What’s the Ideal Age to Start Thinking About Your Retirement Plan as a Business Owner?

You started a business as a source of income. But with the right planning, it can be your legacy. When’s the ideal age to start thinking about retirement as a business owner?

The sooner you start to think about your succession plan, the better. Here are some tips to help you think about long-range planning as a business owner.

Consider Your Long-Term Plan

Forget about the business for a moment. What are your long-term personal plans? For example, do you have an age at which you’d like to retire? Do you have specific goals for life post-retirement?

These questions naturally depend on your personal financial planning. You’ll need to ensure that you have sufficient funds to carry you into retirement, which means you’ll need to develop a plan to save for a retirement “nest egg” to supplement other sources of income like Social Security, annuities, or a retirement account.

That’s why it’s never too early to start dreaming about retirement. As a business owner, your retirement planning will have a direct bearing on how involved you are in your company over the long term.

Having a solid personal plan will give you more flexibility regarding the timing — and urgency — of your business succession plan.

Plan Your Exit

What comes next for your company itself? This is where your business succession plan comes into play. You’ll need a strategy that allows you to gracefully exit your business while determining your company’s future.

Possible exits include:

  • Selling to an employee
  • Selling to a business partner
  • Selling a book of business
  • Passing your company on to your children
  • Selling your business to another company

If your company is to remain a family-owned business, you’ll need to have some very pointed conversations with your potential heirs. Your children may or may not be interested in taking on the family business, which could prompt you to consider a different exit strategy altogether.

Depending on your timing, you may also need to communicate this plan to your employees or shareholders so they can prepare for a coming transition as well.

Maximize the Value of Your Company

Do you know how much your business is truly worth? This is an important question when it comes time to sell your company. Unfortunately, many entrepreneurs overestimate the value of their companies, which can lead to a kind of “sticker shock” when they learn how much their company might sell for.

Fortunately, you can maximize the value of your business with the right planning, which includes:

  • Developing a strategy to increase sales
  • Tapping into new markets
  • Acquiring new equipment or commercial real estate
  • Creating standard operating plans that make it easy to transfer ownership

All of these strategies can make your business more attractive to buyers, thereby increasing your company’s potential value. But implementing them can take time. Making these things a priority now can help you build value in your company once you reach retirement age.

Standardize Your Processes

As an entrepreneur, it can be easy to handle many of your internal processes. But that can create a company that depends heavily on you. If you wish to create a succession plan, you’ll need to develop a set of standard operating procedures for both your core processes and administrative procedures.

Creating standard processes will make it easier to delegate tasks to other employees. It will also make it easier to train a successor once you retire, ensuring that your company will continue on as you intended. Even if you choose to sell your company, having a set of standards in place can help you attract the right buyers.

It’s never too early to start developing these standard procedures. In fact, the sooner you standardize your processes, the sooner you can start delegating. Prompt planning will allow you to grow and expand, which is another way to increase your company’s value.

Get Help with Your Exit Strategy

Our team is committed to providing entrepreneurs with the tools they need to thrive in and out of retirement. We can help you set up an exit plan while maximizing the value of your business. Reach out today to discuss your options.

Benefits of Hiring a Fractional CFO During a Recession

A fractional CFO is a wise investment in any economic climate, but during a recession, their input can truly be critical. No business is totally recession-proof, but a fractional CFO can provide expert-level guidance to help you weather the storm. Here’s how a fractional CFO can help you.

What Is a Fractional CFO?

A fractional CFO is an individual or organization that serves as your company’s Chief Financial Officer (CFO) on a part-time or contractual basis. With this arrangement, your business gets all of the advantages of having a CFO but at a fraction of the cost of hiring a financial professional. 

Fractional CFO services are often offered through online accounting firms, which can provide virtual financial services that give you access to world-class financial advice from anywhere in the country.

How a Fractional CFO Can Help During a Recession

During a recession, you might be resistant to investing in new products or services. But investing in a fractional CFO can actually help you survive a recession. Here’s how.

