Vesta Digital Blog

Posts Tagged ‘income

3 Simple Ways to Increase Cash FlowAre you the type of person that has a tendency to procrastinate because you secretly love the thrill of getting things done on time? If so, you have probably experienced the stress and urgency of trying to establish some cash flow in your small business.

Cash flow

Cash flow is truly the lifeblood of your small business. Without it, your business will drown even if your income statements say you’re making a profit. Cash flow is defined as the relationship between revenue and expenses over a given period of time. Investorwords.com actually calls it “a measure of a company’s financial health.” Revenue is the money flowing into your business through sales of services or products, and expenses can be just about anything you spend money on to run your business.

Your primary objective as a small business owner is to make enough revenue (consistently) so that the revenue made is greater than expenses paid. This way, you begin to build up an overflow of money coming into your business. You need this overflow so you can have the ability to do anything from taking advantage of new opportunities to covering unexpected emergencies.

In order to avoid a cash flow crisis, use the tips below to build up your cash overflow and enjoy your growing business.

Cash overflow

1. Always receive payment upon delivery

Many small businesses allow customers to enjoy first and pay later. The fact is, if you want to see your cash flow remain consistent and steady, you can’t afford to do this. Credit is for banks and large corporations, not your small business. If it’s realistic, always ask for a one-time payment in advance of your services. If your product or service is delivered over a period of time, request payment in advance of each delivery. You should offer some sort of discount for paying more up front rather than over a period of time.

2. Pay every bill on time

Nothing but common sense here, you’ll save money by avoiding late payment charges and you can often take advantage of payment discounts for early payments.

3. Have a product that makes you money more than once

By creating something that you can sell multiple copies of (like an e-book) can be extremely beneficial and cost effective. Having a business website where you can sell your products is also extremely beneficial and can save you a lot of time, money, and effort by reducing many costs.

Distributed by IntelBuilder Social Media Platform

How To Raise Startup FundsBudding entrepreneurs are often faced with the ultimate barrier – having money to make money. While most mentors encourage entrepreneurs to use family, friends, savings accounts, and credit cards for startup capital, there are other alternatives to raising funds.

Here are a few options you have as alternatives to maxing out your credit cards or bumming funds from family and friends:

Do not pull out from your employer

If you are one of those budding entrepreneurs who finds opportunity inspired by a lack in your day job, you may have heard that it’s important to pull out from your employer in order to focus on your business plan. However, if you’re struggling to find capital to start up your business, your most prudent option is probably to keep your day job. You may have to work long nights as it usually takes just as much focus and work to finalize your business plan as it would to work 9-5 day job.

Just make sure your new venture isn’t getting in the way of your day job because scattering your efforts can lead you to mediocre performance in all areas rather than excellent performance in one main focus.

Pay your employees first

If you have already pulled out from your employer and have a fledgling company already up and going, it might be your best option to use the income from your acquired clients to finance your business expansion, rather than to seek external financing. Bootstrapping is an effective way to use your cash flow, at least temporarily. In order to put your company profits back into the business rather than your bank account, you’ll need to cut your expenses and really focus on acquiring leads.

There are many ways to cut expenses, like working from home rather than an office or even exercising deferred compensation with your suppliers.

As you are starting your own business, raising capital can be your number one priority as a business owner. Make sure you’re doing everything possible to cut expenses. You can easily cut your marketing budget by using social media marketing as your main channel for lead generation and brand awareness.

Distributed by IntelBuilder Social Media Platform

What to do in a Cash Flow CrisisIn the event your small business starts experiencing a lull in cash flow, you need to act fast. Even if you’re still profitable on paper, that doesn’t necessarily mean you have enough in the bank to pay the bills. Problems can arise especially if your company is successful, but your customers start slowing down their payments.

David Worrell of Allbusiness.com has a specialty in finance and managing small businesses. He wrote a great article on a few tips that can help you survive a cash flow crisis. Below are a few pieces of advice from David that may help to save your company from going under.

