Find immediate opportunities in your business to save cash.

When times are tough, your business needs cash for survival. When times are good, you need cash for growth. Because cash is such an essential resource for your business, it’s important to know where to find more of it before you need it. If you wait to find financial resources until the cash flow is needed, it may be too late. This doesn’t mean that you need to keep large cash reserves sitting in a vault someplace, but it does mean that you need access to cash at all times.

Cash can be generated either inside your business from internal sources (from profits, for example) or outside your business from external resources (from investors, for example). If you can find cash within your own business there are typically fewer strings attached compared to external resources.

Profit as a Source of Cash

Your best source of new cash is profit, so naturally one of the best ways to get more cash is to earn more profit. There are a few basic ways to increase your profit:

1. Increase your total number of sales

2. Increase the size of each individual sale

3. Raise your prices

Unless your customers are particularly price sensitive, chances are you can raise your prices a small amount without a significant loss in sales volume. The trick, of course, is how much. But even a small price increase can have a greater impact on your profits than you might imagine.

Lowering Your Expenses

Another way to increase your profit is to lower your expenses. This can be done in a number of ways:

1. Buy for quality and properly maintain your supplies. When things are taken care of, they need to be repaired and replaced less often.

2. Buy cheaper. Search for the best price (without impacting your minimum standards for quality) and ask your suppliers for discounts. If you are a longtime customer or if you purchase in quantity, suppliers will often give you a preferred customer rate.

3. Cut costs, reduce waste and increase efficiency. Something as simple as turning off unneeded lights, for example, will have an effect on the bottom line. A penny saved really is a penny earned.

4. Maintain your equipment. Repairing and replacing worn out equipment can absorb a lot of cash. Properly maintain your equipment to keep it in top-notch condition for as long as possible.

5. Rent or lease instead of buying. It’s not always necessary, or even wise, to tie your cash up in your assets. Renting or leasing seldom-used equipment, for example, often makes more sense than purchasing it.

6. Watch your payroll costs. This is typically one of the largest business expenses and the easiest place to overspend. When considering the value and expense of an employee, remember to take into account the extra employee costs, such as cash bonuses, overtime wages, medical and dental insurance, staff discounts, and so on. These extras add up. In fact, the average “extra” cost of an employee is 35% of his or her salary. By no means should you pay your people less than they’re worth. However, every employee should add measurable value to your business. If they don’t, something needs to change. Be giving where you can, but expect results in return. Remember, no one wins if the business fails.

Other Internal Sources of Cash

Profit is not the only internal source of cash for your business. Cash may be found in various other places as well:

1. Fixed Assets. Cash that is tied up in assets can sometimes be more effectively utilized elsewhere. You can free all or some of this cash in the following three ways:

Sell assets — If you don’t need an asset (such as an extra vehicle) you can sell it outright and convert it back into cash.

Sell and outsource asset use — Sometimes it’s more cost effective to outsource the use of an asset. A bakery, for example, may wish to sell off an oven that is only used occasionally and outsource the baking of certain specialty items.

Sell and rent or lease back assets as necessary— This allows you to take back most of the cash tied up in the asset without losing the use of it. Property is a common example, but this can be done with almost any asset.

2. Clean out your inventory. Liquidate obsolete or slow-moving merchandise that tie up cash unnecessarily. It’s typically more efficient to purchase these things when they are required rather than to tie up cash and storage space by storing them.

3. Minimize your inventory. Monitor your inventory and keep it to a minimum. This way you can avoid unnecessarily tying cash up in inventory. If this is an issue for you, identify your current inventory turnover, then work to make it as high as practical.

4. Accounts Payable. If you hold off on paying your bills until they are due, you can temporarily conserve your cash for other purposes. If your payables are due in 30 days, for example, it’s like getting a 30-day, interest-free loan from your suppliers.

5. Accounts Receivable. When you extend credit to your customers, you are essentially making them an interest-free loan. This is one more place that your cash can get tied up when it could be better utilized someplace else. Getting cash up front or taking a deposit is the most effective way to directly fund your immediate needs. Another tactic is to shorten the payment period. If your payables are due 30 days, you could reduce it to 20 or even 15 days. Many companies offer an incentive to their customers who pay their bills right away. A common set of terms is to offer a 2% discount for payment within 10 days. Be sure to collect on overdue accounts by designing a collections system. This will keep overdue accounts from falling through the cracks, which can happen easily when things get busy.

