Connections - September 2009 - 16

The Bottom Dollar After all, if you want to stay in business you must build a prosperous community. My family’s failure presents an opportunity for insight. Tom Burgum, SCORE counselor and 43-year sales and marketing veteran, offered tips that any business can apply today. Burgum offered two solutions that could have raised profits for my family’s business. These ideas are just as relevant today as they would have been 12 years ago. First, tackle accounts receivable. Second, revamp the sales approach with the SPIN method. SPIN stands for Situation, Problem, Implication, and Needs assessment and will be explained in further detail shortly. The first problem was our vendors chopped my family’s business with late rent; since some in our family thought half a slice of bread was better than no bread at all, we’d take their slashed offers. “Small businesses don’t realize when it takes 120 days to collect the money, it’s a price cut,” said Burgam. In the case of our farmers market, when vendors held the rent, our market had less working capital while we were paying interest on a line of credit. The first solution: collect funds faster. Burgum said we could have found out who was paying and how quickly. Then we could have implemented tactics to get the funds, such as demanding that the vendors pay us on time. If that didn’t work, we could have stopped extending no- or low-interest credit to them. Also, if vendors couldn’t pay with cash or a check, we could have told them to pay with a bankcard. This way we would have been paid immediately, which means we would have had more working capital. “The bankcard may charge a fee, but do you want to collect your money faster and pay a fee? Or do you want to have to use a line of credit from the bank to have working capital and wait 120 days to get paid from customers?” Burgam said. This idea works for a variety of businesses including public speakers, contractors and merchants. If you offer bankcard services to customers, you’ll get paid in a prompt manner, and in turn, will have access to capital. Click here to try other strategies. The second problem: slumped sales. Our customers didn’t know what they needed because, really, our vendors didn’t ask. The customers would poke around the market until they found a product or service they thought suited 16 | Connections | September 2009

Connections - September 2009

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