Is Being an Entrepreneur Right for You?

Building a business from nothing is hard work or coming up with a great idea is just as hard. It takes time, money, determination, and fair amounts of criticism and failure. However, despite the hardships though, becoming an entrepreneur can be very rewarding.

An entrepreneur is defined as someone who possesses a business venture and/or idea and assumes risk for it. That is how most dictionaries define it. Which means, they have created an idea and sold it, or created a business or product and support it with their money and reputation failure or not.

So, what are the benefits of being an entrepreneur? Entrepreneurs have a chance of making money for one. And another, they can ask for advice if they need it or can get it, however entrepreneurs are in charge. They are their own boss, and they make the decisions may it be a good one or a bad one. And there is an emotional reward at the end. Looking at your business, product or idea coming to life and knowing you help create that. Plus you work when you want too, may it be all week, or a few.

The benefits seem pretty nice, however, what about the disadvantages? It is stressful and frustrating. Things are not always going to go as planned, and obstacles will pop up and since you are the boss, you have to make it all better. Plus, the work you will have to do is a lot. Even if you have others working for you, you can’t just tell them to work and hope they do it right. You will have to check their work, as well as doing what you need to do. Starting out, you will be playing four or five roles at once.

What skills does it take to become an entrepreneur? People who are wanting to become an entrepreneur need to have a good reading on people. Having good people to work for companies you created, or help make the product you have invented is very important.

Lastly, become an entrepreneur has its up and downs like anything else. If you have a family, that is another thing to consider. How will it affect them? Will it affect them for better or for worse with you working long hard hours?

Though being an entrepreneur can be rewarding in the end emotionally and financially it is extremely hard work, and you have to have a lot of stamina, determination, and patience.

Sarvadi, Paul. “The Best Way to Reward Employees.”

Entrepreneur Mon. 28 March. 2011 http://www.entrepreneur.com/humanresources/article75340.html

Monosoff, Tamara. “The Reality of Being an Entrepreneur.” Entrepreneur 30 Nov. 2007 Mon. 28 March.2011 http://www.entrepreneur.com/startingabusiness/inventing/inventionscolumnisttamaramonosoff/article187294.html

 

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It is a fact: Progressively, internet businesses and their promotions entrepreneurs are coming to terms to the obvious fact like search engine optimization is important to their jobs total success. This apparently has led to a grander sum of cash being committed into on-line SEO publicities by a Developing number of companies.

An on-line advertising Foot Race

As it stands, according to a new study it was determined that in 2004 by itself, spending by business enterprises on web marketing and in certain SEO more past tripled. Thus it appears it has become like an internet business organization promotion horse or foot race like ends up with no finish, with $12 billion as if are being spent in that same year.

It Simply Keeps on Growing

Therefore SEO advertising is expanding and it does not appear that there is an conclusion in vision. As the Internet evolves and becomes more available for more masses, the outcomes will be more on-line business enterprises engaging in search engine optimization marketing.

Incredibly Complex and Changing

Do you understand that Google takes into circumstance more than a hundred constituents when setting PR? Therefore as it becomes, search engine optimization is As A Matter Of Fact a very complex art. It is this really complexity like is driving online business organisations to look into the functions of SEO marketing business firms online.

Staying On Top

Also, the principles of the marketing game are continually varying so it’s very important for an working search engine optimization marketing marketing firm to consistently remain ahead of all recent modifications as they all form themselves obvious.

Continuing Maturation

Thus as the Internet carries on to thrive and even more businesses are continuing to throw their caps into the hoop with a World Wide Web presence, the fighting for SEO promoters will simply go forward to flourish likewise.

