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Business debt can be a good thing. It can help you to establish your business, fund growth or invest for the future.

However, if the level of borrowing becomes excessive it can lead to many problems, such as:

• Running out of cash
• Not having contingency funds to deal with unexpected costs
• Reducing the value of the business
• Inability to take advantage of opportunities
• Reduced service/product quality
• And many more…

This article gives a framework and various practical ideas to help you reduce your business debt.

A framework for recovery

There are six basic strategies that can help you out of excessive debt:

• Reduce costs
• Increase income
• Restructure liabilities
• Restructure assets
• Raise more capital
• Exit the business

The following examples in each area are not exhaustive, but may give the business owner some practical ideas.

1. 1.          Reduce Costs

There are two principle ways to reduce costs:

• looking for big savings, or
• make small reductions across the board

To find big costs savings, concentrate on large savings first. Can you reduce rent by moving? Or cutting staff hours? To make savings across the board, set a savings target (say, 10%) and reduce each budget by that amount. Then take small steps to reduce costs, eg: reduce communication costs by going to prepaid cell phone cards or opting for cheaper equipment when purchasing, etc..

1. 2.        Increase Income

There are various ways of increasing the amount of money flowing into your business, such as:

• Increase sales
  eg: through increased marketing, cross-selling to existing customers, offering special deals to get additional or advance orders, getting referrals with other organisations/affiliates
• Raise your prices. This is easier than it sounds but if a price rise is not accompanied by a hard look at value pricing, then it will frighten existing customers.
• Find alternative sources of income
  eg: renting out unused office space, assessing your waste or unused products and seeing if it has any value., obtaining commissions from other organisations

1. 3.        Restructure liabilities

Your ‘liabilities’ are all the amounts of money that you owe to other people. Restructuring your liabilities doesn’t necessarily reduce the overall amount you owe, but it can give you more cash, more disposable income and/or reduce the amount of debt you need to provide working capital.

Examples of ways that you can restructure your liabilities to reduce your debt include:

• Negotiate longer or scheduled payment terms with suppliers
• Replace existing loans with, for example:
  • loans that have a lower interest rate
  • secured ones (replacing unsecured loans) to reduce the interest rate
  • guaranteed loans (guaranteed by shareholders) to reduce the interest rate
  • repayments over a longer period of time
  • consolidated loans
  • shareholder funds
• Defer tax liabilities (this requires specialist tax advice)

1. 4.        Restructure Assets

Your ‘assets’ are all the things your business owns. This section on restructuring your assets also includes disposing of assets. Examples include:

• Sell unnecessary assets (eg: surplus/old equipment, cars)
• Convert necessary assets into liabilities: sell to a finance company and lease them back
• Factor invoices (this can reduce the asset value of the invoice, but raish cash)
• Use investments or cash to pay off loans.
• Collect your accounts receivable. Too many businesses have receivables running well in excess of 45 days. Your company is not a bank.

1. 5.        Raise more capital

You can raise more capital by:

• finding more investors, eg: venture capitalists
• issuing more shares to current investors
• obtaining grants

Also, take a look at your asset list and assess whether it can be converted into assets of greater value. For example, if you own land, can you build more offices or houses on that land?

1. 6.         Exit the business

To exit the business, options include:

• Selling the business as a going concern
• Going into receivership
• Selling off all the business assets (including the business goodwill, eg: the client base) and using the proceeds to pay off the liabilities

This article is  contributed by AndrewD. Gregson B.A., M.A. M.Sc.(Econ) – Floodlight Consultant

We instinctively know that we have to change in order to find new customers and succeed in a world dominated by technology and instant communication. Most of us are never more than a ringtone or an app away from information overload. Anything we want, when we want it. Music, books, pictures and video via YouTube, periodicals, breaking news, TV shows and movies, movie reviews, restaurant reviews, consumer comments and ratings, addresses, phone numbers, instant messages from friends and family, maps with audio directions, even telephone calls with moving pictures.

Photo: Contributed

We make reservations; buy airline tickets, book vacations, goods and services of all kinds at the click of a mouse or the tap of a tiny screen. We have Smartphones, the new pad technology, laptops, clouds, GPS, iPods and readers. And, if you want, you can buy one device that does it all.

Hands up, how many of you got one of these devices for Christmas? Or, bought one for your kids?

Now, how many of you truly realize and respect the power you hold in your hands?

How many businesses are not yet ready to compete in this new world?

What changes are vital for your continued success? What will be your 2012 New Year’s Resolutions?

The trick is to keep them

It’s more than diets, better fitness and no more bad habits. It’s about survival! Every business could shed needless baggage, become stronger and more agile in competition and create better habits when it comes to sales and customers. You need to assess and make a plan, but not just any plan.

Strategies are vital

That’s why I invite you to re-visit the following Ted Farr Blog Posts from this past year.

1. Build Your Business with a 10 Point Communications Strategy
2. Build Your Business with a Brand Update Strategy
3. Build Your Business with Brilliant Execution

Photo: Contributed

Where to from here

You’ve made your decision. Change is on its way. You know it’s going to be hard. It’ll take focus and discipline. You’ll have to work with your team. Set new standards. Demand better performance.

Do you have the guts or will your new found resolution become that abandoned treadmill in your basement or that long forgotten gym membership buried deep in your wallet?

More often than not, successful change requires a coach.

• To help design the program that best suits you and your business
• To guide you and keep you on track
• To give you confidence
• To help you through the chickening out period when you want to quit and return to your old ways
• To remind you that your focus is your customer

Maybe your first resolution should be to find and hire that person, your personal trainer, your business coach. And yes, I am available.

