Posts

parallel18

Parallel18 seeking startups for acceleration program: Apply now!

/0 Comments/in , , , /by

Parallel18 is a top-level, performance-driven international startup program with a social mission: offering entrepreneurs from all over the world access to high-quality business training, funding, and networks to help them scale globally while working to position Puerto Rico as a unique hub for innovative businesses and technology. 

parallel18

Parallel18 (Image via P18 Impact Report)

Interested in taking your startup to the next level?

Parallel18 is calling for startups to join Gen.9 of their international acceleration program. Applications for the next cohort are open now through May 10th. Interested startups can access the application here. Gen.9 cohort will start in August 2021 and will end in December 2021. 

parallel18, startups

Parallel18 is calling for startups!

Parallel18 is committed to making Gen.9 their most diverse generation yet and they are especially interested in supporting underrepresented entrepreneurs around the globe. Since Gen.5, female founders in P18 amount to no less than 42% of each cohort. Additionally, 61% of P18’s graduates are Latinos and 33% of their Matching Fund investments have been in female-led companies.

Chosen companies accepted into the cohort will have the opportunity to access a network of investors, business partners and contacts who work closely with entrepreneurs to tackle every key aspect of the company’s needs. In addition, they will receive a grant of US $40,000 – equity free – consulting and support during the 20-week program. Participating companies will also have access to the entire parallel18 community composed of the program alumni, a broad network of mentors, corporate clients and investors.

What parallel18 will provide for #P18Startups

parallel18, startups

What parallel18 can offer you. (Image via P18 Impact Report)

  • Funding: US $40K grant (NO EQUITY)
  • Curated network of active investors
  • Connections to multinationals, so they can generate business relationships that can help you scale.
  • Acceleration like no other: parallel18’s program offers amazing mentorship, and the team is always hands-on, helping startups boost their growth. 
  • Because P18 believes in them: they created a follow-on matching fund to invest in their startups. P18Ventures offers the opportunity to apply for US $75K as an investment in your company. P18 has already invested in 24 of their alumni. 
  • Perks for all: P18 works hard to have access to discounts on the services you need to get things going.

What parallel18 is looking for from startups

startups

Parallel18 cohort members.(Image via P18 Impact Report)

  • Traction: startups that already have sales or users that are willing to pay for their product are better served by P18’s program
  • Scalability: companies that have a product that can easily adapt to other markets
  • Early-stage startups: startups that have been operating for 3 years or less
  • Be able to participate in P18’s blended format: selected startups will have to come to Puerto Rico to open their commercial bank accounts. They can also be asked to come to the Island for specific opportunities. All of this can be subject to change depending on how the COVID-19 pandemic keeps developing. 
  • Have a plan for your performance in Puerto Rico: this includes hiring, acquiring customers, among others

You might be interested: 7 Tips startups and entrepreneurs should consider to avoid going down

 

View this post on Instagram

 

A post shared by parallel18 (@p18startups)

Still need more convincing? Parallel18 has worked with more than 200 companies from more than 10 diverse countries. So far, their alumni have raised US $126M in investment after finishing their program and P18’s team is focused on providing the best opportunities to ALL founders. 

If you think your startup would be the right first for parallel18’s program, then Apply Now! Deadline: May 10th, 2021.

cash flow

How your small business can survive and thrive with these cash flow tips

/0 Comments/in , , /by

Keeping your business cash flow alive is one of the most difficult challenges for small business owners and entrepreneurs. It can define the life or death of your business. Handling these savvy tips can help you plan your cash flow during the whole year.

A healthy cash flow can help your business survive and thrive.

Michael Lewis, a former business executive and financial blogger, does not sugar coat things when he says, “owners who cannot efficiently manage their cash flow are almost certain to fail.”

Every day new entrants throw their hat into the ring of entrepreneurship. And every day several die off. Many of these entrepreneurs, after spending considerable time fine-tuning their business plan, find themselves scratching their head, wondering why their company, with its innovative product or service, suffered such a fate.

In a great many cases, the answer is easy: cash flow.

“Cash flow is the lifeblood of a business and critical in its growth,” according to entrepreneur and marketing communications consultant Caron Beesley. “With money tight and bank loans hard to get, a cash-strapped company can easily be pushed to the brink.”

