Growing your business managing cost, funding, customer satisfaction - final

Growing your businessManaging Cost, Funding,
Customer Satisfaction

(c) Copyright Expressive Business
Strategies 2007-2010

1

Financial Management
• Decide “rules”
– What are your revenue sources?
• What are the “billing items” that make up the revenue
sources?

– What are your expenditures?
• What are legitimate business expenses?

Strategies 2010 - 2012

Accounting
• “Keeping the books”
– Bank account
• Handling money
– Availability of money (demand accounts vs saving)

– Writing down (registering) income
• Collecting Money
• Depositing money into bank account

– Writing down (registering) expenses
• Payment Terms
• Paying expenses

Financial Reporting
• Income statement
– Determines profitability
– Determines amount of taxes to pay

• Balance sheet
– Assets, Liabilities and Equity

• Cash Flow
– Understand difference between cash and
profitability.

Sample Income Statement


Sample Balance Sheet


Why are these reports important?
• They give you a quick picture of the “health”
of your business.
– You should look at your income statement and
balance sheet monthly.
– You should look at your cash flow daily.

• Let’s talk about Cash Flow…


Cash is King!
• You need to understand “cash” and how
important it is to your business.
– Sales do not pay bills, cash does
– Cash is the gasoline that makes your business
engine work.
– Most businesses fail because they run out of cash
through losses or other poor management
practices.
– 100% of businesses that run out of cash - FAIL!!

CASH Flow
Ask your accountant to construct a cash flow
statement. Proper cash management begins here:


CASH Flow defined

• Cash flow is defined as cash
receipts minus cash payments
received over a given period of
time.

(c) Copyright Expressive Business Strategies 2010 - 2012

Improving CASH Flow
• Collect your receivables faster.
• If you have a product business get extended credit from
your vendors, maybe 60 or 90 days.
• Sell inventory faster and keeping your inventory levels
low. Know what sells well and what doesn’t.
• Encourage your customers to pay with credit cards.
• Give customers cash discounts for paying there bills on time.
• Ask customers to pay a deposit or advance for services before
you perform them.
• Bill customers as soon as you perform the service or deliver
the product.

Debt Collection
•

•

•

When you accept purchase orders and grow your receivables, you
are extending credit to your customers, make sure you establish
credit practices that are 1) fair enough to your customers under any
applicable laws, and 2) strict enough to ensure that your business
will get paid.
Have a set procedure in place that your business will follow if
customers don't pay when they're supposed to, i.e. overdue notices,
demand letters, and collection notices.
A measured approach to debt collection is better in the long run
than immediately going to a collection agency or court

© Expressive Business
Strategies 2008- All Rights
Reserved

12

A final thought on Cash Flow

• Remember that a REAL
customer is only one that pays
their bills in the agreed upon
time.


Funding your Business


14

Funding your business
• Understand your business, Understand your
market, Understand your risk, understand
your competition… These are all the
fundamentals of a business plan. You need a
business plan to raise capital.
• Let’s look at the process…


15

Raising Capital is dependent on:
• Government

– Business codes
– Laws
– enforcement

• Culture

– Risk-taking
– Saving vs debtor
– Interest friendly

• Business type
–
–
–
–

Product vs service
Key asset
Large vs small
Risk level


16

Dependence (con’t)
• Business climate
– Competition
– economy

• Size of deal
• Investor type
–
–
–
–
–
–

Family/ friends
High net worth individuals (“angels”)
Other businesses (e.g., partners)
Professional investors (e.g., venture capitalists)
Lenders
governments

17

A word about Partnerships
– Choose Partners carefully
• Do they complement what you do?
• Are they of a like mind?
– Equally yoked versus unequally yoked

• Understand the value of what they bring.
– Don’t just “go for the money”

• Understand how you would resolve conflict should that
arise.


