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Factors to Consider While Planning Business Growth Part II

Being business minded is important

If a person is good at marketing, it does not mean that he will be good at running a marketing agency. This is true for every type of profession. Fostering a successful business has more to do with having a great business mind along with a great set of skills in a particular area.

Business operations, billing, and people management are equally essential in the success of a business. Therefore, while planning growth, a business needs to think with a business mindset rather than just following what it is good at.

Passion is important

If you really love what you do, it is going to reflect in your business culture and your surroundings. Showing enthusiasm and excitement works positively towards enabling your team to put in their best efforts and reach desired goals. Similarly, if you are not happy with the core of the business, it too will reflect from your management style, as the air of negativity will circulate your business environment.

Therefore, it is important for businesses to be absolutely sure of what they want to do and feel positive about it so that the end result turns out to be great!

Keep on improving

In the current age, every trend changes quickly. Therefore, it is the prime requirement of every business to focus on innovation no matter which industry it belongs. This could mean newer processes, ways of thinking, ideas or programs.

If a business really wants to keep on making sales and exist in the market, it has to keep on adapting to the changes. Therefore, a business can either move forward or stay where it is just to disappear one day. All businesses should focus on improving themselves through improving their customer relations skills and increasing personal efficiency in order to create products which become popular amongst the target audience and hence result in higher revenue.

Marketing is important

Marketing is super important. Most businesses fail to sell because they are under the impression that sales would come naturally to them. These days, consumers are extremely thoughtful about where they will spend their money and as a result, they only buy products that have either been referred to them or the ones they have sampled.

Therefore, it is important for a business to keep the marketing efforts perfectly aligned with the products so that customers get to know as soon as the product is in the market. Great products have reportedly failed because of marketing cut-downs and lesser awareness about them. Similarly, some of the most average products can work brilliantly in the market if they are promoted in the right manner.

Explore The Possibility Of Making Your Business Grow With These 3 Amazing Tips

Most people think that small businesses do not have a chance to grow when their budget is very limited. But this statement does not hold importance because if any small business focuses well on creating a strong value proposition for the customers, then the road to success for that small business will be paved with gold. If you are a small business owner and wish to make your business venture grow, here are some of the expert tips that you can follow in order to turn your dreams into a reality.

Setting Up A New Shop

It is perfectly understandable that small business owners do not have adequate capital to set up a new store. But the reason why this idea has been mentioned in the beginning is to make people understand that starting up a new shop is not the only way you can make your business grow.

Expansion in terms of the physical location of where the business is set up is no doubt an important factor that contributes to the growth of a business venture but is not the only option. In order to fulfill the dream of expanding your business location wise, it is important that you divide your profit margin into two; one for your monthly expenses and the other set aside for the down payment of setting up a new shop.

Obtaining A License For Your Product

Small business owners usually feel that product licensing is not important since the business that they are running is on a small scale but this isn’t the right approach if you wish to expand your business in the future. Think of having your product licensed as a low cost business growth medium especially if your product falls under the branded product or service product category.

The reason why this is an important step for small businesses is that if lady luck shines down on you and your product is highly successful, you might actually receive royalties and upfront amounts for consistent sales or use of your product or brand’s name. This is considered a highly effective business growth option that does not cost much but mitigates your risk. Plus, it is a much better option for those businessmen who are not looking to start a company of their own in order to sell their product.

Use The Diversification Strategy

Another efficient method you can put to use is the diversification strategy to help your business venture grow. The concept of the diversification strategy is quite simple. You can start offering complementary services or products on the side. This will not only help in generating extra revenue but also increase your product line which will become a foundation for other products to follow in the future.

If this idea doesn’t seem plausible to you, you can start importing other’s products or start exporting yours in order to reach out to more customers. Experts always believe that the diversification strategy is a brilliant idea that can make even humble beginnings turn into profitable business ventures in no time.

Small business owners who find difficulty in book keeping or face accounting related issues in their business can hire a CPA or CFO on a daily, monthly or yearly contract basis through SK Financial CPA.

