This guest post is by Fred Parrish, CEO and Founder of Profit Experts, and author of The Profit Mentality, a guide for maximizing entrepreneurial success by taking control of the financial dynamics critical to profitability. Fred is a speaker and instructor on subjects related to profit and cash flow optimization. His company offers a service to help you manage your cash flow so you can sleep better at night.

In his book The Tipping Point, Malcolm Gladwell addresses the factors that produce and sustain epidemics. He states “the best way to understand the emergence of trends… is to think of them as epidemics. Ideas and products and messages and behaviors spread just like viruses do.”

To illustrate the power of environment, Gladwell uses the Broken Window theory that describes conditions by which crime is propagated readily and continuously. It shows “crime is the inevitable result of disorder. If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge. Soon, more windows will be broken and the sense of anarchy will spread from the building to the street…, sending a signal that anything goes. Relatively minor problems such as graffiti, public disorder and aggressive panhandling are…, invitations to more serious crimes.” Application of this approach was responsible for the dramatic improvement in the New York City crime rate during the early 1990s.

The same approach must be taken with your business. If a “window is broken” and “left unrepaired” your staff will get the idea that there is no concern for efficient, orderly operation. That it is okay to waste time or resources. It’s okay to be haphazard about the way customers are managed. As with crime, “disorder” in the environment is contagious and drains the company of cash.

Consider a company of 50 employees. Let’s say there is an item that costs $0.50 each and it is something that is consumed regularly in the business. If each employee were to waste only one of these items per day (drop it on the floor to be discarded later, leave it out to be spoiled in some way, use it improperly or ineffectively to cause it to be made unusable, etc.), does that seem like a big deal? Maybe…?

In fact, 50 employees “wasting” that $0.50 per day every day of the year would cost the company $6,625. Given this operating style and the reality that there are hundreds of these $0.50 items to be managed during a normal business day throughout the organization, you could easily take the $6,625 and multiply it by 10 – $66,250!

Given that profits (cash) cannot be generated without revenue, the ability to continually replenish the company’s cash supply requires that revenue continually be generated at levels sufficient to cover the expenditures. The amount of revenue required to replace the $66,250 is directly related to the company’s profit margin.

The bottom line – profitability is the direct result of an organized, efficient operating environment and the penalties for failure can be severe. Benjamin Franklin put it this way – “beware of little expenses; a small leak will sink a great ship.” Set an expectation for profitability. Search out and stop your profit leaks!

Related posts:

1. Are You Breaking Even or Dealing With Cash Flow Woes?
2. Always Done It This Way Means You Have A Cash Flow Leak

During your sales activities you’re going to get some “No’s” even if you’ve targeted your market correctly. Sometimes people just don’t need what you have for sale right now.

Rather than make assumptions about why they didn’t buy, be thankful for that no. It means you know exactly where they stand right now and you don’t have to waste any more energy trying to sell them. A “no” is better than a “maybe” any day — and it gets you one step closer to a “yes.”

And don’t take it personally. People buy for their reasons and often their reasons aren’t anything like what you would think. Learn to move beyond the “no” to the successful “Yes, I do want to buy that.”

No matter what many experts say, there are still plenty of small business owners who just can’t accept that “no is no.” Are you one of them? Or have you perfected a technique to get you past that “no” so you can get closer to the “yes?” Tell me about it by leaving a comment.

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1. Speak Your Way To Better Cash Flow
2. Does This Sound Like You?

You don’t need a huge budget to market your business online as long as you’re willing to invest some “sweat equity.” A good way to put your sweat equity to work and reap the benefits for your business is to write free reprint articles and post them to article database sites. Ezine Articles is the authority and my favorite. The articles should be tell the reader “how to” do something and be helpful.

There are several more ways to market with few (zero!) funds. Here are eight ideas for you.

1. Write letters to the editor of publications your target market reads.
2. Get involved in an organization or community project.
3. Build strategic alliances with non-competing businesses and cross-promote each other.
4. Publish a special report. A “super how to” list for your specialty area. Distribute freely. Ensure that your contact information is included.
5. Speak to groups and organizations. Make sure the audience is your target market.
6. Carefully target relationships with media sources.
7. Write newsworthy press releases and distribute to your special contacts.

