Cash Flow in Business

What is cash flow in business? Cash flow is the sum of all the cash received into your business, less all the cash payments being made from your business. Positive cash flow is when there is more cash coming into the business than is being paid out of it. Negative cash flow is when there is more cash being paid out of the business than is being received by the business.

Cash flow business issues arise in a small business for two major reasons:

The small business doesn’t have enough revenue (gross income) coming into the business compared to its expenses, and/or
The small business doesn’t have good internal financial management and administration procedures in place to support the business. This could mean the business has difficulty collecting its accounts receivables; it has too much cash tied up in stock; and/or it is spending too much money on business overheads/expenses/assets.

Many small businesses mostly focus on gross income and profit – before or after tax. While both are important in business, cash flow is the life blood of all businesses, and without it they eventually die.

Think about blood in relation to your body. If you lose all your blood, you will die. It is the same in business: have no cash and the business will eventually fail. While a business can sustain negative cash flow for a while if it has ample cash reserves, most small businesses do not, so consistent negative cash flow will wipe out a business.

Yet, very few small business entrepreneurs spend much time thinking about cash flow or understand how critical a business driver it is. The key transactions in business that affect cash flow are:

Sales (cash and credit).
Purchases (inventory and business expenses).
Business loans (new and repayments).
Business assets (buying and selling them).
Investments (new and repayments).

The key principles of good cash flow management are simple. Firstly, the small business needs to ensure it has more income coming into the business than expenses; and the business needs to have its accounts receivable paid on time so it can pay its own creditors.

I have developed the SPEARHead System™ – 50 Strategies For Supercharged Small Business Cash Flow to support small business entrepreneurs around the world get to grips with cash flow in business issues, so that it is a thing of the past. Why the SPEARHead? Well, the system addresses all the cash flow issues in small business as follows:

S – Sales Receivables

P – Purchases and Payables

E – Expense Management

A – Asset Acquisition

R – Residual Cash

Head – How does your business ‘head –off’ or ‘SPEARHead’ its competitors in the market?

It is critical that each of these factors is actively managed to improve the cash flow in business. Equally, cash and financial management is not necessarily the primary skill set of a small business owner, so it is important that they get help. An accountant or business manager can offer invaluable assistance, as can a book keeper or personal assistant, as they can collect accounts receivables outstanding; they can help with expense management; they can look for and perhaps negotiate for c cheaper input costs for the business. If the small business owner asks others to help them in managing their business, they can work on the parts of the business they are good at, which is very often the sales or business development side of the business.

All parties working together will see the cash flow business issues reduce or hopefully be a thing of the past. Doesn’t that sound attractive? I think so.

If you would like to know more about the SPEARHead System ™ and how it might help minimise the cash flow business problems in your business, please go to www.adelemclay.com/free-resources to download my SPEARHead System™ for free.

Could some guidance from me be helpful to you? If so, please arrange a free 30 mins Skype strategy meeting with me. Here’s my calendar to book a meeting. I’d love to support you in some way to gain ‘seductive clarity’ in any aspect of your business or life.

Other articles on Small Business Cash Flow:

Small Business Cash Flow – The Ultimate Guide
Cash Flow Problems in YOUR Small Business
Small Business Problems – Why are YOU in Business?
Small Business Cash Flow Problems
Cash Flow Projections – Important in Business?
Projected Cash Flow – Relevant in Business?
How to Solve Cash Flow Problems: Inventory Turn

Small Business Cash Flow Problems

Small business cash flow problems are an issue that afflicts many small business entrepreneurs across the world. Here are my top tips for getting through crisis situations in relation to small business cash flow problems.

Reduce the cash tied up in the business’s operating cycle

Accounts receivable and inventory holding can be major drains on cash flow. In a crisis situation, it is key that the business owner reduces the money held in accounts receivable by assertively collecting outstanding customer payments. At the same time, the business owner must increase the inventory turn so that there is less cash tied up in inventory in the business.

Review and increase the business’s gross profit margins

Essentially, this means either increasing the sales price of the products and services sold or reducing the cost of producing the goods (cost of goods sold).

Reduce the operating expenses within the business

A business often incurs too many expenses for its size. With serious attention a business owner can heavily reduce expenditure and therefore improve cash flow.

Reduce sales volumes

By reducing the sales volumes, by default sales and the cost of goods sold will decline. As a result, inventory holding will decline as will the money tied up in accounts receivable. This method of cash flow control is difficult for small businesses to implement and, if undertaken for a considerable period, will require the business owner to substantially reduce operating expenses. This should be considered as an emergency response only.

Ask suppliers for extended payment terms

Delaying the payment needs to be a short-term solution for managing a negative cash flow as it can affect a business’s credit rating with its suppliers. Holding back on the payment of inventory and other operating expenses will have a positive impact on cash flow. The practise of delaying payment of invoices is illegal in some countries, so a better option is to proactively ask your supplier for extended credit terms to help your business through the cash flow crisis.

Borrow money

Borrowing money from banks, family or friends can help a business through short or long-term cash flow crises.

Find equity capital

If the cash crisis is ongoing, another option for a business is to find an equity partner that will contribute cash in exchange for a percentage of the business. This is fraught with danger if the wrong equity partner is found, as things can go very wrong in the business. Equally, it can be a real opportunity if the equity partner is genuinely interested in helping the business grow and become more profitable and successful. When considering this option, make sure your business gets the correct business advisory support to ensure the deal is not too one-sided in favour of the new equity partner.

Hold cash reserves

This is the pie-in-the-sky option for businesses existing hand to mouth each month and unable to amass cash reserves at the bank. Regardless, the only way in which a business will be less impacted by negative cash flows is to have a cash reserve. The best way to have a reserve is to put a bit of money aside for a rainy day during good times. I can promise you that after your business experiences a few nightmarish cash flow crises, you will never want it to happen again, so finding money to put aside for the future is the best way to protect the business for the future.

