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Budget Made Easy

When the budget is to be prepared, the information from past has to be studied. The trends and flow of goods and services, as well as their cost that affects the business, can be collected and analyzed quickly if the business has opted for an electronic medium of keeping its books. Not only the initial phase, but the projection of the upcoming budget on the functioning of the business is also facilitated. When the board is informed of the developments within the organization, and when this information is ensured to be reflecting a true and fair picture of the business, the decisions taken will be for the best results.

Because its preparation can be a time-consuming issue, because there are other works to be done in the meanwhile, and because employing experts cannot be feasible in all posts of the work, use of application can solve more than one issue. While the management installs the system in place for conducting transactions, it is the apps that the performance is efficient and smooth running.

When information is stored in electronic format, the search and retrieval are swift. This also serves in the cause of making an analysis as the management can construct pictorial representations, from a pie chart to bar diagram and trend lines. Also, any complex calculations can be done thanks to the way the app integrates with other software. Exporting the data means it will be less cumbersome than to copy the same repetitively.

There is also the issue of collaborating when preparing a budget; the managers and personnel of the Board should come together and decide their plans and programs. The paper should be shared during various stages. What the app does is facilitate working in collaboration; this way, time consumption as a number of people go through with it is reduced.

With the help of accounting application, the business can prepare any type, be it static budget where a change in sales volume or revenue does not affect the strategy; or financial budget with its focus on assets, cash flows and income/expense. Also, there may be cash flow budget, operating budget and above all, master budget. The management need not fret about the preparation at whatever time period and for whatever duration the need arises; after all, not all time frames are for a year.

Critical Financial Ratios

A Review of Assets and Liabilities

Balance sheets categorize a company’s assets as either a current asset or a long-term asset. Current assets are expected to provide a benefit to the business within the next year. Long-term assets provide a benefit for more than one year.

An example of a current asset might be a certificate of deposit with a maturity of six months. A long-term asset might be a machine that is expected to operate for many years.

A company typically has several assets aside from cash on its balance sheet. The company can invest its cash in financial instruments like money market accounts, certificates of deposit, or U.S. Treasury notes. Because these investments can be converted into money rapidly, general accounting practices consider these to be cash equivalents. Cash and cash equivalents are considered current assets.

Similarly, a company has current liabilities and long-term liabilities. Current liabilities are those that come due within the next year. Long-term liabilities are those that will be paid off over the course of many years.

Return on Assets

One common measure of a company is Return on Assets (ROA). Return on Assets helps the would-be investor glean insight into how profitably a business is using its assets.

If Company A shows a ROA of 9{7785876140be040b2e77d0cd0c16ee5b22835b5870649a5bd5f5ee32e479d6a5} while Company B demonstrates a 23{7785876140be040b2e77d0cd0c16ee5b22835b5870649a5bd5f5ee32e479d6a5} ROA, we see that Company B is getting much more return on its assets. The higher ROA could indicate a competitive advantage that makes Company B an attractive investment. Conversely, if you are the owner of Company A, you may do well to examine how your competition is producing more profit per dollar of assets.

The ROA formula is:

ROA = Net Income / Average Total Assets

Net income can be found readily in a company’s income statement. Average total assets are calculated by adding the value of total assets at the start of the year to the value of total assets at the end of the year. Divide that sum by two.

Debt Ratio

The more debt a business assumes, the more likely the business will be unable to pay that debt. The debt ratio shows the percentage of assets that are financed with liabilities. The debt ratio formula is:

Debt Ratio = Total Liabilities / Total Assets

In spring 2017, Exxon Mobile had a debt ratio of 49{7785876140be040b2e77d0cd0c16ee5b22835b5870649a5bd5f5ee32e479d6a5} (162,989.00/330,314.00). The other 51{7785876140be040b2e77d0cd0c16ee5b22835b5870649a5bd5f5ee32e479d6a5} is financed by the stockholders of the company. By comparison, BP has a debt ratio of 64{7785876140be040b2e77d0cd0c16ee5b22835b5870649a5bd5f5ee32e479d6a5}. If an economic downturn occurs and fewer sales occur, which of these companies is more likely to default on their debts?

