Business owners often get trapped because they don’t heed the messages their business sends and they don’t pay attention to basic principles. The following checklist represents a clear set of danger signals - situations and issues - that have a clear and negative effect on cash flow.  Take a few minutes under the harsh, cold light of reality to ask yourself how many of the following danger signals exist in your business and then evaluate carefully their implications:

* No physical inventory taken on a regular basis.
* Lots of unsold inventory sitting around.
* No monthly cash budget projection.
* Bank credit line not paid down to zero within the last year.
* Term loan payments were paid late one or more times within the year.
* Buying at trade shows without a purchasing plan.
* Short-term credit like credit lines used for long term assets such as rental equipment.
* Bank statements not reconciled every month.
* Supplier discounts rarely taken for early payment.
* Projected annual sales increase of over 25%.
* Balance sheet prepared only at the end of the year, and only used for tax purposes.
* No review of financial statements on a regular basis.
* High interest rates on bank loans.
* Increasing amount of credit supplied by credit cards.
* Bad debt expense increases every year.
* No Accounts Receivable report on weekly basis.
* High moving items are often out.
* Payroll checks have been written late one or more times this year.
* No systems in place to prevent internal fraud.
* Only communication with CPA is in April to discuss tax avoidance strategies.
* No handle on company cost structure or breakeven level.
* Showing profits but no cash.
* Business cycle contains sharp seasonal slumps or booms.

Perhaps the greatest danger of all:  not having adequate records and/or financial skills to be able to answer all of these questions - or not having any questions to ask! Planning is the vital element, especially when we’re talking about cash flow.  Danger signals are just that - signals.  The longer you wait, the fewer options you will have.  Now is the time to gain control and keep it.  Get yourself ahead of the game, sleep better at night, and get in a much better position to weather whatever rough seas lie ahead.

If you want to learn more about avoiding a cash crisis, come get a Fiscal Physical!

How am I doing compared to others in my industry? What’s going to happen to my company if sales decline? Can I afford to expand my business, and is now the right time? If I’m making profit, why don’t I have any cash? Will I run out of cash at any time during the next year? What happens to profits if certain costs suddenly increase? How much will I need to increase sales to pay for that new piece of equipment?

These and other questions confront and confuse small business owners on a regular basis. Business finance is much like a foreign language, requiring a method of translation to understand its meaning.

Bank of Illinois and the Illinois Small Business Development Center at ISU are offering a series of workshops to business owners that will “translate” the language of business finance into plain English, so you can understand what the numbers are trying to tell you. This series is designed for companies who know they are experiencing financial challenges, as well as those who think they are doing well. Even a healthy person goes to the doctor for a physical exam once a year – just in case.

Through a detailed analysis of company financial statements, learn how to:

• Compute financial ratios and show how your company compares to others in the same industry.
• Determine your “breakeven point”, and explain how breakeven will be affected in scenarios where you anticipate future changes in costs, price, or sales volume.
• Convert your projected Income Statement into a Cash Budget, so you can manage cash flow without unexpected surprises.
• Calculate the amount of future financing needed when sales growth is projected.
• Diagnose financial problem areas and identify the likely causes, utilizing a tool called “The Financial Roadmap.”

January 17, 2008, 8:30 AM – 12:00 Noon
Using Financial Statements as Management Tools
Financial Statements: Practical Case Study

January 24, 2008, 8:30 AM – 12:00 Noon
Profit Planning/ Cash Budgeting Case Study
Cash Flow Management: Case Discussion
Pricing and Sales: Break-Even Case Study

January 31, 2008, 8:30 AM – 12:00 Noon
Managing Growth: “Financial Gap” Case Study
Working with Banks – Loan Proposal Checklist

Date: Thursdays - January 17, 24, and 31, 2008
Time: 8:30 am to 12:00 noon
Location: College of Business Building, Room 430 - Executive Classroom
Cost: $50 per workshop or $125 for the complete series of three. Fees include a 192-page work-book binder.