 

As any entrepreneur knows, choosing a business that is right for you requires a lot of research and contemplation. After all, a large number of businesses fail within their first five years of business, and most entrepreneurs know that maintaining a small business for any extended amount of time requires clever thinking at its inception. The best plan of action for choosing a business creation plan is to strategically decide the basics about your potential business and research the aspects of that business diligently. Deciding on what kind of a business is right for you is probably the most important step in planning your new business venture, as success is closely linked with prospect and interest

Choosing a business niche need not be a sleep-depriving concept. You should ask yourself the following questions when choosing a business:

 

  1. What interests me? – Knowing which business would be interesting to you is a great method for choosing a business platform. Do what you love. How many times have you heard that adage? Well, it’s true, especially in small business. A small business that includes a favorite hobby, activity, or concept that you are passionate about is more likely to retain your interest than choosing a business that is strictly about monetary gains.

 

  1. Can I afford this? – A great concept loses some of its luster when it is one that can not be easily afforded. Choosing a business you can afford to start and maintain is essential to provide for steady growth. An idea is nothing without the capital to put it into action.

 

  1. Is it legal? – Some business ideas seem great but are in actuality bordering legality. Consider the legal aspects of your business and whether or not you can legally open your business prior to buying the business license.

 

  1. Are there any businesses like it, and are they meeting the needs of consumers? – This question is essential to answer before choosing a business. If there are too many of any certain business in a community, there is a greater likelihood of struggle to gain a customer base without a lot of hard work. If your business is unique in some way, it might stand out from the others in the pack. Analyze if the current offerings are meeting consumer need prior to getting your heart set on choosing a business niche that might be too popular.

 

  1. Is the concept copyrighted? – Before opening the doors to your business, consider whether the concept behind it might be the intellectual property of someone else. Your business must not infringe on the rights of others and must be cautiously considered to prevent any misunderstandings.

 

  1. Is it in your scope of capabilities? – Knowing whether or not a niche can be addressed affectively and efficiently is just as important as knowing whether you will enjoy a particular business. Choosing a business that will overwhelm you might be the kiss of death for it before the first customer even inquires.

 

  1. Will this business allow free time? – A business that takes away all of your free time is often a rewarding one, but if the result might be burn out or discouragement, consider a simpler concept first, working up to a heavier workload. Even die-hard fans get burned out when the work concept is all they have time for. Choosing a business that still allows for personal time is a wise move that you might appreciate in the future when burnout rears its ugly head.

 

  1. How will the business affect my family? – When choosing a business, the question of family impact is not always a top priority, but it should be something of which you are aware. Be especially concerned of choosing a business that requires interaction that may be objectionable by certain family members, cut into family time, or may negatively impact family relationships.

 

  1. Am I ready? – Jumping too soon is often a common mistake with potential new business owners. If waiting would give the business a better chance of success, you should weigh if that business is right for you at the moment. Perhaps a different related business would be better suited for the time being. Consider how choosing a different business might result in eventually growing it into an optimal one, and weigh if you can wait for that metamorphosis.

 

  1. Online or Turnkey? – This question is one of the main concepts these days concerning choosing a business. Whether your business is on the internet (or whether it requires it) is essential in selecting a niche. Some choose both, and some feel it is appropriate only to have one or the other form of business. If you do not think you can bring your turnkey concept to the web in the future, perhaps this choice will not affect your potential business, but if it requires the web for growth or potential fulfillment, you must keep whether or not you are willing to convert it in mind when choosing a business.

 

Choosing a business to build is one of the most important decisions for an entrepreneur today. These ten questions will hopefully make the pursuit of your dream easier so that your business foundation will have the strength to withstand the challenges of the future.

 

If you’re a pet lover, and you’re looking for a business that has a low start-up cost, then a pet sitting business might be right for you! As the name implies, a pet sitter takes care of other people’s pets. These pets are typically dogs and cats. That’s not surprising since there are nearly one hundred and forty-five million dogs and cats in the United States.

Sometimes, though, you’ll be asked to care for other pets, including birds, ferrets, rabbits, guinea pigs, hamsters, snakes, turtles, horses, and more.

