12. How can I get more customers and keep them coming back?
Every company should have a customer database. Every time a new customer comes to your website or comes into your store you should be capturing their contact information. By building a customer database you know you are marketing to people who are already interested in your product and you can find out how they would like to be contacted. This provides you with an avenue to increase sales and to gain valuable customer loyalty. There are programs you can buy to create a customer database or you can create your own using spreadsheet software. For more information please contact our small business specialist.

Customer Database

A customer database, commonly referred to as a customer data warehouse, contains all of the data the firm has collected about its customers and is the foundation for subsequent Customer Relationship Management activities.

Ideally, the database should contain the following information:

• Transactions—a complete history of the purchases made by the customer, including the purchase date, the price paid, the SKU’s purchased, and whether or not the merchandise was purchased in response to a special promotion or marketing activity.
• Customer contacts—a record of the interactions that the customer has had with the retailer, including visits to the retailer’s website, inquiries made through in-store kiosks, and telephone calls made to the retailer’s call center, plus information about contacts initiated by the retailer, such as catalogs and direct mail sent to the customer.
• Customer preferences—what the customer likes, such as favorite colors, brands, fabrics, and flavors as well as apparel sizes.
• Description information—Demographic and psychographic data describing the customer that can be used in developing market segments.
• Responses to marketing activities—The analysis of the transaction and contact data provides information about the customer’s responsiveness to marketing activities.

Levy, M. & Weitz, B. A., 2004, Retail Management, Boston: McGraw-Hill Irwin, p. 338-339.

14. I need accounting software for my business, how do I choose which one to use?

The key to finding a successful accounting package is finding one that you will actually use. All of the various major accounting packages are good, but if it has too many bells and whistles for you to use it or too few to make it effective, it isn’t the package for you.

Accounting Software
The small businessperson will need to carefully evaluate which accounting program would be best for the business. The key to evaluating these programs is understanding what needs to be accomplished. All of the major programs have vast capabilities to enter, track, and produce financial information. About, Inc. ranks and describes the following as the top five accounting programs for small business:
1. Simply Accounting. Full-featured accounting and payroll package with all the features and reports any small business needs, including Internet and e-commerce features. This accounting software’s data entry screens resemble their paper counterparts, and the screen tips and drag-and-drop functionality make the program easy to learn. Version 9.0 Professional includes a time and billing module. Comes multi-user ready.
2. MYOB Plus. A double-entry accounting software system with a user-friendly interface and over 100 financial and management reports. Includes a Professional Time Billing Module that is ideal for service businesses and the Officelink feature allows direct one-click access to MS Word and Excel. Comes multi-user ready; just purchase an additional workstation license for each additional user.
3. QuickBooks. QuickBooks is another popular full-featured accounting and payroll program designed for small businesses. QuickBooks is available in Basic, Online, Pro, and Premier editions; Premier includes management and planning tools such as building a business plan based on finances and a financial analyzer.
4. Peachtree Complete. The Complete version of this accounting software program includes the ability to generate over 125 reports and features such as in-depth inventory, time and billing, and job costing. It is multi-user ready and “value packs” for three or more users are available. Peachtree accounting software is also available in Premium and First Accounting versions.
5. AccountEdge. This is the MYOB small business accounting software especially designed for the Macintosh platform. It has all the same features as MYOB Plus for Windows, including a user-friendly interface, and built-in one-click access to MS Word and Excel. The easy set-up wizard and many business templates help the user get set up and started quickly. Comes multi-user ready.
These are just five of the numerous accounting programs that are available to small business. Choosing a package that will be useful for a particular business is more a process of understanding the new business first and then finding a package that will accommodate its needs with the least impact on the business of the business. Most of the packages will provide any report that could be demanded by the owner(s), potential investors, auditors, or loan officers. Some of the key reports that the small business person should be prepared to generate include: 1) a chart of accounts, 2) petty cash register, 3) check register, 4) expense accounts, 5) inventory accounts, 6) accounts payable, and 7) payroll.
Bamford, C., Bruton, G. 2006. "Small Business Management." p. 178. Mason, Ohio: Thomson South-Western.

