Selling The Dream

We are big fans of great books.

One of our favorite books is Guy Kawasaki’s Selling The Dream.

In Selling The Dream, former Apple software evangelist Guy Kawasaki lays the groundwork for what it takes to drive passion.

Realizing that people “aren’t stupid” and don’t buy what they’re told, Kawasaki views evangelism as a much more dominant driver of purchase than traditional advertising. The difference between evangelism-based advertising is clearly laid out by Steve Hayden who, along with advertising guru Lee Clow, developed the iconic 1984 ad for Apple:

Evangelism is a much more powerful tool than traditional advertising because evangelism declares, “I believe this and if you join me in this belief, it’s going to be great. Something exciting is going to happen. It’s going to be perfect for me, and it’s going to be perfect for you.”

Contrast this with much of today’s advertising:  “Here’s an attractive offer for you. If you take me up on this offer, you’re going to realize significant benefits.”

Evangelism stems from understanding that brands are co-authored experiences between the customer and the company. Brands that evangelize seek to inspire legions of loyal fans and create mass movements that cultivate the most powerful form of advertising.

Which is why you should…

Start With Why

The starting point of any passionate following is a cause, the why of your existence. Causes that gain traction achieve five things:

Embody a vision

Make people better

Generate big effects

Catalyze selfless actions

Polarize people

These five things are essential if you want to inspire real passion. Which is why it’s important to remember that…

Leaders Must Love Their Cause

Every cause needs a leader who believes more firmly in it than anyone else.

Kawasaki writes, “If a cause is the foundation of the house of evangelism, then the leader is the frame on this foundation. The leader provides the vision for an organization, resolves its seemingly impossible problems, and motivates its members.”

He cites a story about the legendary jeweler Harry Winston: One of Winston’s salespeople couldn’t close the sale of a large diamond. Just as the customer was about to leave, Winston stepped in and closed the deal. When asked how he did it, Winston replied, “That salesperson is one of the best in the business. He knows diamonds—but I love them.”

Which leads us to…

Make Dreams Reality

All movements have objectives; when achieved they create the conditions for passionate followers. These targets have four qualities: they are challenging, few, inspiring, and, perhaps most significantly for modern businesses, stable.

As Kawasaki writes, “Frequent changes suggest that someone doesn’t understand the competition or doesn’t know how to manage people…[they also] usually cause poor morale.”

Sharing The Spotlight: Customers Are The New Celebrities

Influencer marketing is nothing new: companies have been using celebrity endorsements to promote products for decades, if not centuries. But the rise of social media has inspired a new generation of brand ambassadors, and they are real people.

I can still hear Paul Higham’s voice resonating in my mind, “Real People, B.J., Real People.”  Paul was the CMO of Walmart at the time.  After analyzing over 2,000 touch points of influence, Paul was confident that “Real People” were the best ambassadors for the brand. In those days (1989), the internet was not as influential as it is today. So, Paul created a strategy featuring real customers on National TV; this allowed the brand to share 30 seconds of fame with its best customers. Ten Countries and $200 billion in sales later, Paul’s “Real People” strategy was a complete success.

In an amusing side note, most of the TV commercials did not win any awards. However, they did win where it counted most: at the cash register.

The Power of Authenticity

Authentic, customer-led storytelling enhances brand awareness and influences purchasing decisions. We recommend starting small by building relationships with a few carefully selected Brand Lovers—your best customers. Embracing your Brand Lovers and giving them a stage can accelerate your business growth.

Let’s take a quick look at influencer marketing by the numbers:

• Consumer-to-consumer word-of-mouth marketing generates more than twice the sales of paid advertising. (Source: McKinsey)
• 81% of consumers make purchasing decisions based on friends’ social media posts. (Source: Market Force via Forbes)
• 43% of social media users buy a product after sharing or “liking” it. (Source: Vision Critical)

It’s easy to see that people trust themselves and each other more than they trust advertising. Once a person validates his or her choice socially, the purchasing follows.

Here is how three top companies have augmented their traditional marketing messages by partnering with Brand Lovers to share brand and product stories:

Zappos’ VIP fashion and style bloggers

To promote its offerings beyond shoes, the digital retailer engaged with influential fashion and style bloggers, giving the VIP group $300 in shopping credits each month to purchase and design an outfit from Zappos.com.

The strategy paid off. After just a few months, the top referring blogger had generated $9,000 in trackable revenue.

Pottery Barn’s holiday influencers

The beautiful images in Pottery Barn’s catalog can be inspiring, but the level of perfection can also be a bit intimidating.

Brand Marketing Director Kris Mulkey wanted to expand the company’s holiday marketing to show what items could look like in real homes.The brand worked with 12 influencers to show how different types of customers across the country celebrate and decorate for the winter holidays.

“When we’re posting things that are real and feel authentic, people respond,” Mulkey said.

