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Coaches, Do You Make These 7 Deadly Cash Flow Mistakes in Your Practice?
Managing cash flow is every small business owner's most important function. Avoid these seven deadly mistakes to make sure you aren't creating cash flow problems in your coaching practice. 1. Using the "Fly By The Seat of Your Pants" Accounting Method. When tax time rolls around do you find yourself pawing through piles of paper on your desk looking for credit card receipts from your business trip? Or are you upside down digging under the seat of your car trying to figure out where all your gas receipts are? Are you wondering if that coffee stained piece of paper is an invoice from a supplier? Do you have a vague feeling that someone, somewhere owes you money but, you just can't remember who it is? If so, you are probably guilty of operating with the "Fly By the Seat of Your Pants" accounting method. Using this accounting method has a tremendous impact on your business's cash flow. Unless you have a system to track your business finances, you'll always be operating in the dark and in danger of imitating George of the Jungle as he slams into a tree. 2. Not Knowing What the Numbers Are All About. Once you have a real honest to goodness useful accounting system, that's where the real fun starts. You've got a bunch of numbers but what in the world do you do with them? Understanding what the numbers mean is crucial to your cash flow. Are sales trending up or down? Are expenses rising faster than sales? Is one coaching package more profitable or better selling than another? How many clients do you need to meet expenses each month? Can you take a paycheck this month? The answers all lie in the numbers. 3. Mismanaging Credit: I Owe You, You Owe Me. There are two ways to mismanage credit in small business: 1. Granting credit without wise credit policies 2. Using credit with no plan of how to pay the bill. Both have a huge impact on your cash flow and are often closely related. Here's a scenario to demonstrate that point. You have two opportunities: you can work on a big project for a corporate client or you can take on several small clients. You might think the big client is the way to go but how long will it take you to get paid? Often, large companies take their time paying-sometimes 60 or 90 days, sometimes longer. You may find that you've tied up a tremendous amount of your time with no cash flow to pay your bills. The smaller clients could provide you with more immediate cash flow without tying up all your time. And it's easy when times get tough to pull out your credit card to cover your current expenses. But doing this with no plan of how you'll pay the bill gets many small business owners in hot water fast. 4. Ignoring the relationship between Receivables and Payables. Do your Receivables and Payables "play nice" with each other? In a perfect world your receivables (what customers owe you) would be paid just in time for you to pay your payables (what you owe your vendors). But, if you are a small business owner you know Rule #1 is "Stuff Happens". The customer you thought would pay his bill this week, doesn't. So the bills you thought you could pay this week, don't get paid. Are your Payables in balance with you Receivables? If what you owe to others is far more than what is owed to you, then, Houston, you have a problem. And it's not just the balance that's important, it's the quality as well. If your receivables are as old as your Aunt Tilly, chances are good you'll never see the cash. 5. Focusing on profit instead of cash flow. Ahh, Profit. The ultimate goal of every business. Or is it? Did you know that many businesses that fail are operating at a profit? How can that be? For the small business, cash flow is the ultimate goal. No cash flow. No business. Period. What's the difference? Mostly the difference is in the decision making process. "If I take on this big job, it will earn me a huge profit, but if I take on five smaller jobs, I'll have cash to pay my bills." Yes, you want to be profitable but every decision has to be measured against the effect it will have on cash flow. 6. Forgetting your debt to society. Some bills are easy to forget. Bills like insurance, payroll taxes, estimated taxes. They sort of sit out there, almost off the radar screen. They don't have to be paid right away. It's easy to forget them until BAM! they're due and they're due right now. And you better have the money to pay them or you are in hot water. Then, cash flow problems result as you rob Peter to pay Paul. It can take months or even years to recover. 7. Spending your company's future on a speed boat. Haven't you always wanted a speed boat? Or a fancy car? Or an all expense paid trip to the Bahamas? It might be tempting to try to pass your personal purchases off as tax deductible business expenses. But, it's a bad idea for two reasons. The folks who work at the IRS are over-worked but they're not stupid. The last thing you need is an audit. An audit that could reveal your transgressions and could result in an unexpected tax bill plus penalties and interest. Again, huge cash flow headache! Here's the other reason it's a bad idea. Are you spending your company's future on frivolous or unnecessary expenses? Small businesses operate close to the edge. Unless you have a reserve to see you through the tough times, you are always in danger of being on the wrong side of that edge. You've got to take care of the goose that lays the golden eggs first. Then, you can pay yourself a properly taxed bonus and buy all the toys you want. Caroline Jordan, MBA is a small business consultant and creator of Cash Flow Master , a Fast Track, No Holds Barred, Crash Course in Small Business Cash Flow. For more Cash Flow tips and techniques visit http://www.TheJordanResult.com/mastering.html . To get in touch, call Caroline at (207) 583-2630 or send an email to TheJordanResult@adelphia.net.
