And because all the cool professional bloggers are doing it (first popularised by the infamous John Chow), I’ve decided to join the band wagon and publish my income report for my blogs. No, I don’t normally believe in telling people how much I earn.  Quite frankly, if I were earning as much as John, I probably wouldn’t want the world to know either, purely because I belong to the group of individuals that prefers to be rich and unknown.

However, since I am just starting out and Alvin Phang, who is a professional blogger in this part of the world, says it is important to create accountability for the goals that we set for ourselves, I have decided to begin this exercise – at least until I hit my goal to create a replacement income through professional blogging.

So to start with a fresh slate for 2009, this is my income report for January and February:

January: US$504

February: US$525

Goal for March: US$600

Building your credit history is important in today’s time, especially since the laws are changing. We are moving into a system that is making it difficult for us to get ahead unless we have excellent, or at most good credit history.

Credit is important to rent, obtain student loans, and apply for loans or credit cards, as well as getting jobs and especially for entrepreneurs wanting their own business. Nowadays if you do not have a major credit card, it is nearly impossible to make purchases at some areas.

Bad credit only leads to frustration and headaches we want to avoid. If you have bad scores on your credit report, it takes seven long years before the credit is cleared and ten years for bankruptcies to be removed from your files. Therefore, if you want to save yourself some headaches it is time to get started building your credit history.

To do this you have to keep constant watch of the activities on your credit report. To obtain copies of your credit report contact the three B’s. TransUnion, Equifax and Experian have updated copies of your reports. To find out more information go online to get the information needed to get your copies. After you review, your credit reports make sure there are no false claims against you on the report before you proceed to clear up your accounts. If you notice, any false claims make sure to file a dispute immediately with each credit bureau. You are protected under law and it is the credit bureaus obligations to investigate the claims and clear up any mishaps.

After your have cleared up any allegations made against you, your next step is knocking down the accounts on your credit report. It is time to save money, and start building a credit history. Building credit is essential for your future survival. You might want to start by applying for a personal loan or else a credit card. If you are turned down, ask a family member or friend to co-sign with you to get the loan or credit card. Make sure your family member or friend has established credit and their history is not delinquent.

Once you get the card or loan, make sure you meet each month’s installments. If you miss any payments the co-signers are responsible to pick up the tab. do not make enemies, pay your dues on time. After about six months of using your credit card or else paying on the loan you will have notoriety and able to apply for credit cards or loans in your own name.

After about one year, you will have built your credit if you continue this procedure and can then apply for a home mortgage loan or car loan. It depends on your income and age when bank lenders investigate your case to determine if you qualify for a loan. Therefore, if you are in your forties and just getting started building credit your applications will take longer for consideration. Getting started early is the trick to building a stable credit history. Now if you have a credit history already you want to maintain payments to avoid complications.

Once you establish a bad credit history, it is harder to get back on your feet again. The best solution for maintaining, building, or else reestablishing credit history is to keep a close monitoring system on your financial tabs. Remember, credit history is important to your future and nowadays everyone judges you by your credit.

“Old-school” business mentors have fostered the idea that a man’s word was his bond, but in today’s business world the majority of people are always assuming – and assuming the worst. Creditors, debtors or anyone that base their theories on assumptions are headed for failure, and yet it’s done everyday. When people fail to pay their bills on time, many creditors assume the debtor doesn’t have the means to pay the debt. These creditors will often set up an arrangement or lower the amount so that you can repay the debt. This is a step to credit repair, however it takes you to contact the creditor and apprise him or her of your situation.

Staying in contact with your payments each month can help you avoid bad credit and getting into such a situation. If you have several bills on hand and all the bills are pressing, it makes sense to pay off the debt that benefits you the most. After this is paid then you can set aside an amount toward the next debt. Once you follow this strategy it allows you to work your bills down gradually thus repairing your credit standing.

If you don’t have the funds to pay the entire bill, at least pay the minimum amount due so that you can continue using the service. Many debtors assume they are in debt and there’s nothing that they can do to resolve their problems, and this is the process of giving up on life. When we give up, it leads to stress and the answer is often right in front of our nose. Creditors are business people too, and if approached properly will usually try to work with you.

Of course making the wise decision ahead of the game is the ultimate solution to maintaining good credit. If you research the marketplace before coming to a purchasing decision, you’re well on your way to avoiding bad credit and credit repair hassles.

Many people when taking out a home mortgage loan are not aware of the options available to them. They’ll walk in the bank door, fill out the application, and accept the terms & conditions when offered to them. There are many families and individuals who filed bankruptcy because they couldn’t afford their homes anymore, and primarily because they didn’t take the time to check the marketplace first and search the options available to them.

Being informed and educated are two of the best tools offered to us. There are mortgage loans that offer overpayments and underpayments, and these loans include vacation packages and lump sum payments to the borrowers. There are also other loans available that offer low mortgage monthly installments and low interest rates with insurance policies attached that will pay your mortgage if you are sick, unemployed, or in an accident.