Submitted by Ted Farr, Floodlight Consultant

Photo: Contributed

The Yellow Pages are not a marketing plan.

There was a day when you were lost without a phone book.  Chances are the Yellow Pages were in the back.  In a larger city, you probably had two books, white pages for regular listings and Yellow Pages for businesses and services. 

Bring back memories? 

By the end of a year, the books would be all dog eared (with apologies to the dog) and maybe there were some pages missing.  But you used them all the time.  Business owners set aside budget to make sure their Yellow Pages ad was seen.  For many it was a critical part of a simple marketing plan - word of mouth and the Yellow Pages, a great combination because it worked.

Red Alert! 

Do you know where your phone books are?  Do you even have a phone book in the house or at the office?  If you do, what’s it used for?

• A booster seat for your friends 3 year old? 
• A door stop? 
• Kindling for the fire place? 
• Support for that cabinet with the broken leg?
• A convenient stand for your computer monitor?

The point is that a marketing plan requires planning and measurement of success.  Most have multiple components or touch points as you interact with your current and prospective customers.  So what’s your plan?  And, do the Yellow Pages even matter anymore

Computers, tablets and smart phones

According to Stats Canada, more than 90% of Canadians use the internet for email.  What does that tell you about ownership of computers, tablets and smart phones?  It takes but seconds to look up a business and print out a Google Map.  It takes only seconds to find a phone number using your smart phone.  So the real question for your business and your 2012 marketing plan is this.  Can you be easily found on line? 

It’s too expensive, I don’t have the money

It may be the world’s biggest excuse for having a lousy website or no website at all.  Yet many of these same businesses spend hundreds, even thousands of dollars per month advertising in the Yellow Pages or in the new online Yellow Pages. 

It’s time to change

Evaluate your return on investment and ask yourself, am I better to get my on line presence in shape by today’s standards or continue to spend money on a product that is no longer relevant for most current and prospective customers? 

For many businesses the money is available, what’s missing are the guts to make the decision to take your marketing plan in a new direction.  Old school or new?  You must choose to survive in the digital world.

Important questions

1. Use your money wisely (as silly as that sounds).  Look back at your marketing history and ask yourself what worked and why?  Now, ask yourself does that tactic still work in 2012?
2. Remember that the key to being found on line is making sure that your Search Engine Optimization is set up properly so that your business ranks among the first few listings in a Google search.  When was the last time you got expert help on your web strategy?  Do you even have a website?
3. As you create your 2012 marketing plan, consider the quality and the user friendliness of your website content.  Are you trapped in the ancient ways or is your website dynamic and built to generate traffic?
4. Is everything up to date?  Is your website content rich?  ?  Do you provide the information your current and prospective customers are searching for? (The percentage of Canadians researching purchases prior to shopping at a store is growing all the time) 
5. Do you tweet?  Do you have business profiles on Facebook and LinkedIn?  Are your social media connections presented in a way that makes you proud?  Is the information provided to your followers relevant and valuable?
6. Video is the next big thing.  Taking still pictures is easy.   So is uploading to most websites as well as Facebook and Twitter.  Do you have a decent digital camera and do you use it weekly in the promotion of your goods and services? 
7. The harder part is video.  Some predictions suggest that 80 – 90% of web content in 5 years will be video.  Are you ready?  Do you have a YouTube account as a part of your social media marketing strategy?
8. Your 2012 marketing plan must answer some very important questions.  Here’s a big one that requires thought and discussion.  Are you ready for tomorrow or are you spending marketing dollars on the wrong things?
9. If you must list your business in the local Yellow Pages go small.  Contract for your business name and phone number only.  In the appropriate category of course!  What do your competitors do? 
10. Where will you find the budget dollars to do what’s critical for the on-going survival of your business?

Business boot camp - 2012

As we approach the New Year, it’s time for resolutions.  Out with the old and in with the new.  Shed some pounds.  Quit smoking.  Promise to be a nicer person. 

• What about your business?
• Where will you shed pounds?
• What bad habits will you quit?
• And, how about the relationship you have with your customers?
• Is your future in the Yellow Pages or is your future on line?
•  

The Floodlight Business Solutions Group is here to help you “Build Your Business”. Call us for a free, one hour consultation.

Submitted by Ted Farr, Floodlight Consultant

Photo: Contributed

What if Christmas, perhaps, means a little bit more?

Let us remember that the Christmas heart is a giving heart, a wide open heart that thinks of others first.

You are all probably familiar with the Christmas time story of Dr. Seuss', The Grinch Who Stole Christmas.

Dr. Seuss was a favorite at our house and as my family gets a little bit older, we find we all need a break from the commercialism of the holiday season.

In moving some boxes recently I came across a copy of the now famous Dr. Seuss tale and in reading the book it brought great memories of watching the original TV show with my daughters.

There is a part near the end that has always moved me and I trust this holiday season it will help you with what’s really important!!!

From Dr. Seuss:

And the Grinch, with his Grinch-feet ice cold in the snow, stood puzzling and puzzling, how could it be so?

It came without ribbons. It came without tags.

It came without packages, boxes or bags.

And he puzzled and puzzled 'till his puzzler was sore.

Then the Grinch thought of something he hadn't before.

What if Christmas, he thought, doesn't come from a store?

What if Christmas, perhaps, means a little bit more?

As the holiday season approaches, we at Floodlight would like to take this opportunity to thank you for your continued support.

It is business associates and customers like you who make our jobs a pleasure and keep our company successful.

We value our relationship with you and look forward to sharing our business thoughts with you in the years to come.

From all of us at Floodlight we wish you a very Merry Christmas and a New Year filled with peace and prosperity.