5 Practical Tips You Can Implement To Raise The Liquidity Ratio Of Your Business

Having a good liquidity ratio is exceptionally important for all business no matter whether they are big or small. In layman terms, liquidity indicates the company’s self sufficiency and whether it can make timely payments of bills and other expenditures incurred all round the year. As the old catch phrase goes, cash is truly kind and here are 5 ways you can improve the liquidity ratio of your business without making drastic changes in the way you run your business.

Roll Your Extra Cash into Interest Accounts

There will be times when you have a lot of extra cash on hand and there are not many expenses that you would have to pay for except for some of the fixed costs. This situation is favorable for your business because you can simply move that extra amount to an interest bearing account to make surefire profit from it without making a risky investment.

 Whenever you need the cash, you can move it into the current account as and when you need it. You will be amazed at how much extra income you have generated by just making this one smart move.

Review Overhead Costs From Time To Time

Another method you can adopt to improve the liquidity ratio of your business is to check the cost of your overheads from time to time on a regular basis. By doing so, you will actually be able to find a way to reduce the costs which will have a positive impact on the liquidity ratio inevitably. Some of the overhead expenditures that you can cut down on are advertising, professional fees, rent and indirect labor.

Say No to Unproductive Assets

One of the major reasons why some businesses tend to have bad liquidity ratios despite of having everything else in check is because they store unnecessary unproductive assets that the business is better off without. Remember that a smart businessman is one who spends money on assets that play a vital role in revenue generation for example, the office building, cars, trucks and equipment to name a few. If your business is still holding onto assets that are of no use anymore, it’s time to chuck them out and make some extra cash on the side.

Keep a Tab on the Account Receivables

In order to have an optimal liquidity ratio, the business owner must pay attention to all the aspects of running a business. One such aspect that needs to be monitored closely is the account receivables. You must make sure that timely payments are being made by all your clients and no bad debt is recorded.

Go Easy On the Drawings

In a sole proprietor business, the profit made by the businessman is ultimately his income and he may withdraw it at any time for his personal use. But in order to maintain a good liquidity ratio, it is advised that you go easy on the drawings for excessive amount of withdrawals can portray a negative impact on the liquidity ratio of your business unnecessarily. So be on the lookout when you withdraw amounts for your personal use to avoid cash drains.

If you have trouble with accounting and bookkeeping, then free yourself from your accounting responsibilities by hiring CFAs and CPAs from SK Financial CPA at highly affordable rates.

 

 

The 3 Most Effective Tax Planning Strategies for Small and Medium Scale Businesses

The prime focus of tax planning is to arrange one’s financial activities for the year in such a way so that the lowest possible amount for tax payment is incurred. Undoubtedly, the most difficult time for small and medium enterprise owners is the tax season in which they have to pay a taxable amount on all the income they’ve earned during the previous financial year.

Most business owners end up paying more than they should because they are not well aware of the legal tricks they can use to minimize their tax burden. But now, you can save up on taxes by following the three awesome tax burden reduction strategies mentioned in this blog.

Reduce Your Income

One of the key determining factors in figuring out the taxable amount is adjusted gross income also called AGI in short. Your tax rate and different tax credits also rely on AGI. Since the AGI play a vital role in the entire journey of determining and making tax payments accordingly, it is best to pick the adjusted gross income as the starting point of your tax planning process. If you are not sure what AGI exactly is, it is actually the entire income collected from all resources minus the adjustments made to the aggregate income.

Ideally, if your total income is high, your AGI will also follow the higher trend and if you make less income, your AGI for the year will decrease automatically. Therefore, the most effective method to minimize the tax load is to slash down your income. But how exactly can you reduce your income? The answer is pretty simple. Just set aside a large chunk of your income for your retirement plan by following the conventional IRA plan or 401k at work plan.

