Lately Iโve been working with a lot of small businesses that are growing rapidly. Itโs awesome to watch this unfold, but one thing Iโm learning quickly is growth comes has a cost. Whether youโre selling products, providing a service or manufacturing something, in order to grow, you need to invest in the business.
As Iโm sure youโre painfully aware, business doesnโt happen in a neat timeline. Cash flow timing issues are very real. For example, thereโs the furniture designer who is bringing on more staff, expanding to be a bigger storefront and signing new accounts. Thereโs the retailer who needs to make a purchase from the manufacturing company and the larger order comes at the best price. And then thereโs wedding photographer who needs to pay her tax bill during the slow season. A line of credit may be an option to help bridge the gap.
Read MoreI've worked in financial service since I was in college. In fact, my very first job was as a collections agent for a big, evil bank. For four hours a day, five days a week, I'd sit in a call center in suburban Southern California with a fugly headset on, connected to an automatic dialer. I would speak to people who were past due (bank speak for late on making a payment) on their auto loans. The majority of the time the person on the other end of the line just spaced and forgot to make their payment.
The bank had entire department dedicated to closing the gap between revenue that was owed to them (AKA receivables) and cash. The gap is entirely created because of how, when or if a customer will pay their bill or invoice. As a small business owner, you probably experience the drawbacks of this gap like not being able to pay your vendors or yourself or your other bills. But there are things you can do to help minimize the gap. This is called managing your cash inflow.
Read MoreWealth, in the traditional, economic sense is all about owning shit that's valuable and leveraging it. Yes, of course, there are many definitions of wealth, like having the luxury of time or having fulfilling relationships, but I'm talking pure economics here. Ultimately, owning valuable things allows you to sell, rent or lend the value in exchange for resources, like money.
Wealth is having more resources than you need for the present and future. And having more than what you need helps quell any anxiety you might have about the relative present and the future.
Read MoreA balance transfer is when you pay off a higher interest credit card with a lower interest credit card. You're transferring the balance from one credit card to another. A lot people use this strategy with their personal finances to get out of credit card debt. Credit card companies will often advertise balance transfer deals where no interest will be charged for a certain period of time. For example 0% interest (APR) on balance transfers for 12 months. Sounds like a pretty good deal, right? It can be, but there are some things you should know before making the transfer.
Read MoreIf you work for yourself or dream of working for yourself, I'm sure one of the motivating factors is to make a profit. Making a profit can depend on a lot of different factors. Some of those factors are outside of your control like the market and the competition. You can move the needle on other factors like leadership, management, location and the number of locations. But one of the most important factors that have a direct impact on your profit is pricing. Pricing is how much you charge for your service.
Read MoreAlright, student loans. These wonderful and horrible tools that allow people who can't afford an education to pay for one by simply mortgaging their future. Ah, the American way. If you're one of the unlucky and you've been avoiding doing the leg work and mental work when it comes to consolidating, this is for you.
Read MoreIf our calendar year could be compared to a basketball game, we're at about half time. Halftime is a chance to pause and reflect. What's the score? How is the other team playing? How are you playing? You probably went on the court with an objective. Maybe the objective is to win. Or maybe the object is to not lose by 30 points. Whatever the objective is, now is the time to take stock of the score, your performance and how you can make adjustments to finish strong.
Read MoreThe decision to buy or lease your car means finding the balance between what fits into your lifestyle, what you value and what makes economic sense.
Putting too much weight on one of those variables can put you in a less than ideal position. For example, not considering the economics and only considering your lifestyle and what you want could look like you buying a car that you can't really afford.
Read MoreBe discerning. Question assumptions and conventional wisdom. Don't just assume that tax benefits benefit everyone. Run the numbers. Think for yourself.
Read MoreWhether you're in business for yourself or working for the man, the woman or the big faceless corporation, the principles of how to earn money are the same. Understanding these principles and applying them consistently are key. Progress comes from consistency.
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