Small Steps Make Big Difference

Thank people. Your team, clients, suppliers, family, friends. When they do something you’re grateful for, let them know it. Who can you speak with, call, or email today with a thank you?

Like your own social media posts. Add to the likelihood your post will be seen by adding your own thumbs up to every post. It all adds up (that compound effect!). Like your next post and make it a habit.

Pay attention to your money. Track what happens to your money in your business, coming in and going out. Even if it feels like the knowledge might scare you, that ongoing awareness has a calming effect. You’ll make better decisions.

Caption your videos. Over 80{7785876140be040b2e77d0cd0c16ee5b22835b5870649a5bd5f5ee32e479d6a5} of videos on Facebook are viewed with the sound off! Reach your audience with written words on the screen – add captions. This is a DIY you can do in Facebook or YouTube, or you can pay a service ( is a good one). Do you have a video important for your business online right now? Spend 15 minutes adding captions.

Learn something new. Read a book or an article, watch a video, or take a class. Spend a few minutes every day learning, so you expand your perspective and recognize new possibilities.

Small Business Accounting

  • Monthly services that you may not need any longer.
  • Advertising expenses. Look for inexpensive ways to advertise.
  • Payroll Service – Start comparison shopping and see if there is a comparable service for less money.
  • Card processing fees. There are so many out there and this is one place where you may want to really look at. You can call your current processor and ask for lower rates. They may work with you.
  • Overtime hours. Can you cut these if this is an issue?
  • Job duplication. Are there any jobs that can be combined and have one person, not two.
  • Outsourcing jobs. This is another way to possibly save a considerable amount.
  • Internet and Phone fees. Call your provider and many will work with you.
  • Software. Is there anything that can be automated with the use of new software?

These are just a few suggestions. This is something that needs to be looked at on a monthly basis when you are comparing actual to budgeted numbers. Also, if you are not able to print off a list then get started on implementing a set-up for your accounting software. I know that you can spend $17.99 per month on a top-level plan using a cloud-based software. Your business will only benefit from spending a minimal amount of money. A minimal investment that will give you way more back in returns. You will see how beneficial software is once you have it up and running. Once your daily tasks include entering things in the software you will see how easy it is to maintain. The wealth of information you obtain from reports is amazing. You will be able to be proactive and grow your business.

Entrepreneurs Struggle

When these 2 minds are not aligned, it presents a struggle. This struggle appears as a starting and stopping motion. You attempt to take action on your goal and you’re actually stopped in your tracks. The conscious mind attempts to move forward on the goals that you have for your business, yet because the subconscious mind is not engaged in the process, it pulls you right back to where you were. It’s just like getting dressed to go on a family vacation. You walk out of the front door to load up the car and you turn around and your family is still in pajamas, simply lounging around in the living room. You’re moving forward, but they weren’t informed!

In order to end the entrepreneurial struggle, the subconscious mind must be informed of your new goals. These new goals must become your new beliefs in order to become your new reality! Repetitive affirmations, vision boards, meditation, and visualization of your new goals are life-altering tools that imprint your new goals into your subconscious mind.

Your Attractive Thinker Assignment:

Create a Vision Board with Your New Business Goals!
Create a Set of Empowering Affirmations that Support Your Goals!
Meditate and Visualize Your Goals at Least 3 Times a Day!
Speak Your Goals with Boldness and Confidence Daily!

With daily repetition of these practices, you’ll reach your goal in record time! You’ll begin to spot opportunities that will help you to accomplish your goal. Unexpectedly, people will show up that have the exact resource that you need to accomplish your goal. You’ll receive ideas that will expedite your goal and take you further/faster! Consistency is key!

Choose The Best Liquidator For Business

Compare a few prospective companies

The thing is that financial matters can be very sensitive and you need to be able to work very closely with the liquidation service provider. Trusting your gut instincts as far as the services are concerned is what you should strive for. You need to be very comfortable with the liquidator to have a pleasant experience. It therefore helps to start by making a list of prospective companies offering the services and going the extra mile or speaking to them so you are able to gauge which one works best for you as far as trust goes. The way they handle you, the background and experience should all make you feel comfortable and content with what they are about to do for you.

