Small Business Management Fundamentals - Staying Solvent

Lessons learned over the years lead me to consult an expert. So with a nod from me to what might be special in the world of events, here's an article that gives us real information in financial management - Andrea Michaels

Ravi Patel

 -By Ravi Patel
Most small businesses don't make it past the first two  years. And most events industry companies are relatively small businesses. After all, they are not Microsoft. They face tremendous challenges. The key goal for any business is to stay solvent. What should small business owners focus on to stay solvent?

Although being solvent is defined in the accounting sense as having assets in excess of liabilities, this definition is not useful for small businesses. A more practical definition would be to have a consistently positive cash flow where inflows exceed outflows. That means spend less than you take in.

Here are some tips for consideration that should be paid attention to by every member of your company. After all, their employment rides on the company having enough money to pay them.

Increase Cash Inflows from Revenues
There is a difference between increasing sales (which is a given) and enhancing cash flows from sales. If you are a cash business, they might be the same. For a non-cash business, accelerate cash proceeds from revenues by:

• Offering discounts for cash payments or early payments, though be judicious in their use.
• Aggressively staying on top of receivables and improving the collections effort. Don't let AR go past normal industry practice, but do better than that.

Diversify Cash Inflows
If you are a seasonal business, or depend on one or two products/services or a few clients/customers for a majority of your revenues, then focus on diversifying your business. Over-dependence on a few customers or products for a long period limits your continued ability to remain solvent. Never assume that if you have one "big fish" client that you will always have that client, so make sure you have many customers so that if one is lost there is no great impact to your business.

Focus on Margins
Increasing sales is important but not at the expense of gross margins. Getting the optimal margin from each dollar of sale will increase cash inflows. To be direct here, selling a million-dollar project from which you gain $10,000 is not a good investment just to say that you sold and produced a million-dollar project. Could you have benefited more from 10 $100,000 projects from which your margin was $10,000 each?

Delay Cash Outflows or Match them closely to Inflows
Work with your vendors and suppliers to get favorable payment terms at least matching those offered to clients. If you have fixed payments on debt repayment, extend the term to lower your monthly liability.

If You Handle Multiple Accounts and Projects, Keep a Separate "Internal" Bank Account for Each and Spend Money Accordingly.
Therefore, if one project is cancelled, you are not in danger of spending money allocated to another project.

Reduce Cash Outflows
Carefully scrutinize all monthly expenditures with an aim to eliminate, reduce or defer such payments. Avoid spending cash on "nice-to-have-things" rather than on investments that get you an immediate return.

Change your Expenses to Become Variable with Revenues
Convert expenses to become variable with cash inflows so that you are not making payments regardless of your sales. Use temporary or outsourced people resources so there isn't a huge fixed burden.

Manage Your Growth
Don't overextend your infrastructure anticipating growth without first having adequate cash flows to support your monthly operations and a comfortable reserve. Taking on debt without proper cash flow planning could be detrimental to your business.

Always Remember that Profits Have to Account for Overhead Expenses
This means all of them, including your phone bill, rent, auto, taxes, workers comp, liability and auto insurance and so very many extras! You need profit to pay for all of those.

Never, EVER, spend deposit money that you are holding for a specific event.

These are some general tips that need to be customized to your business needs.

Regardless of your desire to remain solvent and potential delays in getting a consistently positive cash flow for your business, it is imperative that you recognize signals that might lead to insolvency. Such signals include but are not limited to:

• Difficulty in making payroll
• Inability to pay suppliers on time
• Skipping debt payments
• High employee turnover
• Selling fixed assets
• Owners forgoing salaries
• Maximizing credit lines

While it is important to recognize danger signals that might lead to insolvency, it is far more prudent to implement measures that allow your business to remain solvent for the long term. Just as clients are requiring transparency in their bids, they are also requiring that you submit financial statements to them. Be wise and make sure you look as good on your balance sheets as you do on your proposals.

Ravi Patel is President and CEO of Patel CFO Services that provides outsourced CFO services for entrepreneurs. He can be reached at ravi.patel@patelCFOservices.com.

Marketing and Branding by Winning Business-Related Awards

I have often been asked if it is worth the time and trouble to enter the various industry awards that are available to the meetings and events industry. Absolutely! For a variety of reasons.

Planning Events as Award Entries Enhances Quality

If you think of every event you propose and produce as a potential industry award winner, you will create and deliver a much higher quality event. What does that mean? You will pay more attention to detail. You think about how to make it unique, give value for the money spent; you add creative elements, which improve the event; you think about ROI; everything is heightened and defined. You will assure that you memorialize the event with photos and/or film and have the necessary imagery to promote it.

