Ways to Improve Productivity, Reduce Waste & Increase Profit
Is your productivity under achieving ? You say “no” right away, but almost every business has places where they could be more efficient.
Is your productivity under achieving ? You say “no” right away, but almost every business has places where they could be more efficient.
The purpose of being in business is to make more money than it costs to provide your goods and service, right? And “what should I charge?” can be a loaded question. You’re making money, but is it enough?
Many business owners have some expectation of what their expenses and revenues will be in coming months, but most have not taken the time to put together and use a real budget.
In order to better understand your business, and maintain good financial stability – a business owner should consider the following when developing their budget:
When we first start a business, the biggest question we often think is, “what should I charge?” We tend to start out where we’re comfortable and confident people will buy. After a while we may find that we’re making sales easily. That’s an indication to consider raising prices. If you also find that you’re working at capacity and losing money, that’s also an indication your pricing (as well as your operations) needs to be reviewed.
What stops most business owners from raising the bar? Fear. Many business owners think that if they raise their prices, it will scare-off their customers and they’ll look to your competitors. Feeling nervous about the adjustment is normal, but consider that in some circumstances, price implies value. You wouldn’t go to a discount doctor, would you? You also may find that you do lose a few customers, but if you’re making more profit from the others, and new ones, you may be better off in the long run.
In an ideal world, your business should raise their prices every year. You Should evaluate your pricing annually, taking into account new capabilities your firm has developed, your overhead costs, and the general economy.
Look at media giant Netflix. The company originally had a streaming combo-plan for $10 per month. Soon after, they decided to raise their prices to $16 – that’s a 60% increase! Customers weren’t happy and unfortunately took to social media to complain (Kuadey, 2011). I’m sure there was a strategy behind this – perhaps one big increase instead of a bunch of little ones but do try to avoid this with your business. If you do want to raise your prices this much, try it with new customers.
Your pricing sets the tone of the kind of company you want to be and the type of customers you are looking to have. For instance, if you are known for your low-cost pricing – customers typically won’t expect high-end customer service. If you have higher-pricing – customers will expect all the bells and whistles for what they’re paying.
Here are a few reasons to help make your decisions easier:
Each year, be sure to look at your pricing and your business’ financial health. Not increasing pricing when needed, can result in loss of cash flow when your business is ready to grow.
Have questions about pricing? Reach out to me at firstname.lastname@example.org.
According to a small business administration study, over 28% of businesses go bankrupt due to problems with the financial structure of the company, and in many cases this could have been avoided.
Understanding your accounting reports is essential in order to stay on top of business so you can manage your finances and make informed decisions based on facts.
These tips will help keep your books current and your habits on point.
The necessity of good accounting practices for small businesses
Poor Record Keeping Has Consequences
Your Cash Flow
The Cash Flow Cycle – Cash Flow is a complex, vital process and requires knowledge of a company’s financial accounting systems general management of financial information, and proper inventory control.
A Basic Formula Covers –
What Documentation Is Needed?
Every Business has financials that evaluate the health of their business. It’s important to take a look at your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement.
Reading The Statements
Profit and Loss Statement – Show net profit. Major components:
There are two basic equations:
Balance Sheet – It’s an overall picture of where your company stands. It includes:
Cash Flow Statement – Analyzes cash generated and used for a specific period. It includes:
Helps eliminate future earnings (typically 1-3 years) and informs your sales strategy.
Projected Annual Sales:
Total Revenue To-Date + Run Date x Remaining Number of Sales Periods
Projected Monthly Sales:
Actual Monthly Sales From The Same Time Last Year / Last Years Remaining Sales x Run Date x Remaining Number of Sales Periods
Company Revenue To-Date / Number Of Sales Periods x Info On If Product Services Have Changed
Financial tools used by financial analysts, investors, and bankers to determine your financial health include different types of standard business ratios:
Finding Someone to Help (Like Me!)
If you’re spending too much time on your business’ financials or you don’t fully understand what you’re looking at, it may be time to hire a professional. It’s still vital to have basic accounting knowledge, but you’ll save yourself time and money by hiring someone who knows what they’re doing – again, like me.
Good accounting is crucial to the growth and longevity of your business. Over time, it will help you create and manage budgets, forecast future revenue, track expenses and look at the overall health of your business. Email me to help go over any of these statements or equations – I’m here to help!
 Making a Market Forecast Estimate, Bplans
Think about it – when drawing out a plan of action for your business, you can minimize any unexpected cash flow issues, control spending, inform decisions in other departments, assist with financing applications and reduce overall risk. Here are 12 steps you can take right now to create a business budget.
Fixed costs to include:
Variable costs to include:
Along the way of creating this budget, feel free to reach out to me with any questions. Each business is individual and unique, as should their plan. Contact us here for more information: CONTACT US HERE
Growing your dream company can have some challenges along the way. With the rate that companies go out of business and fail, here are 8 challenges to consider, along with advice on how you can avert disaster before it strikes.
To learn more business tips, visit the rest of our resources and blogs.
When you’re suffering with cash flow problems and consider alternative finance for your business, there are a few options available. It mostly depends on what the money is needed for, the size, type and life stage of your company, your (and your company’s) credit rating, and how much you need. Do you know which form of alternative business finance is right for you?
Business Loan –
A quick business loan could help when you need:
– A flexible and quick solution that can be repaid in convenient, fixed installments.
– A cash injection to:
o Buy new equipment
o Buy new machinery
o Buy company vehicles
o Fund a marketing campaign
o Fund seasonal fluctuations in trade
Certain quick-loan companies can provide different amounts for different needs, offering fixed rates and flexible loan terms. Be careful here – some online lenders are not so scrupulous. You’ll do better with a local banker you can trust.
