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Monthly Archives: April 2018

Make Business Financially Fit

1. Know Your Overhead Cost – It is easy to know what the cost is of each product or service you sell, but many business owners fail to include their overhead cost when figuring their numbers.

Profitable businesses know what their profit is on each product or service after their overhead cost is included. Overhead costs often include, administrative expenses like office supplies. Other expenses may also include marketing and advertising, employee related, facilities and equipment, vehicle related expenses, insurance, and tax related expenses.

Companies should know the percentage of breakdown related to each product sold, each procedure or job performed, or each service that is provided.

This allows the business owner to price their products and services at the right price. If the overhead cost is not included, it can cause the business to lose money on each sale that they are making.

2. Manage Your Cash Flow Regularly – Cash flow is so important for a financially fit business. If a company does not have a good eye on their cash flow, it can cause them to struggle every month.

Knowing what money you have coming in, and what money you have going out each week and each month will help you to know what you need to bring in each week to manage the bills that are going out.

It will also assist you with meeting goals like buying that piece of equipment that will make you more profitable or investing the money to increase overall profitability. Look at a statement of cash flows; a statement of cash flows will show you what money is coming in and what money is going out each month.

3. Pay Attention to Your Numbers Each Month -Waiting until the end of the year to get your bookkeeping in place for your tax accountant can be a very costly mistake. A financially fit business pays very close attention to how the business is doing on a weekly and monthly basis.

They know how much they need to make each week in order to be a profitable business. They also look at their financials each month to see what they need to do in order to improve the next month overall performance.

If a company fails to do this, they have no way of making important business decisions because they don’t know where they are at. Not know where your business is at will cause your business to fail. If a business isn’t growing, they are dying.

4. Know Your Financial Ratios – Many business owners don’t know what business ratios they need to track in order to be profitable. Knowing the right ratios can help a business owner know what decisions they need to make to move their business in the right direction.

As an example, one of the ratios that a business needs to track is the current ratio. This ratio will help them track how healthy their business is. A healthy business will have at least a 2 to 1 ratio, so $2 in assets for every $1 in liabilities. If the business is carrying inventory, it is important to have a 4 to 1 ratio.

Common Entrepreneur Mistakes

1. Growing too quickly.

Growing too quickly can be just as dangerous for a new business as moving too slowly. Expansion should only be done to meet the demand of the product, not simply for the sake of growth. It takes time, resources, and more, to develop a new brand or location, which takes away from the successful existing ones. For this reason, it is very important not to grow too quickly.

At times it is much better for the small business just to sit back and build up their capital, instead of borrowing money to try to grow too quickly. The rule should be quality over quantity… always. Make sure you provide the best possible service or product for your existing customers, and can do so for new ones before expanding.

2. Not staying ahead of the competition.

This should be right on the top of your list of things to do. If you don’t blaze the trail, then you are simply following others. One of the issues which can really hurt your business is not taking notice when a close competitor makes an announcement or launches a new product. If competition has a policy that makes it more convenient for your customers to do business with them instead of you, take notice. Always pay attention to the market and make adjustments to your business model. One of the benefits of being a small business owner is having the ability to easily adjust to new market conditions. Do not lose touch of that advantage because it could cost your business in terms of sales.

3. Not being careful with whom your hire.

Small business owners need to be very careful whom they hire and employ. Each person working for your business should benefit you in some way. Character and a willingness to work hard are sometimes more important than education, experience, or even pay scale. More often that not, the employees who have degrees and experience will slack off, feeling that they no longer have to work as hard. Pay very close attention to the new guy or girl at the bottom your organization.

4. Not realizing that working hard is a benefit.

Many business owners think that if they go into business for themselves, they can hire people to put in the forty hours a week and then they themselves can just take it easy and let the business run itself. Unfortunately, it does not work that way. The majority of successful business owners actually work more hours than their employees, and do much more because if the person at the top slacks off, the entire organization will slack off.

Start A Business From Scratch

Businesses Fail

The main reason we start at the customer and solve his or her problem is because we need the foundation of a product that will sell for a profit. One that will continue on for years to come. Without that, there is no business. If you go all out and start a business without this kind of product, the business is likely to fail. In fact, even if you come up with a great product, you still have a high risk of business failure. But without a great product, it is almost a certainty.

The Customer’s Problem

Finding a problem to solve is finding an opportunity. You add value when you uniquely solve a customer’s problem with a product they can buy.

What is a product?

A product can be a physical product such as a shovel, a digital product such as an eBook, or a service such as business consulting. It could also be a method of distributing that adds value, or a way of organizing or combining existing product lines. Really the product is up to whatever you can imagine.

Trial Sales

Initially you can sell under your own name, which is the same as a sole proprietorship. If you find that your product sells, you can always sell your sole proprietorship to your corporation or LLC. But until you find a product that really sells for a profit, you should continue using trial sales.

What problem do you have?

After finding a product that sells for a good profit, evaluate your own business problems. Evaluate how you can serve the customer better, your concern for liability from damages or injuries, potential cash flow pitfalls, and so forth. Incrementally improve your business as you discover your own problems, especially focusing your attention on the customer. At this point you will probably want to consider business structure.

Help Entrepreneurs Handle Challenges

1. You Can’t Walk Alone

See, the question is not how they handle the problem but what creates the problem.

Is it the team? Is the team doing the job properly? Or, something is not fitting?

A team’s performance can very well be the difference in between success and failure of an Entrepreneur. Proper team with positive thinking can lead you to the top of stairs.

If you are an entrepreneur and spending most of your time in a negative environment you are landing nowhere. Finding good team is a key factor to handle the challenges faced. With a good team you can delegate work and make them a part of your struggle, where every struggle leads to positive results.

2. Approach Problems with Positive Thinking and a Proper Strategy

Problems are a part of daily routine for startups. Nothing can be accomplished without positive thinking and strength to face those problems.

Every time you see yourself failing, don’t give up. Stress is a factor of negative impact.

Focus and think of the positive things in life. A simple thought related to past successes or the very reason you started your company are well enough to take you out of negativity.

Take your time, think and get your act together.

There is no way you cannot overcome the challenge at hand.

3. A Healthy Routine Leads to a Healthy Mind

Some of the most neglected things by entrepreneurs are the most essential elements to help them succeed. Every day you meet entrepreneurs who have back trouble, sleeping disorder which adversely affects their work. The simplest things in life-like sleep, exercise, healthy diet and time management are the most neglected ones.

Entrepreneurs forget that the best way to deal with the challenges they face in day today life involves a healthy body and a healthy mind frame. To dedicate your self to work requires a dedicated mind, which can only be possible if you are well fed, well slept and follow a daily routine of exercises.

Entrepreneurs are all about dedication. Trust me, working all day and night without proper food proper sleep does not allow your body to work with 100% efficiency. It inadvertently leads to health-related issues and stress.