Then I will continue opening to the reader my vast knowledge of ?inside secrets? of a successful business in a series article that will follow this one.
First and foremost, keep in mind that you want to pick a business or a product that has as many potential customers as possible, ask yourself ?how large is my sales universe?? This is a precursor to deciding what kind of product or service you want to sell, this is vastly important to you especially to a new start up business because it lends itself to how much startup capital you will need. If you have a physical product that you have to make or buy, then you have a totally different set of issues than if you pick a service or information product both require little or no physical space or location.
Once you have picked a product or a service that fits you, and why do I say ?fits you? because you want to enjoy your work because it could or will consume the majority of your lifespan? your time. Then objectively sit back and consider who your customer is, think through the sales process and consider who will be buying your product or service? go all the way from the beginning to end, brainstorm the complete process. Do this with others if you can. As you do this keep something open to take notes on, laptop, notepad and pen, or whatever, these notes are great to refer back to as you consider the sales channel.
Do the same for the purchase channel, you say what is the purchase channel? Well in most cases if you want be in business you will have expenses? things you have to buy to run your business and to provide your product or service. At the end of doing this you should have less money expensed in the purchase channel then you have money coming in the sales channel or you need to reevaluate what you have chosen to sell or do. This is called ROI or Return on Investment, the greater the ROI the better off you will be.
Don't get bogged down with this to start with? if you can figure out exactly what your ROI is great, but just know that money needs to be greater coming in than going out on a reasonable or living scale. Your ROI percentage is not as important as the investment capital, or the setup cost you have to make to get started. Once you get your initial working capital in place the turning of the customers or sales volume will increase your ROI, and yield you what you need and more as long as you were true to the original start up goal. That is? picking a business or a product that has as many potential customers as possible.
In an Aerospace company they only have a 5% or less ROI, but you have to remember that that's 5% or less of several hundred million dollars, if not billions. So over each 90 day accounting cycle the company makes quit a lot of money.
The other side of the reasonable or living scale idea, demands you keep this in mind as you build your business on facts not false hopes? truly consider and pick the largest sales universe as possible. The Lemonade Stand business has a high ROI but it is not a living wage for a head of household. Suzy's Dad provided the free lemons, sugar, water, and cups for Suzy to make $2 selling .25 cent a class Lemonade on one day, but how quickly will Suzy saturate her customer base of those who drive up and down her street? This is an issue of economy of scale that has bearing on everything you do in the decision phase of starting a new business.
Today we looked at some very important concepts? lets review.
Pick a business or a product that has as many potential customers as possible, ask yourself ?how large is my sales universe??
How much startup capital will I need?
What kind of product or service do I want to sell?
Have I picked a product or a service that fits me?
The sales process, who will be buying your product or service?
In the business I have chosen what will be my expenses?
What ROI can I expect in the business I have chosen?
Are the facts I based my initial business decision on going to produce income enough for my needs?
Is my revenue based on the economy today, which way is my market moving, and will it grow or decline?
These are just a few thought I will open to you as this sires continues, I look forward to the next article. As we progress I will entertain opening a few emails and answering some question about specific problem to help those of you who have special challenges in business.
Copyright (c) 2006
So you have completed the job. After many changes and communication breakdowns, you delivered on time and exactly to specification. Now you sit and wait to be paid. Thirty days later, you're still waiting. Sixty days later, you're almost begging. Ninety days later, you are biting off your fingernails and tearing your hair out. This has happened to every small business that offers credit to their clients. How can you get paid on time and maybe even early? Here are my top seven tips for getting paid on time:
1.Do thorough credit checks before offering credit. Ok, I know that many clients will assume that you should automatically give them 30 days credit, no questions asked. That might work great for their cashflow but not for yours. Have every client complete a credit application, perform the checks and get at least two trade references. Credit is a privilege, not an automatic right.
2.Settle any disputes as quickly as possible. If there are any problems, don't bury your head in the sand or procrastinate. Deal with them as soon as you can. Show your client that you are as committed to solving the problem as you were to making the original sale. Not only will this help you get paid on time but it will also strengthen your relationship with your client.
3.Send out invoices promptly. By this I mean, on the day of despatch of the goods or completion date of the service. If you can include the invoice with the goods do that but also send a copy to accounts. Sometimes if you send an invoice late, the accounts department will only pay 30 days from receipt instead of 30 days from the invoice date. Don't allow this to happen.
4.Call to make sure that the invoice was received. Make a gentle call ensuring that the invoice has been seen and did not get ?lost in the post?. This technique is usually recommended for first time clients. Your regular clients might get a little peeved if you do this every single time.
5.Get the name of the person in the accounts payable. You should capture this information on your credit application form. Often, when you call to chase payment, you might speak to more than one person and get different responses. If you deal with the same person every time, they are accountable if the payment does not arrive when promised. If they tell you that the financial director has to approve the payment, get her name too.
6.Call on the day when the payment is due and find when it will be made. Don't be aggressive or demanding this early in the collections process. Calling early can encourage a slow payer to deal with your invoice promptly.
7.Offer a discount for settling the bill early. A small discount such as 5% if settled within 30 days or 10% if settled within 7 days can be very appealing for clients who want to make additional savings on the transaction. Of course, only offer this if your profit margin can take the hit.
My last bit of advice: don't be afraid to pick up the phone and talk to your clients about payment. Often, we might be timid about asking for payment because we don't want to upset our clients. But remember, a client who doesn't pay, no matter how great a company they may seem, is useless to your business.
Both Jessica Deets & Tara Roitman are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Jessica Deets has sinced written about articles on various topics from Interest, Acid Reflux and Heart Conditions. Jessica Deets researches the internet and finds information to help people. You can get more news about starting a business along with referenced information at