentivized me to work with Hungry Howie’s.” – Don Copus, franchisee, Hungry Howie’s Pizza

Reviewing the FDD
Michael Daigle, a partner at franchise industry law firm Cheng Cohen, said both you and a legal and/or financial adviser should read the entire franchise disclosure document (FDD) thoroughly, and pay close attention to the following sections:

Past or current litigation. Items 1 through 4 of the FDD will tell you all about the franchisor’s experience and whether the franchisor or any of the people in charge have been involved in bankruptcies or litigation relevant to the brand or their experience as a franchisor. Existing and historical litigation between the franchisor and its franchisees might show a level of dissatisfaction with the system, or it might show that the franchisor is serious about upholding its system standards for the benefit of all franchisees, Daigle said.

Payments and revenue model. The FDD also explains what you’ll be paying to the franchisor and its affiliates pre- and post-opening, as well as how much the franchisor relies on franchisees for revenue. Daigle said that items 19 (financial performance representations) and 21 (historical growth and revenue sources) give you a glimpse into how well the units are doing financially.

Turnover and resource strain. Item 20 of the FDD provides a list of currently operating franchisees and a list of franchisees who have exited the system or stopped communicating with the franchisor. You should contact as many current and former franchisees as you can and ask questions about their experiences, struggles and profitability, Daigle said. “Look behind the curtain and the sales pitch,” Daigle told Business News Daily. “Don’t be afraid to ask the hard questions — in fact, ask the same question of different people to see if you get consistent answers. Talk to as many franchisees as physically possible, and don’t stop until you’ve heard at least some of each of the good, the bad and the ugly.”

What to ask the franchisor
Alan George, vice president of Franchise Marketing Systems, recommended taking some time to ask specific questions of the parent company that may or may not be covered in the FDD. For instance, ask what its sales approach is, whether there’s enough available business in your marketplace and if you have enough money to wage successful campaigns. He also advised asking about their sales and advertising approaches, and whether they will work in your marketplace.

Bryan McGinness, CEO of WineStyles Tasting Station, added that a potential franchisee should be very clear on what the franchisor expects of him or her, and vice versa.

“Make sure it’s a good fit for both parties,” McGinness said. “It’s easy to sign franchisees and take their royalty money. What happens after is what matters. Make this a long-term partnership and a win-win [situation].”

Some Tips for Preparing Your Business to Grow

bu1Everyone wants their business to succeed. You want your business to be around next year and the following year, don’t you? The question is, how many customers do you need to be successful and, more importantly, sustainable?

Here are four tips for preparing your business for growth.

1. Treat your business like a restaurant.
Do you have enough capacity to accommodate an increase in your customer base? Before you decide to acquire more customers determine whether that strategy is realistic. Take inventory of whether your production and assembly facility can handle an increase of even 10 percent more customers. Everyone dreams of their business being wildly successful. The reality of growth without preparation is like giving a party where everyone shows up — at the same time. Can you feasiblly and successfully serve everyone?

2. Build your growth strategy around a loyal and retained customer base.
If you are constantly replacing customers you lose, that’s no growth strategy at all. A loyal and retained customer base is comprised of your early-adopters and continuous ambassadors. These folks become the fulcrum for leveraging improvements, new product introductions, enhanced and expanded services and referral business. They are gold. Identify who they are early on and make them the focus of your attention over the long haul.

3. Acknowledge customer growth angst.
Your early customers can become anxious as your business grows. Some early adopters will perceive that you have become “too big and famous” to meet their ongoing needs. Create a strategy for maintaining contact with and reassuring your first customers that your success is founded on their belief in you. Realistically, your growth strategy should include how to transition smaller accounts to other companies better able to meet their needs. Some original customers won’t want to increase their job size to meet your need for a customer base seeking increased capacity and complexity — especially in the case of manufacturers.

4. Differentiate yourself and your business via continuous customer touches.
Build your business on the basis of customer experience: The sum total of what each customer experiences when working with you and your company over the lifetime of your relationship. Think about it like a restaurant: You won’t maintain a loyal customer base if you are running around your overcrowded restaurant trying to serve new customers while your original customers wait outside in the rain. If you need to make changes, be transparent. Communicate with your customers and prepare them for changes you are making. It’s better to offer to transition them to other suppliers (in advance) than to disappoint them with your lack of attention and have them voice their feelings to the community.

