Archive for June 3rd, 2008
June 3rd, 2008
Why a Cash Flow Statement?
Many business owners believe their financial statements will give them all the information they need. Financial statements are an historical tool that shows you where your business has been. A Cash Flow is the fancy name for a working budget that tells you how much cash your business actually has. Working in sync with your balance sheet your cash flow should be an easy-to-read tool that allows you to monitor sales, costs, profitability, collections and cash. It allows you to plan for future cash needs for growth, while identifying operational issues requiring immediate action.
Successful cash flow planning does not require a degree in accounting. What you need is real-time understanding of where the cash is originating, where it is going, and how much is left over (just like you do at home). Businesses need to operate with a cash flow model that looks ahead one year, month by month, and is updated with actual results every week.
Create a Worksheet
The formula for successful cash flow management is deceptively simple. Money in. Money out. Money left over. If there isn’t any money left over, then you need to do something differently.
Start with Sales. Sales is work performed that is documented by cash register receipts, guest checks or invoices. Project the amount of sales you anticipate month-by-month starting with the current month. Sales should fluctuate when you consider the seasonality of your business. Break the sales into categories and be conservative.
Project your collections month by month. Collections are the money you put into the bank in the form of cash, checks or charge card vouchers. If Sales do not equal Collections, you either have accounts receivable or a cash control problem.
Review your expenses. Define your expenses into two major areas: Cost of Sales (expenses that fluctuate with sales such as product costs) and Overhead Expenses (expenses that do not fluctuate with sales). Define the cost percentages for your major sales categories. Forecast all other Overhead Expenses (rent, utilities, insurance, licenses, etc.). Project all expenses out in the month they will be paid.
Forecast your payroll. List your current and anticipated employees and categorize them as Cost of Sales labor or Overhead labor. Cost of Sales labor may be projected in part by a target labor cost percentage. Estimate payroll expense per employee (average hours worked, rate of pay) over the next twelve months.
Evaluate Your Profitability
With monthly sales and expenses projected, business profitability, feasibility and value can be determined. Total Sales minus Total Cost of Sales Expenses (including Cost of Sales payroll) minus Total Overhead Expenses (including Overhead payroll) equals Monthly Cash Reserve. This is also your profitability. Is there any money left?
What debt are you servicing? Evaluate this debt separately from your profitability. Debt takes many forms including notes, loans, credit cards, leases, and lines of credit. When businesses must restructure their debt in order to improve cash flow, lenders expect the business’s Balance Sheet to look a certain way in order to qualify for financing.
So, What’s Next?
Once this working budget is assembled, a break-even sales volume can be determined that generates enough profit to cover debt load and have no cash loss. Your cash flow objectives are now clarified and strategies can be implemented. Any issues that caused a cash flow problem will now be corrected.
With your Cash Flow mapped out, you have the beginning of control.
Cash Flow Planning brings financial stability to a business through pro-active budgeting, monitoring and adjustments. You will understand where you are today and what your options and priorities are. You will be able to forecast your cash needs and gain control of your business. With the use of a Cash Flow, your business will have more money and a road map for the future.
- Written by Monte Zwang of Steele Development Corporation, a consulting firm specializing in business development and financial strategies. You can reach Steele Development by calling 206.878.9666 or online at http://www.Steeledevelopment.com.
June 3rd, 2008
Your home is more than likely the largest asset that you have. You want to get the most money out of the sale of your home. At the same time you want to have a realistic marketing time of your house with a sales price that meets your expectation. This is where picking the right realtor is so important.
Wherever you live there seems to be a disproportionate amount of realtors around in relation to the population. Indeed, if you live in a medium sized city, there are generally thousands from which to choose. You can ask friends or relatives their experiences in selling a home and if they would recommend the realtor that they worked with. This can be a start. You may see and hear advertising in your area by real estate companies. Once you start the selection process pick at least 3-5 agents to individually meet with you at your home.
First impressions count. The realtor should be prompt for the appointment. The realtor should be prepared to ask you specific questions concerning your home. The realtor should have an information checklist with him. He should come back to you at a later time to give you an objective as possible listing price with a projected marketing time for the sale of your home. You do not want a yes man who will give you what you want to hear. You want to have a list price that is presentable to the public based on recent sales. You do not want a high list price that was given to get the listing. This will only have to be reduced at a later point after losing valuable “new fresh” on the market time.
