Cash Management

by James Phillipson and David Balmer

Cash management is essentially the process of managing working capital. One way to get a high level view of your business is to calculate its cash conversion cycle. This is the time that it takes to convert cash outflows that are needed to produce goods into cash through sales and collection of accounts receivable.
 

Example

An example would be for CN Railway using their 2010 annual financial statements:
34.1 Days Receivable-$775 (Accounts Receivable)/$8,297 (Sales) x 365 days
14.5 Days Inventory-$210 (Material and Supplies)/$5,273 (Operating Expenses) x 365 days
(46.7) Days Payable-$675 (Trade payables and payroll)/$5,273 (Operating Expenses) x 365 days
1.9 Days

In their case, receivables and inventory are almost entirely financed by payables, so an increase in sales will require a minimal increase in working capital.
 

Considerations

Management of a business should calculate the cash conversion cycle separately for different lines of business and for different geographic areas. A consolidated set of financials can mask significant differences between different businesses and countries.

The cash conversion cycle can be speeded up by collecting receivables faster, lowering inventory levels, and stretching payable payments. These actions can have consequences. Speeding up collections by implementing stricter collection and credit policies can reduce sales, as slow paying customers may no longer qualify for credit and other customers may switch to suppliers who do not demand payment as quickly. Reducing inventory may increase the chances of having to stop production because materials may have run out, or turning away business because the inventory to produce certain products may not be on hand. Stretching payments to suppliers can result in missed discounts, late charges, higher prices to finance delayed payments and delayed shipments until payment is received.
 

Accounts Receivable

Management of accounts receivable is influenced by a company’s credit policies, billing procedures and collection practices.

1. Credit policies and terms are critical for determining a company’s credit exposure. This will determine the risk profile of the customer and your credit exposure (credit limit).

• Have a procedure to set and approve credit limits. Your gut is a bad prescription.
• Use a credit application form to gather information and obtain permission to gather information from third parties such as credit rating agencies, banks and other suppliers.
• Ask for financial statements.
• Use credit agency reports and set up alerts for significant changes in ratings so that you can review a customer’s credit limit, based on the reasons for the change.
• Review all credit limits at least annually and larger limits more frequently.

2. The information system that monitors AR should be integrated with the credit policies and terms, so that sales are in compliance and it will facilitate receivables management such as aging receivables.

3. How soon after shipment are sales invoiced? Delays in invoicing mean delays in receiving cash. A number of companies pay based on when they receive the invoice rather than the invoice date. How are the invoices delivered? Electronically, fax or mail?

4. How are you being paid?

• Electronic credit to your bank account eliminates problems in collection. Either you have been paid or not. You can make this part of your terms of sale.
• Cheques in the mail result in payment delay (mail float), deposit delays (going to the bank), uncertainty about payment (did they really issue the cheque) and risk of a mail strike delaying payment.
• Reduces fraud as payments are made through the banking system so risk of cheque diversion is eliminated.

5. Do you have collection procedures about how overdue payments are followed up, who follows up, how they follow up and how they report progress to management?

• Calculate days sales outstanding taking account of seasonality and analyze reasons for changes.
• Set targets and compensate collections people for achieving them.
• Make collections someone’s job and include it in their job description. Specify time to be allocated.
• Collection calls should be polite and professional with the aim of moving your invoice(s) to the top of the pile.
• Keep notes, follow up and diarize. Consider collection software.
• Call before payment is due and shortly after, if it is not received. They must anticipate receiving the call. Establish a relationship.
• Call at least weekly, when the invoice is overdue.
• Ask for a commitment to pay. Ask for post-dated cheques.
• Make it easy for them to pay by picking up cheques and accepting credit card payments.
• Consider offering discounts for payment now.
• Review the credit terms with them.
• Management must manage the collection process.
• Cut them off until they pay
• Consider deposits/retainers/progress payments to reduce exposure.
• Negotiate and renegotiate payment terms.
• Escalate if not making progress on receiving payment, by using collection agencies and as a last resort, lawyers.

6. If you have a few larger customers, you may get a better result by having one person establishing an ongoing dialogue with them.

7. If your sales force is compensated by commission, consider changing the commission structure so that they are paid when the customer pays you.
 

