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Give Your Small Business a ‘Cash Health’ Checkup for the New Year

Posted: 29 Nov 2019 02:52 PM PST

By Andy Bailey

As we wrap up the year and prepare for the next, make sure to give your business a cash health checkup. This is more than looking at a statement to see if there is money in the bank or to check the profit margin. It's analyzing where you are, deciding where you want to be, and outlining a strategy to get you there.

Cash management is one of the pillars of a successful business. Forty-one percent of small and medium-sized companies report cash flow problems, and 56% of business owners report that cash flow problems have a high emotional impact, according to a WePay SMB & Money Survey. 

Don't let a streak of success fool you into thinking that you don't have to have a cash strategy. The following are steps to ensure your company stays on track to reach its financial goals in the coming year.

1. Analyze your financial KPIs

Every business owner and CEO needs to be mindful of their company's financial performance, which includes having easy access to and tracking the appropriate key performance indicators (KPIs). These KPIs are telling statistics about the health and performance of your company. 

As a part of your cash health checkup, your CFO or accountant should produce a report which includes your company’s relevant KPIs. After building this report, it's crucial not only to analyze it now, but also to check on it continually throughout the year—daily or at least weekly. There are a wide array of KPIs to include in your dashboard. Here are a few important ones:

  • Operating cash flow: Takes into account non-cash expenses (depreciation and amortization) and other relative items, such as inventory changes, accounts receivable, and accounts payable to show an adjusted net income.
  • Gross profit margin: Gauges your company's capacity to acquire additional operating costs (sales and marketing, administrative, and R&D expenses) by measuring the percentage of revenue over the cost of goods.
  • Budget variance: Assesses your company’s financial performance in comparison to the forecasted results.

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2. Develop your cash flow forecast

A cash flow forecast is an outline of how your company's money moves in and out during a specific amount of time. If you have this information on hand, you can better prepare your company for any tight cash flow periods and assure your business survives unscathed.

Realizing you're a bit behind on this practice? Start by implementing a week-by-week cash flow forecast. The smaller a time frame the forecast is applied to, the more accurate and granular view of the business's cash needs you'll get. This in the long run will enable you to better identify and recognize possible obstacles to growth.

3. Embrace honesty and accountability

It's the leader's responsibility to build a professional, emotionally and physically healthy team whose members feel comfortable with open, honest dialogue. A group of "yes" people, who always tell you what you want to hear, is not productive or helpful. Maintain an engaged team that regularly contributes insights on processes affecting your company's cash flow forecast, such as bringing new clients on board or hiring new team members. Then, hold team members and yourself accountable to review the accuracy of that data.

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4. Incorporate discussions regarding cash flow during your daily huddles

The daily huddle is a routine I emphasize to businesses. As outlined in Verne Harnish's book Mastering the Rockefeller Habits, a daily huddle is a key aspect of the Rockefeller Habits (developed by renowned industrialist John D. Rockefeller). Take the time to discuss your KPIs in daily huddles. This is an efficient strategy to inform your whole team about issues affecting cash flow. 

It's no easy feat to manage your business's cash flow, but if you follow these steps, you'll ensure that in good and bad financial times, your company will have a strong system in place to combat the dry spells and manage your company's financial demands. 

RELATED: The Best Ways to Finance Cash Flow Emergencies

Andy Bailey is the author of No Try Only Do: Building a Business on Purpose, Alignment, and Accountability. He is CEO and head coach with business coaching firm Petra Coach and serves in an advisory role on the Gazelles Council, the leaders of the Scale Up movement. Visit his blog at www.petracoach.com for more business and leadership insight.

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Simple Rules to More Effective Communication for Salespeople

Posted: 29 Nov 2019 02:29 PM PST

Playwright George Bernard Shaw is alleged to have said, "The single biggest problem in communication is the illusion that it has taken place." That quote is absolutely true in sales. Since words are the tools that a salesperson uses to sell, good communication is critical. You will not make the sale if you experience only the illusion that communication has taken place.

Here is how to more effectively communicate when you sell.

Avoid ambiguous "gray" words

One of the most important outcomes of good communication is both parties understanding precisely what has been said. When a salesperson speaks, their objective should be to be clear. One way to be clear is to avoid using gray words or words that are open to interpretation. Gray words can be comparative words like more, less, better, and worse. When you hear a customer say he wants more, do you really know how many more he wants?

Gray words can also be broad like fewer, a lot, always, and never. Anything that suggests an evaluation against a yardstick is a gray word. What happens is we interpret what’s been said from our own frame of reference and we are often wrong. If you hear a gray word when you’re selling, ask for clarification to improve the communication.

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Choose positive over negative

When a salesperson speaks, they should be easily understood. And it's far easier to be understood when statements are positive versus negative. Here is an example.

Read the following two sentences and determine which is one easier to understand. The first one is "Selling is easy." The second one is "Selling is not hard." Both sentences mean the same thing. I'll bet you thought that "Selling is easy" was easier to understand. What it took for your brain to understand it was a simpler process. Here's what happened.

When someone speaks in the negative, the listener first has to determine what the positive means. When you read, "Selling is not hard," your brain had to first construct what “selling is hard” meant. Then there was a second step where you had to determine that selling was not that. However, when you read, "Selling is easy," your brain didn't have to construct a second step. It immediately understood what "selling is easy" means.