Register now online or contact the Illinois SBDC at Illinois State at (309) 438-3610.

In our line of work, we see a lot of ugly financial statements.  Not ugly in the sense that the business is performing poorly (well, we see some of those too!) but ugly in the sense that they contain glaring bookkeeping errors.  We suspect there are several reasons for this. One is the proliferation of software that makes doing the books yourself attainable for almost anyone with basic computer skills. Answer a few interactive questions, choose from the drop down list of industry choices and you’re off and running with your very own profit and loss statement.  Press a few more buttons, and voila, instant balance sheet.

The other reason is that many business owners only consult accounting professionals at year-end to figure out how to reduce taxes.  While we’re usually all for saving money (and paying no more taxes than absolutely necessary), this approach can cost dearly in the long run.  First of all, if you’re waiting until year-end to do tax planning, you might be waiting too long to take pro-active steps.  In addition, if you do the books in-house, you’ll mostly save a lot of time (and not a little heartache), if you bring in a professional to help get you set up correctly from the start, and periodically review your statements to ensure accuracy.

And finally, most business owners, if they’re not doing the bookkeeping themselves, are most likely in the difficult position of having to hire, train, and then manage a person in a position about which they themselves might have little or no knowledge. Not an ideal situation.  Then, periodically, you get to review the output of this person, again not really knowing what you should be looking for (or at).

We have entire workshops around reviewing the numbers part of financial statements to use them to diagnose the financial performance of your business (including QuickBooks training in August).  Here, however, is a brief primer for the non-numbers business owner on how to review statements to help determine if they are, at the very least, an accurate reflection on what’s happening in your business:

Balance Sheet

Are there any unusual balances, such as:

• Negative amounts (only accumulated depreciation & amortization should be negative)
• Negative cash - should be in the form of a note payable (or bank overdraft) on the liabilities side
• Inventory - amount should vary from month-to-month according to actual inventory levels (if inventory is off, then your cost of goods, net profit and retained earning amounts will be off as well.)
• Accounts receivable - should have a balance (assuming you sell on account)
• Accounts payable - should have a positive balance (unless in the unlikely event that you’ve paid off every one of your suppliers by month end)

Profit and Loss

• Sales and cost of goods sold detailed for each category
• Sales should be greater than cost of goods sold for each category
• Cost of goods should vary every month to reflect actual expense, not estimate
• Estimated depreciation should be entered monthly, and then reconciled to actual amount at end of year

Overall Look:

• Profit and loss expenses should be grouped by expense category, for example: sales & advertising expenses, employee expenses, general and administrative, and not just listed by alphabetical order.
• Add a column that shows expenses as a percentage of sales, along with year-to-date and year-to-date from prior year so you can see trends and determine real changes in your expenses, not just changes due to sales increases or decreases.

And finally:

Be curious, don’t be afraid to ask questions, and if it doesn’t seem right to you, get to the bottom of it! If you (or whoever you use to do your books) can’t produce both an accurate profit and loss and a balance sheet on a monthly basis, think about outsourcing or upgrading your bookkeeping services. And if your accounting professional isn’t available for large portions of the year due to tax work or isn’t capable of providing this type of advice, find one who is. We promise they’re out there.

With over 3 million small business customers and 230,000 accountants, QuickBooks is the #1 rated and recommended small business financial management software year after year. Small business owners frequently use QuickBooks to perform the day-to-day bookkeeping.  The problem has been the lack of training available to learn how to use the program.

The Illinois Small Business Development Center at Illinois State is offering Hands-On QuickBooks training in a one day event led by Rob Smith, a CPA, QuickBooks ProAdvisor® and partner at Gordon, Stockman & Waugh, P.C.  Rob’s experience with small businesses and QuickBooks will provide you with better ways to set-up and run QuickBooks.

