Helping entrepreneurs and business owners accelerate their growth
May 23 to 29, 2013
The one thing every business owner must manage
By Phillip Chichoni
John was recently forced to close down his hardware retail business. He told me that he had no choice left because he had run out stocks to sell.
The first question that will probably come into your mind is “Why did the stock run out when there are so many manufacturers and suppliers of hardware materials?”
Well, it turns out that John ran out of money to buy the stocks. His case is not isolated. Many businesses are struggling to stay afloat because money is tight. The problem of cash flow usually gets noticed when there is a crisis: you fail to pay salaries, rentals and bills. Stocks and materials run out and you have no cash t buy them.
Money is the lifeblood of every organization. Without money nothing gets done and business grinds to a halt. Try borrowing money when you are broke and everyone will walk away from you. It will be too late to seek a loan or an investor when the business is already ailing from cash flow problem. As a business owner, you should manage your money extra carefully to avoid being caught in a cash crunch that can destroy your business.
Cash flow management involves managing the four elements that constitute your working capital; that is cash, stocks, debtors and creditors. At any given time you should know the status of your working capital. Separately you need answers to the following questions:
- Is my cash balance adequate to meet the business’ commitments for this month?
- How much money do my debtors owe and when is the cash coming?
- How much do I owe my creditors and when and when do they want their money?
- Do I have enough stocks to sale so as to meet my revenue targets?
If you carefully monitor these four elements you will be able to detect danger in advance. Take John, for example. If he was monitoring his working capital, he would have noticed in advance that his stocks are getting low and that there is not enough money to restock to adequate levels. What will be the cause? Is it because he was selling below the minimum viable level? If so, why was that? Maybe not enough people were buying. Were the marketing efforts useful or adequate?
Asking why, why and why will lead you to the real cause of cash running out. So, take time to manage your cash to avoid going under.
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Learn to Keep Your Money
By Brendan and Sally Palmer
We hope your week is going well !!
It is very interesting that, in business, people work so hard to make money and then as soon as they get it, they spend it only to have to start working hard again to get more money.
It is said that one of the keys to success in business is learning how to “keep” money. Keeping money is not about being a miser, it is rather about learning to not spend unnecessarily and learning not to spend everything you earn. Every dollar that you earn is yours until you spend it. It is therefore absolutely critical that you become extremely disciplined with what you decide to spend your money on.
The famous book, “The Richest Man in Babylon” teaches that you should keep 10% of all money that you earn. “Keep” means, “keep” for a long period of time. When you start keeping a portion of your money, you start making more money. There is something about the psychology of being disciplined to keep money that helps you to make more money and it is not a myth, it really does work.
So, be strict with your expenditure, keep a portion of all the money that you earn in a bank account that is difficult for you to access. Don’t touch the money that you keep and slowly but surely you will make and keep more and more money.
Start with keeping $5 a day and see where this takes you…
Have a great week….
Brendan and Sally
Brendan and Sally Palmer
Creators of The Sabre Success Plan Program
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By Milton Kamwendo
To live in it and enjoy it you must have built it. Possessing without building it is self-deceit. Be a master builder. It is not what you build that matters most but what gets built in you as you build with a vision of greatness. Everything that you see was built by someone, someday. Everything around you is crying for a worthy builder with vision, ablaze with purpose and diligence who will build. Building can be slow, painful and laborious, but destroying is fun, fast and with a fist of fury does not need too many tools or planning. Destroyers can afford to be careless; builders do not have that luxury. Build daily and with others. Build on what others have built, no man is an island. If you are not building you are likely destroying.
Every great building starts as a simple dream. Simple paper napkin sketches have been known to develop into mighty ideas, concepts and edifices. Do not despise your dreams and your simple thoughts. They are pregnant with possibility. Capture your dreams in your notebook or journal. Sketch and preserve those dreams. Ask someone to draw the model, plan or do the numbers. Your imagination is the drawing room of your life. Your simple ideas are the sparks that you need to start your greatness engine. Dreams today; brick and mortar tomorrow. In every dream there is a seed of something great that can be built. Seeds must never be wasted, or aimlessly scattered. Without the power to dream, life is empty space and lacks colour and purposeful action.
It is not enough to dreams of building great things. You want to now take concrete action and begin the building process. There is power in beginning. It takes bold and committed action to start something. Never ignore any ground breaking ceremony, it is a mark of commitment to action. Most people never start because they cannot break free from the gravitational pull of fear. The pull of inertia is so strong that many choose to do nothing than to start building. Where you start is not important, what matters is what you are building towards. Unless you pull off the station, you may never begin the journey. Taxi towards the runway, simply sitting in the departure lounge is not enough. Your dream’s boarding call is in the air. Why sit there? For how long will you lounge in inaction?
Dig Into It
The blessing in any building is hidden in the details. Go beyond the dreaming and the talking phase and start digging into your dream. Dig for information, ideas, resources and people to support your dream. Without information, detail, resource and support you may just be a phantom. Digging into it does not mean that stop taking responsibility and start thinking that someone owes you lunch. Unless you are willing to dig into it you could easily remain a dream babbler and idea peddler.
Work is not a curse but a blessing. You will never build it unless you are willing to work it. There is no excellence without work and worthy standards. Many people love the pride of possession, but they do not have a healthy respect of work. The law of the farm prevails. You cannot cheat the farm. You will reap what you sow. If you sow and you do not take care of your crop and do the necessary work you will never build anything great. A harvest without work is fraud. Anything that falls from idea to cash, without work is suspect. Nothing in life is for free. Things that appear free have a hidden price tag. If you do not pay the price now that does not mean no invoice is following in the mail.
Reclaim the dignity and value of work. A nation’s cumulative output is an aggregation of the work of the various individuals in that nation. Whatever words, schemes, excuses and stratagems you use to mask laziness will never compound into worthy work. Simply seeking to inherit what was built in the past is not vision. Working to destroy what has been built it not strategy.
It is time to take action and build. Wishing for it is not enough, build it. You have talked long enough. Dusty plans are not a beautiful sight. Procrastination is not strategic execution. Plans are not drawn to become credenza-ware. Thoughts are not thought so that you can become a great philosopher. Studies are not undertaken so that you can strut some certification and feed your academic ego and professional vanity. Start the building process and let us build. No nation becomes great without nation builders. The race is on. No organisation becomes great by luck, organizations become great by choice. There is something you can build. It could be your village, church, family, and product and …well what have you been dreaming of building by the way? Take responsibility and build.
I will be grateful to connect with you on Twitter. My twitter handle is: @MiltonKamwendo.
Committed to your greatness.