Reduced Operating Costs

Hiring a full-time financial consultant can be costly, but a fractional CFO offers industry-leading advice without the expense of hiring an actual employee. Additionally, many fractional CFOs work remotely, so you won’t have to worry about carving out valuable office space. This convenience likewise reduces your operating burdens.

Boost in Productivity

Chances are that you and your employees are trying to handle your financial decisions on your own. But the time you’re spending on these administrative needs only steals focus from your core business activities. 

A fractional CFO will help you handle these operational needs and allow you to stay focused on the revenue-generating activities your business needs to thrive during an economic recession.

Specialized Experience

Most fractional CFOs are found through accounting firms that hire whole teams of financial professionals. Investing in a fractional CFO service means you’ll partner with a CFO who can offer industry-specific help and guidance to you and your team. 

A fractional CFO will usually also bring advanced education and an understanding of current best practices that can improve your operational viability both in and out of a recession.

Economic Guidance in a Period of Uncertainty

One of the most important things that a fractional CFO can do is offer advice and guidance. Again, this is especially valuable during a recession, when the path forward seems unclear. 

A fractional CFO can provide a broader perspective of the state of the economy and introduce solutions to help you know when to focus on maintenance and when to take on new opportunities and initiatives.

Better Internal Controls

During a recession, mistakes and fraud are some of the last things you want to worry about. A fractional CFO places your company under constant watch, adding an additional, unbiased layer of accountability. 

This monitoring helps to minimize — if not eliminate — instances of financial fraud as well as provide support for ongoing reconciliations and other financial processes. This service keeps you up to date and allows you to measure your progress toward your most important benchmarks and KPIs.

Accurate, Up-to-Date Reporting

Fractional CFO services ensure that you and your team are always operating with the best information. A fractional CFO can help you develop revenue forecasts and budget projections that offer clarity regarding the future of your company. 

Because fractional CFOs typically operate with online accounting firms, you’ll enjoy 24/7 access to your most valuable information. These reports and data can be especially helpful if you need to apply for financing to cover your expenses as a recession persists.

Improved Stakeholder Confidence

Investors and other stakeholders appreciate companies that adapt and innovate. Hiring a fractional CFO can give your stakeholders greater assurance that your company can weather the current economic climate. 

A fractional CFO can also help you identify ways to stay ahead of the competition, and having this edge may entice other investors to support your company.

Don’t Just Survive — Thrive

At Zabel and Co., we understand the challenges business owners face during a season of economic instability. That’s why we offer fractional CFO services that can help you stay the course, if not thrive, during a recession. To discuss your options, contact our team today.

EOY Planning — What Business Owners Need to Know

For most business owners, the new year represents a fresh start. But as the current year draws to a close, it’s important to think through some of your core business processes. Here are some of the most important things to focus on when doing your end-of-year planning.

Collect Documentation Related to ERC Issues

The Employee Retention Credit (ERC) is part of the CARES Act rolled out in 2020. If you received funding through this program, you’ll need to provide documentation indicating how much you received and how you used these funds in your business.

Review Your Tax Bracket

Remember, tax brackets have been updated for 2023, meaning it’s possible your business now fits into a bracket. If that’s the case, you’ll need to adjust your withholdings for the next year.

If you’re struggling with your tax planning, working with a financial team can help with preparation and planning for the following year.

Make Plans for Section 179 Deduction

You could take a Section 179 deduction if you purchased any new vehicles or equipment for your business this year. You’ll need to gather the appropriate documentation to validate this deduction. If you haven’t made these sorts of purchases, consider doing so, as it could help you with your tax situation.

Once again, it can help to consult a qualified financial professional if you’re unsure whether your purchase qualifies.

Check Your Retirement Contributions

Make sure you’ve maxed out your retirement contributions for the year. If not, you still have time to ramp up your contributions before the year closes. Check to see what limits may apply to your retirement accounts: 401(k)s, IRAs, or other investment vehicles.

