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Michele Ball
Your CFO Solutions
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License # 616085
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How to Mark Up Your Price Based on Gross Margin
A crucial factor in pragmatic business management is knowledge of gross margin. This term is commonly connected to markup, which compares the price your business receives from selling an item to the cost incurred to obtain the item. Not every business, of course, sells specific items. But all businesses have direct costs that are absolute necessities for delivering sales.

Gross profitability ignores general overhead costs. Those are the operating expenses a business incurs even if nothing is sold, such as rent and telephone service. Direct costs are the necessary expenditures to make a sale happen. These are things like materials and the labor cost for the specific time allocated to complete a sale.

Gross margin, however, is a bit different than gross profit. Margin is a percentage. If you mark up something 1.5 times above your cost, the price you charge is $150 if your costs are $100. Gross margin equals price minus cost divided by price. It’s your markup amount divided by the sales price. Notice that the gross margin in this example is 33.3% ($150 minus $100 divided by $150).

The objective is to maintain a consistent gross margin. How you accomplish this as costs change means adjusting your price. This requires identifying a markup that corresponds with the gross margin you want to maintain. Simply turn around the relationship formula to show that markup is 1 divided by 1 minus gross margin. So if you want to keep a 33.3% margin, you have to markup your costs 1.5 times, that is, 1 divided by 1 minus 0.333.
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Click below to download your copy of my "Working from Home Survival Guide."

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So You're Thinking about Hosting a Webinar...
The constant innovation of computing technology has not only modernized information and communication processes but also become a driving force of social evolution in a variety of ways. Social media, video chat, and an online presence offer new methods of reaching out to clients all the time. One such powerful outreach tool is the humble webinar.

A webinar is a live virtual event that takes place online with the help of audio and visual streaming. During a webinar, an educational or instructive exchange takes place between a speaker and attendees, making it a fantastic way to foster brand confidence, reach customers directly, and generate sales leads.

Webinars allow you to communicate on a face-to-face level, impart a personal touch, and add personality to a sales pitch or brand-building exercise. Rather than a blog post that can get lost in the online noise, a webinar is an event that helps you stand out as an expert in your niche or industry.

Get started with Facebook Live or Periscope. They’re easy-to-use live streaming services and a great way to learn the webinar ropes. Try a no-pitch, value-only approach to grow your audience.

You can then move on from a simple chat setup to a PowerPoint-based presentation that utilizes webinar software like Demio and WebinarNinja. Webinar expert Melyssa Griffin recommends focusing on quality over quantity, so impart two to three valuable lessons that viewers can easily digest.

Follow this up with a pitch or call to action for results that last long after your webinar session has ended.
Worth Reading
69 Highly Effective Lead Magnet Ideas to Grow Your Email List
By Mary Fernandez
If you’re making a checklist about how to connect with potential clients, put "making a lead magnet" on the top of the list. A lead magnet attracts people and offers them something useful in exchange for their email addresses. This article describes five types of lead magnets: useful, educational, entertaining, community-building, and bottom of the funnel. Hint: this summary mentions one very effective lead magnet.
Read More
7 Powerful TED Talks
that Can Change
Your Business
By Melonie Dodaro, CEO
Top Dog Social Media
TED has connected audiences with "ideas worth spreading" since 1984. What began as a conference to discuss technology, entertainment, and design has expanded into local events, fellowships, and a digital collection of talks organized by topic. It’s safe to say TED knows how to create and connect audiences and can help you do the same for your business. Here are seven crucial talks, with some bonus ones, too.
Read More
6 Ways to Spark Ideas and Innovation
As leaders of small and medium-sized businesses, we should always strive to create a culture of empowerment that gives employees the opportunity to contribute to growth and success. Our employees see, hear, and deal with customer and business issues on a regular basis. Who better to offer insights and ideas to drive growth and improvement?

Here are six ways to spark innovative thinking among employees and empower them to share their thoughts and ideas.

Foster a creative work environment. To foster creativity, some companies set aside time for creative thinking during work hours. This may not be possible for you, but you can encourage open communication, constructive feedback, and an environment of mental flexibility.