On the other hand, there are mortgage loans that have high interest rates, high mortgages and balloon payments attached. When balloon payments are attached to home mortgages it is almost guaranteed that in a few years you’ll be searching for a solution to repair your credit. There are many home lenders who will not tell you the truth about the variety of home loans available because they are making money and you’re a source of income. It’s important to scope the terms & agreements carefully, as well as reading all fine print on any loan contract before you sign. If you’re applying for a home loan and want to avoid bad credit, it makes sense to learn what the fees include and how much those fees are.

There are some home loans that offer an “acceleration clause”, which covers you if you miss mortgage payments. The lender will apply the clause by allowing you leniency providing you make payments the following month on time. This type of loan is great for avoiding bad credit, foreclosures, and repossessions. The marketplace is swarming with realtors and other sources that will help you get a mortgage loan affordable to you with benefits included, make sure to do some checking before you choose one.

Here are some tips about loans that we’ll all take out during our life:

1. Car Loans – When applying for a car loan it’s also important to research the marketplace before agreeing to any terms & conditions. Make sure you find the best deals affordable to you. In college I learned the secret golden rule of car dealers, and that is that most dealers up the fees on cars by 15%. This means that if you negotiate wisely with the dealer you can get a reduction on the vehicle up to 15%.
2. Credit Cards – A word of advice when applying for credit cards, stay away from cards that have fees attached and high interest rates. Avoid credit card offers that have upfront fees or offer a high line of credit for a fee.
3. College Loans – Always consider investigating student loans before committing your self to a personal loan agreement. You may be qualified for a student grant from the government if you take the time to research the opportunities.

In the next post we’ll delve deeper into this question of keeping a good credit reputation and solutions for repairing bad credit.

Budgets and personal finances are not most people’s favorite topics, and certainly not one of mine. Even bank executives have problems in this area, but if you’re an entrepreneur so do you. You’re concentrating so much time on your business, your personal checkbook takes a back seat. Then one day you are met with the startling fact that you’re not saving enough for lean times and you panic.

Well, just apply your professional talents to the situation and become your own personal CFO. By using your CFO eyes on the situation, it somehow tempers the pain of dealing with your own money. To get started, here are 5 rules for treating your personal finances like a business:

1. Be Your Own Board of Directors. To make good decisions, you must know what you’re trying to achieve. In business, Board of Directors write mission statements to keep the company on track with goals. At home, it’s up to you to define your mission and make sure you’re fulfilling it by writing down your goals. Not just your financial goals either, but your “life” goals.

2. Know Your Operating Costs. Do you know what you spend every month on average? Businesses do because they base their budgets on historic spending patterns. Most people, however, don’t know what it costs to keep their lives running. You can make out detailed budgets, but find out at the end of the month that you haven’t stuck to it. So instead of doing a budget that dictates how much to spend, do a “cash flow statement” that records how much you actually spend each month broken into several categories.

3. Know Your Net Worth. Companies measure progress toward goals through balance sheets which list their assets and liabilities. Your net worth is your balance sheet where you list everything that you own. That means your checking and savings accounts, investments, car, house, etc. minus everything you owe. Track your net worth quarterly to make sure you’re moving toward your personal goals. Without this step, you might not see the impact of your money decisions until it’s too late.

4. Forecast Money Decisions Results. When a business makes important decisions, they use a process called “scenario planning”. They look at the possible outcomes of one choice compare to another. You can use the same process to make smart money decisions. For any choice, pick two options, and then look at what each answer would do to your cash flow and net worth. Remember, there are no “good” or “bad” choices – only choices that put you closer or farther from your goals.

5. Track Progress by Annual Reports. Just as companies assess their progress in their annual reports, you need to review your list of priorities every year. Have you accomplished any goals? Have your spending patterns changed? Did you spend less than you earned? Did you save as much as you planned?

You need to treat your money like you treat your business. Give it the time it deserves, because in the end the time you spend is really an investment in yourself and your dreams.

Some of the reasons that make it seem so difficult are that many lending officers feel that they’re lending you their money instead of the bank’s. They take almost personal responsibility for maximizing repayment.

Another is that they are particularly suspect of new ventures. Since 4 out of 5 or 80% fail within the first three years, many lenders require a three-year history of doing business.

Lastly, with all the bank merging and acquisitions that have taken place the decision-making process has been moved far off-site from the local branch. Add all of these reasons up, and you had better be prepared to razzle-dazzle the banker.

Here are some tips to make lending you more attractive to the bank. First, start with a two-part presentation. Initially submit a brief overview of your loan request. In this overview include:

This should be a two to three page document and can be considered a mutual qualifier. It determines if the bank has any interest in lending you funds before you spin your wheels for hours in front of the loan officer. You may want to end the document with your phone number so that the banker can call you back for an appointment or discussion.