The lesson that entrepreneurs must master immediately is that a business cannot operate very long when cash outflow exceeds cash inflow. Every business, particularly a startup, must zealously monitor its cash flow to prevent a serious business disruption. In business, cash is king and cash flow is priority # 1.

A significant percentage of cash-flow issues result because owners have not spent adequate time estimating the arrival of various revenue streams and balanced that against their need to pay certain expenses. Entrepreneurs must realize the critical importance of calculating accurate cash-flow projections to address day-to-day activities. Owners who don’t thoughtfully estimate their cash flow for an upcoming period (the day, week, month and quarter) place their business at serious risk.

From Day 1 businesses must track and manage their cash from the time that they must pay vendors, employees and others to the time that they collect from their customers. Doing anything less assures near certain failure. The following tips can help business owners ensure that their cash flow is managed well and not placing the business at risk of failure:

  1. Create a Budget.

Business owners should sit down to thoughtfully estimate expected cash inflows and outflows. Factors that to consider include the sales cycle, terms and discounts provided customers, industry delinquency rates and other factors that may affect the timing of incoming cash.

Similarly, it is necessary to estimate expenses and other cash outlays. This includes the timing of the purchase of equipment, raw materials and supplies. It also includes the schedule for payment of salaries, taxes and other day-to-day expenses. SCORE, a national nonprofit support group for small business owners, provides a free budget template that business owners can use to manage their cash flow.

  1. Monitor the Results.

Examining the budget should not be an infrequent activity. On at least a monthly basis (but more frequently if warranted), the actual cash flow should be compared with the budget to work out the kinks in the system. If cash inflows are less than anticipated, figure out the reason for the shortfall. If cash outflows end up being greater than expected, understanding the cause is also important.

Once the reasons for the budget variances are determined, the business can make the necessary corrections, either to the budget or the business plan or both.

  1. Have a Plan B.

Regardless of the amount of time and energy a business owner devotes to creating a budget, unexpected events can suddenly crop up, wreaking havoc on even the best cash-management system. During such times, the business might need to rely on a contingent source of cash to keep the operation running until things return to normal.

Typical sources of contingent funding include lines of credit, personal assets and friends and family. Business owners should have a Plan B lined up well before the funds are needed.

For example, a business owner who plans to borrow funds to cover a cash shortfall should have the loan or a line of credit in place well before the cash is needed. Allowing a cash-flow disruption to occur before applying for a loan is asking for trouble as most banks will hesitate to lend money to a business in distress.

Even if a bank were willing to extend a loan, few financial institutions can underwrite and approve a request in less than a month. By then, the business may have already failed due to its inability to cover its cash needs.

  1. Bill Quickly.

cash flow

A key element of cash flow management is controlling the timing of funds coming in and going out. It may be customary, depending on the industry, for a business to extend credit to purchasers. For example, customers may be extended a 30-day period to furnish payment. Every time this type of transaction occurs, it places a strain on the business. While the buyer need not provide payment for 30 days, the company must continue to meet its financial obligations.

The easiest tactic for a business to pursue is to bill a client immediately. Businesses that make sales on credit must ensure that the invoice is delivered within 24 hours of the transaction. Furthermore, companies should track their invoices and send reminders before the payment-due date. Businesses that delay invoice delivery will likely receive their payments late due to the processing time required by the buyer. Business owners should consider delivering invoices by email to ensure rapid and certain delivery of billings.

To alleviate the pressure created by credit sales, a business should implement tactics to accelerate payment. A common technique includes providing discounts to buyers who pay their bill within 10 days. Buyers with sufficient cash to make their payment will be willing to forego availing themselves of the payment period in exchange for a discount.

Every business owner dreams of making a big sale. Unfortunately, businesses that make big sales on credit are often put under duress because they may then require the purchase of additional inventory. In such instances, business owners should consider making the buyer provide a down payment against the purchase so as to relieve the burden on the company’s cash flow.

You might be interested: 5 Cs bankers ask for small biz loans post-Recession

5.Timely Payment Policies.

A sound cash-flow management strategy calls for rapid collection of invoices and timely payments. This means that the business should not pay its bills ahead of time — or late. The company should pay its bills when they are due. This ensures that its cash is working hard.

