Olympic Inspiration

The incredible efforts of the 2012 Olympic athletes are inspiring both the young and the mature. Of course what we spectators have been watching is just the culmination of years of training and interim achievements. The achievements come when they succeed in meeting their goals, and there will have been many of those in the build up to the ultimate objective of winning an Olympic medal.

And unless they decide to retire, their efforts don’t stop there. After a well-earned break, they will be setting more goals for the future and working towards them.

As business people, we may have lessons to learn from that. Whether your ultimate goal for your business is set for five years or twenty years on, you will have to build and develop it to get there. You need to set interim goals in realistic time frames, and give yourself time to celebrate when you have met them. Then you’ll be motivated and enthusiastic about moving on to the next goal.

The Right Goals Point you in the Right Direction

Effective goal setting is a skill that entrepreneurs need to acquire. If you get them right, you will be directing your efforts in the right direction and less likely to be side-tracked into unprofitable activities.

Most business people have heard about using a SMART technique to set a goal, making it specific, measurable, achievable, realistic and timely. But there is more to it than that. The most important aspect is that you really want to achieve it, and it’s not just something you think you ought to be aiming for. If you personally don’t have a passion for it, it will be very hard to summon up the drive you need to achieve it.

Goals Must Remain Dynamic

You will, of course, need to review your goals from time to time to make sure they remain appropriate if circumstances change. For this reason, goals should always be set out in writing which will also help you make them detailed and precise, so they they can’t be dissipated by vagueness. When you write up your goals, don’t include anything you don’t want that needs to be avoided. Keep your text positive and just leave the negatives implicit.

For each of your goals, you need a schedule that sets out the steps you will take to get you there, and when you will take them. This also can be changed at review stage if your plans are not working out as you hoped. External changes out of your control can make this necessary, and you shouldn’t ever blame yourself. You just have to take them in your stride and decide on other strategies to help you reach your goal.

Remember that your outsourced bookkeepers are on hand to discuss your financial goals and may have useful tips on different ways to reach them.

Good News on Bank Lending

When Mervyn King, Governor of the Bank of England, announced the £80 billion Fund for Lending scheme at his Mansion House speech in June this year, he said it would be a ‘joint effort’ between the Bank of England and the Treasury. On August 1^st, the Fund for Lending made cash available to high street banks at low interest rates specifically to be passed on to their small business customers. The aim is to encourage the banks to lend and businesses to gain the finance they need for growth which will help the economy. 

The First Response 

Banks involved included the Royal Bank of Scotland (RBS), which badly needs to lift its image following the technical problems that recently delayed incoming payments to the accounts of many of its customers. 

RBS has now announced that it will cut its rates on loans to small businesses by up to 1.6%. It will make £2.5 billion available for these loans to small businesses with a good business plan. This is really good news at a time when the rising costs of finance have been putting off many SMEs from borrowing to expand. It is especially welcome in London and the South East where finance under the Regional Growth Fund Scheme is not available. 

More Good News 

RBS has also decided to remove arrangement fees which can add an extra £1500 or so to a £100,000 loan. This plus the lower interest rates could result in savings of about £4,000 on the loan repayments. 

According to Chris Sullivan, Chief Executive of RBS and NatWest Corporate Division, this is the best ever offer for SMEs, and the best available in the UK. He said, “RBS and NatWest are determined to play their part in supporting the economic recovery. The clearest and strongest way we can do this is by letting people know that we are open for business and ready to support their ambitions on the best terms available.”

John Cridland, Director-General of the CBI also commented, “Rising borrowing costs have held back the growth ambitions of many small and medium-sized firms. This scheme should support banks to make finance more affordable to businesses and consumers, while also encouraging banks to lend more.”

Tips for a Smooth Running Cash Flow

This aspect of your business is so important that it’s worth looking at over and over again. The economy is still in the doldrums with more negative news recently, and it’s never been more vital to make sure the cash is flowing in as your products and services flow out. 

Regular Cash Flow Reviews 

You really need to review your cash situation regularly, once every week or two unless you are so confident that monthly will do. Sit down with your bookkeepers to see where you are at that moment and work out what cash you will need when. What will ensure you have it at the right time?

Do you have the right stock and resources, or do you need to buy in? Can you afford to or do you need to find more cash? Are your cost figures normal or do you need to investigate hikes? Can you cut costs? Most important: are payments coming in when they should? 

Consistent Credit Control Activities 

Consistency in this area is a must. It’s no good sending out a statement and not following it up for six months. Set up a credit control procedure of regular contact with debtors, and follow it to the letter. They will at least push you up their priority payment list to get you off their backs more quickly. If they are really stuck for the total amount, you might be able to negotiate staged payments and get your cash in that way.  

You could also talk to your outsourced bookkeepers about whether factoring arrangements are suitable for your business. That would take the credit control burden from your shoulders and guarantee at least some early income, although it will add to your costs. 

The Importance of Credit Checks 

Of course you would never offer credit to a new customer unless you were confident of their ability to pay. Or would you? People can do unwise things when they are desperate for business. While some are lucky, others are not and just get taken for a ride. Don’t be one of those. Always check their credit rating. 

It’s wise to keep tabs on existing customers too, especially in the current economic climate. You need to know who is in trouble, so you can make sure it won’t be you next. 

If you get a whiff of negativity, don’t ignore it. The next step is to talk to your customer and renegotiate your terms. In an extreme case, you might need to stop doing business with them. You may not want to add to their troubles, but you certainly don’t want to land yourself in a cash drought. 

Don’t forget to discuss things with your outsourced bookkeepers; they may be able to offer ideas you haven’t thought of yourself.