On my blog I often talk about not spending money, bootstrapping and cash-flow planning. However a recession can be a excellent time to spend money too, providing you have the cash to spend – here are some tips on how to spend & save at the same time:

• Always ask for a better price, no matter what, always ask. If the supplier knows you are ready to buy for the right price they will cut you a deal.
• When buying from big corporations always pay late, their money collection procedures are very transparent. Use this to pay late, complain about anything and everything, so you can justify delaying payment. They’d do exactly the same to you if they could – so no false sentiments here. Just make sure you have the money when it is time to finally pay.
• Get better payment terms by negotiation. Promise to buy from one supplier for better payment terms, like 60 or 90 days.
• Get better payment terms by non-payment. Some utilities companies get panicked if you don’t pay and they will offer you a monthly payment plan, take it.

You can easily find out how far you can take these games, by finding out how companies collect their money. Just one thing don’t do it to fellow small business owners, they need their money just as much as you do. Given the fact that small business can’t get credit, while the big boys can, let them play bank for you for a while.

This is no time for modesty, it is time for survival and we all know cash is king – so keep it as long as you can. – ST.

Credit Crunch, the new scare word of our times. But what does it mean for your business? How can you minimise the effects of it on your business?

In the final analysis the effects are financial, your cash flow is going to stop you will run out of money – that is going to be the problem. So before you can decide what to do about it find out how it would affect your business. Planning your cash flow is the easiest way to see the effects of the credit crunch on your business. You need to ask yourself questions like:

• Is my bank going to call in a loan/overdraft facility?
• Is my turnover going to decrease?
• Can I decrease my fixed costs in my business?

These and other more business specific questions will get you started. Using this information and inputting it into a simple cash-flow model will help you to predict what your businesses future looks like. In the coming years cash is everything, and I don’t mean cash as in ‘money coins and notes’, I mean cash in the liquidity sense of the work – your businesses ability to pay it’s bills and your wages. Nothing is more important than that.

Some people will tell you to get your accounts done and have a look at the numbers. Forget it, it’s all done and dusted – it’s the past. You need to look into the future and get ready for the lean times. Start planning for the above scenarios, but them into a cash-flow and you can see what your problem could be. Having this knowledge will empower you to plan your way out of it, before it is to late.

It is better to make some redundancies and cost cuts now, before the whole business runs out of money. –ST.

I had an interesting conversation about my view that management control over employees is a myth. I have believed for some time now that an office is often a total waste of money and completely unnecessary. Most of the time I’m told it’s OK when you work by yourself, but not if you have employees, as they need to be supervised and somehow “controlled”.

I have now been working for almost ten years from home, and most of my staff works from home too. Apart from being an eco-friendly way to work, it saves people time and frustration to travel in and around London to come to an office, where we all sit in cubicles or offices. In the days of broadband internet, Skype and OnlineOffice, there is no need for an office, even to have meetings.

Offices, like cars are are often nothing else but status symbols – what other reason can there be for a small business to have an office? If that is true then how is the office helping with your business, it’s a big expense. Seriously, if you do not have clients coming thru your office doors several times every day, why have the office. Even if you have, do really all your people need to be in the office every day? I guess not!

We are in an economic downturn, what is more important – your ego or your business – ask yourself that every time you walk into your office. I’m sure there a good reasons for some micro businesses to have offices, even so I currently can’t think of any, but I’m convinced in most cases a healthy bootstrapping and outsourcing mentality would be more beneficial for your business.

Unless the first business goal is to feed your egomania, you need to have a good hard look at your cost structure to survive in these times. — ST.

Two professors, Julian Lang and William Bygrave, from Babson College in the US have found that the business performance of businesses started, with or without business plan, was unaffected.

This finding is not entirely surprising, since I believed for a long time, that getting too hung up about business plans can be a great waste of time, especially if you are not in a position to evaluate all variables that make up small business success.

I still believe cash-flow forecasting, SWOT analysis and a simple business goal sheet are helpful as far as business focus is concerned. A full business plan however, in my opinion is often a waste of time.

Some people plan and plan, but never start a business, why is that? If you are looking for problems you will find them. ST.

Don’t get confused about what you, the business owner of your small business or start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, should be doing? You need to do both of cause!