The ultimate purpose of your business development work is to give you the power to build your business as you envision it. Financial management puts you in the driver’s seat, giving you control over this significant aspect of your business. Of course, money is not the only measure of success, but it is an important one. After all, without it you would have no business at all.

Implementing these options gives you the potential to immediately increase your business’ profit margins. With very little turnaround time you can save money and provide your business with ready cash. By tapping into these internal sources of cash, you will place your company in a better position to successfully weather the tough times and maximize its growth in the good times.

The Value of Developing Corporate Culture

What can you do to encourage the culture you want to develop in your business?

When you walk in the doors of a great company, you can feel it. There's a kind of electricity in the air. Everyone is going about their work with sense of purpose and pride, working toward something they believe in and want to be a part of.  What you're experiencing is the outcome of a great culture, and to an entrepreneur, it's poetry in motion. 

Culture is the set of shared values, goals and behaviours that characterize an organization. It’s the glue that bonds people together for a common purpose. However, if you ask that same entrepreneur to explain it, they’ll often have difficulty. They might tell you about the outstanding men and women who work for them or about the amazing culture that binds them, but rarely can they explain how or why it works. Only that it does.

Sometimes a corporate culture is shaped unwittingly by the natural charisma of a strong leader who promotes and encourages a certain type of behaviour. Unfortunately, when a culture is driven by only one person, their influence can be diluted as the organization grows. Should that leader move on, the culture may leave along with them. To avoid this, a culture must be valued and developed as its own entity.

A strong and independent culture will be built on the foundation of a set of clear corporate values. Corporate values are intended to shape the behaviour of all stakeholders. They help keep a company pointed in the right direction and perhaps more importantly, help attract and identify the right employees. If your employees don’t share your corporate values, the environment at your company will be unlikely to reflect your principles.

As important as the right people are, it’s not enough just to hire well. What makes a culture truly effective is the value of continuous improvement. The result is an environment where everyone takes an active daily interest in making the company better than it was the day before. Whether you want to build a culture of innovation, customer service, or hard-driving sales, the core value of continuous improvement will take you there.

The good news is that you don’t have to go that far to make an impact. Start small and go from there. Something as simple as a fresh coat of paint, for example, can have a positive influence on the care your employees put into their work. A simple litmus test is to ask, “Does this positively influence the culture of our organization?” If the answer is “yes,” the employees involved are more likely to act as internal champions, helping you achieve the great culture you’re striving for.

You already know that there’s a culture that exists in your business. There are parts of it that you love, and parts that you would love to do without. Consciously watch for positive aspects of culture in your business. Build systems that support and encourage those aspects when you discover them. Often the best ideas will show up on their own. In fact, they probably already exist within your company. You just need to recognize them and capture them through documented systems. Otherwise they may fade away as quickly as they showed up.

Your corporate culture will reflect itself in your employees’ attitudes toward each other, their jobs and your company. You will be grateful for the investment you put into building your corporate culture and it will pay dividends in the long run. Not only will it have a positive impact on your employees and the environment at your business but your customers will feel the impact as well, increasing your bottom line for years to come.


Handling Customer Service Problems


“If we don’t take care of our customers, someone else will.” –Edgar Mitchell

Despite your business’ commitment to 100% customer satisfaction, things will occasionally go wrong.  People have bad days, employees make mistakes, and communications break down.  This being the case, you need a contingency plan that will kick into action when all else fails.  You need a safety net to catch any unhappy customers that might fall through the cracks.

What’s your contingency plan?

Always have a safety net to catch any unhappy customers that might fall through the cracks.

Regular mistakes can cause you to lose business, but the occasional honest mistake shouldn’t drive your customers away.  In fact, handled properly, a mistake can create an opportunity to show your customers just how much you care.  The way your company deals with the things that go wrong often makes the difference between a loyal customer and an ex-customer.

Although most unhappy customers never complain, 90% of dissatisfied customers never buy the product again.  Furthermore, an unhappy customer will typically tell at least 9 other people about their bad experience.  That’s why it is always the best policy to take a proactive approach by immediately correcting any mistakes that you catch, rather than letting the little ones slide.

Recurring problems can be managed through systems and policies.  Following your customer service systems, providing customers with more training or answering FAQs can help reduce issues from cropping up regularly.

Random situations, on the other hand, are too unpredictable to fully plan for.  These must be managed on a case-by-case basis.  This doesn’t mean that these problems can’t be solved using systems, but it does mean that the appropriate flexibility must be built in.

