…but ask the small business owner opening his mail from his Commercial Bank credit line that reads, “Dear Customer: thank you for your patronage. Please be advised that to better serve you we are making improvements to your current revolving credit facility. Effective immediately, the extension of credit is being limited. Please feel free to call so that we may assist in compliance with these improved regulations.”

Ummmmm….that was political correct code language for “your loan is being called so that we may limit our lending exposure to generate cash immediately to avoid a run on the bank”

Friends, we have been talking for months about cash flow planning to avoid just the types of events that transpired on Wall Street last Wednesday and today Monday, September 29, 2008. We are called to know where we are in the forest and see the trees that are before us. Now is the time to strike while the collective iron is hot and drive home our business identity in this fragile and tumultuous time. Let’s talk….

(Richard H. Veihl CPA, is an author and owner of Veihl Consulting Group, PC., a full-service accounting firm providing tax, accounting and business consulting services to small businesses. We welcome the
opportunity to discuss your planning and business considerations. )

Veihl Consulting Group, P.C.
Certified Public Accountant
1416 S. Gratiot Avenue
Mount Clemens, Michigan 48043
(586) 468-6611

]]> http://www.mybusinessoflife.com/blog/2008/09/30/hold-on-tight-here-we-gooooooooooooooooooo/feed/ 0 http://www.mybusinessoflife.com/blog/2008/09/29/what-does-the-bailout-mean-to-me/ http://www.mybusinessoflife.com/blog/2008/09/29/what-does-the-bailout-mean-to-me/#comments Mon, 29 Sep 2008 01:39:19 +0000 Certified Public Accountant http://www.mybusinessoflife.com/blog/?p=12 It is Sunday night and Congress seems to have pressed a deal for the President to sign this week. While most of the news centers around sports, weather and entertainment, very few are aware of the sour grapes currently being smashed under political feet.

It is being called a BAILOUT. Well…okay – that’s what we will call it then.

What it means to me is another finger in an ever leaking dike. The real question is whether there are any fingers left because many holes exist. As we wait for another rendition of a Breaking News bulletin on whichever main stream news media you fancy, the financial markets are imploding. Unsure of the veracity of my claims? Try borrowing money to start a business. Have you talked to the Small Business Administration about a start-up loan lately?

Credit has nearly been seized and borrowings between banks are completely uncertain. Small business is caught smack in the middle of a big-time Texas Hold-em game and the deck is stacked. We are looking for serious leadership right now as a nation in perilous times and instead the International bankers have are parlaying a dog and pony show of Barack and John. Are you kidding me???

While special interests have the election bought and paid for, on the local front we are trying to meet payrolls. Between you, me and the lamp-post, I recommend getting back to basics. This “credit crisis” is not about home mortgages or asset values as much as it is about liquidity. Small business today must concentrate on liquidity to insure solvency.

BREAK-EVEN ANALYSIS

Daily in our conferences we talk about cash flow and sales break-even points. Commonly referred to as a “making our nut” in the sales community — we are talking about cash inflows exceeding cash outflows. At the end of the day, week and month did we make a profit? Let’s talk more about your Company in detail next time we get together.

CASH FLOW ANALYSIS

Are we making any money? If your outflows exceed the inflows, it is time to talk right now. We must always be concentrating on sell more to more people at less cost. While those three things are imperative, they are very difficult to do. I know — I am running a Small Business as well remember. Currently, we are in the process of preparing for the upcoming tax season and practicing what we preach. We understand the responsibility we have been afforded in your service.

TAX PLANNING ANALYSIS

We are currently developing a tax structured proforma for each Company we serve that considers the 2008 State and Federal Legislation being negotiated as we speak. In the coming weeks and certainly by Thanksgiving we anticipate meeting in person will all of out Company clients to review the developed tax proforma. We believe we have much to be thankful and a wealth of knowledge to assist and serve.  

(Richard H. Veihl CPA, is an author and owner of Veihl Consulting
Group, PC., a full-service accounting firm providing tax, accounting
and business consulting services to small businesses. We welcome the
opportunity to discuss your planning and business considerations. )

Veihl Consulting Group, P.C.
Certified Public Accountant
1416 S. Gratiot Avenue
Mount Clemens, Michigan 48043
(586) 468-6611

Purchasing. Instead of buying supplies all at once, buy similar quantities more frequently. Buy in bulk only if offered a significant price break.

Negotiate the best possible payment terms with vendors. Pay bills on time, but don’t pay early unless offered a discount for prompt payment. Passing up a discount can be costly. Know your vendors terms and work terms that are mutually advantageous.

Getting paid. To help speed up receipts, put the same concept to work by offering customers a discount for paying their invoices early. If that isn’t successful, charge an extra percentage on past-due invoices – and, send bills promptly. I personally know this can be very difficult – especially during busy seasons. Instead of waiting for a 30-day billing cycle, send invoices immediately after the goods and services are delivered. Consider switching perennially slow-paying customers to COD.

Managing inventory. Generate cash flow by getting rid of slow-moving inventory. Return the items where possible and come up with a plan to move the rest, even if it means marking down the items substantially. For new purchases, avoid overstocking by carefully planning the quantities that need to be kept on hand.

Trimming spending. Review operating expenses to make sure they are necessary. Look at ways to cut costs by shopping for better rates on insurance, telecommunications and other overhead items.

Controlling taxes. Take advantage of opportunities to reduce taxes by planning capital acquisitions or setting up tax-deferred retirement plans. Many of these year-end planning opportunities require timing considerations.

Forecasting and budgeting. Using reliable, up-to-date financial information, map out projected cash inflows and outflows. We can help to make standard practices of regularly monitoring Company cash flow’s.

(Richard H. Veihl CPA, is an author and owner of Veihl Consulting Group, PC., a full-service accounting firm providing tax, accounting and business consulting services to small businesses. We welcome the opportunity to discuss your planning and business considerations. )

Veihl Consulting Group, P.C.
Certified Public Accountant
1416 S. Gratiot Avenue
Mount Clemens, Michigan 48043
(586) 468-6611

Cash Control

All small business owners have to be careful cash managers.  Strict management is particularly critical when cash flows in over a relatively short period of time.  One very important lesson to learn:  Control the temptation to overspend when cash is plentiful.

Arming yourself with a realistic budget and sound financial projections — including next season’s start-up costs — will help you maintain control.  And you may want to establish a line of credit just in case.

In the Off-seaon

It’s difficult to maintain visibility when you aren’t in business year round.  But there’s no reason why you can’t send your customers periodic updates via e-mail or snail mail.  You’ll certainly want to announce your reopening date well ahead of time.  You can also spend time developing new leads and lining up new business.

Time for R and R

You deserve it, so take some time for rest and relaxation.  But you’ll also want to use the time you’re closed to make any necessary repairs and take care of any sprucing up you’d like to do.  You can also use the off-season to shop around and look for deals on items you keep in stock and/or equipment you need to buy or replace.

Expansion Plans

If you’re thinking of making the transition from “closed for the season” to “open all year,” start investigating new product lines or services.  If you diversify in ways that are complementary to and compatible  with your core business, your current customer base may provide support right away.  A well-thought-out expansion can be the key to a successful transition into a year-round business.

Being the owner of any type of business has its ewards — and its challenges.  We have a lot of experience working with small business owners and would be happy to assist you in any way we can.

Veihl Consulting Group, P.C.
Certified Public Accountant
1416 S. Gratiot Avenue
Mount Clemens, Michigan 48043
(586) 468-6611