Inventory

Inventory is critical to most company’s sales and production activities. The amount of inventory being held depends on the company’s objectives.

Sales change over time so it is useful to determine how many months of sales each inventory item represents based on say the past 3 month’s sales/production volume.

Consider your supply lines, their length and the risk of interruption, and set policies accordingly.
For most slow moving inventory, focus on the maxim “cash is king” and liquidate it.
The information system that monitors inventory should be integrated with the production or sales systems to facilitate determination of aging, economic order quantities, supply alternatives, etc.
 

Accounts Payable

The primary objective is to make authorized payments to suppliers on a timely basis at an appropriate cost.

1. Consider using purchasing and other credit cards for high-volume, low dollar purchasing to, reduce processing costs, allow front end controls on types of purchases, and improved spending reporting. This can aid in negotiating supply agreements for specific types of purchases, such as office supplies.

2. Consider using electronic payments to pay suppliers, which will eliminate the costs of issuing cheques, reconciling and use of bank services such as positive pay to reduce fraud.

3. Electronic payments will also ensure that suppliers receive payments on time to earn cash discounts. A 1% discount for paying earlier is currently significantly more than the interest that can be earned on investing surplus cash.

4. Consider using payee positive pay, in addition to regular positive pay which just checks the cheque number and amount, against the issue file that you send to the bank.

5. Analyze your trade payables to determine which payables can be stretched without penalties. There are significant penalties for not paying some obligations on time such as payroll, and taxes in general. Utilities can and do shut off access to their services for non-payment.

6. Stretch your credit terms with selected suppliers to determine how sensitive they are to delays in payment. Explore the limits of their tolerance.

A focus by the CFO of a business on the management of the cash conversion cycle will often reduce significantly the working capital tied up in the operations of the business and release cash for re-investment. An excellent way to improve, and ensure that this focus is maintained, is to change the bonus structure to link the bonus to achieving working capital targets.
 

Links

• Identify and leverage your Key Performance Indicators
• Bankruptcy: ‘Creditor Proposal’ as a business funding model
• image courtesy of gracey

 
David Balmer is a Chartered Accountant with over twenty years of Treasury experience with companies such as RJR Nabisco, Cott Corporation and Maple Leaf Foods Inc. He has presented at treasury conferences in Canada and the United States. He has also earned treasury designations from treasury organizations in both the United States and United Kingdom. You’ll find more details on LinkedIn.

James Phillipson is a Chartered Accountant and a Principal of Mastermind Solutions Inc. with over twenty years experience in large and small businesses. He has provided financial counselling to his clients since 1996, often in the role of or as a coach to a Controller or Chief Financial Officer. James has experience in financial roles in a wide variety of businesses and industries. Contact James at James@MastermindSolutions.ca. You’ll find more details on the Experion website and LinkedIn.

Bankruptcy – ‘Creditor Proposal’ As A Business Funding Model

by Florian Meyer

Hard as you try, does it feel like your business always has more debt than it can pay off? You’ve spoken to your banker, your family and friends, and no one is able to offer you any financial help. Does the constant debt pressure make you wonder whether it would be better to just throw in the towel and bankrupt the business? No … not yet!!!

There is a solution that could provide you with the breathing room you need to help you recover. And it’s legal.

Within the Canadian Bankruptcy & Insolvency Act (BIA), you are allowed to make a proposal to deal with your creditor debt and remain in business.
 

How To Start

First, you need to engage a Chief Restructuring Officer (CRO) and a Trustee. The CRO works inside the business with you to develop and monitor a clear plan for moving the business into a more positive financial position and to encourage you to make some of the hard strategic decisions.

The Trustee works with you for the benefit of the creditors. The Trustee begins by preparing a Notice of Intention to File a Proposal (NOI) that is filed with the courts. That stays all creditor actions against you. In other words, creditors are legally prevented from doing anything to collect on the existing outstanding debts.

After the NOI is filed, you have to ensure that all obligations incurred in the future are paid as they become due. Within ten days of filing the NOI, you have to file a Cash Flow Plan with your Trustee and the courts. The Cash Flow Plan shows how you expect the company to generate enough cash flow to cover any new debts plus a portion of the historical debts that were stayed by the courts. Your CRO will help you prepare the Cash Flow Plan and will help present it to your Trustee.
 

