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Topic: Cash Flow
Message: Posted by: NJJ (Aug 8, 2003 07:20PM)
How do the full time pros amongst us handle cashflow and making sure you have enough cash on hand to buy your next expensive trick?
Message: Posted by: Jim Snack (Aug 9, 2003 07:14AM)
Managing cash flow is an ongoing concern for any small business. Here are some simple strategies for magicians to manage cash flow:

1) Get 50% deposits on shows. This is my number one technique. Then there's money coming in even when there are no shows for a week.

2) Offer a discount (say 5%) for full payment in advance. Not only is this a negotiating strategy for clients who do not have your full fee, but it gets the money in your account sooner.

3) Don't delay when sending invoices to clients. Send them in advance of the gig, then double check that the final check will be there at the show.

4) Accept credit cards. This works well especially for my federal government clients, since it can take much longer going through their regular payment system, but employees can charge their card and get re-imbursed themselves.

5) Use OPM (Other People's Money) whenever possible. If the client is covering an airline ticket and/or hotel room, have it direct billed to them rather than having to invoice them for the expenses after the show.

6) Don't buy the next expensive trick. Improve your act by working on yourself, your personality, and add more humor.

Just a few suggestions. Good question.
Message: Posted by: TheDean (Aug 9, 2003 08:59AM)
Jim ROCKS!

This is awesome advice and Jim knows of where he speaks! PLEASE do yourself a favor and heed his advice well!

Here is one resource that you may also wish to consider. It's Dave Ramsey's Financial Peace University and it is amazing!

I have been trough this system and it is the BEST personal, business and financial program I have ever done... bar NONE!

http://www.DaveRamesy.com

I am at your service and in His Service,
Deano <== Financially Peaceful in Reno. (Hehehehehe!)

PS
He has a few New your Times Best Selling Books too...
- Financial Peace University
- More Than Enough!
- How To Have More Than Enough!
- Total money Makeover!
...all available from his site and Amazon.com
Message: Posted by: David Todd (Aug 9, 2003 09:51AM)
Great advice as usual, Dean.

NOTE:
The URL to Dave Ramsey's site given above is one letter off . It will take you to a generic search site with one of those "this domain for sale"
notices.

Dave Ramsey's site is :

http://www.daveramsey.com/
Message: Posted by: TheDean (Aug 9, 2003 12:50PM)
Oops... Te He! Good thing is "Financial Peace" and not 'spelling peace'... *snicker*snicker*

THANKS brother! Yooz da' BEST!

I am at your service and in HIS Service.
Deano
Message: Posted by: NJJ (Aug 9, 2003 06:30PM)
[quote]
On 2003-08-09 08:14, Jim Snack wrote:
Managing cash flow is an ongoing concern for any small business. Here are some simple strategies for magicians to manage cash flow:

1) Get 50% deposits on shows. This is my number one technique. Then there's money coming in even when there are no shows for a week.

2) Offer a discount (say 5%) for full payment in advance. Not only is this a negotiating strategy for clients who do not have your full fee, but it gets the money in your account sooner.

3) Don't delay when sending invoices to clients. Send them in advance of the gig, then double check that the final check will be there at the show.

4) Accept credit cards. This works well especially for my federal government clients, since it can take much longer going through their regular payment system, but employees can charge their card and get re-imbursed themselves.

5) Use OPM (Other People's Money) whenever possible. If the client is covering an airline ticket and/or hotel room, have it direct billed to them rather than having to invoice them for the expenses after the show.

6) Don't buy the next expensive trick. Improve your act by working on yourself, your personality, and add more humor.

Just a few suggestions. Good question.
[/quote]

1) I do that for corperate guys but not kid's parties.

2)I have found that the worst late payers are big business who don't seem to care about 5% discounts. The people who take advantage of it are smaller gigs where the cash is less important and the usually on time anyway.

3) I send out the invoice at the same time as the contract with a clause in the contract saying "I agree to the details in invoice no 130503A etc".

4) I looked into a credit cards but to get a phone account (i.e. the ability to take CC numbers over the phone) costs quite alot in Australia. Instead, I use EFT a lot. My bank has a GREAT internet banking system.

5)Yes! I REALLY need to do this!!!!