You don't want your listener to have to work when you speak. Avoid using negatives to enhance the understanding of your communication in sales.

Watch your speaking pace

Another objective to enhance communication when you’re selling is to be believable. You want your customers to trust what you say. Unfortunately, some sales situations are stressful which can cause a salesperson to get nervous. What often happens when a salesperson gets nervous is they will start speaking faster. This can become a problem in sales because when a person is not telling the truth, they also will start speaking faster—it's an unconscious way of distancing themselves from the lie. As you can imagine, being perceived as untruthful in selling is an obstacle to effective communication.

To calm your nerves, prepare for your sales calls. Deep breaths can also be calming. The pace of your speaking is an important part of being an effective sales communicator.

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Minimize the use of filler phrases

If you listen to politicians, you'll hear them using a lot of filler phrases. Examples of filler phrases include let's be clear, the fact is, and the end of the day. The purpose of filler phrases is to buy time for the speaker. If you get a tough question on a sales call, you could also use them while you are thinking of an answer—but, just remember, you may not want to sound like a politician. Instead of using a filler phrase, you could instead hesitate while gathering your thoughts and then answer. You would then appear to be thoughtful which could enhance your believability.

I can think of nothing worse than leaving a sales meeting where there has been an illusion that communication has taken place, but nothing has, in fact, been decided or confirmed. But if you work to improve your communication skills by following these basic rules-of-thumb, your customers and prospects may start hearing exactly what you want them to.

RELATED: 14 Overused Business Phrases We Must Retire (And Better Ways to Communicate)

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Employee Benefits: What Do Your Employees Really Want?

Posted: 29 Nov 2019 07:30 AM PST

What kinds of employee benefits does your small business offer? If you're only giving your employees the bare minimum—or not even that—you're not doing your business any favors. In a survey from Kelton Global commissioned by QuickBooks Payroll, 44% of small business employees say companies that don't offer health or dental insurance, paid vacation and sick days, or retirement plans are cheap and don't care about their employees. More than one-third say these companies are "behind the curve," while 41% say they wouldn't want to work there.

The survey of more than 1,000 U.S. small business employees has some other insights into what benefits employees care about, what they're actually getting, and how your business stacks up. Here's a closer look.

What are the most common employee benefits?

The good news: 93% of employees in the survey say their employer provides at least one benefit, with paid time off being the most common. However, while 57% get paid vacation, just 48% get paid sick days and only 37% get paid personal days. New parents fare the worst—just 14% say they get paid parental leave.

Two-thirds of survey respondents get health insurance benefits from their employer: 56% get health insurance, 41% receive dental insurance, and 35% get vision insurance.

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Just 41% are offered a retirement plan such as a 401(k), and retirement benefits are more likely to be offered to employees age 39 and up than to younger employees. Retirement plans for even the smallest businesses are available at reasonable costs, and this is one of the most desirable benefits for employees. Not only are retirement benefits essential to attracting older workers, they can also help make your business a more appealing employer for millennial and Gen Z workers—two demographics that are already concerned with their financial futures.

It's the little things

Beyond the essential employee benefits mentioned earlier, the more discretionary employee benefits—such as free food in the office—are less common. About one-third (36%) of small businesses provide food and drinks to employees; 23% offer flexible work hours and just 13% let employees work remotely.

While free snacks are nice (and 61% of small business employees say they feel "cared for" by employers who provide such benefits), flexible or remote work is arguably a more meaningful benefit. Being able to work from home or adjust work hours around a child's schedule has a significant impact on an employee's daily life far beyond a free latte or granola bar. Flexibility can make all the difference when an employee is weighing a job at your business versus a job elsewhere.

Of course, if you own a retail store, restaurant, or other business where employees must be on-site to do their jobs, this isn't an option for you. But for more and more businesses today, work can be done from anywhere, making it easy to offer flextime and let employees work remotely.

The benefits of benefits

Employee benefits are good for your staff, but they can also benefit your business by improving employee satisfaction and loyalty. Good benefits can also help a small business stand out and compete with bigger companies for qualified workers.

In this area, small businesses still have a way to go. Almost four in 10 (39%) survey respondents are dissatisfied with their employee benefits; 29% say their company only does the "bare minimum" when it comes to benefits.

In addition, just 39% say they have better benefits than most of their peers, and only 6% say their company's benefits are "above and beyond" the norm.

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Bad benefits can drive employees away. More than one-third of employees who looked for a new job in the past year were seeking better employee benefits, and 39% say they'd start looking for a new job if their benefits were cut back.

What can you do?

It's not surprising that small businesses find it more difficult than big ones to offer outstanding benefits packages. After all, you don't have the deep pockets of a Google or Microsoft to ply your employees with free beer on Fridays or on-site medical consultations. But you should do your best to offer the benefits your employees want. That's because benefits have a real effect on employee loyalty.

One-fourth of survey respondents say if they had the right benefits package, they'd happily recommend their employer to others. Almost half (48%) say benefits would make them stay at their job even if another company offered them a raise, and 87% say they'd give up a 5% raise in exchange for more benefits.

While employee benefits may cost you some money in the short run, in the long term, they can pay you back in employee loyalty and satisfaction, ultimately making your business more competitive.

RELATED: Here's What Happened After I Forced My Employees to Take Their Vacation Days

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