Revisiting Your Credit Strategy

Monitoring and understanding your cash flow is probably one of the most critical aspects of business management. Cash flow has always been important to businesses, but many business owners have recently been reminded of this in a very unpleasant fashion; i.e. the cancellation or reduction of a vital credit line.

Business owners typically concentrate their efforts on year-end tax planning and strategizing for increased sales in the coming year. It is rare, in the planning process, to see businesses pay equal attention to planning for cash flow by reviewing the business’ credit strategy (the way that bills are paid and the way in which you receive payments for goods and services that are sold).

Following are some tips on things to consider when you review your credit strategy:

• Think twice about paying early on your business debts since you may use up cash reserves that may be critical for survival.

• You may need to consider asking your customers for more financial information to determine whether they have the capacity to pay for goods and services purchased on account.

• You may need to reconsider the length of time that you are allowing your customers to pay on their accounts or you may need to consider asking for a larger deposit or a greater percentage of the total cost of a project to reduce the risk of bad debts.

• Consider taking credit cards, if you are not doing so already, since the bank’s merchant fees may be a small price to pay for not worrying about collecting from some of your customers. It may be more important for you to have the cash in the bank!

• Use the maximum time allowable to pay your suppliers on account unless you will lose the benefit of a discount.

• The economy is still tight and funding is tough to find, so do not assume that your existing strategy will continue to work for you. Instead, be proactive about addressing any policies that might increase your risk for bad debts.

• Clean up your financial statements, strengthen your equity position in your business, and continually monitor your cash flow position.

Article written by Susan Hoosier, Certified Business Advisor and Certified Economic Development Professional, with the Small Business Development Center, which is part of the 24 statewide offices of the Washington Small Business Development Center network (WSBDC).

The ABCs of Profitability

As a business owner or future entrepreneur, I believe it’s never too early to start thinking about how to make and keep your business profitable. In simple terms, profitability is the amount of sales revenue left over after business costs. Learning to measure profits helps to answer the question, “Are we making enough or going to make enough money for our efforts?”

You, as a business owner, have control over four major areas that affect profitability:

1 Price you charge for your products and/or services.

2 Quantity (or volume) of products and/or services you sell (marketing or operations issue).

3 Variable costs you directly acquire by producing or buying the products and services you sell (These are called variable costs because they increase or decrease as your sales increase or decrease).

4 Fixed costs you incur whether you make any sales or not.

The strategy you come up with involves taking action to increase or decrease any of the four factors in consideration of its impact on, or the impact from, each of the other factors.

Here is an example of learning to measure profitability and make changes. A few years ago I met with owners of a service business that had not been profitable since it started two years prior. I prepared a break-even summary for them, which is a simple equation that says how many sales dollars or units sold are necessary to cover fixed and variable costs.

The conclusion was they needed eight sales a day to break even. Their gasp of horror was the only thing I heard. “But we can only process three sales a day,” they said. “Ah ha,” I responded. “There are two things you need to do to improve profitability in your business.”

1 Streamline your system, (operations), so you can handle more quantity of sales.

2 Raise prices. In this case the paperwork around each sale is what was providing their value to the customers.

The reason it took them a few years to recognize they weren’t profitable was because they were not keeping on top of their bookkeeping. Bookkeeping errors is my fifth addition to the four factors of profitability. SBDC advisors around the state will agree that nearly all of the businesses they advise have errors in their books.

One of the best things a business owner can do is to learn what each report means, how to read it and how to set it up to accurately reflect the true activities of the business. Questions I often hear are: “What is the difference between a balance sheet and income statement? Why does the business show a profit on the income statement yet has no cash in the bank?”

As the leader of the business, learning the answers can be one of the most empowering things an entrepreneur can do. When set up correctly, the information in these financial reports can be used to make accurate decisions toward being and staying a profitable business. As the saying goes, “All roads lead to the numbers.”

This article was written by Jennifer Shelton with the Bellingham Small Business Development Center, which is part of the 24 statewide offices of the Washington Small Business Development Center (WSBDC).  Initially seen in The Bellingham Business Journal and at http://bbjtoday.com/

The WSBDC offers in-depth, confidential, and no-cost management advice to businesses within Washington State.