 

Pet sitting is a relatively easy business to start, and anyone- whether you’re a college graduate or a high school drop out- can run their own successful company in this field. People are always looking for someone who’s reliable to care for their beloved pets. That care usually entails feeding and watering people’s pets, exercising and playing with them, administering prescription medications they need, scooping poop, and just taking good care of them until their owner returns. Pet sitting gigs can range from one day to several weeks.

 

To start your own pet sitting business, you’ll need to create a name for your business. The simpler and more to the point the name is, the easier it will be for your customers to find you. I take my dogs to a professional groomer whose business name is, “For Pets’ Sake.” Cute name, but if she weren’t listed in the phone book under “dog groomers”, I would have never found her. Her roadside sign lets you know that she deals with pets in some way, but it doesn’t give you a clue what she does exactly. Why not make your name simple, like, “Frank’s Pet Sitting Service”?

 

You’ll also need a business license or a permit. Check with your local court house to find out the laws and regulations regarding starting a business in your area. Be sure to get the red tape taken care of before you start your venture so you don’t run into legal hassles later on.

 

And you’ll need to decide on a fair price to charge for your pet sitting services. The best way to do this is to check out your competitors and find out what they’re charging. Then, charge a little less than the going rate, and you’ll instantly have an edge over your competition.

 

You should also have a contract that details your services, your rates, a disclaimer that releases you from responsibilities for accidents, et cetera.

 

Now, in order to get needed customers, you’ll need to advertise. There are free advertising opportunities everywhere. That is, you can print up flyers on your computer and post them on bulletin boards everywhere around town. Be sure to include your business name, address, phone number, and e-mail address. If you have a web site for your pet sitting business, you should list that too. You can also print up your own business cards and place them in veterinarians’ waiting rooms, at pet shops, at groomers, in feed stores, and at travel agencies. (Pet owners who go on vacation always need someone to care for their critters.) Don’t forget to pass out business cards and flyers to your family, friends, and neighbors too.

 

The best form of advertising is, of course, “Word of Mouth.” As your own successful pet sitting business grows, word of your success will get spread around, and you’ll attract even more customers.

 

Once you get your first phone call, you’ll be on your way to having a successful pet sitting business. You can use a notebook to keep track of your customers at first. Just write down their name, address, and phone number, and the details of the services they need.

 

And finally, remember to keep track of all of the expenses that are related to your business. If you don’t have a filing cabinet at first, you can place all of your receipts for travel expenses, supplies, advertising costs, et cetera, in a shoe box until income tax time. Many business expenses are tax deductible. A certified accountant or bookkeeper can prepare your income tax return for you and handle the financial end of your business.

 

Good Luck!

Innovation is an essential ingredient to entrepreneurship. The entire entrepreneurship process begins with innovation. The entrepreneur must be an innovator, he must be able to come up with new breakthrough ideas which no one else has come across.

An entrepreneur constantly scans the environment for novel and innovative ideas. He looks at a situation in its totality. He comprehensively understands the situation and is able to break it down into parts and analyze each part in its totality. He then looks at the problems and difficulties faced in each part as well as the situation as a whole, after which he tries to come out with an innovative way to overcome the problems faced. The solution may be in a tangible form i.e. a product or may be in an intangible form i.e. a service rendered.

 

The solution the entrepreneur proposes is never an abstract idea which cannot be implemented in reality i.e. the entrepreneur solution is a concrete idea which can be developed and marketed in the most cost efficient, within the required quality permissible limits and at the same time the time to provide such a solution to the customer must be minimum i.e. there should a minimum time gap between the time to produce and the time to market to customer. The entrepreneur never forgets the fact that the idea develop must be capable to being functional i.e. it must have functionality and the customer must be able to use the solution without much problem or hassles.

 

Entrepreneurs are the most critical part of any nation’s innovative process. This is because these entrepreneurs run small firms which are more dynamic as compared to large enterprises which put several constraints on the amount of risk to be undertaken, finance and capital risks and other risks associated with technology. These small firms become the breeding ground for innovations which at times get sold over to larger commercial organizations to commercialize and market such innovations. One must remember that the entrepreneur’s innovation output may not only be limited to products and services, innovation can also be done with respect to a process i.e. the entrepreneur can innovate with respect to an existing process and find a new, better, faster and cheaper manner to produce or manufacture a product or render a service.

