When a company is resistant to change

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I have met very few people who enjoy change.  I know I don't.  I like things that are familiar and comfortable.  In such circumstances I know my role, what's expected of me, and what success looks like.  Changing things means all of these are up in the air.  I no longer know what my role is (or if I'll even still have a role), I don't know what others expect of me, and I no longer know how to measure success.  If this is true of the owner-manager of a small business, think how much more true it is for employees.

Unfortunately, change is no longer an option and hasn't been for a long time.  It doesn't matter if you and I enjoy change, it is going to happen.  The marketplace has changed dramatically over the past few years.  Customers, and employees, expectations have changed.  Everyone now demands more value in every item or service they buy.  With the rapid increase in social media, marketing has changed.  Unless your target audience is baby boomers and older I would be very reluctant to advertise in the local newspaper or on the local radio station today.  Younger generations no longer read the newspaper or listen to the radio.  Small businesses that do not move a substantial portion of their marketing dollars to social media may soon find their customer base shrinking rapidly, and with it their profits.

I recently started watching Bar Rescue on television.  I don't know how much of that is reality and how much is staged for the cameras, but the premise is a valid one.  Bars that have been losing money for extended periods of time call in an expert to turn them around.  Immediately, he identifies a number of issues that will require significant change for the owner, the employees, and how the bar operates.  Everyone is opposed to the changes, but once the expert yells at them long enough they agree to make the changes he recommends.  Of course, at the end of the hour-long program the bar is now making money.  What's interesting is when the producers return to the bar a few months later to see how they are doing.  Some continue with the changes and are making a nice profit, but occasionally the bar owners revert back to their old ways of doing things even though they know those ways will not be successful.  The change is just too much for them.

What is limiting the growth of your business?  What do you know needs to be changed, but the thoughts of making that change scares you to death?  What will be the short-term effect if you don't make those changes?  What are the possible long-term effects?  These are questions you need to honestly answer if you want your small business to remain successful and profitable in the future.

Pyschology tells us that we can't resolve problems simply by thinking about them.  We need someone to talk to about them if we want to be able to find the answers we need.  Do you have someone you trust that you can talk to as you try to answer these questions?  If not, I have coached a number of people and would be glad to come alongside you as a coach to help you identify and begin to make the changes your small business needs to make.  Send me a note telling me you would like to discuss having me coach you through some changes in your company, and we'll discuss how I can help your company begin to move forward.  In the meantime you will find a lot of help in my latest book available only on your NOOK or NOOK apps.

Don't forget the taxman

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One of the biggest mistakes a small business owner can make is to not be aware of or ignore his or her tax liabilities.  A friend of mine owned a small business for a short period of time and wasn't aware he needed to pay certain taxes.  Although he was in business for less than two years his tax bill was enough that he found himself in big trouble.  The taxman was ready to freeze his personal bank account, place a lien on his home, and do lots of nasty things.  My friend is not the kind of person to ignore his taxes.  In fact, he is a very honest person.  He simply wasn't aware he needed to be paying this particular tax. He was able to work out a payment agreement and paid his past due taxes fairly quickly, but it still cost him penalties and interest.

His was an honest mistake.  Where so many small business owners get into trouble is by "borrowing" money they should pay in quarterly, sales, or payroll taxes to use to pay other bills.  Probably most of the people who do that are certain they can make it up later.  That is a very dangerous game.  If you need to you can extend paying your vendors.  They might scream and issue threats, but they can't usually shut down your business and seize your assets.  The taxman can do both, and will if necessary.

This cannot be emphasized too much.  Know what taxes you are responsible for paying, when they are due, and make sure they are paid on time every time.  It's fine if you have an accountant handle this for you, but you as the owner must make sure this is done.  If it's not, you are the one who will have to deal with the mess and pay the penalties.

I wish my friend had read this article from Forbes before he began his business.  It might have helped him avoid a lot of sleepless nights and headaches and would have saved him a lot of money.  You may want to read this yourself.

http://www.forbes.com/sites/theyec/2012/08/29/7-biggest-tax-mistakes-new-startups-make/

Cash is king

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One of the things a small business owner must do is keep a close eye on the monthly Profit and Loss statement.  No later than the 10th of each month it is vital to have the P&L statement for the previous month so you can know exactly what is happening in your business.  But, it doesn't matter how profitable a small business is if it runs out of operating cash. 

