Best Business Practices

Small business owners who conduct regular reviews of their business’ operating health are more likely to detect potential issues before they develop into major problems. Some areas should be monitored regularly since they hold the greatest potential for harming a company’s long-term financial health.

Cash Flow

You should be concerned if your cash flow is insufficient to cover expenses because payments for goods or services are slow in coming. Beware also if your cash reserves accumulate rather than being put to work. Excess funds may be parked in short-term investment accounts, but ideally, they should be put to work growing the business.

Gross Profit Margin

If it is shrinking over several quarters, your production costs may be rising at a faster pace than your prices. Or, it may because you are charging less than in the past. Either way, declining gross profit margins are a threat to the financial health of your business.

Receivables

If they are growing faster than sales, it is a sign that your customers are not paying what they owe you in a timely manner. You may need to take steps to improve your collection procedures. Be proactive and consistent about issuing invoices and providing any necessary supporting documentation. In addition, contact customers as soon as you detect any delays in payment and stay on top of accounts that are past due.

Debt

Almost every business carries some debt. It’s generally not a problem as long as it is kept under control. Too much debt is a different matter in that it can eat up your cash, cut into your profits, and reduce the return you’re getting on your investment in the company.

Assets

Turnover rates are an important measure if your business carries inventory. When inventory turns over slowly, cash flow suffers. Your best approach is to determine how many days’ worth of product you’d ideally like to have on hand and adapt your purchasing to meet that goal. Additionally, keep an eye on fixed assets. If you have equipment that’s not being fully utilized, you may be able to repurpose it. If not, it may be time to sell or donate it.

Professional Input Can Be Valuable

Business owners should evaluate a broad range of financial information when making decisions. The input of a financial professional can be helpful in the assessment of a business’s overall financial health

Is your business thinking of moving to a new location? No need to worry, we got you covered with some tips for the journey!

Why are you relocating?

It’s important that you first consider why it is necessary to change your location. If you’re certain about the move, you should be able to fully answer the following questions.

• Are you moving for a new market to give you more opportunity than your previous one?
• Are there lower costs to run a business in this new area? Following that, are there better tax rates in this new area?
• Do you intend to keep the same employees or hire new ones?
• Do you have access to a better hiring market for new employees?
• Will there be a better quality of life in the new area?

Create a Moving Plan 

1. Figure Out a Specific Location

You need to figure out a specific office location for where you want to move. This space should be considerate of the market of clients you want your business to reach. You also should be paying attention to the leasing options, given that you most likely will be renting space in a new area. It’s also important to consider how far away this new location would be for your employees. Are the employees still going to be able to commute or will you need to give relocation bonuses to incentivize employees to follow your business?

2. Create a Moving Budget

Moving isn’t going to be expense-free. It is crucial to figure out the logistics of the move and calculate the expected expenses in advance. This also includes choosing a reputable moving company to help you move as easily as possible. It’s important to ask for quotes ahead of time so you can properly plan your budget, as well as read reviews so you have the best movers.

3. Give a Heads-up

You must let people know that you are moving before you do so. Tell employees and clients that you are changing locations. Give as much notice as possible so everyone can manage this situation in their own way. Some people are going to part ways with your business because they can’t also change locations. Be mindful and respectful of their decisions.

4. Dealing with Equipment

Make sure to have a plan when moving your important servers and technical equipment. Having IT support professionals create a plan for your move is very important. They can help create an easy transition that otherwise could have been a nightmare. It’s also important to figure out if you need more equipment and to order that ahead of time. Determining storage needs is also important because you may not need as much equipment if moving to a smaller office area.

5. Update Location Online

Don’t forget to change your office location on Google and other local listings, as well as your social media profiles so customers will be able to find you after the move. You should update your company website and email signatures to reflect this. Another important aspect to consider is getting new business cards and signs to reflect your business move.

6. Final Details

Make sure your information is registered with the government so you have the correct tax information with the IRS. Also, be sure you understand the mailing situation with your new business location because you will get an influx of mail and shipments during the transition.

Good luck with your new business location!

A bookkeeper for your small business is not a luxury; it’s a necessity. You must always be aware of what is happening to your business on a basic financial level. Lacking that knowledge could hinder your business’s growth and success. Read more to learn what a bookkeeper does and how outsourcing your company’s bookkeeping tasks could help your business succeed.

What Bookkeepers Do

Bookkeepers are responsible for a businesses’ accounts. At the most basic level, a bookkeeper keeps the general ledger by recording cash flow. However, bookkeepers can also create valuable reports such as financial statements, prepare bank deposits, oversee payroll, approve a purchase, create invoices, and monitor delinquent accounts.

Outsourcing Bookkeeping is a Practical Choice

While bookkeeping was once a tedious and grueling task due to manually recording every transaction by hand, technology has advanced the process to make bookkeeping much more straightforward and streamlined. It is now possible to outsource your business’s bookkeeping to an online bookkeeper. This approach is a cost-effective alternative to hiring an in-house bookkeeper.