Boosting Your Tax Deductions

You can also smooth out your tax situation over all by focusing on your taxable income. Now the taxable income actually is the left over amount that is calculated once all the deductions and exemptions are cut off from AGI. Itemized deductions is what you should aim for in various categories such as interest on mortgage, charity, health care, tax planning and preparation expenses, local as well as state taxes and expenses linked to investments.

The best way to do this is to record all your itemized expenses incurred throughout the year in an excel spreadsheet and review it from time to time. By recording all these expenditures, you can easily compare your standard deduction with the itemized expenses incurred within the one year time frame. Remember to always consider the higher of your standard deduction or itemized deduction. When itemizing your expenses, make sure you pay more attention to three main categories; donations to charity, state taxes and interest on mortgage.

Using Tax Credits To Your Advantage

Once you have adjusted your taxable income to reduce your tax burden, the next step is to take full advantage of the tax credits. Some tax credits that can help in minimizing the taxable amount considerably are going to college, adopting a child or setting aside money for retirement.

SK Financial CPA is where you should get help from when filing for taxes by letting professional CPAs and CFAs give you advice on how to present your accounting statements for the year.

Top Abilities That Should Be Present In Every Human Resource Manager

A Human Resource manager tackles numerous management and leadership facets within an organization. Therefore, it is very difficult to pinpoint the number of areas that a human resource manager should work on. However, there are some qualities, which are important in every manager in order to be successful at their job.

The biggest challenge in management success is the fact that a manager should be the kind of an individual everyone must love to follow and admire. Every action taken by a manager decides whether other people would like to follow him/her or not.

Following are some of the traits of successful Human Resource managers:

1- Ability to build interpersonal relationships

An effective manager should always be able to build responsive and effective interpersonal relationships with people in a business organization. Therefore, a manager in the true essence is the “people’s person”. Giving respect to executives, colleagues, and staff members is a quintessential in building interpersonal relationships.

Apart from that, a good manager also cares about people and tries to offer them support and assistance whenever required. Attentiveness is a key quality of a good manager as he tries to collaborate with the staff members, enabling them to reach their true potential.

2- Ability to communicate

Let it be in person, email or print, a good Human Resource manager knows how to communicate well and effectively with everyone present in a business organization. Ability to listen to people is also an important characteristic of good communication and must be practiced in a well-settled organization.

 A manager will not be able to get his message across or motivate his team until he listens to their problems and then effectively communicates the solutions to them.

3- Team building

The ability to build a team, motivate it, and lead it are all prime characteristics of a successful Human Resource manager. Under such a manager, the staff tends to be more productive, creative, and effective at their work. Inducing motivation in the staff is the fundamental job of the manager as this is the only thing that can work towards increasing their productivity levels.

4- Financial management

Financial management is an important aspect of a HR manager’s job and hence he/she is responsible to measure and set financial goals for a business organization. Analyzing and documenting the success and progress of the employees is also extremely important in human resource management.

5- Positivity

It is absolutely normal for business organization to sometimes fall into the pits of negativity and hence the role of a successful human resource manager is to foster recognition and positive morale in employees to keep them motivated so that an organization can reach its desired goals. If the workforce is recognized for their hard work, it will automatically be motivated to perform better for the business.

6- Promoting growth

An effective human resource manager is more interested in polishing out skills and natural talents present in the employees rather than giving them strict commands.

The 14 Determinants of Management That Will Help You Manage Your Business Effectively

Management is an effective part of any business. It is also a process, which is crucial within an organization at every level of the hierarchy. Are you facing greater employee turnover, low employee motivation levels, a tensed office environment, confusion amongst your employees or any other thing, which is not going the way it should be? The answer to all these issues is proper management.

You ask yourself or others about what is management and you get an answer instantaneously like “Management is to control an organization”. However, it is not as unpretentious as it sounds. Many entrepreneurs who own a small dream, struggle with managing a business. It is not about treating people like your slaves because this will do you no good. The key is to act as one of them and communicate on their level, get to know their demands on which you act later to create a positive vibe in the environment, united to work towards a common goal.