It Creates Media Buzz and Supports Your Marketing Strategy

When you enter awards, which provides the opportunity to get nominated (like Woody Allen said: "80 percent of success is just showing up"), you can create a media buzz and get your company name out to potential and existing clients. Part of your marketing strategy should be to produce press releases for trade media, clients and prospects when you have something newsworthy to announce. Being nominated or winning an award is most certainly newsworthy. This makes a great promotion to present to prospective clients. When prospects and current clients come to our office and see awards on our shelves, they are impressed!

It is even better promotion for the existing client that created the opportunity for you to work and showcase your work. Clients like acknowledgement and thus letting them know how many awards we’ve won, as well as what specifically they were for proves that we can back up what we are selling them. Even if they tell you that their event cannot be publicized, once you assure them that many of the entries do not name the client and that logos and guest photos will not ever be publicized, they are usually open to the idea, especially when you mention all the things listed above.

In the case of the Event Solutions Spotlight Awards (See Flo Miniscloux with her 2013 Event Solutions Spotlight Award for Rising Star Female above), it lets our clients know how professional and accomplished our team is.

It Sets You Apart from Your Competition

Having both award nominations and wins does set you apart from your competition. It is a numbers game, and I can't tell you how many awards we entered, got nominated and didn't win, or the events entered that didn't even get nominated. But, we kept entering, started getting nominated every year and often won. As they say, you cannot win the lottery if you don't buy a ticket. As of this writing, Extraordinary Events has won 50+ awards across the event and meeting industry, as well as the WOW awards, Event Marketer, Women in Business Hall of Fame, National Association for Women in Business, Event Solutions Hall of Fame, Special Events Pillar of the Industry and American Business "Stevie" Awards. It's a distinction that validates the quality of the company'w work and has become part of our unique selling proposition.

It Helps Showcase Your Work Across Different Market Segments

Entering awards allows you to create niches in various industries. Award competitions are available for meeting planning, conference execution, entertainment, spectacles, theatrical shows, exhibits, mobile marketing, event marketing, logistical management ... and the list goes on. Thus, you can appeal to different market segments.

Learn About Various Award Programs

I read every trade magazine. I talk to other people in our industry and others not in our industry. I have introduced my international contacts to our U.S. awards, and they have introduced me to theirs. I also have belonged to Meeting Planners International and the Society of Travel Incentives forever and, therefore, knew of their awards.

I took a leap of faith when I introduced my international contacts to our U.S. awards. With their creativity and strategic thinking (and I am specifically referring to Colja Dams of VOK DAMS Agency for Events and Live Marketing), I knew they would be competitors in the same categories I entered. And I was right; they were. So much so that at first when they were not winning I realized that they were writing in the German way, which is different than our entries which are much less about facts and more about story telling. So I wrote a few entries for them, and they won and won and won some more. When this happened, other companies in Germany decided they wanted to play on that same field, so they started entering as well. And in my categories. So the Pros: It upped the game for everyone, including me. Cons: We lost the win to them many times.

Do Joint Awards Entries

Whenever it is a truly collaborative effort, do joint award entries. For instance, VOK DAMS and EE have partnered on automotive events, and when they are award-worthy (and they usually are) we do a joint entry. I might write the entry while VOK DAMS addresses the strategy and provides the graphic support. As it is collaborative on the actual project, it is also on the entry. It totally depends on the ratio of creative or logistical support on the actual project.

Colja Dams agrees that "joint entries illustrate how it makes sense for strong partners to team up to achieve the best results possible for the task at hand." Dams also feels that "U.S. awards are recognized all over the world. Awards mean a lot to our clients. Awards honor our clients' events and are a catalyst for our agency to achieve the desired  result. More and more clients keep asking for awards because receiving them has become an integral part of their personal goals within their organization."

It Is an Important Part of Team Building

I also use awards entries as a way to reinforce to my internal team the quality of the events we produce, of which they are so much a part. They all take part in pulling together the entries (the physical part), as well as the brainstorming or addressing the special needs of that award if they were involved in the creative or logistical processes, etc. or if they were on-site and a client contact, then I ask them to contribute to that part of the award.

If the awards are being presented in a physical ceremony, my policy is that, if nominated, the key people responsible for the event attend the ceremony. If our entry wins, they get to go on stage with me and be acknowledged.

