FRESHviews
GENE SICILIANO: BETTER BUSINESS APPROACHES
Gene Siciliano, CMC, CPA (
www.genesiciliano.com) is a financial consultant, speaker and author of Finance for Non-Financial Managers.
The barometer for
your business
going to have a cash-flow problem if it continues.
Inventory turnover. How quickly is your
inventory moving off the floor? If it’s not moving as
fast as it used to, your cash tied up in inventory is
growing in relation to sales. Inventory sitting
around soon begins to get lost, damaged or obsolete and unsalable. Nothing is worse than having
an asset deteriorate and not getting anything for it.
Current ratio. This is found by dividing your
current assets by your current liabilities. This is a
quick way to determine if you have enough current assets—mostly cash, receivables and inventory—to conduct your business efficiently and
smoothly. Too little and you may find yourself
spending time making collection calls and fending
off past-due creditors; too much and your profitability may decline because you’re not making
good enough use of leverage in your business.
What barometric measurements will work for
you depends on your business model. DSO will be
different for a business that sells on cash and
credit, compared to a credit-only business.
Inventory turnover and the current ratio will be different for a manufacturer than for a distributor or
retailer. Keep in mind that the trend of these metrics is far more important than any single number.
The message: Track your numbers and strive
to constantly improve them. The result will be
greater profitability at the end of the day. C
Support for
your business
IF YOU OWN A small
business, you know the
upside of being your own
ARTVILLE
HOW DO YOU GAUGE whether your business is in
for rough seas or smooth sailing? The cash balance
in your bank account? Your year-to-date sales?
Sailors know the value of having a barometer
to give them advance warning of weather trends
and help them stay out of trouble. Business own-
ers need the same kind of early-warning system.
More in archives
On Costco.com, enter
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New year, new approach
THE NEW YEAR is
the perfect opportunity to reflect on your
business. The authors
of Rethink, Reinvent,
Reposition: 12 Strategies to Renew Your
Business and Boost
Your Bottom Line
Shift to the sweet spot. Not all parts of
your business are equally attractive. How can
you move to where the real money is being
made? If you have a portrait studio, consider-shooting videos for local businesses.
IMAGEZOO
(Adams Business; 2010),
cite Louis Pasteur, who said, “Chance
favors a prepared mind.” International business
consultants and professors (and Costco members)
Build share of wallet. You receive only a portion of your customers’ total purchases. How can
you sell them more of what they are already buying from others? Think about providing tailoring
services at your dry-cleaning operation.
Leo Hopf and William Welter offer some proven
strategies for preparing your mind and your business for a great year.
Aim higher or lower. How can you move
significantly up- or down-market? A car repair
shop can up-market by adding pick-up and
delivery services.
Catch the new wave. Most companies are
prepared to win in the market of three years ago.
How can you shift to what will be hot in coming
years?
Make a time shift. How can you do business
during a new or different part of the day?
Leverage core competencies. How can you
use your hard-earned capabilities in new and different ways?
Put old wine in new bottles. How can you
make offerings that have been around for a long
time seem fresh and new?
Hopf and Welter say, “Many of these ideas
can refresh your business with relatively low capital and modest risk—a great way to kick off an
exciting new year for the business you love.” C
boss is often countered
by a feeling of isolation.
In 2005, small-business
owners and Seattle-area
Costco members Lara Eve
Feltin and her husband,
Dan McCombs, lamented
the lack of a sense of community; they weren’t finding it on other networking
sites, so they created their
own and called it Biznik
(
http://biznik.com).
Feltin says, “Biznik is a
community created specifi-
cally with indie business
in mind. It’s a place exclu-
sively about business, for
indie business people.
Biznik’s good at two
things: helping you form
relationships with your
business peers, and being
a platform for establishing
and strengthening your
professional reputation.”
She emphasizes that
Biznik should not be con-
fused with referral net-
working groups: “Biznik is
about traditional business
networking with peers,
with whom you can share
resources, connections,
inspiration, opportunities,
support and referrals.
Strong relationships and
a solid reputation lead to
more sales.”
Membership is free,
with two other levels of
paid membership available
with more perks. C