To the extent that the organization is flush with cash, business owners should ask for a cash discount at the time of a purchase instead of buying on credit. The offer of a cash payment may entice the seller to offer a discount. This can be especially beneficial in cases of big-ticket purchases where a discount can be meaningful.

 

Feast or famine? How to keep your cash flow working for your business

/0 Comments/in , , /by

Are you in control of your small business cash flow?  Michael Lewis, a former business executive and financial blogger, does not sugar coat things when he says, “owners who cannot efficiently manage their cash flow are almost certain to fail.”

Business cash flow

Every day new entrants throw their hat into the ring of entrepreneurship. And every day several die off. Many of these entrepreneurs, after spending considerable time fine-tuning their business plan, find themselves scratching their head, wondering why their company, with its innovative product or service, suffered such a fate.

In a great many cases, the answer is easy: cash flow.

“Cash flow is the lifeblood of a business and critical in its growth,” according to entrepreneur and marketing communications consultant Caron Beesley. “With money tight and bank loans hard to get, a cash-strapped company can easily be pushed to the brink.”

The lesson that entrepreneurs must master immediately is that a business cannot operate very long when cash outflow exceeds cash inflow. Every business, particularly a startup, must zealously monitor its cash flow to prevent a serious business disruption. In business, cash is king and cash flow is priority # 1.

A significant percentage of cash-flow issues result because owners have not spent adequate time estimating the arrival of various revenue streams and balanced that against their need to pay certain expenses. Entrepreneurs must realize the critical importance of calculating accurate cash-flow projections to address day-to-day activities. Owners who don’t thoughtfully estimate their cash flow for an upcoming period (the day, week, month and quarter) place their business at serious risk.

From Day 1 businesses must track and manage their cash from the time that they must pay vendors, employees and others to the time that they collect from their customers. Doing anything less assures near certain failure. The following tips can help business owners ensure that their cash flow is managed well and not placing the business at risk of failure:

  1. Create a Budget.

Business owners should sit down to thoughtfully estimate expected cash inflows and outflows. Factors that to consider include the sales cycle, terms and discounts provided customers, industry delinquency rates and other factors that may affect the timing of incoming cash.

Similarly, it is necessary to estimate expenses and other cash outlays. This includes the timing of the purchase of equipment, raw materials and supplies. It also includes the schedule for payment of salaries, taxes and other day-to-day expenses. SCORE, a national nonprofit support group for small business owners, provides a free budget template that business owners can use to manage their cash flow.

  1. Monitor the Results.

Examining the budget should not be an infrequent activity. On at least a monthly basis (but more frequently if warranted), the actual cash flow should be compared with the budget to work out the kinks in the system. If cash inflows are less than anticipated, figure out the reason for the shortfall. If cash outflows end up being greater than expected, understanding the cause is also important.

Once the reasons for the budget variances are determined, the business can make the necessary corrections, either to the budget or the business plan or both.

  1. Have a Plan B.

Regardless of the amount of time and energy a business owner devotes to creating a budget, unexpected events can suddenly crop up, wreaking havoc on even the best cash-management system. During such times, the business might need to rely on a contingent source of cash to keep the operation running until things return to normal.

Typical sources of contingent funding include lines of credit, personal assets and friends and family. Business owners should have a Plan B lined up well before the funds are needed.

For example, a business owner who plans to borrow funds to cover a cash shortfall should have the loan or a line of credit in place well before the cash is needed. Allowing a cash-flow disruption to occur before applying for a loan is asking for trouble as most banks will hesitate to lend money to a business in distress.

Even if a bank were willing to extend a loan, few financial institutions can underwrite and approve a request in less than a month. By then, the business may have already failed due to its inability to cover its cash needs.

4. Bill Quickly

A key element of cash-flow management is controlling the timing of funds coming in and going out. It may be customary, depending on the industry, for a business to extend credit to purchasers. For example, customers may be extended a 30-day period to furnish payment. Every time this type of transaction occurs, it places a strain on the business. While the buyer need not provide payment for 30 days, the company must continue to meet its financial obligations.

Its raining money cash flow

 

The easiest tactic for a business to pursue is to bill a client immediately. Businesses that make sales on credit must ensure that the invoice is delivered within 24 hours of the transaction. Furthermore, companies should track their invoices and send reminders before the payment-due date. Businesses that delay invoice delivery will likely receive their payments late due to the processing time required by the buyer. Business owners should consider delivering invoices by email to ensure rapid and certain delivery of billings.