Know the numbers.

“In good times and bad, keep an eye on key cash flow numbers. I’m not talking just about a cash flow statement each month, but also about key ratios or metrics in your business. If you start this habit in good times, you’ll have forewarning when cash turns against you,” David says.

His advice is extremely useful in this circumstance because new business owners have their focus spread out. It’s important to keep a finger on the pulse of your cash flow because you will be able to better sense an incoming crisis and have more opportunities to prevent it from happening.

Cut your own pay. Now.

“Besides taking pressure off of cash, this will motivate you to fix the problem. If you hide behind a salary – and keep building debt, or laying off staff to pay yourself – the problem will grow worse until it is out of control. Cutting your own pay also demonstrates leadership to your team,” David says.

This fact is extremely important to running and entrepreneurial business. As a leader, you need to demonstrate how important it is to work together with your team members. If that means your employees are paid and you’re not in times of crisis, so be it. They will be more motivated to stick with you and have a deeper connection with the business. Employees that feel as though they are a part of the company – rather than just employed by it, can help take a company to a much higher level.

Distributed by IntelBuilder Social Media Platform

customer loyalty campaignThere are several factors that separate successful businesses from those that break even. One of these aspects seems to stand out the most. The most successful businesses have customers that keep coming back, they have a strong customer base. Their lifeblood is customer loyalty.

While short-term sales may show profits, they are unpredictable and require a lot of initial work with no follow up. Long-term sales created by customer loyalty campaigns can actually show more profit in the end, and it is a more consistent and steady flow of income for the business owner.

Entrepreneur.com published a great post on how to retain customers by developing a customer loyalty program for your business.

Follow these tips to build a successful program for your business:

1. Don’t Abandon Service for Savings Alone

Discounts and savings are on the minds of most consumers, yet don’t overlook other major customer-pleasing enhancements, such as quick or better service or improved customer handling. New research from Genesys and analysts at Datamonitor/Ovum shows nearly two-thirds of consumers have ended a relationship with a company due to customer service alone, and the majority of them take their business to a competitor. Your best customers want personalized service and support that’s accessible instantly–often by phone. This is where your small business can excel over larger competitors whose customers may feel lost in a maze of automated self-service.

2. Make Communication a Two-Way Street

With the cost efficiency of e-mail, it’s no wonder it’s the workhorse for the vast majority of loyalty campaigns. Printed mailings and statements are also used by many marketers to remind customers of benefits and rewards. And corporate websites are becoming increasingly important components in loyalty campaigns. For many types of businesses, it’s smart to build interactivity into your company’s site with customer generated content, online customer service, or live chat with a representative. You can also create a site specifically to enhance customer relationships and build loyalty.

3. Avoid Loyalty Turnoffs

Too much spam and junk e-mail top the list of what consumers don’t like about loyalty and rewards program membership. While most member communication is monthly according to the CMO Council report, 20 percent of loyalty marketers interact with members on a daily, weekly or biweekly basis. How often do you communicate with your best customers? Daily or even weekly e-mails may be too frequent for many members, particularly if the offers or other communications are perceived as not relevant to their business or personal needs.

mind of an entrepreneurMany people are diving into the world of small business ownership. Whether this has to do with the state of the economy and job market, or the innate desire to “be your own boss,” the result is a boom in people wanting to own their own business.

There is a difference between a small business owner and an entrepreneur. Steve Smith, a mentor for small business owners and entrepreneurs for the consulting team OneCoach International, wrote an informative brief on Focus.com

The brief discusses the qualities that separate small business owners from entrepreneurs. Read the excerpt below and learn how to transcend the booming market of small business ownership and dive into the world of entrepreneurship:

The term entrepreneur simply means: one who has an idea and takes the financial risk and accountability for the outcome of their pursuits. The real meaning can be better understood in the characteristics an entrepreneur should possess in order to achieve the results they desire.