You have every right to ask questions of the realtor. In addition to what the commission will be, you would want to know how well this realtor knows your neighborhood. You would want to know if the realtor is full time or part time. You want to know what are the steps that will be taken by the realtor to present your home effectively to the marketplace. You want to know how long this person has been in the real estate profession and what that person’s production has been over that last year. If you are the type of person who requires on going communication during the marketing process ask what is the realtor’s response time.
You want to have an honest agent. This agent should keep your confidence and be frank with you at all times. This will create a sense of the realtor and you being a team and real partners.
Taking the time to select one agent from several agents does not guarantee that you have made the best choice. However, you will greatly reduce the stress, and not have diminished results sales price wise, by demanding and expecting quality professional service up front.
Bill Wehr has been in home loan origination for over 25 years. He is the owner of Great Pacific Northwest Mortgage http://www.billwehr.com, a residential mortgage company serving Oregon and Washington.
June 3rd, 2008
While negotiating the auto route and back roads of France during the month of July for the past several years, no vehicle has appeared more confident on the road than the Volkswagen Passat.
The European version looked different than the U.S. models I’d seen, but the Passats scooting down the highway and being adeptly driven through city traffic never got close enough for me to get a better look.
The newly designed 2006 Passat available in the United States, however, looks more like the European version. And after a weekly test drive of the 3.6-liter, 280-horsepower, V6 with a six-speed automatic transmission, it was easy to understand why the vehicle is so popular in Europe.
From a design perspective, the new Passat offers more room nearly everywhere — it’s three inches longer and wider, and the cabin is substantially more spacious with 2.4 inches of rearseat legroom. The rear storage area is slightly smaller than previous editions at 14.2 cubic feet. But there’s more usable area, thanks to the newly designed and more compact rear suspension.
My test vehicle’s exterior color, a rich dark blue, was nicely matched with a two-tone black and tan interior. The combination of new design and superior color coordination prompted a fair share of complimentary looks and comments from passersby.
The interior redesign also features some clever innovations. The Passat no longer has an ignition switch; Instead, a key fob is inserted flush into a dashboard slot.
Further, the Passat has double front-window visors, an umbrella holder in the driver door and an automatic hatchback operating system. The hatchback opens via the key fob and it closes via a push button inside the hatchback hood.
These nice features aside, driving the Passat is even more impressive. My test vehicle included Volkswagen’s all-wheel drive feature called 4Motion, a new fully independent suspension and a sports package option featuring 18-inch wheels.
As such, the vehicle has an impressive grip on the road during as well as impressive acceleration and power. The manufacturer says the vehicle performs the standard 0-60 mph test in 6.2 seconds, which is slightly faster than the front-wheel drive version.
The Passat is more than adequately comfortable, with its leather seats firm and conforming. A leather shift knob and leather-covered steering wheel are also part of the $3,000 sports package option that also includes 12-way power front seats, steering wheel radio controls, automatic headlights, foglights, automatic climate controls, rain-sensing wipers, navigation system and satellite radio. The 3.6-liter Passat version also includes a power sunroof, AM/FM radio with in-dash, six-disc CD/MP3 changer.
The Passat’s one overt shortcoming is that it’s not particularly quiet. Road noise isn’t the issue, rather the engine growls heavily during acceleration.
As a midsize vehicle, the Passat is a more expensive choice than its primary competitors, the Toyota Camry and Honda Accord. But the Passat has been a reviewers’ favorite for several years, and it’s hard to argue the succinct summation of Edmunds.com:
“With its fun-to-drive character, premium interior furnishings and wide range of features, the Passat is one of our favorite midsize sedans and wagons. Don’t buy your next family car without driving one of these first.”
The Weekly Driver: 2006 Volkswagen Passat
Safety Features – Dual front, side and side curtain airbags.
Fuel Mileage (estimates) — 19 mpg (city), 28 mpg (highway).
Warranty – Bumper to bumper, 4 years/50,00 miles; Powertrain, 5 years/60,000 miles, Corrosion, 12 years/unlimited miles; Roadside Assistance, 4 years/50,000 miles; Free scheduled maintenance, 2 years/24,000 miles.
Base price – $31,900.