ThredUP’s #badassmoms

ThredU, Chief Marketing Officer Anthony Marino builds the brand by showing customers that the company “gets it.”

“We have a campaign right now running on the site … where we profile some ‘badass moms’ —moms who are makers, breakers, strivers, doing great things in their communities who’ve had some fascinating lives,” Marino says. “We’ve found this has been an incredible bit of storytelling that helps our customers see the types of other moms [who] get involved in ThredUP and how they choose to live.”

Powerful Marketing

The allure of Hollywood stars and charismatic athletes is far from over, but for many brands, the realness and authenticity of everyday customer stories hold powerful marketing potential.

8 Brilliant Retail Ideas That Are Worth Stealing

Feeling a day late for the innovation party?

Not to worry; we have you covered. Here are eight strategies that will benefit your enterprise.  

Foster Community with Shared Memories and Stories

A long time ago, in a boardroom far, far away, a Target leader must have fondly remembered space adventures gone by. In addition to hosting a “Shop the Force” event to promote Lucasfilm’s “Star Wars: Episode VII — The Force Awakens,” with toys, apparel, and other items related to the film starting at midnight on September 4. The retailer offered a “Share the Force” experience both online and in stores.

In stores, consumers were given the opportunity to enjoy photo ops, giveaways, and demos of Star Wars toys.

Online at SharetheForce.com, those consumers were able to turn memories into “holograms” among the stars. The collected memories will eventually be archived at Lucasfilm. It is a place, as Darth Vader might say, we can all meet again, at last.

Try finding ways to bring your customers together. Building a brand community can supercharge your growth and make it harder for your competitors to take market share from your brand.

Join Product, Lifestyle, and Experience

Warby Parker, a designer eyewear brand, encouraged consumers to “enjoy the ride” of the season by downloading a map of must-see destinations across the United States, along with a Spotify music playlist.

Naturally woven throughout were the hottest styles in sunglasses.

Warby Parker was named Fast Company’s Most Innovative Company of 2015, commended for being the first great made-on-the-Internet brand — so a road trip or two may well be in order.

Show Appreciation

Barbara Bradley Baekgaard, co-founder and chief creative officer of Vera Bradley, has maintained a personal touch throughout the handbag, luggage, and accessories retailer’s impressive growth to $509 million in annual sales.

She recently told Fortune, “My father always said, ‘In business, you sell yourself first, your company second, and the product third,’ and he was right. Business is all about forming relationships and having a company that reflects your values.”

When the company first started, the leadership would put $50 in employee’s’ birthday cards and instructed, “This has to be spent on you.”

“Finance asks every year if we can just put the money in people’s paychecks, and I say no,” she said. “When you have found money in cash, it’s just more meaningful.”

Try showing appreciation to your people and watch appreciation becomes part of your company culture. Little gestures can go a long way in helping people around you feel valued and appreciated.

Give Associates an Insider’s View

Kohl’s hosted a question-and-answer session with designer Vera Wang, who visited the retailer’s new Innovation Center. Associates in IT, store design, purchasing, and supply chain operations had the chance to interact with Wang and Kevin Mansell, Kohl’s chairman, president, and CEO.

The event, which Kohl’s called an opportunity to learn from the industry’s top talent, is part of Kohl’s multiyear Greatness Agenda strategy, which has “Winning Teams” as one of the core components.

What are some fun ways you can bring industry experts and your teams together?

Shake Up Perceptions

As an upscale retailer well entrenched in successful marketing initiatives, Nordstrom would be forgiven for playing it safe, particularly when new technology is concerned. To promote its summer sale, Nordstrom took to the roof with a 3D installation, mimicking its Leith leopard-print body dress as part of one giant Instagram post.

This type of comprehensive social media campaign may not have resonated with its typical affluent customer, but Nordstrom is laying the groundwork to develop the next generation of shoppers.

How can you shake up the perception of your brand in the marketplace?

Build Lasting Relationships through Innovative Memberships

At their best, neighborhood coffee shops are all about community and the chance to see familiar faces over a steaming hot cup o’ joe.

Greenwich Village’s Fair Folks & a Goat is based on a subscription model: $35 a month gets members as many coffees, teas, and lemonades as they desire.

Try creating a membership program for your business where consumers feel a sense of inclusion, and receive relevant rewards.

Take Advantage of Cutting-Edge Technology

Maybe it’s time for the Internet of Things to move to the storefront.

London’s The Dandy Lab has done just that. The storefront was originally designed as a home for small independent British fashion designers, and while that is still at the base of the products, technology is used to drive sales.

Because people like a good story with their purchases, a customer can pick up a product, place it on a near-field communication terminal, and see more about the brand on a large flat screen.

Craft an Experience — and Listen for Cues

Step into an Alton Lane showroom and you might find yourself casually having a drink and an engaging conversation about your hobbies.