Unfortunately working in your business, like answering the phone, writing bills, doing the wages, talking to customers and so on is all that most business owners do. Research shows that most believe that this is all their is to do! That is very wrong and also the reason why many businesses fail.

Working on your business means to looking at it from the outside, remembering all these little customer comments, imagining a new type of technology to be employed in the business, changing the way you advertise, in other words making changes to the business, the whole business:-

• that will improve performance,
• enhance external communication with clients,
• improve the clients experience,
• cut costs out of your business,
• and many other aspects of your business.

That is in reality the most important part of what a business owner should do – plan the future. Working in your business, will make sure you you can pay your bills next week or even next month. Working on your business is all about still having a business next year or the years after that – that has to be the most entrepreneurial thing you can do.

Have a vision for the future – work on your small business – have a future! ST.

I remember my years as a physics student in university, we were told about “Thought Experiments” great physicist made – Newton’s Apple, Schrödinger’s Cat or Einstein’s Train. So these guys were sitting in their chairs and really just ask on question: “What If……?”

Entrepreneurs are not unlike the physicists or philosophers, they ask themselves – consciously or unconsciously – the same question:

• What if …. I could make cubic eggs?
• What if …. I could make that cheaper?
• What if …. I could make it easier to use?
• What if, what if, …….

This has got to be the most entrepreneurial question even. Often finding the answer is not the problem, finding the question is.

So, how can you cultivate an environment conducive to “What if….?” questions? Look outside of your box, read books from other business entrepreneurs, try and see how they made a change work for them, read your wife’s Cosmopolitan – your husband’s Mens Health magazine, look at other industries, ask your kids what they like, be interested in anything and ask yourself all the time, what if…..?

Your customer calls to complain about the last order – what if? Your assistant is unhappy with the coffee-machine, what if? What if, applies to all aspects of your small business or startup business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants:

• Customer Care & Support;
• Sales;
• Marketing & PR;
• Accounting & Credit Control
• especially Business Planning, and so on ….

It just does not end, you may not be the next Einstein, but I bet you, you will get some pretty good answers from yourself, if you bother to find the right “What If….?” question.

Some “What If …?” questions get me regularly quite excited, and keep me awake all night with excitement about the possibilities – so go forth an “What if…?” – a little, or a lot for that matter! ST.

With our recent launch of OnlineOffice 4, we have kept our promise to supply our online accounting software to every small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants free of charge forever.

But not only that – lets face it, if you want free accounting software, you could try the open source arena or other suppliers, even Intuit offers a watered down version of their accounting software free of charge – but a whole raft of other benefits can be gained by using our award winning product:

• Free 24/7 live online support – so when you work after 5 pm, we are still here to help and you do not have to pay for it;
• All future software updates are free of charge as well, so you will never have to pay for new or updated accounting software;
• Data backup and security included – while we all know nothing is ever absolutely safe, we back all your data up continuously and our investment in security would be unobtainable for small businesses, because of cost and complexity;
• All the benefits of online software (SaaS) – means you can access your accounting, write invoices and plan your business from anywhere at anytime.
• Online technology is eco-friendly – no shipping, no packaging, no manuals (help text in software) and our ClimateByte Technology.

All you have to do, is sign up for our free 30 day trail of OnlineOffice, or our free LiveNet and you will have free accounting for your small business, forever.

Let’s face it, nobody makes any money doing their bookkeeping. At least with WinWeb you don’t have to spend any money, not to make any money. ST.

This question is hard to answer, because there are no simple answers here and the outcome of this situation could easily be fatal to the business and if you are personally guaranteeing this money – and you probably are – this could potentially be very serious for your personal life too.

The things that you need to do, in my opinion are:

• Find out why? If the reason given are not satisfactory, you will need to get legal advice.
• Try and extent the deadline? If that is possible reduce the overdraft as soon as you can, or negotiate a stepped reduction of the O/D limit, ie. by month or week.
• Try and change bank, ASAP.

People often believe it is somehow always their fault, if the bank changes their attitude towards them, that is not always the case. Banks will always try and make you believe it is, but in reality they my have new internal guidelines for handing out money – banks can get into “cash-flow” problems too. So – don’t automatically assume it is always your fault.

Banks may have the right to recall a loan or overdraft, but I’m not sure if they have the right to damage your business by doing so – especially if the reason for the recall is not your doing. So if it comes to the crunch, get legal advice. This is one of the reasons why I hate these, IMO, often legal but still unreasonable arrangements between banks and clients.

