RESOURCE CENTRE

Your EnterQuest Bulletin - 24 February 2004

In this week's issue:

• keeping an eye on your cash
• choosing and using an invoice discounter
• how to offer customers 'universal benefits'
• two business events worth visiting

Keeping an eye on your cash

This may seem like a stupid question - in fact, that's quite a common feature of these bulletins - but do you know what cash is?

Revenue from your sales? No, not quite.

Money your business owns and is owed to you by customers? No, that isn't cash.

Notes and coins? Yes, technically that is cash, but in business terms your cash is the money belonging to your business that you can get your hands on now, either from your petty cash or bank account.

So how can you get more of it? Another stupid question, we hear you say.

But this is probably the most important financial question you need to address every week in business, because if you run out of cash, you're a goner. It doesn't matter how good your prospects are, or how much you're owed in: if the cash goes, then how will you pay the bills, your employees' wages, and the repayments on your bank loan?

This is a fundamental principle you just have to understand. Keep a permanent eye on your cash and cashflow, otherwise your business could end up in big trouble, with no way out.

So back to the question, how can you get more cash?

Back in the old days before we started publishing business information, we helped hundreds of entrepreneurs every year to get their new businesses off the ground. Whenever we asked these people what their biggest business priority was going to be, the answer invariably boiled down to the same thing. Generating cash.

There were a variety of ways that these entrepreneurs believed they would be able to get more cash in their businesses (other than putting more of their own in), such as:

- a loan from the bank
- a grant
- a third party investing in the business

But there is really only one way to increase cash and improve cashflow in a business that really matters.

By generating enough sales to customers. It's a very simple equation to understand. Not enough customers means not enough cash.

The whole idea of being in business is to trade successfully, and the only way to do this over the longer term is to sell enough of your product or service at prices where your total sales revenues exceed your total expenditure.

Increasing your borrowings, or putting more of your own savings into your business, are very short-term measures to ease cash problems.

The only way your business will survive is to generate cash through trading profitably.

And you should keep an eye on your cash position at all times, because if you burn it up faster than it's coming in, you'll no longer be able to trade, no matter how big a queue of customers you've got at your door.

One method that is worth considering as an option to improve your cashflow is to use a factoring or invoice discounting service. So this week we've included a factsheet that will give you some guidance on how to choose a suitable invoice discounter, otherwise known as a debtor finance company.

Here is the factsheet:

Choosing and Using a Factor or Invoice Discounter

Weekly business tip

How to offer your customers 'universal benefits'

We've made the point in previous bulletins that people don't buy 'things', they buy opportunities. When you package up all the opportunities you've created to sell a product or service, this is known as your 'offer'.

The challenge when selling your product or service is to create an offer so irresistible that your prospects will find it difficult to refuse.

In order to do this, you have to understand the principle that people are more likely to respond to offers that appeal to their emotional or personal needs, regardless of the features of the product or service being offered.

One way you can do this is to describe the benefits that your prospects will receive in terms of 'universal benefits'. By this we mean those benefits that appeal to every warm-blooded human being. These universal benefits include the desire to:

• be beautiful
• be popular
• be wealthy
• have fun
• not have to work
• be smart
• have better relationships
• have power
• be healthy
• be loved
• avoid pain
• have more time
• avoid guilt

Now take the features of your product or service and see if you can express the results of these features in terms of universal benefits, and you will have just created immense value virtually out of thin air.

If you can do this, you will have a much better opportunity to create your irresistible offer that your prospects will find it difficult to ignore.

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New business ideas

Each week we provide you with summaries of some popular or emerging business ideas in the UK.

Here are this week's ideas:

• Office Stationery Supplies
• Specialist Comic Shop

Just one word

Regularly improving your vocabulary is not just about learning a new word and its meaning. It will improve your general knowledge and make you feel and act smarter in all sorts of personal and business situations.

What is the meaning of the word "apposite"?

a) highly regarded
b) extortionate
c) appropriate
d) identical

Answer at the end of Bulletin.