To manage your business, acting on proper guidelines is vital. Working on the 14 principles of management presented by Henri Fayol, who was the father of modern management theory, has helped us steer our business in the right direction adapting the right work culture.

The 14 Principles of Management:

  1. Division of Work

Assigning tasks to employees in whom they excel brings out their true desire and passion to work for the business. It also helps them become more efficient and skilled in their tasks.

  1. Authority

The manager must have proper authority to give orders and should be responsible in giving them because every employee is working under him/her.

  1. Discipline

It is necessary in an organization to provide the employees with a base attitude and behavior to adopt while on work.

  1. Unity of Command

Having different controlling personnel is confusing. Supervision from a single person can help bring unity in work and a powerful command over employees.

  1. Unity of Direction

Having a manager to make the employees work in the same direction towards achieving a single plan is known as unity of direction.

  1. Relegation of Separate Interests to The General Interests

Interests of a single employee should not be the priority of action even if the manager’s personal interests are at stake.

  1. Remuneration

It is the most important factor upon which rests the satisfaction level of employees.

  1. Centralization

Balance of involvement of employees in the decision making process should be the aim for a more passionate workforce.

  1. Scalar Chain

Proper chain of command and hierarchy level must be known to all employees to make their working and reporting more specific and effective.

  1. Order

Everything at work must be clean and arranged in order.

  1. Equity

Managers must be kind, disciplined and handle their responsibility with care when communicating with staff.

  1. Stability of Tenure of Personnel

This refers to the management of employee turnover. Planning is the key to resolve this issue.

  1. Initiative

Staffs should be given the opportunity to think and carry out plans.

  1. Espirit De Corps

It is a combination of the above 13 principles. Promoting unity and team spirit brings about harmony in work and helps achieve this principle.

SK Financial is your destination for proper guidelines to management of your start-up business.

Sticking To Principles from One Accounting Body Can Help Your Business Flourish in Global Markets

All businesses work on some principles to drive their organization on a pre-planned track that will deem effective in the end. Whether we talk about human resource, management, taxation, finance, accounting or any other function of the business, working with some principles provides for a clear direction and support in achieving the business goals.

Are you a booming business? But you are not clear about the accounting body you want to follow when preparing your financial statements? Then this article will be your guideline towards making an informed choice.

Two major accounting standards are followed in the United States.

US GAAP

The accounting standards used commonly in the US are known as US GAAP (Generally Accepted Accounting Principles) formulated by the FASB (Financial Accounting Standards Board) for governing of the financial reports of non-governmental organizations. There is also the AICPA (American Institute of Certified Public Accountants) who is responsible for developing the standards used in auditing private company’s financial statements.

US GAAP outlines the principles for maintaining the records of inventory valuation, short and long-term investments, taxation and every other component of financial reporting. The guidelines issued by GAAP educate on how to record accounting information properly, in a consistent and fair manner.

Although no company is required to follow these guidelines but large companies, do follow these to provide consistency when comparing organizational statements. Even investors look for proper financial statements that will give them the fair picture of the organization that can be trusted upon, is consistent, reliable, comparable, and relevant in disclosing the right information.

IFRS

This abbreviation refers to International Financial Reporting Standards by the IASB (International Accounting Standards Board). Previously these standards were also known as the IAS (International Accounting Standards) issued by the IASC (International Accounting Standards Committee). People still know the standards as IAS rather than IFRS but the principles are same.

IFRS’s are designed for the goal of communicating with the world through a common language of accounts in business that is comprehensible and comparable. IFRS’s have greatly benefited the international trade and overseas shareholding practices. These accounting standards are making progress across boundaries and becoming increasingly successful in replacing the national accounting standards.

Some general features of IFRS are:

  • Fair Presentation & Compliance

This refers to the faithful representation of transactions considering several events, conditions and respective definitions of components of financial statements.

  • Going Concern

Financial statements should be prepared to show the organization is in operation and should not be produced if management intends to liquidate.