Desire to succeed

The true entrepreneur never gives up in their quest to reach the benchmark of success they have set for themselves. The real test is not in being successful but in being willing to do it again if the 1st, 2nd or 3rd attempts fail.

Determination & work ethic

Their relentless desire to succeed is fueled by a ‘dogged’ work ethic. They think nothing of putting in 15+ hours a day pursuing every aspect of their idea. While this level of determination is all but a requirement in the early phase of getting your idea off the ground, it can also be a blind spot in terms of being able to set priorities and stay focused on specific activities that drive accomplishment.

Having an innovative mindset

Few business ideas today are truly revolutionary. Most are an adaptation of an existing idea. The entrepreneur will frequently borrow an existing business model and make significant improvements to it in order to create a niche that they can grow. They are constantly looking for ways to realize their dreams by innovating what’s already in play, even when they’re not sure that the market is ready for it.

Willingness to go it alone

Entrepreneurs see opportunities differently than most people and will pursue a course of action that maybe unclear to close friends or family members. Frequently, their community will question their motives, ambitions or even sanity in an attempt to keep them from being hurt by their unshakable quest to see the venture to completion. The true entrepreneur understands this level of ‘loving scrutiny’ and presses forward despite the lack of perceived support for what they see very clearly as their road to financial freedom

Acting on creative ideas and solutions

This is one of the key factors that separate entrepreneurs from all other well intentioned business people. Entrepreneurs have an ability to find creative solution to situations that appear daunting and take action on them; sooner rather than later. Their ability to see unique approaches to the opportunities they take on enables them to act on decisions that are critical to the project’s continued momentum. The downside of this ‘go-getter’ mentality can be a pattern of frequent and unneeded ‘trial & error’ because not enough consideration is taken to research and test an idea before jumping into it with all four feet.

Making decisions in the absence of complete information or solid data

At the beginning of an idea, there may not be enough information available to comfortably decide on a particular course of action. The entrepreneur knows this and is confident in making decisions under these circumstances. They recognize that intuitive thinking or ‘gut feelings’ play a role in forging ahead into the unknown and see this as exhilarating as pursuing the idea itself. The entrepreneur knows that there is no better way to kill a promising idea in the early stages than to become paralyzed in the decision making process.

Jack of all trades

The entrepreneur knows how to do many things. They also know how to improvise and find others who can fill in their knowledge or skill gap with whatever is needed to keep moving forward. And while this ability to juggle and assimilate to a variety of situations enables to entrepreneur to keep things in motion, the downside is often an inability to accurately assess a true area requiring expertise outside the entrepreneur’s capabilities. In some cases, critical decisions may be made hastily or incorrectly causing unintended setbacks.

success in businessAlthough there is no one answer that fits all businesses, there are a number of practices followed by successful, happy business owners. No matter what you sell, you’ll be ahead of the game if you live by these ten essential rules for succeeding in your own business.

1. Be true to yourself.

No matter how much money someone else makes, if you don’t enjoy the business, wouldn’t be proud to show your relatives what you are doing and how you are doing it, then don’t do it. If you run a business you don’t like or don’t believe in, even if you have temporary success, it will come back to haunt you one way or another.

2. Find a need and fill it.

Yes, you’ve heard that a million times. But it still works. The easiest business to run is one that produces products or services that people already know they need. The reason: you don’t have to spend a lot of time and money convincing prospects they need what you sell. You can focus on why you are the best source to satisfy their need. Just be sure the “need” is one people will spend money to satisfy.

3. Choose products or services that you can sell for a lot more than it costs you to make or buy them.

If the difference between your cost and selling prices is too low, you will have difficulty growing the business. When profit margins are too low, you won’t have enough money to hire employees, pay for rent (when you need to move the business out of the house), advertise more, and do other things needed to expand.

4. Make realistic estimates of your expenses… then double them.

Most new businesses either forget about marketing, fulfillment, overhead costs, income taxes and self-employment or greatly underestimate them.

