Archive for

Retirement Myth 3 – It Will Be Harder On My Business Than On Me

Most executives become business leaders because they have demonstrated a commitment to the values and culture of their organization that makes them, in a sense, the embodiment of that organization. They are key to the vision, mission and progress of the business. Over time the leader and the organization seem synonymous. Although in a sense the leadership forms the organization, the truth is that in the life of a well-functioning organization everyone is replaceable.

For most C-suite executives, the connection to their business is the most important relationship in their lives. They have invested more time and energy at work than anywhere else. The 60-70 hour work weeks have become the norm and essential to building their reputation and career. Their personal identity has been primarily formed by the organization. Their sense of self-worth is rooted in an extrinsic reward system: the recognition of their business peers via promotions, compensation and power. Most business leaders do not even realize how much their sense of self is wrapped up in their business until that identity is stripped from them. Upon leaving the corporation, they have little sense of who they are without the organization, structure, title, authority, perks, staff, and clients. In giving themselves to an organization, there are benefits but those benefits accrue to the organization and the title not to the individual.

Although we treat them as if they are individuals legally, corporations are not people and we cannot develop true relationships with them. An organization does not have a moral or emotional center to which we can form a real attachment. A business has one purpose to make money and provide economic value. When we cease to be the individuals that can best further that objective, we are expendable. Most executives find this a major shock to the system. They have been loyal to the organization and some how expect that loyalty will be returned and rewarded. What they find instead is that the business has a life without them and continues with barely a blip on the radar. And then they find that their business “friends” are really only business focused. Once the opportunity for mutual career benefit is gone the calls stop coming. They no longer get the expense and travel budget, the invitations to speak, and the executive assistant attending to every detail. The framework of their lives is no longer provided for them.

Retiring executives experience significant stress. Strangely enough, it appears to be more stress than they experience in their high-powered careers because of the dramatic change in lifestyle. In order for executives to make the transition to retirement with ease, they must step back and reflect on who they are apart from the business, title and career. The energy they directed into developing business relationships must be directed in other directions and in order to form other interests and connections. New friendships based on other common interests must be formed.

It is critical to have something specific and significant to look forward to prior to leaving work. Hobbies and vacations can only play a small role in a fulfilling retirement. They really only hold interest for a short period of time. The successful retiree shifts their life to focus on intrinsic rewards and the things that give meaning and purpose. Make no mistake, retiring will be harder on you than on your business. It is important to prepare ahead of your retirement date, so that you can have the support and resources to make this shift as smoothly as possible.

Cash Flow Projection – Predicting The Financial Future Of Your Business

Working out an accurate cash flow projection is one of the most fundamental aspects of good business financial management and financial planning.

Why is this activity so important? It can alert the business to possible financial problems on the horizon. While important in any business, the forecasting of potential financial problems is especially critical for small and medium sized businesses that typically do not have cash reserves set aside to weather a financial storm. Since cash flow is the lifeline of every business, even a temporary slowdown of incoming income can spell disaster for the unprepared business.

In forecasting cash flow, it is wise to conservatively estimate the amount of incoming income and accurately record all expected costs. In addition, predicting the future needs of the business that could add to costs is critical if the business is to experience expansion. Nothing stays stable for very long. Expansion and contraction constantly occur. A business that is not expanding will eventually start to contract. Expansion costs money; sometimes a lot of money. The future cash needs of a business must be anticipated to meet future demands and protect the solvency of the business.

A cash flow projection can be particularly useful as an early warning signal that there may be a shortfall of cash in the business. Forewarned is forearmed, and action can be taken to lower costs and beef up advertising and sales activities to avoid the predicted shortfall. This is, perhaps the most important use of the projection. It allows the business owner to look at the debts and upcoming expenses of the business and to take action in anticipation of the shortfall.

It can also help the business owner realize that changes in their financial policies are needed, especially if the business invoices their customers and waits for payment. Careful review of how the company extends credit to customers, and who they extend it to, can lead to some positive changes in getting incoming cash flow in the door at a faster rate. A simple change like demanding an upfront deposit rather than financing the entire purchase, or setting qualification standards for receiving credit can enhance cash flow. These changes in policy can then be incorporated into the estimation of how fast the money will come in on the projection itself.

Building an accurate budget will help tremendously with the cash flow forecast. A budget is the calculation of how much income is needed to run the company and achieve all of its financial goals, including business expansion, and even the eventual retirement of the business owner. Since it is necessary that the financial management team predicts the projected income and expenditures of the business accurately, they must ensure that the business can survive and grow.

Anticipating dangers and planning for them are easier with both a budget and a projection. The financial management team needs to get it right. No guessing is allowed on anticipated receipts of income or on expenses. Especially anticipated increases in costs. The cost of doing business goes up about 8% to 12% a year, so that needs to be taken into consideration. That also means last year’s projection needs to be re-forecast for this year’s anticipated increases.

The cash flow projection is a dynamic, working document. It needs to be evaluated at the end of each quarter and adjusted for changes that happened so that it remains the most accurate forecast possible. Likewise the budget needs to be updated every quarter as well. Waiting till the end of the year, only to realize that the company is in trouble because nobody was paying attention can result in financial catastrophe. With the evolution of technology in the last decade or so, preparing budgets and projections manually is a thing of the past. Using cash flow management software is very popular in terms of producing accurate and dynamic budgets and projections and greatly reducing the time needed to do the job.

5 Startup Business Tips to Repeat

Starting and keeping a successful business involves many important key factors. Starting from the basic concept to a rock solid business model, every factor is vital to becoming successful. In previous articles on my blog, we covered tips for startup businesses as well as common mistakes people make. Today, we will cover 5 simple tips that help startup businesses grow.

1. Remember, less is sometimes more!
In business, we generally relate growth to action. The more you do for your business, the more it will grow. However, this isn’t always true. Sometimes, the desire to be successful in all fields can lead to an epic fail. Pretty much expert will tell you that focusing on a specific target will lead to greater success than trying to win over the entire market. The lesson, find a small niche and dominate it.

2. Growing a business starts with you
A person can do amazing things once they put their mind to it. This philosophy applies to businesses as well. Growing a business starts with the person running the operation. If you want your business to grow, learn the field. Start by analyzing market trends, studying up on your competition, and playing the game like you mean it.

3. Test every new idea
New ideas and innovation can be either your best friend or your worst enemy. One never knows how the market will react to completely new concepts. This is where testing ensures success. Before launching any new product on the market, try it out locally or in a small focus group. Without this step, a business could find itself overstocked with an unburnable flags very easily.

4. Give what the market asks for
The market is an entity, person, and sometimes your closest ally. What’s hot and new is big today but gone tomorrow. Listen to the market and find out what people are looking for right now. If you can satisfy the demand, you’ll have the most successful business in the world.

5. Repeat steps 1 to 4
Now that you’re doing well, start all over again. No product lasts forever and the markets are ever changing. Continue to analyze the demands of the people to stay ahead of what is currently trending. Once a business gets into the cycle of analyzing a niche, producing a product, and launching in time, that business will drive more wealth you ever imagined.