If you are an entrepreneur looking to start your own Mobile Detailing Business or detail shop, an existing detail business owner looking to increase your detailing skills and profitability or a consumer looking for answers to tough auto appearance questions... You've come to right place!

If you're opening your own auto appearance business, no doubt you plan to make a profit. Knowing how to do a cash flow analysis is an essential skill for every new small business owner; it can be the difference between being able to open a business and being able to stay in business!

Cash flow analysis provides a means for you to conduct a periodic check on your company's financial health. A projected cash flow statement estimates what the stream of money will be in coming months or years, based on a history of sales and expenses. A monthly cash flow statement reveals the current state of affairs.

A cash flow budget is your core tool for maintaining control of company finances. For example, you can show profits in a company, but still be short on cash if a customer is late on payments. While you can usually cut costs, you can't always generate income or sales. You need to know where the money is, where it's going and how to get more when you need it.

Calculating Your Cash Flow
To get a handle on the financial outlook for your dent repair and auto reconditioning business, start with your budget; which projects profits or losses by looking expected income and expenses. (If you need a hand with budgeting, feel free to call The Ding King for personal assistance for proper planning.)

For our purposes, the most important use of the budget is that its numbers can be used to help anticipate cash flow needs, which is essential to keeping a small business operating smoothly.

The basic elements of cash flow are:

• Starting cash - This is your starting balance - what you have on hand at the beginning of each month.
• Cash in -This is all cash received during the month, including sales, paid receivables, interest or cash from sales of assets or stock.
• Cash out - Includes all fixed and variable expenses.
• Ending cash - This is your ending balance. Add starting cash to cash in for total cash, and then subtract cash out.

Let's say you started the month with $3,500. You brought in $2,500 in sales and $500 in paid receivables. You paid out $1,500 in rent, $250 in supplies, and $1,750 for wages and owner's draw - for a total of $3,500 in expenses. Your ending balance is $3,000.

While you did show some sales, your monthly cash flow would be -$500. To survive, you want positive cash flow, which means taking in more than you are spending. Positive cash flow gives you forward motion to build and grow.

Even a small lag in sales or an outstanding bill can make a dramatic impact on cash flow, but you won't know that without your cash flow budget. At the end of every month, compare actual business sales with estimated cash flow and hold them up against your master budget.

If they are out of sync, consider the cause. Maybe you didn't factor in auto reconditioning supplies or labor. Cut back on cash out where you can, and adjust monthly cash flow projections to more realistically meet your needs.

Cash Flow Management Practices
Good cash flow management means you can anticipate when your cash flow needs will occur. Your cash flow budget will help you predict what's coming, but you have to be diligent in daily record keeping and reporting of cash in and cash out.

The following steps can help you monitor cash flow:

• Use pre-numbered cash receipts and account for all receipts
• Deposit checks daily
• Send customer invoices within two days
• Collect receivables within 60 days
• Take advantage of cash discounts
• Use pre-numbered checks for all disbursements

A good cash flow manager should be ready to meet challenges. For example, if your company has a history of slow summer sales, you may have trouble meeting payroll in those months. If you have periodically reviewed your cash flow budget and projections, you will be prepared for the crunch with additional sources of cash, and will have established good relationships with creditors and banks should a short-term loan be necessary.

Here are some ways to project and meet cash flow needs:

• Anticipate payroll
• Anticipate outstanding debt payments
• Set money aside for expansion, emergencies and opportunity purchases
• Use short-term financing when necessary
• Establish a line of credit with a bank to avoid making bad decisions in a cash panic

Cash Flow: Offer Customers Credit with Caution
You may find yourself in a situation where offering credit is necessary for doing business, or you may decide to accept credit as a way to generate more business. Of the two types of credit, trade and consumer, consumer is the easiest to offer and maintain.

Consumer credit involves the acceptance of major credit and debit cards. To offer this service, you simply approach your bank and set up a program. The bank takes a small fee or percentage on each charge and in exchange, it accepts the credit risk. Trade credit is offered by the business itself. In some industries, such as manufacturing and wholesaling, customers expect trade credit. For example, when a wholesaler ships supplies to a retail company, the accompanying invoice indicates terms of payment. Most wholesalers give the retailer 30 days to pay the bill, which amounts to 30 days of credit.

