Central California Small Business Development Center Newsletter February 2010
SBDC California - February 2010
Dear Valerie,
Is Business Falling Off?
In a down economy, most businesses experience an initial drop in revenues. Many do not know what to do and feel somewhat hopeless. This should not be the case, unless of course, your product or service is obsolete, such as Buggy Whip sales and repair.
Dear Valerie,
Message from the Director
Is Business Falling Off?
In a down economy, most businesses experience an initial drop in revenues. Many do not know what to do and feel somewhat hopeless. This should not be the case, unless of course, your product or service is obsolete, such as Buggy Whip sales and repair.
Here is my take on a down economy: A great opportunity to increase
market share! Most of your competitors are experiencing the same
effect of the downturn, less revenues. However, if you have a viable
product, sales within your industry are still taking place - right? I
am sure if you did your due diligence and determined the market size,
in dollars, of your industry within your geographical region, you would
be very happy if all of that revenue was yours. This is a good start;
you should know the size, in dollars, of your industry and then
calculate your share of the market. For example, if the market in your
area for your product or service is $10,000,000 and your annual revenue
is $500,000, then you have 5% of the available market. In order to
double revenues, or increase your market share to 10% you have to one
of two things (or both). Increase the market size by selling your
product or service to a new group of consumers or take market share
from your competitors.
Increase Market Size:
This requires you to find a use for your product beyond its current uses. For example, many companies have watched how consumers use their product or service and discovered a completely new segment for their industry. Many companies have found ways to use their waste as a product.
Taking Market Share:
Most of your competitors will not easily give up their revenue streams. Therefore, you will have to earn it from the consumer. This is where strategic planning becomes a very valuable tool. First, you must fully understand the consumers, your competitor's strengths, and weaknesses - looking for opportunities for you to exploit and potential threats to your competitive advantage.
New Customer Group:
Find out how your customers use your product or service, you may be surprised and discover things about your product or service you were unaware of, which may lead to new uses for your product. A new use means new customers.
You have homework! If you need help, contact your local SBDC office and set up an appointment with an SBDC consultant.
-Bryan Moe, CCSBDC Director
Charlett's Web
Advice you can bank on!
The Seeds of Tomorrow's Cash Crisis Are Being Sown Today!
Business owners often get trapped because they don't heed the messages their business sends and they don't pay attention to basic principles. The following checklist represents a clear set of danger signals - situations and issues - that have a clear and negative effect on cash flow. Take a few minutes under the harsh, cold light of reality to ask yourself how many of the following danger signals exist in your business and then evaluate carefully their implications:
No physical inventory taken on a regular basis.Lots of unsold inventory sitting around.
No monthly cash budget projection.
Bank credit line not paid down to zero within the last year.
Term loan payments were paid late one or more times within the year.
Buying at trade shows without a purchasing plan.
Short-term credit like credit lines used for long term assets such as rental equipment.
Bank statements not reconciled every month.
Supplier discounts rarely taken for early payment
Projected annual sales increase of over 25%.
Balance sheet prepared only at the end of the year, and only used for tax purposes.
No review of financial statements on a regular basis.
High interest rates on bank loans.
Increasing amount of credit supplied by credit cards.
Bad debt expense increases every year
No Accounts Receivable report on weekly basis.
High moving items are often out.
Payroll checks have been written late one or more times this year.
No systems in place to prevent internal fraud.
Only communication with CPA is in April to discuss tax avoidance strategies.
No handle on company cost structure or break even level.
Showing profits but no cash.
Business cycle contains sharp seasonal slumps or booms.
Perhaps the greatest danger of all: not having adequate records and/or financial skills to be able to answer all of these questions - or not having any questions to ask! Planning is the vital element, especially when we're talking about cash flow. Danger signals are just that - signals. The longer you wait, the fewer options you will have. Now is the time to gain control and keep it. Get yourself ahead of the game, sleep better at night, and get in a much better position to weather whatever rough seas lie ahead.
Charlett Nilan, CCSBDC Counselor
HR: It's Your Business.
Sexual Harassment Training: Is Your Business in Compliance?
As we start a new year, this would be a good time to review your current training calendar and ensure that you have sexual harassment training included. In accordance with California AB 1825 law, employers with 50 or more employees are required to provide mandatory two (2) hour sexual harassment training for their supervisors, managers and some administrative personnel. Though this requirement focuses only on management personnel, it has become common practice to offer training to all personnel, due to the liability sexual harassment presents to the employer.
Employers should seriously consider taking a more cautious and proactive approach in providing training to all personnel. Furthermore, the more your employees are educated about the inherent dangers sexual harassment poses within the work environment, the better chances employees will not engage in such malicious acts. Do not let your organization become a victim of insufficient training and procrastination. All it takes is one successful harassment claim to hinder a lifetime of work and accomplishment.