Reconcile Your Accounts

Reconciling your accounts regularly can help you keep your books up-to-date and accurate. But making sure they’re reconciled before the year’s end is particularly important, as it will give you a final opportunity to address any issues that may have snowballed since your last review.

Pay particular attention to any unpaid accounts receivable or accounts payable, as this can likewise be a good opportunity to catch up on outstanding debts or invoices.

Reflect on Your Goals and Strategy

Now’s a good time to look back on the previous year. Did you achieve all of your goals? How might you refine your strategy for the coming year?

If you work with a leadership team, this can also be a perfect occasion to solicit their input on how well your company’s processes are performing and generate new ideas to help you hone your strategy for the coming year.

Review Your Staffing Needs

Just as it’s important to reflect on your company’s overall mission, it’s also important to reflect on the personnel who help you accomplish that mission.

Is your current staff sufficient to help you maintain and grow your business? If the answer is “no,” consider bringing on new staff members or offering training to sharpen your existing staff’s skills and competency.

Update Your List of Vendors

It’s not unusual for vendors to change contact information or for your business to switch to new vendors for certain items and supplies. As such, the end of the year is a good time to update your vendor contact information and purge your supplier list of any inactive vendors.

Celebrate Your Victories

Recognizing your workers’ contributions can go a long way toward improving employee performance and engagement (and retainment, for that matter). Take the time to show your appreciation for your team’s hard work and accomplishments.

Here’s a tip: highlight outstanding employees on your website or social media pages to give them some deserved recognition while also drawing attention to your services.

Update Your Technology Stack

What new technology do you need to expand your business in the near future? The year’s end is a great time to update your security software and protocols or introduce new software to help you manage your finances, inventory, and other processes.

Zabel & Co Can Help with EOY Planning and Financial Oversight

Zabel & Company is committed to helping you meet your financial goals and business objectives each and every year.

Our proactive approach to analysis and expansion can help you align your EOY planning with your future goals, while our financial oversight offers transparency and analysis for every aspect of your business. Contact our team today to learn more.

How to Get Your Business Ready for a Potential Recession

The fear of a recession that brings layoffs and business shutdowns is now closer to becoming a reality. However, the more you do now to prepare, the better off you will be. Even if we don’t hit a recession, and you do all of these things, your company and your cash flow will be better off and more sustainable. 

What Is a Recession? 

Technically, a recession is any two consecutive quarters of negative GDP growth. By that measure, the U.S. is already in a recession — GDP fell by 0.6% in the second quarter and then another 1.6% in the third quarter. 

The major effects of a recession, such as a slowing economy and steep declines in cash flow, have potential to come in 2023. However, business owners can start preparing now for festering economic changes that will help to prevent layoffs and shrinking profit margins. 

Can You Recession-Proof Your Business? 

It is possible to streamline your business operations now and prepare for the worst-case scenario. This includes looking for opportunities to reduce overhead and improve cash flow. There are several ways to start preparing today. 

Start with Your Operating Structure 

Remaining nimble is one of the best things you can do to survive an economic slowdown. This means keeping a flexible cost structure and identifying unnecessary overhead and discretionary expenses. Addressing these costs now will help you help maintain margins in the near term without sacrificing long-term growth. 

How to Improve Operating Efficiency 

Operational efficiency is a relatively easy lever that businesses can pull; however, many overlook this step. A good first step involves creating standard operating procedures to identify any gaps in efficiency — then filling those.

Good examples of gaps you can fill to improve efficiency include: 

  • Identifying what can be automated within your business
  • Deepening customer relationships to reduce competitor shopping
  • Assessing cash flow to reduce overhead, improve cash inflows, and limit outflows 
  • Improving the invoicing and collections process 

Keeping an open line of communication with your customers and vendors can go a long way during a recession. Keeping the customers you already have is vital and will save you from having to find ways to replace that revenue. Good relationships with vendors can get you discounts, whether by paying in cash or buying in bulk. 