Bad things can happen to good entrepreneurs with fantastic ideas. This statement is not meant to burst your bubble – it’s meant to nudge you in the direction of being realistic about your planning efforts long before you’re left with nothing but a soapy residue on the floor because you failed to implement the best practices for protecting your personal assets.

Take the Proper Steps

 

It’s all too easy to get carried away with the thrill of being your own boss and finally pushing the results of your hard work onto the marketplace. There isn’t any serious entrepreneur that at some time has not put their own money on the line, but the cold, hard fact is you can lose your investment if something goes wrong and your business fails. If you have not taken precautions, you could lose everything you own, destroy your personal credit and be left with no choice but to start over.

 

Form a corporation. Most people start out as sole proprietors and register with the state as such, but eventually you will need to form a corporation. You’ll need to form a C Corp, an S Corp or a limited liability company (LLC). If you don’t know the difference, do the research or consult with a business attorney. Consider the tax consequences for the various types in incorporations, and most of all your protection from personal liability. Remember this point – you and your business are not one and the same. Your business is a separate entity with its own life and should be managed as such.

 

Build business credit. The moment you submit your incorporation papers to the state, apply for a federal tax identification number. Once you have that, register with Dun  amp; Bradstreet to start building a business credit score based on your business activity. Get your services and vendor accounts transferred into your name. Set up a bank account under your business name and Tax ID number. If you apply for credit cards or lines of credit for business use, put them in your name, not your personal name.

 

In the beginning you may be asked to provide a personal guarantee for some of your business needs but limit these to as few as possible. Taking these steps will help you remove the personal liability from your business affairs. It is also wise to consider getting a loan when you need financing rather than pulling the cash from your own pocket. If your business does fail, you have not lost all your money. You can learn from your mistakes and start over again – the most successful business people in the world have all experiences flops.

 

Use Business Credit to Get Financing

 

If you feel bad about losing someone else’s money, take heart. Business credit lenders are fully aware of the risks they take in lending money to small business start ups. You can use this to your advantage – they will insist on seeing a viable business plan before they fork over the cash you want and with a well.

The following is a post from Brabble director of business development Patrick Mackaronis. Patrick is a thought leader and subject matter expert in the fields of entrepreneurship, finance and startups, and has been a self-starting businessman for years.

The decision to start a new business can be an exciting moment. However, the moment soon passes and the it’s time to start working. An entrepreneur must not leap into the business start-up fray without building a strong foundation for success. Too often, new businesses omit the most important part of that foundation – good planning.

The planning process encompasses all aspects of a new business – financial stability, product or service marketing and branding, and administration and operations. All of these aspects interrelate with each other, and the entrepreneur will omit or downplay any one of them at her own peril.

Financial Stability

One of the most common reasons for business failure is the lack of capital to survive downturns as well as take advantage of emerging opportunities. Business environments are dynamic in nature and an entrepreneur who does not have the resources to adapt to changing conditions will ultimately fail.

What are the major pieces to financial stability?

  • Obtaining sufficient capital before opening the doors to the business is the first piece to the puzzle. Resources can be gathered from family or friends, personal resources, SBA Loans, or investors. Whatever the source, do not assume that capital will come along. Find it before starting the business venture.
  • The initial nest egg will probably not last through the entire life cycle of the business, so entrepreneurs need to build strong business credit. This can be accomplished by creating vendor accounts and then paying bills on-time and also by obtaining lines-of-credit and credit cards from financial institutions.
  • Track business expenditures to ensure that money is being allocated correctly and to identify any troublesome trends that could become compromising.

Product / Service Marketing and Branding

An innovative idea for a new business is great but, if there is no market for the product or service, it will never become profitable. In addition, if the business is not able to distinguish itself from the competition, it will not succeed.