The premium tailored apparel retailer is creating a bit of a revolution in bespoke menswear, attempting to know its customers well enough to create “the best experience possible,” according to CEO and co-founder Colin Hunter. “We want our team to be observant hosts and hostesses, so we try to pick up on the small cues that naturally come up in conversation.”

Brand DNA

Our approach to understanding customers is founded on what we call the Brand DNA. Brand DNA is the root for developing all long-term strategies and short-term tactics. The Brand DNA consists of three interlocking parts:

• Maslow’s Hierarchy of Needs
• Jungian Archetypes
• The Cultural Story
• Maslow’s Hierarchy of Human Needs

Our work on customers began fifteen years ago trying to understand why some customers develop strong relationships with some brands—brands we labeled Cult Brands. At the heart of this understanding was humanistic psychology, specifically Maslow’s hierarchy of human needs.

Maslow described these needs as instinctoid: they function instinctually in a way like a fight or flight response does.

On some level, these needs motivate everything we do, including purchasing behavior. But not every brand satisfies the same needs.

Understanding the needs you fulfill best is important so that your messaging and strategy does not emphasize something that isn’t motivating your customers to do business with you. It’s important for brands to play to their strengths.

Jungian Archetypes

Humanistic psychology acts as a foundation, but it offers an incomplete picture: it doesn’t explain how the instincts manifest psychically or phenomena like some mothers not having strong maternal instincts.

For this, we turn to Carl Jung’s work on archetypes. Jung has largely been misused by the business world. Those that attempt to apply Jungian ideas tend to try and pigeonhole brands into a limited number of archetypes. This runs counter to Jung’s thinking: he saw the number of potential archetypes as being vast.

Jung thought of archetypes as patterns fueled by instincts.

These archetypes are evolutionary psychic structures. He used the term collective unconscious to describe the sum of all these structures that influence a person’s psyche. They organize the way we interact with and view the world.

Archetypes have both positive and negative—what he called the shadow—sides. This explains why some manifestations of the mother archetype may result in a lack of nurturing.

Understanding what archetypes are linked to your brand is important so that you can reinforce the patterns that positively affect your customers’ psyches and avoid affecting them negatively by accidently emphasizing shadow aspects of the archetype.

The Cultural Story

The Cultural Story is perhaps the most complex piece of the Brand DNA. It takes into account both the hierarchy of human needs and archetypes, and how they manifest to solve tensions in the culture or subculture of the customers.

It is the story of your brand in the customers’ lives.

The Cultural Story is rooted both in ideas of comparative mythology—how stories common to all cultures manifest in a modern, relevant context—and marketing ideas of drivers of choice, drivers of differentiation, and a competitive landscape.

Understanding the Cultural Story is important because it explains how you solve problems that are important in your customers’ lives and how to position yourself against your biggest competitors.

Onward

Next week we’ll dive deeper into the first part of the Brand DNA—the hierarchy of human needs—and how it applies to business.

Until then, start thinking about:

• What needs in Maslow’s hierarchy does your brand fulfill the best?
• What are you doing to reinforce these needs?
• Are you reinforcing any needs that don’t play to your brand’s strengths?

What Is Appvertising ؟

When we think Internet, we mean mobile, and vice-versa.Years ago, we had to connect through dial-up and cable.

Today we have full access to the World Wide Web from smartphones, tablets and other WiFi-enabled devices – meaning individuals and companies are not dependant anymore on their laptop or desktop computer to enter the cyberspace. Mobiles are a lightning fast growing industry.

As of 2010, there were 5 billion mobile phone connections worldwide, more than a billion being added in just 18 months, according to Wireless Intelligence. Ben Wood, an analyst at CCS Insight, said for BBC

“Five billion phones means there are more than three times as many phones as personal computers”

And a (2010) Morgan Stanley study report predicts that by 2015 more users will connect online via mobile devices than desktop PCs owners.

We see the stats and we recognize the power of mobile marketing, so how can businesses leverage this platform and get the most out of it – that is the question. In other words, how can a company attract the right target audience, and sell more products and services through mobile channels, delivering greater ROI.

Well one big Answer: appvertising, or mobile application advertising.

We are living in the  mobile app decade

We cannot run marketing campaigns the same old way and expect different results. Nowadays, professionals are looking for new ways of reaching customers, and appvertising looks promising.

Like with any new medium, you have to firstly understand how it works, and run some trials.However, principles remain, so one cannot neglect facts, nor overlook consumer psychology:

If YouTube transformed TV, mobile apps will completely shift the way we sell and market online, and how users interact with content and information.

Appvertising enables advertisers to promote their product (or whatever offer they are marketing) inside phone applications through video ads, banners, surveys, and so forth. Apple’s iAds have tried to tap into this opportunity, but has not capitalized yet.

What are the numbers?

