Archive for Cash Flow
Analyze Your Product And Services Profitability
Posted by: | CommentsGiven the number of times we’ve had clients ask for help evaluating their product or service mix this past year, I figured it was time for a bit more of a technical discussion. So get that fresh cup of coffee and use this entry to begin to ponder how your products or services help — or hurt — your business.
Knowing the profitability of each individual product/service you provide can help you make decisions to improve your bottom line. You may want to discontinue products and services that aren’t particularly profitable while promoting the ones that improve your overall results.
One basic method of looking at profitability is called cost-volume-profit analysis (CVP). At its core CVP relies on the separation of fixed and variable costs to determine the break even point of a product (or service) and how much it contributes to profit after reaching this point. Read More→
HIRE Act Affidavit Posted by IRS, Form W-11
Posted by: | CommentsThe Internal Revenue Service has been working over time thanks to all the new tax laws just passed. Thankfully they placed a rush order for their team to create the new form needed to allow employers to take advantage of some nice provisions of the HIRE Act.
Form W-11, “Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit,” is now posted on IRS.gov, along with answers to frequently asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement.
Most employers then use Form 941, “Employer’s Quarterly Federal Tax Return,” to claim the payroll tax exemption for eligible new hires. This form, revised for use beginning with the second calendar quarter of 2010, is currently posted as a draft form on IRS.gov and will be released next month as a final along with the form’s instructions. Be sure to check with your payroll company or CPA to see if they will be ready. Read More→
Use financial ratios to review your Company’s results
Posted by: | CommentsFinancial ratios can be helpful tools in understanding your company’s financial health. They are a benchmark by which you can compare your business to industry standards and analyze changes over time.
In fact, benchmarking and comparing to your competition is so important to business success that I provide all my business clients with an annual report on the benchmarks and results for their particular industry or profession. Without this it can be like traveling back roads without a map. Read More→
Time IS Money So Get The Best Return On Your Investment
Posted by: | CommentsHave you ever reached the end of the day and wondered where all your time went? Playing catch-up to retrieve wasted time is what keeps many business owners welded to their business premises way outside of ‘normal’ business hours.
For many business owners a number of their customers, suppliers and employees are likely to be friends as well as business acquaintances. This overlap of private and business relationship can lead to requests for assistance or for special deals that can make serious inroads on their time. A lot of small business operators go slowly broke doing work for friends at discounted rates or for free. ‘Discounted rates’ translates as ‘at less than your market value’ and that means more hours you have to put in to make up for the lost profit. Read More→
Avoid Budget Blowouts
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A budget is an important management tool. Being a projection of your income against your expenses you can check it at any time to see how well or how poorly your business is doing. The value of a budget is in direct proportion to the accuracy of the figures you use to create it. Here are some precautions to take to keep your budget figures accurate. Read More→
Cross Promotion – A Low Cost Way to Grow Your Business
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With marketing budgets under pressure, business owners and managers are looking for ways to do more with less. One of the most effective ways you can find new customers with minimal expense is cross promotion.
Cross promotion is simply when two or more businesses combine resources to market their products or services to each other’s customers. The main criteria for success in cross promotion are that the businesses serve the same types of customers but don’t compete with each other.
There are hundreds of ways businesses can work together to achieve this. Here are a few cross-promotion ideas that can help you expand your market on a small budget. Read More→
Break-Even Analysis – Your simple high value tool
Posted by: | CommentsOne of the trickiest aspects of bringing a new product to market is to estimate the total cost involved in its production. Cost of production effects margin and margin determines how many units must be sold to make a profit. If the number of units sold 
can’t provide sufficient margin at a market acceptable price, then, no matter how good the product is, producing it will result in a loss for the business. The nexus between cost of production, price and units that need to be sold to make a profit, is called the ‘break-even point’.
Break-even analysis is one of the most important financial tools you can use to make better business decisions. Read More→
Discounting is Dangerous
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Offering a discount in the heat of negotiations may seem like a good idea at the time but thoughtless discounting is an easy way to lose money fast.
Before you succumb to the temptation to win new business by offering a discount take a moment to consider these ten problems associated with discounting.
- Discounting eats away profit margins!
- Negotiating a discount focuses the customer’s attention on your price. If your only competitive advantage is price you are in trouble because price can always be matched by a competitor. The focus should be on the benefits of the product to the customer that make the price, if not irrelevant, then at least not the primary influencer of the decision to buy. Read More→
Protect Yourself From Invoice Scams
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Paying on phony invoices is an occupational risk for small businesses. They are regularly the target of scammers hoping to take advantage of sloppy bookkeeping, inattention on the part of employees and poor communications between the people in the firm ordering goods, those receiving them and those approving payment. All too often they are paid unwittingly along with a number of other routine bills.
Scammers have fake invoice production for such things as stationery or cleaning services, down to a fine art. Their invoice will include names (perhaps established by a prior phone call to the business for some innocuous seeming information), figures, and other details that add up to an authentic looking invoice. And they have a range of scams other than fake invoices – solicitations for the purchase of goods or services carefully designed to look like invoices for items already received; payment for listing in a directory of some sort you never agreed to; asserting that there is a government requirement for the services offered when no such requirement exists, and phony advertising to renew an ad allegedly placed ‘last year’ … to cite just a few. Read More→
Building Your Loan Package
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If you’re ready to ask your bank for a business loan — whether for a credit line or a term loan — before you make your request be sure you have your ducks in a row. This is your chance to demonstrate to your banker that you’re a sophisticated business person well worthy of the loan.
So, how can you help your loan process along? Make sure you have all the following documents and information ready to go. Read More→
