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Your Cash Cycle – You really do need financing!

August 16, 2011 in DSO, Small business funding, cash flow, small business by drechsel | 1 comment

It takes money to make money. All businessmen know that. The most fundamental explanation is the Cash Cycle or the Cash Conversion Cycle. When thinking about your company, understanding how quickly you turn cash outflows into cash inflows is as important as how much profit you are booking. This is one of the first metrics I check when I’m hunting for understanding of a business. Today, we’ll see how it applies to a manufacturer I looked at the other day and a distributor that is one of our clients.

Let’s break this down We measure how swiftly a company turns cash into goods or services and back into cash. To do this, compute the cash conversion cycle, or CCC.

CCC = DIO + DSO – DPO   where:

DIO = days inventory outstanding

DSO = days sales outstanding

DPO = days payable outstanding

DIO = 365*Average Inventory/COGS. Days inventory outstanding is how many days it takes to sell inventory. Shorter is better. The more quickly a company can sell its inventory, the less time that cash is tied up as inventory sitting in the warehouse.

DSO = 365*Average Accounts Receivables/Revenue.  Days sales outstanding is how many days it takes to collect accounts receivable. Shorter is better. Quickly collecting the cash for sales means more quickly putting that cash back to work rather than lending it out to its customers (at 0% interest).

DPO = 365*Average Accounts Payable/COGS.  Days payables outstanding is how many days it takes the company to pay the bills to its suppliers. Longer is better. That is, extending payment of accounts payable acts as an interest-free loan to the company and keeps more cash within the company – until they quit extending terms.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the less cash you need to run the profit engine. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both. To calculate the cash conversion cycle, add ‘days inventory outstanding’ to ‘days sales outstanding’, then subtract ‘days payable outstanding’. Like golf, the lower your score here, the better.

Example: a small distributor

Cash Conversion Cycle
Period 1 Period 2 Period 3
DIO 1.04 0.00 0.00
DSO 51.27 67.19 33.57
DPO 57.09 64.53 33.52
CCC -4.78 2.66 0.04

You can see that, as with most distributors, their cash cycle is balanced as they negotiate terms with their suppliers that let them pay for goods about the time they are able to collect on sales. They’ve pretty much averaged zero days cash conversion over these three periods. In that way they avoid needing large amounts of cash to support their profit engine.

For most small businesses, the CCC can give you valuable insight into how much cash is needed to sustain the business, where it is coming from, and whether or not that is a suitable place. It will also tell you how long it takes to turn a profit into cash. A company that’s taking longer to make cash will need to tap financing to grow faster than its profit reinvestment allows.

Many companies have poor basic capital structures where there is no real source of financing for the needed cash to operate the business, and this needs to be corrected.

Example: a small manufacturer

Cash Conversion Cycle
Period 1 Period 2 Period 3
DIO 299.10 375.04 525.18
DSO 175.03 33.17 24.72
DPO 171.76 210.53 312.80
CCC 302.38 197.68 237.10

This firm needs to do work on its policies and operations. Its position improved somewhat over the three time periods, but it still needs to have 237 times its average daily revenue in cash to finance its operation! Mostly this is due to excessively large inventories that are being financed on the back of paying its suppliers very slowly – almost a year on average! – and collecting from its clients very quickly. One look at this would lead us to go look at the inventory to see if it is still useful or if they’ve accumulated a bunch of inventory that will have to be thrown away.

For other firms, especially firms under duress, the CCC can tell you how well the company is managed or, at least, the degree of distress. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This is an important signal of future heightened distress — one that is key to investors and lenders.

How much capital do I need to operate my Cash Cycle?

You must have come up with the cash to pay for the inventory not when it is delivered, but when the invoice is due. Normally this is 30 days after delivery, but specific to the terms you negotiated with your supplier. Then, to the extent those terms are sooner than it turns into a sale (i.e. DIO > DPO), you need to finance your cost of inventory per day for that number of days. Additionally, you need to finance your receivables balance for the duration it is outstanding.