Simple Ways a Small Business Can Scale to Profitability

bu3Downfalls like not being a profitable venture, startups shutting their doors or even bankruptcy are often caused by a lack of knowledge or a willing ignorance amongst small-business owners.

“If the owners really knew what they were doing wrong, they might have been able to fix the problem,” entrepreneur and business speaker Jay Goltz told The New York Times. “Often, it’s simply a matter of denial or of not knowing what you don’t know.”

Don’t fall into the trap. Armed with the following knowledge and know-how, you have a fighting chance of making it as a profitable business that continues to scale for years to come.

1. Prove your expertise. To get customers to trust you (and pay for your products or services), you have to prove you’re an expert in your industry.

You can accomplish this by posting blogs, sending out newsletters, participating in interviews, publishing content through noteworthy blogs or publications and making informative how-to and instruction videos that relate to your business.

“You cannot buy trust at any price. But slowly, over time, you can build it for free,” business advisor Jeffrey Gitomer told Copyblogger.

2. Take calculated risks. All entrepreneurs are risk-takers. They kind of have to be, as it is a huge leap of faith to start a business. But what makes one entrepreneur succeed, where another will fail has to do with if a person makes calculated or reckless risks.

Look at the costs and benefits of every decision and figure out the worst-case scenario. Have back-up plans in place and rely on trusted advisors like your accountants, bank, marketing consultants, lawyers and insurance agents.

Carefully plan out your course of action and make it a collaborative effort amongst you and your employees. That way, if failure does occur, you have people there to support you and assist you in deciding the next move and risk you should take. Plus, by taking these more conservative risks, you are less likely to make a mistake that could have detrimental ramifications — ones that could create financial situations that are hard to climb out of.

3. Develop a cash-flow strategy. Having a steady flow of cash is critical when you have a small business. You need to pay the bills and your employees, as well as purchase materials to scale your services or build your products and more. You also need to make a list of one-time expenses and ongoing expenses and figure out how much money you’ll need to operate on a day-to-day basis.

One great tool is SCORE’s break-even chart, which allows you to track your profits and can help you see how to increase them. To prepare for slow times of the year, you should save at least three to six months worth of cash to keep your operations going.

4. Appreciate your employees. When you hire employees, make sure that they’re actually passionate about the industry you serve. If an interviewee is enthusiastic, does his or her research about your business and asks engaging questions, then he or she is likely to be a good candidate for a position and could provide amazing insights into growing your company.

Once you hire your rock-star team, treat employees as equals and trust them. Show that you appreciate their efforts by encouraging new ideas and collaboration. You can do this by simply being available to them and being positive when they have suggestions. If everyone is on the same page and feels like they have a say, the business is more likely to thrive.

Small business success can be achieved by thinking ahead and planning out your next move. It’s a challenge to run a small business, but with the right preparation, you can come out on top.

More Information About Online Business

bu2Business forecasts indicate that ecommerce is exploding, which means now is the perfect time for startups to firmly establish their online stores. There are numerous tactics for nurturing a new online business. If you’re just getting started, now’s the perfect time to make sure all the elements for your online success are in place.

Let’s review 10 crucial steps to capitalizing on this trend:

1. Carefully target the online audience.
Ecommerce depends largely on a reputable, accessible online presence. To be recognized as such, businesses must make themselves available to those who are most likely to notice. Identify the demographic characteristics of consumers who will benefit from relevant products and services, and base marketing strategies on these details.

2. Create high-quality content and deliver it at high speed.
High-quality content is described as relevant and engaging information that encourages site visitors to return in the future. Content should reflect the given brand in tone and style, and include the company’s mission statement, services and policies. It should also offer industry education and urge interaction with consumers. This may take the form of asking questions, answers to which can be provided in online comment sections. Interaction can also take place via surveys and contests.