If you’ve dazzled the loan officer sufficiently and have obtained an appointment to meet with him, then it’s time to prepare the “big guns”. The ammo you’ll come prepared with will be three years of personal tax returns for all the principals of your company and the existing business. Include credit reports on all principals, a complete and impressive business plan, and collateral and capitalization information.
This sounds like a lot of information and will require immense effort, but that’s why business ownership isn’t for everyone.

In addition to being prepared with all that paperwork be prepared for any off-the-wall questions the lender might throw at you. Take time to think about and originate a 30-second commercial about what you plan on doing and how it will benefit them and the business.

Be prepared to explain away any credit blemishes that show up on the credit reports before the banker has an opportunity to worry about them. Be sure you’re able to show “cash-flow” understanding and awareness, without which any business is doomed. Plot your most realistic estimated cash flow and bank account balance. Make sure the bank balance never goes negative, and for a good touch show the loan repayment as a separate line item. This shows the banker that you understand priorities.

Collateral may be needed to satisfy the lender’s angst about repayment of the loan, and unfortunately most small businesses have too few assets to satisfy this need. Many entrepreneurs are forced to pledge personal assets such as their home to allay the bank. This may seem scary, and it is, unless you’re really sure of your success.

It sounds like a daunting task, but with some preparation and determination it can be done. It’s not as easy as all the ads you’ve heard, and just the fact that you are starting a “woman-owned” business won’t cut any ice with a banker, but all of life is a gamble isn’t it?

After all, that’s why you’re an entrepreneur instead of a corporate lackey isn’t it? GO FOR THE GOLD!

How many e-mail messages do you send everyday? You’re probable missing out on a simple, inexpensive marketing tool. Seize the opportunity to promote your business to a highly targeted market without spending a dime by utilizing your e-mail signature line.

If your email signature line only contains your name and contact information, you’re missing out on advertising to e-mail recipients that have opted for communications from you.

These people are key members of your unofficial marketing network. They are your prospects, clients, press contacts and colleagues and your signature line is the perfect, unobtrusive space for a unique promotional pitch.

Try these tactics to turn your “sign-offs” into sales:

• Highlight what your company offers.
• Offer an incentive for recipients taken a specified action.
• Use the associated web address for the incentive, if it’s also on your site.
• Give better visual positioning to the promotion rather than contact info.
• Play with eye-catching fonts and colors.
• Use less than 64 characters/line so that words don’t wrap to a new line.
• Write a “signature” for different categories of recipients.
• Change your signature copy frequently.
• Never miss a chance to get your product or company noticed.

Another thing that many entrepreneurs don’t think about is the letters they send out. They are merely accepted as solving a problem or answering a need, when you can carry the e-mail idea over into every piece of mail you generate.

On the company letterhead simply add a line at the bottom of page 1. It could be a “tag line” of sorts made up of a slogan that “brands” your services or business. Try to come up with something unique so that every time it’s heard the prospect thinks of you.

Examples of this would be, “Good to the last drop,” which of course is Maxwell House Coffee. “Finger-lickin’ good,” which is KFC chicken, and so on. You get the message of what I’m saying. Play around with this until you come up with a pearl that is uniquely you.

If your business/service does not lend itself to this idea, then focus on increasing your credibility by using a “membership” tag line. For instance a funeral home would be less than tasteful using the line, “Our clients are dying to visit us;” but they COULD use the line “Members of Undertakers Assoc. of America” at the foot of their letterhead. This establishes immediate credibility in the mind of the recipient, even if the letter they received was a direct mail advertising letter.

When you’re an entrepreneur in today’s marketplace you have to be inventive and creative to buck the “big boys” on the block. I suggest that every entrepreneur read about the life of P.T. Barnum to get a better understanding of a truly great entrepreneur.

It isn’t always the almighty dollar that gets the best advertising for our business; it’s the best IDEA that makes you stand out in the crowd.

Every year, several thousand people develop an interest in “going into business.” Many of these people have an idea, a product or a service they hope to promote into an income producing business which they can operate from their homes.

If you are one of these people, here are some practical thoughts to consider before hanging out the “Open for Business” sign.

In areas zoned “Residential Only,” your proposed business could be illegal. In many areas, zoning restrictions rule out home businesses involving the coming and going of many customers, clients or employees. Many businesses that sell or even store anything for sale on the premises also fall into this category.

Be sure to check with your local zoning office to see how the ordinances in your particular area may affect your business plans. You may need a special permit to operate your business from your home; and you may find that making small changes in your plan will put you into the position of meeting zoning standards.

Many communities grant home occupation permits for businesses involve typing, sewing, and teaching, but turn thumbs down on requests from photographers, interior decorators and home improvement businesses to be run from the home. And often, even if you are permitted to use your home for a given business, there will be restrictions that you may need to take into consideration. By all means, work with your zoning people, and save yourself time, trouble and dollars.