Where does it come from

Mostly, you’ve built this up from the original investment in the business, and accumulated profits. Conversely, you can borrow against your receivables and inventory assets (on the balance sheet) to finance them. This financing is called a working capital line of credit, or factoring.

What change over time tells me

For a firm in distress or need of capital, I’m highly interested in comparing a company’s CCC to its prior performance. Here’s where I believe all owners, managers, investors, and lenders need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time. Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to other fiscal periods. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC.

Though the CCC is easy to calculate, it’s definitely worth watching every quarter. You’ll be better informed about potential problems, and you’ll improve your odds of finding the right capital structure for your business.

If you want to get really sophisticated, you can add the amount tied up in property, plant and equipment, call that tangible capital employed, set it as the denominator under profit, and see what returns you are earning on the capital you have tied up in the business. Perhaps you’ll find you’d be better off buying a Treasury bond and sitting on the beach.

Cash is King. Profit numbers live in the accounting fantasy world we call “earnings” and have all sorts of things in them. Understand where your cash is coming from and what it is being consumed by and you’ll be a long way down the path of being able to keep some of it for yourself.

The Missing Link to Your Small Business Strategy – LinkedIn

February 9, 2011 in Uncategorized, economy, fastest growing companies, innovation, small business by admin | No comments

by Sandra Chesnutt

LinkedIn, the most popular social networking site geared towards professionals, has a long-awaited IPO coming soon. Last week, the company filed paperwork with the SEC to officially begin the process of an initial public offering. Currently, LinkedIn is estimated to be worth $2.51 billion, a number that is expected to grow as the company becomes publicly traded.

If social networking isn’t your thing . . . maybe it should be.

Think of LinkedIn as the next step in the evolution of managing business contacts. LinkedIn is to your Outlook contacts, as Outlook was to your Rolodex. Except now, you have access to key introductions that you never knew your personal network had.  As a small business owner, you are already strapped for time so adding another thing to your list sounds daunting.  Wouldn’t you love to connect with new prospective business partners, customers and employees without having to “meet for coffee” with your entire network to find out who they know?   LinkedIn is a resource to find, talk with and influence your industry.  As of December 31, 2010, there are over 90 million registered users of LinkedIn.  Now that the site has gained traction, it’s time start a free account and reap the benefit.

What can it do for me?

A new business opportunity might be looking – Be findable. Remember the Rolodex –> Outlook  –> LinkedIn metaphor?  Think of LinkedIn as the world’s biggest Rolodex – and you and your connections are an invitation-only part of it. You personally, your company, me, everyone can be in this giant Rolodex. Some entries are robust and engaging, others are lackluster. Just as a warm introduction gets more traction than a cold call, a thoughtfully prepared LinkedIn profile with a robust group of connections will help you attract the contacts you need.

Keep in mind people are looking at your “Rolodex entry” as a summary of your career and as way to non-intrusively connect with and learn about you, even if they do not have your email address (The LinkedIn message system includes inter-network message sharing).  Even when your contact information changes over the years, people can easily find you without your email address and vice versa.  Personally, I don’t consider myself prepared for a phone call or meeting until I have done my Linkedin homework.   My link:  www.linkedin.com/in/sandrachesnutt

Link to the right person for the job. Talented job seekers now actively use the extended LinkedIn network and LinkedIn Jobs module (www.LinkedIn.com/jobs) – at all levels.   Searching for new employees through LinkedIn gives the added bonus of allowing you to investigate a candidate’s connections, work experience, and to an extent their character, conveniently displayed within their LinkedIn profile. We have found some of our best hires directly through Linkedin.

Get free PR. As easy as it is for you to use LinkedIn to size up job candidates, you can be sure potential partners, employees, and contacts are sizing up your business.  If you are nowhere to be found, what does that say about your business savvy and industry presence?  Make it easy for people to get the correct message about you – from you.

