E DMO N TO N J O U R NA L e d m o n t o n j o u r n a l .c o m
W edne s da y, J une 1 8 , 2 0 1 4
CAPITAL QUESTION:
D7
UPCOMING:
How do you manage cash flow during seasonal lows? Business owners share tips for making money last during financial lulls
JUNE
#EMomNowAB Tweet Chats
JUNE
Flaunt Tradeshow
JUNE
SEBA June Mixer
SEPT
E-Town
18 21
26 11-12
A weekly tweet chat with the Alberta Entrepreneur Mom Now community. When: 9 p.m. Where: Online via Twitter (follow with #EMomNowAB) Admission: Free
An event showcasing women in business When: 10 a.m. to 4 p.m. Where: Millennium Place (2000 Premier Way, Sherwood Park) Admission: Up to $100. Details at flaunttradeshows.com.
A patio networking event to kick off summer When: 5 p.m. to 7 p.m. Where: The Moose Factory (4810 Calgary Trail) Admission: Free. Details at sebaonline.ca
A festival for the entrepreneurially minded Where: Shaw Conference Centre (9797Jasper Ave.) Admission: $49 to $399. Details at e-town.ca.
Have an event that Capital Ideas should know about? Contact us at hello@capitalideasedmonton.com PH OTO BY SA M BROOKS/C A PI TA L I D E AS
Ashif Mawji of NPO Zero (npozero.com) advises entrepreneurs to plan ahead. “It’s important to project cash flow out two years ahead. It’s also very important to have enough cash to subsidize your operations for at least six months. nd There are several tools to help mitigate cash flow, including receivables-based loans, agreed deferrals to key suppliers, pulation and incentives for early payments.” grow. out there, “First, we track seasonal ebbs and build “Demand for our full- and half-day a plan to get partners and suppliers on soft-skills training slows down in the cs board. Customized loan repayments summer months as employees leave to match periodic cash ups and downs for vacation. Yet slower periods are a huge help. One thing we can’t are an excellent time for staff live without is tracking daily, weekly training in areas that businesses and monthly cash obligations — like struggle with the most, such as payables, payroll, overhead and taxes what’s appropriate for summertime — so we can ensure that during slow business casual dressing. So periods or big growth periods, we don’t we’ve implemented lunch-andwalk into a cash flow crevasse.” learn programs that focus on their — Angela Armstrong of Prime Capital specific challenges. This added Group — pcclease.com revenue helps to keep us afloat until our busy season arrives. Summer is also a great time to test drive new “In my business it can be chicken programs for different audiences or feathers, and it’s not always and demographics.” predictable. It’s a constant challenge — Joanne Blake of Style for that nobody likes to talk about. The Success, Business Image & ideal situation is to have a reserve Etiquette Training — built up in a rainy-day account that styleforsuccess.com you can dip into during leaner times when you’re making more pillows “We manage the seasonality of than chicken pot pie. It can also mean our business by ensuring that we doing without some luxuries for a manage our cash flow equally during time, which takes some discipline.” seasonal highs and lows.” — Jerry Aulenbach of Royal LePage — Anuj Gupta of Anu Homes — Noralta — ZoomJer.com n anuhomes.ca “Plan, plan and plan some more. Nothing is more vital to your business los “Save regularly for rainy days, than revenue and cash flow. Project establish your business line of credit worst-case scenario expenses and at a good rate when times are good, very low levels of cash flow, and then pay yourself first and maintain adjust accordingly. This boils down to a personal reserve, as well as a doing personal audits on a monthly business reserve. As a last resort, basis, and being unwavering in this.” you can give your company a break — Connor Aylwin of College Pro from paying your wages for a short Painters — collegepro.com hyn period until cash flow improves again.” “One of the cardinal rules of business is to keep a minimum of — Mary Lou Gutscher of a Magnetic Business Solutions — three months’ worth of expenses MagneticBusinessSolutions.com in the bank in the event of a slow period. I follow this rule and keep an “We use a specific tool to manage even healthier reserve just in case.” — Linda Banister of Banister cash flow, called Dryrun.com. Our challenge as a startup is Research & Consulting — understanding when cash is going banister.ab.ca to be hitting our bank account and “The general financial planning rule when expenses are exiting. Dryrun of thumb is to keep three months just makes everything visible so we income for emergency periods. The aren’t guessing.” same could apply to business. Build — Sam Jenkins of Wellnext Inc. — a war chest for those slow periods. If getwellnext.com they last longer than three months, then maybe you have bigger issues. Just know your business.” — Desmond Chow of ATB Securities Inc. — is.atb.com/PoitrasChow
COMMUNITY QUESTION: How do you know if you should incorporate or be a sole proprietor? Capital Ideas member Nadine Riopel, webcast host on intelligent and ethical business practices for Innovation Expedition, would like to pick your brains on the following question: How do you know if you should be a sole proprietor or incorporate your business? You can answer the question in two ways: · Open today’s Capital Ideas email if you’re a member, or · Visit capitalideasedmonton.com. We’ll publish the best answers, along with your business name and website address, on June 25. Sign up to watch Riopel’s June 19 discussion on workplace diversity with CRC Consulting’s Ian Mathieson at innovationexpedition.com. Do you have a question you would like the Capital Ideas community to answer? Visit capitalideasedmonton.com to pose your question.
“We have recently moved to a more mature banking arrangement, with an operating line based on receivables, which meant switching banks. It was a bit of a surprise to find that some banks are so risk-averse, while others are much less so. The issue is not to assume that your existing bank is the best fit for your business, and to look elsewhere to see what’s available.” — Mike Mabey of Barriertek Inc. — BarrierTek.com “One word: Visa!” — Barbara May of Stumbling Blocks at Work — barbaramay.com
“It’s like a roller-coaster — you know when your highs and lows will be. The fall is still scary, but you know when you get down there you’re going right back up. Just prepare for the low drops, and when you’re high, remember to save... So just enjoy the ride and buckle up with a savings account!” — Linda Ritter of Salgado Fenwick — salgadofenwick.com “I schedule big cash outflows after seasonal lows, and ask suppliers to extend accounts payable grace periods.” — Michael Sadler of Renturly — renturly.com
These are answers to a question posed by Wellington Holbrook, executive vice-president of ATB Business, in conjunction with EIA. Here’s his take: “ ‘I have a ton of business, but I just don’t have the money to get it done!’ Heard that before? Unfortunately, we hear that from too many great entrepreneurs. Managing cash flow is perhaps the most important thing an entrepreneur must have a handle on, or it can lead to big trouble fast. Sometimes it can be as simple as collecting payments quickly and paying payments more slowly, and sometimes it’s much more complicated than that. Nonetheless, one of the biggest reasons businesses fail isn’t necessarily because of a lack of business, but often because the business just gets stretched too thin. By being a prudent business manager and working with your professional advisers, like your banker and your accountant, to help you manage your cash flow well, you can avoid one of the biggest traps entrepreneurs find themselves in.”
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