Entrepreneurs' Blog

28 Feb, 2011

6 Strategies for preventing your business from getting into hot water by Jamie Constable

Posted by: Bev James In: Business Tips|EBA Seminar|Expert Articles|Mentor Articles|Mentoring|Millionaire Mentors|Tips For Success

6 Strategies for preventing your business from getting into hot water by Jamie Constable

Most businesses don’t make it beyond 5 years.

Where are you in your entrepreneurial journey?

Whatever the size of your company, from one employee (you) upwards, you need to maintain regular contact with your customers, retain them with a great service and delivery and keep them paying on time.

Without cash flow you do not have room to manoeuvre your business.

Without a core business skillset and entrepreneurial mindset – you’re disadvantaged.  Our next TOTAL Business Mastery Seminar takes place in 20 days time. Do you have your ticket?

Here are 6 strategies for staying out of hot water:

Be mindful about money

  • Highlight your payment terms on the invoice
  • Appoint the right person to do your credit control (you, the business owner are not the best person to do this)
  • Keep a tight eye on your finances .. don’t bury your head under the bills
  • Avoid paying out cash too quickly yet stick to payment terms your suppliers offer you
  • Build a great reputation with your clients .. be spontaneous too
  • Consider offering a discount incentive for large invoices you raise
  • Re-negotiate terms on a regular basis with suppliers (they know you want the best deal to keep you as their client)

When is a good client actually not?

  • ‘Profit is sanity, turnover in vanity’
  • Look at the numbers on what seems a fantastic new client contract. When you analyse it properly and drop the excitement for a moment, you might find you wouldn’t actually make enough profit once you take into account the people and resources to do the job
  • It’s OK to say no thanks – a business isn’t a charity unless it is
  • Don’t get dazzled by big named clients for vanity sake .. every client gain has to fit into your forecasted profit margins
  • Do your checks before you sign a deal to ensure the ‘new client’ is good for the money
  • A client isn’t a client unless they pay you

Add a healthy dose of realism to your day

You cannot base your cash projections on rose tinted glasses targets. Set your sales targets as low as you think realistic – “and even on this lower projection we make enough profit.”

Check to make sure your overheads work for that low sales target, not for your high sales target.

This is a fundamental error of over optimistic thinking and one of the reasons businesses fail. The bottom line maths is wrong.

People Power

A business without the right people to do the tasks is doomed. Even if you are the sole person in your venture .. you could unwittingly be helping the business to underperform.

How can this be, you ask? Just because you own the business doesn’t make you a good business owner with the right skills to do all the functions well.

At the heart of success is mindset and skillset. Adjust yours from an honest perspective and only ever employ people with the right skillset and mindset to complement yours ie: to do what you can’t do well. Remember our friend Gill Fielding’s wise words: “Only do the things that only you can only do.”

Take fast action where speed is required

If your turnover is at a cliff-edge location and you know this to be true … you must take immediate action and slash overheads and company spending. This is a case for surgery, not a prescription.

  • Make the financial side of the business a lean, mean fighting machine
  • Make the customer service and sales side superlative
  • Go for gold with your sales and marketing efforts with attitude on a shoestring
  • Do everything you can to collect outstanding monies/cut credit
  • Do all the right kinds of elegant PR you can, for example, use social media for showcasing what you do and could become more well known for faster than jelly sets
  • Keep your company visibility up Up UP

Praise where praise is required

We all have people that make our business what it is. When your stars shine brightly within your business and externally to your clients, make praise and rewards part of your leadership style. Good staff are hard to find. Recruiting staff is expensive. If staff leave with your business knowledge in their head and not in your business systems, more – fool – you.

As the business grows, invest in the right fit good people. Anything less than perfect placement is a false economy.

Jamie Constable is an EBA Millionaire Mentor.

Book your tickets for the next EBA TOTAL Business Mastery One Day Seminar for 19th March and prevent yourself getting into hot water.

4 Responses to "6 Strategies for preventing your business from getting into hot water by Jamie Constable"

1 | Adrian Fowles

March 1st, 2011 at 11:08

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I’m always pleased to read good advice about being mindful about money. Businesses are started because of a passion about a product or service, but often need guidance on the finance side to be the success that they can be. The rapid growth that is often part of a successful startup can lead to a cash shortage as working capital demands increase. For that reason, I always quote the full version of the phrase:

‘Turnover is vanity, profit is sanity, but cash is reality’

2 | Paul Scoplin

March 2nd, 2011 at 09:05

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Useful tips Jamie – thanks.

I would just like to elaborate on the financial side.

A forecast P&L and Cashflow are valuable tools and disaster has been averted many times using these tools.

They are almost like having a crystal ball and enable you to take action before it is too late.

As your article mentions in point 3, these forecasts must be realistic and should certainly not be based on “best case scenario”.

3 | Michael Arabanos

March 2nd, 2011 at 13:29

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It offers solid and clear guidance for being successful in bussiness.

4 | Jamie Constable spills the beans on how to avoid business failure | Entrepreneurs' Business Academy Blog

August 2nd, 2011 at 10:34

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[...] and restructuring companies that are in financial distress, highlights six prevention strategies to stop your business getting into trouble. Jamie was part of the revival of the Little Chef chain which was shown on TV a while [...]

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  • Morgan Grage: I like this post, enjoyed this one regards for putting up. "No man is wise enough by himself." by Titus Maccius Plautus.
  • Derek: Brilliant article Bev, thanks for sharing. coincidentally the kilimamjaro example used is on my 2014 to do list! Ps thanks for the tips you gave me
  • jackson: thanks for your great article about developing your business idea to great business Jackson mutebi

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