Perhaps it is comforting to know that most entrepreneurs experience small business cash flow problems. If you know Sir Richard Branson’s entrepreneurial story, you will know that on many an occasion his businesses had no cash, and the banks were close to closing him down.

The key is NOT to put your head in the sand and hope it goes away. Small business cash flow problems come with the territory of being in business. Be front footed in addressing the issues. Talk to people who may be able to assist – your customers (to get paid quickly); your suppliers (to get extra credit); your accountant (to assist in trimming costs from the business and other business consulting support); your bank (to get extended credit if possible); potential equity parties (if your business can sustain this option).

If you would like to learn more on how to address the cash flow issues in your business, then please go to www.adelemclay.com/free-resources and download my SPEARHead System™ – 50 Strategies For Supercharged Small Business Cash Flow.

Other articles on Small Business Cash Flow:

Small Business Cash Flow – The Ultimate Guide
Cash Flow Problems in YOUR Small Business
Small Business Problems – Why are YOU in Business?
Cash Flow in Business
Cash Flow Projections – Important in Business?
Projected Cash Flow – Relevant to Business?
How to Solve Cash Flow Problems: Inventory Turn

Cash Flow Problems in YOUR Small Business?

Cash flow is king (or queen) in a business. As any small business knows, having positive cash flow running through your small business is the key to success. If you don’t have that, you have a major cash flow problem.

We cannot pay our staff, ourselves and our monthly bills on profit. Our bills are paid from positive cash flow. How stressful is it not having enough money in the bank at month end when staff wages and salaries are due and there is not enough money in the bank? It can be a nightmare for a small business owner!! I know from personal experience when I was a young entrepreneur. We had great customers, but at times, due to their internal systems it took a long time to get paid. At times, cash flow problems were constant.

In accounting terms there is a little formula that can tell a small business owner how successful they are at collecting money from their customers. It’s called the ‘Accounts Receivable Ratio’ and is calculated as follows:

Accounts Receivable Ratio = Total Sales for the Year / Total Accounts Receivable Outstanding

So, if your total sales for the year were $500,000 and you currently have $100,000 outstanding in Accounts Receivable, then your Accounts Receivable Ratio would be $500,000/$100,000 = 5.

We then take the 5 and divide it by 365 days per year, so 365/5 = 73.

What does 73 mean? It means that on average your customers are taking 73 days to pay their accounts. That is scary, as that statistic will seriously affect your small business cash flow.

You see, if your terms of business with your customers are for your accounts to be paid at 7, 14 or 30 days, then by your customers taking on average 73 days to pay you, that is much longer than your terms of business with them, and therefore is detrimental to the success of your small business. Therefore your, will have a cash flow problem. I promise, you will run out of cash flow if that payment history continues.

That type of Accounts Receivable Ratio could also indicate that your customers do not have a healthy regard for your small business and its success. It could also mean that your customers are not good quality and they may also have their own business issues such that you may not collect the payment at all. How much of your Accounts Receivables are you writing off as bad debts each year? Perhaps it is time to find better quality customers that have more respect for you and your business. Writing off bad debts creates an even bigger cash flow problem, as you are receiving less cash into the business than you would originally forecast.

What should you do if your Accounts Receivable Ratio is poor? The first thing is to establish a plan and internal systems and process within your small business to ensure you or someone on your team is politely following up with your customers soon after the accounts are sent to ensure they have received it, and have arranged payment. There is nothing wrong with asking your customers the question: ‘When can we expect to receive payment?’

If you do not follow up with your customers, there will often be no urgency on their part to make payment to you, regardless of your terms of business with them. Remember, it is the squeaky wheel that gets the oil, so don’t be afraid to continue contacting your customer in order that you get paid.

Take control of your business and create systems and processes to enable your customers are followed up with to ensure your accounts are paid on time, or at least close to the due date. In doing that, you will eliminate one area of business challenge that could be exacerbating your small business cash flow problem.

Other articles on Small Business Cash Flow:

Small Business Cash Flow – The Ultimate Guide
Small Business Problems – Why are YOU in Business
Small Business Cash Flow Problems
Cash Flow in Business
Cash Flow Projections – Important in Business?
Projected Cash Flow – Relevant in Business?
How to Solve Cash Flow Problems: Inventory Turn

Small Business Cash Flow Problems

Positive cash flow is the life blood of all businesses. Without it they die – eventually!! Overstating the issue of business cash flow problems, you say? I think not! Without positive cash flow, a small business has big cash flow problems; lack of solvency being the likely key business issue.

Let’s be clear what I mean for a moment. Positive cash flow is where cash received into the business exceeds cash paid out, and negative cash flow is the opposite. It is where cash paid out by the business exceeds cash received by the business. Cash flow problems arise when a business has negative cash flow – more money going out of the business than is coming in.

Consider the ‘life blood’ analogy further. We all have blood moving around our bodies. If we lose most or all of our blood, we die!! It is the same in business. If a business has no cash within it, it will eventually die! I learnt from my own experience in business as a young entrepreneur, that one cannot pay bills, staff salaries and oneself on profit alone!

Profit is exceptionally important to business, and positive cash flow is too. They are two of the most critical drivers of a business. My favourite phrase in business is:

Turnover = Vanity; Profit = Sanity; Cash flow = Reality!!

The key transactions that impact cash flow are:

Sales (cash and credit sales)
Purchases (stock and business expenses)
Business loans (new loans and repayments)
Business assets (buying and selling assets)
Investments (repayments and new investment)

In simple terms, to be financially successful, a business needs to be cash flow positive. That means more cash needs to be coming into the business than is being paid out. Look at this simple example of a profitable business.

