Why You Don't Need To Be A Business Lemming.
February 8th 2012 07:05
Link: www.theprofitfrog.com
Small Businesses, In Particular, Retailers Collapsing Under Current Market Pressure.
"ARA [Australian Retailers Association] executive director Russell Zimmerman says he's seen more closures and administrations over the past 12 months than he's seen in the past 30 years..."
(courtesy SmartCompany.com.au)
According to the Westpac Local Business Sentiment Survey from December 2011, "The number of business owners struggling to manage their cash flow has risen from 32% to 48%; not surprising given that 34% don't have a cash flow budget." (courtesy Westpac.com.au)
Definition of a Lemming: (Slang) - A person who unthinkingly joins a mass movement, especially a headlong rush to destruction. (courtesy Wiki-dictionary).
It's not just consumer confidence that has dipped severely since the GST. The carry-over effect is an obvious one, to a degree. When consumers experience increased daily living costs, such as transport (petrol, public transport tickets), food (in an average shopping trolley, not just the individual items), accommodation (mortgage or rental increases), utilities (gas, power, water) and a host of other expenses, naturally the first thing people do is resist spending cash on non-essentials.
Non-essentials are different things to different people. Restaurant dining, movies and other entertainment, holidays and electronics can all fall into the non-essential category. Families will, of course, spend differently to young independent people, and older citizens and retirees will spend differently again. However, it is accepted that the first to go from every person's spending "budget" is the non-essential.
This has on-going effect - less consumer spending means businesses have less sales, more stock on hand, greater need to clear it so they can pay their suppliers, increased urge by business owners to reduce their retail cost to the consumer in hopes to entice them in to buy, and so the spiral continues... down... fast.
It may not seem surprising then that business owners experience difficulty with cash flow.
Yet, it is shocking to think that over a third of business owners do not have a cash flow budget and comes as no surprise then that so many businesses are facing administration or closure in greater numbers now than in the past three decades.
There are - without doubt - a huge number of costs faced by small (and medium) businesses.
* Wages
* Insurance
* Licences and Registrations
* Stock
* Lease or rental space
* Rates
* Fees - franchise fees for example
* Transport
* Manufacturing / importing
* Packaging
* Distribution
* Utilities - power, gas, water
* Branding, Logo, stationery
* Marketing (including all advertising)
... and the list goes on... and on.
These costs are "universal" - that is, most businesses face these costs every day - particularly the "bricks and mortar" variety. They are, to a degree, predictable and manageable.
Few business owners who could have predicted the onset or the extent of the Global Financial Crisis. While Australia seemed to "coast" through it compared to the impact upon other countries, the idea that the GFC is over and Australian businesses are just getting on with being in business is naive and mistaken. There are many doing it tough.
However, could Aussie business owners have done more after the 2008-2009 upheavals to protect themselves, their staff and their families, to keep business rolling along?
You bet.
When a bank survey can identify that 34% of business owners do not have a cash flow budget, one of the most critical tools for being in business, it beggars belief that those same 34% are still in business.
I would normally voice my concerns over shoddy customer service, and the subsequent impact on cash flow. But I am dumb-founded by the sheer numbers of business owners who, it seems, don't even have the most basic of tools for managing their cash flow, let alone measuring the impact of poor customer service upon it.
Here's the news.
Don't be a business lemming.
If you are in business, do what the other 2/3 are doing - create a cash flow ledger and monitor your expenditure against your sales revenue and cash generation.
Use Excel. Create a spreadsheet. If you don't know how to, pay someone to do it for you.
Use MYOB or Quikbooks or other book-keeping software.
Use your accountant or hire a book keeper.
Do something about it.
There is nothing more disappointing to me as a business marketing consultant than to hear business owners complain about how tough the economy is, or how expensive wages are, or how harsh the latest government taxes are, or how difficult it is when costs for fuel/stock/insurance/utilities go up - only to hear them still complaining instead of taking action.
