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What is meant by Business Potential? - May 25, 2009

Posted by: Linda J. Donegan in Articles

I was sitting in a seminar this morning and the presenter mentioned, "reaching for the full potential of the business." I quickly thought to myself, What is the definition of full business potential?

A quick search on Google proceeded to muddy the waters even more. Some of the search results listed on the first two pages were:

Are You Marketing to Your Business Potential?
Tapping Business Potential in Africa
Tapping Business Potential in India
Increase your Business Potential with a Web Site
The Next Billions: Unleashing Business Potential in Untapped Markets
Maximize Your Business Potential through your Employees!
Aging in Place: A Business Potential
American Express: Unlock Your Business Potential

It appears everyone talks and talks and talks about business potential, but apparently it means something different depending on the message you are trying to convey. Is business potential measured in growth? Gross revenue or Net Revenue? Number of employees? Gross margin percentage? Or is it something more intangible like the satisfaction of the business owner? Happiness of the employees? Service to the community? Or maybe it is the reward of providing a valuable service/product to clients and customers?

I believe business potential is all of these. All business owners need to figure out for themselves what business potential is for their business. They need to set goals based on this potential and start moving in that direction.

But why is it so few actually reach their goal? Why is it that with all the available books and websites telling us how we can achieve more, that most people give up or don't achieve their potential?

I think it has to do with the will to achieve the goal and also understanding how to move toward that goal. Will is an essential component in reaching potential. Many people have wishes they think are goals. They wish their business made more money; they wish their employees were happier; they wish they could make a valuable contribution to the community. Turning wishes into reality is where the word potential comes in. Making those wishes come true takes hard work and a plan and, most of all, will. Yes, a day by day plan that moves ever closer to the potential.

Are your goals written down? Do you have a plan of what you will do day by day, week by week, month by month to make those wishes become reality? If not, keep wishing!!

It's Called Cash Flow for a Reason - Sep 14, 2008

Posted by: Linda J. Donegan in Articles

Business owners need to think about cash flow in terms of water. We can't survive without water, but too much or too little can have devastating consequences.

A heavy rainstorm starts with dark clouds, followed by a light shower, strong winds, then sheets of rain that fill the streets and overwhelm the storm drains. Creeks and rivers overflow their banks, damaging property and limiting movement, bringing the risk of death unless emergency crews fill enough sandbags to keep the ever-rising water away from homes and businesses.

The effects of drought take longer to become visible, but they're just as deadly as flood damage. First the fields and forests are merely thirsty; then leaves and plants begin to wither. Below the surface, roots die off and the water table recedes. Unless alternative sources of water are found, the land dies, and so do the animals and people who depend on it.

Managing your cash flow is like managing water resources because too great of a demand on cash flow-or too little-at the wrong time can kill your company.

I know of a company that has an outstanding receivable of $1.5M. The Company's cash was tied up in direct and indirect labor and materials to produce products and provide services to one of the Company's main clients. The situation worsened by changes to work orders that resulted in the greater cash consumption. The terms of the agreement were for payment at the completion of the work, but both parties had overlooked the impact of this arrangement on cash flow. The Company experienced a prolonged lack of the life-giving element (cash). Meanwhile, the Company's client was unprepared for the storm. When the invoice arrived, the client felt swamped by the deluge. "We don't have that kind of cash, and our LOC is limited," the client protested. "The payment terms are clear," the Company replied, facing the pain and effects of drought.

The whole awkward situation could have been avoided If both parties had been taken their cash flow needs into account when they were negotiating the contract. The storm of the century could have been just another summer shower if they had built periodic payments into the contract.

Cash management properly using a Cash Flow report is like a weather forecast. It focuses on regular inflows and outflows of cash. Businesses use these forecasts to best advantage by making regular bi-weekly payments and issuing invoices on a regular bi-weekly or weekly cycle. Holding payables back too long is similar to building a dam; the accumulating pressure finds any structural weakness and a hairline crack turns into a disaster. At the provider end, neglecting to invoice in a consistent manner means the well can run dry.

Businesses experience other storms that directly affect cash flow: new product line expansion, hyper-growth, overly aggressive hiring practices, material cost increases, lender rate changes, unplanned tax implications. The list can be long.

Testimonial - Dr. Ross Taddeo - Sep 14, 2008

Posted by: Linda J. Donegan in Testimonials

Linda has been an incredible addition to our office. As a business owner with no business sense (they don't teach that in dental school) Linda has restructured my office and is giving me invaluable financial support. When we first met to discuss her working with me, I explained my frustration at working longer and harder with little more profit to show for all the hours. I explained how I thought about taking back control of several duties in my office, like ordering, staffing, etc... Then she handed me your brochure and it was like you had read my mind for all my needs..eerie. I cannot recommend Linda more highly!

Testimonial - Southern Safety & Supply - Sep 14, 2008

Posted by: Linda J. Donegan in Testimonials

Linda implementing our budget has helped my partner & I to make better decisions & capitalize on missed opportunities.

Testimonial - GreatInsuranceJobs.com - Sep 14, 2008

Posted by: Linda J. Donegan in Testimonials

Linda has brought organization and processes to our organization which allow us to make "educated" business decisions.