The Importance of Managing Cash Flow 

Showing an impressive net income figure on your financial statements is nice, but it doesn’t necessarily translate into cash flow. Managing cash flows appropriately will be imperative in a recession. 

Improving efficiency will boost cash flow, and so will being proactive with negotiating with your vendors and outsourcing. 

While downsizing your workforce might be the last resort, you can still feed the growth of your business during a recession with outsourcing. This can be an easy way to fill needed positions or get expertise for your company without committing to a full-time salary. 

Shoring Up Your Balance Sheet 

Getting your balance sheet in order is one of the best things you can do to weather a downturn. This includes making sure you have enough liquidity to offset revenue declines. 

Actionable activities may include refinancing debt now that might come due in the next couple of years and selling off unproductive assets to build a cash reserve. 

Prepare to Capitalize 

If and when the worst of the recession comes, many businesses will be hit unprepared. If you have completed the steps above, you will be ready to capitalize on their shortcomings. 

This may include making strategic acquisitions of other businesses or buying deeply discounted assets. This is where an ironclad balance sheet comes into play. Having the cash to buy these assets is vital, and having the balance sheet to get financing for a big move can be even more vital. 

Other opportunities you will have include being able to diversify your business and further boost marketing efforts. Most businesses will cut marketing expenses when the recession hits, leaving opportunities for your firm to gain a foothold and significant market visibility. 

Also, there will still be customers that need your products — strategic marketing can help you effectively steal customers from the competition. 

Get Expert Help with Recession-Proofing Your Business 

If you need help creating solutions to improve efficiency and plug cash flow leaks, we can help. The Zabel & Co. team has deep expertise in helping businesses navigate the unknown. Connect with us today to see how our business advisors can help you get the right people in the right roles.

Cash Flow: Why It’s Important and How to Leverage Cash Flow for Business Growth

When starting or operating a firm, it’s important to understand cash flow concepts and how to leverage them for your growth. Cash flow is hands-down the lifeblood of any successful firm. Without a healthy cash flow, your business will eventually die.

We’ll examine what cash flow is, why it’s so important, and how you can use it to your advantage. We’ll also provide tips on how to enhance your company’s cash flow situation. So if you’re looking for insights into one of the most important aspects of business success, keep reading.

What Is Cash Flow?

In business, cash flow is the measure of money coming in and out of the company. It’s a key indicator of financial health, and if your cash flow is negative, it means you’re spending more money than you’re bringing in. This isn’t a sustainable situation and will eventually lead to the death of your business.

There are two types of cash flow:

Operating Cash Flow

This cash comes in and out of your business from day-to-day operations. It includes sales revenue, money spent on inventory, and employee salaries.

Investment Cash Flow

This cash comes into or leaves the business from investments or other financing activities. For instance, if you take a loan to finance your business, the money you receive from the loan is considered investment cash flow.

Why Is Cash Flow So Important?

Cash flow is important because it’s a key indicator of your company’s financial health. You’ll eventually go out of business if you’re not bringing in enough cash to cover your expenses.

Additionally, cash flow is important because it can be used to finance growth. If you have positive cash flow, you can reinvest that money into the business to help it grow. For example, you can use it to buy new equipment or hire new employees.

What’s the Best Way to Gauge Inventory?

There are different ways to gauge inventory, but one of the most important is to track your inventory turnover. This will present you with an idea of how fast your stock is moving and whether you need to adjust your buying habits.

Another way to gauge inventory is to track your days sales outstanding (DSO). This metric will indicate how long your customers take to pay their invoices.

You can also use a system like Just-In-Time (JIT) inventory, which helps companies manage their inventory levels by ordering only what they need when they need it.

How Can You Improve Your Firm’s Cash Flow Situation?

There are several ways to improve your company’s cash flow situation. One way is to give discounts for early payment. This will incentivize your customers to pay their invoices sooner, which will help you bring in cash faster.