One of the requirements imposed might be off street parking for your customers or patrons. And, signs are generally forbidden in residential districts. If you teach, there is almost always a limit on the number of students you may have at any one time.

Obtaining zoning approval for your business, then, could be as simple as filling out an application, or it could involve a public hearing. The important points the zoning officials will consider will center around how your business will affect the neighborhood. Will it increase the traffic noticeably on your
street? Will there be a substantial increase in noise? And how will your neighbors feel about this business alongside their homes?

To repeat, check into the zoning restrictions, and then check again to determine if you will need a city license. If you’re selling something, you may need a vendor’s license, and be required to collect sales taxes on your transactions. The sale tax requirement would result in the need for careful record
keeping.

Licensing can be an involved process, and depending upon the type of business, it could even involve the inspection of your home to determine if it meets with local health and building and fire codes. Should this be the case, you will need to bring your facilities up to the local standards. Usually this will involve some simple repairs or adjustments that you can either do personally, or hire out to a handyman at a nominal cost.

Still more items to consider: Will your homeowner’s insurance cover the property and liability in your new business? This must definitely be resolved, so be sure to talk it over with your insurance agent.

Tax deductions, which were once one of the beauties of engaging in a home business, are not what they once were. To be eligible for business related deductions today, you must use that part of your home claimed EXCLUSIVELY AND REGULARLY as either the principal location of your business, or place reserved to meet patients, clients or customers.

An interesting case in point: if you use your den or a spare bedroom as the principal place of business, working there from 8:00 to 5:00 every day, but permit your children to watch TV in that room during evening hours, the IRS dictates that you cannot claim a deduction for that room as your office or place of business.

There are, however, a couple of exceptions to the “exclusive use” rule. One is the storage on inventory in your home, where your home is the location of your trade or business, and your trade or business is the selling of products at retail or wholesale. According to the IRS, such storage space must be used on a REGULAR Basis, and be separately identifiable space.

Another exception applies to daycare services that are provided for children, the elderly, or physically or mentally handicapped. This exception applies only if the owner of the facility complies with the state laws for licensing.

To be eligible for business deductions, your business must be an activity undertaken with the intent of making profit. It’s presumed you meet this requirement if your business makes a profit in any two years of a five-year period.

Once you are this far along, you can deduct business expenses such as supplies, subscriptions to professional journals, and an allowance for the business use of your car or truck. You can also claim deductions for home related business expenses such as utilities, and in some cases, even a new paint job for your home.

The IRS is going to treat the part of your home you use for business as though it were a separate piece of property. This means that you’ll have to keep good records and take care not to mix business and personal matters. No specific method of record keeping is required, but your records must clearly justify and deductions you claim.

You can begin by calculating what percentage of the house is used for business, Either by number of rooms or by area in square footage. Thus, if you use one of the five rooms for your business, the business portion is 20 percent. If you run your business out of a room that’s 10 by 12 feet, and the total area of your home is 1,200 square feet, the business space factor is 10 percent.

An extra computation is required if your business is a home day care center. This is one of the exempted activities in which the exclusive use rule doesn’t apply. Check with your tax preparer
and the IRS for an exact determination.

If you’re a renter, you can deduct the part of your rent which is attributable to the business share of your house or apartment. Homeowners can take a deduction based on the depreciation of the business portion of their house.

There is a limit to the amount you can deduct. This is the amount equal to the gross income generated by the business, minus those home expenses you could deduct even if you weren’t operating a business from your home. As an example, real estate taxes and mortgage interest are deductible regardless of any business activity in your home, so you must subtract from your business
gross income the percentage that’s allocable to the business portion of your home. You thus arrive at the maximum amount for home-related business deductions.

If you are self-employed, you claim your business deductions on SCHEDULE C, PROFIT(or LOSS) for BUSINESS OR PROFESSION. The IRS emphasizes that claiming business-at-home deductions does not
automatically trigger an audit on your tax return. Even so, it is always wise to keep meticulously within the proper guidelines, and of course keep detailed records if you claim business related expenses when you are working out of your home. You should discuss this aspect of your operation with your tax preparer or a person qualified in the field of small business tax requirements.

If your business earnings aren’t subject to withholding tax, and your estimated federal taxes are $100 or more, you’ll probably be filing a Declaration of Estimated Tax, Form 1040 ES. To complete this form, you will have to estimate your income for the coming year and also make a computation of the income tax and self-employed tax you will owe.

The self-employment taxes pay for Social Security coverage. If you have a salaried job covered by Social Security, the self-employment tax applies only to that amount of your home business income that, when added to your salary, reaches the current ceiling. When you file your Form 1040-ES, which is due April 15, you must make the first of four equal installment payments on your estimated tax bill.

Another good way to trim taxes is by setting up a Keogh plan or an Individual Retirement Account. With either of these, you can shelter some of your home business income from taxes by investing
it for your retirement.

Yesterday we looked at ways to reduce costs in our business. Here is Part 2 about how to Anchor More Sales.

