Business Articles - Money Management

Are your completely satisfied when the performance of your business lately?

With this booming economy you must be making tons of money and enjoying the fruits of your efforts. No? Then you must be one of the 9 out of 10 contractors scrambling just to survive this crazy economy. If so, these six tips on fine-tuning a business and turbo-charging its performance are for you.

Business Building Tip Number One: Manage Your Cash Flow! Your business survives on cash; learn to manage it properly. Commit to implementing a system that plans your cash inflows and outflows, and force yourself to stop all silly and unnecessary spending. Learn to treat each job like a mini profit center it is. Perform cash flow statements not only for the company but also for every job that you're doing.

Business Building Tip Number Two: Increase Your Markup! Want to increase your bottom-line? Start here. Increase your mark-up 2%. If that sells, try another 2%. That measly 2% will improve your bottom-line more than you think, especially when you incorporate it with Tip Number Three!

Business Building Tip Number Three: Cut Your Overhead! Take a hard look at your overhead. I can almost guarantee you that it has gotten fat and ugly. Try cutting 2% TODAY! Then commit to sitting down and unearthing ways to cut it more. The compound effect of increasing your markup and decreasing your overhead will dramatically increase your bottom-line.

Business Building Tip Number Four: Increase Your Capital Reserve! You need money to make money. If you're living draw to draw, you don't have enough money behind you to survive. One little downtrend in your economy and you will find yourself bankrupt! First, calculate how much money you should have in your capital reserve. Next, check on the aging of your accounts receivable and calculate the average collection cycle (ACC). Interpolate this into months (not days) and multiply your capital requirements by your ACC factor. This is the minimum you should have access to in cash, line of credit, or a combination of the two. Review these numbers on a monthly basis; as your ACC increases, you will have to adjust your capital reserve amount accordingly.

Business Building Tip Number Five: Develop Your Uniqueness! Separate yourself from your competition. Imitation may be the sincerest form of flattery, but it doesn't make your business stand out from the crowd. Your uniqueness is that one 'thing' that you bring to your clients that they can't or won't. It could be your service, your guarantee, your product line, and your ability to complete the work on time or whatever it is that makes you unique from them. Capture your uniqueness and you capture the market!

Business Building Tip Number Six: Learn to Market Like Magic! Marketing your business never ends. If you've ever sailed you know that any sailor worth their weight in salt doesn't stop sailing just because the wind has died down.

Instead, he or she puts up more sail! Commit to a strategic marketing plan that will keep your name 'sailing' in front of your current and potential customers. Smart contractors have doubled their bottom-line by following a great marketing plan. If you don't know how, don't worry, you can learn how, I wrote the book!

Remember, contractors don't fail because of poor construction skills; they fail because of poor business skills. This six-pack of success tips can be a new beginning for you. Start using them today, and you will become the 1 contractor out of 10 who is truly enjoying the fruits of his or her efforts!

Henry Goudreau, C.S.L.
HG & Associates, Inc
www.hgassociates.com
"We turn contractors who dream of a successful business, into business managers who make a business successful!"