Business Challenges - Part 1

My company, SouthWare Innovations (www.southware.com), sells accounting software thru dealers. Each year we meet with our dealers and there are always some technical issues that we discuss. Many of these issues vary from year to year. But, we also talk about business issues and most of these issues are the same year after year. While the technical issues vary from industry to industry, most of the business issues are common to all kinds of businesses in all kinds of industries. This blog is about business instead of SouthWare, and I want to discuss some of those common business issues in my next few blog entries.
Let’s start with cash flow since the recent economic problems have made this problem even more acute. Most businesses struggle, at least occasionally, with having adequate cash. A shortage of cash can be caused by not selling enough, selling a lot, poor margins, slow paying customers and non-paying customers among other causes.

One thing that has troubled many businesses the last couple of years, is that credit limits that have been okay for specific customers are now way too high. Maybe we didn’t even have to think about credit limits with some long-term stable customers, but suddenly they are in trouble and can’t pay their bills.

The tendency, once we spot the problem, is to take drastic steps which may be necessary and may not. Going back to my school days, I still remember and use the old strategy that we are not trying to eliminate bad debts, we are trying to maximize gross profit. This just means we are trying to find the right degree of credit control that will still keep customers buying but without increasing bad debts to the extent that those extra sales aren’t profitable. Unfortunately, its hard to control that just with formulas - it takes some judgment and common sense as well.

For some customers, extending additional credit - either more dollars or more time - is good for you and them. For others, you are just enabling them to postpone making cash flow management decision that they have to make to survive and prosper. This is similar to people using credit cards. Sometimes they are capable of managing the balances and sometimes it just allows them to get in more trouble.

Broad advice can’t fit every situation but in many businesses it will help to do some combination of tightening credit limits, increasing frequency of collection calls, reviewing all past due accounts, stop extending credit when the warning signs justify, and insist that past due customers keep in touch on how and when they are going to pay.

I will close by reemphasizing a point I made above. Just because an X dollar credit limit has been good for a customer for several years, it isn’t necessarily safe in today’s environment. Many companies are struggling to stay afloat and this may mean they are borrowing from you because they can’t get the funding from their normal sources. The bottom line is that credit sales take more monitoring today than they do when the economy is stronger - both during the sales process and afterward during the collection process.

Staying Young

How to Stay Young
Strange title to appear in a Success/Motivation blog. We all know the parts about eating right, exercising and getting plenty of rest. I have found an additional step that helps both the physical and mental body. Keep learning. Many tests have proven that “exercising” the brain keeps it functioning better and longer. It even partially offsets, or delays, the impact of alzheimers and dementia. Here are some brain activities that can keep us younger longer:
-Sudoku and cross-word puzzles are challenging and stimulating
 -Reading - biographies, self-help and fiction. Including the Bible and other spiritual books is great. Joining, or starting, a group that discusses books and articles is helpful. I attend a Men’s Bible Study every Thursday morning that is really stimulating.

 -Listening to CDs in the car is good and it takes advantage of free time.

One of the books on my Favorites list is Earl’s Pearls on Enjoying Excellence. One of the Pearl’s is Keep Learning and the emphasis is on “No matter how old you are, never stop learning.” Earl says that “Reading is an important habit to continually fuel you with new ideas and information that you can bring to your work, your home and all your activities.”
A sad fact that I have heard multiple times is that most adults never read a book after they complete their formal education. The Bible says to keep growing and it helps keep our brains and bodies young. It keeps our brains working better.  Those are good reasons to keep learning.
If you aren’t in the habit of “exercising” your brain in these ways, decide today what you are going to do and set some specific goals for how to make it happen. For example, I have a written goal to do at least 100 Sudoku puzzles each year. So when I complete a puzzle, I put the date and a number by it. It is July and last night I did #62. So I know I’m on schedule to complete my 100.
I went to a luncheon a few years back and sat by a lady who was 80 plus and very sharp and articulate. She told me that she made it a point to “learn something every day.” That is a pretty good idea and it sure worked for her. Keep going and keep growing!