Let’s assume Smith’s Limited has just established taking a new product to market where sales will be $1,000 in month one, and then will double each month thereafter. Customers are given the fairly standard 30 day payment terms. However, Smith’s Limited has to buy its stock for cash, as it is a new company with no credit history with the supplier. The stock will cost 60 percent of retail price. General business expenses will be 20 percent of gross income each month, and are paid by month end, at the latest. Look at the profitability and cash flow effects of this opportunity after six months in business as shown in Tables 1 and 2.

	Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Total
	$	$	$	$	$	$	$
Gross Income	1,000	2,000	4,000	8,000	16,000	32,000	63,000
Less COGS	(600)	(1,200)	(2,400)	(4,800)	(9,600)	(19,200)	(37,800)
Gross Profit	400	800	1,600	3,200	6,400	12,800	25,200
Less Expenses	(200)	(400)	(800)	(1,600)	(3,200)	(6,400)	(12,600)
Net Profit	200	400	800	1,600	3,200	6,400	12,600

Table 1 – Smith’s Limited – Profit and Loss Statement for Six Months

	Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Total
	$	$	$	$	$	$	$
Cash In	0	1,000	2,000	4,000	8,000	16,000	31,000
Cash Out	(800)	(1,600)	(3,200)	(6,400)	(12,800)	(25,600)	(50,400)
Cash flow	(800)	(600)	(1,200)	(2400)	(4,800)	(9,600)	(19,400)

Table 2 – Smith’s Limited – Cash flow Statement for Six Months

What do you notice? The profitability of Smith’s Limited is $12,600 profit for six months. However in the same period, it also has a negative cash flow of $19,400, which means more cash is going out of the business than is coming in. If this was a real life situation, Smith’s Limited would have a major cash flow problem, especially if it had limited cash flow reserves in the bank. If the company is relying on a bank overdraft to fund the negative cash position, it could be scary for the company, as negative cash flow is the same as bank overdraft, and it is continuing to get bigger each month.

In this situation the accountant will say, ‘Well done for a start up business’, but the bank manager may well be saying, ‘No, we won’t extend your overdraft further’ or worse, ‘We are cancelling your overdraft’.

While this is an imaginary example, it is designed to demonstrate the point that if cash is not managed carefully, a successful business can be crippled and die!!

Reading is one thing, but implementation is another. Please look at your own business’ cash flow, and ask yourself, ‘Do I have cash flow problems in my small business?’. Be honest as your business relies on you to be so!

Ensuring your business is consistently cash flow positive will help you to create a financially strong and viable business, and it will help you sleep at night, not having to worry about where the cash is coming from to pay yourself, your staff and business expenses. Now, that sounds good to me!

Other articles on Small Business Cash Flow:

Small Business Cash Flow – The Ultimate Guide
Cash Flow Problems in YOUR Small Business
Cash Flow in Business
Cash Flow Projections – Important in Business?
Projected Cash Flow – Relevant in Business?
How to Solve Cash Flow Problems: Inventory Turn
Small Business Problems: Why are YOU in Business?

Is Customer Service YOUR Key to Business Success?

‘The customer experience is the next competitive battleground.’ – Jerry Gregoire, CIO Dell Computers

I believe that delivering exceptional customer service is the ultimate key to business success, whether you are a large or small business. After spending a lot of time and money winning a new customer, why waste that effort by not looking after and nurturing them so they stay loyal to you forever? In the competitive market that most businesses operate in, customer service often becomes the differentiator between businesses.

I admire the success of the Wal-Mart company. Sam Walton, the Founder of Wal-Mart, said: ‘The goal as a company is to have customer service that is not just the best but legendary’. I wonder how many companies focus on ensuring their customer service is legendary?

Often it is the simple things:

Acknowledging your customers.
Following up with them and treating them as individuals, not a ‘number’.
Admitting it when things go wrong and quickly fixing the problem.
Asking for feedback, and actioning where appropriate.
Going beyond the call of duty in small but noticeable ways.

Lee Resources in 2010 said that attracting a new customer costs five times as much as keeping an existing one. That is a scary and costly statistic, and if true, will directly impact the bottom line; if you are losing customers and having to spend time gaining new ones, your profit will be reduced! Another relevant statistic is from Customer Thermometer, where in 2012 they stated that companies that prioritise customer experience generate 60 percent higher profits!! That is money to spend in more productive ways in your business, or perhaps to take as drawings from your business to support you in the lifestyle you want to have with your family.

In all the businesses I have owned, managed or coached in my career, superior customer service has been the cornerstone to success. It has always been ingrained into the psyche of all team members too. After-all, customer service, to be successful, MUST be delivered consistently throughout all activities across a company.

Let me share a recent personal experience I had, which demonstrates now NOT to do customer service! My husband and I are property investors in the UK, and we needed to purchase appliances for one of our newly renovated investment properties. As long time customers of CurrysPC World – a major UK appliance retailer – we visited a local store and bought the required appliances (£1300 in cost). Throughout our time at the store the customer service was excellent, such that we opened an account to make our purchases easier in future. The appliances were delivered to the investment property a few days later, and while delivering, the delivery company significantly damaged walls, carpet and vinyl. I notified Currys that afternoon, and was told I would hear from someone within 48 hours to address the issues. I began tweeting my dissatisfaction with Currys after about five days of waiting, and it was only then that their social media people made contact. Eventually I got an email from Currys two weeks after the initial complaint, telling me that their outsourced delivery company was responsible and would make contact with me within seven days. As you might imagine, I emailed Currys back telling them I expected Currys to resolve my complaint and not the delivery company, and that I would continue to tweet my experience until they had paid me approximately £350 so I could get the damage repaired. As of today, I am still waiting, so I will continue to use social media to complain. In the meantime, we have spent £1500 buying new appliances with John Lewis (another UK appliance/department store) for yet another investment property. Currys has lost our business forever, and I am telling everyone about my poor experience!! Ironically there is a very successful appliance company in New Zealand (where I am from) whose mantra is: ‘It is the putting right that counts’…. shame Curry’s doesn’t have the same approach to its business.