If your 2-year time period is this year (2010), consider scheduling your training session(s) now. Furthermore, in accordance with California AB 1825 law, newly hired management personnel should attend sexual harassment training within six (6) months from the date of their employment.
When considering a trainer to meet the AB 1825 requirement, please note that the State requires only qualified individuals meeting specific educational and experience criteria. To learn more, call the Human Resources Consortium or go online to the California Department of Industrial Relations at www.dir.ca.gov.
-Fred J. Mora,III, MA Vice Pres., Human Resources Consortium, Inc.
Increase Market Size:
This requires you to find a use for your product beyond its current uses. For example, many companies have watched how consumers use their product or service and discovered a completely new segment for their industry. Many companies have found ways to use their waste as a product.
Taking Market Share:
Most of your competitors will not easily give up their revenue streams. Therefore, you will have to earn it from the consumer. This is where strategic planning becomes a very valuable tool. First, you must fully understand the consumers, your competitor's strengths, and weaknesses - looking for opportunities for you to exploit and potential threats to your competitive advantage.
New Customer Group:
Find out how your customers use your product or service, you may be surprised and discover things about your product or service you were unaware of, which may lead to new uses for your product. A new use means new customers.
You have homework! If you need help, contact your local SBDC office and set up an appointment with an SBDC consultant.
-Bryan Moe, CCSBDC Director
Charlett's Web
Advice you can bank on!
The Seeds of Tomorrow's Cash Crisis Are Being Sown Today!
Business owners often get trapped because they don't heed the messages their business sends and they don't pay attention to basic principles. The following checklist represents a clear set of danger signals - situations and issues - that have a clear and negative effect on cash flow. Take a few minutes under the harsh, cold light of reality to ask yourself how many of the following danger signals exist in your business and then evaluate carefully their implications:
No physical inventory taken on a regular basis.Lots of unsold inventory sitting around.
No monthly cash budget projection.
Bank credit line not paid down to zero within the last year.
Term loan payments were paid late one or more times within the year.
Buying at trade shows without a purchasing plan.
Short-term credit like credit lines used for long term assets such as rental equipment.
Bank statements not reconciled every month.
Supplier discounts rarely taken for early payment
Projected annual sales increase of over 25%.
Balance sheet prepared only at the end of the year, and only used for tax purposes.
No review of financial statements on a regular basis.
High interest rates on bank loans.
Increasing amount of credit supplied by credit cards.
Bad debt expense increases every year
No Accounts Receivable report on weekly basis.
High moving items are often out.
Payroll checks have been written late one or more times this year.
No systems in place to prevent internal fraud.
Only communication with CPA is in April to discuss tax avoidance strategies.
No handle on company cost structure or break even level.
Showing profits but no cash.
Business cycle contains sharp seasonal slumps or booms.
Perhaps the greatest danger of all: not having adequate records and/or financial skills to be able to answer all of these questions - or not having any questions to ask! Planning is the vital element, especially when we're talking about cash flow. Danger signals are just that - signals. The longer you wait, the fewer options you will have. Now is the time to gain control and keep it. Get yourself ahead of the game, sleep better at night, and get in a much better position to weather whatever rough seas lie ahead.
Charlett Nilan, CCSBDC Counselor
HR: It's Your Business.
Sexual Harassment Training: Is Your Business in Compliance?
As we start a new year, this would be a good time to review your current training calendar and ensure that you have sexual harassment training included. In accordance with California AB 1825 law, employers with 50 or more employees are required to provide mandatory two (2) hour sexual harassment training for their supervisors, managers and some administrative personnel. Though this requirement focuses only on management personnel, it has become common practice to offer training to all personnel, due to the liability sexual harassment presents to the employer.
Employers should seriously consider taking a more cautious and proactive approach in providing training to all personnel. Furthermore, the more your employees are educated about the inherent dangers sexual harassment poses within the work environment, the better chances employees will not engage in such malicious acts. Do not let your organization become a victim of insufficient training and procrastination. All it takes is one successful harassment claim to hinder a lifetime of work and accomplishment.
If your 2-year time period is this year (2010), consider scheduling your training session(s) now. Furthermore, in accordance with California AB 1825 law, newly hired management personnel should attend sexual harassment training within six (6) months from the date of their employment.
When considering a trainer to meet the AB 1825 requirement, please note that the State requires only qualified individuals meeting specific educational and experience criteria. To learn more, call the Human Resources Consortium or go online to the California Department of Industrial Relations at www.dir.ca.gov.
-Fred J. Mora,III, MA Vice Pres., Human Resources Consortium, Inc.
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