Networking and Small Biz Cashflow : Summary from June 16th, 2009

Cash flow, bookkeeping and money management are things that all small business owners struggle with in one way or another.  Mike McDerment, CEO of Freshbooks and our guest this week, helped answer some questions regarding invoicing, billing and outsourcing accounting tasks. The questions regarding billing lead to a epiphany by one of our participants about his cash flow issues as a result of how he was billing projects.

If you know someone who’s looking for the answer to questions like these, please take a moment and tell another small business about SBBuzz and our weekly chats.  We’re aiming to answer the questions that will help small businesses succeed.

Want to participate or have a small business question that other small biz owners can answer? Here’s how you can join us next week!

  • Next buzz-up is Tuesday, June 23rd from 8:00 PM – 10:00 PM Eastern Time. Join us – We’re here to facilitate the conversation between small business owners.
  • Know small businesses that need help? Let them know when this chat happens, help them get started on Twitter and let’s talk!
  • Instructions for participating are at http://sbbuzz.biz/instructions
  • Below is a summary of the most recent discussion. To see the full conversation, go to: http://bit.ly/xAPvc

sbbuzz: Welcome to #sbbuzz, a Tweetchat for next 2 hours of small biz talking about technology. Join us! http://sbbuzz.biz/instructions

sbbuzz: Rules: 1)NO pitching till end 2)Be nice 3)Stay ON TOPIC! 4)Send ?s for group to me w/o hashtag 5)Use #sbbuzz in all messages 6)Have fun!

sbbuzz: And to help us make it a good one, Q1 What type of local networking events do you find most valuable and why? #sbbuzz

  • killspamdead: @sbbuzz Ones which serve Pizza, I think this has been well established. #sbbuzz
  • rzazueta: #sbbuzz Q1: Chamber mixers, but only bc I’m a B2B. Everyone’s there to make a sale, so going in to form relationships works best
  • leoraw: Yes, TweetUps are great. I met @rongraham1 at a TweetUp. Did some social media talks at 3 libraries with people via Twitter. #sbbuzz
  • lindadessau: Q1 For local networking I like to 1. Connect with like-minded folks who do biz online or 2. Be inspired by what others are doing #sbbuzz
  • adarowski: @sbbuzz Adam Darowski also here from @batchblue. I hear @saulcolt is here. And when he’s there, it’s a party. #sbbuzz #sbbuzz
  • rzazueta: @killspamdead Free wine or beer does it for me too. Just enough to loosen the ol’ gears. #sbbuzz
  • saulcolt: @sbbuzz tweet ups, social media mixers with a speaker or two like #wiredwedto as well as industry events #sbbuzz
  • adarowski: @sbbuzz Q1 Our local monthly geek get-together was a “meetup” before it was a “tweetup”. Perfect mix of social and techy folks. #sbbuzz
  • pmohara: #sbbuzz Q1 I think less formal the better. Providence Geeks here in RI is my favorite – advice from local geeks, no pitching or salesness
  • rzazueta: #sbbuzz there’s a tech group that does a monthly meetup here, but it costs $20/pop. Thinking about getting a cheaper group together
  • rzazueta: #sbbuzz Actually, anyone know of any good trade orgs for web developers?
  • LogicommInc: Q1 The AM Prov. Entrepreneurs Group is my favourite. VERY informal, lots of great discussions,, constantly going off topic:) #sbbuzz
  • ImagineGraphics: Q1 Most valuable local networking is peer to peer roundtables in a small group w confidentiality. Ideas, support, connection – YES! #sbbuzz

sbbuzz: Q2 Any ideas for adding a virtual component to a Tweet-up? #sbbuzz

  • bradfordshimp: Q2 – Would that defeat the point? #sbbuzz
  • adarowski: @sbbuzz I went to one tweetup where there was a laptop open ustreaming the event to “who the heck knows”. Was weird and awkward. #sbbuzz
  • adarowski: @sbbuzz The most “virtual” a “meetup” should be is maybe a hashtagged backchannel on Twitter of attendees & friends not there. #sbbuzz
  • rzazueta: #sbbuzz Q2: The geek in me thinks laptop + projector. But, I agree with @bradfordshimp – it would probably defeat the purpose.
  • rzazueta: #sbbuzz I mean, isn’t the point of a tweetup to look people in the eye, not at your Blackberry/iPhone/Laptop all night?
  • mriggen: Q2 agree about the “weird and awkward” ustreaming thing. But I think having twitter handles on nametags (or shirts!) helps :) #sbbuzz
  • sbbuzz: @bradfordshimp Maybe. Just looking for ideas. Thought I’d see if anyone has some crazy ones. :) #sbbuzz
  • LogicommInc: Q2 – I’m still trying to master the tweet up, never mind virtual components:) #sbbuzz
  • bradfordshimp: @sbbuzz I think video chatting with other tweetups might be interesting, kind of an around the world tweetup. #sbbuzz
  • bradfordshimp: In a more formal tweetup, where there is a speaker, that could be broadcast. #sbbuzz

sbbuzz: Q3 Are you using Twitter /social media as an HR tool? For recruiting, researching, team building, how? #sbbuzz