But Internet-based businesses live and die by their online visibility and credibility, and they’re judged by more than just consumers. They’re also judged by search engines, which play a major role in bestowing that credibility and visibility. In the wake of recent security vulnerabilities making national headlines such as the HeartBleed bug, secure web hosting which thwarts vulnerabilities is essential for maintaining credibility, and speedy website load times are essential for delivering a positive user experience, maximizing sales conversions and optimizing from an SEO (search engine optimization) perspective.

Amazon reported a 1 percent revenue increase for every 100 milliseconds improvement in load time. Furthermore, Google has stated that fast load speeds are indeed a factor in the ranking algorithm. In response, VPS hosting is quickly becoming more popular among new businesses looking to maximize site speed, as opposed to traditional, shared hosting services.

3. Personalize content.
Visitors know that unique, individualized web experiences are possible, which is why they expect such features. Take advantage of available technology that can generate shopping selections based on personal preferences. While some of the larger websites (Google, Apple, Facebook, etc.) have apps built into their system that identify users and track their online movements, small businesses might focus on smaller CRM solutions. Batchbook, ContactMe, and Zoho are perfect CRM software solutions for small businesses, each costing less than $20 a month.

4. Invest in mobile capabilities.
Consumer use of mobile devices is greater than ever before, which is why a robust mobile ecommerce platform is crucial. Available solutions include mobile sites, responsive sites, apps, click-to-call tools, maps and real-time notifications.

5. Integrate sales channels.
Enable consumers to experience the brand similarly across all channels of interaction and methods of shopping. Promotions, products, services, company information and policies should be available both on and offline.

6. Consider subscription.
Subscription commerce occurs in various forms. For instance, the replenishment model allows for a product to be sent to a customer every month or other regular basis. The discovery model provides for new and exciting experiences with each delivery. These may include customized or rare items. It’s up to the company to decide which form of subscription works best for them, and to implement that into their sales and marketing strategies. Most CRM software and programs organize consumer data that can be used to delineate and track which model each customer prefers and whether the customer has subscribed or not.

7. Remember logistics.
Scalability is integral to growing a business. To accommodate growth, third-parties such as UPS, Nippon Express, or DB Schenker can be depended upon to manage large and complex transactions. Costs will vary based upon the size of the transaction, the size of shipments, the distance that products need to be shipped or the complexity of the transaction. Third-party logistics become more cost effective as a company grows and handles larger transactions. Reverse logistics — the efficient handling of product exchanges and returns — is significant as well.

For Internet-based businesses, website speed, security and infrastructure are important foundations of not only logistics, but also SEO. These aspects of online business translate to better search engine visibility, resulting in more traffic, leads, brand credibility and sales. Speeding up your website is crucial for online logistics.

8. Skip the middlemen.
Thanks to the Internet, small businesses can reach consumers quickly and easily. Also, manufacturers are increasingly eager to work directly with small businesses because they realize small brands are likely to bring new and innovative products to the marketplace — they are less limited by minimal shelf space and complex supply chains.

9. Sell Internet-only merchandise.
Although essential to maintain continuity across multiple sales channels, it is still possible to offer products via the Internet only. Doing so builds an exclusive brand with ecommerce as the core distribution channel. By offering certain products in only one arena, it is possible to maintain greater control over margins.

10. Curate a proprietary selection.
Proprietary selection refers to a strategy dedicated to “curating” a deep but narrow array of exclusive products in a specific segment. These areas give the relevant merchandise the allure of distinction due to original characteristics and the difficulty of locating such a selection elsewhere.

One of the main goals of any business is consistent growth. Through careful strategic planning, quality marketing campaigns and a healthy combination of the steps outlined above, conversions are likely to increase steadily.

Simple Way to Connect With the Affluent Customers

When it comes to connecting with your target market, here’s the winning formula:

1. Decide exactly who you want as a customer—notably, deciding on the level of income, net worth, overall affluence, lifestyle and ambitions, aspirations, interests, and attitudes about spending you want them to have.

2. Be sure you’ve crafted products, services, a business, its positioning—everything—for that consumer.

3. Go to those consumers where they are.

That third point is succinct, but it’s often far beyond most business owners’ comprehension. Most business owners act as if they’re trees with deep roots, at the mercy of whatever favorable or unfavorable environment exists and evolves around them. But today, consumers, especially affluent consumers, can be found, identified, effectively communicated with, attracted, and sold to at any distance, near or far.