The training will focus on 2 levels of QuickBooks knowledge.  For people who are new to QuickBooks, the “Basic” session is the place to start.  This session will give an overview of how to enter data into the most common features of the program.  The “Advanced” session is for people currently using QuickBooks.  Participants will learn to use the software for more of their bookkeeping functions and learn more of the software’s capabilities.

Each participant will use a computer and QuickBooks software during each session.

QuickBooks Basic Session will be held on August 14, 2007 from 8:00 am - 12:00 pm. Advanced QuickBooks will be held on August 16, 2007 from 8:00 am - 12:00 pm. There is a $90.00 registration fee per session.

Beginner Class will cover:

The two basic functions of QuickBooks:

• Money coming in – sales receipts and invoicing
• Money going out – checks, bills and credit cards

A clear understanding of how to enter:

• Invoices
• Sales receipts
• Received payments
• Bills
• Paying Bills
• Checks

Some basic functions and preferences.  Time savings techniques.

Advanced Class will cover:

Learn more about what QuickBooks is capable of completing for your business.  This Hands-on Session will include an in-depth discussion of:

• Month End Procedures
• Mastering Reports
• Sales Tax
• Tricky Items such as: Bad Checks, Barter Exchanges
• Back Reconciliation Problems
• When to use Journal Entries
• Payroll Overview
• Item Lists
• Open Discussion of attendee’s problems

All courses will be held in the College of Business Building at Illinois State University in room 22G.

Seating is limited so sign up today!

Register online or by calling 309.438.3610.

Get ready for a down-to-earth, hands-on, and practical workshop. One challenge in business is understanding how seemingly non-financial decisions affect cash flow and profitability. The reality, of course, is that any decision you make in your company affects your finances. Sound financial management is essential for business success. Unfortunately, most business owners have not been trained in accounting or finance. Over 90% of business failures are attributable to poor financial management. When you don’t know where you are, it is difficult to chart a future course.

Participants will work with case studies to learn how to solve the root cause of financial problems–instead of just treating the symptoms.  We’ll also show participants how to analyze company performance with financial ratios and how to use industry comparison analysis.  A key component of the ratio analysis is the Financial Road Map.  This valuable graphical tool will help business owners see how different parts of a company can drive financial performance.  Participants will understand what financial statements really tell them about their business operations and gain expertise and confidence to take action. You will leave the Profit Mastery Workshop with a process for evaluating your business and a strategy for implementing change.

Who Should Attend

Business owners, key managers, entrepreneurs, business advisors and others whose decisions have an impact on your company’s financial performance. Profit Mastery is designed to enhance the financial management skills of all business people, regardless of your area of expertise.

When: April 24 AND May 1, 2007 from 8:30 AM – 12 Noon

Where: Bank of Illinois, uptown Normal

Registration Fee: $100 – includes 195 page work book valued at $45!

For more information about this specific course, please contact the Illinois Small Business Development Center at 309-438-3610 or sbdc@IllinoisState.edu

If you have a suggestion for a workshop or seminar topic, please email your suggestion to sbdc@IllinoisState.edu.

Reasonable accommodations for persons with disabilities will be made if requested at least two weeks in advance. Contact the Illinois SBCD at 309-438-3610 to request any accommodations.

Our Certificate in Small Business Management will allow you to gain the advantage you need to succeed as a small business owner or operator. Taught by a combination of Small Business Development Center staff as well as local attorneys, accountants, and business professionals in the trenches, you’ll receive answers to your questions - no theory!

Registration fee of $165 for the entire program or $20 per class! Space is available on a first come, first serve basis with a maximum class size of 30 participants.

This program begins Wednesday, March 28, 2007 running for 11 consecutive Wednesday evenings from 6 – 9:30 PM ending June 6, 2007.

Our Certificate in Small Business Management will allow you to gain the advantage you need to succeed as a small business owner or operator. Taught by a combination of Small Business Development Center staff as well as local attorneys, accountants, and business professionals in the trenches, you’ll receive answers to your questions - no theory!