What are the major pieces to product / service marketing and branding?

  • Identify what the business’ market is, whether it is local, regional, national, or global. Read local and trade publications or go onto the internet to determine if people want what will be sold. Depending on available resources, a market research firm can be hired to do this or just getting out and talking to people can be useful.
  • Examine the market to determine the level of competition. A great idea may not go far if the market is already saturated with competitors while an innovative idea with very few competitors may be very lucrative.
  • Study the number and type of competitors carefully to determine how the business’ product / service can be distinguished from them. Concepts such as quality, affordability, convenience, and customer service are often used to stand out from the crowd.
  • Create a marketing / advertising budget and stick to it. Generally, television, radio, and print advertising is cost prohibitive for a business start-up, and is often not as effective as networking, sponsorships, and volunteering anyway.

Administration and Operations

Many businesses fail because entrepreneurs did not understand adequately the costs of day-to-day business operations. Too often, the assumption is made that actually operating the business will come naturally and does not require planning.

What are the major pieces to administration and operations?

  • Issues such as office space, staffing, equipment and supplies, telephone and internet, and signage must be planned out in advance, with reasonable budgets established and evaluated regularly. Entrepreneurs often find themselves wearing multiple hats when the business opens which is reasonable when resources are tight. However, that same entrepreneur may become overwhelmed if proper staffing is not built into budget formation.
  • Proper tracking is essential in managing a business successfully. This is accomplished through financial tracking software and spreadsheets which can be used to determine where resources are going and what product / services are generating the most income. Tracking of supplies and costs for telephone / internet are also important to determine expenditure levels and ways to better manage them.
  • Evaluate and re-evaluate staffing and other operational issues to better match emerging priorities to available resources.

A Well Constructed Business Plan is an Entrepreneur’s Best Friend

A comprehensive business plan can serve to better understand and track financial, marketing and branding, and administrative and operational variables / priorities. A well designed plan will document the entrepreneurial idea that serves as the motivation for the business and market conditions that can make the idea profitable. It also addresses administrative and operational requirements including staffing and infrastructure costs and how much money will be needed to sustain the business short-, mid- and long-term.

There are numerous resource books / software available on the market to help entrepreneurs develop a successful business plan. Business plan creation can also be performed by business and management consultants. Whatever avenue an entrepreneur uses to obtain a comprehensive business plan, this document is essential for proper business management and ultimate success.

If you would like to move to Canada to live permanently and do not want to work but have money you can invest in starting a business in Canada, you might qualify for immigration under the Canadian Entrepreneur Visa program. The Canadian Entrepreneur Visa is technically a business visa and is part of the Canadian Entrepreneur Immigrant Programme and the Canadian Business Immigration Programme. The Canadian Entrepreneur Visa program is designed to attract people that want to move to Canada to live on a permanent basis that have attractive business skills and business experience. The Canadian government sees the Canadian Entrepreneur Visa program as a way to strengthen the Canadian economy.

The Canadian Entrepreneur Visa program provides the qualifying applicant permanent residence in Canada. This means that once you are approved for the Canadian Entrepreneur Visa program you can come to Canada straight away with no need for a specific job offer. By having the Canadian Entrepreneur Visa you are also able to apply for Canadian citizenship after only 3 years of being a permanent resident. Remember that you are automatically granted permanent residence status when approved for this program.

To qualify for the Canadian Entrepreneur Visa program, you should be prepared to offer proof that you possess at least two years of business experience. You will also need to provide proof having a net worth of $300,000 CDN (that is in Canadian dollars.). If you are curious of what your current net worth is in Canadian dollars, you can check it out on currency exchange site XE.com. Since the purpose of this visa is to attract immigrants that will start businesses and create more jobs in Canada, you must commit to managing and owning at least a third of a business for a minimum of one year. In addition to that requirement, the business must also create at least one job that a Canadian resident or citizen can fill.

