Cash Flow

, ,

Avoid Budget Blowouts

, ,

A budget is an important management tool. Being a projection of your income against your expenses you can check it at any time to see how well or how poorly your business is doing. The value of a budget is in direct proportion to the accuracy of the figures you use to create it. Here are some precautions to take to keep your budget figures accurate.

Use Realistic Projections

Since a budget is based on projections there’s always an element of uncertainty involved in estimating inputs. It pays to be conservative regarding things such as sales forecasts. If they turn out to be better than estimated, that’s great and provides the opportunity to distribute the extra around to advantage.

, ,

Choose your customer wisely, you don't want everyone

, ,

Nearly every business is dependent on a constant flow of new accounts. It’s easy to ignore this because most businesses earn most of their revenue from old, established customers.

The problem is that a certain percentage of old customers will drift away or change their focus every year. They’ll change their buying habits, often for reasons that you can’t influence or life just happens.

So you need to continually market to recruit new customers, establish them, and start promoting them up your customer ladder, so that one day they’ll be part of your staple business clientele.

,

Break-Even Analysis - Your simple high value tool

,

One of the trickiest aspects of bringing a new product to market is to estimate the total cost involved in its production. Cost of production effects margin and margin determines how many units must be sold to make a profit. If the number of units sold can’t provide sufficient margin at a market acceptable price, then, no matter how good the product is, producing it will result in a loss for the business. The nexus between cost of production, price and units that need to be sold to make a profit, is called the ‘break-even point’.

Break-even analysis is one of the most important financial tools you can use to make better business decisions.

, , ,

Discounting is Dangerous

, , ,

Offering a discount in the heat of negotiations may seem like a good idea at the time but thoughtless discounting is an easy way to lose money fast.

Before you succumb to the temptation to win new business by offering a discount take a moment to consider these ten problems associated with discounting.

  1. Discounting eats away profit margins!

  2. Negotiating a discount focuses the customer’s attention on your price. If your only competitive advantage is price you are in trouble because price can always be matched by a competitor. The focus should be on the benefits of the product to the customer that make the price, if not