So, my message to you is to focus on delivering superior customer service all of the time to your customers and you will enjoy long time customer loyalty and more profit in your business. If and when things go wrong (which they will do from time to time), sort them out quickly and respectfully, and you will continue to retain your customers.

Finally, from Jeff Bezos, CEO of Amazon.com ‘If you build a great experience, customers tell each other about that. Word of mouth is powerful.’

If you would like support towards your business success, please visit www.adelemclay.com/free-resources and download all/any of the free resources are of interest to you.

Other articles on Branding, Marketing and Pricing:

Increase Your Prices and Make More Profit
Do You Compete on Price? Bad Business Decision!!
Creating Superior Customer Value – do you do that in your business?
Using YouTube for Finding Customers
Which are Your Most Profitable Customers?
Who Wants High Customer Retention?
Finding Customers via LinkedIn
What is a Customer?
What is Business Marketing?
What’s your Personal Brand?

Small Business Problems: Why are YOU in Business?

I have coached and mentored many small and large businesses to improved financial performance over the last 20 years in several countries, along with a number of charities, and I have received a variety of answers to the question: ‘Why are you in business?

So, I ask you. Why are YOU in business? Think about it and make a list of why….

Are your answers similar to those I have heard over the years:

To be my own boss.
To live my dream.
To bring my product or service to market, as everyone will need my product/service.
To help others.
To have a successful business.
To make a difference, and to make my customers happy.
I am the ultimate entrepreneur and couldn’t work for anyone else.
To earn the money I am worth, rather than receive a salary working for someone else.
To control my life.
To contribute to the lives of those who are less fortunate.
To deliver social/community programmes.

If you answers are any or some of the above, while they are good and at times noble reasons for being in business, they are NOT the reason you are in business. There is ONE reason and ONE reason only as to why you are in business…… and that is:

TO MAKE MONEY…. and hopefully, lots of it!

There is no other reason to be in business. If you have any other reasons for being in business, they must be secondary, otherwise you will have small business problems!

Yes, by being a financially successful business or charity, you will achieve some or all of the above points, but they are not the principle reason WHY you are in business. They are the results of being financially successful in business.

Over the years I have seen so many small businesses not focused on money – the cash-flow and profit (or lack of) in their business… a lack of focus on these areas lead to small business problems. The net result is that they are unsuccessful and fail, or struggle, with the owners living a ‘hand to mouth’ existence….. and, not achieving the dream they have set for themselves and their families.

In my opinion, there has never been a better time to be in small business…. as Lord Digby Jones, a UK based businessman, and UK Trade Ambassador recently said: ‘It is small business that will lead the UK economy out of recession in the coming months’. Whichever economy you are in, I wholeheartedly agreed with the sentiments. But, small businesses will only lead economies out of recession, if they themselves are financially successful.

So watch out for my key strategies to make significantly more profit in your small business. In the meantime, get focused on making money… that is the only reason why you are in business. Successful businesses leads to having fun in business. Marginal or unsuccessful businesses lead to constant small business problems, challenges and issues. Which would you rather have? I know that the answer is for me!

As Warren Buffett, the renowned investor says: ‘Rule No.1 – Never lose money. Rule No.2 – Never forget Rule No.1.’

Other articles on Small Business Cash Flow:

Small Business Cash Flow – The Ultimate Guide
Cash Flow Problems in YOUR Small Business
Small Business Cash Flow Problems
Cash Flow in Business
Cash Flow Projections – Important in Business?
Projected Cash Flow – Relevant in Business?
How to Solve Cash Flow Problems: Inventory Turn

Using YouTube For Finding Customers

Is YouTube relevant for Small Business Entrepreneurs?

I am a recent (and initially reluctant) convert to using YouTube as a way of marketing my business – Small Business Huge Success™ to the worldwide population of small business entrepreneurs that I am seeking to attract to my online business.

However, I have learnt that, if done correctly, YouTube supports all my other marketing activities by helping me to build ongoing Visibility and Credibility with my target audience. Audiences can be highly targeted via YouTube – did you know that? You can market to a very local audience if your business is local rather than national or international. YouTube is the marketing engine of the future, and the exciting news is that it is still in its infancy, so early adopters will reap the benefits. Let me explain.

Here are some staggering facts about YouTube.

What YouTube Itself Tells Us

YouTube has more than 1 billion unique users visiting it each month.
Over 6 billion hours of video are watched each month on YouTube – that’s almost one hour for every person on Earth!
100 hours of video are uploaded to YouTube every minute!
80 percent of YouTube traffic comes from outside the USA.
YouTube is localised in 61 countries and 61 languages.

What Marketers Say About YouTube and Video

One minute of video is equal to 1.8 million words.
One third of all online activity is spent watching video.
One in two consumers say video has influenced a purchase decision.
87 percent of online marketers use video content.
Inclusion of a video in an introductory email can increase the ‘click-through’ rate by 96 percent.
60 percent of visitors watch the video before reading the text on the same webpage.
68 percent of the top 50 internet retailers use videos on their websites.
YouTube accounts for 28 percent of all Google searches.
The brain processes video 60,000 times faster than text information.
Consumers will stay on a webpage seven times longer if it has a video.
YouTube is the Internet’s second to largest search engine.
41 percent of consumers are more likely to share product videos than product content.
80 percent of internet users can recall a video they watched last month.

