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How to create positive cash to leverage lump sales cycles
| Guest post by: Trent Leyshan |
Article Overview: Many businesses structure their payment terms in a way that reduces not only cash flow but also profit. They have valuable money and resources invested in projects or stock- and then their customers drag their feet and pay months after their product or service has been delivered.
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Free Download - Find fear before it finds you By Trent Leyshan |
How to create positive cash to leverage lump sales cycles
We all know how important ‘cash flow' is to any business, but more valuable is what I call ‘positive cash'.
Positive cash is created when your business is paid in advance for your product or service before completing or delivering it.
Many businesses structure their payment terms in a way that reduces not only cash flow but also profit. They have valuable money and resources invested in projects or stock- and then their customers drag their feet and pay months after their product or service has been delivered.
Large companies are some of the worst culprits of squeezing the life out of small suppliers by giving them lengthy black or white terms. The little companies must agree to win the business and then they go in and deliver their work and dont get paid for 3 months or even more. Is it any wonder these small companies stay small and the big ones get bigger?
In my own business, my fees are paid upfront and in-full. This provides my business with not only ‘positive cash', but also the leverage to deliver my value at the highest level. I'm not cutting corners because I have to, nor am I worried about paying my accounts person to chase payments for months after the fact. This allows my business to grow and move from one client to the next seamlessly.
Creating ‘positive cash' is not for every business. First, you must have the confidence you can successfully deliver your value, not just in theory but in practice backed up with relevant cases. And then you need to communicate the benefits of your payment terms being structured in such as way so the customer sees things in real benefit terms.
If ‘positive cash' is too hard to achieve, I recommend your senior leaders and even sales team members collaborate and brainstorm ways you can add more ‘tangible value' into the front end of your offer, with being payment terms being weighted accordingly.
This is not quite positive cash (as I would define it,) but the net effect will be positive to your cash flow and business.
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Article Tags: sales training
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About the Author: Trent Leyshan RSS for Trent's articles - Visit Trent's website Trent Leyshan is founder, CEO of BOOM! A leading international sales training company that specialises in the development of inspirational sales cultures, leaders and salespeople. Early in his career Trent was head tradeshow spruiker and sales manager for Australia's most flamboyant TV salesman, Big Kev. He has since driven two of his own companies from lounge room operations into market leaders. And led sales teams in leading new media and advertising agencies. Trent is a sought after expert and facilitator on sales performance and strategy. He is the Author of sales book, The Naked Salesman: How to walk the talk and sell your way to success! BOOM! develops sales training strategies and delivers inspiring learning experiences for some of the world's most successful and demanding sales driven organisations. Empowering them with modern skills and tools to effectively engage with customers and build stronger and more valuable relationships.
Click here to visit Trent's website   Cold calling is daunting Got any tips The difference between selling with desperation and inspiration How to generate referrals Social Networking or Social Distraction Are you selling with inspiration or desperation |
Related Forum Posts
Re: Cash up front ... or Royalties?
- I'd be inclined to take the cash just because it's guaranteed, but I would make sure I invested it wisely and only used what I truly needed to make the business better. I think this really depends on your past behavior with money management. Some people should never be given lump sums (like my sister-in-law) because they'll blow it all at once. They just don't know how to handle a large influx of cash and something compels them to buy, buy, buy!
Re: How do you conduct negotiations with wealthy clients? Are th
- Right Up my ally as a former mortgage banker/broker for about 25 years. Surprising how many could afford the cash, but preferred to leverage their real estate purchase, other has the cash, but didn't want to expose their cash purchase to the tax people, others wash it a little at a time - some here and some there
One of my favorite saying "Rich People can afford poor taste" (mostly called neuvo(s) rich)
My success in dealing with them
1. Be prepared and confident in your Product
2. Lose you intimation (if you have it), a firm handshake and look them in the eye
3. Think Big as the man said
Built a impossible $137 startup into a multimillion dollar business from wealthy clients, Names you would recognize internationally, if I were to share them
If you want more, feel free to message me
Tax returns!
- Well, this is new on me. i had no idea you could sell a site off. If it's anything like purchasing a non-internet business then you need to check into multiple things. Will you need to finance to purchase? If so, you'll need to calculate the cash flow. Also, find out if there will be any add backs to the cash flow, for example, are there other workers invovled to keep the site running...perhaps workers you won't need when you take the site over? Their salaries can be added back to the cash flow if you will not need them.
You must see the top page of the last year tax return (never go off just the P & L's). Did the seller run anything personal thru the tax returns that you wont? That's also considered an add back to the cash flow.
What is the gross sales for the 12 months? What is the net income for the 12 months? Make sure the purchase price is justified. You can calculate a ball park range on this by doing 30 - 50% of the gross sales for the year or 3- 5 times the net earnings.
What is the web traffic like? Is it steady? Do you have time to run the site or will you need to hire someone to manage it? Make sure the business is supporting itself and is profitable. Does the seller have an initial business plan from when they bagan the business, so you can look it over?
Re: Avatars help conversion
- [quote="Evan":3h886ror]According to February's INC Magazine, avatars are great conversion tools.
They show a case study of a gift company called Say Thank You With Coffee that used an avatar and saw their sales jump 20%. The monthly cost through services like SitePal are $10-$50 / month.
Oh and female avatars produce twice as many sales as male avatars![/quote:3h886ror]
Hi Evan,
That maybe so, but did the magazine go into detail about how attractive the female avatar has to be in order to create more sales? And how much did the avatar's ethnicity or age play a role in the campaign's success?
The problem with using avatars or virtual spokespeople is that their appearance can evoke either positive or negative reactions.
Advertisement that sales
- Plan your marketing programme. It should include commitment to capital resources.
If you run a small business, you aren't likely to have a generous enough advertising budget that will allow you to run costly branding or campaign ads.
Every advertisement you run must convey to your prospect a solid offer and attractive reasons to act quickly, and result in increased sales and an enhanced image of your company.
Good advertising always pays its own way through increased sales and profits, improved cost-effectiveness, reduced selling costs and shortened selling cycles.
A useful formula that will help you increase the effectiveness of your advertising efforts is A-I-D-A, which stands for Attention, Interest, Desire and Action.
When creating an advertisement, always remind yourself that it should: (1) capture your prospects' Attention, (2) arouse their Interest in your offer, (3) create their Desire for your product or service, and (4) provide a powerful spur to Action, that is, turn your prospect into buyers.
Remember, bad advertising is an unproductive expense, and good advertising is an investment in future profits!
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