Why Outsourcing Bookkeeping is Important for a Small Business

Bookkeeping is a critical part of any business for legal and financial management reasons. Accurate records allow you to assess the financial health of your business at a glance. It also assists your accountant when it is time to analyze financial data and recommendations for spending and strategize for future growth. Additionally, it’s vital to have accurate bookkeeping practices in place if you ever need to respond to the IRS regarding inquiries or audits.

The following are some of the benefits of outsourcing bookkeeping for your small business:

1. All financial transactions are accurately recorded.

Every small business owner must know where cash comes from and where it goes. Bookkeeping makes this crystal clear. For example, you can quickly determine how much your business spent on office supplies or how lucrative a given client or customer is for your business. And don’t overlook the importance of accurate records when it comes to resolving discrepancies like those that can occur between employees, vendors, or customers.

2. Spending analysis helps streamline budgeting for your business.

Expense analysis allows you to adjust your businesses’ budget quickly and easily. You can examine financial statements to determine the products, services, and industries that help you generate maximum revenue. You can also identify expenses that were once justifiable but no longer serve your business plan. Perhaps your marketing in the local newspaper generated income at one point, but online advertising is more profitable for your company in today’s market.

3. Filing taxes is easier.

Tax time is stressful for any business. However, bookkeeping eliminates the need to sift through piles of receipts, invoices, and documents to gather information. Proper bookkeeping ensures that information is organized all year long.

4. Your records are accurate in the event of an IRS audit.

While the chances of an audit for a small business are low, there’s always the chance of an audit no matter how compliant your business is with current tax laws. Thorough bookkeeping is your first line of defense when and if the IRS decides to audit your company. Organized bookkeeping records allow you to answer the IRS’s questions about any financial aspect of your business.

5. Cash flow is managed correctly and accurately.

The top concern of any small business is cash flow. By outsourcing your businesses’ bookkeeping, you mitigate the challenge of monitoring cash flow because you keep track of cash moving in and out of your business. At a glance, your bookkeeper can tell you how much profit your business generates and if it’s sufficient for paying your business expenses. This benefit can save you headaches in the long run because it allows you to be proactive, not reactive, by garnering a line of credit or seeking other assistance if needed.

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Realizing the importance of bookkeeping in running your business can provide peace of mind that allows you to do what is most important – manage the day-to-day operation of your business. Contact us now for reliable bookkeeping services.

You face plenty of challenges as a small business owner. Finding ways to protect yourself against lawsuits is a major one. You may be able to add protection by structuring your business as a corporation or limited liability company (LLC). Both these entities may shield the owners’ or members’ personal assets from the company’s debts and liabilities.

The protection isn’t bulletproof, however. Requirements must be met, and the separation between the owners or LLC members and the business must be clearly established. Evidence to the contrary could spell trouble.

The Corporate Veil

In the face of a legal challenge, if you’re not following proper protocol, a court may decide your business isn’t being operated as a separate entity from the owner(s) — despite the existence of a corporation or LLC. That could lead to a legal decision to “pierce the corporate veil,” a term that means the owners’/members’ personal assets can be used to satisfy business debts and liabilities.

Follow Formalities

Corporations must meet strict state requirements regarding bylaws, director and shareholder meetings, issuing stock and recording transfers, fulfilling annual state filing requirements, and paying corporate taxes. There are fewer requirements for LLCs, but members would be wise to follow the guidelines for corporations.

Document Diligently

The best way to show that your business is operating properly is to document everything. Keep minutes of all major management meetings and record all business activities and decisions. Keep these records with your other formal business documents (including contracts your company is party to) for a minimum of seven years.

Capitalize but Don’t Commingle

It takes money to run a business. There are several ways to capitalize your business: You and the other owners or members might fund it, you might take out a loan, or you might find new partners who are willing to fund you. Regardless of what method you choose, be sure to document all important financial transactions.

Never commingle your personal assets with business assets. Establish separate bank accounts and credit cards for your business, keep property and equipment separate, and file separate income tax returns.

Many owners of small businesses would love to see a family member take over their business. If you have children, grandchildren, nieces, or nephews that you think might be interested in running the business in the future, you can help lay the groundwork for that potential transfer of ownership in several ways. Use the following strategies and tips to encourage the next generation to become part of the family business.

See Who Is Interested

One or more of your children may already have shown some interest in the family business and asked about its operations. It’s important to encourage that interest. Talk about the company’s history and your vision for its future. Share the excitement you experience as a business owner.

Over time, you can teach an interested child more about the business’s operations. Consider putting the child to work doing various tasks around the business on weekends and over school holidays.