6) Awwwww! But can't I just buy one...PLEEEASE!
Message: Posted by: Chris Berry (Aug 9, 2003 08:24PM)
Nicholas, a small suggesstion on #2:

I don't know if this would work or not, but why not have it stated in the contract that you must be paid in full no later then 3 business days after the performance. That way, if you don't receive the money the other party can be sued (or at least threatened with a lawsuit) for breach of contract.

Like I said, don't know if it would work or not, just an idea.

Chris
Message: Posted by: Salazar Magic (Aug 9, 2003 08:59PM)
How do you accept credit cards? Ever think about using PayPal for payment?
Message: Posted by: NJJ (Aug 9, 2003 09:58PM)
You can put all sorts of clauses in your contract but, at the end of the day, if they take six weeks to pay you for a $500 close up gig you are not going to take them to court.

I always seem to have enough money in the bank but have trouble keeping track of future expenses and future gigs.
Message: Posted by: TheDean (Aug 10, 2003 03:06AM)
Hmmmmmm...

I NEVER get "hung-out" (having to wait, that is...) for money with the 'rare' exception of billing for overtime or additional 'on-the-spot' services, (which is NOT rare) but they usually they pay me that right always as well. Like I said, in 30+ years and over 25,000 live events, I NEVER have been placed on any "terms" like net 'anything'. (30, 60, 90 days) No way!

My regular business practice (for very FIRST-TIME customers) is that the balance of the agreement is 100% DUE and PAYABLE a full 7 days prior to the contracted performance date. (No dough... no show!)

After our first positive show experience, it ALWAYS due the night of the show like 99% of all the other guys... no problems. And I rarely use contracts per-say.

Don't know?

Deano
<><
Message: Posted by: NJJ (Aug 10, 2003 04:22AM)
Wow!

The clients I work (shopping centres, event managers etc.) have very strict policies that will not pay any contractor until the work is completed!
Message: Posted by: p.b.jones (Aug 10, 2003 05:30AM)
Wow!

The clients I work (shopping centres, event managers etc.) have very strict policies that will not pay any contractor until the work is completed

Hi Nicholas,
I can understand where you are coming from. I have many clients particularly Local authorities which pay good fees but can be a little slow 30 days is the norm here. Most will pay you in 7 - 14 days if you ask if they do BACS (this is what it is called here... I do not know what it stands for but they have your bank details and they simply transfer the money in rather than sending a cheque). This month I have 26 such bookings all of them for multiple hours. Fourtunately I know this happens to me through the summer so I am not desperate for the money even though it is quite a substantial sum. look for patterns like this and plan your finances to allow for it. The money we make we should not really be desperate for cash. I still want what's owed paid as soon as possible but if you plan I do not think it is too much of a hassle.
philip
Message: Posted by: TheDean (Aug 10, 2003 08:49AM)
I LOVE the internet! I get to learn soooo much here!

Actually, I guess there is "one" sort of exception to the rule for me, at least. That is when I'm in a casino one with one of my review shows. I submit a bill for the week or we are on a regular "schedule" for check disbursement, which is the very next Monday (or what-ever day checks get cut THAT WEEK) I submit he billing by Monday at 10:00am and I have it in my hot little hand no latter that THAT Wednesday (two days later) and I cash it right there IN the casino.

Yes, I have been asked if I would wait up-to 90 days before signing the contract (Like working for the Federal Government) when we used to work for all the military bases, and I said NO, (in a nice way...) and not once did we have to wait till after the gig.

That's the GREAT thing about communication and discussion boards such as this... we get to learn for a broad range of situations and experiences.

I wonder what would happen if you just "required" your money no-later than the day you perform so you don't have to wait? Would you loose gigs cuz they just won't?

I didn't... It was never a problem, but like I said, that's the beauty of the internet and situations like this...

THANKS for sharing this question and consideration for ME to learn form!

Have an awesome day!