Consider expertise in your business sector

Liquidators can work with individuals while others specialize with limited companies. What you need to make sure that your liquidator understands your business and its market of operation. When talking to the potential companies for the services, you can easily tell what sectors they are experienced in and gauge how beneficial they will be handling your situation. Ask as many questions as you possibly can when conducting the interviews and listen in to the responses you get. You can tell a lot about the competence of the liquidator in your sector even over the phone.

Look at the experience

Does the liquidator have any experience in liquidation? What strategies does he put in place and how many processes have they handled successfully? Yes is it true that even start up liquidators can still do a great job for your business during liquidation, but you will feel more comfortable when you know that your process is not a trial one for the company especially when you want it to end as fast as possible. A good liquidator needs ample experience to know the tricks of the trade, especially when dealing with tough agencies and professionals working with creditors. Experience makes liquidators competent and you also should ensure that your liquidator is licensed so you do not end up dealing with brokers.

Avoid Business Liquidation

1. Identify potential cash flow

This should be the first step that you take towards saving your business from failure. Go over your current assets and find out what potential cash flow options you have and whether they can do anything much to save your company. High cost items in your possession like vehicles and property can save you if you are bold enough to sell them and you are able to release the monetary potential they hold. You actually have the option of selling the physical property and retain the lease of the business sits on the property so that you do not have to relocate. As for any business vehicles, why not sell and consider hiring so on a temporary basis until business improves? A smart move can be all you need to pay off debts and save your company from liquidation.

2. Sell you inventory

No inventory is too small to save a financial situation for your business. If you are faced with the insolvency situation and you have excess products or stock you should consider selling it off as fast as you can to free up some money. By looking at balance sheets, it is easy to tell which stock is not bringing in any profits and you can sell it fast and use the money to get more successful and profitable stock that can help save your business from liquidation.

3. Offer stock on wholesale

If you are not sure how to go about this, start by contacting professional stock seller. The professional seller will be able to tell you how much the stock is worth and even help you find buyers for any stock type and quantity that you have. The thing is that you have to remember to put the money generated from the sales into good business use. It really does not make any sense to release your investment value only for you to forget the reasons behind why you had to go that far in the first instance.

Administration and Receivership

Administration is a formal procedure where an insolvency practitioner is appointed to control a business as a whole. They will be appointed by a court, the company’s creditors or its directors. The administrator will be charged with achieving the best outcome for all of the creditors of the business.

At this time the administrator is in control of everything and can choose to sell off parts or the whole of the business, enter into a pre-pack or liquidate the company. Once an administration order is granted the business is protected from further creditor action for around eight weeks or so.

Receivership however is generally asset based. This means that a creditor will appoint a receiver to take control of the asset but obtain value for the creditor with a charge alongside any preferential creditors. This is typically when an agreement has been entered into, such as a loan which allows the creditor a charge on an asset or group of assets in the case of default.

The receiver does have one significant difference from an administrator, he is only concerned with realising the cash to pay for the administration and pay back the company’s indebtedness to the creditor he has been appointed by. This means that the receiver has no interest in the value returned to unsecured creditors and this is a point that any large unsecured creditor may need to bear in mind if they hear of the prospect of receivership for one of their debtors.

Receivership will happen when a company defaults on a loan or agreement it has in place with a creditor. This can be as simple as not paying monthly payments due or going over an agreed overdraft limit without permission and making little or no attempt to pay the facility down.

Some loan agreements have rules, called covenants, that the company must abide by. These will include things like maintaining a liquid capital ratio, a maximum creditor balance or others related to turnover and profitability. The firm is usually expected to report on these, either monthly or quarterly and if the company breaches the terms, legal action can naturally follow.

The assets can be named, specific items such as a building or large items of plant or often, especially in the case of a loan or overdraft can be a floating charge. This means that the creditor has a charge on either all assets or on a particular pool.

Sometimes the agreement will include a clause that will allow express appointment meaning that receivership can be effected very quickly indeed and from the directors’ standpoint without enough warning.