If you take this mobile advertising route, then you need to know the stats. Because the question that follows is: what type of apps should I advertise in?

In the Morgan Stanley report we cited earlier we also find that most people prefer to download games apps on Facebook or from the iPhone store. Games also total about 20% out of all applications.

Should you advertise in games?

It depends on your brand, offer and target audience. However, what appvertisers should keep in mind is to avoid interrupting users; it is better in terms of conversion and profit to contextualize the ad/offer within the app.

In other words, blend it inside the specific application, and make it as a natural part of the game for example. The same way Google Adsense users blend in ads on their website content/page.

Consider that an app, the mobile platform, how often a user engages the app, what time of year they use it, and phone model itself can all influence the demographic you may be targeting. There are many levels of targeting options and more apps being created every day as new channels for these ads. If I had to share one last piece of advice, I would add this: the secret to success with Appvertising is to:

1.    Know the app/game and its rules

2.    Keep in mind the facts, and understand consumer psychology, not the message YOU want to push

3.    Never interrupt the app user, but blend your ad within the context

4.    Target your audience right, or everything else will fail

Facebook and games apps are running the leaderboard on mobile phones, while Groupon is king when it comes to online deal making. Think of how to tie in the facts with your offer/product and create a winning ad.

Delight Your Customers Before Your Competitors Do

Cult Brands are masters at building meaningful, long-term relationships with their customers.

Understanding the strategies behind these businesses with raving fan communities enables you to apply the same principles to your business, and build sustainable growth.

Here are four ways to give your best customers a VIP experience:

1: Surprise Them

Connect your brand promise with customer rewards to delight your biggest fans.

MasterCard made their brand promise a reality by surprising customers with “priceless” moments: VIP tickets to the Grammys, jam sessions with Justin Timberlake, and acting lessons with Hugh Jackman.

What can you do to surprise and delight your customers?

2: Give First Access

In 2014, pop sensation Taylor Swift searched the Internet to find fans across the US and UK to invite them to a secret gathering. The unsuspecting fans were joined by Swift at private listening parties for her album “1989” a month ahead of the release. Swift’s brand lovers—her Swifties—were rewarded with first access to her music and personal time with their idol. Swift took the opportunity to connect with her best customers on a human level. The “top secret” sessions generated 2 million views and Swift sold 1.2 million albums in the first week.

First access to a product or service can drive loyalty and create positive word of mouth towards your brand.

What are some new products or services that you have in the works that your brand lovers can experience first?

3: Break Bread

Friends who eat together, stay together.

Inviting your best customers over for dinner is a great way to create genuine friendships. These moments are ideal for listening to customers’ needs and finding out why they love doing business with you. It also allows your employees to meet the people they are serving and create positive memories with them.

With time, customers can even consider you a part of the family.

Try creating an event where your team shares their favorite foods with some of your best customers.

4: Care About Them

Connecting on a human level with a customer makes them feel like a VIP. Support their cause. Send them flowers when they are sick or celebrating. Congratulate them when they reach important milestones in life. Show them that you care about what they care about.

What do your customers care about?

Customer satisfaction is just the start.

When you make your customers feel very important, you unlock the power of your brand.

7 Rules to Grow Your Business

Keeping these rules in mind makes it easier to decide how to grow your business and foster loyalty.

1: Differentiate

Cultural anthropologist Margaret Mead summed up the challenge facing today’s marketers: “Always remember that you are absolutely unique. Just like everyone else.”

Your customers are driven by two simultaneous desires that appear to be diametrically opposed to each other. They want to stand out from the crowd and be a unique individual while simultaneously wanting (and needing) to be part of the crowd, receiving the social support and approval of like-minded individuals.

How do people meet these opposing needs?

By belonging to a group they identify as being unique, often outside of mainstream society.

If you’ve got a home, you need furniture. The community of people who need furniture is considerable. But the community of people who need furniture with minimalist charm and serious organizational capacity (and enjoy quirky Swedish names) is smaller and distinct—just different enough to make IKEA irresistible to legions of their fans.

Your customers want to be part of a group that’s different. It’s that simple.

2: Be Courageous

Even in the face of doubters and critics, Cult Brands dare to be different—and succeed. Cult Brands are successful because they are wholly unlike every other company in the marketplace.

Cult Brands believe in themselves, their products and services, and their customers. They want to challenge conventional wisdom and transform it when given the chance. Willing to take significant risks, the people behind Cult Brands are fighters and leaders, not quitters or followers.

When Whole Foods started in 1980, there were less than six natural foods supermarkets in the United States. Today, the natural and organic foods market is estimated at more than $28.6 billion.

Cult Brands, however, don’t waste their time or energy worrying about who is following them.

Their attention is focused on how to better serve their customers.

3: Promote a Lifestyle

Cult Brands sell more than a product or a service. Customers want more than just things; they are seeking experiences.