15. I'm looking for ways to increase my business.

One of the BEST ways to increase your business is to keep your existing customers happy. It is much more cost effective to retain a customer you already have than it is to have to recruit new customers. There are certain components to customer service that are true to all businesses. Another great way to find out if your customers are happy is to do a customer survey, (see our featured resources for a sample). Remember, happy customers mean more dollars for your business.

Components of Customer Satisfaction

A number of factors under a firm's control contribute to customer satisfaction. One classic article discussing satisfied customers identifies the following four key elements:

1. The most basic benefits of the product or service -- the elements that customers expect all competitors to deliver.

2. General support services, such as customer assistance.

3. A recovery process for counteracting customers' bad experiences.

4. Extraordinary services that excel in meeting customers' preferences and make the product or service seem customized.

Extraordinary service is the factor that small firms are in a unique position to offer. Relationship marketing proponent Patrick Daly, who oversees a customer relations program for a company in Redwood City, California, suggests the following ways to provide extraordinary service:

• Naming names. In today's detached, "just give me your account number" world, nothing is more well received than individual, personalized attention. Even though you may already be courteous and friendly to customers, greeting them by name is valued 10 times more on the "worthy of loyalty" scale.

• Customer care. Customers pretty much know what they do and don't want from your company. If you remember what they want on an individual basis -- even if it's something as simple as knowing a dry cleaning customer likes light starch in his collars -- then you have mastered one of the key elements of a strong loyalty program.

• Keeping in touch. You can't communicate enough on a me-to-you basis with your customers. And don't just connect to make a pitch. Clip out a newspaper or magazine article that pertains to a customer's business and send it to him or her with a note saying "FYI -- though you'd be interested." When customers know that you're taking time to think about them, they don't forget it.

• " Boo-boo research." Part of any customer loyalty program is taking the time to reach out to lost customers to learn why they went elsewhere. In many cases, just contacting them and showing them that you really care about getting their business will win them back -- along with their contribution to your profits. CHECK OUT OUR RESOURCES FOR A SAMPLE CUSTOMER SATISFACTION SURVEY.

Providing exceptional customer service can give small firms a competitive edge, regardless of the nature of the business. Small firms must realize that is costs far more to replace a customer than to keep one. Offering top-notch customer service is something they can do better than large firms.

16. I need to get a business loan.  Should I look to a large bank or should I look at my local lending institution?

In a recently published paper by Temple University the finding was that small businesses receive a more favorable outcome at Community Financial Institutions (CFI's). " Community banks, with their flatter organization structures are better suited to produce soft information such as information about the owner's character, relationship with suppliers or ability to manage through a business cycle.  This information should benefit small,  information-opaque firms that may not have a track record of hard information required of many large banks that rely on financial ratios or credit scoring to make lending decisions. Indeed, the preponderance of the empirical evidence shows that community banks enhance credit availability for small firms (e.g., Berger et al, 2004)... In addition, owners at CFIs experience better service and lower incidence of fee increases, with mixed results for loan terms. Despite the consolidation of the banking industry and the concomitant reduction in the number of community banks, these results suggest that owners of small firms receive better banking outcomes at CFIs – an advantage that has persisted over 14 years from 1987 through 2001. These results also suggest that owners who lack the hard operating numbers that are used in credit scoringmodels used by many large banks are likely to have a better chance of success in obtaining a loan at a community bank."

17. I've heard that starting a business on eBay is easy. Can you tell me what I would need to do?

Starting a business on eBay can be as complicated or as simple as you would like. If you just want to sell the occasional item for extra money or to clean out your garage you can do that. If you want to make it a full fledged business where you sell many items, all of the time, you can do that. And is you want to do something in between you can do that. on eBay you can sell as much or as little as you would like provided that their is a market for it. An eBay business is simpler than some others to start since you can run it out of your home. And for existing businesses eBay is a great way to get rid of excess inventory. You can also donate your excess inventory to charity to action on eBay. You get a nice tax write off and you help a charity in the process. The first thing to consider is what are you going to sell? Next, how are you going to accept payment? And lastly, how are you going to ship it.