Education Is Key

Over the years, the child’s interest in the business may wane or it may become more intense. If the child (or children) continue to express an interest in working for the family business, you might want to bring up future education plans. You can suggest that the child should consider obtaining a degree that would be beneficial in running all or part of the family business. For example, a degree in engineering could be a huge asset if the family business is involved in property development, construction, or design/build. A degree in accounting or finance can be helpful for businesses of all types. In addition, a degree in a related field would give your family member credibility when it comes to interacting with clients, bankers, and employees.

Insist on Outside Experience

Promoting a family member to a leadership position within the family business when that person has little experience can be a recipe for trouble. It can cause discord among employees, especially those who have worked hard with the expectation that they could move up in the ranks. Additionally, it can undermine the family member’s credibility in the eyes of clients and other business owners.

It often makes more sense and can be hugely helpful to have the family member obtain a post-college job outside the family business. Working in a different company in a similar industry to yours can give your family member a level of experience, confidence, and credibility that would not be obtainable by simply transitioning to the family firm. The skill set established through working elsewhere may help propel your family business in a new, more growth-oriented direction. Family business experts suggest that a child expected to take the reins of a family business should spend at least five years working elsewhere before joining the family firm.

When Multiple Children Are Involved

What happens when more than one family member is interested in becoming part of the business? Encourage them to follow the areas of the business that interest them most. With the appropriate education and experience working for other firms, they may be ready to run their own areas of the business when they rejoin the family firm. This is when their talents can develop and shine.

Bring in Outside Experts

The input of outside professionals who are skilled in different business areas, such as operations, finance, manufacturing, logistics, or marketing can be invaluable to the upcoming generation of family members joining the business. Mentors can guide and serve as a sounding board for the ideas of the child or children working for the family business.

Consider Staying on as an Advisor

You could consider making yourself available as an advisor to the incoming new generation of family members. Whether the arrangement is formal or informal, it should not be open-ended. Determine how long you will offer your services. The goal is to ensure that the new generation of leaders in the family business will be able to run the business independently.

Successfully transitioning a family business to the next generation takes time and planning. For planning assistance, consult an experienced financial professional.

Do you like being in charge of your destiny and are you able to handle stress well? Do you have a great idea for a new business? You may be able to strike out on your own and become the entrepreneur you want to be. Here are some ideas that may help clarify your thinking and help you decide if you could become a successful entrepreneur.

What’s Your Personality Type?

If you like routine, stress-free days and the predictability of a regular paycheck, and you are not comfortable taking full responsibility for work-related matters, you may not have the traits necessary to become an entrepreneur. Entrepreneurs have to be highly motivated, driven individuals who can handle high levels of stress and lots of unpredictability. They know that the success or failure of their new ventures depends in large part on their own decisions and actions.

What Is Your Idea?

Is your business idea for a new product or service, or does it reimagine or improve an existing one? New ideas often come from listening to other people expressing frustration with how certain things are. For example, the founders of ride-sharing service Uber recognized that the lack of frequent, reliable taxi services was a huge frustration for them and their friends. They worked on finding a solution that was profitable and scalable.

Other entrepreneurs refine and improve existing products — the classic “building a better mousetrap” approach. You may be working in an industry where you recognize room for improvement. You may decide that items you use every day can be made better, cheaper, or with more features. Your big idea may be the one that delivers the most value to consumers while making their lives more pleasant.

Is There a Need?

Once you have decided on your entrepreneurial idea, you have to determine if there is a need for the product or service you hope to market. You can only ascertain the true extent of that need through market research. It does not have to be an expensive or complex undertaking — you could, for example, use social media to reach out to potential customers and gauge their interest. You could offer early access or future discounts to people in return for them filling out a questionnaire about your product or service.

What About Funding?

Can you fund your start-up using your own money? If not, family and friends may agree to be early investors. Crowdfunding sites, angel investors, or venture capitalists might also be other sources of start-up funding. You could also look into local, city, or state government economic development offices to see if they have any programs that offer funding to entrepreneurs like you.

Will You Go It Alone?

Having a co-founder is not always feasible, but certainly desirable for a number of reasons. Having someone at your side who brings the same passion but different skill sets to the business can be invaluable. Additionally, a co-founder can help you critically assess which parts of the business are working and which are not. Essentially, a co-founder can serve as a sounding board for your ideas as to the direction of the business. If it is not possible to have a co-founder, look into bringing trusted advisors, mentors, and other entrepreneurs into your circle.

How Will You Connect to Potential Customers?

Today’s consumers want to feel a connection to the brands they support. By using social media to reach out to your potential customers with a compelling story that humanizes you and the business you founded, you can build loyalty and help your customers feel part of your success. Just be sure that when you use social media to communicate to customers that you are being transparent and authentic. You want your customers to trust you and your business at all times.

Look for Trusted Advice

If you truly believe that you could build a good livelihood for yourself and for others around your ideas, then you should go for it. And you should absolutely consider reaching out to a financial professional for input and advice on the many financial and strategic details involved in running your own business.