Many times small businesses want to expand their businesses and are not sure when the best time to do that might be. The key of course is cash flow. Will your current and brand new accounts afford you the cash flow to expand? Let us run thru a scenario with you and just so you know this is good advice, I own the Truck Wash Guys and have been doing this a while. Each time a franchisee wished to expand and ask for advice, I would look at their situation and determine if it was a wise idea. Sometimes it was, but often it was not. So let us look a hypothetical scenario for a moment:
Well let's consider. You have two new fleet accounts, one with twenty buses at let's say $10.00 each from a summer day camp for kids. The other is a rent-a-car company that pays once a month. This is your 50 percent increase in sales. Now, let us add in a graffiti removal contract. The graffiti contract starts in two months. Sales are up and everything looks great?except:
The day camp ends after summer (two months left)
The rent-a-car company pays monthly so you will bill them at the end of the month and then they will wait thirty days to pay you plus mail time
The graffiti contract is the same payment schedule and cities are notorious on slow payment
Graffiti can be cleaned at night
Rent-a-cars can be cleaned by starting one and one-half hours earlier on Mondays and thirty minutes earlier other days
Summer camp buses can be cleaned whenever You are not sure yet how often the day camp pays
Still think you want to expand?
NO WAY!
Remember: You can run your pressure washing rig twenty-four hours a day without owning two rigs. You will have a major cash flow problem if you buy another unit because of the billing cycle on big accounts. Your new truck would not be ready for thirty days plus five days to get financing. By that time the summer camp is almost over. Wow. All the indicators point to a second pressure washing rig and new truck or do they?
Sometimes you need to actually open the hood and take a look. Consider putting on your devil's advocate thinking cap and make yourself a mechanic. Ask yourself for help. Let yourself look under the hood. Throw away the ego. Sure it would be nice to own another pressure washing rig and you would be a big business man. But realistically speaking it would all be for show and you would actually be making less money. You can justify the expansion to the leasing company or a bank and get the money all right because sales are up. But that doesn't make it a savvy move. Sometimes race car drivers draft behind the lead car to cut down on drag from the wind. By conserving resources (fuel) they better their chances for winning the race later. In business, the person who gets to keep the most money wins, not the one who has the biggest empire. Think about it before spending the money on expansion.
"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.worldthinktank.net/wttbbs
Wood Dale Chicago prom limo .. Lockport Chicago limo O’HareA recent survey showed that only 28.7% of small business... Read More
You can provide affordable health care plans to your employees.... Read More
What is Business Valuation? The term business valuation is the... Read More
With the massive explosion of start-ups and home businesses developing,... Read More
Don't you find that there are so many decisions you... Read More
One of the best ways to make money in the... Read More
Becoming a contractor or sub-contractor for the U.S. government can... Read More
There are many potential niches for pressure washing companies that... Read More
After over 30 years of participating in hundreds of businesses,... Read More
As a franchisor I am always asked by new and... Read More
You may be in Mail Order, Direct Mail, or you... Read More
Those who are in the pressure washer business should not... Read More
Opportunities for home show businesses have never been more abundant.... Read More
As an entrepreneur you can learn a lot by following... Read More
One of the hidden perks of raising six children is... Read More
TRUTH IN THE LAWN MOWING INDUSTRYWe do not wish to... Read More
No matter your age or station in life, we all... Read More
Service Cleaning Businesses must maintain their equipment in order to... Read More
Managing cash flow is every small business owner's most important... Read More
Just a few years ago, when one thought of a... Read More
A common hazard faced by new entrepreneurs is a lack... Read More
If you interviewed business owners of failed businesses, a majority... Read More
Q: I'm curious. What is the dumbest business question you've... Read More
Rule 15C211Under SEC Rule 15C211, a U.S. securities broker or... Read More
Disclosure laws in franchising are suppose to help the consumer.... Read More
Antigo wedding limo ..Administrative and clerical tasks are the bane of every industry.... Read More
All cities have a purchasing office and/or a procurement officer.... Read More
We very much like what we see in Lubbock, TX... Read More
You make the decision to go into business and for... Read More
Writing a business plan is a fundamental step to ensuring... Read More
Are you thinking of starting a small pressure washer business... Read More
Your business is making profits, but where is the cash?... Read More
Does your small business have a banking and credit card... Read More
When the recent Games of the XXVIII Olympiad came to... Read More
You only have so much time in a day right?So... Read More
There are many choices when thinking about a small business... Read More
"I don't know the key to success, but the key... Read More
Many smaller businesses choose niche markets for various reasons and... Read More
Many experienced auto detailing professionals who have started out using... Read More
How do marine type businesses start? Have you ever thought... Read More
With the massive explosion of start-ups and home businesses developing,... Read More
One thing I have noticed in my travels to different... Read More
Quality control in franchising companies is paramount and all franchising... Read More
Scenario OneDuring a recent presentation, a business owner was given... Read More
If you are in a franchise and have a territory... Read More
Over the years I heard the best way to learn... Read More
It's just like a marriageTo expect a bank manager or... Read More
The Federal Trade Commission which governs the franchise industry thru... Read More
Small Business, Big Business ? What's the Diff?Well a lot... Read More
Attorneys and Lawyers are ruining the franchise industry. It is... Read More
Small Business |