Consider the following concepts to reduce the impact of your random customer service problems:

1. Preventative Action

To head off customer service problems before they have a chance to grow, regularly initiate contact with recent customers to find out if they are still happy with their purchases.  A quick follow-up, be it by phone, email, or survey, is often all it takes to draw valuable feedback from customers and enable you to reach out if they are unhappy. 

2. Communicate Bad News Ahead of Time

When you’ve got bad news, it is always better to let your customers know in advance, rather than let them find out on their own.  They may still be upset, but the after-effects will be much less damaging.  Letting your customer know that their order is delayed but that you will personally drop it off the moment it is ready, for example, will cause much less damage to your customer relations than simply letting it arrive late and apologizing for it later.

3. The Customer is Right

Begin your problem-solving process from your customer’s perspective, with the assumption that the customer is always right.  This can be hard to do, but assuming that they are wrong will only make you appear condescending.  This will get their backs up and they’ll dig their heels in that much harder.  Your goal is to diffuse the situation, not inflame it.  Your customer believes they are right, so start there and work towards a solution.

4. Apologize

To show your customer that you understand their point of view you need to empathize with them and you need to apologize.  If you are in the wrong, quickly admit your mistakes and begin the process of repairing any damaged trust.

Saying you are sorry doesn’t necessarily mean that you admit that you made a mistake.  If your customer is in the wrong, don’t go out of your way to prove it to them.  Instead, try saying something like, “I’m sorry this happened to you, I’d feel exactly the same way if I were in your shoes.  What can we do to make it right?”

When you admit your mistakes and commit your resources to resolving them, your customers will respect and appreciate your honesty and integrity. 

5.  Solve the Problem

Focus on solutions rather than on blame. Take the attitude that every problem has a solution, and you will not give up until you find it.  Think of solving your customer’s problem as a joint mission, taking your customer on a search for the solution to their problem.  Solve the problem by offering a fair resolution.  One way to do this is to ask your customers what they feel would be fair.  Given the choice, most customers will respond with a fair and reasonable request.  Acting on your customers’ resolutions goes a long way towards re-establishing trust.

6. Mend the Relationship

When your customer feels injured in some way as a result of their complaint, it may be appropriate to try to mend the relationship by offering something that is of value to them.  A free dessert or appetizer at a restaurant is a good example, but the concept can be applied to any industry.  Set some parameters and empower your employees to follow through.  In most cases the atonement doesn’t need to be overly substantial in order to have a positive impact.  Showing your customers that you care is often more important than the amount that you spend.

7. Use the Information as Feedback

Customers with legitimate complaints are your best sources of information about your company.  They let you see your most pressing problems, up close and personal.  Remember, most customers who are unhappy with your business don’t complain.  They simply don’t come back.  You are then left with the difficulty of guessing what went wrong.  Luckily, complainers are willing to let you know right up front.  It is amazing how many companies hire consultants to tell them what they would have already known if they had only listened to their customers in the first place.


Going forward, you may want to consider some of the following to enable your team to effectively respond to unhappy customers:

Customer Service Training

Teach your employees basic customer relations skills and explore various methods of handling complaints.  By training your employees to problem solve “on their feet,” they will be better prepared to diffuse customer service problems quickly.

Empowered Employees

Customers never like to wait, especially when they are upset about something.  Give your employees the authority to make decisions on the spot and they will be better able to take care of your customers’ concerns without delay.

Corporate Values

An understanding of your basic business values gives everyone on your staff a place to start when faced with an issue.  It will also inform your employees’ decisions, actions and attitudes towards customers.

As Sam Walton says, “There is only one boss.  The customer.  And he can fire everyone in the company from the chairman on down, simply by spending his money somewhere else.”

In today’s competitive marketplace, outstanding customer service is surprisingly rare.  This makes customer service one of the best opportunities around for adding value.  Responding well to an unhappy customer plays a big part in customer satisfaction: how your company handles problems can be a game-changer.  Become a frontrunner in customer service and your company will stand out from the pack in a big way.  

1 [ 0 ]

As Featured In...

Circle Graphics

“Wardell has helped me systemize my business so I can travel with my family often and live the life I’ve always dreamed of.”

— Brad Haima, Founder, Circle Graphics

Free Resources to Grow Your Business

(Unable to load RSS feed and no cache was found or was invalid.)