These are staggering statistics, which heavily influenced me to explore YouTube as a marketing tool. How are you feeling about marketing your business via YouTube? Scared? Don’t know where to start? Not relevant for you?

I can promise you I have experienced all those emotions, yet I have also overcome them. So, I strongly urge you to seek out the professionals and learn more about how you can use YouTube to gain online Visibility and Credibility for your business.

Marketing for business and the ways in which businesses will be finding new customers is going to change markedly, and soon! The Internet and search engines are how consumers are starting to find their service providers and this approach to finding service providers will increase markedly very soon. As a small business entrepreneur, that means you need to be asking yourself:

How am I going to find customers for my business?
How is my business represented on the Internet?
Can my business be found on the Internet?
Is my business building its Visibility and Credibility via the Internet?
How can my business embrace YouTube as a technology of the future?

Please embrace having your business represented online via YouTube. It is the technology of the future. Be prepared to learn, and to be outside of your comfort zone. Push through your discomfort, and you will be rewarded. ‘Feel the fear and do it anyway, and the death of that fear will be certain.’ Be prepared to teach a lot of content for free via YouTube about what it is you do in your business. Help your audience understand how good you are at what you do.

I promise you, if done correctly your business profits will soar over time as you will be attracting or finding more customers for your business. How great does that sound?

If you would like to learn more about finding more profitable customers for your business, please download any of the FREE resources that may be helpful to you at www.adelemclay.com/free-resources

Other articles on Branding, Marketing and Pricing:

Increase Your Prices and Make More Profit
Do You Compete on Price? Bad Business Decision!!
Creating Superior Customer Value – do you do that in your business?
Which are Your Most Profitable Customers?
Who Wants High Customer Retention?
Finding Customers via LinkedIn
Is Customer Service YOUR Key to Business Success?
What is a Customer?
What is Business Marketing?
What’s your Personal Brand?

Creating Superior Customer Value…Do you do that in your Business?

Recently I re-read a book by Dr Ian Brooks, a New Zealand management consultant who specialises in supporting companies to become Number One in their market. The book is called: ‘Second to None’ – 6 Strategies for Creating Superior Customer Value. A great read (see Dr Brooks’ website below to purchase the book).

In summary, Dr Brooks’ six strategies from his book are¹:

Strategy 1: Focus On Value	If business is the art of creating value, then everyone in your business must understand the concept of value and everything you do must be directed towards creating value in the eyes of your customers.

Strategy 2: Compete On Value, Not Price	Resist the temptation to compete on the basis of price alone. It is an inadequate strategy at best and a suicidal path for both you and your competitors at worst.

Strategy 3: Look Through Your Customer’s Eyes	Since value exists only in the eyes of your customer, you must learn to see the world through your customer’s eyes. Most companies do not.

Strategy 4: Make Your Customers Successful	In this tough marketplace servicing or even satisfying your customers is not enough. Studies show that even happy customers switch to another supplier at a very high rate.

Strategy 5: Reduce The Costs	To compete and win in this crowded market, you need to be a low cost supplier, but instead of reducing your price, try to reduce the other four main costs that customers pay to obtain your products and services.

Strategy 6: Give Them Something Extra	In addition to lower the costs, increase the benefits you offer your customers. Give them something extra – at no extra charge – and delight them!

So how is your business faring in relation to these strategies? Business is tough and hugely competitive…. all businesses need to stand out. Often it is the simple things that help to stand out. As the saying goes, it is better to do 10 things 10 percent better, than one thing 100 percent better.

As a business owner, how about looking at the various elements of your business and consider if you can apply Dr Brooks’ ‘Second to None’ Six Strategies for Creating Superior Customer Value into your business.

Note 1: Reproduced from page14, Second to None – 6 Strategies for Creating Superior Customer Value. Dr Ian Brooks. Nahanni Publishing 1997. See www.ianbrooks.com to purchase.

Other articles on Branding, Marketing and Pricing:

Increase Your Prices and Make More Profit
Do You Compete on Price? Bad Business Decision!!
Which are Your Most Profitable Customers?
Who Wants High Customer Retention?
Finding Customers via LinkedIn
Is Customer Service YOUR Key to Business Success?
Using YouTube for Finding Customers
What is a Customer?
What is Business Marketing?
What’s your Personal Brand?

Making BIG Business Profits in 2014

The beginning of the year is often exciting in business as new goals are set for the year, which leads the entrepreneur to have new excitement and energy for their business. Goal setting in business happens in many different ways, either formally via writing a business plan, writing a set of bullet points listing goals, or ‘head based’ desires on the part of the owner to have a more successful business in 2014.

This article is not about goal setting, rather it is about helping you to substantially grow your business profits by focusing on what is occurring within your business at present. So, let’s get started.

I believe there are 10 key areas of business that an entrepreneur should be looking at to aid in the financial success of their business. What are they?

Cash Flow Management – I have a saying in business: Turnover is vanity, Profit is sanity, Cash flow is reality. Many small businesses do not have strong systems in place to collect outstanding invoices from customers after the work has been done. What systems have you implemented in your business to ensure you get paid by your customers in a timely way? Also, do you fully embrace active cash management across your business by managing your accounts payable and negotiating payment terms with your suppliers? How about inventory turns? Do you actively control the amount of inventory you hold at any one time? Poor cash management leads to the deterioration of the business, and at times, failure.

