How a start up business managed cash flow

A business in Southern California had to carefully manage cash flow during the first three years as it started up and sold products to retail stores in the United States and eventually Canada.

The company didn’t pay cash or incur debt to purchase and stockpile inventory in the start up phase.

“When we started, we started with very little money,” said Jason Carr, co-founder of Softline Home Fashions with brother Rodney Carr.

Softline Home Fashions, located in Gardena, just south of Los Angeles, imports quality polyester fabrics and sells to independent retail outlets and mass merchandisers.

He told me how they started generating their initial cash flow: “Some guy would have a stock lot and we’d go and re-sell it to generate capital. We started taking trips to China to buy more of a regular running line.

“We used factors. People take a certain percentage of the invoice and they collect on receiveables paid to them.”

Financing the start up for Softline Home Fashions required a careful strategy of showing samples to the retail outlets, determining which fabrics were going to sell, and then requesting the fabrics from suppliers in China and Indonesia. The product was then shipped and sales made to the retail outlets and then the suppliers were paid.

Jason Carr, co-founder of Softline with brother and business partner Rodney Carr, told me they’re grateful to the suppliers who allowed flexible financing arrangements.

Softline Home Fashions’ today has a large warehouse with 75 employees at its Gardena, California operations with immediate shipments to customers. The company also has offices in Atlanta, New York and operations in Canada.

Click here to read more on how Softline got started shortly after the tragedy of 9/11 in 2001.

Financing for a start-up business

Ensuring cash flow for a start-up business is one of the main reasons to arrange initial financing.

The amount of financing, and the type of financing, needed depends on the overhead and complexity of the business model.

Here are tips for financing a start-up:

• List all expenses
• Project dates for initial revenue
• Invest a small portion of personal funds
• Fund new business operations through equity and debt
• Check city, county, and state resources for funding guidance and low cost loans

Click here to read the full article on creating a financing recommendation for business

Do not underestimate start-up expenses and do not overestimate start-up income.

Businesses must plan for cash flow

This is the second post with Seth David on the single most common accounting mistake small businesses make. Seth says companies simply don't plan.

Many businesses fail to do this, and they HAVE TO!

The Business Visionary

They know they can go out and make money – you get a visionary with a great idea. Maybe he has the start-up capital and the marketing skills. So he goes at it with all of the passion needed to start it off.

Then as time goes on he starts to wonder why there isn’t more money in the bank. Then he finds himself (or she finds herself) struggling to make payroll.

We know this is normal for a new business and some might even say a requirement for every entrepreneur to experience. At some point the visionary finds me and asks me to help them understand where all the money is going.

What the Business Visionary Overlooked

Invariably what I find broken down simply is that they failed to plan ahead. They failed to sit down and add up their expenses ahead of time to see at a minimum what they needed to bring in to pay for everything and still make a profit.

They forgot to consider that the startup capital came with a payback requirement and interest. This affects cash flow. There are many factors that come into play that we don’t/can’t anticipate – so it is critical to have a plan (forecast) and to review it every single month.

Financial Basics

I have a very robust spreadsheet that I’ve created that lets me export my financial information from QuickBooks each month so I can look at my income, expense, and cash flow forecasts. I have both my corporate and my personal tied in because the money flows that way- from my business to my personal and then out to the bank to pay my mortgage.

Click here to read the first post on why businesses need to plan for basic financial information

Getting an idea to start a business

Ideas for starting a business can come from anywhere and when you least expect it. Here's input on getting an idea to start a business from Seth David of Nerd Enterprises in Burbank, California. Seth's company trains business owners on financial business management (accounting, bookkeeping and products) and assists in projecting profitability.

Here’s a lesson on getting an idea to start your own business from Seth David of Nerd Enterprises, Burbank, CA. He reveals that a job he didn’t like still taught him lessons in starting his own business.

What gave you the idea for starting your business? This one turned into a job, which I held for 3 years. During that time I had a boss who was very difficult to work for. He would be your best friend one day and the next he’d be talking to you as if you were worthless – I was powerless to do anything other than move on when I realized I was unhappy.

Others would sit around and complain – to me that was a waste of time, the solution was to keep moving forward until I found what I was looking for. One more job and I had finally had enough.