Peer to peer lending –
Peer to peer lending could help when you:
– Need to fund a specific project
– Have more time on your side – you can’t get money in your bank within 24 hours
– Are not worries about flexibility – more people are involved and terms are rigid in terms of extending
– Have been in business for at least 2 years
If you are suffering cash flow problems, peer to peer lending may incur higher interest rates.
Asset-based lending –
Asset-based lending could help when you:
– Can fund expansion based on your current assets
– Need to grow your current business
– Need to purchase new/additional property
– Need finance for exporting or importing
Some companies will provide funding in situations where you are struggling to gain business finances from your bank. They can take a different view on longer-term asset-based finance and look past short-term cash flow problems to consider overall business viability when lending.
Invoice financing or Factoring –
Invoice finance could help when you need:
– Quicker access to cash then your payment terms allow for
– To borrow more than a traditional overdraft would offer as a safety net to cover fluctuations in payment
Some companies allow you to borrow up to 85% of your invoice value immediately, releasing cash that you are awaiting to aid your every-day working capital.
Have questions? Feel free to email me at email@example.com
Just because you’ve opened a business, doesn’t mean you necessarily know everything you need to about how to run it, especially the financial aspects. No one teaches this! Unless you have a finance degree, I bet no one ever taught you how to read a cash flow statement or create (and manage) a budget. Many companies tend to fail within the first five years, mostly due to poor financial planning and budgeting. Being able to understand estimates and match expenses to revenue is important because it helps business owners determine if they have enough funds to operate their business. Without a budget and plan, a company runs the risk of spending more than it’s earning.
Here are some steps to build a better business budget.
Not all industries are alike, but there are some comparisons. Google benchmarks for your industry to see what’s out there. It’s important to do some research about your industry, learn what other businesses are doing, and checking the IRS website to get an idea of what percentage of revenue coming in would most likely be allocated toward cost groupings. Small businesses can be volatile as they are more susceptible to a slow economic turn.
I love spreadsheets! Create a spreadsheet to estimate what total dollar amount and percentage of your revenue you’ll have to put toward raw material and other costs. Do the same with rent, taxes, insurance, etc. On your first draft, put in everything you can think of, you can always cut back. If you need a great template to start, I have one – email me at firstname.lastname@example.org to get my template.
Although you may factor a specific revenue or rate of income, remember to estimate certain expenses that can’t be controlled or aren’t set in stone – like emergencies with equipment or liabilities.
If money is tight, finances must be found somewhere to pay bills. If needed, consider cutting some costs. Another way to save money is to wait to make purchases until the start of a new billing cycle. With some careful maneuvering, you can create some breathing room.
While many businesses draft a budget yearly, owners should do it more often. Things change rapidly in the life of a small business owner. You need to be reviewing your budget at least monthly. First to compare your actual results to the plan, and second to make any necessary adjustments.
Don’t be afraid to shop around for new suppliers, negotiate contracts on renewal, or to save money with other services being performed for your business. This can be done at many different stages of your business, including annually or during periodic reviews.
The Bottom Line
Budgeting is an easy, but essential process for business owners to forecast their future and current revenue expenses. The end goal is to make sure that there’s enough money to keep the business up and running – and ready to grow.
Need further help with preparing a budget for your business? I’m just an email away – email@example.com.
When considering social media marketing for your business, there are two factors you should know: Cost and ROI (Return On Investment). I’ve heard some business owners comment that since Facebook and LinkedIn is free, why should there be a cost, but they don’t consider the time and efforts in content writing and posting? Others may say that social media is only an option in marketing and not measurable. Of course with any investment you put into your business, there is risk. Understanding Social Media ROI really depends of your company and overall goals.
What are your goals?
It’s important to include a marketing plan and goals for any advertising or marketing strategy you create. Is your overall goal to increase followers? Are you looking to sell more product? Increase traffic to your website? To determine social media ROI, it gets down how much you’re currently spending and how much your social media impact matters to your business. This is where you have to make some decisions for your company – for example, one company may spend their money on more traditional forms of advertising, such as print or TV. It could be difficult for a company to switch from traditional marketing to social media. However, social media ad spending may actually get more results in the long run, as they’ve recently surpassed TV ad spending.
Before you start measuring your social media activities, here is a recommended list to follow:
It’s crazy to think that many companies don’t know how much they’re actually spending on social media. Take a look at which social media channel is bringing your company the most revenue right now and why. Also look at areas where you can improve. By monitoring these changes, you can move forward with a better game plan and hopefully see more revenue.
If you’re not sure which channel is right for you, try and experiment with different platforms such as LinkedIn, Instagram, Facebook or Twitter. A restaurant for example might be benefit better from Instagram – customers will react and engage with beautiful photos of yummy dishes and the inviting ambiance. A mid-size consulting firm may do better having it presence focused on LinkedIn, where they can interact with potential clients and engage in conversation within the industry.
Social Media Campaigns
Again, one you define your goals (followers, sales, likes, foot traffic), it will be easier to measure your social media performance. It’s important to remember not to hit every platform at once – this can get time consuming and overwhelming.
After defining your goal, budget and a proposed plan – what would be the best ROI for you? Maybe set a company goal of having 10,000 visitors visit your website. You can then measure using Google My Business and Google Analytics how long someone spent on your site, what they clicked and did it turn into a phone call? Which then turns into a sale.
The impact of your social media campaign should be measurable from the beginning with the value of each link trackable. This will make it easier to see which links are building traffic and promoting engagement.
Although it may take some time and patience to see your ROI add up, there are other factors that can help enhance your social media presence. If you decide you hire a marketing company, make sure you go over your overall social media goals, analytics and that you’re on track for ROI.
Have more questions about fitting social media into your budget? Contact me at firstname.lastname@example.org.