The Creditor Proposal Meeting

With the cash flow filed, you have 20 days to develop a plan for the business and a plan to repay a portion of the historical debts before you are required to have the Creditor Proposal Meeting. It’s often possible to get extensions of up to six months for having the Creditor Proposal Meeting as long as the creditors are not disadvantaged. An extension requires court approval and needs a reasonable justification, such as: 

1. You have not negotiated a settlement with the secured creditors, or
2. Another activity that needs to be completed before the proposal is ready to be presented to the creditors.

 

Payments

Generally, you will offer to repay 15% to 20% of the existing, unsecured debt over a three to four year period. You send a cheque monthly to the Trustee who annually distributes the payment among all the creditors included in the NOI. The Trustee’s fees to administer the process are paid out of the pool allotted to pay the creditors, with no additional cost to you.

Bear in mind that a Creditor Proposal will not reduce your obligation to pay off any bank loans or other secured debts. By obtaining a secured interest for their loans, the secured creditors have acquired a legal interest in some or all of your company’s assets. You and your CRO will have to negotiate with them to arrange a repayment plan that eventually pays those debts in full.

After the Cash Flow has been filed and a repayment plan has been negotiated with your secured creditors, the CRO will work with your unsecured creditors to obtain their verbal agreement to the plan. Finally, the Trustee will hold an official Creditor Proposal Meeting to receive legal and court approval of the process.
 

Benefits

The Creditor Proposal Process gives you a legal avenue for reducing your unsecured debt to a more manageable range of 15% to 20% with a defined schedule of how it will eventually be paid off. With the assistance of your CRO, you will develop a go-forward plan to bring your finances back to a much healthier position. Your CRO will help you negotiate an achievable repayment plan with your secured creditors and help you look for additional sources of financing, if needed. And, your time can be more effectively devoted to managing and improving the business to ensure that the plan works.
 

Resolution

Now you can move the business forward with a much improved cash flow. The creditors are no longer calling to collect, and you have a new plan that allows you to move forward with the historical issues resolved.
 

Example

As an example, I worked with a client that was behind in payments to the landlords and other vendors. It owed a large debt to the Canada Revenue Agency (CRA) which was primarily unpaid payroll source deductions for which the owner was personally liable. At first glance, there simply seemed to be no way to move forward.

I stepped in as the CRO, connected the client with a Trustee, and introduced an accountant who could effectively manage the financial reporting. By helping the client work through and obtain approval of its Creditor Proposal we accomplished the following:

1. Developed a go-forward plan that realistically gave the company a chance to succeed.
2. Engaged a lawyer and obtained court approval to eliminate an obligation to a creditor who had inappropriately attempted to declare its claim as a secured debt.
3. Established a six-month payment plan with CRA. They would no longer continue to chase for collection, and the accrued penalties and interest were stopped as of the date of the Notice of Intention to File a Proposal (NOI).
4. We renegotiated with the landlords to have rent reduced to a level that the company could afford. The accountant worked with the internal staff to ensure that informative and timely monthly financial Statements were now being produced.
5. After the six-month payment plan with CRA was completed, the plan began paying the unsecured creditors at 15% of the original obligation over the next four years.

Although it may feel as though there is no hope of keeping your business afloat, our legal system provides a life raft to give you a second chance.

Links

• Focus on the important not the urgent
• Identify and leverage your Key Performance Indicators
• image courtesy of Mitarart

Florian Meyer is resourceful and imaginative Chief Restructuring Officer (CRO) who maximizes the benefits of restructuring for the business. As a client recently said, “You never give up until a great solution has been developed and implemented.”
Florian has an MBA and CPA, CA and is a Principal of Newhouse Partners Inc. He has been consulting as interim CFO and CRO to a number of private and public companies since 1996, You can reach Florian at fmeyer@newhousepartners.com or 416-873-8684. You will find more details on the Experion Group website and LinkedIn.

How To Benefit From A Group Blog

by Promod Sharma

When you work for a big company, you have the advantage of a known brand. You gain credence by association. When you're on your own, building a brand is essential but more difficult. You probably can't build awareness through advertising.

If you're part of an established group like Experion, you benefit to the extent the shared brand is known. As a member, you help spread the message. You then get the benefits by association. The other members do too.

