Over on Long Island, over 25% of the population is over 55. That’s a lot of boomers out there. And a recent story in the Long Island Business News reports that many are cashing out- selling their businesses - either because of the economy or age.
One of the reasons stated was the rising cost of running a business. So my question is, how could a new business owner spend LESS on running the business and why would they buy a business now? If the reason for selling is age, that makes sense, but not costs. Or am I missing something?
Collections Rule #1, as I heard it many years ago: The longer the bill is unpaid, the less likely it is that it will be paid. Here is dramatic visual proof of that rule in a recent Forbes article about collecting money in difficult financial times.
So what do you do to collect money? Here are some practical tips:
1. Start at the beginning. At the beginning of the business relationship, put in writing your expectations of payment and have the customer sign the document. Doctors include a financial responsibility statement in their new patient forms, and this is the kind of thing I’m talking about.
2. Reinforce your expectations with every encounter and every communication, particularly with new customers. Include reminders in every invoice/bill, or put a computer-generated note on every piece of paper that goes back and forth.
3. Bill frequently. Don’t wait until the end of the month. Send out bills every couple of weeks, at most. (Remember Rule #1).
4. Plan your collections strategy to increase the level of urgency and insistence with each communication. And require response. For example:
Communication #1 - Oops! I’m sure you already sent this payment, but in case you didn’t….
Communications #2 - We didn’t receive your payment and wondered if there’s a problem.
Communications #3 - We did the work/we provided the product or service, now we need to get paid.
Communications #4 - If we don’t receive payment by X date, we’ll submit your account to collections.
5. Offer payment terms to good customers. This could make the difference between getting some of the money and having the person go bankrupt, leaving you with little or nothing.
6. Keep in contact. If the customer comes in or orders frequently, make sure you and your sales people continue to be friendly and pleasant. If the person drops out of sight (often because they are embarrassed that they haven’t paid their bills), make sure your messages are received. Use certified mail, or whatever will get you a signature.
7. Finally, throughout the process, communicate, communicate, communicate. The more you communicate and work on getting the customer to communicate, the better your chances of getting paid.
Do you have any other collections tips that have worked for you?
I just heard of a young professional who has been in practice for only a few years. He was in a terrible accident, which will mean hundreds of thousands of dollars in medical bills, not to say the loss of his ability to practice.
If you are considering leaving your job to go into a small business, please check out health insurance and disability insurance. If you can’t afford these payments, you need to find something else to sacrifice to get them. If you are not going into business, be sure you have health coverage, and don’t depend on your employer (you know what happened to GM retiree health coverage).
You may be able to set up an insurance plan for your small business, but get help doing this, as the IRS has rules about deductibility of such plans.
Finally. The modeling industry is waking up to the reality of 72 million baby boomers with $2 trillion in buying power. And we know that women do most of the spending, so marketers are now starting to target them. Case in point:
TVLand’s new reality series “She’s Got the Look,” which selected 35-year old plus women (ok, they’re not quite ready for the 50-somethings, but they’re getting closer) and searched for the most photogenic. The winner of the competition is a 45-year old mother of 5, married 17 years.
I am not making any claims about any of these sites, although I will check them out (I might not sign up for the dinosaur thing; I haven’t decided about that one yet) and I’ll let you know.
How about a travel service for grandparents and grandchildren. It is called “Grandtravel.“ Tours go to places like Alaska, the Galapagos. and Italy. Obviously these are for older grandchildren, not young ones, depending on the type of tour.
While you are on their website, check out their quotes at the bottom of the Grandparents page. And note that they seem to understand the younger generation - iTunes, etc.
One tour that sounds great is the Trains of the Wild West one, which includes a ride on the Durango/Silverton Railway. My children, my mother-in-law and I took this tour several years ago, and it’s fantastic! If you ever get the chance to take this rail trip, do it. This one would be fun for the younger ones (like 8-10 year olds).
Remember, I am not making any recommendations, just giving you information. If you know of someone who has experience with this travel site, let me know.
Today I received his Retirement Intelligence newsletter/blog with a good post on a subject I’ve been meaning to talk about: The cyclical nature of the market and he did a nice job of summarizing the ups and downs over the past 80 years. His post is titled “How Fast the Markets Recover.”
One of the benefits of being a baby boomer is that we have been through a few of these ups and downs. I remember the “Black Friday” of 1987, how everyone was concerned we were headed for another depression, and how the market rebounded. I remember talking to someone at the beginning of the 2000 - 2001 stock market fall. He said he was pulling out all his retirement funds. (He was and still is in his 50s.) He took big losses. If he had left his money in, he would have recovered what he had lost and more.
Remember the fundamentals, folks: Buy low, sell high. And also remember that, since 1929, the stock market has averaged an 11% annual gain. Yes, that’s including the “Great Depression.” So think, read, listen, wait.
Warren Buffett’s words of wisdom on this subject:
Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.
And
Our favorite holding period is forever. (Berkshire Hathaway?)
Have you heard about “coaching?” No, I don’t mean the football kind. I’m mean the “business coach” or “life coach.” While coaching (the sports variety) has been around for a long time, the concept of a business or life coach or personal coach is relatively new. Many star athletes have had personal coaches to help them improve their careers. Now, anyone can have a personal/business/life coach. And they are everywhere. The International Coach Federation, a non-profit organization with over 13,000 members worldwide, credentials coaches.
Dr. Phil talks about coaching with his clients. You can find a local coach or sign up for an online coach. Either way, you’ll pay between $500 and thousands a month for the services of this person.
Is the coaching worth it? I don’t honestly know. I had a coach for about a year. He initially did some personality tests, etc. and got me to write down my goals and develop a mission and vision for my business. He helped me to keep my goals in mind and be motivated; he kept me on track. Could I have done that myself? Probably. Would I have done it as well as he did? Probably not.
In my “day job” I talk to a lot of Millenials who want to go into health care practices as “associates,” working with baby boomers. These young people come to me with contracts and want my opinion. I don’t give legal opinions (I’m not a lawyer and I don’t play one on TV), but I do walk them through the contract and ask questions: “What does this mean?” “Why is this section here?” “Here is what I think this means.” And sometimes, “What the bleep is this?!”
I recently saw a contract that was written by the hiring doctor. Himself. It was full of typographical errors, incomplete sentences. Worse, it was unclear. The terms of payment were not stated clearly (was the associate getting $3400 a month, or a day, or a year?), the length of the contract was “two years or more” (now what does that mean?), and there was a lot missing, like what state laws the contract was applicable too.
Now, I’m not out to make lots of money for lawyers, but they do have a legitimate purpose, to save people from getting into bad contracts that can be major problems later.
I just read the new John Grisham book The Appeal about a couple of small town lawyers who get a verdict for their client, the plaintiff, in a wrongful death lawsuit against a big, bad chemical company. The book clearly contrasts the appealing lawyer couple with the mean, money-hungry, evil company. Are trial attorneys the problem? I’m not telling you the ending, but I can say I wasn’t totally satisfied.
Lawyers get blamed for all the evils of society (Grisham himself said, “My decision to become a lawyer was irrevocably sealed when I realized my father hated the legal profession.”), and lawyer jokes abound, even back as far as Shakespeare’s time (”The first thing we do, let’s kill all the lawyers.” - Henry IV, Part 2).
But if we all tried to be our own lawyers, we’d be in worse shape than we are right now.
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