18

When raising capital what people
forget….
• Two factors are frequently overlooked by
those raising capital, and weigh heavily on
investor decisions:
– Threshold amount
– Liquidity


19

Threshold Amount
• The threshold amount is that sum which is
needed to fund the company until it can
either:
– Raise more capital
– Ensure liquidity


20

Liquidity
• Liquidity is necessary for an investor to profit
from an investment
• Liquidity events could be:
– From profits
– From the sale of assets
– From the sale of the business
– From becoming a Public company (allowing the
sale of an individual’s stake in the business)


21

The Funding Deal Structure
• Can alter risk, threshold amount and liquidity
• Should be specific to the investor audience
• Thus, multiple versions of a Business Plan may
be appropriate


22

How investors decide….
• Investor decision making is primarily a process of
“due diligence”
• Due diligence is often an investigation of why a
business will NOT succeed. It is a hunt for “horribles”
• Your role is to provide independent evidence that
“bad things” will not happen


23

Managing Due Diligence
• Do not emphasize your own convictions. These are
opinions. Investors want evidence.
• Use research and analysis, the more independent,
the better.
• Keep a record of all possible concerns
• Respond only when prepared
• Follow up on all concerns (thoroughly)
• Admit risks or unknowns


24

The Decision
• Remember, investors decide to invest when
“they” conclude the business will succeed, not
when “you” conclude it will succeed.
• Focus on the “lead”
• Follow up aggressively, but not obnoxiously
• Be flexible
• Be prepare for a long process

25

Use of Funds
Funding provides cash that fuel
business growth.
Let’s look at ways to grow your
business


26

Customer Satisfaction: Growing
your business
• Simply defined, growing your business means
to generate more revenue and increase your
profits.

© Expressive Business Strtegies, 2012.
All Rights Reserved.

How do you do that?
1. Gain new customers or clients
2. Increase the profits associated with each
sale, transaction or contract
3. Increase repeat business (keep current
customers / clients coming back for more)

© Expressive Business Strategies,
2012.

New customers / clients
• Requires a lot of resources and effort
– Branding
– Longer sales cycle
– … money

• (Obviously) If you have a completely new
business, you do need to focus all of your
efforts in gaining new customers.
2012.

Increasing profits for each
transaction
• Reduce costs
– Must add up everything that goes into the cost of
a business transaction
• Costs of raw materials, salaries of workers
• Don’t forget rest of the costs – for example, rent, taxes,
all other salaries, marketing, travel

– Be careful not to sacrifice quality!!!

• Raise prices (very difficult to do in tough
economic times)
2012.

Repeat business
• Much easier to sell more to current customers
– Relationship is already established
• They know who you are
• Trust is established
• Like your products or services

2012.

Reaching current customers
• You need a method of telling customers when something new
is available, a sale is occurring, etc
– Have them sign up for a mailing list
– Gather their email and mailing addresses
– Sign up on Facebook or your website
– Get their phone number
• Use the method of reaching your existing customers that
makes sense for your company

2012.

Reaching current customers –
Customer satisfaction
• No point trying to reach current customers or
clients if they are not happy with your
products and/or services!

2012.

Achieving customer satisfaction
“The customer is always right”
•Take their complaints and learn from them –
use the information to make your process or
product or service better

2012.

Retaining existing customers
Do not assume that your customers will keep
buying just because they’ve purchased from you
before
Customers:
•Must feel there is a perceived value
•Want consistency of products and services
•Need to feel listened-to
2012.

Survey your customers
Find out about their experience / satisfaction with a
product. Use this information to improve AND to know
you’re doing the right thing
•Offer product reviews on your website
•Comment card on restaurant table
•Coupon for filling out survey
•Email a survey
•Call once a service has been completed to make sure it
was satisfactory
2012.

Customer satisfaction
•
•
•
•

Provide good value for the price
Provide excellent service
Listen to your customers
Pay attention to the details
– Often it’s the small things that make a difference

Ask yourself – would I be satisfied with our
customer service and the quality of our
products?
2012.

Key to Growing your business
• The easiest sale is to your current customers /
clients, keep them satisfied.
• Don’t be so focused on gaining new customers
that you ignore your customer customers /
clients

2012.

Summary
• Business is about risk. It’s a risk to start a business.
• Understanding your risk, market, business and
competition helps you with business planning
• With a good plan you can raise money to fuel
growth.
• Grow your business and keep your customers
satisfied.
• The Result: Success!


39

Growing your business managing cost, funding, customer satisfaction - final

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