Another way to improve your company’s cash flow is to extend payment terms to your suppliers. This will give you more time to pay your bills and help you build a good relationship with your suppliers.

You can also improve your company’s cash flow by reducing inventory levels. This will free up cash that’s tied up in inventory, and it will also reduce the risk of having obsolete inventory.

Finally, you can improve your company’s cash flow by reducing operating expenses. This will free up more cash to reinvest into the business or pay down debt.

How Frequently Should You Do Product Counts and Why Is This Important? 

Product counts are important because they help you gauge your inventory levels and ensure that you have the right levels of product on hand.

There are a few different ways to do product counts, but one of the most common is to do them weekly. This will paint you a clear picture of your inventory levels and help you make adjustments as needed.

Another way to do product counts is to do them every month. This will give you a more long-term view of your inventory levels and help you make strategic decisions about your inventory.

Why Is the Turnover Ratio Important? 

The turnover ratio refers to how fast you sell through your inventory and is a key indicator of your company’s financial health. A high turnover ratio means your stock is moving quickly, which is good for business.

A low turnover ratio means your inventory isn’t moving as quickly, which can signify financial trouble. The turnover ratio is important because it can help you gauge your company’s financial health and adjust your business as needed.

Get Expert Help with Your Cash Flow

If you’re having trouble managing your company’s cash flow, it’s important to get expert help. Our team of professionals at Zabel & Co. can help you understand your cash flow situation and develop a plan to improve it. Let’s chat!

Minnesota Bonus Pay Program Signed into Law

Minnesota Governor Tim Walz recently signed a bill passed by the Minnesota Legislature that will provide bonus pay for eligible COVID -19 frontline workers. While program details are still being finalized, potential applicants are encouraged to visit to sign up for updates and view an information sheet about the Frontline Worker Pay program. 

According to the details on the website as of this, to be eligible for Frontline Worker Pay, the applicant:

  • must have been employed at least 120 hours in Minnesota in one or more frontline sectors between March 15, 2020, and June 30, 2021.
  • for the hours worked during this time period the applicant –
    • was not able to telework due to the nature of the individual’s work and
    • worked in close proximity to people outside of the individual’s household;
  • must meet the income requirements for at least one year between Dec. 31, 2019, and Jan. 1, 2022 –
    • workers with direct COVID-19 patient care responsibilities must have had an adjusted gross income of less than $350,000 for married taxpayers filing jointly, or less than $175,000 for other filers and
    • for workers in occupations without direct COVID-19 patient care responsibilities, the adjusted gross income limit is $185,000 for married taxpayers filing jointly, or $85,000 for other filers; and
  • must not have received an unemployment insurance benefit payment for more than 20 weeks on a cumulative basis for weeks between March 15, 2020, and June 26, 2021 (Minnesota Statutes, section 268.085, subdivision 1, clause 6).

A summary of the sectors that qualify for frontline worker pay include, but are not limited to:

  • retail
  • foodservice
  • manufacturing
  • long-term care and home care
  • health care
  • emergency responders
  • schools
  • child care

A full list of sectors and more information about the program can be found at

How to Replace Yourself in Your Business 

After spending years growing your business, it feels like a part of you. While this can be rewarding, it also makes it harder to hand over control of certain tasks and learn to step back. However, this can be essential for both long-term business success and to avoid burnout. In addition, if your plan is to eventually sell your business, the best thing you can do for your business is identify how to replace yourself. 

Keep reading to learn how to create effective systems in your business to promote growth and transfer the workload off your shoulders. 

How to Create Systems that Work

Implementing a series of effective systems will help your business run smoothly without requiring you to be involved in every little detail of the operation. Systems achieve specific goals by combining three integral components: the people, the tools, and the process. 

Having all three of these things in place for every system you create will allow your business to grow beyond you and put it in a prime position to be sold in the future — if that is what you desire.

Whether running a one-man show or managing a small team, the following tips will help you create the systems necessary to replace yourself in your business. 