Entrepreneurs are a special breed of business people who strive for the conventional goals and attain them via unconventional means. That oftentimes means not having a lot of hard cash to invest in the traditional marketing methods for attaining customers. There are ways though, to make your business a customer magnet that will bring you “sales”.

One of the first things you must know when starting off are the characteristics of your prospects and customers. Just as a wagon needs four wheels to move forward, your business needs four wheels too. They are a marketing plan (whether you have the budget for it or not), a marketing calendar (so you can work the plan as you acquire capital), a competitive advantage (very, very important), and customer research.

The age of the “lone-wolf business owner” is over, gone with the wind and the innocence. Today there is a world of businesses that would love to help you in return for you helping them. Enlisting their aid is paramount, paying them cold hard cash is unnecessary. This is where you can put some of the bartering skills we spoke of last week into practice. You’ll find just how you can help another business owner and he/she can help you after you get going. I only bring it up here so that you don’t forget to use this resource.

One of the most important things for you to do to achieve your business goals is to stay in touch with the people on your customer list. If you don’t have one yet – then start building one, even if you don’t know them personally yet. Do this by mailing announcement postcards to the surrounding neighborhood of your business. Announce the Grand Opening if yours is a brick and mortar shop, offering a small gift for the 25th or 50th customer on opening day. If yours is a business without a walk-in shop send the same announcement about the opening of your business and offer tear-off coupon for them to fill out (with their name & address) for the opportunity to win something in a drawing scheduled for 6 days after your mail date. There is the beginning of your “customer data base” for all future advertising.

You must find your “niche” or “position” as they call it on Madison Avenue. Your niche is what you stand for, what makes you different, and the first thing you want your prospective customers to think of when they hear your company’s name. Put it down on paper and make everything that you do from this point on accomplish what you’ve written.

Next to do is a “benefits list”. What benefits does your customer derive from doing business with you rather than your competitor? What makes your business or services special?

After those, then you must determine what “quality” you offer. Quality in this sense is not what you put into your business, rather it is what customers get out of it. You may use the highest grade tin in the tin whistles that you’re selling, but the customer doesn’t care about that. What the customer cares about, is if that tin whistle is going to stay in one piece when his 6-year old plays with it for 6 months. Look at “quality” as setting you apart from the competition – BUT from the customers POV (point of view).

Once these lists are down on paper, look them over and honestly evaluate if your competitors offer the same benefits as you. If they do, then differentiate yourself and stress a competitive advantage. Then develop your “elevator” pitch. If you only had 10 seconds to tell somebody what you did for a living that would make them want to know more – that’s your “elevator” pitch.

Once you’re doing business, keep track of your “A” customers. All customers are not created equal. Some buy more, refer more, are easier to deal with, and keep coming back. Treat your “B” list customers like Royalty, but your “A” list like Family.

Keep track of your success stories, because everything that you’ve done right becomes another weapon in your marketing arsenal. When you do have the capital to invest in some marketing, it’s always reassuring to new clients to read about the success of others doing business with you. This will also elevate your credibility with new clients.

Of course it goes without saying that “service” is the secret to every businesses success. The only definition of “service” that makes sense these days is that it’s anything the customer wants it to be. It’s not what you’ve always done in the past; it’s what keeps the customer happy and returning.

Guarantees are very important in any type of business, and people expect it. The longer the guarantee, the more enticing it will be and yet fewer people will ever ask for refunds.

Follow-up is so important, that I can hardly find a way to make it stand out. Nearly 70% of business that is LOST is due not to poor service or shoddy quality, but because of apathy after the sale. Once you serve a customer don’t just forget about them, have a way of adding them to your customer data base. Get their pertinent information – name, address, phone number, what you did for them, etc. Find a way, be it postcard mail, fliers, whatever – but send them something every 4 weeks. If they’re not seeing your name regularly, when they need what you offer they won’t remember you. You might sell tires and we know there’s only a certain number of tires you can expect a customer to buy in a year, but when they have unexpected tire damage or the time to replace tires rolls around why will they come back to you? Is it because they got your postcard last week and it reminded them they needed replacements. They may have gotten a second car, and since they got your mail it reminded them to get tires from you. Remember, whatever you’re selling, they can go to your competitor unless you give them a reason to come to you!

Networking is a great tool for you to use. I mean networking not with your peers, but rather with your prospective clients. Join the group and ask questions, listen to answers, take notes, and contact who you met. Gauge your success by the cards you GOT, not gave. Offer those you contact a free consultation, and don’t give a sales-pitch during that time. Anyone can resist a sales presentation, but it’s hard to resist a free consultation that will help them solve whatever problem they have. Many times your service is the answer for their problem but save the sales pitch until the next call. By the same token, if during the consultation you find you can’t help them but one of your fellow entrepreneurs can – be honest and refer them to him/her. (This not only shows your prospect that you really are interested in being of service, but it also gives you an unwritten IOU from one of your peers.) You’d be surprised how many clients will refer a friend or family member to you, just because they felt you were honest enough to tell them you couldn’t help them.