18. How Can I obtain money to start my business?

The most common source of capital for established ongoing small businesses is borrowed funds. This is the case for several reasons including the simple fact that small businesses do not have easy access to equity financing through organized stock exchanges. Additionally, national, state, and local governments all encourage small business borrowing. This is done in three ways: (1) direct loans of cash, (2) guaranteeing loans made by commercial banks, and (3) reducing taxes by allowing interest to be deducted. However, when it comes to borrowing significant amounts of money, all firms are not created equal. Established businesses that have valuable assets that are separable from the owners are able to borrow more easily than are start-up or knowledge businesses.
So, where can a business actually get loans to start and grow? As you might expect, your best source is the bank where you are currently doing business. After all, it is in the business of making loans. You are the customer. As such, you are a known commodity-you pay your bills, you keep your account balance positive, you don't bounce checks. Start where you're known.
But if your bank turns you down, you are not out of luck. In fact, in the Small Business Administration guaranteed loan programs, you must be turned down by a bank before you qualify. So, maybe your bank did you a favor. Having been turned down, you can apply for an SBA guaranteed loan. Through this avenue, you will still borrow from your own bank, but the SBA will guarantee the bank that if your business fails, the SBA will pay off your loan. Other sources for SBA guaranteed loans include community development organizations, and for small loans, microlenders.
A third source of SBA guaranteed loans is the numerous small business investment companies (SBIC). A directory of SBICs is maintained on the SBA Web site: http://www.sba.gov/INV/index.html. You can access the listing by clicking on the appropriate state on the map presented at the site. The directory provides not only a list of active SBICs, but also an outline of the business requirements.
You may also have access to incubators or accelerators in your area. These organizations exist solely for the purpose of facilitating the start up and growth of new businesses. They provide advice for finding loans, and, in some cases, have the ability to make loans to member businesses.
The main things that lenders want to see before they give businesses their money are the Four Cs of Borrowing, listed here:
1. Character of the managers of the business.
2. Capacity of the business to repay both the principal and interest on time.
3. Conditions of the industry and economy in which the business operates.
4. Collateral that can be used to secure the loan.

Katz, Jerome A., and Richard P. Green. Entrepreneurial Small Business. New York: McGraw-Hill/Irwin, 2007. 445.

For more information on starting an eBay business please set up an appointment with our Business Specialist at perrault@hcplonline.info Also, check out our NEW BOOK section for more information on starting an eBay business.

19. How do I handle potential problems with my business when writing my business plan?

The development of a business has risks and problems, and the business plan invariably contains some implicit assumptions about them. You need to include a description of the risks and the consequences of adverse outcomes relating to your industry, your company and its personnel, your product's market appeal, and the timing and financing of your startup. Be sure to discuss assumptions concerning sales projections, customer orders, and so forth. If the venture has anything that could be considered a fatal flaw, discuss why it is not. The discovery of any unstated negative factors by potential investors can undermine the credibility of the venture and endanger its financing. Be aware that most investors will read the section describing the management team first and then this section.

Do not omit this section. If you do, the reader will most likely come to one or more of the following conclusions:
1. You think he or she is incredibly naive or stupid, or both.
2. You hope to pull the wool over his or her eyes.
3 You do not have enough objectivity to recognize and deal with assumptions and problems.

1. Discuss assumptions and risks that implicit in your plan.
2. Identify and discuss any major problems and other risks, such as:
• Running out of cash before orders are secured.
• Potential price cutting by competitors.
• Any potentially unfavorable industry trends.
• Design or manufacturing costs in excess of estimates.
• Sales projections not achieved.
• An unmet product development schedule.
• Difficulties or long lead times encountered in the procurement of parts or raw materials.
• Larger-than-expected innovation and development costs.
• Running out of cash after orders pour in.
3. Indicate what assumptions or potential problems and risks are most critical to the success of the venture, and describe your plans for minimizing the impact of unfavorable developments in each case.

Q- I have a retail store. While I have quality merchandise and a good selection, people often come in to browse but don't purchase anything. Can you help me figure out why?

A- There are many factors which affect a consumer's decision to purchase items. According to Barry Berman and Joel Evans in "Retail Management: A Strategic Approach" consumers attitudes have shifted and retailers must actively combat some negative perceptions in order to gain and retain business.

Attitudes Toward Shopping

Considerable research has been done on people's attitudes toward shopping. Such attitudes have a big impact on the ways in which people act in a retail setting. Retailers must strive to turn around some negative perceptions that now exist. Let us highlight some research findings.

