By Pamela Patterson, CEO
I can always tell when the calls are coming in to business owners soliciting how to receive grants or funds to expand or start a business. I am a West Company employee of 12 years. Within this time and every recession, the grant scammers come out in force and prey on business owners or those wishing to start a business.
Just the other day a business owner came in that had wire transferred $3,000 to a company claiming to help him to get non-profit status in order to expand his business and funding. Anyone should be alerted to a company suggesting non-profit status for a business. Funding is a typical word used for both grants and loans, and is a common word used by companies that are trying to maintain ambiguity. When you hear "funding" you may think free grant money, but in reality you are getting a high interest predatory loan.
A few questions later, I knew it was a scam, and yes I already knew this before the questions. He read the contract for the first time that stated he couldn’t get a refund or dispute the charges. Another tell -tale fact, the company name changed from the first contract offer to the current one. He wanted to know if he should send $5,800 on to the second company. Well you know my answer. A solid NO! It used to be that the entry for these scams was $39.95 for a book and it was refundable or you could charge these large sums on a credit card and dispute the charges. Now they want a wire transfer that is cash and it is gone the moment you send it.
Grants to start or expand businesses are extremely rare (you have a better chance of winning the lottery). Better to keep your money in your pocket and seek out assistance to better manage your business. As the Mendocino Women's Business Center and Small Business Development Center, West Company offers services at no or low cost that can help you manage your financial health and your business!
Monday, December 20, 2010
Monday, December 13, 2010
It’s All in Being Prepared
By Loyd Hambrick
Chief Operating Officer
New and valuable tools – I too am excited about the new tools we are preparing to offer to local business owners and the increased prosperity they can bring to our communities. The program Heather spoke of in her last post, ProfitCents, presents some great tools for analyzing existing businesses. The ability to compare performance of an existing business to industry standards as well as to past years’ performance levels can have a great impact on a business owner’s ability to make sound decisions. However, as they are brand new to us, it will it take us a bit to get proficient with these tools. It is always West Company’s desire that business advisors be comfortable with the tools they use and offer to businesses before they are rolled out. That being said, there is still much we can do to help you improve your knowledge fostering better decision-making.
GIGO – Computers have been part of both my personal and business lives for a long time. My first exposure came while attending college at CSUS in the form of a programming class using a language called FORTRAN. Our project involved creating a computer program that compared foreign currencies to US dollars and using a compiler to translate the code into computer language. For those of you that can’t remember ever using a compiler, don’t worry about it, they are hidden in today’s computer world; for those of you who have used a compiler, I am dating myself. After inputting code into the compiler, our jobs as students was to begin to fix each of the many error messages the compiler would spit out. Each message was a clue to what was wrong about the code entered. The biggest frustration came after fixing the long list of errors to the point the program worked, only to get an incorrect answer. That is when one was faced with a tried and true basic principle of computer programmers– GIGO (pronounced gi go) – which stands for Garbage In, Garbage Out. Throughout my thirty plus years starting, owning, operating, and selling small businesses, I have found this principle can be applied to many different areas of business management including the most important aspect financial management. With computer programming, GIGO means that even if your code is of top quality in its writing, if the premise you use to begin the process is flawed or “garbage”, the result will certainly be “garbage”. This basic principle should be applied when analyzing financial data, the vital statistics of a successful small business.
What’s needed – Endless numbers of financial management tools, such as ProfitCents, exist in today’s business world including products that will collect the necessary data for you provided you implement and follow data collection systems. Many of those products have made my business management life much simpler and efficient and I highly recommend implementing such technology. But of huge importance is GIGO! You must make sure the information you are inputting is data of sound and accurate origins. Otherwise, the conclusions will be garbage and your decision-making flawed. Accurate and valuable analysis utilizing any kind of tool, whether manual or automatic, requires first having data to analyze. Generally, at least two specific financial documents are required, a profit and loss statement and a balance sheet; many times a cash-flow statement is required as well. These types of tools can make the difference between a stressed-out business owner and one that is cool, calm, and collected because knowledge is power. When you have accurate financial knowledge about your business, you can steer its course into calmer and more prosperous waters as well as take advantage of opportunities that present themselves.
The bottom line – You can successfully manage your business finances if you will practice GIGO and get your financial information system created and implemented. Contact West Company today and schedule an appointment with an advisor who can help you understand chart of accounts, create a profit and loss statement, and replace any “garbage out” with sound financial knowledge improving your decision-making. While our SBDC business advisors are busy mastering the use of ProfitCents, we can help you get prepared to take full advantage of its potential for your business. Remember GIGO!
Chief Operating Officer
New and valuable tools – I too am excited about the new tools we are preparing to offer to local business owners and the increased prosperity they can bring to our communities. The program Heather spoke of in her last post, ProfitCents, presents some great tools for analyzing existing businesses. The ability to compare performance of an existing business to industry standards as well as to past years’ performance levels can have a great impact on a business owner’s ability to make sound decisions. However, as they are brand new to us, it will it take us a bit to get proficient with these tools. It is always West Company’s desire that business advisors be comfortable with the tools they use and offer to businesses before they are rolled out. That being said, there is still much we can do to help you improve your knowledge fostering better decision-making.