Become an Influencer. LinkedIn also gives small businesses the opportunity to engage prospects on the same footing as larger businesses. Forget press releases and outsourced public relations. Participating in and guiding industry-focused discussions on LinkedIn is an affordable and credible way to build your brand.

Begin discussions and give insight that is meaningful to your business.  You can impact your client’s, prospect’s and potential employee’s awareness of you. Try searching LinkedIn Groups for discussions related to your business or industry. One caution, don’t seek attention. Being annoying is one way to make an impression and improve stickiness, but certainly not the one you wanted!

Finally, you can’t afford not to participate in LinkedIn. Ignoring LinkedIn reduces your company’s ability to make impressions on your targets. And we all know, out of sight, out of mind.

Effective Collection Call Secrets

January 19, 2011 in Access to capital, DSO, Receivables management, cash flow, collections, receivables, small business by admin | No comments

Collections Confidential

by Sandra Chesnutt

Recently, I spoke with a professional collections representative, Frances Robinson, to find out the secrets behind effective collections calls. As background, you should know that Frances, who has been in the collections industry for 17 years and has lead our collections team for three years, is well known at AdvancedAR for her kind and gentle spirit.  Here are some nuggets of wisdom from our conversation:

Sandra: What is it like to call someone at a business about payment when you know that they are busy and not going to be excited to get your call?
Frances:  Regardless of the industry there is a common phrase that is universal in the world of collections, “The check is in the mail.” Unfortunately, in many instances the invoice has not even been scheduled for payment, and this line is simply a way to get the collector off the telephone with a promise to pay.

Sandra:  I bet you hear that frequently. And I wouldn’t be surprised if that promise is routinely broken. How do you respond?
Frances:  The key to successful collections is to not take the broken promise so personally that it alters your personality, speech, and professionalism on the follow-up call. It is beneficial to maintain a firm but respectful tone during a collection call. This allows you as the person seeking to be paid to take control of the call and to stress the importance of making your company’s debt a priority without insulting the customer.

Sandra: How do you make sure that your phone call gets results?
Frances:  As I have heard often, it is easier to draw bees with honey than vinegar. The same is true with collections. When a collector treats a debtor with respect, most of the time your invoice is placed closer to the pile of invoices scheduled to be paid.

Sandra: What philosophy have you developed from over 20 years in professional B2B collections?
Frances:  My philosophy has always been to treat people the way I want to be treated. Each call and circumstance is different. A collector may be speaking to a customer experiencing temporary financial problems one month, and enjoying a flourishing business the next month.

Sandra: What’s changed about collections since you first began?
Frances:  Although we are living in an electronic era, one factor remains the same in collections, often the check is actually in the mail, and past due invoices will be paid with follow up and a firm, but respectful, collection call.

Sandra Chesnutt is a Marketing Director with AdvancedAR.   She spoke with Frances Robinson, a valued AdvancedAR associate who makes collections calls as part of the AR services provided by AdvancedAR.  AdvancedAR combines professional receivables services with fast and affordable access to funding – providing small and medium businesses the cash they need to grow and take advantage of market opportunities.

Any Relief for Small Businesses in Proposed Tax Plan?

September 8, 2010 in economy, small business by schesnutt | No comments

I’ve been following this week’s press on the proposed tax plans for small businesses.  Two prongs of the plan to provide $35B in tax cuts for small businesses and workers were under fire in this morning’s edition of The Wall Street Journal: 1) increasing, for 2010 and 2011, the write-off for qualifying equipment to 100%–a two-year cut, and 2) making the tax credit for business-research expenses permanent.

Today’s articles highlighted some of the issues small businesses struggle with as they contemplate how these proposed cuts could help them lower the 9.6% unemployment rate the country is facing.  Assessing the net impact of any tax cut or increase is difficult at best, and consumer and business confidence is much of what helps to boost the economy.  Knowing that you won’t have to spend additional money on taxes, or that you might even spend less, can give you the confidence to project your revenues and expenses, and thus to assess growth opportunities and the hiring of additional employees.