Shopping Enjoyment: Considerable research has been done on people's attitudes toward shopping. Such attitudes have a big impact on the ways in which people act in a retail setting. Retailers must strive to turn around some negative perceptions that now exist. Let us highlight some research findings.

Shopping Enjoyment: In general, people do not enjoy shopping as much as in the past. So, what does foster a pleasurable shopping experience--a challenge that retailers must address? Many shoppers enjoy bargain hunting ("I get a thrill out of finding a real bargain"), recreational browsing ("window shopping"), being pampered by salespeople (difficult for retailers to accomplish in this era of self-service and cost cutting), and the opportunity to get out of the house or office.

Attitudes Toward Shopping Time: Retail shopping is often viewed as a chore: "Consumers now attempt to limit the time they spend shopping. Time-pressed by family and work responsibilities, they spend fewer hours cruising the mall in search of the perfect item, and look to get what they need as quickly as possible. This trend has been dubbed 'precision shopping.' The upside of precision shopping is that consumers spend more money each time they visit a store."

Shifting Feelings About Retailing:There has been a major change in attitudes toward spending, value, and shopping with established retailers: "The same shopper who buys commodity goods at a BJ's Wholesale Club Inc. may also buy expensive apparel at Nordstrom. This shift does not appear to be transitory, but rather seems to define a more enduring pattern of the sameness of malls, with their closed-in windowless feel and identical cast of retailers and food court vendors."

Why People Buy or Do Not Buy on a Shopping Trip:It is critical for retailers to determine why shoppers leave without making a purchase. Is it prices? A rude salesperson? Not accepting the consumer's credit card? Not having an item in stock? Or some other factor? According to Kurt Salmon Associates, here are the top 10 reasons why shoppers leave an apparel store without buying:

1. Cannot find an appealing style.
2. Cannot find the right size or the item is out of stock.
3. Nothing fits.
4. No sales help is available.
5. Cannot get in and out of the store easily.
6. Prices are too high.
7. In-store experience is stressful.
8. Cannot find a good value.
9. Store is not merchandised conveniently.
10. Seasonality is off.

Attitudes by Market Segment:According to Adjoined Consulting, shoppers can be broken into four types. "Thrifties" are most interested in price and convenience. They are apt to shop at Wal-Mart. "Allures" want a "fun, social shopping experience." They gravitate toward retailers such as Bloomingdale's and Limited Brands. "Speedsters" want to shop quickly. They shop disproportionately at Target and Costco. "Elites" want quality merchandise, an unhurried shopping experience, and the ability to be educated about products. They patronize retailers such as Neiman-Marcus and Amazon.com. Adjoined Consulting believes that many "retailers don't know how their customers prefer their shopping experience and compete by doing what their competitors do. But that doesn't work. Customer insight will allow a retailer not only to survive but to thrive against even the toughest competition."

Attitudes Toward Private Brands:Many consumers believe private (retailer) brands are as good as or better than manufacturer brands: "For American consumers, private brands are brands like any other brands. In a landmark nation-wide study, 75 percent of consumers defined store brands as 'brands' and ascribed to them the same degree of positive product qualities and characteristics--such as guarantee of satisfaction, packaging, value, taste, and performance--that they attribute to manufacturer brands. Moreover, more than 90 percent of all consumers polled were familiar with private brands, and 83 percent said that they purchase these products on a regular basis.

Barry Berman and Joel R. Evans. Retail Management: A Strategic Approach 10th Edition Pearson Education, Inc. 2007 Pages 208-209.

Q- I often think I’m going to make a sale and then it doesn’t happen. Can you help me to close more sales?

A- Sales are often one of the hardest tasks and entrepreneur faces. According to Tom Hopkins, learning to ask the right questions will greatly improve your potential sales that result in actual sales.

Closing the Sale
Learn how to ask the right questions that will help you complete each sale like a star.

By Tom Hopkins
March 07, 2005
Entrepreuner.com

Typically, when I talk with my students on a one-to-one basis, they ask me a lot of questions about how to close sales. That's to be expected because it's the positive end result all salespeople seek in any contact with potential clients.
In most situations where sales aren't closed, it's usually because the salesperson didn't ask the right question. In all my training, you'll hear it repeated over and over that every answer you need to get in order to meet someone, qualify them as to their needs, get permission to give a presentation or close a sale will come to you if you only ask the right questions.
Sometimes, it's not just the question that matters, but how it's presented. You may have to set the stage or tell a story leading up to the question that helps the client rationalize the buying decision. No matter how good your lead in or story is, however, you won't get the sale if you don't ask for it.
Let me give you a few closes that have proven successful for my students the world over. Don't be concerned if they seem a bit wordy--you're painting pictures and involving the emotions of your potential clients. Say the words with warmth and sincerity, and they'll work for you.