To alleviate the pressure created by credit sales, a business should implement tactics to accelerate payment. A common technique includes providing discounts to buyers who pay their bill within 10 days. Buyers with sufficient cash to make their payment will be willing to forego availing themselves of the payment period in exchange for a discount.

Every business owner dreams of making a big sale. Unfortunately, businesses that make big sales on credit are often put under duress because they may then require the purchase of additional inventory. In such instances, business owners should consider making the buyer provide a down payment against the purchase so as to relieve the burden on the company’s cash flow.

5.Timely Payment Policies.

A sound cash-flow management strategy calls for rapid collection of invoices and timely payments. This means that the business should not pay its bills ahead of time — or late. The company should pay its bills when they are due. This ensures that its cash is working hard.

To the extent that the organization is flush with cash, business owners should ask for a cash discount at the time of a purchase instead of buying on credit. The offer of a cash payment may entice the seller to offer a discount. This can be especially beneficial in cases of big-ticket purchases where a discount can be meaningful.

 

credit cards credit history

Consumer debt, credit cards and the small business trap

/1 Comment/in , /by

Many small business owners rely on personal savings and credit cards for funding their business. The excitement and energy that helped them start might turn into stress and despair when cash is not flowing and debt starts piling up. If you are like most small business owners

Read more
Latinas leaving corporate America, startups, small business, launching a business

Leaving the rat race to launch your dream business

/1 Comment/in , , /by

startups, small business, launching a businessBy Jesse Torres

During my Money Talk radio interview on KCAA with Los Angeles area game developer Giovanni Luis, co-founder of MakeData and co-creator of the Papermals Pre-K app, he explained how he made the leap to entrepreneur after 20 years of working for Electronic Arts and Sony.

His work experience gave him the technical expertise and his parenting role gave him the motivation to move from creating blockbuster action games to making high-quality educational apps. “My corporate experience gave me the confidence to go out and create these games,” he said.

He first stumbled upon game development after completing a degree program in industrial design at the Academy of Art University in San Francisco. “I just happened to know a piece of software that they were using to develop a game called Nuclear Strike,” said Luis, calling the experience a “happy accident.” This resulted in a five-year run with Electronic Arts followed by 15 years of working for Sony’s gaming unit.

As his children began preschool, Luis started to explore the technology used by his school district. He felt that the software and apps available left a lot to be desired, both from the educational and visual perspective. Thus the gamification expert decided to leave the corporate world to start his own company with several like-minded associates.

Luis has another advantage: his preschool and kindergarten-age children. Every day his kids rekindle his passion to develop meaningful apps. His goal is the highest level in edutainment. Luis strived to fashion age-appropriate educational lessons, such as instruction in numbers, sizes and coins.

Here are some thoughts to keep in mind when launching your new business, according to Luis:

  1. Aim to exceed expectations. While Luis’ education apps are less complex than the games he developed for Electronic Arts and Sony, he aimed to develop products that exceeded the ordinary and expected. He wanted his first app to have such a visually stunning interface that the pre-K crowd would adore it and that a high level of engagement would result in solid word-of-mouth referrals from parents and teachers.

Make a product that incorporates the wow factor to increase sales organically.

  1. Know the business landscape. An entrepreneur must be intimately familiar with the industry he’s operating in. Luis wished to market his app as not only a game but also as educational technology. This dual purpose could potentially improve the return on investment.

Keep your finger on the pulse of the market in order to provide timely innovations and provide a product that meets buyers’ evolving desires.latina microfunding

  1. Produce for the masses. Luis learned the importance of economies of scale while developing games at Sony. A single AAA game could take as long as 18 months to develop, cost millions. A large customer market is needed generate a return on investment.

In California alone thousands of new kindergartners arrive on the scene each year, Luis discovered. Papermals Pre-K has Spanish and Mandarin versions to capitalize on the growing Latino market in the States and the large Mandarin-speaking population abroad.

Target growing niches to fuel market expansion and provide opportunities for innovation.

