The March Newsletter has three key topics
Having decided where your business needs to be in 2020, the next step requires a strong plan.
Learning from your past development pace you know what pace the business will move at, however, new growth in business works differently.
Three reasons why:
- Excitement, and
We often think of ourselves as pragmatic when we have matured, but we still love the anticipation off something new.
Last week I had a conversation with a business that had hit a wall when their major client announced the contract would be ending at least 6 months earlier than projected.
The senior management team focused on the issue with the client but that announcement will not change. So the business has 4 weeks to do something.
A director rang and asked did I know of many clients who would step in before the end of April? The due diligence on a new contract will take 8 weeks so this was unlikely to happen.
This was an interesting dilemma, but after an initial conversation, new growth and diversification as possible.
The immediate impact taking this idea to the senior management with a few potential opportunities and suddenly everyone was engaged. The whole team worked through the weekend and by Tuesday the new service was ready for a test run.
From this one area of new growth, the directors have now put together a new plan. April will run its course. The contract will close but the staff is already looking beyond.
Business Development Nurturing Growth
The key to new growth is developing your strengths not the same client base but the strength of your team, employees and grasping opportunities.
List all the skills, match them to opportunities and then review how to nurture this potential growth.
Not everything will work, however, everything will empower your greatest asset.
Business Life is all about making the next opportunity, failing to look for it is missing all the potential new growth.
Finance – Insolvency
There is a popular definition of Insolvency:
Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency. (Wiki)
However, many business owners trade on the next payday principle. If money is coming in that will cover the next due invoice we are still solvent.
Nice idea but it can create a problem. One failure to pay your invoice has a ripple effect often delaying your ability to pay bills, a second invoice payment delayed can create the tsunami!
One of my clients delayed their payment of my invoice no big deal but it was a breach of terms. So I sent the reminder, they promised it would be in the bank by the end of the week. It wasn’t.
40 days had passed so learning from a brilliant young businesswoman, I started insolvency proceedings, shocking my client.
They rang me to explain one of their clients hadn’t paid them a substantial sum and the dispute had caught my invoice in the delay.
We resolved the issue, and when it was finished I asked the company how they traded. The hand to mouth approach and they traded on the edge of insolvency.
A couple of years later they crashed and burned as a business because of their debt modeling and hand to mouth existence.
- Keep at least one month ahead of your incoming bills.
- Talk to your suppliers and be honest with them
- Never enter an agreement if you can’t guarantee the bill will be paid.
Charity Begins Locally
Last week I was stopped in the local high street and asked to contribute to a National Charity.
I asked the young person (who didn’t work for the charity) how much goes to the people who need it? “Oh, most of it, about 35%”
Two issues here, the understanding of the maths and then lack of accuracy.
Having been a fundraiser for many years this corporate approach sticks in my throat.
Play the game a give without asking I am often told. However, checking some home truths is always useful. For example how £3 donations a month are required to pay the CEO and the NED’s of the charity? In one case it turned out to be over 10,000 doners.
Another fact that it is worth clarifying, playing a lottery means that the bulk of the funds raised go to the good causes. Not true, the range is 10% to 30% the rest is tax and the profit-making business behind the lottery.
So if less than 30 pence goes to the good cause how could we support those in need better?
Tax effective giving
Gift Aid is the obvious choice, for every £1 donated the charity or sports club can claim from the HMRC.
Small Cash Donation Schemes, same principle, give and the government gives if you pay tax.
There are other measures as well.
Give locally and to groups run by volunteers and 100% of your donation goes to the cause of your choice.
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