6 Things to Fix in 2012

Yes, I know that 12 things to fix in 2012 would have a much better ring, but who has time for 12 things.  In fact, I think 6 things may be pushing it.  At least 12 is divisible by 6.  You know what, just read this list and pick out 2 or 3 that you are comfortable with, and stick with those. 

1.      Poor cash flow management

Problem: Payment doesn't always match outflow and it's up to the business owner to make up the difference.

Solution: Fill out a cash flow (not P/L statement) and identify shortfalls.  Do not extend credit to all customers.  Bill customers quicker in order to speed up the collection process (billing cycle) and get funds into the business faster.  Eliminate or reduce some overhead or fixed costs to reduce monthly expenses. Pull frequent (weekly) accounts receivable reports in order to examine how effective the business is at collecting funds. 

2.      Lack of planning

Problem: On average, people spend more time planning a vacation or wedding than they do for running their small business.  The business should last a lot longer than a seven day vacation or a one night wedding.

Solution: Create goals for your business and a plan to reach those goals through marketing, management, and financial planning. Obtain an annual business check-up.  Meet with an accountant, banker, or TSBDC counselor to review financial statements and get advice on how to improve performance.

3.      Marketing

Problem: Set up a real marketing budget. It should be at least .5% - 8% of your monthly expenditures.

Solution: Identify your target market and a good marketing mix to attract that target market.  Track where your sales come from, such as internet, coupons, chamber contacts, etc.

4.      Delegation

Problem: If you want something done right, you have to do it yourself.  If you want to own your business longer than a few years, learn to delegate and deal with imperfection.

Solution: Hire the right people using systematic processes to operate the business.  Recognize what you are not good at and delegate that role so you can spend time managing your business

5.      Personal use of business funds

Problem: DO NOT GET THAT NEW DIAMOND ENCRUSTED IPAD YET!

Solution: Monitor the amount of money that is being used for activities unrelated to the business.  Keep personal use of funds separate from all business funds, by using different accounts.

6.      Unexpected growth 

Problem: Perform an annual SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to determine what your business will likely be experiencing and create a plan to meet that growth.

Solution: Have a growth plan and stick to it.  This may mean turning down customers.