  1. Score a quick win. Luis and his small band of fellow developers needed a quick win to serve as proof of his concept and keep the troops motivated and engaged — and eating! Rather than trying to create an app with an evolving technology like virtual reality, Luis and his team focused on the iOs and Android platforms, creating their first app in three months in the hopes of soon generating revenue.

Identify strategic opportunities that can provide an immediate return on investment so as to support current operations and increase the likelihood of the company’s survival.

  1. Tap into influencers. Luis and his team develop apps for a market just out of diapers. This market does not carry a credit card or use mobile devices. So Luis cannot directly market his product to end users. Instead, he must find the individuals who can influence its purchase, such as teachers, school district administrators and parents.

One impressed teacher could recommend an app to dozens of parents. And impressed parents might engage in verbal and social-media-based word-of-mouth, prompting scores of purchases.

Beginning on Day 1, create genuine relationships with parties that can maintain influence or build relationships with the target market.

 

 About Jesse TorresJesse_Torres

Jesse Torres has spent nearly 20 years in leadership and executive management posts, including executive management roles at financial institutions. In 2013 the Independent Community Bankers of America named him a top community banker influencer on social media. He is a frequent speaker at financial services and leadership conferences and has written several books. He hosts an NBC News Radio show called Money Talk with Jesse Torres.
Follow @jstorres or contact  Jesse@JesseTorres.com

 

small business insurance, Latina small business,

Better safe than sorry with appropriate business insurance

/0 Comments/in , /by

small business insurance, Latina small business,Every business needs some type of insurance coverage to protect its assets and be covered for potential liabilities. Finding the right type of insurance your specific business needs, and the types of insurance available is a conversation to have with your insurance agent or broker. Your agency can also advise you on the exact amount of insurance you should consider purchasing according to your business size and volume.

Here are some basic insurance definitions the Small Business Administration (SBA) recommends for small businesses and their definitions.

General Liability Insurance

Business owners purchase general liability insurance to cover legal hassles due to accident, injuries and claims of negligence. These policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.

Product Liability Insurance

Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Product liability insurance protects against financial loss as a result of a defect product that causes injury or bodily harm. The amount of insurance you should purchase depends on the products you sell or manufacture. A clothing store would have far less risk than a small appliance store, for example.

Professional Liability Insurance

Business owners providing services should consider having professional liability insurance (also known as errors and omissions insurance). This type of liability coverage protects your business against malpractice, errors, and negligence in provision of services to your customers. Depending on your profession, you may be required by your state government to carry such a policy. For example, physicians are required to purchase malpractice insurance as a condition of practicing in certain states.

Commercial Property Insurance

Property insurance covers everything related to the loss and damage of company property due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism. The definition of “property” is broad, and includes lost income, business interruption, buildings, computers, company papers and money.

Property insurance policies come in two basic forms:

(1) all-risk policies covering a wide-range of incidents and perils except those noted in the policy;

(2) peril-specific policies that cover losses from only those perils listed in the policy. Examples of peril-specific policies include fire, flood, crime, and business interruption insurance. All-risk policies generally cover risks faced by the average small business, while peril-specific policies are usually purchased when there is high risk of peril in a certain area. Consult your insurance agent or broker about the type of business property insurance best suited for your small business.

Home-Based Business Insurance

Contrary to popular belief, homeowners’ insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners’ policy to cover normal business risks such as property damage. However, homeowners’ policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.

One final suggestion: Find a broker or agent that speaks your language of preference and explain them your needs. It always feels better to trust someone who knows in detail the way we conduct business in our community and, at the same time, is familiar with the US law requirements to protect your business and your livelihood.

3 Strategies to keep your business model relevant

/0 Comments/in , /by

women entrepreneur, leadershipBy Jesse Torres

Entrepreneurs like Ryan Krane, president of the eponymous firm Ryan Krane Inc. and creator of the Krane Training Method, know that launching and operating a company is a challenge and that success requires continuous evaluation of the business model to improve tactics and try new approaches.

Slightly more than 10 years ago Krane began his fitness-training and rehabilitation business, offering personal sessions and one-on-one attention.

Over the years Krane has adjusted his business model to take advantage of demographic changes. On my Money Talk radio show, he recently shared his tips for keeping a business model relevant and achieving entrepreneurial success:

1. Seek a growth component.

Abraham Lincoln once said, “The probability that we may fall in the struggle ought not deter us from the support of a cause we believe to be just; it shall not deter me.”