GIGO – Computers have been part of both my personal and business lives for a long time. My first exposure came while attending college at CSUS in the form of a programming class using a language called FORTRAN. Our project involved creating a computer program that compared foreign currencies to US dollars and using a compiler to translate the code into computer language. For those of you that can’t remember ever using a compiler, don’t worry about it, they are hidden in today’s computer world; for those of you who have used a compiler, I am dating myself. After inputting code into the compiler, our jobs as students was to begin to fix each of the many error messages the compiler would spit out. Each message was a clue to what was wrong about the code entered. The biggest frustration came after fixing the long list of errors to the point the program worked, only to get an incorrect answer. That is when one was faced with a tried and true basic principle of computer programmers– GIGO (pronounced gi go) – which stands for Garbage In, Garbage Out. Throughout my thirty plus years starting, owning, operating, and selling small businesses, I have found this principle can be applied to many different areas of business management including the most important aspect financial management. With computer programming, GIGO means that even if your code is of top quality in its writing, if the premise you use to begin the process is flawed or “garbage”, the result will certainly be “garbage”. This basic principle should be applied when analyzing financial data, the vital statistics of a successful small business.
What’s needed – Endless numbers of financial management tools, such as ProfitCents, exist in today’s business world including products that will collect the necessary data for you provided you implement and follow data collection systems. Many of those products have made my business management life much simpler and efficient and I highly recommend implementing such technology. But of huge importance is GIGO! You must make sure the information you are inputting is data of sound and accurate origins. Otherwise, the conclusions will be garbage and your decision-making flawed. Accurate and valuable analysis utilizing any kind of tool, whether manual or automatic, requires first having data to analyze. Generally, at least two specific financial documents are required, a profit and loss statement and a balance sheet; many times a cash-flow statement is required as well. These types of tools can make the difference between a stressed-out business owner and one that is cool, calm, and collected because knowledge is power. When you have accurate financial knowledge about your business, you can steer its course into calmer and more prosperous waters as well as take advantage of opportunities that present themselves.
The bottom line – You can successfully manage your business finances if you will practice GIGO and get your financial information system created and implemented. Contact West Company today and schedule an appointment with an advisor who can help you understand chart of accounts, create a profit and loss statement, and replace any “garbage out” with sound financial knowledge improving your decision-making. While our SBDC business advisors are busy mastering the use of ProfitCents, we can help you get prepared to take full advantage of its potential for your business. Remember GIGO!
Friday, December 10, 2010
We have some new tools to help our clients make better business decisions in the coming year!
By Heather Gurewitz
Mendocino Women's Business Center Director
The holidays are a busy time for our clients. People seem to be putting their business plans on hold or working hard making those last end of the year sales. Which, I have to say is great, because it leaves me some time to investigate some of the resources that are "at our fingertips." I learned about a lot of great things at the Association of Small Business Development Centers' Conference back in September, but with all of the classes and training, I haven't had a chance to investigate further...until now!
We can perform an industry specific business analysis for our clients by comparing their finances to other businesses in their industry across the nation. It also means that when someone is starting a business we can use up-to-date information to help them figure out if their projections are reasonable compared to other businesses.
Accessing data is only part of what we get from ProfitCents. The system has some very advanced financial analysis tools that allow us to look at the operating model of the business and determine how changes will affect profits and cash flow by creating a variety of different scenarios.
So, how does this all help the business owner?
Example: If a business owner feels that they are always low on cash and have high debt financing, we can take their information from their profit and loss statement and their balance sheet and compare them to other businesses in the industry to find out what areas might be potential for improved performance. Should they be reducing inventory turn days? Should they be collecting accounts receivable faster? Should they increase their pricing? Then we can create projections for the business where we can see the impacts of these actions.
I should note that we have always created projections for our clients and helped them to look at all these factors, but now, with ProfitCents we are able to offer a much more sophisticated system. Also, with the industry data, we can figure out if the assumptions are realistic. For example, if we determine that the business needs to increase their profit margin by 10%, we can look at the other businesses in the industry and compare the average profit margin.
The bottom line...
We have some REALLY cool new tools to help our clients make better business decisions in the coming year!
More information on the availability of ProfitCents will be available in late January, 2011.
Mendocino Women's Business Center Director
The holidays are a busy time for our clients. People seem to be putting their business plans on hold or working hard making those last end of the year sales. Which, I have to say is great, because it leaves me some time to investigate some of the resources that are "at our fingertips." I learned about a lot of great things at the Association of Small Business Development Centers' Conference back in September, but with all of the classes and training, I haven't had a chance to investigate further...until now!
By far the most exciting thing I have come across yet, is an online tool that was recently made available to California Small Business Development Centers (SBDC) called ProfitCents. Created by Sageworks, this is an online information system that provides industry specific financial information based on industry codes (NAICS).
In plain English, that means:
We can perform an industry specific business analysis for our clients by comparing their finances to other businesses in their industry across the nation. It also means that when someone is starting a business we can use up-to-date information to help them figure out if their projections are reasonable compared to other businesses.