Like the Canadian skilled worker visa, the Canadian Entrepreneur Visa program relies upon a point based skills assessment to find qualified candidates. The assessment asks questions about and ranks the applicant on business experience, educational background, language proficiency, age and more. The minimum pass mark is 35 points. By having a master’s degree or PhD you get 25 points, which means you only need 10 more to qualify for the Canadian Entrepreneur Visa program.

You can bring your spouse to Canada with the Canadian Entrepreneur Visa program. You can also bring unmarried children under the age of 22 as dependants.

From humble beginnings in Southern California, Jane Wurwand’s Dermalogica skin care line has grown into the world’s most widely used professional brand. Wurwand’s success is based on result-oriented products, an “education first” philosophy, and professional product recommendations.

Dermalogica Founder Jane Wurwand Arrives in the U.S.

In 1983, native Briton Jane Wurwand arrived in California to join her now-husband Raymond, who was attempting to sell advanced skin care equipment to an industry obsessed with pretty packaging rather than science.

Wurwand was already a licensed skin care professional in England, a country with considerably more rigorous standards for becoming a skin therapist than the U.S. Realizing that her chosen industry was neither particularly well-respected nor strict in its licensing standards, Wurwand began teaching weekly classes in skin care techniques.

Dermalogica’s Origins: International Dermal Institute

Wurwand’s weekly classes became so popular that she opened a classroom in Marina Del Rey, California, naming it The International Dermal Institute. From the start, the IDI emphasized skin care as a health concern rather than a cosmetic fix.

Wurwand was unsatisfied with the skin products available to her students, finding that they caused as many problems (like irritation and dryness) as they solved. In 1986, with the help of a chemist, Wurwand developed the first products that would become the foundation of Dermalogica skin care.


With a “no junk” approach, Wurwand shunned industry-standard filler ingredients such as mineral oil, lanolin, artificial color, synthetic fragrance, and denatured alcohol in the Dermalogica line.

Dermalogica’s First Products

The Dermalogica brand began with five products: Special Cleansing Gel, Multi-Active Toner, Active Moist, Skin Smoothing Cream and Dermal Clay Cleanser. These first Dermalogica products are still strong sellers.

From these foundational products, Wurwand has grown Dermalogica, Inc. (a privately-held company d/b/a The Dermal Group) into a multi-national phenomenon with a dedicated and expanding customer base.

Dermalogica’s Focus on Professional Skin Therapists

A key component of Dermalogica’s brand identity is the professional skin therapist. Through IDI’s continuing education, Dermalogica focuses on training its representatives in Dermalogica-specific skin care techniques and deep knowledge of the product line.

For many years, Dermalogica took the official stance that customers should only purchase their products through their professionals after receiving a consultation or analysis. “[W]e support the licensed professional skin therapist 100% by not selling on the Internet or through mass market…[D]ue to the importance of prescribing our products to meet individual skin needs, we do not sell our products online, nor do we recommend that you purchase them online.”

Times have changed, however. Dermalogica, in response to competition from product resellers on the Internet during lean economic times, has begun officially selling its products online. The website has introduced Speed Mapping (a highly-abbreviated interactive form of its in-person Face Mapping) to assist first-time customers in selecting Dermalogica products.

Dermalogica’s Expanding Empire

Dermalogica is now headquartered in Carson, 18 miles south of Los Angeles. Dermalogica ships 44 million products each year from its Southern California base.

In addition to expanding its customer base by selling product online, Dermalogica’s skin care line is distributed through 6,500 skin care shops in the United States. Globally, Dermalogica has a presence in 48 countries, including “concept stores” located in Los Angeles, New York City, London, Dubai, Auckland, Berlin, and Mumbai. Over 75,000 professional skin therapists utilize Dermalogica products worldwide.

As a privately-held company, Dermalogica is not obligated to disclose their financial information, but experts estimate their earnings at over $100 million.