Experiential purchases are more meaningful than material purchases. As such, all Cult Brands sell lifestyles. They develop and sell “the tools” that help their customers pursue their dreams and celebrate distinct lifestyles.

Cult Brands remove barriers for their customers. Apple promotes a creative lifestyle that facilitate self expression. Jimmy Buffett celebrates life as a party. The Life is good Company promotes a laid back weekend BBQ with friends.

Your customers have aspirations. Those aspirations are powered by emotions. If you can support your customers in the realization of their aspirations, they will associate their positive emotions with your business.

4: Listen to Your Customers

Cult Brands focus on serving the wants and needs of the customers they have. They have the ability to listen to their customers’ discontent and create solutions that build strong, enduring loyalty.

By listening, Amazon.com discovered that the high cost of shipping interfered with how often their customers made purchases. In response, they launched Amazon Prime in 2005, a program in which members enjoy unlimited free two-day shipping in exchange for a yearly fee.

It’s an initiative that has been more successful than anyone could have ever imagined. Over 40 million people are Amazon Prime members. The typical Amazon Prime member buys as much as 150 percent more than non-Prime members. It’s a powerful example of the results of listening.

Respect your choir. Listen to them. Value their opinions. Reward them. Never ignore an enthusiastic follower of your business. Remember that core followers all want to believe, but first they need to see miracles in the form of unexpected gifts and surprises.

Do extraordinary things for your choir and they’ll become incredible brand evangelists.

5: Support Customer Communities

Cult Brands know how to start a cult. They build strong, ongoing relationships with their customers by developing and supporting customer communities.

Cult Brands aren’t afraid to use today’s profits to support customer communities to generate powerful, long-term goodwill for their businesses and their brands.

When possible, they establish social events that reflect their missions. MINI created their annual Take the State tour. Life is good puts on their popular Music Festival each year.  Harley supports HOG Rallies worldwide.

Rule #6: Be Open, Inviting and Inclusive

You don’t have to earn your way into a Cult Brand by proving you’re cool enough. Cult Brands take it as a given that you’re already cool enough.

Cult Brands welcome customers of all ages, races, creeds, and socioeconomic backgrounds with open arms. They don’t discriminate against anyone who doesn’t fit into an idealized customer profile. Everyone is welcome.

Cult Brands prove to their customers that they are indeed open and inclusive by helping to fulfill the deep human needs that we all share, including belonging and self-esteem.

7: Promote Personal Freedom

Deep inside every human being on this planet is a need for freedom.

According to Abraham Maslow, the feeling of freedom is a bridge to self-actualization: we want to be able to grow and express our own unique identity and worldview without fear of consequences.

Harley promotes freedom on the open road. Vans promotes freedom from convention. Linux promotes freedom of information. Apple promotes creativity and self-expression.

Cult Brands are empowering and expansive. When customers engage with a Cult Brand, they come away feeling like they can do more, and do it more effectively.

Tapping into the Forces Behind Customer Loyalty

Integrating the Seven Rules of Cult Brands into your operations expands the number of ways you can tap into the forces of customer loyalty.

Consistent application of these principles will strengthen the bond you have with your existing all-star customers, while simultaneously creating new customers.

As your customers deepen their emotional connection with you, their loyalty will grow. Your organization will become stronger, more resilient, and distinct.

By BJ Bueno & Scott Jeffrey

Why Ignoring Cash Flow Can Kill Your Small Business

Businesses face many hurdles, especially when just getting started, and cash flow is near the top of the list. Even for profitable companies, it can be a challenge to make sure that more money is coming in every month than is going out. Inventory, accounts receivable, vendor contracts and payroll all must be managed effectively so companies don’t lose out on needed investment and growth due to a shortage of working capital.

We asked Jeremy Office, a Delray Beach, Florida-based wealth advisor to entrepreneurs and a member of NerdWallet’s Ask an Advisor network, about ways business owners can control their cash flow and grow their businesses.

Why is managing cash flow important for small businesses?

Managing cash flow is the determining factor of whether a business succeeds. Statistics show upward of 50% of businesses fail. In many cases, these are profitable businesses, but they close their doors due to poor cash flow management. While the primary concerns are obvious, such as meeting payroll or paying a supplier, it’s the ripple and compounding effects of consistently poor cash flow management that can be truly damaging.

Here’s an all-too-common scenario: Bob’s Dry Cleaning is a profitable business, so Bob decides to make a down payment on a new piece of equipment. He doesn’t pay attention to cash flow, however, and the money he spent on the equipment was needed for payroll that week. He doesn’t have the cash and fails to meet payroll (this wasn’t the first time), so his pickup/delivery driver quits. Bob is in a panic and shifts his focus to pickup/delivery to fill the void while also trying to find a new driver. Bob doesn’t have time to call other accounts to collect receivables in a timely fashion, so a couple more payments are delayed.