The process is simple. Here are the three steps, starting with the easiest.

1. Share links to blog posts
2. Make comments on blog posts
3. Write blog posts (here's how)

1. Share Links To Blog Posts

These days, content circulates by "word of mouth", which means by circulating links.
If you share one link per week with 100 connections, you invite about 5,000 potential visits in a year. If 20 members share, that’s 100,000. If an average network has 200 people, that’s 200,000 potential visits. There’s also traffic from web searches.

To find out about new articles by email, subscribe now.

There are two easy ways to share a link.

A. Share Button

When you read an article online, you'll often see sharing buttons on the side, top or bottom of the article (this blog has them at the bottom). Facebook uses "Like", Google+ uses "+1" and Twitter uses "tweet". Click and you share with the network of your choice. Feel free to share with more than one network.

Note: the location and look of the buttons may change over time but the basic functionality remains

B. Actual Link

There is another way. Each web page has a address. By clicking on the address bar, you can copy the link and then paste it using your sharing tool. For instance, let's say you want to share via LinkedIn. Paste the link into a status update, type a brief description and send it out.

This screenshot shows the steps in LinkedIn.



Bonus: You can also post links in LinkedIn Groups or send them out via email or newsletter.

2. Make Comments On Blog Posts

At the bottom of each blog post, you'll see an option to leave a comment. Type in your thoughts and submit them. Commenting anonymously doesn't build your brand. Use your real name.

When you comment, you usually see future comments too. If you wrote the blog post and make a comment, you're notified when others leave messages. It's good form to participate.



Comments here use Disqus, which gives you credit for your comments on Harvard Business Review and other participating blogs. That context lets readers quickly see if you’re credible.



Exercise: As a experiment, leave a comment on this article.

Bonus: wait until your comment goes live before you circulate a link (step 1). Readers can then read what you said too.

3. Write Blog Posts

Sharing content shows that you're good at curating (a parrot). That's good but creating content is even better (a pundit). You then show your current expertise. Isn't that the reason clients hire you?

The process of writing may seem daunting but think of the benefits. Your words remain visible at no cost. Your article gets read and re-read. That’s better than advertising.

As blog traffic grows, you get read by visitors who arrived to read other articles. You're more likely to show up in web searches too. When you help a group blog, everyone benefits.

Momentum

Imagine if 20 members commit to writing one article per month. That’s one post per business day or about 240 in a year. That will bring ongoing traffic and credibility to Experion and you.

Can you spare 10 minutes a week?  That’s enough time to share one link (takes seconds) and make one comment (takes minutes).

Links

• How to start blogging
• Building trust with blogging
• Building trust before meeting in person
• Are you a parrot or a pundit?
• Brand you successful

Promod Sharma is your insurance literacy tutor. Learn about life and health protection online (wiki, blog, Twitter) or at a live event. At Taxevity, get a fee-only insurance review and help updating your coverage. You’ll find more details on the Experion website and LinkedIn.

PS Be sure to subscribe to receive new blog posts by email.

Reasons To Get A Mentor

by Cheryl Crumb

What makes successful people successful? Sure, they’re likely bright. They might have advanced education. Maybe they were even lucky. There’s another hugely important ingredient to add to the mix.

Think about it … what do the following successful people have in common: Sir Richard Branson, Alexander the Great, Oliver Stone, Wolfgang Amadeus Mozart and David Beckham?

They all had mentors … experienced people who thought, “You are worth my time and effort; I can offer you ways to expand your horizons and increase the likelihood that you will achieve success”.
The Chinese ancients had a proverb:

“A single conversation across the table with a wise man is worth a month’s study of books”.

Albeit politically incorrect and gender dismissive, this belief was echoed by Dr. Beverley Kay in her recent book “Help Them Grow or Watch Them Go” when she said,

“Behind every successful person there is one elementary truth: somewhere, somehow, someone cared about their growth and development. This person was their mentor”.

Enlightened organizations are realizing the truth behind these statements and are orchestrating formal mentoring programs as part of their knowledge management and succession management strategies. Find a wise and experienced individual and team her/him up with an emerging leader.
 