If things are tough, talk to an expert about what steps you can take to take the pressure off.
If cash flow is really tight to the point of breaking, then get all the advice you can handle - from accountants, financial advisors, your bank, and don't forget the importance of re-visiting your current marketing and advertising. You could easily have cash flow tied up unnecessarily in your advertising.
The marketing arena has changed dramatically over the last five years and if you are not keeping pace, have no idea about social media, think you don't need it or worst still, if you think marketing - especially social media - is too expensive, then you are not talking to the right service providers. You need to consider the importance of current and relevant marketing strategies, and invest only in those that are well-suited to the business you operate.
Here is what the Profit Frog approach would be:
1. We set an appointment for 3 hours and we discuss EVERY part of your business, from the basic operations right through to your marketing.
2. Once the appraisal is complete, you and I will have a very clear picture of where you are, how you got there and more importantly - "where to from here?"
3. I will advise you about the steps we can take - together - to support your next move forward to manage your cash flow. If you don't have the tools in place to manage your cash flow, then we will get those organized. If you do, we will make sure they are functioning and see whether any form of automation or outsourcing can improve productivity and efficiency.
4. I will begin working with you using The Profit Frog's unique marketing system to increase your cash flow - in both the immediate sense, and also within the first 90 days, as well as long term. I will guarantee IN WRITING that you will see a minimum 10% cash flow increase - provided you are willing to implement my strategies. Work with me on it, and you'll see at least 34% BOOST to your cash flow within the first quarter.
5. I will monitor your cash flow performance across the first 3 months, to determine exactly what next actions steps from the unique marketing system would bolster your cash flow, generated from (a) sales, (b) redirection of your current budget, (c) implementing a cash-flow monitoring tool, (d) minimising your expenditure on advertising.
Overall, it is too hard to ignore the survey outcome, and impossible not to be worried by the observations made by the ARA.
Don't be a Lemming.
Take Action Today.
If you need help, call the Profit Frog now - 1300 98 -36- 41
Email the Profit Frog - you will receive a response within 48 hours.
Contact the Profit Frog via the webform:
"ARA [Australian Retailers Association] executive director Russell Zimmerman says he's seen more closures and administrations over the past 12 months than he's seen in the past 30 years..."
(courtesy SmartCompany.com.au)
According to the Westpac Local Business Sentiment Survey from December 2011, "The number of business owners struggling to manage their cash flow has risen from 32% to 48%; not surprising given that 34% don't have a cash flow budget." (courtesy Westpac.com.au)
Definition of a Lemming: (Slang) - A person who unthinkingly joins a mass movement, especially a headlong rush to destruction. (courtesy Wiki-dictionary).
It's not just consumer confidence that has dipped severely since the GST. The carry-over effect is an obvious one, to a degree. When consumers experience increased daily living costs, such as transport (petrol, public transport tickets), food (in an average shopping trolley, not just the individual items), accommodation (mortgage or rental increases), utilities (gas, power, water) and a host of other expenses, naturally the first thing people do is resist spending cash on non-essentials.
Non-essentials are different things to different people. Restaurant dining, movies and other entertainment, holidays and electronics can all fall into the non-essential category. Families will, of course, spend differently to young independent people, and older citizens and retirees will spend differently again. However, it is accepted that the first to go from every person's spending "budget" is the non-essential.
This has on-going effect - less consumer spending means businesses have less sales, more stock on hand, greater need to clear it so they can pay their suppliers, increased urge by business owners to reduce their retail cost to the consumer in hopes to entice them in to buy, and so the spiral continues... down... fast.
It may not seem surprising then that business owners experience difficulty with cash flow.
Yet, it is shocking to think that over a third of business owners do not have a cash flow budget and comes as no surprise then that so many businesses are facing administration or closure in greater numbers now than in the past three decades.
There are - without doubt - a huge number of costs faced by small (and medium) businesses.