Make sure your employees have the tools they need. This includes computers, software, education, and training. Online collaboration tools can help build community and generate ideas.

Hold team bonding events. These may be video retreats, online exchange meetings, or even virtual learning webinars. You may include presentations and outside speakers, but also invite employees to offer their thoughts about changes, improvements, or solutions to problems.

Motivate your team. Recognition can incent creative thinking and help people realize that their efforts are valued. Positive reinforcement may include rewards, bonuses, or comp time.

Encourage diversity. A wide range of working styles, thought processes, experiences, skill sets, and viewpoints is essential to avoid groupthink.

Say "thank you." Make sure employees know that their contributions are appreciated even if their ideas are not all winners.
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Growing Your Business - Expanding Knowledge
Looking to accelerate your business growth, expand your knowledge, or develop new business skills? Check out these links for courses, training, and academies:
Business Courses to
Get You Started

This website provides thousands of paid and free online video business courses that you can do at your own pace. Topics include sales, marketing, operations, strategy, management, and many more.

Read More
Business courses
on edX

Prestigious business
education is as close as
your mobile device.
Begin your tour of MIT,
Harvard, and others.

Read More
Canva Design

Learn to master digital and
print advertisements and promotions
from industry experts at this
free design school.

Read More
Grow Your Career
and Business

These free courses can prepare you to navigate the landscape of the dizzying world of digital business and maintain a strong business strategy.

Read More
Make Financial Statements a Tool, Not a Burden
Sound business decisions are molded by knowledge of conditions in the same way that a downhill skier successfully traverses the mountain in an Olympic event. Sufficiently detailed information bestows insights that enhance wise decision-making, especially in challenging conditions. By contrast, imprecise information bends itself into false conclusions.

Unfortunately, business owners can make errors because they don’t derive enough information from their financial records. Poor judgments about where to allocate time or money correlate with the misunderstanding of past spending decisions. An efficient reporting process is the first step to having useful financial order rather than a blizzard of numbers.

Accounting Records Depth

The benefit of financial statements dissolves with haphazard details. For instance, recording costs associated with each product or service is a standard deserving of careful attention. In some industries, having the costs for each project is relevant. Leaving your bookkeeper in the dark about these specific elements results in less refined financial statements.

This technique of classifying costs enables calculation of profit margin for every line of business or a particular job. It further assures consistency that permits comparison of expenditures and profit across multiple periods. A service business should examine the profitability of each job and every client. Product-related enterprises must understand the profitability of various product lines as well as customers. These data permit informed decisions about raising prices and ceasing unprofitable business lines or relationships.

Consideration of the accounting method is vital. Accrual basis accounting is best for analysis because it matches revenue with corresponding expenses. Sales count as income when invoiced, and expenses are recognized as they are billed. Cash basis is commonly used for income tax purposes because revenue only counts when it’s collected and expenses are recognized only when paid.

Accounting software can produce either accrual basis or cash basis statements. Use accrual basis for evaluation, since it eliminates profitability discrepancies, which are triggered by timing differences between collecting revenue and paying associated expenditures. But you may use cash basis for income tax reporting.

Financial Statement Timeliness

Financial statements for periods that passed months ago are of little relevance. Superior decision-making requires recent information. Evaluation of results for the preceding month should occur soon after the month’s end. Bookkeeping services are often late in providing financial reports because they’re relying upon business management for key information. Delays in giving bookkeepers what they need will ultimately result in receiving stale financial data.

The responsibility for a company’s numbers rests with the owner. Bookkeepers cannot invent figures, but a business owner may provide estimates or guidelines for bookkeeper estimations that are corrected later. The aim is rendering of financial statements in time for prudent evaluation. Follow up with adjustments, but do not make perpetual changes to long-ago periods. And especially do not alter past-year bookkeeping after the income tax return is completed.

The only sure method for making effective business decisions is possessing accurate and timely financial statements with optimal formatting for easy analysis.
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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