Hire the Right People 

The first step toward setting up systems to take your place in your business is hiring the right people. Any potential employees should be well-vetted. 

Of course, the hiring process will look different for businesses in various industries, but don’t rush the process just to get a position filled quickly. It’s better to take time to ensure the people you hire are a good fit for your team — especially if you plan to leave your business in their hands.

Rather than get hung up on education and experience, it’s important to hire people with desirable character traits. Team players who possess strong communication skills and are eager to learn are always more valuable than people who believe they have nothing left to learn. 

Give Employees the Tools and Training They Need 

Every business has its unique ways of operating, so it’s not fair to expect new employees to instinctively know what you need from them. Once you have the right people on your side, you must give them the tools and processes to succeed. 

For example, for a client relations rep to schedule appointments, they must know how to interact with customers and use the proper software — whether that’s a basic company-wide calendar or a complex database. 

In this example, scheduling appointments is the process you want to complete, and the software and customer service skills are the tools used to achieve that. This is a simple example, but you can use the same logic to create systems at every business level to keep things running smoothly. 

Don’t Be Afraid to Delegate

This is usually the hardest part for business owners, but it is important to remember not to try to manage every facet of your business just because you can. Delegating out responsibilities and time-consuming tasks is a great way to reduce personal stress, free up your time, and get your company primed for running smoothly without you. 

Delegating responsibilities can give you more time to focus on the bigger picture, but it’s important to delegate wisely. You should always play to your employees’ strengths to maximize efficiency and employee satisfaction when giving out tasks. 

Keep Your Finger on the Pulse

Even though your ultimate goal is to replace yourself in your business, you still need to stay in the know on the health and status of your business. You should never check out completely while the business is still under your control. Otherwise, you could end up with a mismanaged business on the edge of collapse. 

Keeping your finger on the pulse of your business allows you to steer your business in whatever direction you want and promptly address any issues that arise rather than let them fester in your absence. 

Regularly checking in on your business and staying informed is essential to building a business that will attract buyers down the line. 

When you’re ready to start preparing for the future of your business, we can help you create and implement a strategic plan to get there. Connect with us today to schedule a complimentary consultation to discuss your specific situation. 

3 Tips to Finding Repeat Customers

The chances are that you have heard the old saying that it is cheaper to keep a customer you already have than it is to secure a new one. Repeat customers are oftentimes the cornerstone of your business, coming back time and again for more of what your company has to offer. 

You want to secure more repeat business for yourself, but how can you go about doing so?

Finding repeat customers has never been easier, and there are a few things you can implement to make it more likely that your shoppers will return. Here are 3 of the top tips you can follow to get more repeat business:

1. Have Great Customer Service

It should go without saying, but every business needs to have top-notch customer service if they expect their customers to stick around. 

More people than ever before will claim loyalty to a brand if they feel that they were treated well during the purchase process. If they had an issue with the product or service you offered them, were you able to find a suitable solution for them?

A beneficial resolution for your customer will transform their experience from a negative one to a positive one. This service makes them more likely to recommend you to all of their friends if they feel that they were truly heard and understood by your staff.

You need to train employees on how to handle customer complaints with a smile. It can be challenging at times to meet angry or upset customers with kindness, but it is essential if you want to cash in on repeat customers.

2. Educate Customers 

Does your customer know how to effectively use or manage what they purchase from you? One way to ensure repeat customers is simply to educate them on how to best use the item or service they purchased. In the process of teaching them more about it, you can also cross-sell them on different products that enhance their overall experience.

How can you effectively educate and cross-sell products to your customers? It might not be as hard as you think:

  • Start a blog on your company website
  • Create short videos for your social media platforms
  • Email out a monthly newsletter with information and promotions

Another tactic is to better educate your sales staff on how they can cross-sell products to the customers who come into your storefront. Staff should know and understand your customers’ pain points and how each item that you carry can factor into the solution.

Once you train them, you might start to see bigger sales from your repeat customers who finally understand what they need to do to solve their problem!