Monthly Financial Management – Do you know the costs of running your business each month relative to the turnover you are generating? Many small businesses have a ‘cash in/cash out’, receipts and payments mentality when running their business. They do not have monthly management accounts to help them manage their business. Year end accounts are only useful to determine the profitability of your business and how much tax is to be paid. They will not help you to manage your business during the year. So, how about getting your accountant to work with you throughout the year, producing monthly management accounts that you can analyse together? Monthly analysis will enable you to make improvements in your business during the year to enhance your business’s profitability.

Product and Service Profitability – Another element of financial management is understanding the profitability of all the products and services you offer to your customers. The most expensive product or service you sell to your customers may not be the most profitable to your business. How about learning about product and service profitability, working out which are your most profitable, and selling more of those to your customers. That strategy alone will have a measureable impact on your business’s profitability.

Customer Profitability – Do you know who your most profitable customers are? Most business owners do not. Many businesses aim to service any customers that come their way without thinking about whether they are going to be profitable customers. So, learning how to work out customer profitability is critical to making more profit in your business.

Differentiating your Product and Service Offering – Do you sell all your products and services as one offering or do you differentiate them according to what your customers need and can afford? Do you make offers to your customers to cross-sell, up-sell, down-sell and frequently sell your products and services? Those businesses that have a strategy in place to differentiate their product and service offerings are making BIG profits.

Pricing – How about increasing your prices to your customers? This is a touchy subject as many business owners think that they will not survive if they increase their prices. Studies have shown that only 9 percent of customers move away from a supplier due to price increases, yet 82 percent will move away to a new supplier due to perceived indifference and unresolved conflict with the original supplier. It comes down to value. How much value do you think you are offering your customers for the prices you charge, and do they feel that they are really important to your business?

More Customers – All businesses want to grow their customer base, but many small businesses do not have a strategy in place to attract new customers? How are you marketing your business? How much networking are you doing? Most markets are crowded, so how are you standing apart from your competitors, so that when a potential customer hears of you, they will come to your business for the product or service you are offering? Get this right and you will have a constant funnel of customers coming your way.

Systemising Your Business – Regardless of whether your business is just you, or you plus your employees, is your business systemised and automated in a way that your customers receive streamlined service? If not, then you are offering what I refer to as ‘random service’, which is unpredictable and not able to be replicated by your staff. McDonald’s doesn’t make the best hamburgers in the world, but they developed arguably the best systems in the world to deliver their products to their customers. How does your business measure up? If your customers return more than once to buy from you, will they get a consistent experience with your business? If not, then your business is not systemised.

Lifelong Learning – I am a ‘lover of lifetime learning’. Are you? There is so much to learn about business and it is easily accessible and often free via the internet and networking, so there is really no excuse for any business owner not to continue learning. I believe we can never learn enough, and that there is always something to learn. How about embracing the idea and developing more knowledge in business to support your success? Time and time again we hear from the world’s most successful entrepreneurs, and on every occasion they say that embracing ongoing learning was key to their success.

Mindset – Do you truly believe that you will be successful in business, and that you will topple any hurdle that gets in your way? If you do, then you will be hugely successful in your business. If not, then how about spending time evolving your mindset towards believing that you can achieve anything you want in business and life? Once the belief is set, you will be invincible. I just love the quote: “The future belongs to those who believe in the beauty of their dreams”. ~ Eleanor Roosevelt.

So, that’s it. My top 10 strategies to help you make Big Profits in your business in 2014. I hope you embrace the strategies to support your HUGE business success.

If you would like to learn more about finding more profitable customers for your business, please download any of the FREE resources that may be helpful to you at www.adelemclay.com/free-resources

Redefining Success – in 7 Dimensions

Money, status, assets, power! They’re the markers of success, right?

Certainly that’s how I measured success for a long time. I had a successful business and career, and I had the trappings of success as I defined it – money, sports car, million dollar house, gorgeous wardrobe of clothes, expensive jewellery (until it all got stolen – but that’s a story for another day), travel……you get the picture.

Have you ever wondered if defining success as money, status, assets and power is a little, well, last century, one dimensional thinking? I had started to wonder about this in my life…..

Then something happened.

Life in all its beauty, joy, heartbreak and sadness tumbled over me during a series of years, challenging and uplifting me to the core of my soul….

The birth of our beautiful baby girl.

Losing money, making money.

The power of love, and the emptiness of being alone.

Death of loved ones.

The destruction of relationships and broken trust.

The unexpected death of babies – my friends’ and my own.

Health, fitness and illness, and the opportunity we have to create our personal wellbeing (or not).

The glory of travel, learning about and treasuring diversity.

The power of choice in life, and insidious nature of living as a ‘victim’.

The beauty of spirituality and legacy, and the sadness of it too.

What is success, really?

The universe was asking me to reconsider what success in life really means. And so I did!

I created the Seven Dimensions of Success – my new model and barometer of success. No more one dimensional, last century thinking for me!

Success as I define it is based on the balance we can create in seven key areas of life – in no particular order:

Wellbeing
Growth
Achievement
Relationships
Experiences
Spirituality
Legacy

You might be thinking: “Oh, she’s into that woo woo, weirdo, stuff. I’m not having a bar of that!”

If you are, I’m smiling, as you’re not alone…. and once upon a time, I’d have been in your ‘camp’ too. But, please hear me out for a bit.

Aren’t seven dimensions more exciting than one?

Living in London, I hear of and read stories about people who are working themselves to the bone – day and night. Work hard, play hard is the ‘mantra’ in the City of London and amongst bankers, in particular. They work seriously ridiculous hours, and the ‘play hard’ often includes partying, serious drinking, drugs, sex… and a whole lot more…. Yes, some are earning plenty of money, but is that really success?

Or there are others – entrepreneurs and business owners who have achieved tremendous financial and business success? But at what cost? How’s their health and fitness? Or their most important relationships with their partners and children? Often there’s a cost. Is it too much?