Cash Flow: How to Deal with Profit
What do I do with all this cash?

If you have managed your cash flow effectively, you should end up with extra cash. What you do with those profits should be directly related to your cash flow budget. Remember that you created this budget to predict cash flow needs. There may be some outstanding debts ballooning in the future or inventory that needs restocking. These anticipated needs determine where and how long you can reroute cash.

Some places to put excess cash include:

• Debt service - Repaying debt should help improve cash flow even further, unless the loan's interest rate is so low you would get a better return for your money on outside investments.
• Investments - Check out the pros and cons of investment opportunities such as certificates of deposit, money market funds, sweep accounts (combined checking and investment accounts) or interest-bearing checking accounts.
• Emergency savings - Liquid cash accounts can help you over small hurdles and provide ready money for unexpected opportunities.
• Capital improvements - Putting money back into the business may be a long-term goal in keeping with your business plan and capital budget.
• Increasing wages and dividends - Salary increases can help you retain your best employees, and you may deserve a reward, too.
• Profit sharing - A benefit and an incentive for employees

Adding services to a detail business is the key to increasing business year round!

Every business has goals of consistently growing, developing a loyal customer base and getting better at what they do.

Adding-on services will grow your business and increase each invoice you write.
If you're averaging 150 dollars a ticket now, that can grow to an average of 200 or more tapping your existing customers. If the add-on service is specialized and can be done quickly, that also allows you to generate more money per hour than your current detail services you are offering. This is important, because you don?t want to take your labor away from what they are already contributing during the day.

Expanding your services will also expand your client base.
By adding something to your menu of services, you will have customers come to you that might not have been a previous customer. Then of course, while they are there, you may be able to up-sell them to some of your detail services. Expanding your customer base also allows for greater referrals. Perhaps that individual customer didn?t go for an additional service but perhaps he knows someone who will.

Add-on services can also generate a more loyal customer base.
Your customers already trust you and have built a relationship where they know there expectations will be exceeded. If they need a service done that you didn?t offer and they went to someone else, that gives someone else a chance to earn that trust and possibly take your client. Obviously you want your customers coming to you for all of their auto appearance needs first.

Last but not least is consistency.
No doubt you have experienced rises and falls in business. By becoming more versatile, you will find more consistency throughout the year. Being more consistent can also have positive effects other than just cash flow. It can also help you keep and maintain your labor by not losing them during those slow periods.

Adding services is not a new business concept; however it has been proven that adding a service that is specialized will help grow your business.

I hope you find the information here informative and can help you in making decisions to reach your particular goals and continued success.

Copyright 2007, The Ding King Training Institute, Inc.

One of the most common questions people ask me is, "How do I grow my business?" It's a question that every business owner wants answered, preferably with ways that don't cost them a small fortune. My response to them is simple. There are really only three ways to grow any business.

First, you go out and find new customers. Second, you increase the unit of purchase, and third, you increase the frequency of purchase. These are the only three ways I know of to grow any business. Let's take a closer look at what each one really means.

Most people believe that in order to grow a business, you have to prospect, cold call, advertise, do direct mail, or use the Internet to find new customers. While finding new customers may be one way of growing your business, it's also the most expensive and most risky way to go.

There is no guarantee that the thousands of dollars you just spent placing an ad in a national magazine is going to bring you new business, or that the 10,000 pieces of mail you just sent out will generate a profitable response. Yet, if you look around, most businesses spend the majority of their time and resources in this one area alone.

A better way is to focus more of your attention on the other two ways of growing your business. Although at first glance, these two might seem surprisingly similar, they are, in fact, very different.

The first one is to increase the unit of sale. What this means is that you want to make your current or even any new customers purchase more from you at each and every sale. In other words, if you?re typical customer buys an average of $100 worth of goods or services from you at each purchase, your goals are to try and move that number up as much as possible without losing that customer.

You might try adding complimentary items to your product mix. An example that immediately comes to mind is a photo store I once worked with. To increase the unit of sale, instead of having the clients just come in for film or processing, I suggested he start offering photo albums, frames, and batteries. So when a customer came in to pick up their finished photos, they could also buy a nice frame or photo album, while they were thinking about. This also saved them from having to go to another merchant for these items.