3. Create a Customer Loyalty Program

If you want your customers to come back over and over again to make new purchases, then you should have some kind of incentive for them. A customer appreciation or loyalty program of some kind gives shoppers a reason to come back to your storefront instead of your competitors’.

While every business is different, many people find that offering a small discount or promotion for repeat customers helps them to retain those customers for longer periods. 

Despite giving out a discount or a free item, many business owners will find that they still come out ahead because they no longer need to invest in their marketing budget to pull in more customers. Instead, their repeat customers do all of the legwork for them.

Additionally, the incentive might be good enough to convince your new repeat customers to refer their friends to you. Consider giving an additional perk for loyal customers who send friends and family your way.

This approach can be a little tricky to keep track of, but once you find a system that works for you, you might find that you can reallocate your marketing budget to some of these other incentives.

Growing a Thriving Business

Getting repeat customers is just one aspect of a thriving business that will continue to grow well into the future. 

Zabel & Co. is here to help you reach your business and personal goals while aligning with our basic philosophy of integrity, respect, and client commitment. Contact us today to learn more about how our company can help you achieve your goals!

Improving Cash Flow: 3 Steps to Take Now

Cash. It’s something every company needs, regardless of your core competencies. Perhaps you’re passionate about baking the best muffins in the world. Well, you still ultimately need to sell those muffins and make cash. You might make incredible muffins, but that doesn’t necessarily mean you know how to optimize your cash flow.

Defining Cash Flow

Before we go further, let’s go over what exactly “cash flow” means. Cash flow is all money transferred in (inflows) or out (outflows) of your business.

Generating positive cash flow (where inflow exceeds outflow) is every company’s goal. Cash flow statements show companies’ use and sources of money and are part of accurate financial documentation.

How You Can Improve Cash Flow

Cash inflow is essential, but don’t overlook your cash outflow either. Being able to responsibly manage all of the money you touch, whether it comes in or goes out, will keep you from getting a visit from the IRS and make your banker happy!

No one wants an audit, and accurate financial records that demonstrate responsible handling of money will come in handy regardless of whether the government examines your books or not.

Here are three tips that will help you improve your cash flow:

1. Manage Accounts Receivable Daily

Your accounts receivable might not seem to be assets, but they are. They represent the promise of money from your customers and while it would seem like accounts receivable is a liability because the cash isn’t in hand yet, that’s not how banks see it.

A large number of accounts receivable shows that you have a steady business, and well-documented accounts receivable demonstrate responsibility. If you need a loan for some working capital, banks are more likely to lend to you if you illustrate that you have many accounts receivable.

That said, even if you have an extraordinary amount of accounts receivable, there’s still work to be done. If you want to ensure you get paid as fast as possible, you should:

●     Send invoices immediately

●     Follow up on overdue invoices

●     Set up prepayments whenever possible

●     Use outside help from firms like Zabelco to optimize your processes

You must do this work daily to ensure you don’t fall behind and lose track. You might not have invoices to send every day, but going over your transactions can show you any discrepancies you need to address.

2. Consider Increasing Prices

You might feel you will lose business if you increase your prices, and you might be right. However, the business you lose can be offset by the increases you see from bringing in new customers at better margins.

Because price is psychologically linked to quality, an increase in price can suggest that your products are worth the premium. If your cash flow is weak, this might be a good solution.

However, just how much you should increase your prices can be a tough decision. You’ll need to:

●     Research the prices of competitors

●     Analyze customer habits

●     Look into changing products to justify the extra cost

●     Get assistance from firms such as Zabelco to identify a solid pricing strategy

If you believe in your products and customers are buying them at the current price, reliable customers probably won’t disappear if you nudge your prices up.

3. Reevaluate Operating Expenses

The building you work from could be perfect. Or it could be too expensive, in the wrong location, or unfit for your needs and in need of renovation. Finding areas of your business that are costing you more money than they should is essential for improving cash flow.

