Category Archives: Management Issues

How much cash should a small business keep in reserve?

piggy bank cashCash is the fuel that makes a business run. It is needed to pay salaries including your own, fund marketing programs to acquire and retain new customers, invest in equipment and facilities, pay rent, supplies and many more day-to-day activities. Most financial experts recommend three to six months of operating expenses, but using this for every business in every situation is misleading.

To determine how much cash you need, you must look at the following key areas.

How Much Cash Have You Been Using?

If you’re an established business owner, look at your monthly cash flow report (or go to the next paragraph if you’re a start-up). This report will provide an historical and seasonal perspective. Note the cash received from sales and the cash spent. The net of these two is often referred to as the “net burn rate.” For example, if you have $50,000 in sales and $30,000 in expenses, then your net burn is +$20,000

Your “gross burn rate” only takes cash expenditures into account; in our example, that’s $30,000 and is the more conservative amount, since it does not assume any sales are made. Historical spending patterns are a good starting point in considering future spending plans.  Continue reading

Prepare now for paid family leave law in 2019.

by Monica Blackwood, Columnist, Kitsap Peninsula Business Journal

The last half of 2017 saw companies scrambling to understand and prepare for Washington’s paid sick leave law, and employers continued to educate themselves on the new regulations into the summer of 2018. While that flurry of activity was happening, there was another bill which Gov. Jay Inslee signed: Washington State Paid Family and Medical Leave Law.

We are now the fifth state in the nation to pass such a law, after California, New Jersey, Rhode Island and New York. And, the law’s “go live” date is fast approaching – employers need to comply by January 1, 2019.

A quick summary about this law: For the year 2019, funding will be built up into the plan. Starting January 1, 2020 eligible employees are allowed 12 weeks of family or medical leave. This includes mothers and fathers welcoming a child into their home either by birth or adoption; or to take care of themselves or a family member (defined as a child, spouse, domestic partner, parent, parent-in-law, sibling, grandparent or grandchild) who has a serious health condition, or for a family member injured due to military service. In some situations, that paid leave can be extended to up to 18 weeks.

Read the rest of the story here


ABOUT THE AUTHOR
Monica Blackwood is president and CEO of Westsound Workforce, with offices in Gig Harbor and Poulsbo. Contact her at monica@westsoundworkforce.com.

Don’t set (unrealistic) expectations for the value of your business.

by Kelly Deis of SoundPoint Consulting

Most business owners do not have a realistic idea of what their businesses are worth. Owners almost always think that their business is worth quite a bit more than the market would likely bear. There are several reasons for this.

1. Emotional Ties: Owners are personally and psychologically tied to their business.This is particularly true for long-running family businesses.

An owner has poured their heart and soul into their business. Where others may see a mundane business, owners – like proud parents, see their business as an apple of their eye. This emotional tie may cause a disconnect with the realities of the market.  Continue reading

Good leaders know everyone is watching.

by Mary Marshall, CEO Coach

good leaders know As a leader, you are always being watched. What you say, what you do, your reactions, your comments, your behavior, everything. Inadvertently passing someone without a “hello” or acknowledgment of their existence could be viewed as a slight by the receiver. Even though that was not remotely the intent.

When I’m working with leaders, they are often surprised when I bring this up. In their minds, people should be able to know what they meant or what they were thinking. It’s just common sense, right? It might be common sense, but we can’t be in the minds of the people we meet or work with every day. We don’t know their frame of mind, what fears or doubts they have, what happened before they arrived at work. What would be “common sense” in a neutral setting, might be anything but given the baggage, everyone shows up at the office with.

Good leaders know that it’s up to them as the leader to be aware of and modify their own behavior given the circumstances, not the other way around. Smiles, frowns, jokes, hurriedness, tone of voice, words, etc. are ALL evaluated for what they might mean to the person on the receiving end. And usually, these interpretations are wrong, but they now create a new narrative about what the leader meant or wanted done. Some leaders feel like it’s a sign of strength to “leave them guessing.” It’s not. It’s a sign of a need for control. Some leaders never clean up their messes – intentionally or unintentionally – and either way, it creates chaos in the workplace and ultimately distracts from the goals.

Continue reading on Mary Marshall’s website…

Options in selling your business: asset vs stock sale.

by Kelly Deis of SoundPoint Consulting

So, you want to sell your business. For most of us, it is a once in a lifetime event. There is no reason to expect that you should know the intricacies of a transaction.

That is why it is oh so important to have good advisers help walk you through the process.

One of the fundamental decisions you will need to make is whether the transaction will be an asset or stock sale. It will depend upon your individual circumstances as well as your business structure.  Continue reading

Washington’s Paid Family and Medical Leave Program.

PFML_Employer_OverviewWashington is soon to be the fifth state to offer paid family and medical leave benefits. All workers will no longer have to choose between caring for their loved ones and making ends meet. They can dedicate their time away from work to be the best caretaker they can be. In return employers have access to an inexpensive benefit, save on payroll costs while the worker is on leave, and reduced employee turnover costs.

Workers can begin taking leave in 2020, but next year employers will have some actions to take.

First, employers need to withhold premiums from paychecks starting with the first check in 2019. These premiums are split between employers and workers. Workers foot most of the bill, but employers with 50 or more employees have a portion to pay also. (Employers with fewer than 50 employees don’t have to pay premiums but are still responsible for collecting and remitting the workers share.) Premiums are paid to the Employment Security Department by employers quarterly, starting in 2019. Learn more about premiums on the Premiums page.  Continue reading

The #1 reason small businesses fail… and how to avoid it.

Cash flow.

Mention those two little words to almost any small business owner, and you’ll see them flinch.

Very few business terms get as cool a response. And sadly, those two little words (both of them four-letter words, interestingly enough), are the #1 reason small businesses fail. They take out more small businesses than any other factor.

In fact, 82% of small businesses fail due to cash flow problemsContinue reading