* Wages
* Insurance
* Licences and Registrations
* Stock
* Lease or rental space
* Rates
* Fees - franchise fees for example
* Transport
* Manufacturing / importing
* Packaging
* Distribution
* Utilities - power, gas, water
* Branding, Logo, stationery
* Marketing (including all advertising)
... and the list goes on... and on.
These costs are "universal" - that is, most businesses face these costs every day - particularly the "bricks and mortar" variety. They are, to a degree, predictable and manageable.
Few business owners who could have predicted the onset or the extent of the Global Financial Crisis. While Australia seemed to "coast" through it compared to the impact upon other countries, the idea that the GFC is over and Australian businesses are just getting on with being in business is naive and mistaken. There are many doing it tough.
However, could Aussie business owners have done more after the 2008-2009 upheavals to protect themselves, their staff and their families, to keep business rolling along?
You bet.
When a bank survey can identify that 34% of business owners do not have a cash flow budget, one of the most critical tools for being in business, it beggars belief that those same 34% are still in business.
I would normally voice my concerns over shoddy customer service, and the subsequent impact on cash flow. But I am dumb-founded by the sheer numbers of business owners who, it seems, don't even have the most basic of tools for managing their cash flow, let alone measuring the impact of poor customer service upon it.
Here's the news.
Don't be a business lemming.
If you are in business, do what the other 2/3 are doing - create a cash flow ledger and monitor your expenditure against your sales revenue and cash generation.
Use Excel. Create a spreadsheet. If you don't know how to, pay someone to do it for you.
Use MYOB or Quikbooks or other book-keeping software.
Use your accountant or hire a book keeper.
Do something about it.
There is nothing more disappointing to me as a business marketing consultant than to hear business owners complain about how tough the economy is, or how expensive wages are, or how harsh the latest government taxes are, or how difficult it is when costs for fuel/stock/insurance/utilities go up - only to hear them still complaining instead of taking action.
If things are tough, talk to an expert about what steps you can take to take the pressure off.
If cash flow is really tight to the point of breaking, then get all the advice you can handle - from accountants, financial advisors, your bank, and don't forget the importance of re-visiting your current marketing and advertising. You could easily have cash flow tied up unnecessarily in your advertising.
The marketing arena has changed dramatically over the last five years and if you are not keeping pace, have no idea about social media, think you don't need it or worst still, if you think marketing - especially social media - is too expensive, then you are not talking to the right service providers. You need to consider the importance of current and relevant marketing strategies, and invest only in those that are well-suited to the business you operate.
Here is what the Profit Frog approach would be:
1. We set an appointment for 3 hours and we discuss EVERY part of your business, from the basic operations right through to your marketing.
2. Once the appraisal is complete, you and I will have a very clear picture of where you are, how you got there and more importantly - "where to from here?"
3. I will advise you about the steps we can take - together - to support your next move forward to manage your cash flow. If you don't have the tools in place to manage your cash flow, then we will get those organized. If you do, we will make sure they are functioning and see whether any form of automation or outsourcing can improve productivity and efficiency.
4. I will begin working with you using The Profit Frog's unique marketing system to increase your cash flow - in both the immediate sense, and also within the first 90 days, as well as long term. I will guarantee IN WRITING that you will see a minimum 10% cash flow increase - provided you are willing to implement my strategies. Work with me on it, and you'll see at least 34% BOOST to your cash flow within the first quarter.
5. I will monitor your cash flow performance across the first 3 months, to determine exactly what next actions steps from the unique marketing system would bolster your cash flow, generated from (a) sales, (b) redirection of your current budget, (c) implementing a cash-flow monitoring tool, (d) minimising your expenditure on advertising.
Overall, it is too hard to ignore the survey outcome, and impossible not to be worried by the observations made by the ARA.
Don't be a Lemming.
Take Action Today.
If you need help, call the Profit Frog now - 1300 98 -36- 41
Email the Profit Frog - you will receive a response within 48 hours.
Contact the Profit Frog via the webform:
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