July 18th, 2012 David Finkel (Taxloopholes.com Advisor)
Today I wanted to talk about getting the money you need to grow and expand your business.
To be clear, I’m not going to be talking about raising capital from angel investors or VCs today, although for some business’s that is a critical way to fund growth. Nor am I going to be talking about borrowing operating capital from local banks.
Instead, today I want to focus on tapping into the money that is already present in your business, but that you likely just aren’t seeing.
Most business owners never see the hundreds of thousands of dollars hidden away in their own businesses, which once you unlock it, can be used to take your business to the next level.
After you’re done reading this, never again will you allow yourself to say, “I just don’t have the money to grow. Nor do I have the money to invest in accessing the help I need to grow.”
Instead you’ll see 3 concrete strategies to unlock the hidden cash reserves currently buried inside your company.
Strategy One: Tap into your underutilized assets to free up hundreds of thousands in extra cash flow.
Just about every business has at least one underutilized asset that it isn’t using, that properly aligned and implemented, will turn into tangible cash flow in 90 days or less.
What’s more, usually the business owner fails to see this underutilized asset because he or she is just too close to the business. It takes an outside, third party with a better perspective to see the asset and how best to leverage it to generate money for growth.
Case Study #1: Debbie – Successful Real Estate Investment Business Owner.
When we first began working with Debbie to systematize and grow her real estate investment company she shared that while she was very equity rich, the business struggled due to poor cash flow.
Working together, we analyzed her business and found two strategic shifts she needed to make that would free up over $150,000 per year of extra cash flow the very first year we implemented them.
The second of these two strategies had to do with her Maui coach spotting an unused asset in her business–25 vacant properties she owned in a rough but what she felt would be up and coming neighborhood that she bought for a song.
Debbie, like most business owners, was so familiar with how she always had done her business that she never questioned the fact that these badly damaged vacant houses were an asset that she could use to generate money to fund her business operations. But her Maui coach, being on the outside looking in, immediately saw the opportunity. He helped Debbie create a plan so that over 90 days Debbie could turn 17 of the easiest to fix up of these houses into an $11,000 per month income stream!
And before you say, “Well gee, that’s so obvious. Of course Debbie needed to do something with those houses,” let me just say that RIGHT NOW, in your business, you are looking right past a similar asset that if you only could see it, and come up with a plan to harness it, you could turn into a 6-figure income stream to help fund your growth.
Sadly, without outside perspective, you’re unlikely to see it because you’re simply habituated to it and hence will just look right past it. You’re no different than Debbie. You need your outside “coach” to help you spot it and strategize the simplest, fastest, and most effective way to leverage it to generate healthy cash flow for your business.
Strategy Two: Look to your receivables to unlock 10% or more additional gross revenue.
If one commonality among business owners exists, it may just be this: most business owners do a lousy job at quickly and professionally collecting on the money they are owed (i.e. their receivables.)
In over 55% of our Business Coaching clients, we help them spot and unlock 10% or more additional gross revenue simply by redesigning their “A/R” (accounts receivable) system.
Case Study Two: Bonnie–Therapy clinic owner with a hidden collections hole.
When Bonnie joined our Business Coaching Program three years ago, she wasn’t even aware that she had a collections issue. In fact, she argued with her Maui coach saying that almost all her patients paid cash at time of service and she didn’t have any real receivables.
But with a little patience and a few pointed questions, Bonnie’s Maui coach finally got her to see that this might just be an opportunity to increase her net profits by 20% or more.
With a little investigation Bonnie was shocked to find that she had missed over $70,000 of valid receivables in the last year. Since she had already paid all of her business’s expenses that money was pure net profit lost inside her business.
Over the next 9 months her Maui coach helped her revamp her collections system, select a better team member to put in charge, and build clear controls to make sure that the problem really was solved. The impact? That additional $70,000 per year of revenue, since it went 100% to her bottom line, was the equivalent to a 20% increase in net profits!
One Maui client, found over $500,000 per year of uncollected receivables in his business. Another client who was an attorney identified that $45,000 per year in her practice went uncollected.
This is such a common occurrence that a high percentage of our Business Coaching clients reap a 5-fold return on the coaching program based purely on the redesigned collections system we help them implement the first year we work together!
Strategy Three: Increase your sales team’s “Direct Sales Time” and exponentially grow your sales.
Here is a hard truth to hear, but an important one:
Most of your sales team (whether that be you or a team of 12 sales people you’ve hired) hide behind inconsequential “make work” to avoid the potential rejection of talking to prospects and asking for their business.
Over the years we’ve developed one critical metric you must track for your sales team. We call this metric “Direct Sales Time” or DST.
DST is the time per day your sales person(s) spend in direct selling activities with your customers and prospects. By measuring it on a daily basis and then looking for simple ways to increase this time you’ll see your sales sky rocket.
Case Study: Brian – a solo-preneur who double his DST and then doubled his sales.
One of our business coaching clients Brian started with our program 3 years ago. At the time Brian had no sales people, no admin help, and only a part time book keeper. He did everything else in the business himself.
His Maui coach helped Brian bring on the operational and admin help he needed (“Diane”) so that he could instead focus on doing what he needed to do–increase his DST and sell more.
It took approximately 9 months for Brian to replace 90% of his operational and administrative responsibilities with Diane, plus solid systems, and baseline controls. The impact of this on his business was that with the extra time he freed up he literally doubled his sales in his first year in the program. And this is a common result.
Most sales people only spend 2-3 hours a day on average in DST. When you double that time to 4-6 hours per day you often will see a 75-150% jump in sales!
The bottom line is that when you hear a business owner complain that they just don’t have the cash flow to afford to re-invest back into his or her business to grow, they are wrong.
In fact, you’ve just learned three concrete ways you can unlock hundreds of thousands in hidden cash flow from your business to re-invest in growing your business.
Let Us Help Coach You and Your Business to Level 3!
Don’t build your business in isolation!