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My advice is to have a very aggressive, disciplined cash collections process, as such:

1. Get your invoices out on time.  In fact, I say get them out early.  I used to send invoices to builders even before we were finished with our work, knowing that they typically pay 45-60 days out.
2. Be firm on your invoice.  Make the due date clear and consistent.  If you need to be a bank and offer terms, then getting this invoice out on time (i.e. early) is even more important.  Be sure to include a little nudge, like “please remit payment immediately.”
3. Give them a small grace period after the due date, but once they hit that date, send them a ‘nasty-gram’ immediately.  Politely inform them that payment is past-due and that you expect payment in full immediately.  This letter can be gracious and firm.  And because it’s a letter, it is impersonal enough that it shouldn’t get in the way of your relationship.
4. If the customer still hasn’t paid, then it’s time for a phone call: “Hey [name], can I stop by and pick up that check?”  Friendly, but with a firm expectation of payment.

You can come up with your own formula.  The point is to have some firmness and some discipline.  That sends a message to your customers that you expect payment, and they will start to put you at the front of the line when they write checks.  This will also help you maintain that great relationship because there won’t be any hard or uncomfortable feelings that go along with a long-outstanding invoice.

The point is a real understanding of cash flows.  You see, my supplier also had their own suppliers, whom they had to pay on time.  If they extended me some credit, then they’d have to find the cash to pay their own invoices.  They probably get that from a line of credit (I’m making some other convenient assumptions, here).   They pay interest for a line of credit to a BANK.  So, in order to make extended terms to their customers, they’d have to charge a fee/interest to cover their own fees/interest, thereby turning themselves into a bank.  They were smart enough to know that 1. they were not in the banking business, and 2. there ARE banks out there for that reason.

Why do I bring this up?  Because we’re talking about YOUR cash, the life blood of your business.  Don’t allow your customers to use you as an interest-free bank.  When you give ANY terms on your invoices, you are lending them money with zero interest.  Your goal should be to collect that cash as soon as possible.  So my advice: when asked for special terms, gently let them know you’re not in the banking business, but you know a few banks who might be able to help.

Here’s what:

1. Set a new Big Picture Goal. Maybe your BPG was to get to $1,000,000 in sales and you made it. Now, you might set a new BPG of $10,000,000 or a second location doing the $1M. Alternatively, your BPG might have been more short term in order to ensure survival, and now you’re ready to look even bigger!
2. Sell the Business. An admirable end for any business is to sell it and retire financially independent. If that is what you have in mind, then start researching how a business in your industry is valued (multiple of sales, multiple of profits, value of assets, etc.) Then, you can start planning for the Big Sale!
3. The Succession Plan. You might want to step aside and have a new leader manage your business. Just as Bill Gates stepped aside and allowed a ‘real’ CEO to run his company, you might want to set up a plan of succession for a manager/CEO to take over the day-to-day operations of the business. That new manager can SMS text you the good news while you’re fishing!
4. Close the Doors. Sometimes, the owner is the talent of a micro-business, a talent that just can’t be passed on or sold. If this is the case, then a plan of creating investment savings from profits might be the end game. Yo u still want to leave this with financial security. However, I would still recommend you look for ways to replicate yourself (licensing, website, write a book, etc.).

So, what’s your end game?

That led me to think about some past seminars I’ve given and blogs I’ve written about “What business are you in?” That question was answered in a short list of types of businesses, identified by the ‘need’ they fulfill for their customers. For example, the need for physical health can be met at a gym. This painter’s truck made me start to reconsider that angle. While I’m not ready to change my ideas completely, I am ready to start considering that we all need to be in one of three types of business:

1. I’m in the Customer Service Business! I’ve always said that Southwest Airlines is in the Customer Service Business. Their focus is on the passenger. I’ve even contended that if you were to take away their airplanes and give them, say, running shoes, they would continue on without a hitch, because they are in the customer service business and simply use their products to deliver that special experience. One of my favorite lines is, “We don’t want to tell YOU we have great customer service, we want YOU to tell OTHERS!” Know where that came from?