Why A Mentor Matters

Why do you want to have a mentor? Look at this laundry list and select what appeals to you:

• Offer you experienced guidance and support
• Further your professional development
• Share the pros and cons of various career paths
• Offer new and different perspectives
• Be a sounding board to test your ideas and plans
• Expand your personal network
• Provide you constructive feedback on your developmental areas

Boiled down, a mentor’s role is to help you become a better observer of yourself and your blind spots. That let’s you take new actions you didn’t have the knowledge, perspective or courage to take previously.

From a more personal level, a mentor is there to:

• Be someone you can confide in during your darkest hours
• Help you to get back up when you crash
• Help you to accept changes or change what you can’t accept
• Rebalance yourself
• Find your motivation when it’s temporarily lost
• Help you to think outside your box
• Introduce you to contacts
• Step out of your comfort zone

 

Finding A Mentor

But what if your organization isn’t enlightened? What if you’re on your own with no company resources behind you? Take charge and find a mentor!

Keep your eye open for people you respect … people who have enjoyed the “thrill of victory and the agony of defeat” as ABC’s Wide World of Sports proclaimed decades ago. Since wisdom isn’t gained easily, learning includes spectacular failures! Be bold and ask an individual if they would be willing to be your mentor, that you would be honoured to learn from them.
 

Why Mentors Mentor

Why might mentors willingly invest themselves in you? Past mentors have told me

• mentoring renews their enthusiasm
• they enjoy the opportunity to share expertise
• mentoring enhances their skills in coaching
• mentoring allows them to practice a more personal style of leadership
• mentoring enhances their generational awareness.

 

How To Be A Mentee

Being a mentee isn’t about sitting at the feet of your mentor and waiting for her/him to pontificate brilliance. Instead, actively take ownership, identify your initial learning goals, use your initiative to drive mentoring sessions, be open and coachable, seek feedback, accept criticism graciously, and ask questions.

Contrary to popular belief, the most effective mentoring relationships are ones in which the mentee is relatively proactive and the mentor is relatively passive. In other words … you as mentee need to be in charge!
 

The Process

The mentoring process begins with definition: together, define your boundaries, set your ground rules, clarify your objectives. Share perceptions you think others have of you, and what you see as your strengths and weaknesses. Be honest with your mentor and yourself. The second stage is identifying your developmental needs and priorities. The third stage is action: ask for insights, discuss options, set a plan, practice, do it, debrief.

Remember, mentoring should lead to change. It was Darwin who said,

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change”.

Mistakes are inevitable!
 

Get Started

Start by reflecting:

• What do you really want to be and do?
• What are you doing really well that is helping you get there?
• What are you not doing well that is preventing you from getting there?
• What are you willing to do differently tomorrow to meet those challenges?
• How can your mentor help?

Arrangements can be formal or informal. To formalize with your mentor, create a contract including your willingness to be coachable, the number of times you will connect monthly, how long your meetings will last, how you will deal with confidentiality, and how you will periodically assess the value to both of you.

Mentoring is a science and an art. And don’t despair if The Most Respected Individual You Know is 4,000 km away … phone mentoring can be very powerful!

Find a mentor. Be a mentor. Buy the T-shirt!

Links

• Why a private mentor matters (and how to get one for free) (Marketing Actuary, Oct 2012)
• Every woman should have a mentor at work (Business Insider, Dev 2012)
• Why you need a mentor (OPEN Forum, Jan 2012)
• Why you need a mentor (BusinessWeek, Feb 2007)
• 10 good reasons for having a mentor (CIO Update, Nov 2006)
• image courtesy of Studio CI Art

 
Cheryl Crumb helps you get customers for keeps. She is an ISO 9000 accredited trainer, coach, transition consultant and facilitator who designs training programs to fit specific corporate needs. You’ll find more details on her website, the Experion website and LinkedIn.

Structure Your Presentation

by Heather Stubbs

Structure! It benefits both presenter and listener. A clear framework keeps speakers on track and helps audiences follow and remember what is being said. Here’s a method for creating a structure that enables you to guide your audience on a journey from starting point to destination, and helps them stay with you along the way.
 

Premise

Your first priority when planning a presentation is to be clear in your own mind about your purpose. What’s the core idea you want your listeners to take away? Can you state it as a concise headline? The premise of a photographer’s talk might be, “Good composition creates great photos.” For a succession planner the core idea might be, “Advance planning avoids future headaches.” A presentation to a Board of Directors might have “Better customer service will increase profits” as the premise.

