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Three Expenses to Examine to Eliminate Wasteful Spending
Are you spending more than you have to? Unnecessary expenditures chip away at your profit margin. Keep a close eye on the following three areas to control overhead costs and boost your bottom line.

1. Office Space: Rent is expensive. Selecting the right location and amount of space is very important. For example, although a retail business benefits from a visible site on a main boulevard, the owner doesn't need a large private office. Some enterprises don't need any space at all. Many small operations have only personnel who work remotely. Keep in mind, if you don't meet clientele at your office, an expensive location on a main avenue is unnecessary.

2. Staff: Even if a freelancer costs a bit more per hour than an employee, you may still save money. Employees are paid regularly regardless of how much work has been assigned to them. Freelancers are only compensated when your business needs them. For routine daily matters, employees are the answer. But a company can manage with freelancers to perform special projects for customers or to complete multiple nonrecurring tasks. Moreover, you have to provide employees with supplies, office space, and equipment, as well as administer payroll taxes. Not so with freelancers.

3. Non-Essential Services: Knowing the difference between DIY roles and outsourcing is vital. If you have the time to clean your office, for example, you don't need a janitorial service. An extended service contract isn't needed for things you can fix yourself. But don't jeopardize your future merely to cut short-term costs. You may, for instance, be capable of troubleshooting a problem with your internet router, but tackling unfamiliar territory like preparing financial statements or income tax returns is best left to finance professionals.

Are You Using the Start/Stop/Continue Technique?
The Start/Stop/Continue technique is a simple and effective way to get customers to reflect on their experiences with your company and help you identify areas for improvement or expansion going forward.

The procedure requires no special equipment, training, or knowledge, and you can easily adapt the technique to gain helpful insights into products, services, methods, or processes.


To begin, initiate a conversation with a customer and ask him or her to suggest new products, services, or activities that they would like to see your business offer in the future. Prompt them to think about new ideas, trends, or developments they may be aware of.


Next, ask the customer to look retrospectively at any problems or unmet needs they may have encountered when dealing with your company in the past. It's important to ask specifically about any negative behaviors or low standards they observed.


Finally, ask your respondent to think about the core strengths of your business. Ask them why they do business with your company and encourage them to focus on those aspects that they believe you should continue or even double down on in order to improve future outcomes.

You can use the Start, Stop, Continue technique to get meaningful feedback from both internal and external stakeholders.

Because of its simplicity, the S/S/C method is a great tool to use with project teams, small groups and committees, all-staff meetings, and personal performance evaluations, as well as customers.

When Was Your Last Legal Check-Up?
Heading into the final quarter of the year is a good time to evaluate for next year and make sure you're caught up on paperwork, fully compliant, and in good legal standing. It's also a good time to think about changes that will help your business grow and succeed. Here are some things to review:

Consider your legal structure: Many businesses begin with a simple legal structure, but as they grow and become more complex, they find that a different structure is more appropriate. For example, small businesses often begin as sole proprietorships, but eventually opt to form an LLC or incorporate for purposes of liability protection, tax flexibility, and potential funding opportunities.

Reassess your physical or operational footprint: Maybe it's time to expand, relocate, or enter a new market. It may be an opportune time to add a new line of business or enhance your product line. A bit of market research can reveal if conditions are right. The Bureau of Labor Statistics, the Economics and Statistics Administration, and local commerce websites are good places to start.

Take a look at staffing: Evaluate your team and identify where professional development and/or additional staff or contractors may be needed going forward.

Review regulation concerns: If you have changed the company name, business address, board membership, or operating structure, you may be required to report these changes. Also, licenses and permits may need to be renewed. And, of course, it's critical to address your tax liability and file or pay what is owed.

When considering these matters, it's always a good idea to consult an attorney and an accountant for guidance to ensure you're doing everything necessary to keep your company legal, compliant, and on a path to success.

Solving the Mystery of Financial Statements
Business owners often limit their examination of financial statements to a single report. They rely solely on a statement of incoming revenue and paid expenses, commonly known as the profit and loss report, or P&L.