The fact is, the more affluent the customer, the less concerned with convenience and the more they’re willing to conduct business at a distance, import from afar, or travel to places in order to get exactly what they want and what they believe to be the best of a category.

A lot of people ask me about finding the affluent, as if they were all residing in secret, undisclosed locations. Actually, privacy in America and many other places in the world is dead. We not only know where they live but also what they’ve been buying.

For starters, there are people who’ve already gone to a great deal of trouble to spy on them, dig up data on them, monitor their buying behavior, and compile lists of them sorted by their interests and passions, by their level of affluence, by the frequency of their spending in a category, as well as by gender, age, ethnicity, marital status, home ownership, income ZIP code, and a myriad of other divisions. In mailing list lingo, these are called selects. The world of mailing lists commercially available for rent is an amazing place. You can pretty much find any kind of group of desired prospects, then drill down closer and closer to your ideal prospects within the group by these selects.

When you pass through the gateway to the mailing list world, you’ll discover that tens of thousands of mail-order, retail, service, credit card, publishing, and other companies have all their lists of past and present customers, cardholders, and subscribers as well as their prospects or inquiries available for rent.

For better understanding, let’s work our way through a hypothetical example.

Let’s assume you own a very upscale French restaurant with a good wine cellar, snooty waiters, and high prices—and you wish to go in search of affluent new customers. This happens to be an easy one, which is why I picked it. There are hundreds of list choices. For example, there’s a compiled list of yacht and private plane owners, available by state or county. There are 213,090 prospects on the list. On that list, within a 45-minute driving radius of your restaurant in Beachwood, Ohio, there will be only a small number. Let’s assume there are only 200 of them. Those 200 names may be very valuable. We know to create and send them a mailing with planes and boats on the envelope, and maybe a line of copy like “Free Voucher for the Adventure Trip of a Lifetime Enclosed.” Inside, we can tell them we know they appreciate the finer things in life, appreciate new experiences, and often fly their own plane or sail their own yacht in search of them. But did they know they could take a trip to one of the finest restaurants in all of France, only a short drive from their own home?

There’s also a list available of people in any ZIP code of your choice, arranged by birthday. So, in every month, there are quite a few people in reach of your restaurant having a birthday, and most people go out to dinner to celebrate. From that list, you can select only married people or people who own homes in pricey neighborhoods or people with certain incomes. A colleague of mine operates a company that does these “Happy Birthday” mailings for restaurants and consistently gets tremendous response and very good return on investment.

Or we could get very sophisticated and merge or purge. That means taking only the names appearing on two or more lists. The duplicates. The yacht and plane owners’ list giving us only 200 names in our area might thin out to only 10 to 20 birthday names in any given month. But they’re the quadruple-perfect prospects. So instead of sending them a birthday card or letter and a coupon for a free birthday dinner, we might send them a beautifully wrapped gift box, a copy of our menu, and a fancy certificate on parchment paper. Doing this, we would spend a lot more per prospect, but we’d be spending all our money on ideal prospects.

Here’s the point: If you can describe your ideal affluent customers—whether ultra-affluent, affluent, mass-affluent, young, old, male, female, and so on—you can go into the inventory of available lists and find them, already rounded up for you. In all cases, you can get their physical addresses. In many cases, you can also get their phone numbers and email addresses.

One way or another, from one or multiple databases, it’s possible for all marketers to obtain and develop a hit list of ideal prospects. You can drill down with incredible specificity to identify and reach out only to people perfectly, precisely, and multi data-point matched with your current customer, ideal customer, or product or service offer. And you should.

5 Strategies To Escalate Revenue and Growth

Success is dependent on growth, and while we all strive for success, many entrepreneurs experience very little growth in their business.

With the right strategies and plan, revenue and growth can be escalated. Here are five tips that can help you scale your business.

1. Identify your unique selling point and run wide open with it. Your unique selling point is what makes your product or service different from your top competitors. Do you have a lower cost? Do you offer a higher quality product? What do you offer that your direct competitors do not?

Once you identify your USP, use it to your advantage. Make it the focal point of your marketing efforts and make sure your target customer is aware of what makes your product or service superior.