I am at your service and in His service,
Deano
Message: Posted by: Salazar Magic (Aug 10, 2003 09:13AM)
So... what about this PayPal thing?
Message: Posted by: magic4u02 (Aug 10, 2003 11:47AM)
Yes, I would also be intersted in knowing more about paypal as well.
Message: Posted by: Eldon (Aug 10, 2003 12:04PM)
Basically PayPal allows merchants and individules to receive payment online. Here is a link. http://www.paypal.com
Message: Posted by: magic4u02 (Aug 10, 2003 02:35PM)
Thanks. I will have to go there and check it out and read more about it. I knew what it was but just did not understand the details of it.
Message: Posted by: Scott Grimm (Aug 10, 2003 05:01PM)
Let us know how good it is. I am not looking to try it out untill I hear from people that it is all it's cracked up to be.
Message: Posted by: RobertBloor (Aug 10, 2003 05:38PM)
I'd like to step back to basics...

Why do you need a new 'expensive' trick?

I initially invested several thousand into my show. Most of which now sits in the closet.

Between December of '02 and January of this year (about a 30 day period total) I dropped another $1200 into my show. I've since quadrupled my amount of income with this program.

Trust me - it's not 'what' you're doing.
It's HOW you're doing it.

As for adding to my show - absolutely. We all should look at additions from time to time.
However, I'm starting to believe much of the product out on the market is ****.
If you're going to spend hard earned dough on something, don't do it because, "It's a killer trick and laymen will be blown away." Do it because it's practical, and effective.
Also when adding to your act, remember that you're fooling laymen, NOT magician. Tricks don't have to be complicated.

And finally, remember as a business person if you're not generating enough cash flow to add to your show, you probably don't have enough cash flow to put food on the table.

Which is more important?

Robert Bloor
Message: Posted by: NJJ (Aug 10, 2003 06:05PM)
But I really like wasting my money on expensive tricks! ;)

I actually spend very little on magic these days. I have strict guidelines for what I will and won't buy.
Message: Posted by: Salazar Magic (Aug 10, 2003 11:18PM)
How about, "For the deposit, you can send me a check in the amount of ..... or PayPal me at Blah, blah, blah"
Message: Posted by: Jim Snack (Aug 12, 2003 10:24PM)
For processing credit cards I use a company called Practice Pay Solutions (http://www.practicepaysolutions.com) For a small fee you can be up and running in a few days. They have great customer service.

My shopping cart allows Paypal payments and I also use Paypal when buying magic on ebay. I have never had any problems with Paypal. They only problem is that I use it to buy expensive props on ebay (like the Losander Floating Table delivered last week..sweet!)
Message: Posted by: TheDean (Aug 12, 2003 11:16PM)
SWEET!
Message: Posted by: Al Kazam the Magic Man (Aug 13, 2003 12:28PM)
Back to the discussion about payments. Here in Taiwan, it is very rare that anyone will pay you in advance for shows. For government work it is a known fact that payment comes in a month or two. (I've even waited up to 6 months once) It's either take it or leave it here. Department stores also have policy of not paying until 45 days after the show. What works best is to have an agent do the bookings and hassling and have an arrangement for them to pay you after the show. This often means less money than if I took care of the booking myself though.
Here, no company will pay you in advance, and they will sometimes cancel at the last minute without as much as a "I'm sorry". I just have to live and work with it, as it's part of the way things are done here.
JoJo
Message: Posted by: Stuart Cumberland (Aug 13, 2003 05:26PM)
Some really great advice here.

Cashflow. My accountant explained this really simply to me. Add up all your fixed expenses--you monthly budget. THAT is the amount of money you need to generate EVERY single month to generate "good/ positive" cashflow.

If your expenses are $2000 a month, you need to generate $2000+ a month to have good cashflow. Every month.

Note: if you generate $4000 this month and nothing next month, you ARE NOT doing very well *cashflow* wise.

I fully endorse the 50% deposit concept.

I don't want to argue with anyone here, but I well and truly believe that getting payment is a mindset you must have. Ask yourself, who's making the rules?

"Our policy is to not pay vendors for 45 days" just doesn't cut it with me. (No disrespect).

"We don't give vendors deposits."

Well, I don't perform unless I get a deposit to hold the date. It's that simple.

If you have them to the selling stage of wanting your show, they WILL understand your need for a financial deposit to take the date off the market. They will also--most likely--realize that a signed contract isn't as legally binding as a signed contract with a deposit. THAT is INTENT.

Now, I'm not a lawyer here, but I can assure you if you that I've done my homework on that one.