Many years ago someone made the the loan, O/D – umbrella analogy and it goes like this:

When the sun is shining your bank gives you an umbrella;
when it is raining, they need the umbrella themselves.

It is best if you do everything possible to not need banks in the first place, by bootstrapping, outsourcing, planning your business and keeping your fixed costs as low as possible.

Remember sometimes, attack is the best defense even with banks, they may need their money, but they do not need bad publicity either. ST.

Choosing an accountant/CPA is probably one of the most important decisions to get right, because you are unlikely to have an accountant’s grasp of

• taxation
• company law
• dealing with the tax authorities
• wide range of knowledge about small business.

You need to make sure you find an accountant/CPA who concentrates on small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants before you make any appointments.

Another aspect is size, make sure you are not “one among millions” sort of speak, smaller accountants practices are often more in tune with your small business needs, because they are a small business too.

Here are some questions I would be asking when starting out with a new business venture:

• Should I start my business as a sole-trader, partnership or limited liability company?
• Can you help me to find and raise finance? (Read about bootstrapping first!)
• Will you help me with setting up my cash-flow forecast?
• When do I need to register for VAT (UK), GST (Australia) or when do I need to charge sales tax (US)?
• Am I ready to start trading, or should I wait?
• Do I need to choose my financial year and trading year end date?
• Are you going to do my bookkeeping and accounting work?
• Will you work online with me, so we both can be up-to-date with my business progress?
• Will you deal with my employment issues, pensions, annuities and insurances for me?
• Will you help me to understand more and more of these issues myself, and will you be available for advice if and when I need it?

There are many more issues to consider and they depend on your business, that is where your accountant will help you too. If you find the accountant is dealing with other businesses like yours you are in good hands, they can give you better and more realistic planning guidelines about your business venture.

The most important question is the one you need to ask yourself, “do I trust this person and can I work with him/her long term?” If you feel intimidated, or misunderstood, get up and walk. An accountant should be your advisor, he/she should never be your boss, what I mean is you need to make the final decisions, not your accountant. No matter what advice you get anywhere, you are always responsible.

Most of all your accountant should be a trusted advisor, trust me you will need his/her advice on a regular basis! ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below – I’d be most grateful.

I’m answering three questions here, emailed to me during last week, so excuse the long headline. I will give examples and will let you fill in the rest for yourself.

What are “Fixed Costs”?

Fixed costs are operating cost that are incurred when providing necessities for doing business and have no relation to the volume of production and sales. Examples are rent, some employee costs, property taxes, telephone, heating and interest/bank expense.

As opposed to “Variable Costs“, they only occur in proportion to activity within the business and hopefully that will lead to sales and revenue.

Why should I keep my “Fixed Costs” as low as possible?

When I talk about outsourcing, I’m talking about changing fixed cost into variable cost. Let me give you an obvious example to make my point.

Let us assume you have hired someone to answer the telephone, this person cost you $1,000 per month, and on average you get about 5 calls per day. Most of these calls are not even from clients, or you could take the calls while you are in the office. This $1,000 is a fixed cost, no matter how many calls you get, or if you are in the office or not.

So you outsource it to a virtual assistant, now you pay $100 per month and that includes 50 calls received, each extra call is $1 per call. The $100 are still fixed cost, but you have lowered your monthly fixed outgoings by $900. And depending how often you are in or out of your office, the 50 inclusive calls are probably enough to cover your needs. Combine this with online technology and you can stay in touch anywhere and anytime.

Should that not be the case, then you have “variable costs” of $1 per call, which means you are out of the office, working or enjoying life while it is quiet, for example during holiday season. You phone is professionally looked after in any case.

Outsourcing, bootstrapping (cutting costs), it all means the same for any small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants, more money for you, less distractions, and a more recession proof small business, that is why business planning is so important.

Answer: Keep your “Fixed Costs” down. Stay mean and lean, while enjoying your work and life. ST.

Disclaimer: As with any of my readers questions, I do not have all the answers and here on my blog I can only give you some ideas, since I know very little about your small business. If any of you can add anything here do so for the benefit of my reader, who asked the question and everybody else, leave a comment below – I’d be most grateful.