Then there are yet others who have terrible things that happen to them, and they live in a state of victimhood – lifeless, directionless, and at times addicted to goodness knows what.

It starts with a DREAM

Here comes the ‘woo woo’ again, but I truly believe that success is based on having a DREAM for our lives. Actually knowing what we want in life and then working towards it in all dimensions. For me, DREAM means, Destiny, Represented Evocatively, Actively and Magnetically.

If we don’t know the DREAM, then we’ve got no path to follow in life… and we’ll end up anywhere or nowhere, and possibly towards the end of our lives, pretty sad that we haven’t made more of our journey through life.

I believe there’s a better way. Rather than striving for more and more one-dimensional success, aiming for perfect and feeling like a failure when we inevitably miss perfection, exhausting ourselves in the process, we would do better to identify the things we truly value and then work to generate more of them in our lives.

Please don’t think I’m knocking aspiration. I’m not! I’m hugely aspirational in my life – as one measure of my success.

So, start with working out what you want in all seven dimensions of YOUR life… then create a plan towards getting there.

Seven dimensions of success – what are they?

Life should be multi-layered. For me, it’s about love, adventure, creativity, people, books, dancing, great food, conversations, silence, laughter, fun, the beauty of precious moments, charity, curiosity, learning, teaching, giving… it’s also about those more traditional markers. I’m really into my career and business success is important too… but not at all costs. Life should be full, rich and exciting. It should also be evolving all the time.

As you can see from the Heptagram, there’s no hierarchy with the seven dimensions of success; it’s not that growth is more important than relationships, or that spirituality counts for more than achievement. Think of the Heptagram as a nudge to expand your imagination as you start to explore what success means to you. You can move from one category to another and back again. They all flow from one to another; they’re all inter-connected.

You will naturally find that you’re more attracted to some areas than others. That’s fine. You may also find some concepts uncomfortable. A lot of us are deeply uneasy about the idea of making wealth, for example (that’s one of the markers within the achievement dimension). We think rich people must by definition be greedy, or believe that wanting a certain lifestyle makes us shallow. Others dismiss all talk of spirituality. We label it as not for us – religious dogma or hippy nonsense. By thinking in this way we stay comfortable within our own narrow definition of success and cut ourselves off from potential fulfilment.

Use the Heptagram to explore and challenge your beliefs about what’s possible for you. As you’re reading the descriptions below, jot down in a notebook any thoughts or ideas that occur to you, especially if a particular dimension either appeals or puts you off. You might have a light bulb moment and start to feel energy forming around goals or aspirations.

Wellbeing

While there is no hierarchy within the seven success dimensions, for me wellbeing is the foundation of everything we do and everything we can achieve. We might have all the money in the world, be successful on every measure, but if we don’t have our health, vitality and wellbeing, we won’t be able to enjoy it.

I’m not talking about being a size eight or having a seriously enviable six pack, although if you aspire to those things, go for it. Do the work and make them happen. I am referring to looking after ourselves in the widest sense.

Why is it that in the richest nations of the world, the people are the fattest and sickest, often drug dependent? For me, it’s because so many of us have lost a sense of accountability for our own health and wellbeing. We cannot delegate this. It’s our responsibility.

Do you eat the right food, drink ample water, get plenty of sleep? Are you taking regular exercise? Are you nurturing yourself as you would your child or a friend who wasn’t well? If not, why not? It’s not self-indulgent, it’s basic self-care.

This stuff often feels like a chore (especially, for many of us, our diet or exercise regime) but small changes can reap huge rewards. Rather than thinking of wellbeing as an old enemy or dull routine, see it as a source of easy nurturing wins.

Growth

Seven-dimensional success is built on staying dynamic. Don’t settle. Keep learning. Babies and children grow every day, not just their bodies but their body of knowledge. As adults we forget how exciting it is to learn and grow, and how vital to a meaningful life.

Successful people grow by being productive. I’m talking about producing in the broadest sense: making things happen. Any process that incorporates learning, problem solving and creativity into our lives enables us to grow.

Personal growth only happens when something changes, and change is often painful. It means we risk failure, which is very often painful. But failure is a fact of life for anyone who is dynamic, and failures are fast tracks to growth. We should try to fear them less.

Growth also leads to new opportunity, new horizons and new people in our lives. That’s exciting.

Achievement

So here comes the bit about traditional markers of success, whether it’s making a good salary, building a successful business, creating wealth through investment, reaching the pinnacle of your profession, getting published, winning awards, being influential, well-known or even famous.

These are all wonderful goals – just because they’re the ones we are more familiar with doesn’t make them less valid. We all long to be recognised for our achievements. When we are paid well for our work, we feel appreciated. And money is handy, as anyone who has ever been without it will tell you.

The interesting thing for me, though is that this is the dimension of success that brings disillusionment as well as satisfaction. We need to watch it with achievement, to make sure that we’re not getting sucked into a cycle of competitiveness, or always needing more. There are ways to offset that risk.

The flip side of getting hooked on winning (I’ve met a lot of achievement junkies in my time) is thinking that it’s shallow to want to earn a good salary, or win an award. That’s a self-defeating approach, not to mention a judgmental one. When we push ourselves to be the best we can personally be, our life feels richer as a result.

Relationships

When a nurse who worked with people who were dying was asked what her patients most regretted, she responded, ‘Not spending more time with loved ones.’ Her interview went viral. Millions of us all over the world recognised the truth of that sentiment. It’s the people we care about that give most shape to our lives, whether they’re our partners, children, extended family, friends, colleagues or communities.

