Help from above

It is one of the oldest cliches in small business, but it is one of the most misunderstood. It says one of the greatest problems with small business people is that they spend too much time working in their business and not enough time on their business.

When it comes to government money or assistance and contracts there are so many business owners out there with their heads down, ‘doing it, doing it, doing it’ as Michael Gerber has said in the past, that they don’t see the opportunities just waiting to be discovered.

Gerber, the author of the E-Myth Revisited, a perennial international best-seller, differentiates the entrepreneur from the technician, who simply does the work in his or her own business. The entrepreneur works on the business.

Working on doesn’t just mean thinking laterally about market opportunities, which searching for government contracts – at federal, state and local government levels – could mean. It also means thinking about government assistance out there that could make you take your business to the next level, to a new overseas market or to network into other groups who could tell you something you don’t know and create opportunities for you at the same time.

Two classic suppliers of government assistance that every creative business owner – oh, let’s call them entrepreneurs – should think about are AusIndustry and Austrade.

AusIndustry has a myriad of money grants that can help bankroll research and development (R&D) and ultimately innovation. Meanwhile, Austrade’s export development grant has become a great encouragement for entrepreneurs who think outside the domestic market square.

I recently saw a guy who has patented an invention, all on his own time and it cost him tens of thousands of dollars to develop the concept and patent it. Luckily for him, while he was too busy working in his business to see the opportunities, his accountant did his thinking on the business for him and put him in touch with an expert adviser who took him to AusIndustry.

The advice he received helped him add protection to his patent for overseas opportunities and showed him how to access government grants. This guy was lucky to have a lateral thinking accountant – most business people don’t and miss out.
For inventive business owners committed to R&D, looking for money to make their dream come true, be aware that AusIndustry has helped thousands of businesses and many have received hundreds of thousands of dollars. AusIndustry has opened the doors for many exporters and its Export Market Development Grant offers assistance in defraying the costs of the promotion of a product or service overseas.

The bottom line is if you are making money overseas, whether it is via transporting products by plane, ship or eBay, there are many monetary reasons to contact Austrade.

If you are too time poor to work on your business, use a search engine – contact government bodies or industry groups to find expert consultants who know how to help small operators tap into government assistance.

Finally, if you are afraid of the expense of using experts to position yourself for government contracts or assistance, then start putting on your networking thinking caps.

Many businesses have targeted various government departments by putting their hand up to serve on various government-related committees. Some offer their time and expertise to be judges for awards or offer to help in business community groups such as Business Enterprise Centres.

By being on the boards of these groups they have worked their way into the favour of government departments and public servants, winding up with lucrative contracts.

Where there is a will and a damn smart plan, you can put yourself in the right place at the right time to pick up a plum public prize.

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Wealth creation

Edward de Bono said great business owners think outside the square; they are lateral thinkers.

Over the years, I’ve pondered what really holds people back and I reckon the greatest hurdle to success is old habits. You see it with athletes when they change coaches, or even get a coach for the first time. They excel. Deep down, anyone who wants to build a business is also in the wealth building game.

You need to be inspired
Building wealth is like building a great business – it not only rests on getting the fundamentals right, it also requires commitment to doing things right.

Of course, business owners hopefully use their operation to create a platform for wealth building. And putting more effort into building a great business makes more money sense.

Unfortunately, like eating junk food, it always seems easier to do the wrong or easy thing instead of the right or hard task.
That’s where inspiration comes in, and that’s why so many high achievers I’ve dealt with never underestimate the importance of being inspired.

Anyone cynical towards the importance of inspiration and motivation has never owned a small business. Business owners know that at times when deadlines, suppliers, customers, staff and even yourself are all piling the pressure on, recalling words of wisdom, experience or success can simply lift you.

Mingling with magic
Not too long ago I did a ‘talkfest’ road show, which meant I worked as a master of ceremonies with some absolutely inspirational people.

They included Lauren Burns, who won a gold medal in taekwondo at the Sydney Olympics, and Ben Darwin, the Wallaby rugby union player whose career ended prematurely with a terrible neck injury in the semi-final of the 2003 World Cup against the Kiwis.

Then there was that great cricketer, Bruce Yardley, who was named international cricketer of the year in the 1980s and who played with great Aussies like Thommo, Lillee and the Chappells.
Another was a guy called Tony Mowbray, who not only battled the seas of that tragic Sydney to Hobart Yacht race in 1998, when many lives were lost, but he also broke the record for sailing solo around the world.

Mimic the magic
Individuals who have taken on the odds and pulled off big results should always be studied. The best way to build a great business is to copy the best.

