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Category Archives: Business

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.

Hiring a Good Accountant

Ask the right questions

Not every accountant will be the ideal candidate for you. Therefore, prepare a list of questions to get to the bottom of exactly what they are offering to avoid any surprises. Do they provide monthly bookkeeping as well as business taxes? What exactly can you expect to pay for their services?

Get a referral from a personal contact

Like a good hairdresser, finding a professional that ‘gets’ you can be a challenge. Ask around and see if there is an accountant that somebody near and dear to you recommends. Find out what they like about them. Ask them what services they are given and at what price.

Double check their qualifications and experience

Don’t be swayed by the promise of a large check following your tax return submission. Always confirm their qualifications and experience thoroughly. If in doubt, ask them for a reference so you can verify they are as good as they say they are.

Understand what they need from you

Make sure you know what is expected of you up front. Can you do everything that is required from your perspective? Do you need to visit their office and supply them with physical paperwork, or will electronic copies sent through email be suitable? Does the way they operate meet your expectations?

Gauge their availability

Accountants may not be known for their customer service skills, but it is still an important and real aspect of their job. If you don’t hear from them for days, perhaps they are not the one for you. You need to know that you can get a hold of them when you need them the most.

Starting a Business Overseas

1. Local Culture

The local culture and habits are extremely important for any entrepreneur who’s looking to start a business in another country. It is essential to know the ins- and outs of the local environment and how to get around. As hard as it might be, try to find a local investor or a business advisor who can inform and explain key factors of doing business in a specific area. Depending on your business and target market, get to know local consumer behavior. It’s key for your potential business to have local partners who are trustworthy; this key point can make or break your business.

Local business events are a great way to meet new people in the area. In case you are looking to build a network before flying out, which is a smart thing to do, use your current network to see if you can connect to someone doing business in that area. Another possibility would be to join expat communities and ask questions there. Join Facebook groups! They are surprisingly effective.

2. Language

Studying a new language is hard and very time-consuming. It may even present a bigger barrier for you than running an actual business. However, learning the local language will prove to be a huge advantage when doing business with local people. Especially in Asian countries, people will show you more respect and trust when you speak the language. Besides the fact that communication will be easier, it’s easier to meet new people and you’ll most likely get better deals.

3. Way of Life

Integrate with the local community and neighbors through events and other get-togethers. This is a great way to meet new people, potential clients, potential business partners and besides that, a great way to learn more about the country and its culture. It’s an awesome experience to see, understand and feel how the local people live their life. Learn about their values and vision in life. Study the local market and local economy and how that knowledge can profit your business.

Growing a Small Business

Maintain detailed records

Any successful business will keep and maintain detailed records. A major benefit of record keeping is the ability to constantly know the financial position of a business and make it easier to see potential growth options or challenges in the future. Also, if things do start to look bad, there is more time to start creating strategies to overcome those hurdles.

Analyze the competition

Healthy competition has the potential to breed the best possible results. To grow the successful business it is always worth checking the local competition to see if there is anything to learn that could help improve your business.

Be creative

Try to be creative in the process of setting up your business and think up ideas that could potentially make your business stand out from the rest. It is worth remembering that you won’t have the complete business knowledge when starting out, so you should always be open to new approaches and ideas to expand the business.

Stay focused

Even with a lot of time spent on the planning stage, there is no guarantee the business will start to earn money straightaway. It can take a little time and marketing to get a new business recognized, so it is essential to stay focused and continue to work on the short-term goals.

Small Businesses Fail at Marketing

1. Their definition of marketing is wrong

When business owners tell me that marketing doesn’t matter, they usually have a totally different understanding of what marketing is than those who recognise how marketing contributes to business goals where it enables you to charge the most money you can for your services and products.

Marketing is first about spending time building a solid foundation based on strategy before proposing a series of tactics aimed at lifting sales. Until the business finds a way to change the context of how their ideal customer views what they do, and then becomes become the obvious choice provider, they’ll find that their marketing efforts never seem to build momentum or gain any return on investment.

You must be able to enter the conversation taking place in the head of your customers. Or, to look at it in a different way, to be able to address the number one question on your customer’s mind at exactly the right time.

So, how do you do this? The conversation that is taking place in every prospective customer’s mind revolves around two major points. There is a problem they have, and that they don’t want… and there is a result that they want, and they don’t have.