2. Tap into additional revenue sources using your existing customer base. Many businesses will focus solely on new customer acquisition and forget that they have an existing customer base that they can tap into and utilize. Creating an effective customer loyalty program, establishing a customer referral program, or launching an affiliate program are all ways to leverage your current customer base to produce additional revenue.

Examples include Groupon launching a partner network that rewards 10 percent of all deals purchased, and Starbucks’ loyalty program that resulted in a 26 percent rise in profit and 11 percent jump in total revenue.

3. Work out all kinks before thinking of expanding. As entrepreneurs, we all have a “bigger picture” that we are shooting for, but it is important that you don’t put the cart before the horse, especially when it comes to expansion. Opening new locations and entering new markets sounds great and can potentially equal huge growth, but if you do it prematurely it can result in a complete failure.

Make sure there are no holes in your business before thinking of expanding. Creating a winner and then duplicating it in additional markets or locations is easier than rushing the expansion when you have multiple holes in the business. Remember, even the smallest hole can sink the largest ship.

4. Don’t be afraid to get dirty. Have you ever noticed a trend among failing businesses? The owner is usually MIA and not hands on. Many entrepreneurs think that having owner, founder or CEO on their business cards means it is time to sit back, kick their feet up on the desk, and bark orders.

When I started Market Domination Media I was working the phones, speaking to prospects and doing client follow-up. I still do those things to this day, and it is something I will always continue to do. There is nobody in your company that knows your product or service better than you.

For your business to grow, you must lead the way for your team. Jump in the trenches and get dirty with them. Show them how it is done, and you will not only gain respect, but you will also gain a more productive and motivated team.

5. Reinvest back into your business. Growth requires capital, so the exuberant salaries and lavish company spending will have to be put on hold to reinvest the revenue back into the business.

Companies will often seek funding and run it dry because they were supporting large salaries and unnecessary spending, only to attempt to secure more funding to pull them out of the hole they dug. Be frugal and concentrate on reinvesting every dollar back into your growth.

Some Fast Ideas to Rapidly Grow Your Revenue

There exists only one unbreakable rule for entrepreneurial growth: Get revenue!

That’s it. There are a thousand tasks that compete for your attention every day, but raising revenue must always remain at the top of your list.

You cannot fund your business on hard work alone. You cannot pay your bills with optimism. You either raise revenue or your business dies.

So how does the average entrepreneur continue feeding the revenue beast? Here are four fast ideas for rapid revenue growth that I’ve identified inside my own company for the upcoming quarter:

1. Leverage your existing fan base. Your best and most reliable source of revenue comes from your fan base. They already love and trust you. Now is the time to add new value for them to raise new revenue.

Start by asking the question, “What would add so much value so quickly that our existing customers would pay well to receive it?”

Is it a new service that supports something you have sold before? Is it an improved version of a previous product or service? Maybe it is an entirely new line that you can rush to market.

The key is to leverage existing buyer relationships. In doing so, you gain a shorter buying cycle, a higher conversion rate and more rapid revenue growth.

2. Host a seminar. Are you truly leveraging your expertise, or do you hold it back for a select few clients? Now, is this “hold back” increasing your revenue? Maybe … maybe not.

I know this is out of the box for many people, but if you have expertise that people can immediately benefit from, consider an open invitation, half-day educational seminar. There are countless resources online (and in bookstores) that describe how to create, promote and deliver seminars (or webinars).

Do the math: Find 200 people willing to pay $100 each and you just grew revenue by $20,000. Layer in product sales, consulting contracts and sponsorships, and pretty soon that rapid revenue growth begins looking quite impressive.

The key is coming up with a killer idea that appeals to the broadest audience possible. What is your specialty? How do you define the power of your message? What do you have to say to the world?

Figure it out and hold on for the ride!

(Author’s credibility note: I’m doing 11 such events in the fourth quarter this year.)

3. Cross-promote to new audiences. Are you promoting exclusively to your own audience? Big mistake! Go find someone (or many “someones”) with a larger audience and offer your product to the people in their database. (You will have to share the revenue, of course).

If you ever receive an email from a prominent expert endorsing the product or service of “my very good friend,” you are likely reading a cross-promotional sales opportunity.