  • Accrual Basis of Accounting

Assets, expenses, income, liabilities and equity should satisfy recognition criteria present in the IFRS framework.

  • Materiality & Aggregation

Every distinct item should be read separately unless immaterial. Similar items should be shown as one.

  • Offsetting

Although forbidden, some standards require this when explicit conditions are fulfilled.

Frequency of Reporting

IFRS guides to prepare financial statements at least annually although listed companies are required to publish provisional financial statements.

  • Comparative Information

As IFRS’s are globally adopted, information should be relevant, narrative, descriptive and comparable with the preceding periods.

  • Consistency of Presentation

Classification of financial statement items should be consistent from one period to next, to make it understandable and easily reviewable.

SK Financial is a Tampa based company that can help you with preparing your financial statements by adopting the accounting principles you reckon necessary for your business.

Management Functions That Will Keep Your Business on Track

What is management? To understand management, firstly, the true meaning of management must be understood. A business combines several functions at small and large scales to execute a common goal through strategies that are not ideal, but effective for the success of the business in the long term.

Several business functions include:

  • Utilizing Resources
  • Managing Resources
  • Coordinating Activities
  • Selling Products
  • Offering Services
  • Creating Jobs
  • Preparing Budgets, Forecasts and Financial Accounting
  • Payroll Activities
  • Human Resource Activities

All the above functions of the business need a force to bind them together. This binding force of the functions of the business is known as management. Management is commonly explained as an art that coordinates people’s efforts to achieve goals and aims of a business using the resources available efficiently.

Management brings discipline to a business environment. It combines the functions of organizing, planning, controlling, formulating policies and steering a firm’s resources in the right direction to achieve the policy’s objectives.

One of the most important management functions these days is organizational development (OD). With a fast change in technology, people’s intellect, and the world moving towards scarce resources, an organization must properly organize itself to use every resource to its benefit rather than wasting it.

Organizational development takes notice of the changing management needs of a business and tries to cope with them and ensuring that the needs are met immediately. Organizational development is a business process that involves efforts to change people’s attitudes, relationship styles, belief systems etc. for collective benefit of the employees and the organization.

Organizational development was previously categorized as HR function but recently the relative importance of this function has made a separately recognized function. OD is regarded as a strategic business management function that executes various roles in a business.

  • It ensures a balanced organizational climate.

The OD management function helps structuralize the organization and educating the employees with the art of multi-tasking. It helps reduce the number of people or employees by using technology making the production or work process more efficient.It encourages teamwork and train managers to treat the business as their own asset adopting appropriate leadership styles at all levels. Periodic training and effective communication are some of the other roles of the OD function.

  • Installation of PMS – Performance Management Systems

This involves setting clear parameters for performance through job targets, policies and procedures and making these performance levels known. Informing about inadequate performance, warnings and ensuring supply of essential resources is key to efficiency.

  • Minding the cash outflow by:

o   ensuring resource accountability, reviewing and monitoring the pattern of resource utilization and eliminating wastage

o   use of latest technology to execute tasks that prove cost and energy efficient

o   developing the thinking of managers and executives to adopt cost efficient  ways of achieving the goal

o   Identifying employees that contribute to increasing costs and monitor their attitudes and behavior during work hours, and counseling them as a cost reduction initiative

SK Financials provides with a complete guide for startups and growing businesses on how to survive the tight competition. For more info, visit: www.skfinancial.com

Human Resources Are the Driving Force of Any Business

Human Resources are the group of individuals who specializes in forming, binding and maintaining the workforce of a firm, business sector or an industry. They play a vital part in any organization to get things done the right way. Therefore, it is imperative to setup an efficient human resource department because without it, businesses cannot carry out their day-to-day functions optimally.

An organization cannot build a great team of professionals without adequate human resources. Most of the small business owners do not have HR departments because they are the sole owner and operator of their business. The owners themselves take care of the hiring and firing of the employees and analyze the performance of each of the employees, and provide them with adequate benefits and compensations.