Strive to write your premise in eight words or less. If your talk were a house, your premise is the roof under which everything you say is gathered.
 

Opening

As I mentioned in my Tips on Talking article “A Strong Start”, don’t waste your precious opening moments on meaningless fillers like, “Tonight I’m here to talk to you about...” That kind of opening takes the audience’s initial intensity of interest and dials it down several notches.

The first few words of your talk are probably the only time you have the full attention of the entire audience. Take advantage of that attention and dive right in! One way is to open with your headline premise and expand on it in your next sentence or two. Take a look back at the opening paragraph of this article for an example.
 

Three Points

Chances are you know volumes more about your topic than you have time to convey in your presentation. There’s so much you want to tell them! It’s important not to try to “pack it all in.” Your audience won’t remember everything you say, anyway. They’ll probably remember one outstanding point, and perhaps a couple more.

Let’s say you’re planning your talk and you have a host of sticky notes all over the top of your desk, each one with an aspect you could talk about. Think in terms of support for the roof of your presentation house, your headline premise. Pick no more than three points for the walls holding up that roof. The more points you make, the less your audience will remember, so discipline yourself to three. Don’t be afraid to number your points as you talk through them. It helps your audience to follow you.

If they need to know more than three points, distribute a handout.
 

On Track And On Time

Building your presentation around a three point structure gives you a clear sense of direction and keeps your mind on track. If you find yourself getting off on a tangent, structure pulls you back into the right direction. If you’re concerned about forgetting which point comes next, use a 3 x 5 card with key words for each section of your talk. A quick glance will bring your thoughts into focus.

Structure also helps keep you on time. You know you have just so much time for each point, so plan it out. Be sure to allow time for your opener, your conclusion and Q&A. If audience questions threaten to derail your timing, knowing you have one or two points yet to cover allows you politely to move on by suggesting you chat with the questioner after the presentation.
 

Illustrate With Stories

Back up your points with two or three supporting points (no more). Bear in mind that dry data is boring and will instantly be forgotten, so incorporate the human element. The surest way to keep your audience engaged is to illustrate facts with stories. Use analogies to make numbers relevant. If you have data like “At this very moment, there are 600 million stray dogs in the world,” make that number real with “That’s nearly two dogs for every person in the United States.”
 

Conclusion

Conclude your talk by reminding the audience of your three points and then “close the circle” by restating your opening in a way that includes a call to action. Invite your listeners to take the next step.

For your next presentation, let a clear structure keep you moving efficiently from point to point and keep your audience in step with you all the way.

Links

• image courtesy of Gorilla

Heather Stubbs helps her clients discover their own potential as exciting speakers at Skilltime. She has been performing onstage since early childhood as a musician, singer and actress. Heather compiled the lessons learned and mastered over a lifetime into a training program called, “SPEAK UP! How to Talk So People Listen”. She offers workshops, keynote speeches and private coaching. You’ll find more on the Experion website, LinkedIn and Twitter.

The Dangers Of Advertising Through A Group-Buy Daily Deals Site

by Elizabeth Lipsz

If you are considering advertising through group-buy promotions, make sure this strategy works for you. This type of marketing has made a big impact on the service and retail industries in North America. Here is some advice from a retailer who has been there and done that!

Group-buy companies look for deep discounts and will push a retailer to discount more than 50% on their offer. The marketing fees are typically 50% of the revenue earned and their payment terms might be as long as 90 days after the sale date. The marketing company will also sweeten the offer by saying that 20% of the coupon-buyers will never get around to redeeming their coupons. In reality, this can be very unpredictable and in our experience the non-redemptions were closer to 10%.

Assess your cost structure

If you are a service business with high labor or material costs, this type of marketing may not be not for you (e.g., spas, nail-bars, laser hair removal service-providers and even some restaurants). On the other hand, products and services with low unit costs and the potential for upgrades will do much better (e.g., restaurants with a bar will do much better than restaurants without, gyms and yoga studios will do better as well because of the low marginal cost of each additional client who shows up to a class).