The good news is that you can reach an entirely new audience. And when you sell to them once, you increase your chances of selling to them again in the future. Recurring revenue at it’s finest!

4. Repurpose an existing product. Do you blog? Assemble your very best blog posts into an ebook and sell it online. Do you have inventory lying around? Repackage it and combine it with something else so that you can promote it as something new. Consider expanding a service you offer or launching a unique sales promotion to clear out stale inventory.

The key is looking at your products and services in an entirely new way. Find a new perspective on an existing product and ask how it can generate revenue right now. As long as your product adds value to the customer, you can keep selling it over and over again.
So, are you working with a revenue-first mindset right now?

Steps to Better Manage Your Cash Flow

Cash is king when it comes to the financial management of a growing company. The lag between the time you have to pay your suppliers and employees and the time you collect from your customers is the problem, and the solution is cash flow management. At its simplest, cash flow management means delaying outlays of cash as long as possible while encouraging anyone who owes you money to pay it as rapidly as possible.

Measuring Cash Flow
Prepare cash flow projections for next year, next quarter and, if you’re on shaky ground, next week. An accurate cash flow projection can alert you to trouble well before it strikes.

Understand that cash flow plans are not glimpses into the future. They’re educated guesses that balance a number of factors, including your customers’ payment histories, your own thoroughness at identifying upcoming expenditures, and your vendors’ patience. Watch out for assuming without justification that receivables will continue coming in at the same rate they have recently, that payables can be extended as far as they have in the past, that you have included expenses such as capital improvements, loan interest and principal payments, and that you have accounted for seasonal sales fluctuations.

Start your cash flow projection by adding cash on hand at the beginning of the period with other cash to be received from various sources. In the process, you will wind up gathering information from salespeople, service representatives, collections, credit workers and your finance department. In all cases, you’ll be asking the same question: How much cash in the form of customer payments, interest earnings, service fees, partial collections of bad debts, and other sources are we going to get in, and when?

The second part of making accurate cash flow projections is detailed knowledge of amounts and dates of upcoming cash outlays. That means not only knowing when each penny will be spent, but on what. Have a line item on your projection for every significant outlay, including rent, inventory (when purchased for cash), salaries and wages, sales and other taxes withheld or payable, benefits paid, equipment purchased for cash, professional fees, utilities, office supplies, debt payments, advertising, vehicle and equipment maintenance and fuel, and cash dividends.

“As difficult as it is for a business owner to prepare projections, it’s one of the most important things one can do,” says accountant Steve Mayer. “Projections rank next to business plans and mission statements among things a business must do to plan for the future.”

Improving Receivables
If you got paid for sales the instant you made them, you would never have a cash flow problem. Unfortunately, that doesn’t happen, but you can still improve your cash flow by managing your receivables. The basic idea is to improve the speed with which you turn materials and supplies into products, inventory into receivables, and receivables into cash. Here are specific techniques for doing this:

– Offer discounts to customers who pay their bills rapidly.
– Ask customers to make deposit payments at the time orders are taken.
– Require credit checks on all new noncash customers.
– Get rid of old, outdated inventory for whatever you can get.
– Issue invoices promptly and follow up immediately if payments are slow in coming.
– Track accounts receivable to identify and avoid slow-paying customers. Instituting a policy of cash on delivery (c.o.d.) is an alternative to refusing to do business with slow-paying customers.

Managing Payables
Top-line sales growth can conceal a lot of problems-sometimes too well. When you are managing a growing company, you have to watch expenses carefully. Don’t be lulled into complacency by simply expanding sales. Any time and any place you see expenses growing faster than sales, examine costs carefully to find places to cut or control them. Here are some more tips for using cash wisely:

– Take full advantage of creditor payment terms. If a payment is due in 30 days, don’t pay it in 15 days.
– Use electronic funds transfer to make payments on the last day they are due. You will remain current with suppliers while retaining use of your funds as long as possible.
– Communicate with your suppliers so they know your financial situation. If you ever need to delay a payment, you’ll need their trust and understanding.
– Carefully consider vendors’ offers of discounts for earlier payments. These can amount to expensive loans to your suppliers, or they may provide you with a change to reduce overall costs. The devil is in the details.
– Don’t always focus on the lowest price when choosing suppliers. Sometimes more flexible payment terms can improve your cash flow more than a bargain-basement price.