What about you? Do you have a favorite no cost, low cost marketing tactic? Share it with me by leaving a comment.

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1. This Is A Wonderful Cash Flow Management Primer
2. A Cash Flow Budget Can Help You Control The Ebb And Flow
3. Pump Up Your Cash Flow By Getting Paid

One of the things that is really cool about advances in technology and software is that there’s plenty of opportunities to “do it yourself.” That may or may not be the best way to do something depending on your particular situation.

Up until about three years ago, I was an advocate of having an accountant do both your business and personal taxes. But then I started checking out tax software by talking to experts and decided to prepare my personal tax return using tax preparation software. That’s all it took for me to be sold (and to save a bunch of money every year by doing it myself!)

My software of choice for completing my personal tax return is TaxCut Software from H&R Block. It’s easy to use, guides you through the process and gives you the option of consulting with a tax professional. All for a lot less than hiring an accountant. And that’s a plus for your cash flow in my book.

What about you? Do you use tax preparation software? Tell me why or why not by leaving a comment.

Related posts:

1. There’s Cash In Declined Sales
2. Always Done It This Way Means You Have A Cash Flow Leak

No small business can afford to be a bank, yet many of you extend credit each and every day to clients who want to pay Net 30 or more. If you simply must do business this way, take the time to learn about collecting and creditors’ rights before the unpaid bills start piling up.

“Many organizations are so focused on ‘getting the sale’ that they inadvertently do the wrong things,” says Bob Bernstein, managing partner of Bernstein Law Firm, P.C. “It’s understandable. There is an inherent tension between sales and credit, and until your company learns to defuse that tension, you’re going to keep making the same mistakes.” That means you need to pay attention. And Bernstein shares a few little-known creditors’ rights secrets below.

• If a company’s creditworthiness seems marginal, look for alternative pockets. Admittedly, it’s not advisable to extend credit to a company whose application sends up red flags. On the other hand, you need all the business you can get and risk-taking is integral to making money.
• Retain a purchase money security interest with a debtor. A purchase money security interest basically gives you a string on the merchandise and the proceeds.
• When a previously “good” customer stops paying, remember: communication trumps litigation. You don’t want to ruin a good long-term relationship over what might be a short-term customer problem.
• Don’t send a salesperson to do a collector’s job. It’s usually-not always-a bad idea to let your salespeople double as collectors.

“Remember, the biggest sale in the world means nothing until you get paid,” says Bernstein. “Getting paid is what makes companies successful.”

What do you have to add? Please leave a comment.

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1. Pump Up Your Cash Flow By Getting Paid
2. Yes, Credit Is Still Available If Your Business Is In Good Shape
3. Be Thankful for a No - It Saves You Money

If you’re looking for a way to increase your bottom line, take a look at your payment options. How many choices do your customers have to pay you? If you only accept cash and checks, you’re letting a lot of money walk out your door. I know that accepting credit cards — at first look — seems to be just an added expense, but they can add quickly to your bottom line and can actually save your company money.

Consider this.

If you only accept cash or checks, you have to total purchases and take them to the bank which could take an hour or two. And in the case of checks, you have to wait at least 48 hours for them to clear and be available for your use. When you accept a credit card for a purchase, you pay your merchant provider nominal fees and the money for that purchase makes its way into your bank account typically within about 24 hours. No extra work on your part is required.

If you take the time to compare the fees you are charged to accept credit cards against the cost of a human being handling the transaction, I’m sure you’ll find it’s less expensive for your business and you’ll save a ton of time in the process.

What do you think? Leave me a message.

Related posts:

1. Pump Up Your Cash Flow By Getting Paid
2. There’s Cash In Declined Sales
3. Cash Flow Management: You Can’t Afford To Be A Bank To Your Customers

If you sell products online, you’re bound to get a few declined credit card transactions just because of safeguards that are in place to protect your business from fraud.

But there’s lots of opportunity to pump up your bank account with those declined transactions if you just take one extra step. Here’s what I do.