Most of us have busy months and slow months. Many of us have very busy Decembers. But folks book WAY before then, and the 50% deposit in August counts as cashflow. It really does make a difference.

Now, we're all talking business here. Obviously you shouldn't be rude about it! When they state their policy about not paying you a deposit (or whatever), just firmly and politely say to them that you absolutely need to get a 50% deposit to hold the date or else you may have to give *their* date to someone else.

It works.

And if they don't want to play ball, do you really want to do business with them? Jim talks about the government. I personally *will not* do business with the Canadian Government if they don't pay me right up front. Period. No exceptions. I once had to wait 6 months for a payment and had to do a TON of paperwork to get it and promised myself never again.

As Deano mentioned "no dough, no show." I got that line from Stan Kramien. In my contract it clearly states that I must be paid the balance immediately prior to my performance (not after, BEFORE) and that the performance WILL NOT take place until payment is settled. I've had people "forget" or tell me the check person is sick/away/etc. (Particularly at schools!). Well, when you tell them that you can't perform until you get paid, it's amazing how quickly they can find a check or cash to pay you.

On paper, this all sounds crass. Again, dealt with politely--but FIRMLY--you command respect and we get back to...

A positive cash flow for you.

Finally, I highly recommend that you master the concept of multiple streams of income. If you ONLY do birthdays, or corporate, or whatever.... I believe you are limiting yourself. Example, many years ago I only did school shows (hypnosis). Then, the teachers went on a major strike. KILLED my business cashflow and darn near bankrupted me! But with multiple streams...$500 here, $1500 there, $3500 here, etc. can really add up quick. If one market dies you've got the others flowing in....Can't even begin to tell you how nice it is to do a psychic house party and get $250-$500 on a dead week. (And I'm doing very well). It's cashflow. It pays the bills.

Anyway. I've rambled on too much here. I hope this helps, or at least shines a light on what one full timer does.

Blair

FREE Newsletter:[url=http://www.1shoppingcart.com/app/adtrack.asp?AdID=34754]www.Mental-List.com[/url]
Message: Posted by: TheDean (Aug 13, 2003 08:12PM)
Incredibly well presented Blair!

Your RIGHT, it "IS" a mindset, and I know that some of you will disagree, but THAT is part of that mindset. I have worked ALL-OVER the world and for MANY 'governments & agencies', (including most offered here!) and when it's CLEAR (appropriately and professionally) that this IS just the way it IS...

Like we said, it's a MINDSET.

We already know some won't understand or agree because they've 'had an experience' where they wouldn't pay... there goes that mindset again.

Funny, in the BUSINESS of professional entertaining (as well as most other business) that "mindset" is often the most 'interesting' thing to “GET” and UNDERSTAND, but I guess that too is a mindset. (Hehehehehe!)

Nicely done Blair!

I am at your service and in His service,
Dean

“THINK and Grow Rich!”
Message: Posted by: NJJ (Aug 13, 2003 08:18PM)
I have taken to keeping two sets of books on the computer. One for the tax man and one for...no wait!

I have to sets of records - one is all of the money I have spent and received and the other is all of the money I am GOING to spend and receive. That way I put all of my household budget, upcoming expenses and gigs into my cash flow projection and then move them to my books when the event has passed. That way I do not have to worry if I have a bad month because I always have a date on my computer when my books will go into the red.

It is a little bit more work but it seems to be working for me. All I have to do is add in my big expenses to futures and see how it effects my cash flow.

I do this using a version of Microsoft Money from 1993!
Message: Posted by: Frank Tougas (Aug 13, 2003 09:03PM)
Business 101 is NEVER mix your business accounts and your personal accounts. This is a blunder often made by the beginning small businessman. It could end up to be a nightmare should you ever get audited by the dreaded IRS. (Instability of Reason and Sense).

Other blunders are forgetting to pay quarterly taxes, taking out S.S. or witholding. Get some good advice if magic is to be your career. Or you can do what I overheard a student say in a small business seminar when the subject of cash flow was brought up, "Cash Flow! there's no cash flowing around here!"

Just my two cents worth (minus State and Local.)
Message: Posted by: brianmayo (Aug 27, 2003 12:58AM)
Come on Frank, what's a little mixing of money here or there? You too, with little work, can operate your own little Enron! :rotf: