Business Education

Tesla is Now Asking Suppliers for Cash Back, Here’s How to Avoid that Scenario

Tesla is back in the news. Headlines proclaim the electric car manufacturer actually approached some of its suppliers, requesting cash back in an effort to realize profitability. Elon Musk quickly reacted to the reports. Now, it’s a he-said-she-said storyline. But, that’s just another fight the media will happily play up for clicks and tune-ins. The reality is Tesla is not a profitable company. Even though it enjoys so much buzz and customer loyalty, it can’t turn a profit.

The Top Reason Small Businesses Fail

The company reportedly burned through $1 billion in a quarter. And, it’s promised to bring its expenditure to under $3 billion this year. That, after it went through $3.4 billion last year. Not to mention, it lost $710 million in Q1 of this year alone.

Just as good cash flow keeps a business afloat, poor cash flow can sink it. In fact, poor cash flow is a big reason why one in every four businesses doesn’t make it past the first year. And why more than half don’t survive past the fifth. —Fresh Books.com

It gets worse. The company might not reach a stock conversion price of $560.64. Which means it will have to shell out $230 million to obtain a convertible bond in November. Its stock fell by nearly 4.5 percent just in the last twelve months and continues to struggle.

This is an important lesson to those who’d like to start a small business because it’s one of the main reasons startups fail in the first place: inadequate cash flow and reserves. Problems with cash is typically the reason small businesses fail.

Top Small Business Cash-Flow Mistakes to Avoid

So, if cash is the biggest reason new companies fail, then how do they actually get into such a pickle? Well, it’s not just avoiding bad business ideas (although that’s certainly helpful), it’s more about being smart with money in the first place:

Impulse spending. We all know retailers embrace this practice. But, it’s far too easy to fall into the trap of impulse spending, particularly during the startup phase. It’s also a shortcut to failure because it’s the ultimately lack of responsible cash management.
Past-due receivable apathy. When cash is rolling in, it’s very easy to let an invoice or two or more slide. After all, there’s plenty of money coming in, so why bother? It’s important to stay on top of receivables because it sends the wrong signal when you become apathetic. Plus, you might be able to put that money to good use in the future.
Not sticking to a real budget. You wouldn’t spend more money that’s in your personal bank account. However, when it comes to business finances, too many owners just don’t adhere to a realistic and strict budget. And, that’s a recipe for failure.
Failure to put some cash aside. Feast or famine. That’s an old cliché but it’s entirely true for many businesses. That reality means it’s best to have some cash on-hand when needed because it’s very likely that time will come.

What other ways do small business mishandle cash? What other advice would you give about maintaining positive cash-flow? Please share your thoughts and experiences!

Interested in learning more about business? Then just visit Waters Business Consulting Group.

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The Samsung Galaxy Fold Demonstrates this Powerful Business Lesson

May 29, 2019 No Comments

The mobile technology world experienced one of the biggest public blunders of all time. Samsung shipped a number of demo units of its $2,000 foldable smartphone to several high-profile reviewers. Within 48 hours, a good number of the devices were broken. The reviewers shared their surprise and since, Samsung has delayed the release of its “Foldable Phone of the Future.” The Samsung Galaxy Fold Unfolds Unnecessary Bad Publicity To be fair, some broken due to reviewer mishandling. They mistook a part of the screen as a protective layer that all smartphones ship with. Others noticed bulges in corners near the fold. While the former did inadvertently damage the devices, the latter simply watched as the units failed. You’re anxious to get your business off the ground or get your latest product out to the public as quickly as possible. Perhaps you’ve already started your marketing and promotional campaigns. You’ve got visions of a best-selling product dancing in your head. But selling too quickly can be dangerous; there can be drawbacks if you are putting the cart before the proverbial horse. Businesses that start selling new or innovative products without taking the time to put their ducks in a row often regret their decision. —All Business It’s yet another example of a manufacturer rushing a product to market before it’s truly ready. When such bad PR situations occur, these can lead to companies going out of business outright. The Negative Effects of Rushing a Product to Market Companies rush products to market. It does happen. And, it’s a huge and completely unnecessary risk. Here’s why: Damage to reputation. Let’s begin with the obvious. While mega corporations can weather such storms, small businesses might suffer tarnishes to large to overcome. It sends the wrong message. Thomas Edison practically invented “vapor-ware,” the introduction of a product which doesn’t actually exist. When you release something prematurely, you’re sending a message you care more about turning a profit than your customers. It causes a loss of trust. If the gamble fails to payoff, it means you’ve sacrificed trust. Consumers just won’t trust your brand in the future and that’s never a good thing. Your team will also suffer. Pushing out a product before it’s ready just might lead to a loss of key employees. Some could walk away, not wanting an association with a company who isn’t willing to wait until it’s right. You’ll regret the decision. Of course, as the leader of the organization, it’s you who takes all the blame. Ultimately, you’ll have to accept making a bad decision and the consequences which inevitably follow thereafter. What other negative consequences does rushing a product to market have? Please share your thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

5 Effective Ways to Increase Team Motivation

March 15, 2018 No Comments

Team motivation. It’s an ongoing challenge in some organizations. Team motivation is actually more about the role of management than employees themselves. In fact, a study by Harvard found that the majority of companies demotivate their employees. Now, that sounds strange at first but it’s completely sensible. So, let’s take a look at both team motivation and employee demotivation. Why Employees Lose their Motivation According to the Harvard Business School Working Knowledge, a full 85 percent of employees’ morale decreases after just six months on the job. (That survey included a whopping 1.2 million team members from 52 Fortune 1000 companies.) Perhaps most surprisingly, that same study reveals it’s actually management which is squarely to blame for the loss of motivation. There are a number of benefits to having highly motivated employees in your ranks but for business owners, all roads eventually lead to the bottom line. High levels of employee motivation are intrinsically linked to high levels of employee engagement, which is something that organizations are paying much more attention to these days, and with good reason. —Business.com That’s an incredible fact. And, it means you’re probably (albeit unwittingly) inflicting more damage than you are creating a productive workplace. It’s all about the dynamic between employees and managers, when it comes down to it. 5 Effective Ways to Increase Team Motivation So, how do you motivate your employees? What do you do to keep them upbeat and ready to tackle the next challenge? It’s really not that difficult. Team motivation just requires a bit of self-awareness and a few changes in your day-to-day work life. Here are five effective ways to increase team motivation: Forgo useless meetings. Did you know the average company wastes 3.8 hours every week holding truly unproductive meetings? That’s a significant amount of time that could be otherwise spent much more wisely. So, only invite the necessary people and keep the meeting on-track. Don’t micromanage. Micromanagement is one of the biggest demotivators in the workplace. One survey even reveals 38 percent of employees would actually prefer performing unpleasant activities than deal with a micromanaging boss. Provide them with a pleasant environment. There are a number of ways to create a more pleasant work environment. For instance, allowing pets at work. Or, giving employees more flexibility with their work hours. Simply put, the more pleasant the environment, the more happy your employees and that’s good news for everyone. Quickly forgive mistakes. Everybody makes mistakes. It’s just part of life. And, it doesn’t help to ruminate over an error. It’s also unhelpful to go so far as to punish an employee for a mistake. Forgive mistakes quickly and move on with a healthy dose of encouragement. Pay employees what they’re worth. Here’s a disturbing statistic — 26 percent of productive employees report they’d leave their companies for just a 5 percent pay increase. The lesson, of course, is to pay your employees what they are worth. How do you motivate your employees? What methods make your team members more effective? Please share your thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Help! My Dad Retired from the Family Business Years Ago but Still Tries to Run It and It’s Causing a Lot of Problems

March 31, 2022 No Comments

It can be difficult when a parent retires from their job within the family business but continues to act as if they are still in charge. They may make unnecessary demands or try to micro-manage things that are no longer their responsibility. This can cause tension and conflict among other family members who are trying to run the business smoothly. If you find yourself in this situation, it is important to set boundaries and communicate effectively with your parent. So, let’s discuss some tips for how to do that. The “Unable to Let Go” Syndrome Some people, be it a father, mother, or even another family member, who’s worked for long periods of time in a family business regard the company as part of their identity. It’s simply part of who they are and therefore, it’s not easy to walk away. It becomes even more difficult when handing the operation over to children, who don’t have all their years of experience. One of the most agonizing experiences that any business faces is moving from one generation of top management to the next. The problem is often most acute in family businesses, where the original entrepreneur hangs on as he watches others try to help manage or take over his business, while at the same time, his heirs feel overshadowed and frustrated. Paralleling the stages of family power are stages of company growth or of stagnation, and the smoothness with which one kind of transition is made often has a direct effect on the success of the other. —Harvard Business Review Unsurprisingly, this can easily lead to a father, mother, aunt, uncle, or even a cousin to hang around. Perhaps to the extent that he or she still continues to “run” the business, without the permission of their successors. He or she may make promises, enter into deals, or offer discounts that undermine the new authority of their successive family member(s). Of course, this can cause resentment, anger, frustration, and might also be the cause of unnecessary fighting and/or financial trouble. How to Deal with a Parent Who Keeps Interloping in a Family Business After Retiring Fortunately, if you’re in a situation where one or more of your family members has retired but still continues to interlope in the family business, there are steps you can take. First, you need to have a discussion with your parent about their role in the business now that they are retired. It is important to be respectful yet firm in this conversation. Explain to them that while you value their opinion, they need to respect the fact that you are now running the business. This means that they should not try to make decisions or give orders without consulting with you first. You may also want to set some ground rules about how often they can come into the office or participate in business meetings. It is also important to stay calm and avoid getting into arguments with your parent. If they continue to try and take control, it will only escalate the situation and make it more difficult to resolve. Instead, try to have a rational and calm discussion about the situation. If necessary, you may need to involve other family members or even a mediator to help resolve the situation. Additionally, it may be necessary to speak privately with any customers who aren’t completely clear about who is actually running the company and who makes the decisions. This could help in the future with communication and in other important areas. If you find yourself in this situation, it is important to set boundaries and communicate effectively with your parent. By doing so, you can hopefully avoid conflict and maintain a healthy relationship with your parent. Have you ever dealt with this type of situation? What would you do to resolve it? Please take a moment to share your experiences and thoughts so others can benefit from your input. Interested in learning more about business? Then just visit Waters Business Consulting Group.