Your customer list is worth its weight in platinum, especially if it’s bulging with information and it’s free to compile and insane not to. With these tactics, it’s a foregone conclusion that more sales will not only naturally follow, but will be anchored down safe from competition.

I bet that got your attention! It’s something that every business owner knows, but it seems to get lost in the shuffle of our day-to-day doing business.

I’m not going to give you a lot of rhetoric on the subject. Instead I’m going to simply give you a list of 10 points on each that will jog your business memory.

Let’s start with some savvy ways to reduce the cost of you doing business:

1. Barter – You should be bartering goods or services with other businesses. Try to trade for something before you buy it.
2. Network – Could you trade leads or mailing lists with another business similar to your? This will cut down on your marketing/advertising costs. If you don’t have a leads list, try bartering your goods/services for their leads.
3. Wholesale/Bulk Buying – You can save money buying your business supplies in bulk quantities. Get a membership at a wholesale warehouse (such as Costco, Sam’s Club, etc.) or buy through a mail order wholesaler. I buy most of my office supplies/paper through mail order vendors which saves me money, and also delivers them to my door. No lugging from store to car to office, and saving money too! What a deal.
4. Free Stuff – Try visiting the thousands of “freebie” sites on the Internet before buying business supplies. You can find free software, graphics, legal forms, online business services, etc.
5. Borrow/Rent – Have you purchased a piece of business equipment and only needed it for a short period of time? You could have borrowed the equipment from someone else or rented it from a rental store.
6. Online/Offline Auctions – You can find office furniture, equipment, and even cars and trucks at online and offline auctions. Pay special attention to those held by law enforcement agencies or IRS that auctions off items seized from offenders. I’m not saying all the time, but before you pay retail for some big ticket items try bidding on them.
7. Plan Ahead – Make a list of supplies or equipment that you’ll need in the future. Watch for stores that have big sales, and purchase your items when they go on sale before you need them.
8. Used but Not Abused – If you equipment and supplies don’t need to be new, buy them used. Cars, desks, file cabinets, etc. can be found at yard and garage sales, used stores, on message boards, and free publications. Some excellent items are sometimes offered when a business decides to relocate or is closing.
9. Negotiate, negotiate, negotiate! This has become a lost art. You should always try to negotiate a lower price for any business equipment or supplies. It doesn’t hurt to try. Pretend you’re talking to a used car salesman.
10. Search – You can always be searching for new suppliers for your needs. Look for suppliers with lower prices and better quality. When you find one, try pointing the difference out to your current supplier. You may get a better deal from him and not have to change. Don’t be satisfied with just a few. You never know when your favorite supplier may decide to go out of business.

If you’re a native Californian, you might find these things I’ve discussed a little hard to swallow. Let me tell you, being a native New Yorker, these are things that you learn from doing business there, and at an early age.

Just remember! Every millionaire didn’t acquire their wealth through inheritance; some were shrewd business dealers.

Whether it is a multi-billion dollar empire, such as Bill Gates’ Microsoft, or the tiny mom-and-pop convenience store on the street corner, cash is the life blood of the business.

In today’s uncertain economy with ever rising interest rates, many small businesses with limited financial training are having problems staying alive, let alone prospering. In fact, 63% of new businesses don’t survive six years — and most work-at-home people fail within 6 months!

The primary reason is bad cash management. To many self-employed people neglect their cash flow until it is too late to recover. Suddenly, presto! it ‘s back to your office job! We don’t want that to happen.

So the big question is: will you be able to manage your cash flow effectively? If you are not sure, then you are on shaky ground.

Les Masonson, author of Cash, Cash, Cash: The Three Principles of Business Survival and Success, says cash flow is all about, “getting the money from customers sooner, paying bills at the last possible moment, concentrating money to a single bank account, managing accounts payable, accounts receivable and inventory more effectively, and squeezing every penny out of
your daily business.”

Let’s break down Masonson’s tips one at a time.

FAST COLLECTION

In your business, you should collect money as fast as you can. To do so, try these four things:

(1) Try to speed up customer orders by having them fax their orders to you.

(2) Send out your invoices the same day goods are shipped, not a week or two later.

(3) Indicate on your invoice when payment is due, and specify the penalty interest for late payment.

(4) Consider using a bank lock box (post office box strategically located near customers to reduce mail time) to collect your mailed checks from customers across the country. You lockbox bank picks up mail around the clock including weekends, processes the checks and credits your account. (Note: this last step is probably more appropriate for businesses grossing more than $25 million annually. You may not be there yet, but keep it in mind for when you get there)!

DEPOSIT CHECKS FAST!

This seems only obvious, but it’s extremely important. In fact, here are Masonson’s six sure-fire suggestions for getting the fastest availability on deposited checks.