  • rzazueta: #sbbuzz Q3: Thinking about it, if I can ever get back into a hiring mode again ;-)
  • lindadessau: Q3 I hired a virtual assistant after following her Tweets for awhile and I liked what I saw. #sbbuzz
  • merylkevans: Q3 just talked to someone who finds future team members by following and watching thoughts. #sbbuzz
  • bradfordshimp: Yes, for Idea Anglers especially. Finding people who have similar interests and who are givers via Twitter. #sbbuzz
  • Peer_Resources: Using it to build community and engagement but majority of tweets are broadcasting. #sbbuzz
  • LogicommInc: Q3 – My partner, who lives 65 miles away and drives a Detroit Chrome Mtn of a vehicle and I use a combo of Skype/LogMeIn and Twitter #sbbuzz
  • mriggen: @sbbuzz Q3 We definitely do! Last three out of four hires have been people we’ve “met” online first. #sbbuzz
  • adarowski: @sbbuzz Q3 I an also envision it going the other way… candidates finding potential co-workers on Twitter and following them. #sbbuzz
  • LogicommInc: Q3 – addendum: we’ve used contractors that we’ve ‘met’ through Twitter. Prov. Entrepreneur Meetups (combo of off/online) as well #sbbuzz
  • leoraw: RT @rongraham1: @sbbuzz Q3: forming a mastermind group for people in brand-new start-ups. It’s advanced networking by affinity. :-) #sbbuzz
  • LogicommInc: Q3 redux – If one evangelizes a medium, one should be using it afterall…#sbbuzz
  • bradfordshimp: Other than perm. hires, Twitter is a good place to find professionals, virtual assistants, and people who can answer questions. #sbbuzz
  • ImagineGraphics: Q3 I want to use it as team building but need to clarify boundaries 1st, esp as to time spent on twitter rather than client work #sbbuzz
  • leoraw: I use Twitter a LOT for technical research. Some very knowledgeable people have answered Qs. #sbbuzz
  • ImagineGraphics: Q3 Same bldg but diff jobs can = disconnection. Following my employees’ tweets is fun & connective. Get 2 know diff side of them. #sbbuzz

(Editor’s note: Some participants were having issues getting their tweets to show up, with the hashtag.)

sbbuzz: Q4 How are you finding new recruits or professionals to hire in social media? Does it make a difference in the work? #sbbuzz

  • LogicommInc: Q4 – As we primarily use consultants, and have used Soc. networking for about a yr, it’s easy to create a list of experts #sbbuzz
  • rzazueta: #sbbuzz Relationships are key. SM is an investment – takes time to get results, but more you put in, more you get out.
  • rzazueta: #sbbuzz The relationship thing is vital whether asking Qs or looking for hires or whatever. Use SM to build trust, then reap the benefits.

sbbuzz: Q6 Balance sheet, cashflow, income statement and more. Where should a new business owner start and when? #sbbuzz

  • MikeMcDerment: Q6 first things first, sort out what kind of business you are running. #sbbuzz
  • MikeMcDerment: Q6 some businesses reply on a lot of capital (machines, bricks and morter) #sbbuzz
  • MikeMcDerment: Q6 but must do not. Most businesses are service based – people who get paid for time and expertise. #sbbuzz
  • MikeMcDerment: Q6 no matter what kind of business you run, cash is king. So getting controls for your cash flow is the place to start. #sbbuzz
  • lindadessau: Q6 My bookkeeper prepares a cash flow report every two weeks via QuickBooks and it’s a great snapshot of what’s going on. #sbbuzz
  • MikeMcDerment: Q6 so i’d start with cash flow statements for sure. #sbbuzz
  • LogicommInc: Q6 – Logicomm is a mostly virtual company. We provide IT Services to micro business (<20), mostly remotely #sbbuzz

sbbuzz: Q7 from @rzazueta How can project-driven service companies keep cash flowing? When should they ask to get paid? #sbbuzz