The IDI and Dermalogica Education

Since its humble 1983 single-classroom debut, Wurwand’s International Dermal Institute has expanded into 40 locations worldwide. In addition to acting as a training facility for current and future skin therapists, the IDI still serves as the research-and-development facility for Dermalogica products. Products are branded with the tagline “a skin care system researched and developed by The International Dermal Instutite”.

Dermalogica also maintains an online Education Center, through which qualified employees of Dermalogica-sanctioned companies can take classes in technique and product knowledge.

Jane Wurwand has maintained the single-minded focus on quality that revolutionized the skin care industry over 25 years ago. She arrived in the U.S. during the recession of the ’80s, and the Dermalogica empire continues to grow during our current recession. English emigrant Jane Wurwand embodies the American dream.

One of the biggest problems facing small to medium sized businesses is the issue of cash flow. Every business must pay its vendors and creditors, pay its employees, and hope that its customers pay them on time to make these payments. It’s not easy, and many businesses struggle with cash flow on a daily basis. It’s a reality of today’s business. However, is there something that small businesses can do to improve their cash flow?

Small businesses have two outlets to improve their cash flow. First, they have their customers, and second, they have their vendors. So, how can both improve cash flow? Well, in the case of customers, would getting them to pay sooner, improve cash flow? Certainly it would! In the case of vendors if they extended a business longer credit terms, or even discounts on prompt payment initiatives, would these improve cash flow? Surprisingly, both would. While it may seem strange to bring up prompt payments when discussing cash flow issues, many companies still pursue discounts on prepayments with their vendors even though they can’t make those prepayments right away. They do this to plan for the future. In those cases when cash flow is no longer a concern, that discount for prompt payment can provide significant savings. So, how does each of these by themselves improve cash flow?

Which Customers are able to Pay Sooner?

For a number of businesses, the easiest customers to get prompt payments from are typically those customers that can’t get any credit. Companies use these customers to promote dead stock or obsolete stock at discounts in order to incentivize them to prepay. When a company does a credit check on these businesses, it’s more than likely that nobody would extend them credit. By promoting dead stock, or obsolete stock, a company can not only get paid faster, but alleviate a huge impact on their daily cost of money by selling inventory that might otherwise not be sold. Inventory costs money, and by selling dead stock to customers that are not credit worthy, a businesses can get immediate payment and alleviate their inventory holdings.

Can Extended Terms With Vendors Improve Cash Flow?

By negotiating extended terms of credit with vendors, a company can extend the period they must pay their invoices. Ideally, getting 45 to 60 day terms with vendors allows a business to extend the period they must pay their vendors, and preserves important cash reserves for other payments and payroll. While negotiating these terms isn’t easy, the point is not to worry about getting extended terms with all vendors. Getting extended terms with a company’s largest vendors is a realistic goal, especially if those vendors value and appreciate the business. Since the largest invoices require the most money, getting extended terms has a tremendous impact on cash flow.

Can Prompt Payment Initiatives With Vendors Improve Cash Flow?

Perhaps the most ignored way to improve cash flow is to prepay vendor invoices when possible. Sound confusing? Well, it really does make sense. By negotiating a 1% net 10 or net 15 payment incentive, a company can set the stage for future savings, and capitalize on this discount by making prepayments when possible. For some businesses, cash flow is a seasonal or temporary issue. For those periods where cash flow isn’t a concern, making a prompt payment with a vendor willing to provide a discount, makes a huge impact in the long run. In this case, consider it a deposit. Saving money improves cash flow because it provides the business with more money in its pocket. Whether that money is saved now or later, it’s still a savings.
Small changes here and there can make a significant impact on a company’s cash flow. It takes a willingness to sell to those less than credit worthy customers, and the kind of vendors that see the business relationship as more of a partnership. By working both ends of the spectrum, a company can significantly improve their cash flow. It takes time, but eventually all of these approaches will pay off. Cash flow issues are not always a concern, and it is incumbent upon businesses to take advantage of vendor discounts when possible.