When your clients hesitate because they aren't sure it's the right decision, try what we call "The Best Things in Life Close." This is a great close to use with a personal sale, especially when you're trying to sell something to a husband and wife. Compare the decision they're considering right now to other decisions they've made and have been happy with. It's especially helpful when they've admitted they want the product but are just struggling with saying yes. It goes like this:
"Isn't it true, John and Mary, that the only time you've ever really benefited from anything in your life has been when you said yes instead of no? You said yes to your marriage. . ." [And this next part's optional: ". . .and I can see how happy you are." But don't add this phrase unless you've seen signs that they truly are a happy couple!] "You said yes to your job, your home, your car--all the things I'm sure you truly enjoy.
"You see, when you say yes to me, it's not really me you are saying yes to but all the benefits this product offers... [and then list a few of the benefits they were most excited about.] Those are the things you really want for your family, aren't they?"
With these words, you're helping them focus on the benefits they want from the product rather than their hesitation to make the investment to own it. The little agreements you ask for during the close get the "yes" momentum started. If they do truly believe your product is good for them, these words will help them get over their hesitation to give you the final yes and close the sale.
Another situation might be during a business sale where the decision-maker uses "the budget" as a reason not to go ahead. This purchase might not have been in their plans, so the money isn't in the budget. If you truly believe your product would provide excellent benefits to their company, your goal in this situation is to get them to admit and agree to that point. Ask this: "John, if the money for this investment was in your budget, would you proceed?" If he says yes, agree with him by saying "That's wonderful, John. I'm glad you see the benefits our XYZ product can bring to your business."
At this point, you can either move on to a discussion of their return on investment or try these words:
"I can understand your concern with your budget, John. That's why I contacted you in the first place. I'm fully aware of the fact that every well-managed business controls the flow of its money with a carefully planned budget. The budget is a necessary tool for every company to give direction to its goals. However, the tool itself doesn't dictate how the company is run, does it?
"It must be flexible to allow the company to manage crises or take advantage of unplanned opportunities. As the controller of that budget, you retain for yourself the right to flex it in the best interest of the company's financial present and competitive future, don't you?
"What we've been examining here today is a system which will allow your company an immediate and continuing competitive edge. Tell me, under these conditions, will your budget flex or will it dictate your actions?"
Hopefully, you see the difference between just asking for the sale and helping people make decisions that are good for them. That's the difference between an average salesperson and a great one!
Tom Hopkins is the "Sales Basics" coach at Entrepreneur.com and is world-renowned as "The Builder of Sales Champions." For the past 30 years, he has provided the finest sales training available through his company, Tom Hopkins International.

Links-
http://allbusiness.businessweek.com/article.asp?ID=450&CenterID=26&CatID=1839
Tips for closing a sale, Allbusiness.com
http://www.dummies.com/WileyCDA/DummiesArticle/id-779.html
Closing the sale, Dummies.com
http://www10.americanexpress.com/sif/cda/page/0,1641,15839,00.asp
Closing the sale, American Express Business Resources, americanexpress.com
http://www.missouribusiness.net/cq/2002/closing_the_sale.asp
Closing the sale, Missouribusiness.net

Q- I believe I have written an n excellent business plan. I’ve spent a lot of time on it and have carefully researched it. However, every time I get it in front of potential investors I get turned down. Have I done something wrong?

A- I commend you on preparing a thoughtful business plan. It is the first step towards launching a successful business. The rule of thumb with investors ( whether they are a bank or an individual) is that you have approximately five minutes to capture their interest. If you do not manage to capture their interest in those five minutes they will move on to the next entrepreneur looking for money. Here are some common mistakes entrepreneurs make with their business plans.

