Overseeing A Small Business

Maybe even at the most ideal of times, overseeing a small company is usually very demanding. It is rather important for a person to understand just how to operate a small business, and in particular when you have invested all your future into the enterprise.

Tips on How to Oversee and Control a Local Business

managing a small business

Managing Marketing Promotions and Sales

Sales and promotions are also aspects of a business organization that need proper control.

Appropriate practices should be executed to develop revenues and realize goals.

Employ relevant and proper advertising approaches such as online and e-mail promotions together with alternative marketing programs.

Regularly measure the effects of your marketing and sales efforts and change them as neccesary.

Managing Finances

Accounting software applications reduce the effort invested in managing the firm’s finances. Filing tax returns on time and making sure there are insurance policies to manage risk are also important to offer security that the venture will continue if something untoward occurs.

Outstanding administration will make certain that you do not borrow more than can be repaid, as early as feasible. A strategy to reinvest revenues generated back in the business will also be a great sign of good management.

Managing Human Resources

When managing the business’ employees you need to ensure that they are motivated, satisfied and happy in your employ as well as performing the roles and responsibilities they were employed to do.

Empowering employees to do the job is important although regular inspections need to be conducted to assess their effectiveness and representing your business well.

“You can only manage what you can measure!” When it comes to employees you need to have a documented job description and regular review.

When all components of an organization are properly overseen and well coordinated, the business will function much better.

There are specialist businesses that offer services as well as products or services that will help take care of and manage a firm productively. I highly recommend that you get advice from people who have a good track record and engage in some mentoring groups.

 

Accounting Throughout History

There are many examples throughout history where people used their knowledge of accounting to ensure the success of their nation, their business or their livelihood. In this article we are going to look at a number of examples throughout history.

The Roman Empire

rome was built on good accounting

Augustus Caesar was the first emperor of Rome. He not only established the imperial books of account, he also started the practice of publishing information from them.

Jacob Soll, author of The Reckoning: Financial accountability and the rise and fall of nations says in his book that the attentiveness of Augustus to the accounts was a key to Rome’s success.

The Medicis

The Medici family from Florence, Italy adopted double-entry accounting in their bank in the 15th century. This allowed them to dominate the financial world of the time as they could undertake much more than their competitors. For example, they were able to establish branches, offer investment opportunities and enable easy transfer of money from one country to another.

The Netherlands

The Netherlands was the richest sector in the Spanish Empire in the 16th century. A lot of this success was due to the emphasis on accounting in their education system. This resulted in a consistent good standard of financial management that enabled them to invest around the world.

Britain

The South Sea Company scheme failed in the early 18th century. However, due to his excellent knowledge of accounting, the first lord of the Treasury, Sir Robert Walpole successfully negotiated a financial bailout that saved the economy.

France

Jacques Necker was a Swiss banker appointed by King Louis XVI to manage France’s finances in the late 18th century. The finances of the crown had always been kept secret, but Jacques Necker published the accounts.

In his paper France’s Financial Crisis: Analyzing the Role of the Finance Minister, Jadon B. Smith writes that the published accounts showed that the king spent 10 times more on his brothers than he spent on hospitals, and 5 times more than on upkeep of capital.

Surprise. Surprise. The king sacked Necker, but his revelation about the public finances was a major factor in the French revolution that started in 1789.

The United States

George Washington, before becoming the first US president, was accused of profiting from the War of Independence.

As he kept very detailed accounts of his activities, he decided to publish them. It was a risky choice due to his lavish personal spending patterns but he did not take a salary as the commander-in-chief of the army, which offset the criticism he received.

When he was elected as the first president he also established the administrative procedures for the new government.

 

So, here are a number of examples throughout history where good accounting practices have saved the day. You might never be accused of profiting from a war but the fact is, the quality of your accounting will have a large bearing on the success of your business. Make sure you establish good accounting practices and be very disciplined in implementing them.

Cash Flow – How It Affects Small Business

Whether your business is small or large, cash flow is essential for survival. There are times in any business when cash is plentiful and other times when cash is scarce. While it may be somewhat hit and miss, it is important to analyze your business cash cycles as accurately as possible, and more especially when your business is young or in a growth stage.

Have a Cash Flow Plan

It is not always possible to regulate the things that can impact your company’s cash flow, even when you are diligent in following up your accounts receivable and managing your accounts payable. Consequently, it is highly advisable to have plans in place that permit additional money to be accessed in the event of unusual events in your business.

There are ways to boost cash flow even in tough times, so let’s consider some of the options.

Increase Prices

This may sound counter intuitive, but most small businesses tend to undercharge. So one of the options you should seriously consider to increase cash flow is to raise your prices.

Ask yourself this question: “If I put up my prices by 5%, how much business am I likely to lose?”

The answer may astound you. By the way, it might also be a good idea to get your accounting professional to help you answer questions like this.

Sales Promotions

Sales promotions are not just the realm of larger companies. Small businesses can use them as well, especially when times are slow. You may be able to have a ‘scratch and dent’ sale to sell slow moving, damaged or obsolete inventory items. You could consider loyalty offers that reward people from buying from you on an ongoing basis. Have a promotion that ties in with different holidays in the year, such as Valentine’s Day, Easter, Thanksgiving and Christmas. An end of year sale or a birthday celebration sale is another option.

