The money you need

The process of borrowing money for your business is similar to borrowing for yourself. However, the reasons can be different. When you get a personal loan, it’s usually to buy something you simply want to own — like a car or appliances…

but when you borrow money for your business — if you’re a smart business owner — it will be to expand or improve your business and its profitability.

You’re right! One example would be getting a loan to buy equipment that, over time, would increase your production capacity or lower your production costs.

Having business credit can definitely be helpful, but remember: you’ll pay a price in interest. If your business has good cash flow, you may not need to borrow as much or as often.

Tips for maximizing cash flow

Lower your overhead

Look for ways to lower your overhead. Shop for better pricing on what you buy. Cut back on non-essentials.

Work with reliable vendors

Work with reliable vendors that deliver quality merchandise on time. If a shipment is late or of poor quality, you miss opportunities to sell your inventory and bring in cash.

Lower prices selectively

Make the hard decision, when necessary, to lower prices when items don’t sell. You’ll be able to recover your cash and put it into products that will sell more quickly.

Improve your cash tracking

Create a monthly cash flow chart, showing when you expect cash to come in and go out. This will help you anticipate possible cash shortages. Streamline your bill collection process so that you get paid more quickly whenever possible. That way, you’ll have your own cash to work with, rather than paying interest on borrowed money. Double-check your bookkeeping to avoid fraud and overpayments.

Invoice and collect promptly

Invoice and collect promptly from your customers. Consider having a 14-day payment cycle rather than a 30-day payment cycle. Be sure that your invoices permit you to charge interest for late payments. Be careful to track accounts for prompt payment. When you extend credit, you lose access to cash and the interest it may generate if invested. Follow past-due accounts closely. The more overdue an invoice is, the less likely you are to collect it.

create a customer database

Marketing tactics may include advertising, public relations, customer communications, special sale pricing, etc. But what’s important to remember is that a good marketing strategy always starts with understanding your customers and prospective customers — who they are and what they’re looking for.

A customer database can be a fantastic tool to help you market your business successfully. Here are some tips for how to create one that will help your business grow.

Consider what each person in your company wants to do with the information. For example, will you need a phone, email list, or social media profiles of your customers? A report of which customers bought which products? A mailing list to send postcards or newsletters? Based on how you will use the database, create and add fields to track information. Remember, a practical, simple, and flexible database comes not from a computer program, but from people who understand the importance of gathering information, who think ahead about how the data will be used, and who are dedicated to keeping the information up-to-date.

Everyone at your business should contribute information for the database. However, consider assigning just one person the responsibility of inputting, changing, or deleting information to the database. This cuts down on duplicate records, information conflicts, etc. If more than one person is inputting information, you need to create a category that tracks who made each entry.

While one person may be in charge of the database, everyone on staff should have access to looking at and using the information.

You might consider hiring an outside consultant to help you create your database. But if at all possible, have the person on your team who is going to be using it most participate in the design process. Select the simplest software package that’s flexible enough for your current and future needs. Be sure to get the software training you need.

The more separate databases you create, the harder it is to cross-reference information. If a customer moves, you might have to change his or her information on several separate databases. It’s just not time- or cost-effective. Set up just one database for tracking and marketing to your customers. Keep in mind that your accounting staff may need their own database for tracking vendors, bills, and payroll.

The goal is to have your database constantly grow. Anyone who voices an interest in your business — by calling, coming to a sale, requesting information, etc. — should be added to the database. Keep adding new information and updates in a timely manner.

Consider having security passwords for different levels of use (one for inputting information, one for designing screens, one for viewing confidential information, etc.). This ensures confidentiality as needed, and prevents staff members who don’t know how to use the system from making unintentional, but costly, mistakes.

gray checklist

research your market

It pays to understand the world your business would like to reach — and doesn’t have to cost a lot to do so.

When should a business conduct research? Two excellent situations are when you’re considering launching a new product or service, or when you need to find new customers for an existing product or service.

Where do you find published research? Ask at your local public library. Look on the Web. Visit Web sites for trade associations and government agencies related to your industry.

How can you conduct research on your own? Create a questionnaire for customers, prospects, vendors, and suppliers. Ask: do you like our product or service? What are we doing right? What can we do better?

Go to industry meetings and trade shows. Ask questions. Listen. Find out what your competitors are doing. Get a sense of what’s happening in your industry, and what’s helping others to succeed.

How can you make hiring a market research firm more affordable? Find non-competing businesses that are in a business related to yours and propose sharing the expense of a research study.

Note: Learn about your customers, competitors, and market by observing, listening, and asking questions. If you use an outside research firm, customers may be more willing to give honest feedback.

cafe owners working on notes and bookkeeping

increase sales with pr

A well-written press release will attract positive attention for your small business. Public Relations (P.R.) means a business’ efforts to maintain a positive public image. Public relations are often conducted through the media. Writing and distributing a press release — a thoughtfully prepared written statement — is one traditional way for businesses to communicate with the media.

What is in a press release?

Here is a list of the main parts of a press release, in order as they appear:

The most important, attention-grabbing, newsworthy idea

First paragraph
Essential info; who, what, when, where, why

Further info/quote
Background or supporting info; optional first-person statement from key person/expert

Final paragraph
Brief summary of your company: location, type of business, who you serve, year founded

Contact info
Your name, phone number, email address

The date of your release and the phrase “For immediate release”

use low cost tactics

Effective marketing can be affordable. Here are examples of techniques used by a small retail store.

Give free samples
Give away free samples of your products to customers who visit your store.

Print your own
Produce your own catalogs and other marketing materials. With today’s technology — personal computers, software, and color printers — you can produce small quantities of professional-looking materials less expensively than ever before. If graphic design and marketing are not your strengths, look for reasonably priced vendors to assist you.

Use email
Use email promotions — but only customers who have given you their permission to contact them. The people who know and like your products already are far more likely to read your emails and respond to them positively.

Send personal notes
Mail thank-you cards to clients shortly after they’ve purchased from you. These cards need not be expensive, but a warm and friendly, hand-signed note will help build customer loyalty.