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 August 1, 1999

Institute controls to ease cash-flow problems

Question: Cash-flow problems are beginning to control my company to the point I need a short-term loan. The problem is the banks will not talk with me due to my poor cash flow. What strategies should I have in place to keep my business afloat?

Answer: First, sit down with your certified public accountant to get a good understanding on your financial position and to set up cash-flow controls for your company. Have your CPA or accountant review your receivables, credit, collection and inventory systems and polices. These can lead to an increase in cash over a short time, lessening the need to borrow. Have them assist you in setting up, tightening and maintaining cash controls for your company.

Second, establish a financial contingency plan and hope you never have to use it. A contingency plan outlines what you would do if all your optimistic plans fail.

A contingency plan should provide answers to the following questions:

1. What suppliers would give you extended terms or carry you in case of a

crunch? Why should they carry you? How long and by how much?

2. What new investment could you make? Would you refinance personal assets to provide a cash cushion for your business? What other assets could you bring to support a cash crunch?

3. What assets does your business have to either sell or turn to cash?

4. How will you keep your banker and major trade creditors on your side? Keep your communications open with all your creditors. They will be more willing to work with those whom they know and trust. You should check in quarterly.

5. Have you examined all possible sources of additional working capital in your business? Where might you have some leverage?

6. What customers would be willing to prepay or speed up orders if it would help?

7. Equity investment — seeking an outside investment into the company — might help save the company from the big “B” — bankruptcy. Be prepared to give up a large part. The key is to have a plan in hand before a crisis so you will not panic. The plan will also build valuable credibility with your creditors.

Q. How do I get a newspaper to print my press release on my business. I have a new Internet idea that I believe could be the next Yahoo! I believe what I am doing would make for a great story. I am a beginner at this game of business and need some key pointers. Look out Yahoo! Here comes Zammboo!

A. If you want to get noticed by the press, you need to understand the media. The key is to make the strongest possible case for what’s in this for the media source you’re approaching.

If you approach a media source and say, “Give me space so I can sell my products and services,” you’ll be laughed out of the building. Why should they give you something of value?

You must position yourself, your company and your media materials as the solution to a pressing problem. You must:

* Identify a pressing problem. If you expect to get free time and space in the media, you must sell your problem. If your problem is of no interest to the media source you’re approaching, your solution won’t be of any interest either.

* Make sure the media source connects with people who have this problem. The problem will not be of interest to the media source unless its audience has it.

* Sell your ability to solve the problem(s). Both the problem that those afflicted have as well as the problem the media source has should be addressed. You need to be able solve the problem of the afflicted while making the media look good, entertaining, informative and stimulating.

Notice, there is no mention here of details about your product and service. Those, after all, are features with which you cannot lead your story. You must lead with the information that will get you the time and space you desire. So produce different marketing materials, all about a page in length (double-spaced, please), dealing with the three areas above. Then follow with your supporting story information that sells the importance of the problem.

On a second sheet, state why these people look to you for help. State why you are the expert and where you are getting your information. The problem must be important, but it must also be a problem that this media source’s audience needs to solve.

Your third sheet should indicate that you can solve both the immediate prospect’s problem (your media source) and your ultimate prospect’s problem (the people who need your product or service). Remember, do not sell yourself (a feature). Instead, sell your benefit (a story).

Greeley resident is a founding member of Tekquity Ventures LLC, a Louisville-based specialty venture-capital firm investing in technology development and licensing. He can be reached at (970) 396-7009.

Question: Cash-flow problems are beginning to control my company to the point I need a short-term loan. The problem is the banks will not talk with me due to my poor cash flow. What strategies should I have in place to keep my business afloat?

Answer: First, sit down with your certified public accountant to get a good understanding on your financial position and to set up cash-flow controls for your company. Have your CPA or accountant review your receivables, credit, collection and inventory systems and polices. These can lead to an increase in cash over…

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