Designing the deal

Group-buy companies promise lots of exposure to new clients and the possibility of making money on upgrades. The reality is quite the opposite. The profile of the typical coupon-buyer is that they are cheap and they move from deal-to-deal. Most clients will not upgrade their services nor will they buy products.
When designing your offer, resist the pressure to discount more than 50%. Be sure to negotiate the marketing fee and push to get it down to 35% or 40%. There are other factors to consider:

• the maximum number of coupons to be sold
• the number of coupons a single customer can buy
• the size of groups you are willing to accept at any one time (if applicable)

The more restrictions you put in place, the less successful the sale but you, as the retailer, will be better protected.

The bigger the sale, the more you will inundated with calls and demands for reservations after the promotion. The typical coupon-customer has gained experience with these promotions and is now more critical of retailers if expectations are not met. Remember that the coupon-buyer expects maximum value and superior customer service at the lowest possible price.

After the sale, the retailer will be faced with balancing the needs of regular clients as well as meeting the demands of the coupon-clients. It is a very fine balance. A retailer who accepts too many coupon-clients at any one time risks losing the regulars. If the retailer fails to meet the expectations of the coupon-clients who are social media savvy, then the reputation of the retailer can be put at risk. Keep a close eye on review sites such as TripAdvisor and Yelp.

Final thoughts

Why would a service/retailer do a group-buy promotion? These deals do drive new business to the retailer but they do not bring in new, loyal clients. Is an additional 1-2% of new regular clients worth the cost running the promotion? Instead, it can damage the image or the brand of the retailer.

The principal reason for running a promotion is to use up excess capacity and lower overhead costs. If the bookings and reservations are handled exceptionally well without any customer-complaints then this promotion will provide a short-term boost. But if anything goes wrong — if the design of the promotion is too complex, too expensive and the discount is too deep and sale is too large — things can go wrong very quickly.

Links

• Groupon stock sinks as daily deal service struggles (Washington Times,, Nov 2012)
• Rebound: Groupon’s share price has doubled since its record lows, rising 99% in 58 days (TNW, Jan 2013)
• image courtesy of Indigo Fish

Elizabeth Lipsz is a Management Consultant at BluHorizons Inc, which provides general business consulting services for SME. She specializes in manufacturing with regards to business analysis, business planning and assessment of systems of operations and methods of work, particularly in context of ISO 9001, in order to reduce costs and improve efficiencies. You’ll find more on LinkedIn.

Two Instant Presentation Upgrades

by Heather Stubbs

Do you want to upgrade the effectiveness of your presentations? The two most powerful actions you can incorporate into your delivery are a smile and eye contact.

Everyone you talk to is sizing you up emotionally and instinctively before they focus consciously on the content of your presentation. They can’t help it. It’s the way the human brain is designed. Neuroscientist Antonio Damasio said, “We are not thinking machines that feel; rather, we are feeling machines that think.”

Even people who seem unemotional base their decisions on their feelings to a vastly greater degree than we might imagine.

The path of information

All information that reaches us through our eyes and ears travels along nerve paths that go first to the instinctive and emotional centres of our brain. When you speak, this part of your listener’s brain pays close attention to how you look and sound. Based on that, it develops a feel for whether it’s safe to open up and trust you, or whether it needs to be on guard against you.

It’s no secret that when someone trusts us, they are more likely to be receptive to our ideas, but someone who is on the defensive doesn’t really hear what we are saying. If a person feels even slightly uncomfortable with you, to that degree they are on the defensive against you, and will not be responsive to your message.

Why so powerful?

Why are eye contact and a smile so powerful? Because they link to our deepest and most primitive desire – to survive. Scientists believe that the process of screening information through the instinctive and emotional parts of our brain appeared very early in human evolution. The perceptions we develop are sometimes buried so deeply in our unconscious that we’re not even aware of them. We think it just feels better when someone smiles.

But why? Because it makes us feel safer.

As far as our unconscious brain is concerned, a person who smiles is more likely to be friendly and safe than an unsmiling person, who might be hostile and a threat to our survival. Instinctively, we all know that the quickest way to make someone relax is to smile at them. Even if you must be the bearer of bad news, your message will be more effective if you can find a way to ensure that your listeners don’t feel you are personally hostile toward them. Focusing on solutions and wearing even a slight smile will increase your listeners’ receptivity.