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Business Management Change vs Transition "There is a time for departure, even when there's no certain place to go." -- Tennessee Williams Being an Emotional Victim None of us like to think of ourselves as victims. The term "victim" brings to mind a pathetic image of a person who is powerless. Therefore, It comes as a shock to most of us to realize how often we allow ourselves to be emotional victims. Having counseled individuals, couples, families and business partners for 35 years, I know that many of us are victims much of the time without realizing it. How To Improve Your Selling Skills -- With Coaching Skills But people love being coached. It's respectful and considerate of their needs. it helps them focus on what is right for them. In fact, it's all about them - the client. It doesn't matter to you if you make a sale or not, and they appreciate that? in fact, they just may buy something from you after all? you are so 'nice' and honest! Q-Tip It! Back in the 1920's when Polish-American entrepreneur Leo Gerstenzang invented cotton swabs as a safer way to clean his baby's ears, he called his product "Q-Tip." Actually, his first name-choice was "Baby Gay" but that did not sell, so the by-now familiar name emerged. Mr. Gerstenzang chose "Q" for Quality . . . and he must have been on to something, because Q-Tip has become a household word (and we've developed a whole 'nother set of connotations for 'Baby Gay.') Dealing Effectively with Midlife Issues In this article we would like to help you explore the challenges and opportunities that come at midlife. You will have an opportunity to take a look at issues that are specific to the Baby Boomer generation. You will also have a chance to begin the process of your own midlife assessment with a list of questions presented at the end of the newsletter. We call this assessment the Midlife Checkup. How Stella (Laurie) Got Her Groove Back! Being a Life Strategy Coach doesn't mean I'm always on top of my game, completely balanced and without my own challenges. Building a website, writing an e-book, getting a newsletter off the ground and securing clients required a great deal of work and commitment. If What You Are Doing Is Not Working Change Your Approach And ironically the more we worry about it, the more tense we get and the more likely we are to say something stupid. Can You Say No? As a manager you are constantly being asked to do things - by your boss, by one of your fellow managers, by the head of another department, by one of your staff. Greasing the Path to Success: Finding the Confidence to Step Up to Key Moments Whether it's making a prospecting call to a promising business contact, giving an informal "elevator speech" to a networking group, or attempting to close a transaction, there are certain key moments when putting your best-dressed foot forward really matters. Some of life's fortunate people seem to be naturally at their best finding confidence under pressure. The rest of us have to learn. Executive Coaching Case Studies If you are wondering whether investment in executive coaching would promote your business growth, some case studies might help you in making a decision. Do You Need a Performance Coach? In today's fast paced world, we are often confronted with the issue, "I want to get in shape, but I just don't have the time!" We all have faced it at one time or another. So, when we finally decide to get in shape we go to the gym, and then another decision hits us. Should you get a personal trainer? That would speed up the process, I mean, they have taken massive amounts of time to study the body, and know how best to work out without hurting yourself. They can help you with a proper diet, implementing exercise into your lifestyle, etc. Also, I do not know of a single professional athlete who does not have a coach or mentor?get the hint? Strategic Checklists I've been through a couple of checklists in the past few days, and it's reaffirmed my faith in their effectiveness as a communication tool. Simple Tips to Move Forward on the Job Someone I know wants to move into another job in the same company. It is not a management job. It's a job as an assistant safety coordinator. Communicating with Case Studies Not long ago, I made a partnership pitch, on behalf of an organization I represent, to another organization with similar interests. If the idea had come to fruition, it would have radically changed our organization. 6 Practices for Achieving Excellent Self-Care Adults with Attention Deficit Disorder (ADD) often feel like they are running behind schedule, and just don't have the time get everything done. As a result, many ADDers end up sacrificing their own self-care in order to scratch off items on their to-do lists. Those who skimp on self-care, however, will find themselves slowed down in the end. It's nearly impossible to be an effective parent, spouse, friend, or worker when you are not operating at your best. And you can't be at your best when you are not taking care of yourself! Masterminding Success - How to Start a Masterminding Meeting? Masterminding is about a group of like-minded, achievement-oriented individuals who come together to combine the power of several minds to tackle problems, seek advice and perspectives in achieving their goals. Choosing The Perfect Coach So, you are ready to start coaching. You either have some issues that you think a coach can help you overcome, or you just think it's time for a quality of life tune-up. You've reviewed your budget and set aside some money to cover the fees and you've ascertained that you are reasonably free of any serious mental or emotional issues that might interfere with the process. But now comes the big question: "How can I find a coach that's right for me?" Where to Begin? January is the king of months for those looking to make new beginnings. After the reflections and indulgences of December, the excitement of a new year unfolding brings contemplation of better days ahead. How Not Letting Go of Your Past can Hurt Your Future Experiences, whether good or bad, are sometimes all we have, and most of them reside in the past. So you may ask, why should I let go of my past when much of it is filled with beautiful memories and serenity? The Problem with Blame? If You Fix the Blame, You Ignore the Problem Have you ever found yourself in a hurry to leave the house for an appointment when you could not find your car keys?
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