Posted by Dave Lorenzo - Business Coach

Revenue, Profit and Cash Flow are some of the things most of us think of when we think about the value of a business.  The Street.com  points out several things that many people over look when it comes to the value of a business.  Here are the three best things pointed out in the article titled  15 Hidden Revenue Streams (with my editorial commentary of course).  

Customer Lists are valuable.  This is huge.  Many business don’t even keep track of their customers’ information.  A good customer list is incredibly valuable.  People who purchased a product from you will probably purchase similar or complementary products from others. 

Your Website Address could be valuable.  Here’s an example:  I owned a domain name that was close to the name of my business. Someone else wanted that domain name and they were not going to be in a business that competed with me.  I wasn’t sure what I was going to do with that name in the future.  They made me an offer of $5,000 in cash and I gladly sold the domain name to them.

Space on the roof of your building could be valuable.  In 1998 I rented space on the top of a hotel in East Rutherford, New Jersey to a cell phone company for $500 per month. The going rate today is probably much higher.   Could you use the extra cash?

There is value in many of the nooks and crannies of your business.  Make sure you look around with a creative eye when thinking about the value of your business.

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Posted by Dave Lorenzo - Business Coach

Forbes offers us some good tips on deductions for your home business:

By the Census Bureau’s last count in 2002, half of all businesses in the U.S. are home-based. The U.S. government encourages this kind of entrepreneurship. Dig deep and at-home entrepreneurs will find a few precious tax deductions.

Alterations to the tax code in 1999 made it easier to qualify for home-office tax deductions. Below are five deductions homebodies would be foolish to ignore. To increase your odds of success, be sure to keep your business and personal life separate–including all checking accounts, credit cards and phone bills.

1. Infrastructure (utilities, phone service, housekeeping services, landscaping) Run-of-the-mill homeowners and renters can’t deduct these expenses, but at-home entrepreneurs can.

2. Home mortgage interest and property taxes. U.S. taxpayers can deduct these anyway, but as a small business owner, you can save even more by applying a percentage of mortgage interest and property taxes to the home-office section of your tax form.

3. Travel expenses. You can’t deduct fuel expenses if you commute to work each day, but if you work from home, you can deduct the costs of traveling away from your home for any business-related activity.

4. One-time office equipment purchases. Section 179 of the tax code says you can take a one-time deduction–up to $105,000–for the purchase of office equipment, as long as you don’t purchase more than $400,000 of equipment in a calendar year.

5. Family affair. Sole proprietors with children under 18 who work for them can deduct their children’s “wages.”

Thanks to The Business Opportunities Weblog for the link.

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Posted by Dave Lorenzo - Business Coach

“Money often costs too much.” –Ralph Waldo Emerson

I have been working with a couple of clients recently who are both facing trying circumstances. One of them is struggling to come up with funds for developing and expanding his startup business, while the other is longing to end a very difficult business relationship but feels trapped because the financial reward of the situation is so good. This is a great reminder that money is not the answer to all our problems, and that no matter how much money we have, we will always face obstacles and enjoy benefits specific to us.

The younger client is short on funds but long on optimism and elbow grease. His strength is that he is not letting the financial situation be an obstacle. He’s viewing it as an opportunity to exercise his creativity and find innovative and inexpensive ways to develop his business. The older client feels trapped. He has grown comfortable with the income provided by this overbearing client, and he fears he will lose too much if he ends the relationship. He is having a hard time imagining what he stands to gain if he cuts his losses and moves on.

Money can set you free or chain you down. It is nothing more than a tool. How you use it is entirely up to you.

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Posted by Dave Lorenzo - Business Coach

Entrepreneur provides us with Seven Tips for Improving Cash Flow.  They are:

1. Require a down payment on projects so that your customers fund the project, not you.

2. Set your terms to be payment in full upon completion. Don’t extend out 30 or 60 days after you’ve completed your work. 3. Negotiate terms with your vendors for 30 days or more so you have an opportunity to complete the work, bill your customers and receive payments prior to paying your vendor.

4. Have a collection process in place, and follow through. When your customers delay payments, they’re using your cash. You need to ensure that you’re being diligent in collecting from your customers.

5. Set up a line of credit at your bank that you can use in case of emergency.

6. Factoring of your receivables allows you to sell your receivables and get cash now instead of waiting 30 or 60 days. There’s a fee for using a factoring service, so you need to ensure that the benefits of getting cash today exceeds the cost you’ll pay for that expedience.

7. Minimize the amount of draws you take personally from your business. Each dollar you take from your company reduces the amount of cash flow you’ll have available for the business to grow.

There’s nothing earth-shattering about this list of tips.  Most entrepreneurs will consider these things solid business practices.  The key take-away is this:  Cash flow is the most important component of your business.  If the money coming in does not surpass the money going out, you will not be in business for very long.

Think of cash in the same way you think of blood in your body.  If you get a small cut, you patch it up and continue about your business.  But several small cuts, bleeding at the same time, can be too much to care for.  The best option is to not get cut at all.

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