I worked at a CPA firm where I was assured I would be provided with training since I had no experience doing tax returns. The training I got was to be thrown in front of a program I had only seen from a distance on other people’s screens and handed a tax file to complete a return.

This frustrated both myself and the managing partner of the CPA firm. It was during this time that I started going out on my own and getting clients on the side.

Get a business start up loan with no business plan

No business plan in hand? There's a way to get a business start-up loan with no business plan.

Demonstrate expertise and thorough business knowledge in the industry. Have a good credit rating and get to know the local bankers and lenders. Going to a community bank may prove most beneficial or work with a business incubator in the area.

Establish key relationships

Demonstrate past success

Have a strong credit rating

Click here to read the complete article I wrote on How to Get a Business Loan without a Business Plan.

Now, I don't recommend trying this approach but it can be possible. Also, a business plan doesn't have to be exhaustive in detail and scope. Make bullet points on key topics like:

• the purpose of the business,
• what service it offers,
• what products it will sell,
• who is the key audience,
• what are the main ways to get business
• who is the primary competition
• how much cash is needed to operate
• who will keep the books
• what type of accounting system will be used

Answering those points may be enough to serve as a simple business plan and help secure a loan.

Resources for Starting a Small Business

Resources for starting a small business are available for free.

Start online through the Small Business Administration or at the local library where there are books utilizing paper!


I recently checked out Small Business for Dummies by Eric Tyson and Jim Schell. There is basic information, yet it is important to go back and review time and again. On the inside cover, there are 20 points for Small Business Success including Tip #9 "Solve your customers' problems":


"The besy way to satisfy your customers is not by selling them products but by providing solutions to their problems. Understand the difference."


Tip #11 "Put profitability first, rewards second":
"Find out how to measure your cash flow and understand your key financial ratios."


Small Business for Dummies is written as a reference book where each chapter can stand alone and provide advice making it quite practical and easy to use.


But one of the most important uses of the book is causing the prospective business owner to think about the service or product being offered and the market being targeted. Despite being in the "Dummies" series of books, the information is thorough enough to be useful even for the smartest MBA-degree earner.


I took out the book because I'm looking at launching my own marketing service focusing on helping craft marketing messages and writing marketing collateral.
Check out my web site Right Touch Marketing.

Cash flow, of course, is essential for the success of any business so researching using free resources for businesses is always a wise option.

Ignoring Business Opportunities

You set out to start a business and problems attack your business.

Other business opportunities look good - even better. Now you start working on a separate project and drop the first one.

If you want to start a business and then build a lasting business legacy, then I suggest you put on blinders and start ignoring business opportunities that aren't your central focus.

The thought came to me after reading a blog post from a 22-year-old man, Dontrell Lyons, who outlined the differences between an entrepreneur who builds a business for the long-term and an opportunity seeker who's swayed by every money making deal that sounds hot.

I recommend reading through the list Dontrell compiled.

In the meantime, do you have a long-term value-added outlook for your business whether it's your own or someone else's and you're hired to work?

Building long-term value is a satisfying pursuit and can take you through the discouraging times when cash flow is tight.

Why Ameicans want to Run a Business

The drive for Americans to run their own business runs deeply across the United States.

1 in 3 Americans wants to run their own business, according to a survey recently conducted by Success magazine.

No wonder: recently, Starbucks announced the closing of several hundred stores and in my hometown of Pasadena, IndyMac bank is purging its workforce, too.

A person who has the will and drive to successfully run their own business may seem in control of their career goals, business dreams and personal finances.

The Life Goals survey from Success magazine also revealed 31% of the 1,200 people who responded said they want to retire early. Raising a family was the top goal of 16% of those surveyed.

Success magazine has listed 27 resources for success that covers everything from having a personal life coach to building a personal library.

The list of resources for success includes:

#1 Having a list of goals

#2 Eating properly
I know I don’t function as well when I’ve binged on ice cream right before bed.

#3 Friends
Having a support network is key to moving through the challenges of each day. Personally, there are 3 people I meet with on a regular basis.

There are other items on the list which surprised me:

# 8 Having a great pillow and bed!

# 17 External or online drive

# 18 Good dress shoes

#23 Breath mints!
Now isn’t this getting a bit picky? However, I often run to the store for my favorite gum after lunch or a snack.