When a declined transaction comes through my shopping cart system, I immediately pick up the phone and call the person who placed the order. (They’re normally surprised to be hearing from a human being, so expect that.)

I identify myself and the reason for my call. Then I ask if they’re still interested in the product. I’ve never had anyone say no. So I apologize, proceed to obtain the correct information and process the order. (And I spend a little “chit chat” time developing a quick relationship.)

Most times what has happened is they’ve entered credit card information for their business and a home address or vice versa. If you process many online orders, you know that the software is smart enough to detect that. Most order forms aren’t intuitive enough for people to realize it matters.

And I take two additional steps. Once the order is processed, I zip off a quick email to them thanking them once again. Then I jot a simple thank you note and send it to them via USPS mail.

How can these simple steps with declined orders help your business? Two things, the processed order puts money in the bank (I know it’s made me thousands — you could too), and it changes the relationship from an inanimate object (the computer) to a real person. A definite prescription for potential future business.

Try it and see how it works in your business.

How about you? Do you have a special process for handling online sales declines? Or have you been letting all that cash slip beyond your finger tips? Tell me about it by leaving a comment.

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1. Payment Options Can Increase Your Cash Flow
2. Yes, Credit Is Still Available If Your Business Is In Good Shape
3. Cash Flow Management: You Can’t Afford To Be A Bank To Your Customers

Has this year been a little lackluster in the cash flow department for your business? There are a lot of actions you can take in your business to improve cash flow, but it’s a good idea to set some goals first.

That way you can track your progress against your goals and get real, tangible evidence that what you are doing is working.

But most small business owners aren’t great at goal setting — are you? Here’s help. Right now you can get my Goal Setting Guide absolutely free. The guide will help you create a road map for your business so at the end of next year you can say, “Yea! I achieved my cash flow targets.”

Hop on over to and pick up your copy of the Free Goal Setting Guide here.

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Sacred cows take a long time to die. We get comfortable in the way we do things and lose sight of how they could be improved. Here’s an interesting story.

A woman was in the process of fixing her special holiday ham. She cleaned it and then took a huge knife, lopped off both ends of the ham and placed it in a pan. Her daughter, who was learning how to cook asked, “Now Mom, why did you do that?”

“Because that’s how your grandmother taught me,” was her answer. “Let’s ask her.” So they did. Her answer was the same. Her mother taught her that way. Being a lucky family, great grandma was still with them so they asked her.

Her answer? “I always cut off the ends of the ham so it would fit in the pan.”

Just think of all the pork they wasted over the years doing it great grandma’s way. Just because great grandma didn’t have a big enough pan.

Do you have any hams in your small business? Their probably costing you a bunch of money. At least once a year you should be reviewing your business processes to make sure they are being completed in the most efficient way for your business.

How about you? Are you doing things in your company just because you’ve always done them that way?

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1. Epidemics, Broken Windows and Your Profitability
2. Set New Year Goals To Improve Cash Flow
3. Simple Steps Can Save Money and Improve Cash Flow

Think your business is squeezing every penny out of its activities to keep expenses low and the cash flowing? Think again.

Waste is rampant in just about any company. But most small business owners don’t take the time to see where changes can be made until they feel the pinch in cash flow.

We get used to doing things the same old way. We get comfortable with our business activities just like putting on an old worn shoe. But we can’t afford to do that. It’s important that you consistently assess what you are spending your hard earned money on so you can find ways to keep it in your business.

At least once a month take the time to look at what it’s costing you to provide your product or service. Specifically look for places that might be leaking cash because of waste. Ask your staff where the company could save money. You’ll be surprised and amazed at what they come up with. One company’s employees recommended they reuse paper in the fax machine by turning it over once the fax is recieved and ready to be destroyed. That’s saving them hundreds of dollars of paper cost each year.

You can also reap a lot of cash for your business by making sure your staff understands what expenses their job causes in the workplace. Then ask them to look at everyday activities to see where some trimming can be done.

What do you think? What little things do you do that add up to big savings for your company? Leave me a comment.

Related posts:

1. Be Thankful for a No - It Saves You Money
2. Epidemics, Broken Windows and Your Profitability
3. Does This Sound Like You?