Five Keys to Building a Strong Business

One thing all business owners have in common  is their desire to build a strong business. A strong business is one that can withstand the ups an downs of an economic cycle; it can replenish itself through profits; it’s agile, flexible, and communicates well; and it can support the owner’s lifestyle. A strong business is based on a true business opportunity and a sound business model. While a business opportunity is shaped by the market environment; a business model is the shaped by the owner.

There are at least five keys to building a strong business: the owner’s ability to lead and manage; a focus on customer needs and wants; systematized processes and procedures; hiring and investing in the right people; and managing cash.

Lead and Manage

Whether the business consists of one person or many, a clear vision and mission is imperative. These drive goals and objectives that are timely, measurable, and accountable. Amid many distractions, it keeps the owner focused. If the owner can effectively engage employees to embrace the vision and achieve company goals, the probability of success is high. In fact, the most important things an owner can do is stay focused on what the company does well and help employees do their best work. These concepts are driven home in books like “Good to Great” by Jim Collins and “The E-Myth” by Michael Gerber.

Maintain a Customer-Driven Focus

A customer-driven business is one that is synchronized with what customers really want and need. Most important is what customers value. These can be many things: a fair price, convenience, fast turnaround, quality, etc. The reward for meeting their needs is predictable sales and growth. However, “customers” include more than the buying public. They include shareholders, suppliers, bankers, employees, and others who rely on an owner’s ability to keep his or her promises. A strong business balances the needs of all these “customers.”

Use Systematic Processes and Procedures

Customers don’t really care how it’s done, they just want their needs met. However, to meet the needs of everyone—especially shareholders—production and delivery of goods and services must be efficient. The process of creating value to customers is based on a total management system originally used by Toyota and described in “The Machine that Changed the World” by J. Womack, D. Jones, and D. Roos.

Use of a total management system eliminates waste, improves productivity, assures quality, and meets or exceeds the customer’s expectations. Better use of resources results in higher profitability and higher profits feed growth. An excellent example of applying total management systems to small business is described in “Better Thinking, Better Results: Using the Power of Lean as a Total Business Solution” by Bob Emiliani.

Hire Right

An owner soon realizes that building a strong business is tough to do alone. At a minimum, an external team including a banker, insurance agent, certified public accountant, and attorney is required. At some point, though, employees will be needed to manage day-to-day functions as the business grows. An owner needs to assemble and lead people to apply principles and practices systematically and coherently. The key to assembling the right people is hiring right. This means selecting people for their talents and building on their

strengths. The next steps include investing in their talents, listening to their thoughts, assisting them in their jobs, and rewarding them for work well done. In the book, “First, Break All the Rules”, authors Marcus Buckingham and Curt Coffman share the results of in-depth interviews revealing how the world’s greatest managers use these techniques.

Manage Cash

Every strong business depends on a predictable, consistent cash flow. A profit plan measures true profitability and is the best measure of efficiency. However, a cash budget that predicts and monitors cash flowing into and out of a business is a good measure of sustainability. If an owner can predict and budget cash flow, then he or she can make better decisions on how and when to use cash. When businesses extend credit to buyers, incoming cash lags behind sales. When sales are made, assets (like inventory or labor) are required to complete the transaction and these assets require cash. Therefore, a lot of cash is going out and not a lot of cash is coming in throughout seasonal or cyclical fluctuations. Since the business owner can’t pay bills with negative cash, he or she has to either borrow cash or inject it. Managing cash with a budget helps the owner predict cash shortages so funds can be arranged (often with a bank loan) to fill the gaps. When collections create excess cash, the short term loans can be paid back. Even profitable businesses can go

bankrupt if they haven’t balanced the cash flow cycle.

While many factors contribute to building a strong business, these five deserve special attention. Strong businesses support their local communities and are the foundation upon which the economy grows.

This article was written by Janet A. Harte, an SBDC Certified Business Advisor with the Vancouver Small Business Development Center which is part of the 24 statewide offices of the Washington Small Business Development Center (WSBDC).

The WSBDC offers in-depth, confidential, and no-cost management advice to businesses within Washington State.