Meanwhile, Bob’s biggest client is unhappy because his deliveries are delayed, and he decides to find a different vendor. The next payroll cycle arrives, and it’s twice as big now. At the same time, rent is also due, and Bob has a new payment owed on the equipment purchase he made. Bob can’t go two cycles without paying his employees, so now Bob’s time is spent managing late payments to his landlord and equipment vendor and assuring them he’ll pay ASAP.

Bob is frantically trying to understand who owes him money and calling them to get paid. He has no time to focus on getting new accounts, so his sales start dropping. Bob starts losing clients because the delivery driver he hired out of desperation hasn’t had the proper training and mixes everyone’s clothes up. Before Bob knows it, he is consumed by his business and doesn’t know what to focus on. His once-profitable business is now on the verge of closing its doors because he no longer has the revenue to support his monthly burn.

A small business that needs to implement a new strategy — for example, increasing inventory for the holidays, hiring new employees, implementing new technology or buying new equipment — can do so faster and have conviction in its decision if it understands the repercussions and plans for the cash flow impact. Cash crunches are inevitable for a small business, but it is much easier to overcome when the business anticipates and has ample time to find a resolution.

What should small-business owners keep in mind to most accurately calculate cash flow?

They should stay focused on actual rather than hypothetical data. Small-business owners often make decisions based on the expectation of receiving cash in the future, and when that doesn’t happen, it can put them in a cash crunch. This isn’t to say you shouldn’t account for future receipts (as this is important in modeling cash flow), but rather you should be realistic as to when such receipts will be received. If an invoice owed to you is due in 30 days but the customer has always paid 15 days late, you should account for the additional delay when projecting cash flow.

It’s important that small-business owners continually monitor their cash flow process to ensure their expectations are in line with what actually happens. This will help build conviction and reliance upon the process.

What are some simple tools small businesses can use to track their cash flow?

Tools for managing cash flow are abundant and vary based on the information needed, technical expertise required and level of automation. Various websites dedicated to small business, along with well-known business applications such as Microsoft Office and Google Docs, have created standardized templates that can be downloaded for free. In recent years, there have been various software platforms and applications that have surfaced to help manage cash flow. A simple Google search will yield a multitude of platforms, including Pulse, Float and Up Your Cash Flow. And many of the leading accounting programs have started incorporating cash flow management tools (for example, QuickBooks’ cash flow forecast report).

Each option has its own strengths and weaknesses, and a small business should base its decision on the tool that it finds most efficient. A tool is only beneficial if the information it provides leads to actionable results, so if a small business finds that a tool is too complex or it is not able to pull beneficial information, the owner should look for another solution.

In general, it’s a good idea to hire an independent consultant to establish the framework and teach the business owner how to utilize cash flow. This provides a resource to call with questions and leads to a deeper understanding.

Jeremy Office is a wealth advisor to entrepreneurs and principal of Maclendon Wealth Management, based in Delray Beach, Fla.

The article Why Ignoring Cash Flow Can Kill Your Small Business originally appeared on NerdWallet.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Read more: http://www.nasdaq.com/article/why-ignoring-cash-flow-can-kill-your-small-business-cm622838#ixzz49B1iRhea

A Beginner's Guide to Freelancing

More than one in three American workers are setting their own hours and working from home or cafes while still contributing to companies large and small on a consistent basis. Yes, freelance or contract employees are here, and they're here to stay, given that technology increasingly allows us all to work together without being together. Freelancing, meanwhile, can be a job all its own, and is often devoid of collaboration. For those of you considering going this route, consider our beginner's guide before going it alone.

Starting: Making Connections and Getting Hired

The first step toward becoming a successful freelancer is to create your identity online. "Build your brand," a phrase you'll hear often in this space, starts with creating an online portfolio to show potential employers what kind of work you have executed in the past and, perhaps, to show some of your personality. To do this, consider using a website-building tool like Wordpress or Squarespace. Furthermore, completing and updating your LinkedIn profile -- and building a following on social media (i.e. Twitter, Facebook) -- will help give employers context as to who you are and what you're capable of doing.

Next, build your address book and reach out to every contact with whom your name carries weight. Tell your friends, peers, past colleagues about your new venture and ask them for advice; it's a nice, veiled way of asking for work. (Example: If you're a freelance writer, email your old student newspaper colleagues or any editors that you worked with previously.) This strategy will only get you so far, so the ensuing step will be to join online communities connecting freelancers with hiring companies. Websites like UpWork, WorkMarket, Elance will connect you with people you don't already know. Once you're logged on, you'll be able to scan job listings and submit applications. This is really the key at this early stage: Foster existing relationships and go about creating new, fruitful ones. You never know who might be the first person to offer you a gig.

