Monthly Archives: April 2017

How to Make Your Business Financially Fit

Steve is a successful business owner who takes his business very seriously. He focuses on growing his business and has several employees. People love his products and services and are sharing them with others. What Steve is struggling with is making his business financially fit. It seems like his business is always tight, and he is barely making it each month. Sound familiar?

This is what we hear from many business owners. They want to grow and be successful, but they are missing some tools to assist them in staying profitable. Here are four tools you can implement into your business to be 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.

To determine the current ratio, take the current assets and divide them by current liabilities (Current Assets/Current Liabilities.) Once you have the current ratio, it can be tracked each month to determine if your company is moving in a good direction or if you need to make some changes in your business to move it in the right direction.

Implementing these tools into a business can make a huge difference on how profitable a business is. A small hinge on a gate can help a large gate swing back and forth, just as a small step in the right direction can make a huge impact on a business.

The Ways To Make Your Business Work Harder

Many business owners are working so hard at their business that they fail to enjoy the rewards of being the business owner. If you are letting the life of your business overrule the business of living your life, then it is time to begin turning the tides.

Finding ways to make your business work harder for you and your family is the reason we all started our businesses in the first place. If your business is obstructing your efforts to enjoy life with friends and family, this is a problem. We all know a lot of work goes into building a successful business, but if it is consuming all your time, effort and energy… is it worth it?

Why this coordination is important:

Every time you find new ways to help your family benefit from the efforts of your business, your life balance and family life improves.

If your business consumes your entire life and your family life suffers because of it, your spouse and children may actually resent the time that you spend there. Even if it provides a great deal of income, the value of family and social life may be sacrificed.

Make your business help you, your family and your social life. You will be happier, healthier and live a longer more rewarding life.

5 Ways To Consider:

Consider paying children’s education expenses as wages for work

Many small business owners make a good living and have higher than average incomes. This can cause their family to qualify for little to no college financial aid when their children are ready to attend college.

If you are going to have to pay for it anyway, why not pay your children to help out at your small business. Pay them as an employee, contractor or consultant to do work for you and your business.

If you pay them enough to cover their college costs, you will receive a tax deduction for the cost of their college education by deducting their income from your business. They will be responsible for helping out with your business and they may surprise you with how much value they add to the business. New ideas, new technology, a new and different viewpoint might be just what your business needs.

Schedule family vacations around business travel

When a family vacation is something you’re considering, think about coordinating it around a work trip. Do you need to go to conventions, trade shows, seminars or other training for work? If you drive to go to those business activities, your gas mileage is tax-deductible regardless of how many individuals you have in the car with you. Does this conference or training trip require you to stay in a hotel? Your hotel expenses for that night can also be deductible regardless of whether you have your family with you in the room.

Scheduling family vacations around business travel can help make it more manageable. This allows you to enjoy time with your family or friends while also working on your business. Consult with your spouse or family to coordinate the two.

Resilient Businesses Move Their People To The Cloud

Every year, as the Atlantic hurricane season approaches many businesses have a nagging realization that they are at risk due to a catastrophic “Black Swan ” event. Black Swan events are a constant source of risk in states like Florida where many communities are subject to disruption due to coastal storms. This risk is particularly acute for businesses that depend on the storage of on-line data if there is a chance their critical data could become lost or corrupted. But the threat from Black Swan events isn’t limited to Florida, nor is it limited to large scale disruptive events like hurricanes.The black swan theory or theory of black swan events describes a disruptive event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term is based on an ancient saying which presumed black swans did not exist, but the saying was rewritten after black swans were discovered in the wild. Consider the following scenario…

“We tend to think of disasters in terms of the attacks on the World Trade Center, Hurricane Katrina, or other mega events. Sometimes, however, less notable events occur that can have a catastrophic effect on a business. In February 1981, an electrical fire in the basement of the State Office Building in Binghamton, New York, spread throughout the basement of the building setting fire to a transformer containing over a thousand gallons of toxin-laden oil. Originally thought to be PCBs, the toxins were soon determined to contain dioxin and dibenzofuran, two of the most dangerous chemicals ever created. The fire was smoky and quickly filled the 18-story building with smoke. As the transformer burned, the soot entered the buildings ventilation shafts and quickly spread toxic soot throughout the building. The building was so badly contaminated that it took 13 years and over $47 million to clean before the building could be reentered or used. Because of the nature of the fire, the building and its contents, including all paper records, computers, and personal effects of the people who worked there, were not recoverable. This type of event would be irrecoverable for many businesses.” – Operations Due Diligence, Published by McGraw Hill

What affect would a catastrophic hurricane that affected an entire region or a localized disruptive event like a fire have on the operation of your business? Could you survive that kind of interruption or loss? As the dependence on on-line data has grown in virtually every type of business, so has the risk that loss of their data could disrupt the operation of the business and even result in its complete failure. In response to these threats, there has been an evolution in the approaches used to mitigate these risks as the volume of on-line data has continued to grow. Originally, the concept of Disaster Recovery (DR) emerged as a mitigation strategy that focused on the recovery of critical data after a disruptive event by giving the business the ability to restore disrupted IT operations.

Disaster Recovery (DR) involves a set of policies and procedures that enable the restoration of critical business data and allows the IT infrastructure to be restored to a prior state. DR was originally seen as the domain of the IT department who were given responsibility for mitigating the risk. To minimize the risk, system backups were scheduled frequently and aggressive DR plans that included server cold start procedures and data backups were implemented.

Business Coaching for Business Improvement

Business coaching can actually bring the much-desired changes to your business. Coach is a word which is derived from “kocsi”, a Hungarian name that means “carriage”. Today, however, the word has a wider use and it basically means transportation of people from one point to the other where they desire to be.

Business coaching, therefore, can be defined as a process that can be applied so as to move a business from its current position to where the owner envisions it to be. What a business coach does is to offer guidance and assistance to the owner in view of business growth, helping in the clarification of the business vision and how exactly it can fit well with the personal goals. This is a very important step and should be a point of focus.

Business owners should be made to understand the importance of reaching their goals for the business and how it can affect them personally. The business owner is responsible for the determination of the passion and speed in which goals are met. When the business owner has a passion for reaching a goal, he will be more determined to make it work by all means.

Usually, a coach will get to know the business owner desires and this helps in the prioritization of the goals and strategies that need to be put in place. It is the work of the coach to meet you with the owner on a regular basis so as to ensure they remain on track to all commitments that they may have made.

Accountability is a critical component of business coaching. It is important to understand that a business coach isn’t a consultant. This means that they don’t work for the business. The main aim is to help you with focus and keep on reminding you the importance of reaching the set goals. They also work to motivate the business owner to actually keep the commitments. They are the sounding board and can even hold a mirror so as to reflect all the blind spots that you may have missed.

Most of the success stories that you may have heard attributed it to amazing business coaches. For business owners who seek to have more time, more money and better relationships and health, it becomes important to have a business coach. The reason why the most business fails is that people are not really taught about ways in which they can actually win at life. Coaching, therefore, bridges the gap and enlightens the business owners in ways that only a coach can achieve.

It is the dream of every business owner to have a winning team around them. Also, anyone in business desires to have great profits in an effortless and exponential way. A winning business allows you to have time and money freedom. If you feel that you need to rethink your commitments and focus on the goals you had initially set out for your business, then getting a great business coach can actually help you and your business to a great extent.