Registration fee of $165 for the entire program or $20 per class! Space is available on a first come, first serve basis with a maximum class size of 30 participants.

This program begins Wednesday, March 28, 2007 running for 11 consecutive Wednesday evenings from 6 – 9:30 PM ending June 6, 2007.

Date                Class Topic

March 28, 2007        Introductions and Business Management Basics
April 4, 2007             Legal Issues for the Small Business
April 11, 2007           How to Hyper-Grow your Business through Smart Marketing
April 18. 2007           Using Financial Statements to Manage your Business
April 25, 2007           Controlling Growth through Bugdeting and Cash Flow
May 2, 2007              Reducing your Tax Burden
May 9, 2007              HR Law
May 16, 2007            Interviewing Techiniques
May 23, 2007            Performance Appraisals & How to Manage Employee Performance
May 30, 2007            Customer Service
June 6, 2007             Strategic Planning for the Small Business

All classes will be held in Room 355 in the new College of Business Building on the ISU campus.   To register for the Certificate in Small Business Management, call the Illinois SBDC at 309-438-3610 or email at sbdc@IllinoisState.edu  Individuals may register for each separate session for $20, which includes that day’s materials. ATTENDANCE AT A MINIMUM OF 10 SESSIONS IS REQUIRED TO RECEIVE THE CERTIFICATE IN SMALL BUSINESS MANAGEMENT.

Reasonable accommodations for persons with disabilities will be made if requested at least two weeks in advance. Contact the Illinois SBCD at 309-438-3610 to request any accommodations. This program has been developed through a partnership between the U.S. Small Business Administration, the Illinois Department of Commerce and Economic Opportunity and the Illinois SBDC at ISU as a service to Illinois small businesses. The funding is not an endorsement of any products, opinions, or services. All funded programs are extended to the public on a non-discriminatory basis.

Clients at the Illinois SBDC at Illinois State often find bookkeeping and accounting to be a chore – especially when they feel like working on other things such as production or sales. But it’s worth remembering that there are four reasons (and advantages) for keeping good business records.

1) Knowing where you stand financially

Without accurate records, you will never know what your real financial position is. Most of the clients at the Illinois SBDC at ISU don’t want to produce detailed financial statements every month, but they are very useful. At the very least, you should know how much money you have in your business bank account, how much is owed to you by your customers, and how much you owe to your suppliers.

2) Making financial decisions

Armed with up-to-date financial statements you can make informed decisions such as can you afford to replace the delivery van? Is it worth taking on an extra sales person? Do you need a partner? Without business records to provide current data, businesses frequently make decisions based on the seat of their pants. And seat of the pants is generally not a good business strategy.

3) Preparing for and reducing your tax liability

If the business seems to be running itself you may not feel you need information to make financial decisions (although you would probably run the business better if you did). But you still need to keep records for the IRS. Do you need to pay quarterly taxes? Do you collect sales or other taxes from customers? Do you have extra charges from your accountant just to sort out your details? Do you spend a lot of time in the first quarter just getting your numbers pulled together to pay your taxes? Organizing your books from the start will help immensely.

4) Discussing your financial position with others

From time to time you may need to give other people an up-to-date financial picture of your business. In particular, if you are relying on bank financing then your banker may ask you to provide regular information about your debtors and creditors, especially as you come in to ask for an extended line of credit. Facts and figures may also have to be discussed with partners or senior staff, investors in your business, or major suppliers (for example, if you are asking for extended credit on payables).

Although software programs are very helpful in tracking data (and the Illinois SBDC at Illinois State has two training seminars on QuickBooks – click HERE for more information), experience shows that unless the person knows what they’re doing, business owners can create a bigger mess. This isn’t a reflection on the software – it’s the human factor. The software only does as it’s told so if garbage goes in, you get garbage out. Take the time to understand how your accounts are set up and bookkeeping and accounting in 2007 can be a breeze!