5. Be true to your customers and prospects.

Don’t promise what you can’t deliver. Don’t lie or exaggerate the benefits of what you sell and always deliver a quality product or service. Word-of-mouth marketing has always been one of the primary ways small businesses find customers. The Internet and social networking sites spread the word (good or bad) to even more potential customers.

6. Understand the importance of marketing and learn how to do it effectively.

The world won’t beat a path to your door just because you build a better mousetrap or write a great ebook about how to grow tomatoes or teach a child to read. To get customers you will have to market your products or services effectively and continually.

7. Treat your vendors, manufacturers and service providers with respect and let them know you appreciate them.

They are an important part of your team and your success. If you speak down to them, pester them with questions you could answer yourself, imply that they don’t’ do a good job, nickel and dime them to death, or are an ongoing pain in the neck, they’ll never go out of their way to help you — and might drop you all together. No business needs picky, annoying, time-consuming customers.

8. Embrace the web.

No matter what you sell or to whom, there’s a good chance your customers will turn to the web in one way or another to make their purchase. They may turn to online yellow pages to find a florist in Florence, SC; or go to Google, MSN or Yahoo and search for a phrase like “Elder law attorney Farmington Hills MI”, or “plumber weekends Astoria NY” If customers can’t find you in their queries, they are likely to give their business to one of your competitors.

9. Don’t expect miracles.

Yes, people do make money in their sleep or while they’re away on vacation — the Internet makes that possible. But only after they’ve invested a lot of time , effort, and money in building the business and building the team that keeps it going and growing.

10. Remind yourself that one is the loneliest number in business.

One product, one service, one main client, and all your records stored on one computer hard drive without regular off-site backups is a recipe for failure. If you only have one product or service you’re missing out on the chance to profit by selling more things to people who already know and trust you. If you have only one main client, you ‘re up the proverbial creek if they decide to change vendors or run into cash flow problems. And if all your records are on your computer and you don’t have always up-to-date backups of your important files, a hard drive crash could destroy your business.

successful business ownerIf you are a business owner and you’ve seen your business grow to a level where you can manage a team to help steer the business towards profit, you may be at a turning point. Management techniques should always be adapting with time. Many small businesses may reach the level of $1-3 million in annual sales, or 5-15 employees. This is the perfect time to revamp your management techniques.

A manager of a business must evolve from technical thinking and expertise to a manager of people and strategy. It is critical to learn how to manage your company in a way that will grow long-term.

There are 3 aspects of successful business owners listed below that will help you succeed in business, in relationships, in life, and in whatever you choose to put effort into.

Positivity, Persistence, and Patience

Successful business owners have a level of commitment to their goals that is difficult to find many places. The dedication it takes to nurture your projects will not just be handed to you, it must be earned. Entrepreneurs are one breed of a few that understand there is not too much of a difference between an obstacle and an opportunity. Successful entrepreneurs know how to turn both to their advantage.

Strategic Business Plan

Having a business plan is great, sticking to it is even better. Many of you reading this post will feel reassured; of course you have a business plan. However, when was the last time you updated it? Obviously if you are going to change your managerial tactics, your whole business strategy needs to be updated with the times as well. Stagnant businesses are the ones who fail.

Organized Company Structure

According to Robert A. Normand, a writer for Business Know-How this system should have policies and procedures that encourage all associates to perform to their utmost capabilities. It should reward those who excel in proportion to their contributions. It also disciplines those who deviate from acceptable behavior. Positions, tasks, duties and responsibilities are defined and communicated and performance is routinely measured. Training, job enrichment programs and incentive compensation plans are designed to encourage each associate to excel. Successful owners view their associates as their most valuable asset and resource.

In conclusions, successful business owners have a positive outlook on their business and their lives that helps them stay persistent, committed, and patient. They have a living strategic business plan that they stick to, and update as times change. They also have an organized company structure that helps their associates perform and excel, all in the best interest of the business.