On one hand, this has become a truism of modern life: people matter. On the other, most of us forget it, every day. We take our loved ones for granted. We do what we need to, in order to keep the home fires burning or fulfil our social obligations, and we forget that this is a dimension of life in which we can either succeed or… not.

It could be our professional contacts, our colleagues, our friends, the other parents on the school run or our elderly next-door neighbour who really appreciates it when we pop around to say hi: when we connect in meaningful ways and give our time and attention to our relationships, our lives start to have more joy and meaning. More connection.

Experiences

When was the last time you did something just for fun? When did you last give yourself permission to visit a museum or walk in the woods? All of us need novelty, treats and intriguing situations. We need recreation and adventure. We need time to play.

If this sounds self-indulgent or irrelevant, think again. I know you’re busy, and I know you’re a grown up with lots of responsibilities. Doesn’t matter, you still need time to play! You probably have a job, or kids, or a job and kids. Maybe you have a sick relative you’re looking after, or a business that’s in trouble. If that’s the case, you are even more in need of nourishing experiences.

A life that has no room for a new experience is a life over which we have lost control. I’m not necessarily talking about sailing solo down the Amazon. It could just be going for lunch in the café you’ve always wanted to try, rather than eating a sandwich at your desk. We fill our lives with obligation and think there’s nothing we can do about it. Not true. Experiences, however grand or modest, are what we thrive on. They are the stories we tell our friends, our children and grandchildren. They are also the memories that sustain us in challenging times.

Spirituality

This is another of the dimensions of success that often provokes resistance. But spirituality doesn’t equal religion, or New Age thinking. (Not that there’s anything wrong with either of those things, at least not in my book.) Spirituality might consist of being mindful of every moment as precious, developing a personal system of values to live by, letting go of perfectionism and embracing the idea that life is a journey, or exploring your purpose. It can just as easily entail delving within ourselves to find stronger connections to others, as turning to God.

Nurturing our psyche and our soul makes our lives shine with peace, with acceptance of others and ourselves. In this state we are freed from constant ego-driven demands so that we can explore bigger questions and do greater work. Some of the most ‘alive’ people I’ve ever met are those who live within a spiritual framework they have figured out for themselves. That’s a huge achievement. That too is success.

Legacy

When we ask ourselves what trace we’d like to leave in the world, we naturally focus on what matters most to us. Do we want to leave a treasure trove of happy memories for our grandchildren, be remembered as the person who saved the local football pitches for future generations? Do we want to raise £10,000 for charity? Perhaps we want to be remembered as a loving husband or as a political activist who never gave up, or as a businesswoman who ran a company that employed dozens or hundreds or even thousands of people. There are infinite ways to leave behind something of value in the lives of others.

Imagine being in the crowd of mourners at your own funeral and listening to the eulogy. I bet you’d want to hear a sincere and emotional roll call of the traits people loved about you and the good things you did.

This might sound ghoulish but it is a fast track to thinking clearly about how to make the most of your potential. Most of us could do, be and give more: more of our attention, time, expertise or money. And most of us know this; it nags at us but we push it away.

When we know we’re running out of time we get on with the things we’ve always wanted to do but were too distracted or afraid to prioritise. Start those things right now.

Meet the 29 year olds in my life… and my 80 year old father

I have a 29 year old stepson who without realising it lives and breathes the seven dimensions of success along with his friends.

Right now, they’re all at the early stages of their lives and careers, and living in London they’re really focused on some aspects of wellbeing (mainly fitness); growth is tremendously important to them as they learn and develop in their careers. Achievement for them means pay increases and promotions. Relationships are equally important as they network and socialise around London and Europe meeting great people, adding to their networks, dating as they seek to find love and a longer term partnership with someone. Experiences are key to their joy in life… they’re always travelling Europe and beyond, clocking up the most amazing life adventures and creating memories. Right now, for my stepson and his friends, spirituality and legacy are not on their radars…. But one day they will be.

Then there’s my recently widowed father. He’s from New Zealand and a ‘country boy’ at heart. After dedicating himself for over two years to supporting my mother during her unexpected illness and subsequent passing, dad’s now recognised that he’s got plenty of life left in him – at least another 15+ years of quality living and experiences.

So, for him the seven dimensions play out as like this. Wellbeing – for the first time in a long time, dad’s recognised the importance of his health and he’s paying much more attention to it, seeking help as necessary to keep him in shape. Experiences are now all important to him! He wants to do and see things… he wants to travel… anywhere and everywhere – and that’s from a guy who for most of his life wasn’t too interested in much travel. Relationships are critical to dad – and always have been. He’s spending more time with people he loves and in doing so, he’s creating more of a legacy… memories he’ll leave behind after his time’s up on earth. Finally there’s spirituality. Dad’s not a religious man, but from time to time, he visits the church mum went to every week, as that was an important part of her life. In going to her church, dad reconnects with a place that was very special for mum, and with people whom she loved. It adds to the spiritual connection he now has with mum.

As I hope you can see, the seven dimensions of life can be applied in any stage in life and in any circumstances. I hope you’ll embrace them. What might they mean for you at your stage in life?

It’s time for your life to be in seven dimensions

Are you feeling fired up to get started on creating the life of your dreams, a life that’s alive in all seven dimensions? I want to inspire you to believe that you can turn your dreams into reality. Remember, what distinguishes people with lives that are alive, passionate and extraordinary as they define it, from those who are stuck in struggle or simmer, is that they have total clarity on what success means to them, great strategies to achieve it and are prepared to take massive action to make it happen. You can develop all those things too. Are you ready?

Would some guidance from me be helpful to you? If so, please arrange a free 30 mins Skype strategy meeting with me. Here’s my calendar to make an appointment. I’d love to support you in some way to gain ‘seductive clarity’ in any aspect of your business or life.