Follow through for the win

“Nothing happens until somebody sells something.” It’s uncertain who originated this pearl of business wisdom, but it’s widely recognized as an unarguable principle of business success. The truth is, until a sale is made, the business goes nowhere.

However, what it fails to point out is that focusing solely on sales at the expense of sound business management can be a path to financial mediocrity — or worse. How you manage the revenue generated by your garden center’s sales will determine how much of that money reaches your bottom line.

This article discusses nine powerful techniques that can help you gain maximum benefit from your sales right now:
 

Keep your money working for you

Skillful management of your revenue demands that you never allow any of your money to lie idle. Here’s a technique that will help you to avoid that costly error:

If you don’t already have one, open a money market account at your bank and ask to have it linked to your business checking account so that you can make telephone or online transfers.

Then, deposit all of your daily receipts into the money market account where they will immediately start drawing interest.

NEVER deposit receipts directly into your checking account. Keep a minimum balance in the checking account and transfer cash by phone or online only as needed to cover checks written. The banks have made this technique so easy to use that there is no longer any reasonable excuse for not using it.

While even money market interest is anemic at this time, interest rates are certain to climb and you’ll be set for an extra benefit when they do.
 

Don’t be in a big hurry to pay your bills

Ever notice how checks are slow to come in from people who owe you money? There’s a good reason for that; it’s because hanging on to cash as long as possible keeps that money available to draw interest.

That’s why it’s important for you to set up a system to pay your bills just before they come due. It’s easy and it moves you up another rung on the ladder of professional cash management.

Of course, you don’t want to jeopardize your credit standing and pay heavy penalties for paying bills late. Pay your bills just before they’re due — not well before, not after.

It’s especially important to avoid late payment on credit card bills because of the oppressive penalties that most issuers have put into place in recent years.
 

Be aggressive with customers who owe you money

If you do any of your own billing, never allow those receivables to go untended. You’ve earned that money. You have a right to it; you need it.

Dunning late-paying customers may not be your favorite pastime, but setting up an accounts receivable file and following through on late payments is as important to your financial success as the quality and professionalism of the services and products you offer. If your customers learn that you are cavalier about money owed to you, you can be certain they will stretch your patience (and your cash flow) to the limit.
 

Diversify to keep cash flowing

Always be on the lookout for new and untried ways to diversify your offerings; don’t be afraid to try something new. This is an important strategy during those inevitable times when business is off and revenue is down. During slack times, any income is better than no income. Consider offering special services or products during slow periods at sale prices that do not satisfy your usual parameters of profitability. That approach makes sense by providing work to help smooth out the inevitable and costly ups and downs of cash inflow.
 

Maintain a cash cushion

Keeping enough cash in interest-bearing accounts to cover normal operating expenses for three to six months is a smart move. The peace of mind and self-confidence that come when you don’t have to sweat out next month’s rent or next week’s payroll during a business slowdown are important psychological business advantages. Also, keep in mind that your cushion money is making money for you in those interest-bearing accounts while you are free to concentrate on running your business.
 

Get to know your local banker

Knowing how to handle money is a banker’s primary job, and most are quite good at it. Whether your business is relatively large or small, it’s a good idea to develop a personal relationship with the branch manager of your bank. If you haven’t already done so, drop in and introduce yourself. Discuss the financial picture of your business honestly and you’ll likely get some good ideas and a favorable ear should you ever need financial help in the way of a business loan.
 

Make full use of your computer in managing your cash flow

Whether you use of one of those heavyweight commercial software packages designed especially for your operation, or whether you use Quicken or Money on a desktop PC, trust every aspect of your business, including investments, to your computer.

The financial reports and analyses that modern software can produce at the touch of a button can be vitally important management tools for improving cash flow and profits.

The most popular software packages designed for small business are infinitely easier to use than they were as recently as a couple of years ago.

More importantly, they will teach you in dramatic fashion how much you can benefit from a sensible cash management system.
 

Consider leasing for any large capital purchase

Most financial advisors agree that leasing products like cars or vans for personal use is usually not financially advantageous, but business is a different animal entirely.

“The nature of business accounting is such that leasing can be the most sensible approach to many types of capital investment,” says accountant Jay Blumenthal, Abington, Pa. “It usually makes sense to lease if you will be able to use the cash in your business or in your investments to earn a better return than the cost of leasing.”

Talk to your tax advisor about this the next time you’re considering any large capital purchase.
 

Spread the gospel

In order to do a professional job of managing cash, you must have a steady flow of the stuff coming in. Many owners keep themselves so busy dealing with day-to-day operating problems that they never get around to putting together an aggressive business-building marketing program. That’s a serious mistake.

Marketing is an essential ingredient in the recipe for growth — even survival — for any business. Yet, many owners shy away from all but the most obvious ways to promote their businesses. For some, their entire marketing program consists of a website or an expensive ad in the newspaper.

Sometime, in some place, someone may have bought the necessary equipment and inventory, rented a location, placed an ad in the Yellow Pages, and sat back while the phone rang off the hook and the customers poured in.

Perhaps, but not likely.

Building a growing and profitable business requires an ongoing marketing program. There is no other way. Competitive prices alone won’t do it. A high degree of professional skill alone won’t do it. As one entrepreneur puts it, “You have to tell the world your story. If you don’t do it, no one else will.”

Taken individually, good cash management techniques may seem obvious or inconsequential. However, when you blend them together in a consistent way, they become a significant and permanent contributor to your bottom line and economic future.

Willam J. Lynott is a freelance writer specializing in business management as well as personal and business finance. lynott@verizon.net