Beyond interacting with people with the power to give your work, rub elbows with your competition. Read up on the market for freelancers within your field, whether it's graphic design or accounting. The Freelancers Union, one such group, covers professionals of all types, and other organizations exist for freelancers with a specific niche. (If you're a freelance writer, check out the Editorial Freelancers Association and the Society of Professional Journalists Freelance Community, for example.)

Optimizing: Scheduling -- and Valuing -- Your Time

Once the online version of you has been created and you've been connecting with actual people online or off, it will be time to get into the actual practice of being a freelancer. The truth is that it's one part salesman, one part project manager, one part tradesman and one part bookeeper. Whether you're responding to freelance opportunities or pitching your own ideas to companies, you'll have to gain the skill of selling yourself. To do this, figure out the overlap between your overall skillset and the void existing at the company or companies that you're targeting. Tailor your pitch to them with this venn diagram in mind. Oh, and never say no to an assignment. At this stage, you can't afford to. All work is good work. Be available for it, accept feedback and strike a balance between being communicative and being autonomous and resourceful.

Now that you've had an attitude adjustment, you need to streamline your workflow. Enter the project manager. Some specific advice: Without losing a personal touch in your dealings with employers, build a template for everything you'll be doing, from pitches to invoices; tools like Harvest, FreshBooks and Zoho Books can help with the bookeeping aspect of your job. Back to managing your time: Build a schedule for yourself and your work, which will push you into a daily routine and allow you to find your creative zone. No longer stuck in the 9-to-5 mindset, you might find yourself the most productive from 12 to 8 p.m., for example. There are many free online tools to accomplish this, but something like Google Calendar, with its ability to remind you of deadlines, should suffice while you're starting out. During this process, track every assignment, how much time you spent on and how much you earned from it. Having this list, however informal, will remind you to evaluate the worth of each assignment and to strive for more challenging -- and, ideally, lucrative -- work over time.

Financing: Getting Paid and Paying Taxes

OK, so now you're a pro, and you can pick and choose which assignments you'd like to take on. With each potential assignment, whether it originates from you or the employer, figure out if it's worth your time. Perhaps, when getting started, you completed a project for a non-profit organization free of charge, just to add to your portfolio. Now you can afford to weigh its financial value. The simplest way to do this is to estimate the number of hours it will take you to complete and then apply a "market rate" to that number of hours. Go through this practice even if the employer wants to pay you a flat fee. Figuring out the hourly cost will help you determine if their suggested fee is a fair one or not; if not, you can explain your formula in the course of your negotiations for a higher one.

What is the market rate? Besides asking straight out, there are myriad ways to figure out what your peers are earning for similar work. For example, Contently.net maintains a rates database and Whopayswriters.com has a similar trove of user-supplier data for scribes specifically. Keep in mind that not all hiring companies have an established rate or even expectation. Your ability to explain to them why you should be paid how much you're asking for goes a long way toward actually being able to get it. Beyond "market rate" pricing, as described above, there are two more ways to quote or estimate a project fee. Firstly, consider the costs to you first and foremost -- perhaps long-distance phone calls, buying software or meals and hotel stays -- and then tack on a a sufficient profit. A second option: Consider the value of the project to the company. In other words, one project completed for a multi-billion-dollar corporation should pay more than a 12-person startup company would. It almost goes without saying, but you should be more earning more than the nationally proposed $15 per hour minimum wage.

The salesman in you can rest now. Time for the bookeeper to take over. You don't have to become an actuary to do this right, but there are two important financial issues to consider for full-time freelancers: taxes and health insurance. As for the latter, open up a separate savings account and put aside a percentage of each check; after all, your local, state and federal taxes won't be taken out until the springtime. Additionally, track your expenses for the purposes of deduction, whether you invest in a new office chair for your desk at home or have to travel for an assignment. You could go so far as to set up an LLC to keep your personal and business expenses completely separate. As for the benefits you would forfeit by forgoing full-time work, just because you're going it alone at work doesn't mean there isn't a health insurance product that fits your needs.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Business News