My Very Own Shabbes Make Up

I like to look nice for chag and yom tov, like I assume most of us do.
In Israel I never had a hard time with this, since everything goes. Here in chul I make more of an effort. I really don't want to be the shlubby outcast, so no more naot for me on shabbes, in fact, no more naot at all.
One of the hardest things for me now is not being able to put make up on during shabbes.
Here, the women in shul look stunning. They've put on nice close, nice hats and their make up is perfect. In general, we're a little frummer than the rest and I'm guessing that the women aren't all using "shabbes make up", since there is none over here. So, however hard I try, I still feel very shlubby with my naked face, especially come second or even third day yom tov.

Now, I realize I'm lucky. I'm still young and have nice skin. I generally don't use a lot of make up and it takes me about 5 minutes to apply, whether on a normal day or for a wedding. The only difference being a darker shade of eyeshadow/ lipstick for the latter occasion.

During our glorious trip to Paris last year I got to spend a little time in their make up heaven Sephora.
There I found their MAKE UP FOREVER line. I bought this aqua cream eyeshadow

I obviously chose a more neutral color, for who wants to be walking around with this for 24 hours +. Yes, you heard me right. I put it on before shabbes and by motsei shabbes it's still there. Maybe it faded a little, but I'm definitely still wearing eyeshadow. I combine it with an eyeliner from Essence (added bonus, it's really cheap) and my eyes are set to go all shabbes long and have lasted into 2nd day yom tov.

It's a little boring, wearing the same colors every weak, but at least there's some color there, even if it's just my eyes. And so, slowly, my own supply of shabbes make up started to accumulate.

I've only recently gotten into lipstick (I've always been pretty self conscious about my big lips and as a result never put more then colorless lip balm on my lips), so I don't mind when it's starts fading during the Friday evening meal, not to be seen again until next erev shabbes.
However, when I recently saw an add for a 24 hour lipstick, I thought, why not give it a try. Apparently Maybelline already had a 16 hour one (I'm really not that into make up, I only discovered this while looking for a link to place in this post) and their Super Stay 24 Color is meant to be even better.

 

I tried out a few colors on my hand, chose one, payed for it and went home. At home I discovered I could not get the color of my hand, no matter how hard I tried, even when I used my usual face wash. However annoying this was for me and my hand, it looked very promising for the goal for which I purchased this product. Yet, before trying it I did go out and buy an oil based make up remover as recommended on the box, just in case.

Good thing I did, cause come motsei shabbes and I really needed it. The color was still very much there (only down side is that you can't reapply the balm during shabbes). When I went to shul shabbes morning my old self conscious friend popped up and I felt compelled to ask my best friend if I didnt look like a clown, that's how bright the color still was. 

I'm looking forward to trying this now for a 2 day yom tov and see what happens. But I might still try to go out and get a little lighter, subtler color, cause let's face it, I'm not there yet.

Chag sameach everyone. And if anyone else has any super long lasting "shabbes" make up tips of their own to give, I'd love to hear them.

The Jewish Nakba

I've been puzzled by the events that have unfolded in the last few days.

I was already confused when reading all the reports in the Israeli news about how the army/police where preparing for the Nakba. What was the big deal? Even in my uni days (not that long ago), surrounded with lots of Arabs, I never really noticed this day come and go. So why was Israel so worried something was going to happen this year?

As it turns out, they were right and Israel was in fact infiltrated by protesters from Syria and Lebanon. What's more, it looks like there was another terror attack. The perpetrator, however, is claiming it all was an accident, even though eyewitnesses seem to think otherwise.
Either way, there were significant problems as a result of Nakba day. Where were all these thousands of protesters all the previous years? Probably, Israel is right in saying Asad is trying to take the heat off himself and Iran probably is involved.

As a descendant of a Middle Eastern Jew, I have to ask, what about our "Nakba" day. What about all the Middle Eastern Jews who have been kicked out of their house, their homes, after having been in these countries for centuries, just because they're Jewish. People that had to leave everything behind. The stories my family tell sound very much like how it was for Jews during the Nazi regime before they were deported. Yet some how these horrific times are forgotten. Not only by them, but also by us. We have chosen to forget how badly we have been treated by Israel's neighboring countries and have in stead rebuilt our lives. My family, after having been one of the most richest and influential people of their city had to start all over again, and only one generation later, they have done very well for themselves. No one is living in poverty and no one is still a refugee. Yet somehow, the Palestinians outside of Israel have managed to hold on to their refugee status for three generations. They do so either willingly, or simply because their Arab hosts are denying them the right to become citizens.

