Archive for May 2009
We are rapidly approaching the end of the graduation season. Many college seniors are finishing four years of spending someone else’s money and now face supporting themselves. The big question is do they know how?
A resource I recently learned of and suggest you and your graduate check out is the site Feed the Pig. The site includes tools, a quiz, tips and other resources to help young people think through their spending and saving habits, identify ways to start saving and commit to making changes that will reduce their debt and grow their savings.
Get your graduate off to a good start…Feed the Pig!
Large or small your customers need to know you care. We often think they’ll tell us when they have a need until something happens and we’re the last to find out.
When was the last time you actually talked to your customers? Do you know what issues they are facing? Don’t assume that their issues are the same as yours. Furthermore they may have found a solution that would work for you.
Don’t let the pursuit of new business or collection of overdue receivables cause you to neglect your existing customers. They are your best source of new business. Call them today.
Whether you’re the CEO, an investor or a board member of a business or nonprofit the following questions need to be frequently considered in today’s economic environment:
- How liquid are our cash equivalents? If they aren’t immediately available or you will suffer a loss when you sell, the “cash equivalent” is not really liquid.
- How many days in cash do you have on hand? This means that if cash stopped coming into the organization and your cash expenses continued at the current rate, how many days would the organization last? I read in a recent Inc. article that Jim Collins, author of Built to Last and Good to Great, has enough cash on-hand to last one year.
- What is your current ratio? When you divide current assets by current liabilities, what is the result? Greater than one, you’re OK for the short-term. Less than one and you need to start cash flow triage immediately. Get on the phone with late paying customers, tamper down spending, start paying a bit slower, and defer any non-essential capital improvements/purchases.
- What is the balance on the credit line & when is it up for renewal? If you are fully extended you have no cash cushion for emergencies and you’re in a weak negotiating position on renewal. Take no comfort because the balance is small or zero as you may not have full access. I’ve heard too many stories of banks arbitrarily reducing lines of long-standing customers.
- Where will the year end up? Will you be profitable or will the year end in the red? Ending with a loss will limit what you can do for the foreseeable future. It is something to avoid at almost all costs. Hopefully you have been tracking against an operating budget and know where you can slim down to end the year at breakeven at the worst. It would be prudent to prepare a new forecast looking out beyond the end of your operating year by several quarters. As they say in football sometimes a the best offense is a good defense…if you can’t see the potential for problems because you don’t budget then you’re setting up your organization to fail.
As you read the above questions how are you feeling about your organization? Do you have work to do? Is your board on top of the situation or will your CFO be explaining the unpleasant reality? Now is the time to act.