While you’re figuring out how to increase inflow, you should also be finding ways to decrease outflow. When you’re analyzing your expenses, you should:

●     Cut unnecessary expenditures

●     Streamline inefficient processes

●     Consider investing in more efficient equipment

●     Reconsider your space needs

●     Run your analysis by Zabelco to optimize business practices and cash flow

You never know when more up-to-date computers or moving to a building with lower rent could dramatically impact your net profits.

Zabelco Is Here to Help You Win

Zabelco is more than just tax and accounting services. We are also business growth coaches dedicated to transforming your business into a world-beating success. If you need help optimizing your cash flow, connect with Todd to learn more at

5 Tips for Managing Profit-Draining Customers

Like many other business owners, you have probably encountered your fair share of profit-draining customers. You know the ones we are referring to. These clients often produce a high amount of gross revenue but generate so little profit that your margins are razor-thin. In many cases, these types of accounts end up costing your organization money.

While you may have considered severing your relationship with these profit-draining customers, there may be a chance to plug the leaks and maximize company profitability. To learn more, check out these 5 tips for managing profit-draining customers.

1.  Find the Leak

Many companies fail to take a deep dive into the data in order to find the exact cause of a profit leak. Oftentimes, our experts find that the solution could have easily been remedied by simply reviewing and listening to the data.

Once you have identified a leak, you can take steps to remedy the issue. This will allow you to maximize company profitability while nurturing an existing client relationship.

2.  Reduce Your Costs (and Theirs)

When addressing profit-draining customers, many organizations get focused on maximizing company profitability and reducing their own costs. However, it is equally important to help the client cut costs and improve their margins.

In order to reduce their costs, you must identify why they are causing a drain on your profits in the first place. Typically, below-market pricing is not the source of the issue.

Instead, the profit-draining customer likely has an excessive cost to serve. A high cost to serve can be linked to several factors, such as unusual order patterns or a poor product mix, but we’ll dive deeper into those issues below.

3.  Reassign Top Employees

After you have reviewed the data and identified the source of your profit drain, it is now time to reassess your relationships with these clients. Sometimes, simply assigning a new account manager to a profit-draining client can resolve the issue.

By pairing a potentially lucrative customer account with one of your top managers, you can often salvage the relationship. The high-performing account manager may be able to bring a new perspective to the situation and devise a creative way to maximize company profitability.

4.  Rework Your Product Mix and Order Patterns

Another proven way to maximize company profitability is to rework your product mix and order patterns. Poor order patterns are a common source of profit drains. This is an easily remedied issue in most instances.

Once you have identified the customers that are the source of the profit drain, closely review their order patterns. Are they ordering items too frequently or at irregular intervals? If so, work with them to establish less frequent, higher volume ordering patterns so that you can reduce supply chain costs.

As you’re assessing your current product mix, make sure that your sales team and account managers are aware of each item’s net profit. Create an internal catalog for these items.

This data will allow your account managers to provide each client with a customized product mix that can maximize company profitability.

5.  Don’t Be Afraid to Cut Ties

Unfortunately, not every customer relationship can be saved. Therefore, it is essential to be willing to cut ties when a partnership no longer benefits your organization.

Waiting too long to sever a relationship that has taken a negative turn can cost your company tens of thousands of dollars in revenue.

With that being said, it is important that you make an earnest effort to eliminate profit drains before you end a customer relationship. Prematurely terminating an account can have major consequences for both parties. It can even impact your overall brand reputation if it happens frequently.

Ready to Maximize Company Profitability with Zabel & Co?

While the tips outlined above are great ways to manage profit-draining customers, implementing these solutions can still be tough. Fortunately, Zabel & Co is here to help.

Our team of expert strategists and advisors can help you identify cost-saving opportunities, strengthen client relationships, and maximize company profitability.

To learn more, contact Zabel & Co today. We’ll identify the barriers that your business is facing. Then, we’ll make a comprehensive plan so that you can effectively overcome them.