I think it's time that we remind people of our tragedy, of our Nakba. Yes we have moved on and we are doing well, but if the Palestinians refugees are part of the Peace negotiations, then so should ours. Yes, it wasnt the Palestinians that kicked us out of Gaza, we did that for them. But the Arab countries that kicked us out are also the Arab countries that wont take the Palestinians in. And even if we're not considered refugees anymore, it is only because we worked hard on that. We still deserve to be recognized. We still deserve to be reimbursed for all the money and property that has been stolen from us. And if that is ever going to happen, it is time for us to stand up and make sure that no one forgets what happened.

The Next Big Thing that is Banned

In general, I'm not very into the blind following of Rabbi's, especially not when they come out assuring something or other that until then was totally accepted by all.
But today I find myself posting in favor of such a proclamation by Rabbi Ovadia Yosef. The Jerusalem Post reports that Rav Ovadia has changed his stand on smoking.

Everyone who has ever come in contact with a chareidi yeshive knows how common spread and accepted smoking is. It reminds me of a shabbat I spent at my Chareidi, Sfardi family. Somehow the conversation drifted onto smoking and my cousins were appealing to my uncle (the retired doctor) that smoking really isn't bad for you, right? I felt like I had just drifted back 50 years in time. I know the Chareidi world isn't very into science and all that, but I was shocked to hear that they honestly believed it doesn't harm them whatsoever and that almost all their friends in yeshive and rabbi's smoke. I have to add that at this point in life my husband was also in yeshive and that no one their smoked. I think it wasn't tolerated their, though it really was a non issue, simply no one smoked. My uncle gave a little smile, but refrained from answering the original question, which was a little disappointing. I still tried to make a stand, but it was hopeless.

Now however, the hope is back, for this time it isn't a non-chareidi woman telling him to stop, but rather it's their biggest spiritual leader, Rav Ovadia. He is calling on everyone to quit and stop the practice of handing out cigarettes at happy occasions like engagements. He even gives an example of how one can try quiting.
All I can say is good for him and I hope that people will listen to this one as they usually do when things are assured.

Why didn't Anyone Mention the Post-Pesach Stress?

First off, I apologize for having been so quiet lately. Things have been a little crazy, what with Pesach and general life stuff.
Things are always so crazy before Pesach; the cooking, shopping- both food and clothes and let's not forget about all the cleaning. Of course, life doesn't stop for major holidays. So I was somehow juggling this all, together with work, the kids and general daily nuisances that continue to crop up. So when chag came around, I was really ready. Ready for some peace and quiet, ready for some vacation, ready for some family fun.

Chag was good, albeit with some downsides. We went away, the food wasn't great and I didn't make it through seider cause I was sick. But on the up side, we were all together, had lots of laughs and the weather was fantastic.

And now we're back to normal, or well, sort of.
The day we came back was filled with stress, some quick food shopping and speedy unpacking. The next 2 days it was work as usual, coming home just a few hours before shabbes. Luckily, we were away for shabbes, so I didn't have to cook.

Somehow, after chag is over, I assume we'll just fall right back into routine. But I still feel a big post-pesach weight hanging over me (and not just around my waist). I haven't been able to restock a lot of the food, given that where we live I have to go to several different shops for all our daily needs and I've only made it to one. The loundry is piled meters high, especially the clean stuff that is just luring at me, waiting to be folded and put away. And today we came home after shabbes to find our fridge was left open (courtesy of one of my little helpers) and I had to throw out the majority of the food I had managed to buy. Oh, did I mention I don't live in Israel anymore but in this oh so Chrisitian place where stores arent open on Sunday? (Luckily, there is one a little further out, so I sent my husband, though I know it means half of what we need wont be bought).

I planned on spending my day restocking my freezer with all the shabbes essentials like challe and kugel and since I work so close to shabbes, this is really one of my priorities if we want to have food next shabbes. But honestly, I just feel so overwhelmed. Can I please just lie in bed and start over tomorrow? Do you think I can convince my kids to do the same?