2. I’m in the Sales Business. Again, this business is not about the products, but is about building relationships with its customers. The focus is on creating a finely tuned sales machine that increases that top line each month and each year. When product is considered, it is designed with the sales process in mind. I might put Amazon.com in this category. They have built a great sales machine. They keep adding new products without a hitch because their sales system works so well.

3. I’m in the Marketing Business. Proctor and Gamble is in the marketing business. They know how to create products driven by their market, get it positioned right in front of them, and get the word out so that their customers flock to purchase thier products. They are not about the ‘best widget available!’ They are about marketing.

So, am I recommending that you become a Sales, Marketing or Customer Service Business? Yes! However, I’m not asking you to abandon your core strength, which is creating products that satisfy your customers’ needs. I’m simply recommending that you make one of the three methods central to your business. That way, you’ll get a steady flow of the customers you need.

Assuming we’re talking to the right ad rep, we need to have a good answer to the ‘What are your objectives’ question. Have you thought this through? Most of us haven’t when confronted with this insightful question. So, what are your objectives when it comes to advertising/marketing/promotions?

Consider these possibilities:

1. X number of new customers (say, 100 or 100,000 or 5)
2. A sold out event (example: 100 tickets sold)
3. X units sold on your online store (10,000)
4. Entry into a new market (a new city, state, or age bracket)
5. Introduce a new product/service (Introducing!)
6. Create a brand or identity (not a typical small business objective)
7. Increase traffic on the website (increase traffic by 50%)
8. Return on Advertising (NOT to pay for itself, but to return 10:1 Sales:Ad expense)

When defining an objective, it is important that it be clear, measurable, and realistic.

I think the goal of any small business owner is to make their products a little BETTER and still a little CHEAPER to their customers.  We talk of customer service being the central strategy for small business owners, and we think of that in terms of interaction with our customers: problem resolution, building a relationship, personal attention.  However, when boiled down, customer service, serving the customers, can also be tied directly to the product: give them what they want at the best price.  That! is what will get them to buy from you.

As we get more efficient in producing and delivering our products; as we hammer our suppliers for better pricing; as we get more niche focused, we will have savings to pass along on products that are ever improving.  It’s a marketing evolution that will help a small business owner increase sales, market share, and happy customers.

Once, I was sitting in a meeting with a client when his phone rang.  He saw the Caller ID number and had to answer it.  “Okay…okay…yes…alright…thank you!”  It was his banker, calling to tell him he was about to bounce a big check.  He looked at me, apologized for having to run, and headed out to collect a receivable to cover the check.  Now, proper bookkeeping might have prevented this, but the point is this person knew his banker well enough for his banker to make that call and save him an overdraft charge, if not something more embarrassing.

There is a good article at sba.gov about this topic.  I’d recommend reading over it and then heading straight out to your bank and start building a relationship with your banker.

1. Start small and build your marketing budget/campaign as you grow. This way, you don’t spend away your much-needed cash.
2. Give away free samples. Let your market sample your work so they come back for more in the form of sales.
3. Create a great product. Marketing is asking people what they want and then offering it to them. Make sure they want what you’re selling!
4. Maintain control. I bet one of the reasons you started your business is that you have some ‘control freak’ in you. Well, that’s a good thing. Make sure you control your product, the rights to your product, and the messages around your product.

Check out the video:

I’ve gotten to know the owners of a certain local business over the past year or so.  Every time I get off the highway and drive home, I pass their shop.  And every time I do, I glance over to see how many cars are parked out front.  It’s an instant indicator of how business is doing.  I had a client a while back who measured her daily success by how often the phone rang.  To her, the ringing phone was orders calling in, business getting done.

While I try to get business owners to identify key metrics for their Dashboard (well-defined, measurable numbers), it is these less formal indicators that many of us look to to see how business is doing.  What are yours?  Here are a few more I’ve heard:

1. Cars in the parking lot
2. Phones ringing
3. Deliveries
4. Butts in seats
5. Presses running
6. Invoices printed
7. Email inquiries
8. Website visits

Take a moment to sit back and observe your business.  Look at the operations.  What stands out as an indicator of a busy day, a profitable day, a day that you would say, “Since you asked, business is doing quite well!”