Sell or Lease Unwanted Assets

Another method that you can make use of to boost your small business cashflow is by leasing or selling assets of the business that are no longer being used. Disposing of such assets can clean up your balance sheet as well as providing much needed cash flow. Items might include plant and equipment that is no longer used as well as inventory that is obsolete.

Discount Prices

You can increase small business cash flow by discounting. Everyone loves a bargain and discounting can generate more sales. The problem with discounting is that you have to sell more volume to make the same amount of money. For example, if your sales gross margin is 33% and you discount by 10%, your volume has to increase by 50% to make the same amount of profit. So discounting is not a long term strategy, but it can be used as part of your overall Cashflow management strategy.

So there are a few tips for increasing cash flow for a small business. But as I said at the start, cash flow is essential for the survival of a small business. It is more important than profit because a business can survive for a period of time while making a loss, but if you need to pay suppliers or employees and you have no cash, your survival is under threat.

The bottom line is this: You must make sure you pay attention to your cash flow.

Here is a video from Bank of America with more tips on how to manage your cash flow.

Bookkeeping Benefits Explained

best bookkeeping records Maintaining exceptional books for your small business is crucial. Keeping excellent business books will provide the following benefits.

1. Keep on top of your tax obligations

Appropriate accounts are needed when taking care of tax regulations and laws. Your accounting records are useful in calculating your tax obligations as well as lodging tax returns for the business.

2. Assisting in company solvency

Studies show that a significant factor of company failure is attributed to poor financial management. The owners of any company have to show that the business can pay what it owes and this means appropriate bookkeeping records are maintained. Good bookkeeping helps the owner establish the return on investment but more notably, a company owner needs the ability to pay accounts as they become due or the company is considered to be insolvent.

3. Assisting in financial performance

Bookkeeping also provides crucial data about financial performance in the financial reports that include a Balance Sheet and Income Statement.

4. Detecting mistakes and scams

Mistakes and fraud can often be detected through the accounting records. That is why it is important to keep records up to date and for the owner to understand what the financial statements mean. It is also good practice to separate activities such as receipting payments from customers and then depositing it in the bank, and also ensure that workers have stringent spending limits that are monitored.

5. Support to management and stakeholders

To make planning choices and business decisions, management need to keep on top of the finances. As such, bookkeeping helps the owners or the management to strategize and plan company tasks. Correct bookkeeping is useful in making contrasts of current and prior performance, which is essential in identifying aspects that are influencing the performance of the business, and doing something about it. Good bookkeeping records are also vital when offering a business for sale.

6. Enhancing memory

It is not easy to always recall business financial transactions no matter how good one’s memory might be. Therefore, there is should boost the memory power so in order to. Doing your bookkeeping on a regular basis and recording additional information about transactions can counter constraints of memory and save you lots of time.

7. Managing cash flow

It is often difficult to get banks to make loans to smaller businesses. Good accounting records give you a much better chance of being successful in acquiring a loan when you need it. It is far better to be proactive rather of delaying cash flow is really a problem.

So these are just 7 benefits that come from good record keeping. Financial management is something that many business owners do not understand. But it is vital to your success.

More about bookkeeping
Here is a video with small business bookkeeping tips.

Why People Start a Business

Reasons why people start a businessFolks have all kinds of motives for beginning their own company.

Some just have a terrific idea which will help other individuals and they’re able to see the potential that can result from it.

Others work for a company and think they can do it better. Or they have the impression their company is becoming rich from all their initiatives and become disgruntled. So they determine to set their own company up and make the money for themselves.

For some it may simply be a natural advancement. For instance, a person’s first aim was to begin their own company but they needed to get the education and experience first.

Some individuals say they’re not employable. They go to work for themselves because they cannot see themselves working for somebody else.

Others merely need to have a chance because they struggle to get employment elsewhere.

And of course, some people think owning your own business is the best method to get rich.

Wikipedia (http://en.wikipedia.org/wiki/Entrepreneur) claims ‘In political economics, entrepreneurship is the process of identifying and beginning a new business venture, sourcing and coordinating the required resources, while taking equally the risks and benefits associated with the enterprise.’

Anyone who begins a company is actually classified an entrepreneur by this.

However, some individuals are compelled to begin their own company. As an example, it can be common for a company to just engage contractors and not employees, due to the dangers and costs entailed in being a company. So somebody who’d have been previously classified as an employee converts to a business proprietor. They still have regular employment with the one company. That’s never to say that all risk has been extinguished as sub-contractors are much easier to lay off than employees when times are tough.

Risk is something a genuine entrepreneur allows for and that may be why business’ failure rates are so large. But a lot of individuals who start a small company simply want to pay the bills and minimize their risks. They own a job and are not genuinely thinking about growing their company or doing something to expand.

This can be a bad move because establishing an effective company is really a great method to enhance your wealth.

If you are one of those people who want to use their company to increase their abundance and to achieve success, this blog is devoted to helping you.

We intend to bring you regular content and ideas which can help you run your company better as well as to give you thoughts that might result in more products, manage your employees better, and improve the success rates of the people who are prepared to start businesses.

Take a look at this video on how to start a business with no money now.