I believe one of the key ingredients to success is certainly having a goal and then understanding the key objectives and steps needed to reach that goal.

But the ability to “stick it out” or “staying power” is key to surviving the first 2 years in business.

Having a plan will help ensure the possibilities of success especially when planning for issues like cash flow or investigating franchise opportunities versus owning your own brick and mortar or online store.

Despite all the technological advances, good solid input from trusted advisors should always rank high on any survey.

Start Your Own Ecommerce Site

How can you start a successful e-commerce site?

Learn a few lessons from Michelle Lieck, founder of Ladylanguage.com and a related blog titled Ladylanguage.blogspot.com. Michelle has a technical background which has been an advantage for her. When you log on to her site, look at her tag line and you can clearly see the niche market she has targeted.

1. I sold on ebay for a year and enjoyed it and I have followed fashion since I was 12 years old - I guess I wanted to fulfill a childhood dream. My prior gig was computer support, database design, and building internet sites as a business analyst for a large corporation - to which I owe most of my technical savvy. You really have to be technically inclined to work in e-commerce.

2. Ladylanguage.com has been live since Dec 1st 2006.

3. The store is beginning to meet my goals financially (the past few months have seen the biggest increase). I am not making millions, but building the company name alone has been fun and it could prove to be lucrative in time. I love what I do, but owning your own business is hard - I work nonstop at all hours, every day of the week - you have to be committed and relentless. You have to follow the books and file your taxes, etc.

4. Advice? Get in now - it’s getting more competitive out there. Develop a good business plan, make sure you are well funded, find an under served niche and become an expert in that area. Develop your social networks and get listed in directories (especially DMOZ and Alexa). Read, read, read - about your customer, products, technology - travel the same avenues your customer does to learn about them. Take care of your customers first and everything else next - they are your life so don’t make them mad!


Thanks, Michelle.

Okay, let's say you don't have a strong technical background - like me. There is a site where you can open up a store and begin learning. Try http://www.zlio.com/ or get started selling on e-Bay. Are there others of you who have successfully entered the world of e-commerce? If so, email me to share your tips.

Business Plan and Personal Development

Here's a link to an article on why you should write a business plan from the folks at NAFASG. It includes the tedious but important step of collecting input from others.

I'd like to point you to the blog of Mel Kaye who posted an updated version of the Personal Development List. Please take a look. There are excellent resources available to you.

How to "Grow a Business" using the 7Ps of Marketing

"Grow your business" with these business ideas using at least a few of the 7Ps of marketing.

Coffee roasting company Jameson Brown is only a few months old but business owners large and small can learn valuable lessons.

Planning - the two partners and their families spent 15 months planning and preparing before opening their doors.

People - Niche market - the coffee industry is dominated by major brands. They sell to people who love freshly roasted coffee bought from around the globe.

Product - their coffee is "customized" during the roasting process by personally watching the grinding process in action as demonstrated on the video. In their shop, a former machine fabricating shop, they made the strategic decision to only sell coffee in a comfortable setting. They're not selling pastries or smoothies. They believe there's a demand for a quality roasted cup of coffee.

Price - their coffee is competitively priced with local shops, yet their product is high quality.

Promotion - they haven't chosen one specific promotional strategy yet, except for Word of Mouth - which is the most effective form of marketing and advertising.

Place - they're selling to a local retail population in Pasadena, California, Internet customers and selling wholesale to pastry shops and restaurants.

Partners - their vendor is a buyer who can service a small company. They've not yet chosen promotional partners.

"The good news," said partner David Ross, "is we can feel the momentum building. We have regulars who come in everyday."

"Our goal," said Ryan Hamlin, "is keeping our focus on coffee."

Ask Yourself:

Planning: Am I giving myself enough time to launch a new business, new product line or new service? Marketing efforts alone can take up to 6 months to build momentum.

People: Do I know all I need to know about my primary client or customer? Can I learn any new information that will give me a competitive edge?

Product: How does my product benefit my target customer?

Price: If I price my service or product high, how easy or difficult is to convey the value? If I price too low, does it cheapen what I offer? Am I offering a premium service or "cookie cutter" service?

Promotion: how will I generate needed Word of Mouth advertising?

Place: How many people in my local geographic location know I exist?