As far as the proposed cuts go, businesses spending less than $800K on certain equipment can already write-off up to $250K, which means many small businesses are already taking advantage of this write-off.  It appears to be a two-year tax cut targeted at a very small number of businesses: those making over $800K in either manufacturing or an industry that must constantly re-invest in new equipment. While manufacturing as a whole comprises almost 12% of employment, it represents only 5% of all establishments, most of whom are large companies. 

If this write-off is an attempt to encourage spending through the purchase of new equipment (which could have a net positive, short-term impact), what is the reality of a small business having the funds to make such a purchase?  Investing in capital equipment requires a cash investment no matter how quickly it can be written off.  Most small businesses simply don’t have access to the cash required for these purchases, and, even if they do, most are already with the qualifying $250K limit.  Is a tax credit with a two-year limit really just a quick shot of adrenaline versus a boost that will provide a long-lasting impact to the majority of small businesses, the fabric of our economy?

Making the credit for research expenses permanent is a longer-term fix, but it requires the ability to see ahead and invest in the future in a time when many small businesses are struggling to make it from one day to the next. 

What would you propose?  What tax relief would help you expand your business and help reduce the unemployment rate?

WSJ: Obama Tax Plan Holds Less for Small Business http://online.wsj.com/article/SB10001424052748704358904575478053722103156.html

Parties Spar Over Small-Business Proposal http://online.wsj.com/article/SB10001424052748703417104575473653330146646.html

Kelli Spencer is a product marketing professional.  Ftrans combines professional receivables services with fast and affordable access to funding – providing small and medium businesses the cash they need to grow and take advantage of market opportunities.  Liberating you from funding challenges and receivables hassles.

SBA loans: No Green for this Landscape Architecture Firm

August 2, 2010 in Access to capital, SBA 504, SBA lending, SBA loan, Small business funding, lending, small business by schesnutt | No comments

As part of our ongoing series on small business funding, I sat down with Dave Price, whose firm, Bennett Design and Landscape, is a nationally recognized landscape architecture firm and a fixture in the Atlanta landscape design scene.  He shared with me his personal observations and described his experience applying for an SBA loan.

Your story is a classic start-from-scratch American small business story.  Can you share a little bit about how you went from not having a business to a $5 million business with 13 employees a few years later?

My partner and I both had full time jobs.  He was a landscape architect and we thought why not make some money on the side designing and installing small landscape projects for homeowners?  We soon realized that once we earned our customer’s trust on the small jobs it quickly went to, “I need a new driveway or retaining wall.”  Within a year we thought we had enough business for one of us full time and a small office in the basement.  A year and a half later we had an office manager, and a couple of employees and we were both working in the business full time. 

Whenever owners of small or start-up businesses ask around about financing they are often advised to look into an SBA loan.  When you started thinking about getting an SBA loan, how did you research the process and how did you get started? 

Around that time we already had a $60,000 working capital line of credit and an additional $15,000 line of credit secured by our building, plus a HELOC on my home.  We knew nothing about SBA loans.  We already had depository and lending relationships with a couple of Tier 1 banks so we started there.  They explained the process to us, looked at our P&Ls and Balance Sheet and gave us packets outlining the process step-by-step.

With your existing lines of credit, you had already been through the underwriting process before. What was different about applying for an SBA loan?

The level of paperwork involved.   We learned it wasn’t just a lot of paperwork for us; it was a lot of paperwork for the bank too.  We also had a misconception.  We thought, here was the SBA with a pile of government money to help small businesses to grow the economy.  We found out that the banks are really lending their own money and the government was just acting more like the FDIC, as a back up.

The bank was much pickier than for a standard line of credit.  The SBA wanted to know specifically how you were going to use the money and how it was going to impact your business.   In the end, both banks told us this is going to be a mess.  It’s going take a lot of your time and your chances of getting approved for the loan are maybe 30%. We were bankable but weren’t nicely fitting into the criteria.  They explained that we were not a minority or female owned business.  We weren’t doing work for the government. 

