To stay, or start, on the road to profitability, most businesses need good relationships with their suppliers.  Pick them carefully based on product, quality, price, distances from your location and service.  You, or your staff, also shoulder responsibilities in the relationship.  Be organized, pleasant and precise when dealing with suppliers.  Remember the adage, “put a smile on your face while on the phone”.  It does make a difference.  Follow up verbal orders in writing (email, purchase order via fax or mail, letter, whatever works for this business) to confirm product number, description, quantities, pricing, delivery schedule, delivery method.

Suppliers can make or break your company’s reliability and profitability.  A trusted relationship with a supplier would have prevented the circumstances discussed in this column last week.  The salesman involved in that transaction unloaded a trailer full of unsuitable merchandise and oversold the client.  Either of these actions could have bankrupted most customers.  In combination, bankruptcy was a sure event.  (To review prior columns, please go to www.recordonline.com, click on Business, scroll down to the photo area, click photo to see list of prior articles, click on each title to review.)

A good salesperson or customer service person can be a teacher and informant for trends and technology in the industry.  They can steer a buyer to the best product for the price, an item more likely to be in stock each time it is re-ordered, a more reliable product, a better guarantee, a more consistent color match or whatever matters most in your industry.  A good rep will call or send fliers about special sales.  They will go to bat in your behalf when a problem occurs.

A poor rep will sell the item(s) on which he/she gets paid the highest commission regardless of the quality or the appropriateness to your company.  They may fail to call back if you are a small customer, particularly if there is a problem.  They might fail to spend time searching for a product absolutely needed in 3 days to fill a significant order at your business.  When timing is crucial, an ambitious salesperson will not only search their warehouse and sample stock other reps have stashed away, but may call your competition to see if they have stock-piled what your business requires.

Know suppliers’ sales and customer service people by name.  Treat them decently.  Build a relationship.  Send a thank you on occasion.  Sign your own name if your business sends birthday or holiday cards.

Be a friend, and have a friend who will help you do business in the best and worst of times.

flow of money.  They listen to the class, or part of it, then a hand goes up.  One popular comment is: “My bank doesn’t require a business plan

for a loan up to $50,000, or $100,000 or $150,000, so I don’t need to do a business plan with a cash flow forecast.”  I might respond, “Does the

lender want you to pledge something valuable as collateral?”  Invariably, the bank wants the family residence to secure the loan.  My question,

“How much do you like your home?”

When people buy a home, they and their lender, take time to study the availability of household income to pay back the mortgage.

(Perhaps some people did not study that as well as necessary.)  Traditionally, circumstances were analyzed quite thoroughly for home purchases.

Once people build up equity in their home, they and some lenders seem very eager to “take money out of the house” for a business loan, a

new car, a new addition, etc.  Equity is the difference between what the home is worth and any mortgages or lines of credit against it.  Write

down a realistic appraisal value of the house and land; subtract the balance due on the mortgage and other loans or lines of credit on that

property to find the equity.

Consider any loan against your residence seriously.  This is a time to stop and think.  Loans for business purposes need to be paid back.

Simple concept, but sometimes people rush.  The devil is in the details.

In some cases, the business owner will keep a current job and start a part-time business.  They live a dual life until the business can

generate sufficient income to replace all or part of the full-time salary and benefits.  This is difficult, but it can work for some people in

certain small businesses for a set duration of time.  If taking on more debt (additional monthly payments), make sure salary or business income

will be sufficient to pay off this new obligation.  Banks want to lend money and, over time, collect interest and receive back the principal.

They do not want to own your home or business real estate.

A bank may be doing you and their organization a favor by suggesting a loan on a house without a business plan.  This is not wrong.  It

can save time and expense on both sides.  The interest rate may be better.  Approval time may be quicker.  Make a list of the pros and cons.

When a lender doesn’t require a business plan including cash flows to support a loan, the lender is not forcing a business owner to complete

forecasts.  Nor does the borrower benefit from the lender as an experienced sounding board.  The business owner needs to force themselves to

shoulder these important responsibilities.

What is a Business Plan?    by Charlene Finerty www.PlansAndProfits.com        www.BusinessPlanWritingClass.com

It is a story in words and numbers about the business you own, manage or expect to own.  The process of writing

a business plan produces a learning curve for most individuals.

A business plan adds focus to a myriad of ideas running rampant in one’s brain, particularly regarding start-ups and small businesses.  A

plan is, also, integral to buying or selling a business.  It organizes and commits the thoughts to paper in a logical manner.  It should be used

internally by every business for guiding operations and comparing actual cash receipts and expenses to projections.

The majority of business people dedicate time and money to a plan only when a lender requires the document.  It is an interesting study

of human behavior that business people will work on a plan for a banker and seldom for themselves.  Many a person has obtained personal loans,

lines of credit, even pledged the family home for business funding without attempting to plan the future.

The Narrative of the business plan discusses the business, its owner/s, management, marketing, advertising, market size, product or

service, sales forecast, facility, personnel, etc.  It creates a sense of place.  The reader learns what is happening now and what is expected to

transpire in the future.

Usually the most difficult to complete, perhaps the most important pages, are the Cash Flows.  That is where ideas, concepts and ambition

turn into dollar bills.  In a perfect world, Cash Flows are a mirror image of the business’s future checkbook.

Often, a business owner decides to temporarily test demand while fine-tuning parameters for the best permanent geographic location and future square footage.

Buying is such a permanent decision. It is generally a slow process and involves various expenses, such as closing costs and a down payment. In many instances, the needed level of capital is not remotely available, or limited funds are better preserved for support staff, equipment, inventory, vehicles or advertising.

As a result, new and expanding businesses choose instead to rent. But, is paying rent akin to throwing money down the drain? Even if it is, renting may be the best — or only — alternative at certain stages.