Accessing data is only part of what we get from ProfitCents. The system has some very advanced financial analysis tools that allow us to look at the operating model of the business and determine how changes will affect profits and cash flow by creating a variety of different scenarios.
So, how does this all help the business owner?
Example: If a business owner feels that they are always low on cash and have high debt financing, we can take their information from their profit and loss statement and their balance sheet and compare them to other businesses in the industry to find out what areas might be potential for improved performance. Should they be reducing inventory turn days? Should they be collecting accounts receivable faster? Should they increase their pricing? Then we can create projections for the business where we can see the impacts of these actions.
I should note that we have always created projections for our clients and helped them to look at all these factors, but now, with ProfitCents we are able to offer a much more sophisticated system. Also, with the industry data, we can figure out if the assumptions are realistic. For example, if we determine that the business needs to increase their profit margin by 10%, we can look at the other businesses in the industry and compare the average profit margin.
The bottom line...
We have some REALLY cool new tools to help our clients make better business decisions in the coming year!
More information on the availability of ProfitCents will be available in late January, 2011.
Friday, December 3, 2010
"No Business is an Island"
by Heather Gurewitz
WBC Director
I had a great consult with a client the other day, at the end she really understood what she needed to do in order to turn her business around. Unfortunately, it was so empowering for her that she decided she didn't need any help going through the process. I have to say, I was not comfortable with that conclusion.
The major issue for this client was that her pricing model was completely out of date and that she had never analyzed her cost of goods. She was a great technician, but she has no business training and what she knows, she knows from having done it. When I called to follow up she thanked me for my help and expressed her gratitude for my assistance, but made it clear, she didn't need any help.
Most of the business owners that come to see us are bright and enterprising people, however they sometimes lack financial management skills, mainly because they have never taken business classes. Now, people can figure out what they want to charge on their own, but really, if it were me, I would want someone who had the knowledge and tools to help me figure out exactly how much to change my prices. While it sounds simple changing pricing can be tricky, if you don't raise your prices enough you may not solve your cash/profit issues. Or, if you raise them too much you may end up shrinking your client base, and nullify the change. So, while it sounds simple, "I'll just raise my prices," really it requires maintaining a delicate balance which requires some serious analysis. A "knee-jerk" price increase or decrease could cause your business a lot more trouble than it solves.
When West Company consultants look at this issue with our clients, we use our break-even analysis tools, profit and loss projections, cash flow projections, and a number of other tools to understand the implications of changes to the pricing model. We look at several options and we also work with our clients to make sure they understand the new sales goals they need to meet based on the decisions they make.
The economy is changing and this may require revising the pricing model your business is using, and while I often joke about being a "holistic business healer," the truth is, to determine the right pricing for your business, you need to look at all the effects of those changes, and it is best to do that before you actually make them. Not to mention, West Company offers consulting by qualified professionals at no cost to the individual (thanks to the Small Business Administration, the County of Mendocino, and the City of Fort Bragg). So, when you are taking a major risk with your business why a neutral outside opinion can help you make a more strategic and effective decision by working with an advisor through West Company, host of the Mendocino Small Business Development Center and the Women's Business Center.
WBC Director
I had a great consult with a client the other day, at the end she really understood what she needed to do in order to turn her business around. Unfortunately, it was so empowering for her that she decided she didn't need any help going through the process. I have to say, I was not comfortable with that conclusion.
The major issue for this client was that her pricing model was completely out of date and that she had never analyzed her cost of goods. She was a great technician, but she has no business training and what she knows, she knows from having done it. When I called to follow up she thanked me for my help and expressed her gratitude for my assistance, but made it clear, she didn't need any help.
Most of the business owners that come to see us are bright and enterprising people, however they sometimes lack financial management skills, mainly because they have never taken business classes. Now, people can figure out what they want to charge on their own, but really, if it were me, I would want someone who had the knowledge and tools to help me figure out exactly how much to change my prices. While it sounds simple changing pricing can be tricky, if you don't raise your prices enough you may not solve your cash/profit issues. Or, if you raise them too much you may end up shrinking your client base, and nullify the change. So, while it sounds simple, "I'll just raise my prices," really it requires maintaining a delicate balance which requires some serious analysis. A "knee-jerk" price increase or decrease could cause your business a lot more trouble than it solves.
When West Company consultants look at this issue with our clients, we use our break-even analysis tools, profit and loss projections, cash flow projections, and a number of other tools to understand the implications of changes to the pricing model. We look at several options and we also work with our clients to make sure they understand the new sales goals they need to meet based on the decisions they make.
The economy is changing and this may require revising the pricing model your business is using, and while I often joke about being a "holistic business healer," the truth is, to determine the right pricing for your business, you need to look at all the effects of those changes, and it is best to do that before you actually make them. Not to mention, West Company offers consulting by qualified professionals at no cost to the individual (thanks to the Small Business Administration, the County of Mendocino, and the City of Fort Bragg). So, when you are taking a major risk with your business why a neutral outside opinion can help you make a more strategic and effective decision by working with an advisor through West Company, host of the Mendocino Small Business Development Center and the Women's Business Center.
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