Working capital is simply the value of “liquid” assets available on any day of the week to be able to pay your current bills.  This consists generally of cash, accounts receivables and inventory.  It will not take a rocket scientist to realize that if you do not have enough cash on hand to make all your necessary payments then you have to collect the monies due to you and you must convert your inventory into cash sales.

As a business owner you therefore have to be a cash manager a bill collector and a creative genius for converting inventory into profits.  The value of sales has to be more than what you paid for the inventory and for what it costs to convert it to the finished product.  You have to have a profit margin that is sufficient to sustain payment of your daily expenses.

Profits when re-invested back into the business (meaning not all stripped out by the business owner) allow for your business cycle to continue; i.e. new inventory purchases.  But often in a struggling start-up operation I have seen entrepreneurs blinded by the need to add equipment they may feel is necessary for growth.  Prior to engaging in this practice however the entrepreneur should make sure that the expenditure will not jeopardize his/her ability to maintain supplier payments.  “Don’t fall in love with assets”  If they do not produce a profit for you then do not buy.

I have seen many cases where new business start-ups fall into the trap of over spending on capital assets before they become profitable, always thinking that more sales will be “automatic” once the new equipment is installed.  Think again! Ask yourself this; “If my sales do not improve how am I going to continue my bill payments?”  Before spending valuable working capital  make sure you have performed a proper cost benefit analysis, do not go with your “gut feel”.  Prove to yourself in research and numbers that your acquisition will be a net benefit to your business.

Once you spend your working capital the only way to get it back is through greater sales and maintenance of proper profit margins.  If there is doubt about this don’t spend!

A recent article “Gen X workers feeling the promotion pinch”[1] highlighted the workforce squeeze on Gen X.   The article refers to a new study by PricewaterhouseCoopers (PwC).  The memorable quote is “the potential for disaffection in Generation X ranks is significant”.  This claim alludes to the reality that older workers are staying on longer while younger Generation Y employees with a hunger for advancement are coming up from below.

Like the housing industry which requires first time buyers to move up so does the workforce.  Organizations need the Baby Boomers to leave.  The real danger however is not the potential departure of younger workers it lies in the form of management’s desire to advance the Gen Y work force beyond their skill level to keep them engaged.

Most organizations have different level positions designed for progression.  Depending upon performance, employees move up.  This requires position availability.  However, employment initiatives have been curbed and older workers are not leaving for fear of financial downgrade in retirement. By not leaving their productivity may fade.  Executive management has not yet accepted there is a way to motivate this group to allow greater job satisfaction before retirement.  Some employers are just letting these workers watch the clock tick down.

Executive management has to have a transition plan for their “senior” workers to create the space needed for this upward mobility.  Most organizations have HR policies which protect older worker rights so you cannot just let them go or make work life so miserable they willingly leave.  Constructive dismissal is not the way to go; it is bad for morale and does not set the right example for those you want to promote.

Why not develop a program enlisting boomers to step into a training role and leave their current position open for upwardly deserving candidates? Improvement in overall workforce skills and productivity may out weigh your cost overlap.   Your older workers can remain goodwill ambassadors to your customer base who have come to rely on their experience.  The boomers will retire eventually but in the meantime you gain productivity and an enthused work force.

I have seen this practice work effectively in smaller shops where the owner understands that selling their business requires leaving a skilled workforce to carry on after he/she leaves.

Wikipedia http://en.wikipedia.org/wiki/Business_networking defines Business networking as “a socioeconomic activity by which groups of like minded business people recognize, create or act upon opportunities.”  Therefore the sole purpose of business networking is to uncover mutually beneficial opportunities and take action.

The problem however is entrepreneurs do not spend enough time getting face-to-face with real people.  Some of us will attend an event and gravitate to those we already know because we feel uncomfortable talking to those we don’t.  Hello!  Why go to the event if your purpose is to meet new business people?

Who among us has not been stuck in a corner with a complete bore whose only purpose is to talk about their achievements?  When two people meet and freely learn something interesting from the other each can come away with the desire to meet again.  The art of networking therefore lies in one’s ability to take an interest in and learning from others.  Do not become the conversation hog.

One of the best ways to build your network is to find a reason to make contact again after the initial meeting.  Set up a “remember file” for each new connection.   I record what the person was like, what they do, how they do it, and I ask myself would I refer them?   The same is true in online networking.  Once connected engage them with comments about their blogs, or tweets.  I have met many new referral partners this way.

The cold network process for me starts with a face to face meeting and an exchange of business cards and then an invitation to join me on LinkedIn.   Once connected you have to maintain contact.  Top of mind awareness will draw your connections back to you because you have been “introduced”.  Know, like and trust are the building blocks of power networking.  You refer business to others and they refer business to you.  Do not be afraid to attend events; you can develop real referral opportunities from them.

Wikipedia continues “…many business people contend that business networking is a more cost effective method of generating new business than advertising or public relations efforts.  This is because networking is a low-cost activity that involves more personal commitment than company money.”  Leaders should not fail to recognize this commitment in truly engaged employees.