  • MikeMcDerment: Q7 I used to run a consulting firm. I’d demand 50% to start any project, 40% to deliver it and 10% holdback for housekeeping. #sbbuzz
  • MikeMcDerment: Q7 that way I always figured if the project failed or client disappeared, I’d cover my sunk costs. #sbbuzz
  • lindadessau: @MikeMcDerment Does “delivery” mean complete project or first draft? #sbbuzz
  • sophware: Q7 We’ve had some success with progress billing – payments after major milestones or things that represented being x% done. #sbbuzz
  • MikeMcDerment: Q7 I also found getting paid to start closely aligned the clients with my efforts – often they are the ones slowing things down. #sbbuzz
  • rzazueta: #sbbuzz Wow, 50% up front? Is that common among other folks?
  • MikeMcDerment: @lindadessau in that case it would mean completion. But you can use other milestones. Main point is I liked 50% to start. #sbbuzz
  • rzazueta: @sophware How do you determine what % at what milestone? #sbbuzz
  • leoraw: RT @rongraham1: @sbbuzz, Q6 gotta be a business plan. Even if we don’t need funding, we do need direction, and the plan gives it. #sbbuzz
  • lindadessau: @MikeMcDerment @rzazueta Yes, I also request 50% upfront – it’s the subsequent payment schedule that doesn’t always flow for me #sbbuzz
  • scoblitz: @rzazueta for project based work that is typically what I request #sbbuzz
  • MikeMcDerment: @rzazueta in my experience, yes. Also seen 25%, but mostly 50%. The biggest changes I’ve seen is in the later stage milestones. #sbbuzz
  • pmohara: @rzazueta we see that frequently from our vendors – 1/2 up front. Especially for first time projects. #sbbuzz
  • rzazueta: #sbbuzz I’m running off after this to restructure my contracts. Don’t know why 50% is such a revelation to me.
  • sophware: Q7 @rzazueta decide how much you can lay out there. If it’s $5k and it’s a $20 project, bill every 25%. #sbbuzz
  • scoblitz: @MikeMcDerment @rzazueta I usually do 50 / 50 but for long projects I’ll break out to 50 / 25 / 25 #sbbuzz
  • MikeMcDerment: @rzazueta great to see that kind of epiphany in here – very exciting. And yes, run don’t walk. :) #sbbuzz
  • rzazueta: #sbbuzz Been doing this for 3+ years and always started with 10-20% up front. No wonder my cash flow sucks! ;-)
  • MikeMcDerment: @scoblitz I’ve done that too. I found I was more comfortable making changes on the back end. 50/40/10 was my preference though #sbbuzz

sbbuzz: Q8 How do small businesses find the time to manage their books? Any time-saving tips? #sbbuzz

  • MikeMcDerment: Q8 Start by thinking about the process consciously, most business owners just develop habits and not processes around the books. #sbbuzz
  • MikeMcDerment: Q8 Think about ways to streamline your processes. You want to spend as little time as possible on them. #sbbuzz
  • scoblitz: @MikeMcDerment excellent idea, something to think about for sure. #sbbuzz
  • lindadessau: Q8 I batch my record-keeping tasks. I put things invoices etc. in folders & then go through every 2 weeks on “pay day” #sbbuzz
  • MikeMcDerment: Q8 I also found doing the books as close to the actual work helped. The details are fresh in your mind. #sbbuzz
  • MikeMcDerment: Q8 Especially with invoicing. Not only will it take longer if you put it off, you will loose money by forgetting work you did. #sbbuzz
  • MikeMcDerment: Q8 Also think carefully about what you can automate and/or outsource. You do not need to do it all yourself. #sbbuzz
  • ImagineGraphics: Q8 We hire a free-lance bookkeeper. When we were small she’d come every 2 weeks, now every week for a few hours. It’s great. #sbbuzz
  • wvpmc: keeping on top of process is essential – otherwise you lose track of details – takes much longer to recreate #sbbuzz
  • JoGolden: oopps #sbbuzz neat desk / neat receipts keeps our managing partner happy when it’s time to do the books http://bit.ly/qafud (expand)
  • MikeMcDerment: Q8 Things like Payroll services, recurring billing and online payments can be huge time savers, as well as receipt scanning services #sbbuzz
  • lindadessau: @MikeMcDerment Great point. I’ve also started noting outstanding invoices on my project list so they’re front & center #sbbuzz
  • ImagineGraphics: Q8 Whoever sells the job bills it. Bookkeeper only for paying vendors, payroll, and keeping the books. #sbbuzz
  • MikeMcDerment: Q8 +1 @JoGolden, keeping things tidy is a big time saver. And if not tidy, ordered. I store all receipts in my wallet, then Ziplock #sbbuzz
  • MikeMcDerment: @lindadessau yes, outstanding invoices need to be easy to find and address and their lateness needs to be clear to you can prioritiz #sbbuzz
  • ImagineGraphics: Q8 we staple receipts to back of full size scrap paper so little ones don’t get lost. We write the check number upper right &file.#sbbuzz
  • chelpixie: Q8 I had to begin checking invoices daily, lots of work and I was going over hours in some cases. #sbbuzz

sbbuzz: Q9 What part of bookkeeping should small business owners do themselves vs. outsourcing? #sbbuzz