You’ve come up with an idea for a product or service, identified a target market and decided to start your small business. Congratulations on pursuing your dream! Now comes the hard part — long months spent building a business, one customer at a time. The first year of a small business’s existence is crucial, as entrepreneurs run headlong into critical questions. What should I be focusing on? Where should I turn for financing? And what are the pitfalls to watch out for? We asked members of NerdWallet’s Ask an Advisor network about ways business owners can get off to a good start with their entrepreneurial dreams. What are the key factors small businesses should think about in the first year? RITA CHENG, FINANCIAL ADVISOR IN ROCKVILLE, MARYLAND Prior to and in the beginning stages of launching your venture, there are a few key things you should do: Consult with a certified financial planner to make sure you have the proper insurance in place. Consult with a tax advisor to make sure that you have the correct structure for your business (for example, sole proprietorship, S corporation or limited liability company). Maintain good records. Do not commingle personal expenses with business expenses. Focus on cash flow and building client relationships. Manage excessive or insufficient inventory. Monitor your accounts receivable, because uncollected receivables hamper your business’s growth and could result in cash flow management problems. Manage your working capital, which is defined as current assets less current liabilities. Without sufficient working capital, you will not be able to stay in business. JEREMY OFFICE, DELRAY BEACH, FLORIDA-BASED WEALTH ADVISOR TO ENTREPRENEURS The most important factor should always be the quality of the product or service. In focusing on delivering the highest-quality product or service, it’s imperative to manage the staging of revenue and investment early in the life cycle. If a company loses sight of delivering its product to market in ample time to generate sufficient revenue to meet obligations, there can be significant consequences, and the future of the business could be at jeopardy. Also, businesses should be aware of their timeline so they know the ripple effects of failing to meet hurdles. This allows them to make strategic shifts, such as financing or ancillary product launches, to ensure they have the necessary resources to meet their objectives. Ultimately, the goal is delivering the best product or service, and the process should be focused around sustainability. ANNA SERGUNINA, FINANCIAL ADVISOR IN WASHINGTON, D.C. In the first year, it’s hard to see far, therefore focus on bringing in as much revenue as possible. And keep expenses lean — this will circle back when you start thinking about raising capital. What are some of the options for raising financing at this early stage? What are some of the advantages and disadvantages of these options? Jeremy Office: One option is self-funding — using your personal savings, as well as leveraging assets or grants. The advantages are that you’re not beholden to outside investors, you retain 100% ownership, and the timing can be fast. The disadvantage is that all the risk is on you, and you can potentially lose your life savings and assets. Businesses can also tap outside money — angel funding, venture capital and private equity funding, and banks and other institutional investors and lenders. The advantages are that you can align with “smart” money, outside investor accountability can be a positive, and there are massive amounts of available funds. The disadvantages are that it can be a difficult process, terms can be less than favorable, it’s time-consuming and expensive, and accountability can also be a negative. Rita Cheng: Outside investment is an option, but you can reduce or diminish your own control and influence if you accept money from investors too early. Angel investors or venture capitalists may want to have a large share in their invested company as well as have a say in every business decision, including routine ones. New business owners can also access financial capital through debt financing. Business loans can offer business owners exactly what they value: the essential financial capital to launch their new businesses. Anna Sergunina: As for getting financing from friends and family, this might create unnecessary tension in the family if something goes wrong. Think about future Thanksgiving dinners! But you could also create a positive outcome and allow for the business to stay in the family. Another option is strategic partnerships. Consider finding another business that supports your business idea and offers a complementary product or service. Offer it a small share in your business. This will provide exposure to its network of clients and will help build credibility for your brand and business faster. How can business owners determine how much they should raise? Anna Sergunina: It will depend on how much expansion is anticipated and how fast you want to grow. Project fixed and variable costs for six to 12 months out. Factor in your sales cycle (how long it takes to sell your product or service) to determine how much capital you will need to support it. Jeremy Office: Start with the total budget needed to get the business to sustainable cash flow. From there, you should look at the various milestones the business will need to accomplish (for example, conception, prototype, beta testing and market acceptance) and determine how much money is needed for each stage. For startups backed by outside investors, the earlier the stage, the more equity the business will be giving away; thus the owner should determine the amount of capital needed to get to the next stage that justifies a significant increase in valuation. Business owners should raise that amount with a comfortable cushion. This way you preserve equity for stakeholders while also mitigating risk as you accomplish needed objectives. Rita Cheng: Seek the guidance of professionals in this area. There can be multiple rounds of financing if a business is going to be successful. The challenge is sometimes getting caught in raising the money, then forgetting about the business. Every company’s situation is unique and must be evaluated independently. What kind of cash flow analysis might be helpful in this situation? Rita Cheng: Cash flow has two components: inflow from the sale of goods and services or proceeds from loans or lines of credit, and outflow attributed to business expenditures, loan payments and business purchases. The maxim “Cash is king” holds true. Business owners need cash to create, manage and expand their business. However, despite its importance, many small-business owners experience challenges in understanding and managing their cash flow. Inaccurate cash flow analysis can affect the day-to-day operations of a business, as well as the ability for a business to beapproved for a loan. Anna Sergunina: Figure out your cash burn — how much cash you’re going through within a specific period of time. This will help you determine what your needs are for how much needs to be raised. Also, this should help point out unnecessary expenses and what could be cut or reduced. Jeremy Office: It’s important to project cash flows and consistently monitor against such projection. The business owner must focus on actively modifying the projections as production or delivery timelines change. Too often, businesses delay product launches without considering the impact to their cash flow. Taking a proactive approach to constrained cash flow is the best method to ensure you make it through. Read more: http://www.nasdaq.com/article/what-business-owners-should-think-about-in-the-first-year-cm623544#ixzz49B1AWPP8