To come – Part 2:  That’s not the end of the story though.  You tried again! 

This post is part of a series on funding small and medium sized businesses; first-hand accounts from people who have been through it from knocking down SBA loan hurtles, to how venture capitalists and private equity partners think, to what’s new in getting an old school line of credit. 

Dave Price started his landscaping design and architecture firm in Atlanta with a $100 investment.  Fourteen years and several local and national awards later, Bennett Design & Landscape’s designs have been featured in Southern Living and Atlanta Homes & Lifestyles. 

Sandra Chesnutt is a Marketing Senior Manager with Ftrans.  Ftrans combines outsourced accounts receivable management with fast and affordable access to funding – providing small and medium businesses the cash they need to grow and take advantage of market opportunities.

Small Business Loans – The Collateral Catch-22

July 22, 2010 in Access to capital, Small business funding, credit crisis, credit scoring, lending, receivables, small business, small business lending by JimLesterIV | No comments

For businesses seeking small business loans or working capital loans, the process may seem like a Catch-22, or no-win situation.     Generally, loans are secured by collateral such as accounts receivable, inventory, real estate, and other assets.  But, according to the Wall Street Journal’s article, Collateral Damage in Lending, the collapsing value of assets such as inventory and equipment is causing a collateral gap and resulting in many businesses falling short of loan eligibility.   Thus, these small businesses must still pledge the usual collateral, but, increasingly, small business lenders are requiring cash or other highly liquid assets as secondary sources of repayment.   The Catch-22 is that often these cash requirements are equal to the loan request amount.   As a result, small business owners find themselves asking, rhetorically, “If I have the cash, why do I need the loan?”  

Accounts receivable remain one of the most important assets of a company.  They are the primary generator of cash.  Tighten and reduce your cash conversion cycle by reducing your business’s accounts receivable days outstanding to generate more cash.   To do this, consider your business’s complete revenue cycle from customer acquisition to invoicing to payment receipt.  Is your business following accounts receivable best practices?  What is the propensity to pay and credit worthiness of your customers?   How does the business handle aging receivables?  

Companies such as Ftrans offer complete accounts relievable and credit management solutions that help businesses address cash and revenue cycle concerns.   Implementing these best practices enables accounts receivable funding for your business without a Catch-22.

Go Low With Your Cash Conversion Cycle

July 14, 2010 in Access to capital, Small business funding, credit crisis, lending, receivables, small business by JimLesterIV | No comments

As reported by the Wall Street Journal, small and medium size businesses continue to have limited access to credit.   According to Federal Reserve Chairman, Ben Bernanke,

“The formation and growth of small businesses depends critically on access to credit,” Mr. Bernanke said in the text of his remarks. “Unfortunately, those businesses report that credit conditions remain very difficult.”

Absent credit availability in the form of small business lending, businesses must actively manage their cash conversion cycle, which is the time it takes to convert a business’s cash consuming activities into cash payments.   In other words, businesses must manage to a low cash conversion cycle which means having cash tied up in business operations for as few days as possible.  Clearly, a shallow credit market highlights the importance of managing to a low cash conversion cycle as this may be one of the few ways for businesses to have the liquidity necessary to fund their operations.   

How do you manage your cash conversion cycle?   Focusing on revenues and expenses is important.   However, equally important, and perhaps more complex is developing a better understanding of your business’s working capital situation.   Analyze your accounts receivable and accounts payable outstanding days, including inventory, to understand how movements in each affect your cash conversion cycle.   Good cash cycle conversion management equates to better revenue cycle management which equates to an increase in the health of a company.   For more information on cash cycle conversion, click here.   Additionally, consider solutions from companies such as Ftrans which provide full accounts receivable management solutions.

Banks not structured for SMB lending just yet

June 29, 2010 in Access to capital, Small business funding, credit crisis, economy, small business by schesnutt | No comments

It’s not that banks don’t want to see a small business recovery.  In fact, they are indeed under political pressure to lend to SMBs and help build the recovery. 