Those who often misunderstand marketing believe that it is only about advertising campaigns, brochures, flyers, website, email marketing, SEO, tradeshows, social media, copy, etc. These are the tactics – the way you implement your marketing. I’d argue that marketing is essentially the core of business strategy because it is about understanding the current customer, tapping into their fears, their goals and their aspirations and then creating products and services that the ideal customer is willing to buy from a brand they now they know, like and trust.

2. They believe either they or their co-worker can do it

Sometimes in the “do it all yourself” world of small business (or even big business when it comes to it), it’s difficult to identify the areas that require outside help. A business may be able to set up their newsletter, add plugins to WordPress, write a Facebook or LinkedIn post, and clumsily create header graphics, but you need somebody who is trained, practiced, and skilled at looking strategically and holistically at the marketplace, understanding the customer, and then creating unique opportunities based on this understanding.

Just think about it for a minute; just because you have a calculator and excel does that mean you are an accountant? If you have a ruler, pencil and have watched some episodes of Grand Designs – does that make you an architect? If you post regularly to your friends on Facebook and Instagram – does that mean you are a social media expert?

So why do small businesses believe that by buying a Mac and some software they will become a designer, marketer and communications expert?

It needs to be led by a strategic marketer who can then develop an integrated marketing approach. Can you or your co-worker do this? In some cases, you can. But those who can are most likely to either come from marketing or consulting backgrounds where they have transferable skills and experience defining AND delivering against a growth strategy.

If you are a small business, you need somebody who will have a very solid, process, streamlined, consistent, repeatable approach. First, they will research and learn about your company in great depth, the dynamics of the marketplace and identify shifts, trends, and changes. From there, the strategic marketer will be able to present the different elements of your marketing plan in logical order of how you should construct them, update them, or revise them; and identify the key areas you should be focusing on – be it generating leads, converting leads, increasing transactions right down to changing prices.

Effective Working Capital Management

Create proper cash flow projecting – This process must consider the market cycles, the loss of a valued client, the actions done by your competitors, and the impact of all unanticipated events to your business’ overall performance. Moreover, you must also consider the unexpected demands of your capital.

Craft contingency plans for unexpected events – Regardless of how profitable your business is, you must always ensure that you are well-prepared in case unexpected events arises. You need to hone your skills in efficiently managing any uncertainty by formulating risk management procedures. Remember though to establish these procedures based on the objective and realistic view of your working capital requirements.

Use your working capital in a corporate wide basis – This is regarded as among the most effective capital management strategies because this will help make sure that your business’ cash on hand are utilized in various functions. This can be performed by using such cash from one place to another. Making sure that different aspects are in place is a great way of efficiently implementing this tip. These will include efficient banking channels, excellent linkages between production and billing, effective internal systems, information access, and good treasury practices.

Manage disputes properly – This can free up cash that have been locked in due to certain disputes to clients. Customer service can also be improved with efficient dispute management procedures. Most importantly, your business efficiency is expected to improve since you can begin to minimize operating costs via this tip.

Start a Bookkeeping Business

Another area of expertise may be in the area of risk analysis and internal control. Highly experienced bookkeepers understand the importance of financial controls, segregation of duties and best practices. This also allows the bookkeeper to improve the value provided to the client by identifying risks in the organisation and improving ways to minimise the risk to the business. If you can save the business owner from a fine, penalty or even an audit due to lack of compliance with legislation, you are a valuable asset to the business.

Payroll is often a requirement for a bookkeeper to perform. This however can be expanded beyond the payroll generation and compliance with associated items such as work cover, superannuation,payroll tax and tax. You may have deeper experience in human resources or staff management. Depending on the requirements of the client and the business size, there may be opportunities to offer additional HR type services beyond basic payroll and compliance services.

IT skills and experience could form an additional area of expertise. For example as part of the asset register, depreciation or budgeting process you may have the opportunity to look at the infrastructure or software used by the business. If you have the skills and experience, it may be an opportunity for the client to go cloud based, or online with software or even select more appropriate software for the entity.

Many small enterprises need experience in multiple areas but they may not have the budget for specialist services. This is where you can add more value to your service offerings. I am not suggesting you are suddenly a Jack or Jill of all trades, especially if you have not had exposure to these types of tasks. However looking beyond the traditional bookkeeping services may help you not only increase your revenue but the perceived value of your service.