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BUDGETING |
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Building an Emergency Fund for Your Business |
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Every business needs a rainy-day fund, but a commitment to action for accomplishing this objective is often elusive. Waiting to see how much money is left for your virtual piggy bank after paying all the bills is not a viable solution. There's never enough unless you take steps to control spending.
An effective method to build a cash reserve is to make a place in your budget for the emergency fund as if it were another vendor bill. Adding this cost of doing business may seem impossible at first. But close examination of your recent spending categories is certain to reveal some areas for expense reduction.
Look at the trends in your business spending. Are some types of expenses rising? Buying more is common when a business starts generating a little more revenue. Finding your previous spending level and returning to it merely requires inspection of historical expenses. Perhaps your vendors' prices have increased. This is an opportunity to negotiate volume discounts, find different vendors, or raise your own prices.
Most important of all in creating an emergency fund is putting aside the additional income you make from an extraordinarily profitable month or period of the year. Completing a particularly large project or seasonal phase means you have more cash to retain for future lean periods.
Keeping a separate bank account is usually best to avoid the temptation of extra spending. This same account functions as a place for those ongoing deposits of small fixed amounts every month until the inevitable disaster strikes. When it does, your rainy-day account provides the perfect protection. |
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HOT BIZ TRENDS |
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Ready to Grow? Here's How to Manage Multiple Locations |
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Even the smallest of businesses may have multiple sites and employ people at various locations. Managing disparate locales can present challenges, yet it is important to maintain consistent standards of quality, service, and professionalism and to foster team allegiance throughout the organization.
If you do not work with or even see your employees on a regular basis, there is little opportunity for natural or unplanned interaction. This makes communication essential. Conduct weekly team meetings via phone or webinar and use these occasions to emphasize safety protocols, reinforce business priorities, discuss progress toward stated goals, and share news about the industry and the company. Make it a point to visit each site regularly and try to get the entire group together for trainings, updates, and team-building sessions once or twice a year.
Put systems in place to delineate roles and responsibilities as well as clear decision-making protocols. Establish specific, quantifiable performance metrics that are aligned with the company's goals (key performance indicators or KPIs) and measure performance at both the site and individual levels. Hold all employees accountable for delivering on their KPIs, regardless of where they are based.
Take advantage of technology to facilitate communication, skill-building, and administrative tasks. Some of the best and most cost-effective training communication and management tools commonly used by small businesses include Google Docs, Gmail, and Google Calendar; Basecamp; Salesforce.com; and Skype. Most of these tools are affordable (or even free) or are available on a subscription basis. |
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CUSTOMER RELATIONS |
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Psychological Secrets to Customer Retention |
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Psychology plays a key role in the purchase decision-making process, and you can use this fact to boost customer retention.
One approach is to take advantage of a trigger known as FOMO, or fear of missing out. FOMO is a powerful psychological motivator that stems from basic human survival instinct, the fear that something is going to be gone, finished, or over before you get to it. You can apply FOMO by presenting your customers with limited-time offers. When customers sign up with their email address, incent them to become repeat customers by sending exclusive, limited-time repeat customer specials.
Social proof is another psychological principle you can employ to bolster customer retention. Social proof refers to the reaction people have when they see other people enjoying something or benefiting in a way that sparks desire or envy. Shares, links, testimonials, tweets/retweets, and positive online reviews can serve as social proof points.
You can also use psychology to help your customers rationalize their purchases and feel good about the purchase experience. Sending personalized thank-you texts or emails tells customers that you value them and their business. Following up with advice on how they can get the most out of their product and offering special incentives reinforces the positive message and fuels repeat sales.
As you shape your marketing strategy and develop your retention methodologies, keep in mind that using a little psychology can encourage customers to remain loyal and transform first-time buyers into lifelong customers. |
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ACCOUNTING |
| How to Separate Business and Personal Finances |
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The two biggest hassles for most entrepreneurs are accounting for expenses and paying taxes. It's not a coincidence that these things are inextricably linked. Business expenses lower your taxable profit.
