Although these are all essential aspects of business, answer isn’t any of above. The number one way to prevent business failure is to properly manage your working capital.

To ensure that we’re all on same page, working capital is simply defined as difference between your current assets and current liabilities. If this figure is positive, you have working capital available. This working capital may exist as inventory, accounts receivable, or cash on hand.

Working capital management is a critical management issue for growing businesses or medical practices. Take example of a growing doctor’s office: As expenses rise with patient-load increases, you accrue more outstanding cash, particularly before receiving reimbursement from health insurance payors. At this point, your incoming cash does not nearly offset your costs going out. This may be manageable while you work with payments for past services; however, eventually time lag may become a significant stress-point for your business. By adopting a few working capital management strategies, you can make your assets work for you, without becoming beholden to banks.

Strategy No. 1: Get Paid Now Let’s take a look at most obvious area: accounts receivable. What do your receivables do for you when they are not being paid? While your profit margins may look stellar if you have a lot of orders, you have essentially loaned all of your clients amounts of your invoices—until they decide to pay you. Doctors, in particular, know pain of this situation. Insurance payors are particularly adept at prolonging time for payment; they realize that longer they take to pay, greater their profit margins. Is this just another cost of doing business? Well, not necessarily. Eighty percent of small business owners, medical practitioners, and small hospitals are completely unaware of a resource Fortune 500 companies have used for decades: accounts receivable funding.

Banks often measure accounts receivable at as low as 50 percent of their overall value as collateral for a traditional loan. In accounts receivable funding, however, accounts receivable are calculated at full value. Plus, you accrue no debt for this financing, as you essentially sell your accounts receivable for payment against full value.

Perhaps idea of selling your revenue stream makes you nervous. But consider this: You usually receive 80 percent of entire amount of invoice within one or two days—at least 28 to 118 days sooner than usual. This cash injection allows you to make capital improvements for your business to generate more revenue, leverage cash for discounts on your inventory, cover operating costs, or provide bonuses to your employees, for instance.

As your invoices are paid, your funder will repay other 20 percent, minus negotiated fee (average four to five percent of invoiced amount). Don’t get hung up on “cost” of funding. With proper management of those funds, you will more than make up for fees by investments made in your business. Your day-to-day business costs may stay same, but tremendous increase in incoming cash will enable you to rest easy.

Homework: Review your accounts receivable aging report. Note average payment time from one of your best clients or insurance payors. Assuming payment of 80 percent of invoice value in 48 hours, make a list of ways to use that money for your business:

·Cash discounts on inventory (estimate in dollar amounts). ·Buying or leasing new equipment (anticipated return in additional sales). ·New marketing campaign (anticipated additional revenue).

After you total increased income generated by implementing this strategy, you can easily see real benefit.

Strategy No. 2: Shorten Your Operating Cycle Your operating cycle starts when you take cash out of your account to begin work for a client, and ends day client pays you. If you complete a project on Tuesday, for instance, but do not invoice until following Friday—or even end of month—you lose days of income. Since you need cash in your account—not just in your profit margins—you must minimize time between service rendered and service invoiced.

Sure enough a group of four students came rushing into classroom with their lunches in hand. They sincerely apologized and quickly explained that they receive poor service at a restaurant (This restaurant is part of a national chain. Hint: its name references a day in week. I can’t give you complete answer.). They went on to explain that after waiter initially took their order, they waited 45 minutes before their food finally arrived. During wait, no one came to check on them.

They went on to explain food finally came and it was time to leave for class. They were not happy. They asked to see restaurant manager. The manager sheepishly came to see them and asked, "What was problem?" One of my students explained situation to which restaurant manager replied, "The food ticket only shows you were waiting for eleven minutes." My students were not happy and expressed it to which manager asked them, "Would you like dessert?" My students again expressed they were not happy. Each time my students expressed their unhappiness, manager would say she was sorry. My students weren’t buying it. The manager then left without explaining where and what she was doing. The manager returned and told my students that their meals were free. Even though manager gave them free meals my students said they will never go back to that restaurant or any other restaurant in that chain.

So why weren’t these customers happy? The restaurant had an opportunity to turn a difficult customer service experience into a winning situation for all and squandered it. Not only will these patrons, my students, never go back to any restaurant in that chain but how many other people will they tell about their unhappy experience? The unhappy customer, on average, will tell 27 other people about their experience. With use of Internet, whether web pages or e-mail, that number can increase in thousands, if not millions with click of a button. However, according to Department of Consumer Affairs, 82-95% of unhappy customers will come back if impressed and actually refer five new customers.

Let’s take a look at ten secrets that will not only win back your customer in any situation, but have them referring new customers, but will add more money to your bottom line revenue.

1. Smile Nothing can turn a hostile situation into position moment faster than a sincere smile. A smile that says, "I want to help you in a positive way." It communicates you are positive about interaction with customer. A sincere smile enhances communication process so that you can find solution faster.

2. Introduce Yourself as Solution Creator Make sure you introduce yourself, find out customer’s name, and let your customer know your position and why you are there. This lets customer know you are taking responsibility to creating a solution for them. You might say something like: "Hello, my name is Mike. I am manager at this location. I am here to assist you in this situation, please tell me about it."

Notice I didn't say, "What’s problem?" By using "What’s problem?" you start customer service situation in a negative note. The customer is thinking "You’re problem," "This establishment is problem," "The whole world is problem," etc. By starting your conversation with "I am here to assist you in this situation, please tell me about it" you are setting up a "verbal agreement" in customer’s mind to move to a solution. Note: If possible, please use customer’s name throughout conversation.

3. Listen Customers want tell their side of story and feel like they are only heard but you listened to them. Mentally take a step back and dedicate yourself to actively listening to customer’s story with an open mind so that you can find a solution. In above situation, manager stood silently while my students were explaining their story. Be active in your listening and create empathy ("put yourself in customer’s shoes") with statements such as:

* "I can appreciate what you’re saying." * "I can understand how you’d feel that way." * "I can see how you’d be upset." * "It sounds as if we’ve caused you inconvenience." * "What I understand situation to be..."