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Quick quiz
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Each month I'll give you a new question.
Just reply to this email for the answer.
In which film was Betty Boop's debut appearance in August 1930? |
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Liquidity Measures for Small Business Operations |
You may think that revenue and profit are the only important measures of business success, but any successful business analysis also includes liquidity, which refers to the ease with which an asset can be converted into accessible cash.
Your balance sheet report should tell you everything you need to know about your company’s liquidity, but you may need to get that information by calculating key ratios using balance sheet data. Two such ratios are current ratio and inventory turnover ratio.
Current ratio is the most commonly used measure of liquidity. It calculates a company’s ability to pay short-term obligations (generally speaking, those due within one year). To obtain this ratio, simply divide current assets (cash and receivables plus easily liquidated inventory) by current liabilities (all the bills you owe as well as loan payments in the upcoming year). Look for a result greater than one.
Inventory turnover ratio is another liquidity calculation. You compute it by dividing the cost of goods sold by average inventory. A high ratio indicates that you have low inventory, which may cause you to lose sales. A low ratio may indicate that you spend too much on inventory that is not selling fast enough.
Generally speaking, a valuable company quickly collects on its invoices and promptly pays its bills, so your turnover analysis should reveal that accounts receivable and accounts payable are not staying on the balance sheet for extended periods of time and any inventory is swiftly sold. An efficiently liquid business is not overstocked with inventory. |
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How to Win Big in Today's Economy
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The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive.
Find out how by requesting my free
report "How to Win Big in Today's
Economy."
Just reply to this email and I'll send it right out to you.
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The Case for Compassionate Listening in Business |
Key components of any successful business are positive communication and trust among colleagues. People spend years learning and refining the ability to get their points across with confidence and clarity, but, when on the receiving end, we can forget how equally powerful it is to be able to listen effectively. How often do you have conversations where, while the other person is talking, you’re already thinking about what you’ll say when there’s a break in their words? With half of your mind working to conjure up your reply, your focus on understanding what they’re actually telling you is diminished, leaving you less brainpower to genuinely take in the context of their message and respond with true compassion or thoughtfulness.
Research suggests that practicing active listening within business has an extremely positive impact upon the relationships within a team, the level of trust among the group and the creativity shown by individuals. Being able to listen to someone else with full undivided attention, undistracted by our own internal thoughts, opens up a whole new level of understanding between people. It allows us not just to hear the words being said but also to read subtle cues from body language, facial expressions, vocal intonation and more, and as humans, we have an innate ability to decode these cues in order to better empathize with the person giving them.
In turn, the ability to show genuine empathy on a human level and not just a formal or superficial one is an enormous step towards building genuine trust and connection between individuals. So, allowing ourselves the mindfulness and headspace to really connect beyond the formalities of business talk truly strengthens the bonds between us. |
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Worth Reading |
5 Ways Remote
Workers Can Build Their
Networks (and Skyrocket
Their Careers)
By Deanna deBara
The Muse |
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Working from home provides much-wanted flexibility for many workers, but it can make it hard to connect with new people. If you want to work from home and build a network, consider these tips from The Muse: seek out opportunities to offer value, establish yourself as an expert (and drive connections) through the media, start a podcast, participate in activities you love and more. |
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10 Body Language
Tips to Be Awesome
in Front of a
Crowd!
By Dana Claudat
The Tao of Dana |
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Do you want to look your best for a meeting, interview or presentation? Consider using body language. Open your chest and arms, smile, keep calm, bring movement to your speech by walking, vary your hand gestures, use open gestures and walk toward people, take time to pause and breathe, and use positive gestures. Claudat shares about these and more in infographic form. |
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Here Are 3 Reasons to Consider Starting a Podcast |
You’ve probably listened to a podcast and perhaps even wondered if launching one might help you start a new business or support an existing one. But is it worth the time and effort? The answer: it depends on your individual circumstances, including the type of business. But here are three reasons you might consider starting a podcast.