(1) Always deposit checks the same day they are received. Don’t hold checks until the next day because you lose one day’s float. Key point: you can lose three days of float by not depositing Friday’s checks until Monday.

(2) Obtain availability of 0 to 2 days on deposited checks. Don’t let your bank give you the customer availability of 1 to 5 days. Be persistent. Ask the bank for its “availability schedule” and scan it to be sure you’re receiving fast availability of two days or less.

Each bank has its own availability schedule. This is used to assign check availability to consumers, business (commercial accounts), and large corporate accounts. Availability is the number of days until you can use the money deposited by check as cash. For example, a $1,000 check deposited today and assigned a one-day availability can be withdrawn as cash tomorrow.

(3) Don’t deposit checks in a bank’s Automated Teller Machine or use the Night Depository since you have no evidence that you actually deposited the checks you said you did. Remember, you only receive a receipt that shows the time and dollar amount on the deposit at the ATM, and you get no
receipt at the Night Depositor.

(4) MICR encode your customer’s checks (using a machine that prints magnetic ink on the bottom of the check) with the dollar amount before depositing them in the bank if you deposit more than 500 checks per month. Banks charge 3 to 5 cents less for each encoded check. Used encoded machines cost about $1,500. (Check your Yellow Pages under bank equipment for dealers). Besides saving money, you may get another benefit: faster check availability.

(5) Ask you bank about its deadline for receiving availability on deposited checks. Some banks may require a deposit of an encoded check by 2 p.m., even though the bank is open to 5 p.m. Make sure you make this deadline, otherwise you lose one day’s float.

(6) Before using a bank’s ATM for check deposits, find out the bank’s availability deadline. Some banks have a 12 noon cut-off time which means that any checks deposited later are considered to be deposited the next day! In that case, you lose an entire day’s float, even though you did your bit to get the checks cashed.

HAVE A SUPER TIGHT ACCOUNTS RECEIVABLE POLICY

Many people think it is no big deal to neglect accounts receivable until bills are collectible. This is bad cash flow policy. Here are seven excellent tips for handling accounts receivable:

(1) Check the financial health of a new customer before offering them credit. One way of doing this is by using a rating service, such as Dun & Bradstreet (1-800-234-3867).

(2) Ask a new customer for five business references and don’t neglect to call them.

(3) Don’t offer too generous discounts, such as 3% for payment in 10 days. A better rate is 1.5% cash discount. It costs you less.

(4) Charge a “late fee” of 2% per month to customers who pay late and charge back customers who take discounts after the discount periods.

(5) Follow up on late payers with phone calls and letters. These may seem a bit extreme, but the first letter should go out the very day the amount is one day late! After 30 days late, start this sequence:

– send out a letter from your attorney
– turn over the account to a collection agency
– use a collection attorney

(6) Don’t send out new merchandise if bills remain unpaid. Remember that bad debts hurt your bottom line! Be vigilant and try to get at least periodic payments from slow payers.

(7) Instruct your bank to automatically deposit “returned checks.” Ask your bank if they offer Return Item box service. If they do, then use it to redeposit your check and charge back the bank return item free to your customer.

These seven steps are tough and unrelenting, but they may make the difference between a positive cash flow month and a sluggish month for your business. It may seem a bit hypocritical to demand swift and exacting payment, and then do what we suggest next. But just remind yourself, all (almost) is fair in love and war and business.

DISBURSE YOUR MONEY SLOWLY

Just the opposite of collecting at the earliest possible moment, you should never pay a day sooner than you have to, unless you get a discount for doing so. A lot of people believe in staying ahead of bills and paying them as early as possible, but that’s just poor cash management. You want to keep your money in your hands as long as you can. Here are five suggestions to slow down your disbursements:

(1) Pay your invoices on the last day they’re due, not before.

(2) try to mail your payment on Thursday or Friday to pick up a few extra days mail float over the weekend.

(3) Use business credit cards for travel, lodging, meals, and small expenses for yourself and your employees. With credit cards you typically don’t have to make payment until 25 days after receiving the statement. Use this float by investing the money. In total, you can typically keep your money invested for 45 days from date of purchase.

(4) Don’t issue advances to employees. Have them use their personal credit cards or business cards, if you provide them

(5) Consider setting up a remote disbursement checking account in another state to extend the check clearing float by at least a day. This practice is used very successfully by 17% of large companies. The downside of this practice is that some vendors may complain about their delayed availability on their bank deposit. But this can be overcome by mailing them their checks one day earlier.

Now, many small businesses neglect to reconcile their monthly bank statements or assume that the bank never makes a mistake. Banks do make mistakes, and you must stay on top of your disbursement to control your cash flow. If you are one of those people who simply can’t stand to
balance you check book, you can use a bank’s standard account reconcilement services for a low monthly price — $30 to $70 base charge and 5 to 7 cents a check. When is it best to use a bank’s reconcilement service?

