Small Business Finance Blog

Financial tips and hacks for small business owners

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Pricing complex sales

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Pricing is one of the most challenging decisions that small business owners must make.  It determines revenues and profitability; it communicates value; and ultimately is responsible for the success or failure of a business. Setting a price becomes even more difficult when the company in question is selling something complex that includes both a product and service component. Software that requires upfront integration and ongoing maintenance is a typical example.  These complex sales if priced … [Read more...]

Small business budgeting

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Small business budgets come in many formats, types and degrees of complexity. In most cases though they serve three purposes. The first purpose of a budget is to establish performance targets over a specified period of time. Usually a budget plans for revenues and expenditures on a monthly, quarterly, annual and multi-year basis. Company managers and employees can then devise action plans to achieve the targets provided by the budget. The second purpose of a budget is to measure … [Read more...]

Financial analysis and small business health

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The financial health of a small business is one of the best indicators of its potential for long-term growth and success. The Federal Reserve Bank of Chicago recently published the results of its Small Business Financial Health Analysis. The results show that business owners who are knowledgeable about business finance tend to have companies with greater revenues and profits, more employees and generally have more success. The first step towards improving small business financial literacy is … [Read more...]

How to evaluate the Cuba opportunity for small businesses

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Since President Obama announced his intention to restore diplomatic relations with the government of Cuba, there has been tremendous speculation regarding the opportunity for U.S. businesses. Much of this speculation assumes that the law codifying the U.S. embargo will be changed and U.S. companies will be permitted to invest. Many analysts have arrived at the conclusion that Cuba represents a lucrative opportunity for U.S. businesses because: There are over 11 million consumers with nearly … [Read more...]

How to manage small business bookkeeping

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Angus Reid Public Opinion recently conducted a survey of business owners generating up to $5 million in revenues and employing up to 100 people to understand what they like and dislike about running their companies. The worst-ranking task was bookkeeping with 85 percent indicating they dislike it and 46 percent stating it was their least favorite task. The problem is that bookkeeping can be tedious, time consuming and the business benefits aren’t as obvious as those from sales or marketing. When … [Read more...]

Tax insight: IRS issues new rules on expensing and capitalizing property

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Since 2003 the IRS has been working to revamp how businesses should account for money spent on buying, making, improving and repairing tangible property. The final regulations were announced in 2014 with an important update made in 2015.  Why would such a seemingly arcane tax accounting topic take a decade to finalize? The changes affect over $17 trillion in tangible assets owned by U.S. businesses and may require accounting changes for virtually every company in the country. The new … [Read more...]

How a 1031 exchange works

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1031 exchanges offer business owners and real estate investors a solution to a “good” problem. When you buy an asset like a warehouse, office building, rental apartment or piece of land, it will likely increase in value over time. When you sell it for a profit, there is usually a hefty tax bill that must also be paid. Those taxes eat into the money you earned on the transaction which in turn leaves you with less cash available to reinvest in a new property. To solve this problem, Congress passed … [Read more...]

How hackers hack small businesses

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Sony Pictures Entertainment (SPE) is finally starting to move beyond the hack attack which began on November 24th, 2014 and led to tremendous embarrassment for executives and multi-million dollar losses for the company. Hackers stole over 100 terabytes of confidential information, the equivalent of ten times the entire printed collection of the U.S. Library of Congress. In this attack the victim is a small division of Sony which has over $120 billion in assets and $65 billion in annual revenues. … [Read more...]

Getting paid what you’re owed without breaking the law

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Collecting from customers that can’t or won’t pay you is one of the trickiest parts of running a small business. If you are too lenient you could go bankrupt; if you are too strict you could turn away good customers that just need a little flexibility; if you are too aggressive you could find yourself being sued by a Federal Agency or a State Attorney General. This last mistake – being too aggressive – could have dire consequences for your business. Both Federal and State government agencies … [Read more...]