Is it time-consuming and a lot of work? Yes! But think of it as part of your marketing strategy and devote some funds for a specialist to write the entries for you or designate a team member with good writing skills to be in charge of getting them completed. (When you enter, pay close attention to the 'criteria,' because many worthy entries have been disqualified when they were not appropriately addressed.) And invest in a great photographer/videographer to document the event.

You will see positive results if you do enter award competitions, especially if you promote and market your nominations and wins.

This article was originally published by Event Solutions. Andrea Michaels is the founder/president of multiple award-winning Extraordinary Events. She may be reached via amichaels@extraordinaryevents.net.

Getting Creative with Business Meal Conversation

We caught up with our friend John Daly for this one. His advice was simple: It's a business lunch or dinner. Its purpose is to discuss business. So, be prepared. Then, he proceeded to tell us how to creatively maneuver our way through it.

Who Should Begin the Business Conversation?

The host should initiate business-related discussions. But not as soon as everyone is seated. He or she should wait until the meal is finishing up, perhaps over coffee, unless there is an urgent situation to address. Otherwise, it's difficult to carry on a serious discussion in-between bites of salad! He or she should leave ample time for the discussion, taking into account the agreed-upon time allotted for the meal.

It is the host's responsibility to guide the conversation, suggest the topics and engage everyone at the table in general conversation before the business discussion takes place. If the table isn't involved in a general discussion, be sure that you engage the folks seated on either side of you. And, junior members of the group should never try to dominate the discussion but rather ask questions and comment when they have something worthy to contribute.

What Qualities Does a Good Conversationalist Have?

To bone up on your conversation skills:

• Know your audience.
• Be knowledgeable about a number of topics so that you can vary the conversation to fit the audience.
• Have a sense of humor in order to entertain others.
• Be a good listener and truly interested in what others have to say.
• Never talk down to anyone.

So many people lack the ability to listen, and listening is the most important of all the qualities I've listed. Listening attentively even when you are uninterested is a great skill. I promise you that it will be information that you will need for the future.

Knowing your audience will allow you to make small talk for 30 minutes or so before getting down to business. However, if you are taking an hour lunch with colleagues to discuss business, then stick to business. If entertaining clients in your home or at a restaurant, try to make that entertainment enjoyable and limit business discussion, particularly if significant others have been invited.

What's the Best Way to Start a Conversation?

If you are sharing a meal with guests you see occasionally, or even regularly, open by asking for recent updates in their lives or what they've been doing since the last time you spoke. If you don't know the people that well, do a little background checking to see if you have any common interests, then talk about them. If you don't have any way to check them out, make small talk until you discover common ground.

Small talk will fill the void, ease any uncomfortable moments, and help everyone become acquainted. If you are able to talk about a variety of topics, you can open with subjects like current popular books or movies, travel, sports or news events - all worthy of small talk. But the best way to slide into small talk is by asking others about themselves, their work, hobbies, or family. If you know that one of your guests is particularly expert at a given topic, steer the conversation in that direction.

What Is the Best Way to Kill a Conversation?

It is perfectly acceptable to ask a person about himself or herself. But, never, never ask personal or intimate questions. Avoid:

• Personal financial situations
• Details about divorce or intimate relationships
• Religion
• Illness of any kind
• Someone's weight, age or mental health
• Politics
• Racial, ethnic and sexually-oriented jokes
• Harmful gossip
• Strongly debatable, controversial issues like women or gay rights or abortion.

How Do I Respond to Rudeness?

If you are asked a rude question or are the recipient of a tactless comment, you may handle it in a number of ways. 1) Do not acknowledge the question or comment; 2) provide a vague reply; or 3) look the person straight in the eyes and tell them you do not want to discuss the issue.

It's the host's job to mediate conversations when the need arises. The host can do so by ending the small talk and getting on to business, switching to a lighter topic, or making sure everyone is involved in the conversation.

You don't want to leave one or two people out of a conversation because they are shy or unfamiliar with the topic being discussed. Include them in a conversation by starting it with something with which you know they are involved or interested.

How Do We Keep Business Discussions Confidential?

When having a business meal, always check the proximity of tables near to where you are seated. It is wise not to discuss anything even slightly confidential in a restaurant. Be aware that the voices of those in your party might easily carry to other tables, so set the tone for a lower, softer speaking level. Always keep your professional demeanor, both inside and outside of the office. Remember, when you are in public, you never know who might overhear you. So keep anything critical or confidential inside the office.

John Daly is the founder and president of The Key Class, the go-to-guide for job search and retention success. To learn more about The Key Class, go to www.thekeyclass.com. To get John's book, The Key Class, which provides business and job search and retention advice, click here. Follow John on Facebook and Twitter @johnjdalyjr.