We have all heard by now that you should keep anyhere from 2 to 3 months worth of business expenses in the bank for when times are lean, but exactly why is that? Are not having profits simply enough? Well to put it politely, NO!

It’s not enough to have profits when those accounts have never paid you. It’s not enough to send out invoices and yet, not have deposits to show for it. A small business (or any business for that matter) can survive without income for a little while, but it will not survive without cash at all for any length of time. Cash is the absolute lifeblood of all businesses.

Cash can take on many various forms such as extra money in an account, stretching out accounts payable, established lines of credit, funding from private investors, and having assets that are easily liquidated into cash. By having cash or quick access to it, your company can avoid going into debt and avoid paying unnecessary interest on business debt.

When you have available cash, you can take advantage of sales on much needed equipment. Paying with cash in full normally accompanies discounts which will also enable your company to save additional money. To put is simply, cash is a small businesses lifeline. Without it, there is no business.

Whatever you do, do not create excuses for not taking on new projects and sales that can generate you money. I remember the first time that I sold a website. It was to our local chamber of commerce and I had absolutely no idea of how to make one. All I knew at the time was that there was a program called Adobe Dreamweaver that could help you make a site. Of course, I was a bit concerned at first and if I could not get the job done, I would have hired someone else to do it for me. If I would have turned that job down, it very well would have affected any referral work that the chamber of commerce would have brought my business. Business is too hard to come by to turn down work. It can have a nasty residual effect on your company’s bottom line.

So when it comes to getting a project that may be a bit too consuming for your company, refuse to say no to the money. If you are a florist and you just can’t handle the size of the order, then, higher temporary help or get other local florist companies involved that can offer you a decent price and at the same time, allow you to still make a profit.

If you perform well just once in situations like this, you can get more projects from the same customer as well as highly desirable referrals. Do not make it harder on yourself and do not make excuses by choosing not to bid. If there is money to be made, do not pass up on the opportunity because it will never come by again.

When customers buy your products and services, they do this in order to either feel better about themselves or solve a problem. Sometimes it is for both reasons that you choose to buy from you. They just do not buy products and services. They buy what those products and services offer them. If you sell a product that solves a problem, such as a $30 bottle of weed killer, attach a dollar figure to what the problem could cost if left untreated. For example, if weeds take over a lawn, it can cost you $2,000 to replace the lawn plus the embarrassment and aggravation that goes along with it. Now, doesn’t it make better sense to buy this $30 bottle of weed killer.

By putting a dollar value on the solution, the initial purchase looks that more attractive to the potential customer. By doing this, you are actually selling money and not the product itself. Another example of this in a service based industry is magazine advertising. A magazine may be selling $500/month magazine ads, but if they have an idea of the number of leads that each ad generates their advertisers each month, then the potential advertiser/business take the number of leads that they would get and multiply that by their conversion rates for new leads and thus, be able to determine, if purchasing the ad makes sense for them. Again, it is assumed that the potential customer knows the lifetime value of their customer. So, when it comes right down to it. The potential advertiser is purchasing the ability to earn more money. To put it simply, they are buying money.

There is a vast array of ways to set the prices of your products and services for your small business.  Some of the more popular methods include the following:

• Examine competitor pricing and meet or beat them with the lowest price, or you can provide more value or perceived value to the service and charge customers more.

• Set the pricing based on net or gross profit margins.

Missing from these common methods of pricing your products or services is the whole idea of pricing to value. In other words, you charge based on what the product or service is worth to the customer in need. This pricing model works great for both service and product based businesses. An example of this with a service based business is a simple logo design. Your local florist might get charged $250 for a new logo design by their local graphic artist whereas McDonalds or Burger King can pay hundreds of thousands for the very same thing for their nationally branded company to top name advertising agencies for the same thing. What’s the difference? After all, they are both purchased the same exact service that may have taken the same amount of time to create. The difference is this. The logo seen by the local florist will be seen by thousands each year whereas the logo seen at a company such as McDonalds or Burger King would be seen by untold millions. The time to design the logo design itself is insignificant. It’s all about how many times it is viewed or exposed to the public eye. Because of this increased market exposure, the value is higher for the nationally exposed logo.

In business, we get to price our services and products based on the value of the problem that we solve. Defense attorneys tend to get paid more then janitors because they help keep people out of jail, and that sure means something to those facing criminal charges.  Their future or a part of it is at stake. Therefore, the defense attorney gets paid quite well. That same attorney may help file bankruptcies on the side, but they cannot charge near what they would as a defense attorney. Even though they are the same person, the value of each of their services differs greatly to the customer in need.

So, when it comes to pricing your services, always consider value. It may significantly increase your bottom line!

Whatever you do with your time and money do not waste it on fame unless you are using your fame as a lead generator for your business. At the end of the day, fame does not pay the bills and stroking your ego with popularity, will not increase sales.  Always choose sales over awards and profits over plaques.

If you are the face of your business, as is often the case for realtors and architects, then, make sure that any publicity that you get is directed to your company’s products and services. Put them first over promoting yourself when it comes to media coverage. Try to get your top money makers or cash cows featured in any article, news story, blog post, review or any other form of media that may be covering you.

Rather than having an article that has only pictures of you, ask the publication to show some of your best services or products. Basically, do not waste your time on tasks that do not involve customer acquisition and retention. Focus your time and efforts on increasing the bank account and not inflating your ego. Chances are that your fame has not accounted for many sales in your business anyhow.

When fame does come, make sure that you redirect the spotlight where it belongs and that is on the products and services that you offer that provide you the lifestyle that you enjoy.