I once observed young artists copying the masters in the British Museum, and that’s what would-be master business people should be doing to – mimicking the magic.

Follow the success trail
Some champions can give you small yet enduring hints for success, while others can give you a virtual blueprint.

One unforgettable line that Lauren Burns uses is: “I think success leaves clues.” She told her audiences that successful people leave clues on how to win. Working hard was important, but she said when she was young she did too much and overtrained. When she accessed experts at the Australian Institute of Sport, she worked smarter.

Divine inspiration!
One short story before I finish. This is not about a well-known star, but a local hero who turned around a potential poverty problem.

This fella left the priesthood in his 50s and when you cut out of God’s service, there is no superannuation or divine pension.
He had ‘diddly squat’ and there’s not many jobs for out-of-work priests.

After talking to a money expert, he decided the only way he could catch up in the money stakes was to buy ramshackled homes – he didn’t have much money – and he simply did them up and sold them.

He had somewhere to live while he did them up and, as it was his principal residence, he was able to sell the homes with no capital gains tax.

He pulled off the triple play. First, he built up his wealth, so he is set to retire with a lump sum better than most Australians. Second, he gave himself a job, which was really a development business in doing up the properties, and, third, he had somewhere to live.

Part of the inspiration was the knowledge that there is no capital gains tax on your principal residence, while the other part of the boost was the money expert who convinced him he could do it.

Spend a penny to make a pound
We all can do it, but we need education, commitment and inspiration. Often experts or coaches can show small business owners how to do it better.

Too many business owners are not willing to face what is wrong with them and therefore what is holding back their business. That’s where a pair of independent eyes can work wonders.

By the way, the advice and the recommendations will generally cost money, but it will often be the best money ever spent.

Tips:
o Look to others to inspire you if you feel yourself getting flat.
o Mingle with magical people by going to seminars and reading books or this column!
o Make a determined commitment to write a success plan and mimic what successful people do.
o Follow your success plan – if you go off the trail, get more inspiration to get back on it.
o Spend a penny to make a pound.

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Cash Forecasts

What is it about cash?
There’s one thing for certain and anyone in business knows it. If you don’t understand the impact of a cash flow gap (the time between cash going out and cash coming in) you can turn a profitable job or project into a financial mess.

Nearly every business experiences this: the money flows out before it starts to flow in.

Make it easy
What most people don’t always know is how to find a solution to this pressing problem. One way to reduce the cash flow gap is give your customers easier ways to pay you on time.

Let’s get real here. If a customer’s only option is to write a cheque, address an envelope, find a stamp and post the letter – you’re really are putting a lot of obstacles in the way of getting the money you so badly want. Offer customers a range of payment options. These include BPAY, Credit Card and Postbillpay.

Electronic payment methods can streamline your banking. Giving your customers access to these payment methods means payments can credited directly to your bank account. In many cases these payments will be credited as cleared funds, which enhance your cash flow and removes the uncertainty of whether or not a cheque payment will be honoured.

What else can you do?
A sensible business does cash flow forecasts which make it easy to see when expenses occur and when income can be expected. This help to plan your need for cash.

The next thing to do is to keep updating your cash flow forecast to see whether you need to access additional cash – through sources such as a line of credit or a bank overdraft.

Why do cash gaps occur?
Well there are lots of reasons, but try these for starters:
o You buy stock before you sell any goods
o If you’re a manufacturer, you pay many of the costs of manufacturing a product before you can sell it
o If you’re just a one-man band, you still need pay the costs of your own labour (that is, pay yourself a wage) until you complete a job and get payment. If you have employees, then they won’t stay with you for long if you don’t have the money to pay them!

When you do your cash flow forecast include:
o Rent
o Gas, electricity and phone
o Insurance
o Office consumables (such as stationery, photocopying and postage costs)
o Couriers
o Advertising and printing
o Tax office payments (BAS, GST etc, when they fall due)
o Superannuation
o Credit card payments etc

Control the flow
Learning to control factors that affect your cash flow is the first step in reducing the potential cash shortage.

When developing a cash flow management strategy for your business, you need to take into account how your customers pay you. For example, are you paid in advance; when the sale occurs; or do you offer credit?

If you’re lucky enough to receive payment in advance, your cash flow gap should be minimal. However, if you regularly invoice for goods or services after you have provided them, you’ll have a greater cashflow gap.

The longer your customers take to pay you, the greater the impact on your cash flow.

Worst case scenario is that these debts that are taking too long to be paid turn into bad debts and become extremely hard to receive without employing a debt collection agency, this is why you need to stay on top of your debtors and keep your cash flowing making it easier to run your business and grow.

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