The Seven Deadly Sins for New Venture Business Plans

Let us say it again: less than five minutes. That's the amount of time your plan has in the hands of many potential investors before they decide to turn "thumbs up" or "thumbs down" on it. In other words, they evaluate a document that may have taken you weeks or even months to prepare in just a few moments. For this reason, it is absolutely imperative that you avoid errors that will doom your plan to the rejection pile no matter how good other sections of it may be. We term these blunders the "Seven Deadly Sins of New Venture Business Plans," and here they are for you to recognize - and avoid:

Sin #1: The plan is poorly prepared and has an unprofessional look (e.g., no cover page, a cover page without contact information, glaring typos). This carelessness triggers the following investor reaction: "I'm dealing with a group of amateurs."

Sin #2: The plan is far too slick (e.g., it is bound like a book, is printed on shiny paper, and uses flashy graphics). This leads investors to think: "What are they trying to hide behind all that glitter?"

Sin #3: The executive summary is too long and rambling - it doesn't get right to the point. This failure to be concise leads investors to think: "If they can't describe their own idea and company succinctly, I don't want to waste my time - and certainly not my money - on them."

Sin #4: It's not clear where the product is in terms of development - does it exist or not? Can it be readily manufactured? If investors have to ask these questions, they may conclude: "I can't tell whether this is real or just another pipedream; I'll pass on this one."

Sin #5: No clear answer is provided to the question: "Why would anyone ever want to buy one?" Many entrepreneurs seem to assume that their new product or service is so wonderful that it will virtually sell itself. This kind of blind faith on the part of entrepreneurs leads investors to think: "How naive can you get? Even a machine that grew hair on the heads of bald men would need a marketing plan. These are truly amateurs."

Sin #6: It gives no clear statement of the qualifications of the management team: This oversight leads investors to conclude: "They probably have no relevant experience - and may not even know what relevant experience would be!"

Sin #7: Financial projections are largely an exercise in wishful thinking: This over optimism leads potential investors to conclude: "They have no idea about what it is like to run a company, or (even worse) they think I am incredibly naive or stupid. Pass!"

The moral is clear: keep a sharp lookout for these deadly errors, because if you commit even one, your chance of obtaining financial support and other forms of help sophisticated investors will fade quickly.

Robert A. Baron and Scott A. Shane. Entrepreneurship: A Process Perspective 2nd Edition. 2008. Thomson South-Western. p220.

New Books-

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ISBN # 0060758708, Get back in the box : how being great at what you do is great for business, Douglas Rushkoff.

ISBN # 0743297849, Nothing down for women : the smart woman's quick-start guide to real estate investing, Robert G. Allen and Karen Nelson Bell

ISBN # 0767923308, One minute manners : quick solutions to the most awkward situations you'll ever face at work / Ann Marie Sabath.

Q-I want to start a business. I've decided that I would prefer to start a franchise. However, there are so many out there, how do I know what's a good franchise?

A-Franchises are a great way to start a business. They offer a proven formula, corporate help, and a turnkey operation. But some franchises are better then others. Below are some red flags to watch out for in a franchise agreement.

Franchise Red Flags

The American Franchisee Association strongly recommends that you do not sign a franchise agreement if it contains one of these provisions:

Gag Rules: Franchise agreements may not allow current franchisees to discuss any aspect of their business experience with anyone outside the system - which defeats the purpose of the FTC disclosure rules.

Franchisor Venue Provisions: These provisions may require any disputes to be litigated or arbitrated in the home state of the franchisor, increasing the franchisee's travel costs and giving franchisors home field advantage.

Lack of Reciprocal Cure Periods: Agreements need to provide equal remedies if the other party defaults, but not all do.

Nonreciprocal Noncompete Covenants: Franchisors have a lot of leeway in placing new franchises wherever they want, but agreements can include oppressive noncompete covenants.

Sole Sourcing Requirements: Product-oriented franchises often require franchisees to purchase goods only from the franchisor. Allowing purchase from alternate sources (with quality standards) is better.

Mandatory Subleases with Rent Overrides: Many franchise systems require the franchisee to sublease real estate from the franchisor, allowing the franchisor to gain profit without risk.

Lack of Accountability for Advertising Funds: Franchisors do not always have to spend advertising dollars in markets where franchisees have paid in.

Lack of Reciprocal Legal Fee Provisions: Many agreements require franchisees to pay all of the franchisor's legal expenses if litigation arises between parties.