Partners: How can I improve my relationship with my vendors or current customers to gain new business or better serve existing customers and clients?

How to Start a Business: Plan, plan and plan

Starting a business requires a business plan. Sounds logical, but so many small business owners, or would-be owners, rush headlong into opening up their shop, buying in to a MLM structure or getting an e-commerce site built and launched.

Here's an helpful article found on Entrepreneur.com.

Coffee roaster Jameson Brown opened up a few months ago after many months of talking and planning. They told me how they went about planning.

"We had been friends for many years," said David Ross. He and his business partner Ryan Hamlin shared a love of coffee.

"We spent 6 months talking," said Ryan. "But we were roasting during this time and our friends liked the taste. Our issue was how to approach starting our business. We decided to go slow and go small."

As they discussed their idea, they saw it taking shape.

"You want to make sure we were saying the same thing about our business idea," said David.

"We spent a lot of time asking 'who is our customer?' and deciding the standards or quality we wanted for our coffee," Ryan mentioned.

The two business partners spent another 9 months looking for a commercial building where they could roast and have customers walk in. It also took time to handle zoning issues.

Their location is clean, well-lit and has a nice appealing brick fireplace.

However, it was a former machine fabrication shop so it took their families lots of work to scrub it down and convert it to a coffee roasting location.

They have walk-in retail customers, distribute wholesale to restaurants and coffee shops, and they have a Jameson Brown website for Internet customers. Surf on by and click on their site to learn more.

Fox TV Back To You - and Coffee?

Back to You is a new comedy series starring Kelsey Grammer and Patricia Heaton scheduled to air on the FOX network in September.

An excellent article in the Los Angeles Times on Sunday, July 22, raised the question if Back to You, about a news team in Pittsburgh, will be a hit because reality shows, cable and even the Internet have TV audiences fragmented. The article raised the point that the star quality of Kelsey Grammer and Patricia Heaton would have made the show a sure success 10 years ago.

Television comedies are caught in a changing business climate. But change in any industry can also mean opportunity. The coffee industry is one example.

Two friends, Ryan Hamlin and David Ross, recently launched the coffee roasting company Jameson Brown in Pasadena, California and I enjoyed speaking to them about their new business venture.

Forget Starbucks or the Coffee Bean and Tea Leaf companies. The two men personally had a love for coffee as a beverage and as a hobby.

"We started home roasting and it opened up a new world of taste," Ryan told me. "I thought 'I'd love to retire and roast and blend for people."

Ryan and David discussed their idea and after friends gave them positive feedback on the quality of their roasted coffee, they decided to find their niche market for quality roasted beans from around the world.

In my next post, you'll find out how long it took them to plan before opening their doors.

A Business Plan and Strategic Thinking

Businesses, especially business start-ups needing cash flow, may lose sight of why they got started in business or the benefits to the customer of their product.

In my experience, I was part of a marketing start-up where we couldn't find our focus. We ended up producing everything from brochures and Web sites to trying to generate leads for a Foreign Exchange (FOREX) investment company.

We had successes, but we also disappointed some of our clients. Finally, feeling scattered and stressed I then called it a day.

This week, I'm going to write about a business start-up in Pasadena, California that's a coffee roasting company and you'll learn why they decided to invest capital and open their doors.

So here is one key point to keep in mind:

Why are you starting your business? What are you offering to your customers that is unique?

This is a basic step in strategic thinking and planning.

If you offer one product then it's easier to keep in mind.

But if you're a service company and you and your partners have multiple talents then you can get sidetracked chasing accounts and income that pull you away from where you perform at your best.

Early on, you may need cash flow but it may do you more harm than good in the long run to try and land every job.

Try to land ones you know you can do and ones that are willing to pay your price.

Early on in my previous start-up, we gave away too many creative hours and we were afraid to charge the right price for what we offered. We tried to "win" every account and we got too scattered.

So stay focused, land the clients you really want, and have courage to charge the right price.

Starting a Business - Solving a problem

Starting a business may come from solving a problem you’re facing.

Corey Bornmann of Haulin Junk spoke with me about his home-based hauling business.

“I’m a Web developer by passion and training, but a few years ago I bought apartments to ‘secure’ my financial future. I got up to 21 units this year and I needed to have old stuff hauled off. I discovered haulers weren’t dependable, so I bought a trailer,” said Corey who lives and works near Harrisburg, Pennsylvania.