Surviving Shortfalls
Sooner or later, you will foresee or find yourself in a situation where you lack the cash to pay your bills. This doesn’t mean you’re a failure as a businessperson-you’re a normal entrepreneur who can’t perfectly predict the future. And there are normal, everyday business practices that can help you manage the shortfall.

The key to managing cash shortfalls is to become aware of the problem as early and as accurately as possible. Banks are wary of borrowers who have to have money today. They’d much prefer lending to you before you need it, preferably months before. When the reason you are caught short is that you failed to plan, a banker is not going to be very interested in helping you out.

If you assume from the beginning that you will someday be short on cash, you can arrange for a line of credit at your bank. This allows you to borrow money up to a preset limit any time you need it. Since it’s far easier to borrow when you don’t need it, arranging a credit line before you are short is vital.

If bankers won’t help, turn next to your suppliers. These people are more interested in keeping you going than a banker, and they probably know more about your business. You can often get extended terms from suppliers that amount to a hefty, low-cost loan just by asking. That’s especially true if you’ve been a good customer in the past and kept them informed about your financial situation.

Consider using factors. These are financial service businesses that can pay you today for receivables you may not otherwise be able to collect on for weeks or months. You’ll receive as much as 15 percent less than you would otherwise, since factors demand a discount, but you’ll eliminate the hassle of collecting and be able to fund current operations without borrowing.

Ask your best customers to accelerate payments. Explain the situation and, if necessary, offer a discount of a percentage point or two off the bill. You should also go after your worst customers-those whose invoices are more than 90 days past due. Offer them a steeper discount if they pay today.

You may be able to raise cash by selling and leasing back assets such as machinery, equipment, computers, phone systems and even office furniture. Leasing companies may be willing to perform the transactions. It’s not cheap, however, and you could lose your assets if you miss lease payments.

Choose the bills you’ll pay carefully. Don’t just pay the smallest ones and let the rest slide. Make payroll first-unpaid employees will soon be ex-employees. Pay crucial suppliers next. Ask the rest if you can skip a payment or make a partial payment.

The Best Tips for Successfully Marketing Your Crowdfunding

It’s all about the money. When it comes to getting a new product off the ground, raising money for a cause, exploring growth opportunities for your small business and building your brand, crowdfunding offers a nontraditional way to reach non-conventional investors.

Crowdfunding reaches a larger and more diversified pool of interest than many standard methods of raising capital. It invites investment at any level, small-dollar and big. And, it helps you do something new and important for yourself and your investors. Plain and simple, it just makes sense to explore the marketing side of crowdfunding.

I recently chatted with Mark Thimmig, chairman and CEO of the Ignite Agency, experts in Kickstarter, Indiegogo and equity crowdfunding, to learn more about the art of crowdfunding campaign marketing.

Six Marketing Essentials
Here are six essentials culled from our conversation to keep in mind before getting a crowdfunding campaign started.

1. Straddle the fence. Crowdfunding is all about capturing the personal ethos of the campaign — a connection between message and emotion. However professional it looks and sounds, your marketing has to separate itself from the corporate impression with something casual, humorous or sentimental. If your message is somehow too proper and perfect, the audience might wonder why it requires crowdfunding.

2. Make it worthwhile. The object of the campaign has to come across as special or unique. It should embody an element of innovation, need or scarcity in any market. Scarcity drives the demand for any product, so you have to offer some exchange for the participation. It might be a T-shirt for helping fund a charity walk, or equity participation in a startup, or even an early model of the product (if it’s a physical gadget). But, creating marketing reciprocity must have a felt quality that takes more than just convincing language.

3. Build momentum. Every campaign needs an end date. At some point, the funding has to stop. So, several tracks run in sequence:

You need a calendar to plan your strategy for the action and implementation.
During the period before launch, it’s the campaign owner’s job to generate as much interest as possible. Usually through collecting emails and marketing to them.
Lastly, a specific marketing event launches the period of funding.
Your strategic thinking has to visualize this rollout. You might, for example, peg your calendars around the date for the specific marketing event. That date cannot conflict with competing events like religious holidays, seasonal distractions, equity market activities and more. It’s to your benefit to make your launch stand alone.