On the other hand, when we talk about large organizations, the HR department plays an important role in the success of the organization. What good would be a business without professionally trained employees who are ready to infuse their skills into the business? The main purpose of a HR department is to seek out individuals with potential and skills relevant to the business and motivate them to unleash their potential for the benefit of the organization.

Functions of a HR Department

The prominent functions of a Human Resource department include:

  • Recruiting people
  • Selection and Screening process
  • Training new employees
  • Compensation
  • Performance appraisals
  • Informing about the company policies on workplace safety
  • Motivating employees
  • Workplace communication
  • Organizational hierarchy

The basic function that the HR department performs before hiring an employee is participating in a decision-making process, where it outlines the staffing needs, the personal qualities of an individual, his/her abilities and skills necessary to be an asset to the business. HR compensation specialists scrutinize and conduct right compensation measures according to the duties of the new employee.

Another important role of the HR Department is to reduce the potential liability to the firm after a new recruitment and maintaining the company atmosphere. Through an effective selection and screening process, HR manages to lower the allegations of unfair practices in employment. They identify and resolve workplace issues that are unattended and could spiral out of control. They help keep the company safe from legal issues that can hold on for long periods.

Maintaining workplace atmosphere is essential to create a positive environment for employees that come every day and perform their duties with honesty and professionalism. The HR department makes sure that compliance is at every level of the organization from top to bottom.

Employee compensation is an important part of the HR management. Employees tend to get de-motivated when they are compensated inadequately. This breaks the sense of trust and responsibility in the employee, and the business may suffer due to poor performance. Payroll of employees should be according to the quality of work they deliver and each employee is to be treated differently rather than compensating everyone on the same level.

Therefore, HR plays a crucial role in binding the whole business together physically and mentally. It recognizes the need for human resources and the quality of work expected, and delivers individuals that are confident and motivated.

Effective Strategies for Growing your Existing Business

It is tough setting up a business that offers products and services, which have already captured a major part of the market, but letting your business grow and prosper involves a lot of work and formulation of new business strategies.

For Home Based Business

At first, you have to consider, what type of business you are trying to expand. If you are planning to sell self-made products like figurines or clothes, you will have to depend greatly on word of mouth. The two lowest risk options are penetrating the existing market with your unique product or entering a new market.

A careful look at the economy will give you the right idea of what factors to focus on. An economy always consists of loopholes, you have to analyze and act on that opportunity, which will help you tactfully challenge these situations.

Once you have considered the economy as a whole, you can now look at different segments of the market, which are not being currently serviced or gaining benefit from the existing products. To attack on the segments that attract consumers and continuous research helps gain a deep insight of what is achievable.

For Online Business

Online businesses are a breakthrough technique in influencing customer preferences. It is already easy for online businesses to start up but it is more important to consider the online competitors. Of course, word of mouth strategy will work here as well, but has little scope. Online businesses will require direct marketing on websites that have huge numbers of traffic every hour.

For Normal Businesses

Whether you are a manufacturing or service business, there are several factors to consider if you physically exist in the market and are involved in the strategic, tactical and operational decisions. Business can grow through two ways. First is your luck and the second is conscious awareness of the market. Optimists know that good luck does not last for long and therefore, it is important to act on the opportunity.

If you have recently decided to grow your business, it means that you are ready to face the risks that will come your way in the long term. There are 2 metrics that businesses focus on to grow.

  • Measure What Matters

Depending on a business’s objective, there are different things that matter to entrepreneurs. Some might focus on their costs strategies where as others might focus on marketing techniques. Outsourcing is a great option for those who want to reduce their management costs and the time it takes for a product to reach its potential customer.

  • Determining the Average of Customer Acquisition Cost (CAC)

The time that customers remain with your business and the efforts done by the business to retain a customer for a specific period is known as CAC, Customer Acquisition Cost. These terms provide important insight into effectiveness of marketing.