48 Of Every 100 Businesses That Go Down Are Profitable!

It's common knowledge that the survival rate for new businesses is that if you start 100 new businesses today, only 20 of them will still be in business five years from now. Recent surveys have shown that the other 80 will have gone out of business sometime during that time frame.

What isn't as well known, however, is that 48 (60%) of those 80 new businesses that failed were profitable when they went down!

How can that be?

It is easier to understand when you consider the impact of "payment terms." Payment terms measure the number of days between the time a service is provided and the time payment is actually made.

What are the average "effective" payment terms in a typical small business?

Cash in from Customers averages 45 to 60 days

Cash out for Rent - in advance & for Employees - 7 to 14 days (Federal law) & for Vendors & Suppliers - 15 to 30 days.

The timing gap between the terms on money coming into the business is quite different from money going out of the business. If you combine that with rapidly increasing sales, you can see how a profitable business failed to survive because it simply ran out of cash. Other bills were payable before revenues came in and a lack of working capital failed to bridge the gap.

However, they didn't fail simply because they ran out of money. According to the research, the cash shortfall was just a symptom of the real problem.

The underlying problem was that they didn't have the management information they needed to successfully manage a dynamic business. In other words, they failed to maintain bookkeeping and accounting systems to provide them with critical management information -- such as how much they had in the bank, which customers owed them and when it was due, which suppliers they owed and when it was due, etc. -- the type of information required on a day-to-day basis to successfully manage a business in a changing business environment!

Fluidity Business Planning Group can work with your bookkeeper and accountant on your behalf to help you manage this critical and vital information to achieve and preserve your profitability. We can recommend professionals to assist you or you can search www.smallbizaccountants.com for help.

Commercial Loan Basics

Commercial Loan Basics: Developing a Business Plan

One of the first things a loan officer likes to see when making a commercial loan is a business plan. Why? It’s a “blueprint” for business success!

Imagine you are ready to build your dream home. Would you tell the contractor to “build me my dream home” and hope that his idea of a “dream home” is the same as yours? What if you’re thinking of a spacious rambler, with 5 bedrooms, a huge great room, game room, indoor/outdoor pool, 3 baths, a Jacuzzi, huge windows and a walk-out basement sitting on a knoll overlooking Cache Valley whereas his vision is a 3 bedroom multi-level sitting on 5 acres right next to a dairy farm (with the accompanying “fresh” air)? How can you ensure that the contractor actually builds your vision of a dream home? By using a blueprint and adequate planning.

You will meet with an architect, explain what features you want and he will draw up a blue print. After several meetings with the architect the blue print will undergo many changes. (You want a bigger walk-in closet, larger bedrooms but a smaller living room, stairs centrally located rather than on one end of the house, etc.) Finally, when you are satisfied with the plans you will hire a contractor to construct the home and if you hire a good one you can expect that the finished product will actually be your “dream home”.

Businesses also need a blue print, a business plan, if they want to succeed. Before starting a business the entrepreneur needs to ask him or herself questions such as:
· What service or product does my business provide and what needs does it fill?
· Who are the potential customers for my product or service and why will they purchase it from me?
· How will I reach my potential customers?
· Where will I get the financial resources to start my business?

Keeping these questions in mind the entrepreneur should then prepare the plan being sure to address the following:

The Business – Description of the product(s) or service, marketing, competition, operating procedures, key personnel, business insurance, etc. (Keep in mind that a successful business needs expertise in marketing, finance, accounting, and personnel management, as well as the ability to provide a valuable product or service.)

Financial Data– Loan application, equipment and inventory list, balance sheet, profit and loss statements, income projections, cash flow projections, assumptions upon which projections were based, break-even analysis, etc.

Supporting Documents – Three years personal tax returns for all principal owners, personal financial statement(s), copy of proposed lease for place of business, copies of professional and business licenses and other legal documents, resumes on all principals, notice of intent from suppliers (of inventory and equipment being acquired to start business), for franchise operations – a copy of the franchise agreement and disclosure.

The business entrepreneur may say “Wow, that’s a lot of information!” and he would be absolutely correct! However, just as he would want to plan construction of his “dream home” with minute detail, he should plan for business success with great detail because better, more complete, information generally makes for better decisions which, in turn, breed success. “So,” the entrepreneur asks, “what if I don’t prepare a plan?” The results are best described by the title of a book by David P. Campbell, “If You Don’t Know Where You’re Going, You’ll Probably End Up Somewhere Else”.

Established Resource for Regional Banks

Fluidity Business Planning Group LLC leverages relationships with North Shore Bank and expands to other Financial Institutions. Associated Bank and US Bank express interest!

MEDIA ADVISORY – IMMEDIATE RELEASE

June 30, 2010
CONTACT: David Rovinski (920) 562-3456 or Terry Misfeldt (920) 366-6334

Business Planning Group to Headquarter Operations in Green Bay, WI
In today’s economic environment, business owners looking for financing need to meet the more stringent requirements of financial institutions, meaning a comprehensive business plan with accurate cash flow projections. David A. Rovinski and Terry C. Misfeldt of Green Bay have created Fluidity Business Planning Group LLC to assist lending institutions in Wisconsin, Illinois, Michigan, Indiana and Minnesota by helping business owners develop effective business plans with customer-focused marketing strategies, and assistance in the implementation of business strategies to obtain funding.
“Fluidity offers a vital, helpful service that leverages our intellectual capital to provide business owners with a competitive advantage and ensure their profitability through our unique approach to business planning, marketing, and implementation strategies,” said Rovinski, formerly of TMC Business Connections LLC. “Using a solid software platform such as the globally recognized and accredited Business Plan Pro business planning program by Palo Alto Software and coupling it with current, credible market data from the world’s leading supplier of business research information, Hoover’s and First Research divisions of Dun & Bradstreet, in addition to our global networking connections, Fluidity works with the business owner to prepare viable plans that support the growth of their business,” he added, “and Fluidity then works with business owners on an on-going basis to execute and control their efforts to achieve profitability. Banks appreciate that we are there to help.”
As professionals in business strategy and implementation, Rovinski and Misfeldt bring more than 40 years of combined experience to Fluidity, with proven track records of success across a variety of disciplines. Misfeldt brings more than 20 years of consulting experience in marketing and business development from his involvement with Simply…Success, as a director for BNI, and as a Chamber of Commerce executive. Rovinski brings more than 20 years of work experience with small to Fortune 500 companies in strategic planning and product management.
A recent article by Tim Berry, founder of Palo Alto Software’s Business Plan Pro program, at entrepreneur.com stated: “Whether you’re just starting out, growing your business, or seeking outside help, a well thought out business plan is the vehicle you need to get there.”

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