Yet, Our research indicates that the community banks that typically serve SMBs  just aren’t structured to handle the the highly specialized risk assessments required to successfully underwrite C&I loans.  Nor are they staffed right now to properly manage the rigorous monitoring of these loans.

Dan Drechsel, Ftrans CEO, explains further. 

[youtube=http://www.youtube.com/watch?v=FKSi4vaocYg]

Next:  Banks say they aren’t lending because there is no demand.  Do you believe that?

Bootstrapping a Start Up: Confessions of an Entrepreneur

June 2, 2010 in Access to capital, receivables, small business by schesnutt | 1 comment

This is the first post in a series on funding small and medium sized businesses; first-hand accounts from people who have been through it from knocking down SBA loans hurtles, to how venture capitalists and private equity partners think, to what’s new in getting an old school line of credit. 

In this one-on-one, I spoke with Michael King, serial entrepreneur.  He’s currently a Regional Sales Manager with Ftrans, helping small business owners finance their growth opportunities with accounts receivable financing.

The small business owner is an American icon.   All kinds of Americans dream of owning their own business.  How did you get started?  What personally lured you?

When I started in the importing and wholesale distribution industry in the mid 80’s, going to China and India and Asia was exotic and different and not that many people did it.  From about 1986 to 2006 I was involved in importing products for the home, seasonal decorations and gift products, eventually owning two businesses in that space.  We sold to independent retailers and to major big box retailers as well.  We hired designers, went to factories in Asia to make our products and sold them to retailers in America. 

I’m interested in hearing more about the business you started from scratch.  Looking back, how well were you able to predict your cash needs?

Having gone through the ups and downs of owning a business before, and successfully handling it, I thought, with the right partners, we could grow to a decent size.  Our target was $1 million in the first year which we reached. 

In that industry, even with a lot of experience and very competent partners, you have to find the right product and get in front of the right customers.  Product lifecycles last maybe three years.  It’s almost a fashion industry.  You might have $6 million in sales one year and if you don’t guess right on a trend, your sales might be $1 million the next year.  When you start out, you plan for the worst case scenario –and the worst case may actually be selling a whole bunch.  You’ll owe a lot to your vendors for inventory and you can have your cash all tied up in accounts receivable.

You bootstrapped this business.  What was that like?

They call it bootstrapping  because you’re pulling your business up by your own bootstraps.  Even with an industry reputation, if you want your business to stand on its own, you have to prove that you have the management skills, the need and the collateral in the form of receivables to be able to get lines of credit.   

Starting out, to get us through the first six months, I used my own money.  I used credit cards.  I went to my family and I was fortunate enough to get some money there.  My other partners did the same.   But to fund the business cycle of buying inventory and selling it to customers on account, we had to get our vendors to let us pay on terms, too.   We had a track record and a bit of a reputation in the industry that helped as well. 

After about six months, we’d had good results and at that point we were able to use our AR to get financing with Ftrans.  That worked for us because in addition to getting access to capital more quickly, Ftrans took over many of the administrative burdens of managing our receivables. 

What were some of the decisions you made early on that you think had an impact on your ability to be successful?

We planned big, but we tried to keep internal costs variable.  Using  outsourcing is a good way to do that; we used third party warehouses and accounts receivable outsourcing.  Try to be as efficient as you can.  Empower the employees you have with the right technology so you get the most out of a few employees.  You try to maintain as much flexibility as you can from a cost standpoint so that you can maintain your profitability at whatever sales level you hit. 

Experience is important.  It pays to know who is going to buy your product, how to talk to them and to know what their needs are.   If I didn’t have certain skills in my own skills set, such as design or sourcing skills, for example, I was willing to bring in partners who did.

I always hear about small business owners who are constantly scrambling to find cash.  How were you getting stretched cash wise?         