When it comes to starting and growing a business, entrepreneurs should give themselves the best shot at success. The marketplace is packed with competitors. While new entrants with considerable innovation can have success in serving mature and stable segments, entrepreneurs must be cautious. They can get the greatest bang for their buck by targeting segments that are growing and where players are not yet established.

Krane recognized the business-development opportunities suggested in research citing the health benefits of regular exercise. His hunch was bolstered by the following Bureau of Labor Statistics projection: “Employment of fitness trainers and instructors is projected to grow 13 percent from 2012 to 2022, about as fast as the average for all occupations.”

2. Evolve the business.

The Greek philosopher Heraclitus is widely credited with saying, “The only thing that is constant is change.” While some entrepreneurs may not be trained in the classics, this is one lesson that business owners ought to know. All industries are in a constant state of change and companies that do not evolve will eventually die.

When Krane began his fitness-training business, baby boomers were still years away from beginning their exodus into the world of retirement (perhaps eating bonbons and sipping Mai Tais). As years passed, he recognized a need to address the aches and pains that come with aging.

Indeed as the Denver Post reported, “the benefits of exercise for any age are well documented, but recent studies indicate that it can have significant impact on reducing illness and chronic disease in those over the age of 50.” Krane saw business potential in this trend and took timely action by implementing programs focusing not only on traditional fitness and nutrition regimens but also on addressing some common ailments that arise with aging.

Earlier this year, Krane released a series of videos intended to address these ailments with titles like Get My Ankle Better, Get My Knee Better and Get My Back Better.

3. Be innovative.

Innovation can keep an entrepreneur’s competition at bay. About three years ago, as Krane witnessed the surge in popularity of video and the power of YouTube, he began to explore the use of instructional videos as a form of marketing. (Indeed YouTube broke the billion-user mark in 2013, according to Advertising Age.) Krane created his own YouTube channel and began to create and distribute fitness advice online.

Krane’s reputation for producing fitness and nutrition content spread and he began receiving inquiries from potential clients around the world.

Pursuing yet another chance to innovate, Krane expanded his in-person fitness training business to include virtual training by using Skype. His client portfolio expanded to include clients from as far away as Indonesia. His innovative approach to fitness training scored him a recent interview with ABC’s Diane Sawyer.

In the real world, more than three areas of concern arise. But entrepreneurs who adequately focus on growth, evolution and innovation can aim for their business models remaining relevant at all times and giving them the greatest opportunity to achieve success.

 

 About Jesse TorresJesse_Torres

Jesse Torres has spent nearly 20 years in leadership and executive management posts, including executive management roles at financial institutions. In 2013 the Independent Community Bankers of America named him a top community banker influencer on social media. He is a frequent speaker at financial services and leadership conferences and has written several books. He hosts an NBC News Radio show called Money Talk with Jesse Torres.
Follow @jstorres or contact  Jesse@JesseTorres.com

Do THIS to keep your business cash flowing!

/2 Comments/in , , /by

Business cash flow

By Jesse Torres

Michael Lewis, a former business executive and financial blogger, does not sugar coat things when he says, “owners who cannot efficiently manage their cash flow are almost certain to fail.”

Every day new entrants throw their hat into the ring of entrepreneurship. And every day several die off. Many of these entrepreneurs, after spending considerable time fine-tuning their business plan, find themselves scratching their head, wondering why their company, with its innovative product or service, suffered such a fate.

In a great many cases, the answer is easy: cash flow.

“Cash flow is the lifeblood of a business and critical in its growth,” according to entrepreneur and marketing communications consultant Caron Beesley. “With money tight and bank loans hard to get, a cash-strapped company can easily be pushed to the brink.”

The lesson that entrepreneurs must master immediately is that a business cannot operate very long when cash outflow exceeds cash inflow. Every business, particularly a startup, must zealously monitor its cash flow to prevent a serious business disruption. In business, cash is king and cash flow is priority # 1.

A significant percentage of cash-flow issues result because owners have not spent adequate time estimating the arrival of various revenue streams and balanced that against their need to pay certain expenses. Entrepreneurs must realize the critical importance of calculating accurate cash-flow projections to address day-to-day activities. Owners who don’t thoughtfully estimate their cash flow for an upcoming period (the day, week, month and quarter) place their business at serious risk.

