Corpcentre's Blog

April 22, 2010

Customer Red Flags to Watch Out for

If you are in business, you know that you have to constantly be on alert on all fronts. You try as hard as you can to plan and operate your business with clear guidelines. Sometimes, though, all the planning cannot prevent the unexpected. Many business leaders will tell you that the problems from outside are the biggest challenge.

In order for you to operate, you count on suppliers for goods and services. Your cash flow is dependant on timely payment by your customers. Any disruption from your suppliers or customers can be harmful to your operations. Continued disruption can become fatal. However, by being vigilant and spotting the early warning signs of potential problems, you can avoid trouble before it happens.

Keep abreast of a customer’s payments. If the payments start becoming delinquent on a regular basis, they may be in trouble. Don’t wait, though, until they stop paying. Open up a dialogue early to help you collect payments while their doors are still open.

Another warning sign is commonly known as nit-picking. You owe a customer a small credit and they refuse to pay their large bill until the credit is received. This stalling tactic should indicate to you that all is not well, as they could obviously just deduct the credit and send the balance. Perhaps, the customer suddenly begins sending you the balance in several payments, without consulting with you. Your early warning signal should be blaring loudly.

Have you noticed that there has been a large turnover of employees at your customer or supplier? Is this a sign that the passengers are jumping ship before it sinks? When you called to speak to someone over there, the usual perky, friendly reception was replaced by a rather laconic, curt reply or a disinterested, half-hearted response. Be on the alert and assess the situation carefully. You need to protect your interests.

Keeping one step ahead of the storm can be your best insurance plan.

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March 25, 2010

Do I Need a Business Plan?

A business plan sounds like a complex study. In some cases, it may be. But, the question is asked if every business truly requires a business plan?

The answer to that question is “yes”, more often than not. A viable business, rather small or large, should make use of a well-designed business plan at some point in time.

Starting at the time when the business is still but an idea, a business plan is an excellent way to organize ideas. It allows you to create a filing system in which the various cogs and wheels begin to come together into a working machine. Long before you begin actually getting the idea off the ground, your business plan allows you to draw a picture of your idea – so to speak – and stand back to take a look if there are any mistakes or problems. Also, none of us are perfect. Especially if we are dealing with a complex idea such as a new business, it is best to have others review our concepts. Your business plan is an excellent way to allow others to help you develop your thoughts and use their feedback to improve what you have begun.

As your business begins taking shape, you will need the business plan to help interest possible investors. Your bank may wish to see the plan when you begin discussing credit with them. Perhaps you have decided to take in a partner. The business plan will be dissected at your meeting. The business plan is the blueprint of your business. It should accurately describe the concept. It will discuss the goals, milestones, financing, cash flow, staffing, and virtually every aspect of your business. It is the theoretical side of the entity. Also, a good business plan should be updated as the business begins operating, especially in relation to financial projections.

Invest the time to write a proper business plan. It is an investment that will have a guaranteed positive return.

Here is some business plan software to get you started.

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February 9, 2010

Obama and Small Businesses

In his recent State of the Union address, U.S. President Obama presented a bold, economic initiative to help bolster his nation’s struggling economy. Obama proposed making $30 billion available to small community banks so that they, in turn, can make these funds available in the form of credit to small businesses.

From a patriotic standpoint, Obama is worthy of praise in his concern for small businesses, part of the backbone of America. From an economic standpoint, many feel he has missed the boat.

Many bankers and economists agree that the problem in the U.S. economy is not the lack of credit but the lack of demand by small business and consumers. Simply put, Americans are not interested in borrowing money at this point in time. Unsure of their country’s economic future, Americans prefer to save rather than spend. Herein lays the problem for small businesses. Their market has shrunk, due to fewer customers. As a result, they cut costs by hiring less and purchasing less from suppliers. At the end of the chain are the businesses that face closure. In order to keep afloat, these businesses attempt to obtain credit to pay their bills. But, these are the high risk customers that the banks don’t want. The banks want the solid customers who can repay their loans. After all, banks make money from repaid credit, not defaulted loans.

At this point, the only banks that would require funds from Obama’s $30 billion are those holding problematic loans, and they probably won’t qualify. Bank regulators are examining records with magnifying glasses. High risk banks will most probably fail, rather than receive federal relief.

Maybe Obama should re-direct his funds. Stimulus funds need to get into the economy right away. Rather than strengthen the banks that are in trouble, strengthen the small business sector. When consumer spending is stimulated, the wheels of the economy will be oiled and the system will move forward.

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