The industry normal is net 30 days and they don’t get too worried about paying you for 45 days or so.  My DSO was 47 to 50.  Target demanded net 90 on new stores and net 60 for established stores.  I‘ve heard stories of retailers demanding even longer than that.   It helped that one of our partners was well known by one of our big vendors and they sold to us on terms.  It was like an interest free loan.

You mentioned that some of your capital came from family and I’m curious about that.  Was it in the form of a loan or as an investor?  What would you tell someone who was going to invest with a family member? 

Well, you have to be very careful about that!  In my case it was in the form of a loan.  Fortunately, I was able to pay it back.  Obviously, you take a lot of risk in damaging your personal relationships in doing that type of thing.   It wasn’t a ton of money, in my case, but it was some money and it was very important.  Obviously, if you can find partners or get debt financing, I would always suggest doing that before approaching family members or friends.  Personal relationships are too important to ruin over some type of business venture and I’ve seen it happen.

If someone in your family approached you and said “I’m starting a business and I’d like you to invest.”  As a former small business owner, what would persuade you to invest?

It would be more now than it used to be!  I realize what is needed in terms of properly managing the financial side, having good internal cost controls and financial skills and savvy.  Not just having a good idea with market demand and a differentiating competitive advantage, but the ability to run the business side of it.  And I wouldn’t give more than I could comfortably lose. 

Was there ever a time when you thought, “This is not going to work?”  When it became a real gut check?   What did you do?

I went to my vendors and tried to get better terms.  I always tried to be respectful and keep a mutually profitable relationship with my vendors, but I explained that it would help me grow my business and help my loyalty with them.  Sometimes you have to not take salary yourself.  There were times I did have to reduce staff.  There were always hard choices. 

There’s nothing like real life business experience.  If you planned to start another business, what did you learn from your initial experience that you would always have in mind?

I would look at private equity or the angel environment and try to get bigger faster rather than relying on retained earnings or debt to grow the business.  I wouldn’t try to do it all myself.   I would be more careful about picking a business with strong margins, smarter about analyzing competitive pressures.  I got in the import business because I liked to travel and I did a lot of that.  I lucked into a way to make money but I don’t think that space exists now the way it did then.

You think you’d ever start another business again?

Absolutely!  I plan on it!  I’d definitely be an entrepreneur again.  I liked wearing a lot of different hats.   I don’t know about the stock market being the path to retirement.   I’m probably going to have a couple of small businesses that are running well.   I come from a family of business owners; it’s in my blood a little. 

More on Bootstrapping:

The Art of Bootstrapping

Bootstrapping Your Start Up 

 

Sandra Chesnutt is a Marketing Senior Manager with Ftrans.  Ftrans combines outsourced accounts receivable management with fast and affordable access to funding – providing small and medium businesses the cash they need to grow and take advantage of market opportunities.

Is Your Business MIA — Missing in Automation?

May 21, 2010 in credit scoring, innovation, marketing automation, small business by JimLesterIV | No comments

No, we’re not referring to accounts receivable and credit automation, even though we encourage this and a tie in does exist.  To be specific, we are referring to missing in “marketing automation.”  Most businesses, regardless of size, either have a web presence or are contemplating one.  Many of these businesses have no idea who is visiting them or how to nurture their visitors towards conversion.       

Over the last few years, SaaS firms such as Pardot and Marketo have made significant progress in offering comprehensive, cost effective marketing automation solutions to small and medium size businesses.   For as little as $500/month with no contract, a business can implement Pardot and really supercharge the management of their web traffic and leads.  

Automate to intelligently interact with your visitors; know how they are getting to your website; know what content is valuable to them; offer the right solution at the right time; and if you have a CRM system, make sure the MA system integrates with it.   

Now, tying marketing automation to a credit automation solution such as offered by Ftrans can greatly improve decisions about interacting with visitors and prospects.   For example, based on the business credit score of the visitor, coupled with their level of interaction with your website, your business can quickly determine how to prioritize subsequent interactions with the visitor in an effort to convert them to a qualified lead and then client.

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