within a given period of time (such as a month) to get the revenue recognized during that time. “None of this has anything to do with when cash flows in or out of the business,” says Jerry F. White, director of Caruth Institute for Entrepreneurship, SMU Cox School of Business, Dallas. “Irrespective of ‘profit,’ if enough cash does not flow into the business in a given time period to cover mandatory payments, such as payroll and debt service, the business will fail.” How can cash flow be improved? “By collecting accounts receivable quicker, delaying payables as long as practical, increasing the time period for debt repayment, and figuring out how to operate with a lower level of inventory,” says White. “Profit is important to the longer term health and prosperity of a business, but cash flow is critical to short term survival. The tendency is to think that if there is a strong profit the cash flow will also be strong. It is common, however, in a growing business, to have solid ‘profits’ and a negative cash flow. Businesses that survive and prosper over time never forget that profit is not cash flow.”
approach to the details. Business owners need to remember that people follow up on what the boss deems important. To be sure that your ideas are being thoroughly and correctly carried out, you must continue to pay attention to the small, daily activities that are essential to your operation.”
6 Set the example
In a small business, the owner’s behavior, actions, and attitudes establish the guidelines for employees. “Many so-called leaders in the small business world believe that they can operate with impunity because of their position as owners or managers,” says Mounts. “Do as I say, not as I do is their mantra. They do such things as criticize employees openly in front of their peers, leave early on Friday afternoon for a round of golf, or treat vendors discourteously. “If a leader wants to build a healthy company culture, he or she needs to discuss problems with employees in a private setting. If she wants people to work hard on Fridays to get ready for the coming week, she needs to stay late herself. If she wants courteous
employees, she must offer courtesy to others. In short, the person leading the company must display the behavior he or she wants others to emulate.”
7Embrace change; it’s inevitable
You like doing things the way you’ve always done them. You may not like the idea of change, but change is both inevitable and healthy. “At the end of the day all we can count on is change, and a business owner’s ability to adapt to change is a major factor in determining the success of the company,” says Justin Green, business coach, The Impel Group, Chicago, Il. “A business owner must remain steadfast to core values while constantly evaluating how the company can best adapt to changes in the market place. If your business doesn’t fill that need someone else will. The best way to identify these changes is to be inquisitive, talk with suppliers, customers and employees to understand what is changing and how you can adapt.” Carl Doerksen, director of corporate development, Generational
4 Keep a tight lid on overhead
“Some businesses suffer from ‘creeping overhead’ caused by unnecessary spending on things that are not essential and which the business really can’t afford,” says White. “High overhead limits a business’s flexibility to maneuver. It drains the company of resources needed to grow and improve. It also elevates the risk that the business will not survive an unexpected financial downturn. Long-term, successful business owners understand the need to focus on essential expenditures and work continually to keep overhead low.”
5 The devil is in the details
Successful business owners often establish their success in part by knowing every facet of their business. Some then want to hand over the reins to someone else so that they can just ‘be the boss’,” says Dr. Mounts. “They forget that what got them success in the first place was their hands-on November / December 2012 n Fabricator
Call for Nearest Dealer
61