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Showing posts with label SME Obama UN risk CNN BNN The Pitch debt money Jim Jacoline Loewen hockey investment bank. Show all posts
Showing posts with label SME Obama UN risk CNN BNN The Pitch debt money Jim Jacoline Loewen hockey investment bank. Show all posts

November 14, 2012

Does your business have lumpy payments?

If your business doesn’t have enough cash, you will be under stress. That is something I experienced first-hand. When you don’t have enough cash, you feel pressure to take any client who shows interest. This is usually a mistake. Trying to be all things to all people is a downward strategy.
Most owners understand this. When you are under pressure to pay your bills, it’s hard to say no — even if the customer is outside of your target market. You need money, you take the business, and you often end up spending too much time serving the customer. And if you stay in this cycle, you put your business at risk. When you own a microbusiness, burning time is just like burning money.
Several years ago, I did some work with a graphic design firm, Gray Cat Studio. Michelle Bisceglia, the owner, had built a knowledge base working with specialty food manufacturers. She knew a great deal about the businesses and what made them successful.
When I first started working with her, she would take work from anyone. She often lost money when she went outside her knowledge area, but like many microbusiness owners, she was often short on cash.
We worked on developing her niche and I coached her in using a new word: No. Over time, two things happened. She was able to charge higher fees because of her expertise, and it took her much less time to complete projects. This allowed her to create a cash cushion, which made it even easier to say no to customers who didn’t fit her profile.
Two Paths for Microbusinesses
Ultimately, microbusiness owners have two choices. They can choose to remain a microbusiness, like Ms. Bisceglia, or they can do what I did in my previous business and move into the next level, the traditional SME. In both cases, understanding the drivers that create cash for living and saving is crucial. If you want to grow, you will not only need to finance your own living needs and retirement savings, but you also need to create cash for growth.
There is no good or bad about this decision. It’s truly about an owner’s preferences. Some people decide they want a bigger business, and some are happy just doing what they want without having to worry about managing other people.
If you choose to stay at the micro level, you need to understand that lumpy sales exist and you must have a strategy for dealing with them. You should have a plan in place in case you become disabled. You should have a strategy for saving for retirement, because you will not be able to sell your business.
What do you think? If you’re a microbusiness, what are your challenges? Have you decided to stay at this level?
Jacoline Loewen   See Jacoline on BNN, The Pitch  Author of Money Magnet Director, Crosbie Co.
Crosbie & Co.
150 King Street West
Toronto, ON
M5H 1J9
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