The need to be acknowledged

Everyone, from the most introverted to the most extroverted, has a need to be acknowledged as someone who matters. When you look someone in the eye, you fulfill that need. You show them that you see them and care about them. This harks back to our need to feel safe, doesn’t it?

Someone who cares about you is less likely to be a threat. When your direct eye contact shows you care about your listeners, the instinctive and emotional parts of their brain feel it’s safe to relax and respond.
We think we’re so modern, don’t we? Yet we all still function from a part of ourselves that is deep and primal. When you look your listeners in the eye and smile at them, you get that deep, primal part of them working with you, instead of against you.

Links

• image courtesy of Arkady Chubykin

Heather Stubbs helps her clients discover their own potential as exciting speakers at Skilltime. She has been performing onstage since early childhood as a musician, singer and actress. Heather compiled the lessons learned and mastered over a lifetime into a training program called, “SPEAK UP! How to Talk So People Listen”. She offers workshops, keynote speeches and private coaching. You’ll find more on the Experion website,  LinkedIn and Twitter.

How To Start Blogging

by Promod Sharma

Blogging is writing an article with a touch of personality. You're not writing for a newspaper, magazine, journal or book. There's no rigorous editing process (which has pros and cons).

This post explains how current Experion members can write for this blog. The process is much simpler than starting and running your own.

Why Blog?

In this short clip, Seth Godin and Tom Peters give the reasons for blogging.

The Topics

You have considerable leeway in what you write about. Since this is a business blog, you probably want to show your expertise in your field.

Please be original. You can build on content you've written before which is not already online. If you’re referring to other content that’s online, provide links.

The Process

The blogging process is meant to be simple for you.

Write

When blogging, the length of the content makes a difference. An article that's too short may disappoint readers looking for detail. and rank low in Google searches.

Target a minimum final length of 500 words. There's no maximum limit but a longer article might work better as two related articles. A shorter article can often be extended or used as a segment of a longer piece.
Consider using subheadings to help readers skim.

You can write in your usual word processor or text editor. If you have an iPad and like writing, consider getting iA Writer. If you use Windows, consider using Windows Live Writer. It’s free from Microsoft and gets used to finalize each blog post here.

Distill

Editing makes your message clearer and more concise. The challenge is being objective. For better results, leave a gap of at least one day between writing and editing.

Twitter is the extreme form of blogging (called microblogging). Here you’re limited to 140 characters. Can you summarize your article in that length? The result might make a great title for your post.

Find Visuals (optional)

Your article will have more impact with visuals. Here are free sources. Better still, use original photos or graphics. It's important that you have permission to use the visual. Include a link to the source as a form of thanks.

Submit

When you’re satisfied, email your article to the Blog Editor. Light editing and posting will be done for you. If more extensive changes are needed, you’ll be contacted. Once ready, your article will be scheduled for publication.

Format

Each post will show

1. Title (catchy to attract readers)
2. Author’s name
3. Article (can include photos, audio and video)
4. Author's byline with a links to their Experion page and LinkedIn profile. Links to Twitter and a website can be added too.

This post is an example.

Frequency

Plan to write at least once a month. To keep on track, consider submitting your draft in time for monthly Experion meeting.

Subscribe

Subscribe to receive blog updates automatically. Invite others to subscribe too. The process is quick and free.

Patience

Traffic builds. Old articles continue to get read year after year. There's no way of predicting what will be popular. That’s why having lots of articles is important. Each visitor has the opportunity to read other articles, subscribe and follow on Twitter.

If you have questions, please post them as Comments below. That lets others participate.

Links

• How to benefit from a group blog (new)
• Building trust with blogging (Marketing Actuary blog, Aug 2011)
• The best places to get free images (Goodyear Toastmasters, Mar 2012)
• The simple guide to business blogging (simplybusiness.co.uk)
• 50 ideas for business blog posts (Entrepreneur, Mar 2012)
• Blogging links and more (promodsharma.com)
• image courtesy of Andrew Eldridge

Promod Sharma is your insurance literacy tutor. Learn about life and health protection online (wiki, blog, Twitter) or at a live event. At Taxevity, get a fee-only insurance review and help updating your coverage. You’ll find more details on the Experion website and LinkedIn.