Making the best decisions for a business, however, depends on recognizing the limits of P&L evaluation. Many vital numbers depend on the type of P&L you obtain as well as other complementary financial information.

Accruing Information

Some businesses operate on a cash basis. Customers pay at the time a sale is made. But many enterprises invoice for services and are paid at a future date. The true output for your business is the amount invoiced. The P&L you want, therefore, is accrual basis, which shows the total invoiced sales. And it will have the accrued but unpaid bills for expenses. Conversely, a cash basis P&L only shows the expenses already paid.

An accrual basis P&L reveals how effectively your time was deployed to realize a profit. The obvious number is the bottom-line profit that represents the amount by which revenue exceeds expenses. A few key ratios will unlock the context of the profit figure.

The most helpful profitability ratios depend on your industry. Some businesses depend mostly on personnel for their output. These businesses should measure profit as a percentage of employee hours. Other enterprises are primarily impacted by the quantity and type of equipment. They should determine the profit as a percentage of capital investment in fixed assets.

Comparing these ratios for various periods conveys the trend in business profitability. You will find out if working more hours or an investment in new equipment is delivering the improved results you expected. Be sure to consider seasonal factors. Contrasting your ratios from recent months to the same period in prior years is usually the best process.

Cashing In

The detail you're missing, however, when examining the accrual basis P&L, is the cash impact of your operations. The companion of the accrual basis P&L is a cash flow statement. This report adjusts your accrued profit by showing changes that affect business cash. The cash flow statement is crucial to identifying how easily your business can pay its bills in the near term. A growth trajectory is nice to see on the accrual basis P&L, but it can trigger a cash constraint. Your business must pay its bills on time, even if your customers are late in paying your business.

Cash flow will be negative if you recently acquired new customers who are slow in paying your invoices, while you have paid the costs to acquire and serve those customers.

Your business cash flow may also be negative if you recently invested in new equipment. Eventually, these expansion efforts should pay off with rising cash flow. You merely need assurance that your company has enough cash to sustain a period of negative cash flow. Fortunately, cash flow statements tell you the amount of negative cash flow, and indicate when the trend is turning positive.

Use these financial statements to monitor and maintain healthy growth for your business.

If you need assistance, a financial professional can walk you through how to set these up and use them to foster ongoing business success.
Michele Ball
Perfect Additions
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Worth Reading
Four Things Leaders Misunderstand About Performance Reviews
By Rashan Dixon
Employees often dread performance reviews. That makes sense; as this article describes, the format of performance reviews needs a review. Potential improvements include scheduling these more often, making them less formal to avoid turning them into second job interviews, and allowing employees to give feedback to their leaders. Management creates the culture for employees, so if managers are willing to change to improve, their employees may follow that example.

Apply These 4 Techniques to Improve Project Management in Your Small Business
By J. T. Ripton

Your small business needs to think like a project manager, even if you don't have one on staff. This article describes how to develop that mind-set. Know what you want to accomplish and all the steps involved. Most importantly, this article argues, learn to work well with the people on your team. People aren't projects, but all projects involve people.

How to Run a Family Business Successfully
By Kerry Hannon

Regular business transitions become more complicated when business partners, bosses, and colleagues are your family members. This interview with Rob Lachenauer of Banyan Global Family Business Advisors discusses how to work with parents, siblings, and children. His insights may improve your relationship with your family, even if you don't run a business with them.

This Month-Business Forms
Having the right tool for the job makes all the difference in the world. This truth applies to everything from construction projects to paperwork. When you need appropriate forms for your business documentation, check out these helpful sources.

Whether you need a bill of sale template or an employment contract, you can search here for a variety of free template downloads in Word and PDF formats:
Free Legal Documents

If you need to share forms via email or other online methods, Google Docs offers a good solution. Learn how to create forms with this software here:
Google Docs

Do you need to send forms that require a signature? Here's how to create fillable pdfs:
Convert Existing Forms to Fillable PDFs

For basic small and home-based businesses, check out this collection of free business templates, forms, and letters:
Free Business Forms

For access to hundreds of business templates, sign up for a free account with here:
Business Forms & Templates
This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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