This increased the unit of purchase for the store owner, and inevitably increased his bottom line. Think about it, he had no additional advertising expenditures, he took very little risk, and he still managed to achieve his goal of growing his business.

The other way to grow your business is by increasing the frequency of sale. In other words, if your typical customer buys from you once a month, for example, you could offer them a reason to buy twice a month.

An example that comes to mind is a client I worked with just last year. In this case we also had them offer an extended product line in order to increase the number of times a customer would purchase from them. Theirs was a business services company that offered a wide range of services for the small office/home office professional. We looked at what people were buying and how often they were buying.

We decided to poll their customers directly and ask them what was missing. In just a few days, we had an answer. What they needed most were simple office supplies. For just a few hundred dollars, the owner of the business was able to bring in a full range of office supplies including paper, computer ribbons, cables, staples, ink, etc. These were the types of things these people frequently ran out of and by offering them in this location; they saved a long trip down to the office super-center.

It's always a good idea to talk to your customers on a regular basis. Find out what they really like about your business, but even more importantly, find out what they don't like and change it. You may find that if you were just to offer them the product(s) they needed either before or after purchasing your products, you could increase your sales exponentially.

These last two methods work for most any business because they have very little risk associated with them and can very easily have the same growth effect as finding new customers, but without the inherent risk associated with cold prospecting.

Another key advantage to using these two methods is that your customers already know you and trust you. They've done business with you in the past and they have some positive references about your company. In a cold prospecting situation, you are trying not only to sell a product or service, but you are trying to sell your prospect on your company's integrity for which they have no references.

A great question I often ask of my clients is how do they get most of their new business? Inevitably they'll tell me that most of their new customers come from referrals. So, my next logical question is, how much time and effort do you place into developing referrals? I'm always amazed to find out that although they realize that referrals are a major part of their business, they dedicate few, if any, resources to this powerful means of generating new business!

If referrals are a major part of your growth strategy, you've got to spend time developing programs that increase the number and frequency of referred clients to your business. An easy way to do this is to offer your existing clients a premium or discount of some sort for each new customer they bring you. What you are actually doing is turning your satisfied customers into a powerful, persuasive sales force and paying them only when they produce a result or in other words, bring you a new client.

Growing your business doesn't have to be expensive, risky, or even time-consuming. Unless you have a time-tested way to advertise that produces reliable results, try these other ways I've mentioned first. You might be surprised to find that they work as good or better than cold prospecting at a fraction of the cost and with dramatically reduced risk!

To make jobs run smoothly, there must be an obvious, well-documented and fully communicated operational system. In other words, the planning that occurs prior to taking on a full recon account is directly proportional to your profit margin. Several processes proven to work are:

Lead Sheets:
When an inquiry comes in, get every possible detail. Determine the structure: is it a retail customer wanting work done at their home or business? If a hail job, is an insurance company involved? Gather as much contact information as possible. Ask for the reference the client used to reach you so you can track the effectiveness of your advertising for marketing purposes.

Sales:
Always be selling. Tell people what you do for a living. Ask them if they know anybody needing your services. When completed with a job, send that customer a thank you card and include some business cards and let them know your business has been built on referrals. Watch what happens!

When visiting auto dealerships, sell your company to all departments; new, used and service. When you discuss with a manager your business services and your desire to work with them, be sure to ask the important questions like: how many used vehicles do you sell per month? What is you average monthly recon expense? Are you happy with your current vendors? What is it you're unhappy with? Ask the proper questions of the client. Most clients know what they want and know what they don't want. What they don't know is why doing business with you is a better business decision for them. Let them know the time and money they'll save by dealing with one vendor for multiple services. Offer a free trial. Just get your foot in the door and provide a quality service and the rest will fall into place. Remember, the manager knows the functional problems they currently have, so be sure to identify what it is and provide a solution.

Develop an Accurate Estimate:
Surprisingly, this obvious task is one of the biggest killers of a decent profit margin. A detailed accounting of prior jobs, profit margins, materials and time should be reviewed and compared to the current job. An indication of an inexperienced and probably short-lived business person is one who does not have a proper system for estimation.

Hopefully, these few simple steps can help you streamline your production process, and increase your profit margin.

Copyright 2007, The Ding King Training Institute, Inc.