Here are six suggestions:

(1) When you have a monthly check volume of at least 500 checks.

(2) When you need specialized reports.

(3) When you are currently performing your own reconcilement.

(4) You can find software at a reasonable price that meets your needs.

(5) When you don’t have your own PC or any other kind of computer system. (We already warned you about that).

(6) When you have no staff to do it, or time to do it yourself.

NO EXTRA MONEY IN YOUR BANK ACCOUNT

Many businesses make the mistake of keeping too much money in their bank accounts to pay for bank services. This money could be used more effectively elsewhere — such as to pay off a loan or to invest at a more competitive rate. Many businesses have no idea how much money to leave in
the bank or what alternatives they have to compensate the bank. Take some time to find out what your minimum balance needs to be.

GET AN ACCOUNT ANALYSIS STATEMENT

How do you know how much money (bankers refer to this as “balances”) to leave in your checking account to pay for bank’s services? That’s a question that more business owners should be asking themselves.

(1) First, get a price list which shows how much your bank charges for services like account maintenance, checks deposited, checks paid, stop payments and wire transfers.

(2) Ask the bank to send you a monthly “Account Analysis Statement.” The analysis statement contains the average balance levels for the month — both the ledger and the available balance — as well as a listing of services used, their transaction volumes and cost. This statement should be obtained in addition to the regular monthly bank statement.

(3) Look at the account analysis to see whether you are overcompensating the bank. Then pull out any excess funds and invest them in a high-yielding money market mutual fund, for example.

A word of advice: Smaller banks may not know what you are talking about when you ask for an account analysis. Larger banks often offer such a statement, but you have to ask for it. And don’t let them charge you for this kind of statement since it is only an invoice.

INVENTORY IS NOT CASH

Every item you have sitting on your shelf should eventually be transformed into cash in your bank account, and the sooner the better. As long as it’s inventory, it’s basically dead weight. If it is not moving, you’re not having cash flow.

Here are six recommendations to minimize the cost of your inventory:

(1) Attempt to forecast as accurately as you can the day, week and month what you expect to sell.

(2) If you are dealing in more than one item, determine which item accounts for 80% of your sales. Then minimize ordering other items that are selling poorly or infrequently.

(3) Determine how fast you can get inventory, once you order it. Try to order as late as you can. Some firms can use “just-in-time” inventory which enables them to receive their order the day they need it.

(4) Determine your economic order quantity and don’t order too much inventory just to save a few pennies.

(5) Shop around and make sure you are getting competitive prices.

(6) Develop a policy for determining what is obsolete inventory, and how you can get rid of it. The best way to get rid of dead inventory is to sell it whatever you can get for it, even if that’s only 10 percent of what you paid for it. At least it will generate cash flow.

DON’T FORGET CONTINUITY SALES

Once of the most exceptional ways of controlling and improving cash flow well into the future is by employing something called continuity of sales or services.

Continuity sales are simply a contract to purchase products or services on an installment basis for a fixed period of time.

That may sound complicated, but in practice, it actually is not. The best example of a continuity sale is a magazine subscription. 12, 24, or 36 issues delivered each month for X amount of dollars. The bigger the subscription, they better deal you get. The publisher gets more money up front, and the customer gets a better deal in the long run.

Continuity can apply to anything.

Let’s say you own a dry cleaning business. How about an annual deal to clean 5 shirts or blouses per week for set amount of money? Get people to pay your for the entire week up front for a lot of fast cash flow. You’ll trade a discount for getting business, but you’ll ensure a steady cash flow for months to come.

Continuity works with just about any kind of product or service you are offering, from dry cleaning to to your personal consulting service.

You can structure payments for continuity sales on almost any basis, but it’s best by far to go for complete payment up front. After all, the discount is based on a customer’s commitment, and they’ll be a lot more committed with their money on the line.

LICENSING AGREEMENTS

After all is said and done, if you were to list the assets of the company you have created, you’d probably include your inventory, equipment, accounts receivable, equity, and so on.

But by this time, especially if you have been reading carefully, you have something more — something that is not necessarily a physical “thing” such as cash or inventory.

If you’ve been a clever business person, you have come up with certain ads that have outpulled your competitors. You have developed policies and procedures that have kept your returns and refunds the lowest of any around. Or you may have come up with a money-making technique that is completely unique. If so, you are potentially sitting on fast source of cash.

You can license the rights to use any of your specialized techniques or assets to other non-competitive businesses. You can do it for a flat fee, a percentage of profits, on a royalty basis, or any other way that makes sense to you. You can also conduct seminars to teach your techniques to
other would-be work-at-home entrepreneurs and charge whatever the market will bear. It’s easy to generate an extra $5,000 a month and much more on the lecture circuit. While you are getting paid to spread your knowledge, you will be drumming up more business.

The knowledge you have in your head right now could very well be worth a lot of money. It’s only a matter of you looking within yourself and at your successes to see how you can transform it all into real, hard cash.