Your employees want a paycheck.  Your vendors expect to be paid in a timely manner.  You have numerous fixed costs that require money on a regular basis.    You have operating costs that require cash on hand.  You simply cannot afford to run out of cash.

What can a small business owner do to ensure his or her company will have sufficient cash to operate?  The first thing is to have money set aside for operating expenses.  In our business we found it was much less stressful when we knew we had several months of operating expenses in savings that we could tap into during slower periods.  Identify how much you will need for three to six months of operating expenses and begin to set that money aside in a savings account that you will not touch for any other reason.

The second thing small businesses must do is watch their accounts receivable.  Ideally, you will have no money out on A/R, but many service companies continue to bill their customers rather than require payment at the time of service.  I would suggest doing that only in rare circumstances and only for your best customers.  Everyone else would need to pay at the time of service. 

For those who are being billed, invoices should be sent out immediately.  Another statement should be sent after 30 days, and five days later they should receive a phone call from the owner if they still haven't paid their bill.  At 60 days they probably should be turned over to collections because if they go to 90 days chances are you'll never see their money.  Small business owners must be aggressive in collecting past due bills.  This is your money.  You need this money to pay your employees, your vendors, and your other bills.   Without cash your business cannot operate.

The third thing a small business owner needs to do is to have a line of credit available to help cover expenses during slow times.  This may not be needed if you've created sufficient cash reserves to cover these times yourself, but it might provide you with a little extra assurance, especially if you have just started creating a cash reserve.  The time to request a line of credit is when you don't need it, because if you wait until you need one it's likely you may find you can't get it.

You will find more information about the importance of cash and ways to ensure you have sufficient cash to operate in my book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.

Welcome

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I want to welcome you to my new blog where I want to help you succeed in your small business.  You may have just started a new business or perhaps you've owned your small business for many years, but one thing I know about small business owners is that they are always looking for tools to help them succeed.  Owning a small business has never been easy, and it's been especially difficult for the past few years with a weak economy.  When you add to that the uncertainties around the changes in health care and taxes it becomes even more difficult to own a small business.  That's why I have created this blog.  I want to help you find tools that will make your task easier and your company more profitable.  Let me begin by telling you a little about myself.

For twenty years I served as a bivocational pastor of a small, rural church in our community.  For much of that time I worked in a factory before taking early retirement from the factory job.  However, two years before that retirement our family took ownership of a small business which I managed for the next 15 years.  For the first couple of years I pastored the church, worked my factory job, managed the business, and completed my bachelor's degree.  Believe me, I was glad when I retired and a year later earned my degree!  That allowed me to focus on our business and my pastoral work.

Unfortunately, I knew nothing about owning and managing a small business.  For the first several years we did very well due to a strong economy and an experienced work force who knew our company much better than I did.  The mistakes I made were overcome by those two factors, but when the economy began to go down my mistakes became magnified.  I learned a lot from those mistakes about leadership and the factors that make for a successful small business, but those lessons cost me more than my college degree did. 

Shortly after I sold that business I wrote a book that detailed many of the lessons I learned while managing the business in the hopes that others could learn from my mistakes.  I have found that it is always less costly to learn from other people's mistakes than from your own.  My book is titled Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.  It includes chapters on such important topics as managing your cash flow, how to hire and develop top-level employees, what happens when the owner doesn't have a vision for the future of the business or a strategic plan to achieve that vision, marketing, misplaced loyalties to bad employees, vendors, and even customers, as well as other topics.

This book is only available at this time on NOOK products and apps and sells for the low price of $7.99.  I read a lot of books, and it would be difficult to find this much material that is written specifically for the small business owner for such a low investment.

I want this blog to be a dialogue so please feel free to respond.  I intend to provide you with numerous resources that will help you own a profitable company that will enable you and your family to enjoy the life you've always wanted.  Please bookmark this blog and follow it.  You can also follow me on Twitter @DennisBickers and on Facebook.

Thanks for stopping by and checking me out.