4. Write a narrative. Everyone involved should follow the same script. They should all know the story of how things started, where you want to go and how you intend to get there. Your story needs an explanation of why you are pursuing crowdfunding as opposed to other investment strategies and a description of how the funding will make a difference.

It’s also important to respect the needs for copywriting. That is, your team has to brainstorm the language repeatedly until you can reduce the message to one quotable phrase. Then, all parties must be able to speak and write briefly from no more than four to five talking points.

5. Make it multi-dimensional. Content copy is important. It has to convince and persuade. It needs to testify with proof and credibility. Be sure to support your pitch with facts, figures and specifics on costs, forecasts and expectations. You’ll also want to make this a media event, something that goes viral across many a platform.

That takes vivid visuals, such as photos of people interacting with the product, commitments by key principles, testimonials by end users and so on. Finally, well-educated and entertaining videos of prototypes in action, users involved, or analysts’ comments will help your campaign go viral.

6. Improve your image. You must have some evidence of a positive past, some proof that things are ongoing. That said, your initial strategy must include development or improvement of existing marketing media. You might revitalize your website to complement and support the language and visuals of your planned campaign. Brochures, logos, business cards and other collateral material should reflect the evolving pitch and maintain a consistent branded look and feel.

It’s also the right time to think about social media and which social networks make the most sense for you strategically. Demographics research will tell you which audiences crowd Facebook, LinkedIn, Twitter and more. More serious research might interest you in networks conceived for financial advisors, realty investors and other specific markets. Bloggers and influencers are also very important to help promote your offering. Finally, you might look into the accelerator worlds available through AngelList, Gust, Indiegogo, Kickstarter and more.

Do the work and deliver.
As Tanya Prive wrote, “There is a huge misconception that creating a successful crowdfunding campaign is as simple as hitting ‘submit’ and waiting for it to go viral.” With strategy and commitment, you can reach people throughout the world bypassing banks and professional investors. You spread the risk among many contributors, building loyalty and customers among them. Ultimately, this relieves you of the major business investment burden.

While the opportunity is expansive and promising, it takes work that starts with exploring the qualitative marketing challenges of crowdfunding. In the end, perhaps one of the most important crowdfunding essentials is to deliver on your product and promise.

Information About Money Metric You Might Not Know

Paul Graham, founder of the accelerator Y-Combinator, coined a term every startup should know: default dead. It is a pretty simple concept. Assume that your expenses and revenue growth remain constant, and now fast-forward into the future: Will you run out of money before you turn a profit? That means you’re default dead. (And if you will escape the red before running out of cash, congrats: You’re default alive!)

This isn’t just an academic exercise. Go ahead and graph your monthly expenses and revenue over time, and find the point where they (hopefully) intersect and you become cash flow positive. The amount of money needed to get there — between now and profitability — is the amount you need to secure from investors or other funding sources. And until you can get that funding, you’ll need to concentrate on growing revenue and keeping your operation running on the cheap. By carefully monitoring this graph, a default dead company can track its performance on a month-to-month basis and react to negative changes, such as the breakeven date suddenly moving from one year to two years.

The VC firm I work for has invested in two Y-Combinator companies, and I noticed that these startups evaluate this metric constantly to help them prioritize their time and brainpower. After all, few can rely on a bottomless cash hoard like Uber does with its $8.71 billion raised. The rest have to take their short-term future seriously. I’ve been particularly impressed by how these Y-Combinator companies know their respective default dead status and its fluidity. This keeps their teams aware that, unless important changes are made, their operations right now aren’t sustainable. They may even need to chuck their original business model and go in a new direction. They understand, better than most startups I’ve seen, that revenue forecasts five to 10 years in the future are great to drool over, but they mean nothing if the money runs out in the next two years.

So when you find yourself starting a company where expenses exceed revenues — which is pretty much every startup in history — make sure you evaluate and pay attention to this important status. If you realize you’re going to be default dead for years and years (or decades, in the case of Amazon), your daily priority should be running a lean operation and soliciting more investment. Don’t bother deciding how much to spend on the company holiday party.