How To Use Barter To Leverage Your Cash Flow
Every
month someone or something tugs at your sleeve for a hefty cash handout:
suppliers, landlords, tax collectors, employees, loan officers. The
stark fact is that if you don't have cash at a crucial point in the
chain of demands, you're finished.
Therefore,
your company's cash flow is vital. It represents the everyday reality
of your business, the movement of money in and out of your company.
Cash flow is your company's most valuable asset, because without it
you're out of business.
The
goal of good cash flow management ought to be obvious...to have enough
cash on hand when you need it. It's a simple concept, yet in practice
it really isn't. The problem in analyzing your cash flow is that it
involves tomorrow, which is uncertain.
That's
why it is so important to learn how to leverage cash flow, deftly
playing one element against another, harnessing other people's capital
whenever possible.
The
fundamental cash flow leverage rule is get your vendors to let you
take your time paying them (preferably within several months.) The
premise is that every dollar collected in receivables this morning
that isn't needed for payable until tonight is yours to multiply all
day. Such added sales, by making every day count is certainly one
important path to follow.
That's
why it's imperative today to work the other side of the ledger. Give
more attention and serious focus to saving dollars by getting control
of your company's many costs. Because that's where the really big
payoff is. Every time your company "saves" (avoids spending) a dollar
it goes directly to your bottom line.
Ways
To Save Money
1)
Do more business through your trade exchange. Every barter purchase,
replacing a cash purchase, saves you money.
2)
Begin negotiating better with your cash vendors. Ask a simple question:
What else can you do for me?
3)
Focus on performing to the utmost for existing clients. Remember,
it costs 1/5 as much to keep them happy and satisfied as to find and
secure new clients.
4) Introduce incentive programs for greater productivity, then make
them pay off daily, or weekly. Create a mission, a sense of urgency.
And use barter whenever possible to fund the incentive programs.
5)
Install an idea box for your employees. Reward them for the best money
saving idea. Tie in the reward to the annual savings, from dinner
for two to a week-end getaway with all expenses paid. Be sure to check
with your trade exchange to see what's available for rewards...no
sense in using up the cash savings by spending that cash!
Computer
magnate Michael Dell, founder of Dell Computer while still in high
school, recently traded 4.6 million ($200 million) Dell shares for
stakes in a unique investment fund.
The
fund is one in which other wealthy executives like Dell band together
to essentially create their own mutual fund. It's done by pooling
their shares, which they claim, reduces their individual investment
risks among each other.
American
Airline's Rearrangement of Seats Addresses Capacity Glut
The
growing plight of the major airline carriers, where excess capacity
is growing faster than seats can be filled, is being answered by the
removal of seats from each plane. (The alternative, according to AA
would have been to put 50 planes in storage.)
That
wasn't an option, however, because flying fewer planes would provide
greater opportunities for other carriers...especially the low-cost
ones, for picking up the business by adding flights.
The
new plan is based on the hope that the extra room will offset the
higher fares AA plans to charge passengers. Prediction: Within a year
AA, and others, will see the merits of bartering their seats through
the expanding commercial barter industry.
Vogue
Magazine Reports On The Glamour-Barter Economy
In the March issue
of Vogue, a two-page story shows the enormous barter network within
the fashion and beauty world. Outlined, in detail, is the cashless
traffic in luxury goods and services, and where it flourishes...which
is wherever the style-conscious meet!
Who trades? They
all do...from designers to hairdressers, stylists, trainers, masseurs
and models.
The owner of Decades,
the Hollywood boutique where Cameron Diaz and Rose McGowan get their
glamour gowns for movie premieres, says, "barter is clean and immediate,
unaffected by the credit and debt issues of the money system. It builds
trust and family, it's the way, ideally, society should work."
Here
& There. . .