  • MikeMcDerment: Q9 I think it’s personal choice what books you do versus outsource. Personally I only like to read the reports. #sbbuzz
  • scoblitz: @MikeMcDerment I’m thrilled to hear you make the distinction between habit and process – so often those two get confused. #sbbuzz
  • ImagineGraphics: Q9 Preparing statements can be outsourced. but no one can monitor the numbers for you. Critical to success. Gives so much info. #sbbuzz
  • lindadessau: Q9 I like to be the one to contact my clients about account balances (hours remaining in a retainer payment) or payment owing. #sbbuzz
  • MikeMcDerment: Q9 I think owners should be driving sales, therefore they should know how those numbers are shaping up. That’s paramount. #sbbuzz
  • chelpixie: Q9 I’m hands on everything billing. I know what the hours are and who’s close (now) and how my cash flow is moving. #sbbuzz
  • MikeMcDerment: Q9 Automating as much of collections as you can will help with getting reports in real time on demand. #sbbuzz
  • boghani: @ImagineGraphics Very well said. I totally agree with you on this. I got burnt few times when I outsourced it. #sbbuzz
  • MikeMcDerment: Q9 FWIW, I think outsourcing payroll makes all the sense in the world. You need to manage it, but outsource the core of the process. #sbbuzz
  • rzazueta: Relevant to tonight’s #sbbuzz – RT @CoCoSmallBiz: New blog post: Cash Flow (Intro) http://bit.ly/CpHBH
  • MikeMcDerment: @chelpixie agree, if there is one thing to own outright, it’s the cash coming in. #sbbuzz
  • MikeMcDerment: @boghani @ImagineGraphics Yes, you need to carefully select trustworthy vendors and team members to give these responsibilities to. #sbbuzz

sbbuzz: Q10 How do small businesses keep track of online & offline activities? #sbbuzz

  • MikeMcDerment: @sbbuzz can you clarify? you mean when it comes to bookkeeping I presume? Like making sure both are getting updated? Assuming yes #sbbuzz
  • MikeMcDerment: Q10 The trick to managing online and offline activities is to have a consolidated view somewhere. #sbbuzz
  • sbbuzz: @MikeMcDerment Yes – just getting it all back to one place. (oops – forgot my own #sbbuzz tag)
  • IACEZ: @sbbuzz Or (if they don’t have time) they should at least know HOW to do it so they understand what they are looking at. #sbbuzz
  • lindadessau: @sbbuzz My very low-tech solution is a project list that I print 1x/week & always keep front & center on my desk #sbbuzz
  • boghani: Q10 I use flexwiki. I know some people claim that using flexwiki is like being water boarded. Try pbwiki #sbbuzz#sbbuzz
  • scoblitz: @MikeMcDerment @sbbuzz having your various tools and services work together and share info helps with this a lot as well. #sbbuzz
  • IACEZ: @sbbuzz Which is where easy-to-use accounting apps come in handy! :) #sbbuzz
  • MikeMcDerment: Q10 You need a system that shows both online and offline payments in one place in a sane manner, ideally with payment status. #sbbuzz

sbbuzz: Q11 from @greathomes What is best method/quickest way to get one’s biz out there? #sbbuzz

  • MikeMcDerment: @greathomes you mean to market your business? Really depends on so many things like the nature of the business and how u r different #sbbuzz
  • lindadessau: @sbbuzz Q11 #sbbuzz The best way to get one’s biz out there? Do great work and be nice to work with.
  • MikeMcDerment: Q11 How you get your business “out there” really depends on a million things (industry, budget, your unique approach). #sbbuzz
  • MikeMcDerment: Q11 Sometimes if you know what you want to do, it’s good to find someone who enjoys the “how to promote” question. #sbbuzz
  • IACEZ: Q11 Build relationships with people, and if they want to do business with you prove to them that you will go the extra mile. #sbbuzz
  • chelpixie: Q11 definitely different things. Find what you’re good at, do it well, and let people know. Work hard. #sbbuzz
  • MikeMcDerment: Q11 Most businesses are build through referrals. Starting with your customers is a great place to start “getting the word out”. #sbbuzz
  • boghani: Q11 Networking Networking Networking Networking Networking #sbbuzz
  • lutherlowe: #sbbuzz Q11 For a local SMB: Unlock a free listing at biz.yelp.com; view traffic, send msgs, post coupons/etc. Start a convo re:your biz
  • chelpixie: Q11 I’ve talked to people who think running your own biz is easy. It’s not. You work. A lot. #sbbuzz

sbbuzz: Thanks Mike for the awesome chat tonight. Think we have to end with Q12 – how do you get on the cover of Entrepreneur? ;) #sbbuzz

  • MikeMcDerment: Q12 You string together a long line of tiny successes and hope they lead you somewhere. :D #sbbuzz
  • sbbuzz: Thanks to Mike and everyone for he great discussion! We’ll get the #sbbuzz summary posted on the site soon at http://sbbuzz.biz
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