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Setting the Tone: Collecting Your Cash

5/27/2015

For a small business, one of the most difficult tasks is to collect on receivables: invoices. Small business owners work very hard on building a strong relationship with each customer. Many even become personal friends with clients. Therefore, it can become very difficult to collect money when it’s due, and it gets harder and and more uncomfortable with each over-due minute. But cash is cash and is the life-blood of our businesses. So what’s the solution?

My advice is to have a very aggressive, disciplined cash collections process, as such:

Get your invoices out on time. In fact, I say get them out early. I used to send invoices to builders even before we were finished with our work, knowing that they typically pay 45-60 days out.
Be firm on your invoice. Make the due date clear and consistent. If you need to be a bank and offer terms, then getting this invoice out on time (i.e. early) is even more important. Be sure to include a little nudge, like “please remit payment immediately.”
Give them a small grace period after the due date, but once they hit that date, send them a ‘nasty-gram’ immediately. Politely inform them that payment is past-due and that you expect payment in full immediately. This letter can be gracious and firm. And because it’s a letter, it is impersonal enough that it shouldn’t get in the way of your relationship.
If the customer still hasn’t paid, then it’s time for a phone call: “Hey [name], can I stop by and pick up that check?” Friendly, but with a firm expectation of payment.

You can come up with your own formula. The point is to have some firmness and some discipline. That sends a message to your customers that you expect payment, and they will start to put you at the front of the line when they write checks. This will also help you maintain that great relationship because there won’t be any hard or uncomfortable feelings that go along with a long-outstanding invoice.

Chicken Wing Guide to Small Business

5/11/2015

As many of you know, one of my favorite foods is the famous Buffalo Wing. In today’s blog, I’ll cover The Chicken Wing Guide to Small Business.

Here are the Categories:

Suicide. If you’ve ever eaten a ’suicide’ flavored wing, you know that the first two, three, maybe four wings are really good. However, by the time you start to pick up the fourth or fifth wing, all kinds of alarms are going off trying to keep you from the next wing: cleared sinuses, sweaty forehead, blazing mouth, and rumbling stomach. A small business in this category is the one that outgrows its strategy and quickly heads down the path of destruction. These are the businesses that seek out the one HUGE customer that will make them rich. Instead, they find that that customer leads to a faster exit.
Hot. These are the best wings. Full flavor plus the punch of a good, hot sauce. A HOT business is one that is finally cooking. Typically, for a business to be HOT, it must catch a break. A key alliance, deal, or breakthrough will take this business quickly from Medium to HOT, but avoid the suicide temptations.
Medium. Medium is safe, for both wings and business. A medium-flavored wing will have some of the zing of a HOT wing, but save the mouth from the fiery after effects. A Medium business is a little more mature. It has weathered the startup storm and has moved on to the ‘cash cow’ phase of business. New sales will come from referrals and word-of-mouth. This business has been there, done that, and doesn’t need to impress anybody by trying too hard.
Mild. We’re starting to reach the limits of way I’d call a true ‘Buffalo’ wing. Eating a wing with Mild sauce says, “I’ll join you in eating these things, but I’d really be eating something else.” Same thing for the Mild business. This business is likely to be more of a hobby than a business. From mowing your neighbor’s lawn to selling crafts once a year at a show, this is not a full-time gig.
Before closing, I should mention Teriyaki and Honey BBQ. I normally would not accept Honey BBQ as a wing sauce, but the inventor of the original Buffalo Wing, the Anchor Bar in Buffalo, does offer Honey BBQ — so it gets an exception. Teriyaki, though, will not receive an exception.
So, what kind of business would I describe as Honey BBQ? This is the business that was fueled by Passion! This business owner would not take “NO” for an answer. When everyone else was full of doubt, this entrepreneur was full of enough spice to push her/his way through and was sweet enough to get what they needed!
That’s the Chicken Wing Guide to Small Business.

Author

Stuart Preston, small business advisor, coach, consultant.

Setting the Tone: Collecting Your Cash

Chicken Wing Guide to Small Business

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