Radically Different Franchise Agreements on Renewal: Many franchises are surprised to find that they are not really renewing their existing deal, but entering into a wholly new, sometimes very different franchise agreement.

Unilateral Amendments to the Franchise Agreements: Franchisors have the latitude to change operations and policies from time to time, thereby unilaterally changing the franchisee agreement.

Timothy S. Hatten. Small Business Management: Entrepreneurship and Beyond. 2006. Houghton Mifflin Company. p149.

Q-I have a successful business. However, I always seem to be behind with my cash flow. Do you have any suggestions for improving my cash flow?

A- The first place to look for ways to improve cash flow is in accounts receivable.The key to an effective cash-flow management system is the ability to collect receivables quickly. If customers abuse your credit policies by paying slowly, any future sales to them will have to be COD (cash on delivery) until they prove that you will receive your money in a reasonable amount of time.

Receivables have inherent procedural problems in most small businesses. Information often gets lost or delayed between salespeople, shipping departments, and the accounting clerks who create the billing statements. Most firms bill only once a month and may delay that step if workers are busy with other activities.

Managing your accounts receivable is an important step in controlling your cash flow. You need a healthy stream of cash for your small business to succeed. The following tips can help you accelerate the flow:

• Establish sound credit practices. Never give credit until you are comfortable with a customer's ability to pay. You can get a credit report from Dun and Bradstreet to indicate a purchasing company's financial health.

• Process orders quickly. Ensure that each order is handled on or before the date specified by the customer. Unnecessary delays can add days or weeks to a customer's order.

• Offer discounts for prompt service. Give customers an incentive to pay sooner. Trade discounts typically amount to 1 to 2 percent if the bill is paid within ten days.

• Aggressively follow up on past due accounts. Call the customer as soon as a bill becomes past duel ask when payment can be expected. Keep a record of conversations and customer responses, and follow up. For customers with genuine financial problems, try to get even a small amount each week.

• Deposit payments promptly. Accelerate receipt of checks by using a bank lockbox.

• Negotiate better terms from suppliers and banks. Improving cash flows also includes money going out.

• Keep a tight control on inventory. Items sitting in inventory tie up money that be used elsewhere. Be sure that deep discounts on volume purchases can be financially justified by the drain they will put on cash flow.

• Review and reduce expenses. Take a hard look at all expenses. What effect will an expense have on your bottom line?

• Pay bills on time, but not before they are due. Unless you receive enough trade discount incentive to pay early, don't rush to send payments.

• Be smart in designing your invoice. Make sure that the amount due, due date, discount for early payment, and penalty for late payment are clearly laid out.

Q-I’ve been told I need to have both a Business Plan for the bank and a Business or Strategic Plan for myself. Can you tell me what the differences are and what I should do differently for the bank proposal?

A- The Loan or Investment Proposal

There is a difference between a working business plan - the one the entrepreneur is using to guide the business - and the presentation business plan - the one he or she is using to attract capital. Although coffee rings and penciled-in changes in a working plan don't matter (in fact, they're a good sign that the entrepreneur is actually using the plan), they have no place on a plan going to someone outside the company. A plan is usually the tool that an entrepreneur uses to make a first impression on potential lenders and investors. To make sure that impression is a favorable one, an entrepreneur should follow these tips:

• Realize that first impressions are crucial. Make sure the plan has an attractive (not necessarily expensive) cover.

• Make sure the plan is free of spelling a grammatical errors and "typos." It is a professional document and should look like one.

• Make it visually appealing. Use color charts, figures, and diagrams to illustrate key points. Don't get carried away, however, and end up with a "comic book" plan.

• Include a table of contents with page numbers to allow readers to navigate the plan easily. Reviewers should be able to look through a plan and quickly locate the sections they want to see.

• Make it interesting. Boring plans are seldom read.

• A plan must prove that the business will make money. In one survey of lenders, investors, and financial advisors, 81 percent sad that, first and foremost, a plan should prove that a venture will earn a profit. Start-ups do not necessarily have to be profitable immediately, but sooner or later (preferably sooner), they must make money.

• Use computer spreadsheets to generate financial forecasts. They allow entrepreneurs to perform valuable "what if" (sensitivity) analysis in just seconds.

• Always include cash flow projects. Entrepreneurs sometimes focus excessively on their proposed venture's profit forecasts and ignore cash flow