He put $1,000 on his credit card to buy the trailer, no cash out of pocket, and then he started to advertise his services to haul away junk.

“I had the trailer and other people had things to haul,” he said. “I put an ad in the local paper for $15. I worded it so alphabetically my ad came first: ‘haul a bunch of junk.’ Other ads usually just referred to ‘hauling’ but mine had the ‘a’ and the next word started with a ‘b.’ Just a little trick I used to keep my placement first.”

Corey’s business is part-time. He’s been operating for several weeks and he regularly pulls in about $175 to $200 weekly. “It’s spending money for the family, plus I’ve paid off the trailer from what I’ve made.”

His blog, www.haulinjunk.com is an online journal to help other people who may want to start a similar business.

“There are a lot of scams out there,” he said. “This business really is simple. I can cut my costs and get orders and beat the large franchise 1-800 Got Junk. Really, I want to show people how simple this is and you can also use what I’ve learned to adapt to another business you might want to start.”
Corey is also monetizing his blog through affiliate programs.

“I’m using Azoogle, a pay per lead where they have products which you can refer people to,” he said. “Another one I have is from Auction Ads.”

What’s Corey’s advice in starting a business?

“Research the opportunity. There are so many overhyped scams. If you see an opportunity or have an idea then ‘Google’ it . . . and 9 out of 10 times you can read about experiences other people have had with the similar business.

“Also, find a niche that you also have an interest in. If you’re not interested in it, then it will eventually show – whether that’s a brick and mortar type business or an online affiliate marketing program.”

Growing a Business, Democracy

Growing a business requires:
money, partners - even if they're ardent supporters - a plan, a product or service and an attitude to prevail.

During the past 4 years, I've endured many challenges after stepping out of the corporate world - well, the non-profit world to be exact.

Since July 4th is coming up when Americans celebrate independence, I'd like to quote from a book that has become a favorite of mine, John Adams, a biography by David McCullough. Adams and his wife Abigail had to spend nearly two years apart during his trips to France as he sought to gain support during the Revolutionary War.

Her situation was described as "times of horrible duress with war at her doorstep and epidemic disease raging" (p216). She wrote, "This is a painful situation and my patience is nearly exhausted."

She later wrote to Adams that future generations would probably not understand the sacrifices they made.

The story of John and Abigail Adams has inspired me as I have not only set out in new career directions - and have faced tough times - but also as my wife and I have continued to guide our children - now in their mid-teens to early 20s: 4 adopted out of foster care at different ages and 2 guardians who came to us in their teens with no where else to go.

Each of us, in our cycle of life, may face our personal "revolutions" and that is why the story of American indpendence has always tugged at my imagination.

I am thankful for the sacrifices of many from earlier generations and centuries.

Word-of-Mouth Marketing

Marketing your business requires consistency and persistence. The goal is developing a core of satisfied and trusted customers or clients who assist you in word-of-mouth referrals - the most powerful and trusted source of advertising and marketing.

I interviewed Kristina Hughes and Brian Vermeire who turned a Christmas gift, an organizational tool for their acting auditions, in to a thriving business known as HoldenLog that focuses on a narrow market that includes: actors, models, and live performers.

Today, their product line includes software known as ActorTrack.

Here's a summary of how Kristina and Brian promoted their business:

#1 In early 2001, they used the tool themselves and friends saw them and started asking about it. During that time, one friend was helping them think about a software application for the organizational journal.

#2 They launched a Web site in September 2001.

#3 They began a newsletter which today has 20,000 active subscribers with readers internationally: Canada, Australia, the U.K. plus Singapore and Japan.

#4 In 2005, they began hosting free industry seminars.

#5 They now have 100 commission-based field reps promoting their product line.

#6 They regularly attend industry trade shows held around the country.

Their efforts weren't without obstacles. Kristina told me they would have up to 100 people rsvp for a seminar and then it would rain and only 15 would show. Now, remember, "rain" in Los Angeles can mean steady drizzle.

Today, approaching 7 years, they're now forecasting with plans 5 years out and more.

They remain clear on the purpose of their product.

"Our books and software," said Brian, "helps performers track their Return on Investment."