From Day 1 businesses must track and manage their cash from the time that they must pay vendors, employees and others to the time that they collect from their customers. Doing anything less assures near certain failure. The following tips can help business owners ensure that their cash flow is managed well and not placing the business at risk of failure:

  1. Create a Budget.

Business owners should sit down to thoughtfully estimate expected cash inflows and outflows. Factors that to consider include the sales cycle, terms and discounts provided customers, industry delinquency rates and other factors that may affect the timing of incoming cash.

Similarly, it is necessary to estimate expenses and other cash outlays. This includes the timing of the purchase of equipment, raw materials and supplies. It also includes the schedule for payment of salaries, taxes and other day-to-day expenses. SCORE, a national nonprofit support group for small business owners, provides a free budget template that business owners can use to manage their cash flow.

  1. Monitor the Results.

Examining the budget should not be an infrequent activity. On at least a monthly basis (but more frequently if warranted), the actual cash flow should be compared with the budget to work out the kinks in the system. If cash inflows are less than anticipated, figure out the reason for the shortfall. If cash outflows end up being greater than expected, understanding the cause is also important.

Once the reasons for the budget variances are determined, the business can make the necessary corrections, either to the budget or the business plan or both.

  1. Have a Plan B.

Regardless of the amount of time and energy a business owner devotes to creating a budget, unexpected events can suddenly crop up, wreaking havoc on even the best cash-management system. During such times, the business might need to rely on a contingent source of cash to keep the operation running until things return to normal.

Typical sources of contingent funding include lines of credit, personal assets and friends and family. Business owners should have a Plan B lined up well before the funds are needed.

For example, a business owner who plans to borrow funds to cover a cash shortfall should have the loan or a line of credit in place well before the cash is needed. Allowing a cash-flow disruption to occur before applying for a loan is asking for trouble as most banks will hesitate to lend money to a business in distress.

Even if a bank were willing to extend a loan, few financial institutions can underwrite and approve a request in less than a month. By then, the business may have already failed due to its inability to cover its cash needs.

  1. Bill Quickly.Its raining money

A key element of cash-flow management is controlling the timing of funds coming in and going out. It may be customary, depending on the industry, for a business to extend credit to purchasers. For example, customers may be extended a 30-day period to furnish payment. Every time this type of transaction occurs, it places a strain on the business. While the buyer need not provide payment for 30 days, the company must continue to meet its financial obligations.

The easiest tactic for a business to pursue is to bill a client immediately. Businesses that make sales on credit must ensure that the invoice is delivered within 24 hours of the transaction. Furthermore, companies should track their invoices and send reminders before the payment-due date. Businesses that delay invoice delivery will likely receive their payments late due to the processing time required by the buyer. Business owners should consider delivering invoices by email to ensure rapid and certain delivery of billings.

To alleviate the pressure created by credit sales, a business should implement tactics to accelerate payment. A common technique includes providing discounts to buyers who pay their bill within 10 days. Buyers with sufficient cash to make their payment will be willing to forego availing themselves of the payment period in exchange for a discount.

Every business owner dreams of making a big sale. Unfortunately, businesses that make big sales on credit are often put under duress because they may then require the purchase of additional inventory. In such instances, business owners should consider making the buyer provide a down payment against the purchase so as to relieve the burden on the company’s cash flow.

5.Timely Payment Policies.

A sound cash-flow management strategy calls for rapid collection of invoices and timely payments. This means that the business should not pay its bills ahead of time — or late. The company should pay its bills when they are due. This ensures that its cash is working hard.

To the extent that the organization is flush with cash, business owners should ask for a cash discount at the time of a purchase instead of buying on credit. The offer of a cash payment may entice the seller to offer a discount. This can be especially beneficial in cases of big-ticket purchases where a discount can be meaningful.

 

 About Jesse TorresJesse_Torres

 Jesse Torres has spent nearly 20 years in leadership and executive management posts, including executive management roles at financial institutions. In 2013 the Independent Community Bankers of America named him a top community banker influencer on social media. He is a frequent speaker at financial services and leadership conferences and has written several books. He hosts an NBC News Radio show called Money Talk with Jesse Torres.
Follow @jstorres or contact  Jesse@JesseTorres.com