In some cases receivership is survivable, especially if the assets that are affected are not vital to the company’s operations. However there will be an inevitable downgrading of the firms credit score and of course once word gets out it would certainly affect the firm’s reputation.

The distress sale of assets is rarely advantageous and typically the transaction is at a knock down price to get cash in the door quickly. Remember that the receivers’ interest is purely to return value to the bank that appointed them. It’s important also to be aware that the bank at this point will be concerned with reducing its exposure to the debt and they will not be interested in saving jobs or the firm in any shape unless it has a better than reasonable chance of survival and paying back the totality of the debt.

Limiting Small Business

The Self Fulfilling Loop

The ability to work in your business and work on your business are two very separate things. You may be the best at working very hard, doing long hours and motivating your staff, if you have any. But this doesn’t translate to growing your business. Growing your business is something different. It takes a whole new skill set.

If you’re stuck in the process of being a ‘worker’ in your business, you’re not moving your business forwards. You must step out of the roles which worked when you were an employee. Things which make a good employee are: turning up on time, working hard, delivering to deadlines and thinking of ways to achieve the maximum output for your boss.

Things which make a good business owner are entirely different. Knowing how to grow your business is about marketing. You need a whole new skill set and new ways of thinking in order to do this.

The Skill Set Of Online Marketing

Online marketing is vital to grow your business. Whatever kind of business you have, you need some kind of marketing engine driving it forwards. With new technology comes a new type of marketing. Before the internet there was traditional advertising: yellow pages, newspapers, flyers, billboards, television and radio.

Online marketing is a fantastic opportunity for business owners. But with it comes a few problems. The main one is not just learning the skills to create online advertising, but rather our mindset, or more importantly our industrial age thinking.

Industrial Age Thinking

We have been brought up with a lot of baggage. Our minds hold ideas which our forefathers embodied in their lives. Many of us are limited by old thinking patterns which no longer serve us. This is true in many areas of our lives but none so much as with growing a business using online marketing.

A poverty mindset always thinks of reasons to cut back and avoid spending. It is based on a presupposition that ‘there is never enough’ – a self fulfilling prophecy! Of course this is often well founded based on the past. But as a business owner this can be your biggest limiting factor to forward growth.

If our very thinking is based on our past and what it has taught us in terms of our income, we hold back and tend to be careful with our money. This is for good reason of course. But with online marketing your long term plan should be to be spending more and more on advertising, not less and less. This is a major roadblock to business growth.

All about Competitive Advantage

Then addressing his men before the battle began, he said, “You see the boats going up in flames. That means that we cannot leave these shores alive unless we win! We now have no choice. We win or we perish.” As it was told, they won.

Our case as entrepreneurs is much like this story, we either succeed in our business or we perish. One of those factors that “kill” businesses is the COMPETITION.

It will not matter how good you are if your competitor is better, so you need to find out what your competitor is offering. Find out your competitor’s advantage over you and how she goes about it.

Everyone has competitors. Do you know yours?

You will need a visit to your competitor to have a deep feel of her offer. You need to understand what gives her an edge over you. It’s probably just customer service, a better knowledge of the product or service, promo given to customers etc.

You can achieve this by paying a visit to your competitor as a potential customer. You can order for the service or product being provided and then you can criticize or make a complaint as a customer to see how they respond.

Sometimes it’s about a visit to their online store or website to rake in ideas that will eventually work for you.

Sometimes, you could even ask directly if you have relationship with your competitor.

If the idea works, you can replicate it in your own business.

Now you must learn to focus on your own advantage eventually.

There is something that other business is doing that you are not doing, locate it and focus on it.

Some people tend to get jealous of big businesses and wish they fold them.

Recently, the NCC wanted to force communication giants to have a high data rate. That means that data we used to buy for #1,000 might now go for #2,500. They claimed they want to do that so that small businesses can have a chance to succeed.

Small businesses fail to compete against bigger firms because they want to compete with the bigger firm on what the big firm is known for. They do not have to do that, they will continue to fail if they do that.