1. It doesn’t cost a lot to start. While you may think podcast equipment costs thousands of dollars, it has become less and less expensive as podcasts have become more popular. It’s feasible to start with under $100 of equipment, assuming you have a computer with an Internet connection. You’ll just need a microphone, a headset and a pop filter, which can be purchased alone or in combination.
2. It will help you build a following. When you launch a podcast, you gradually build an audience. And as the popularity of that podcast grows, so too does the size of that audience. If your business is the podcast, that’s reason enough to start a podcast. And if you’re using the podcast to support another business, that audience could be converted to paying customers.
3. You can make money. Sharing helpful advice on a specific topic you know a lot about helps position you as an authority in your industry, and that leads to revenue opportunities such as collaborations, selling ads and sponsorships. But more importantly, if you sell products or services separate from your podcast, your podcast becomes a new sales channel for you. At the same time, your podcast is a great way to attract customers. Podcast listeners tend to become raving fans of the podcasts they love, and a raving fan of your podcast can easily become a raving customer of your business. |
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Share This Newsletter
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If you find this newsletter helpful or interesting, share it with those you care about.
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Links You Can Use - Goal Setting |
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Goal setting is essential for success. Get tips for creating a clear direction of where you want to go in life and tools to get there. |
Powerful Goal-Setting
Tips for Creating Your
Extraordinary Life |
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Bestselling author Jack Canfield explains
how to find your true purpose and
create joy by setting clear goals. |
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Goal Setting: 20 Templates
and Worksheets for
Achieving Goals |
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Goal setting is
easy with these
hand-selected tools. |
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7 Best Goal Tracking
Apps to Help You
Reach Your Goals |
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There’s an app for everything these
days, and goal setting is
no exception. |
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Tips to Help You
Set and Reach
Your Goals |
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The counterintuitive advice in this
TED Talk collection will help you
set and achieve your goals. |
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Why Your Business Needs an Emergency Fund |
Running a small business can be hard, as you know. According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year, 50% fail within five years, and 66% fail within 10 years. And that’s why your business needs an emergency fund.
While every business needs an emergency fund, and most will likely agree on its importance, acting on this objective is not as common. Some businesses wait to see how much money is left for their virtual piggy banks after paying all the bills, but that is not a viable solution. There is never enough money for an emergency fund unless you plan ahead and take steps to control your spending.
So how do you achieve an adequate emergency fund? One effective way of building a cash reserve is creating a place in your budget for the emergency fund as if it were just another vendor bill. You probably do this when creating a personal budget; why not do it for your business budget as well?
Adding an emergency fund to your cost of doing business may seem difficult, if not impossible, at first. But you can likely achieve your goal with a close examination of your recent spending categories. Start by looking at the trends in your business spending.
First, ask if some types of expenses are rising. Buying more is common when a business starts generating more revenue than it did in its early days. At some point, that can stop.
Finding your previous spending level and returning to it merely requires inspection of historical expenses. Perhaps your vendors’ prices have increased. This is an opportunity to negotiate volume discounts, find different vendors, or raise your own prices.
Next, ask if some types of expenses are falling. That may not seem likely, but a business’s finances change in both directions as it grows. You may be getting volume discounts where you didn’t expect them, for example, or you may have found that as your business has evolved, certain expenses have declined (such as office furniture and equipment or startup legal expenses).
That said, the single most important step in creating an emergency fund is putting aside any additional income you make from an extraordinarily profitable period of time, be it a month or a year. Again, it’s just like a personal budget!
When you complete a particularly large project or a seasonal phase comes to an end, take some of the extra cash and invest it in your emergency fund. That will ensure you have more of a cushion for any future lean periods.
Lastly, keep a separate bank account to avoid the temptation of extra spending. This is where you should place ongoing deposits of both large windfalls and small fixed amounts. When the inevitable disaster strikes, your emergency account will then provide the perfect protection for your business.
Of course, an emergency fund isn’t the be-all and end-all of small business operations; you also need a solid strategy, a good product or service and competent management. But saving for a rainy day will help ensure your success. |
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This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter. |
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