The Seven Laws of Business
1. The bigger the company the longer the payment terms
Many businesses follow the herd and set their payment terms to 30 days. In all honesty there are two rules about payment terms; one, they have to be acceptable to your potential client or customer; and two they shouldn’t cripple your cash flow. The bigger your buying power, the more leverage you have to ask for longer payment terms. So, what does payment terms of 30 days actually mean? In real terms it means that you are funding the cash flow of your client for 30 days. As a business the shorter your payment terms the better your cash flow. To help your business’s efficiency consider offering a discount for prompt payment, or a penalty for late payment. Or set your payment terms to 14 days, and you will normally get paid within the 30 days.
2. Insanity: doing the same thing repeatedly and expecting different results
How many times do you plug away at something and expect to see different results? In truth if you keep hitting your head against a brick wall all you will end up with is a headache. I have thought of a few possible exceptions to this role. Do give a marketing strategy six months before ditching it, and remember that 80% of all sales are made on the 5th follow up.
3. “A bank is a place that will lend you money if you can prove that you don’t need it.” Bob Hope
Unless you keep a very tight rein on your cash flow and expenses, you will potentially find yourself in financial difficulties. Banks tend not to lend money to people or businesses who don’t carefully manage their capital and cash flow. As my accountant will tell you stringent financial control is vital to good business efficiency.
4. It’s not hard to meet expenses, they’re everywhere.
When you set up in business, expenses, bills and invoices becomes a fact of life. When budgeting always leave a little bit of contingency funds, as the unexpected does happen and you need to be prepared for it.
5. Research is the act of going up alleys to see if they are blind.
Sorry to be a party pooper but not everything is going to work first time. It is far better to know that an idea is not going to work before you spend considerable amounts of time and money discovering it wouldn’t work.
6. The more time you spend in reporting on what you are doing, the less time you have to do anything.
Don’t get me wrong, reporting, evaluating and reviewing is vital for good business efficiency. However, time and time again I see many businesses spending far too long planning as well as producing countless meaningless reports which no one reads, when they actually need to focused on making stuff happen.
7. Bills travel through the mail at twice the speed of cheques.
Why is it that bills always seem to arrive promptly, but cheques can take a while to appear. If you ask your clients to pay you via BACS rather than a cheque, it saves you popping down to the bank and improves your personal cash flow. If you put your bank details on your invoices it will prompt people to pay you via BACS.
By Heather Townsend The Efficiency Coach specializes in working with professional services firms – helping both the firm and the individuals achieve more for their time, effort and money. Why not have take a look at our website – http://www.theefficiencycoach.co.uk,