Can rapid small business growth actually lead to failure? Absolutely. Businesses close their doors every day because of too much success too soon. Keep an eye on your cash: Customers that provide large, unexpected orders aren’t always willing to pay cash in advance. Calculate how much cash your business needs to fulfill your new order volume Don’t divert cash from your current options to pay for the new growth; your new customers may not pay you on time or at all Obtain financing to … [Read more...]
Small business accounting: balance sheet decoded
Small business accounting balance sheet The balance sheet provides a snapshot of your company’s financial position on a given date. It lists the assets (what a company owns), the liabilities (what it owes) and the owners’ equity in the business. The balance sheet is based on the basic accounting equation: Assets = Liabilities + Owners’ equity. The left side (assets) is the value of everything the business owns. The right side (liabilities + owners’ equity) represents how the business paid … [Read more...]
Three steps to getting paid on time
Small business getting paid on time on your accounts receivable What’s more important than closing a big sale? Getting paid! Sometimes this is harder than winning the deal. Small businesses lose over $15 billion a year to unpaid sales. Here’s how to avoid adding to those losses. Do your research before you make an offer Before closing a sale, determine how willing and able the client is to pay you on time. Structure your payments accordingly; the riskier the client the more you need to … [Read more...]
Is your small business cash working for you?
Managing your small business cash In business cash is king; it’s even more important than profits. Successful businesses carefully measure and manage the amount and the timing of cash coming in and going out. Many highly profitable businesses go bankrupt ever year because they didn’t pay attention to cash flow Why is cash flow more important than profits? Employees, suppliers, creditors, the government – pretty much anyone you owe money to – expect to be paid on time and in cash. Failure to … [Read more...]
Is it the right time to raise your prices?
Healthy profit margins are one of the best indicators of long-term business success. As an investor, I’d much rather take my chances on a company with 25 percent profit margins versus one with 3 percent, because that additional profit percentage means more cash that can be reinvested for growth or used to fix mistakes. Over the past six years, U.S. companies have seen their profit margins squeezed because of inflation. Usually when we talk about inflation, it's consumers who are feeling the … [Read more...]
Increase small business profits without raising prices
Consultants, engineers, accountants, designers and other professionals who make a living by essentially selling their expertise all have a huge problem that effectively chokes their business growth. That problem is time—there are only 168 hours in a week, and no amount of creativity can get around this fact. Professionals are basically in the rental business. They rent the use of their brain for a certain amount of time to solve problems or develop responses to client requests. Even the most … [Read more...]
5 steps to clean your small business finances
This winter was brutal in every sense of the word, and most people are looking forward to spring. The American Cleaning Institute reports that more than 80 percent of Americans plan to spring clean their homes, a ritual that dates back to the 1700s, when the first days of spring allowed you to open your windows and doors and let out the winter dust and dirt. For small-business owners, the process of spring cleaning small business finances is one that should be applied to your finances as … [Read more...]
Small business tax trap catches entreprenuers
Donald and Brenda Fitch learned the hard way that married entrepreneurs have a third partner in their businesses—Uncle Sam. The couple recently lost a tax court battle with the IRS over how much money they owed in self-employment taxes for their respective businesses. Their hard-earned experience provides an important lesson for couples when both spouses are small-business owners. Self-employment taxes are the equivalent of payroll taxes for employed people, with the business owner … [Read more...]
Is the stock market another bubble about to burst?
March 6, 2009, was a terrible day for stock market investors. The Dow Jones Industrial Average (DJIA) closed at 6,626.94, and the S&P 500 closed at 683.38. Both indices showed losses of nearly 60 percent from their peak value only six months prior. With the financial crisis in full swing, there were many financial experts who thought we were about to enter a new Great Depression with people better off saving gold bars under their mattresses instead of investing in the markets. How … [Read more...]
Make your small business look good despite bad finances
Clients expect consultants and other professional services providers to be successful. If you're good at what you do, then you should have the bank to back it up. But given the financial turmoil of the recent past, there are many talented, hard-working people who are still trying to spend less than they make, negotiate their underwater mortgage and rebuild their credit scores. Their small business finances and personal finances are in bad shape and this can hurt them. It’s difficult to … [Read more...]
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