Failure to capture all your business expenses results in overestimating your profit and overpaying income tax. But mixing personal expenditures with your legitimate business costs creates bookkeeping confusion and may trigger scrutiny from the tax authorities.
The fact is, not all business purchases are paid from the company checking account. You likely use a personal credit card and spend some cash. Especially complicated is adding to your bookkeeping a home office or business use of a personal vehicle.
Adhering to specific accounting procedures ensures you take the correct tax deductions for using personal funds or credit cards for business costs, as well as for contributing personal items to the business. Use the following principles to guide your accounting practices.
You Are Not the Business
Think of your business as something separate from yourself. In fact, this is exactly the legal structure if your business is a corporation or partnership, or an LLC treated as one of these entities for tax purposes. When you spend money on your credit card for business, simply turn in the receipts for reimbursement by the company. Of course, the business doesn't need to actually reimburse you as it would an employee. Since you're the owner, these personally paid items count as capital contributed to the enterprise.
Personal cash used for business must be accounted for by promptly providing receipts for reimbursement or, rather, capital contributions. Holding these for too long is a mistake because they could be misplaced. Or you might not remember what exactly was purchased, which means the expenses cannot be properly recorded in the correct bookkeeping category.
An even better practice is having a dedicated credit card for business purchases. Remember, just because you have a card for your business doesn't mean everything you buy is a tax-deductible expense. Personal uses of the dedicated business credit card become capital distributions from the business. These make your company poorer. You don't want an investment in a business that's losing wealth.
Things for You and the Business
Special tax rules apply to business use of your personal vehicle or home. Don't expect reimbursement or capital contribution credit for all your gasoline purchases simply because you drove around for business.
Actually, you may be cheating yourself out of a larger tax deduction by not having the crucial record of business miles driven. Fuel is only one of the expenses considered when using the standard reimbursement rate established each year for business miles driven.
Home offices may or may not be tax-deductible expenses, depending on several circumstances. Track your home expenses separately from business costs. A calculation is made at year-end based on those amounts and the percentage of your home used regularly and exclusively for business.
Lastly, when you make a major business purchase with personal funds, especially if money is borrowed, advice from your tax accountant is vital. The entire cost, along with any loan, must be recorded in your bookkeeping records. Also, the accounting for tax purposes is very precise when you acquire some things that are used both professionally and personally. |
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Michele Ball
Perfect Additions and Your CFO Solutions
401 Market Street
Suite 980
Shreveport LA 71101
318-423-4776 Office |
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| www.yourcfo.solutions |
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| info@yourcfo.solutions
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| License # 616085 |
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| How to Win Big in Today's Economy |
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| The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive. |
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Find out how by requesting my free report
"How to Win Big in Today's Economy" by
replying to this email. |
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| Worth Reading |
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Every Entrepreneur Should Listen to These 10 Podcasts
By Deep Patel |
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Entrepreneur.com
Subscribing to every podcast devoted to business and self-improvement could be a full-time job. Let this list direct you to interviews with innovative leaders, successful businesspeople, and acclaimed entertainers. This list also includes some video series.
The Best and Worst Time of Day to Ask for a Raise or Close a Sale
By Geoffrey James
Inc.com
When you ask for something may be just as important as how you ask for something. This article provides a primer on "decision fatigue" and how employees can use it properly. In summary, it's hard to make good decisions, especially about important matters, near the end of the day. Don't ask for a raise while dashing out the door. The request will likely be denied or dismissed. On the flip side, the last portion of the workday may be an ideal time to ask for a vacation, because your boss might be less inclined to consider all the implications of your break.
20 Places to Find Online Entrepreneur Courses
By Gabrielle Pickard-Whitehead
Smallbiztrends.com
Scroll through this list for educational opportunities to sharpen your business knowledge and hopefully increase your revenue. This selection includes offerings from universities like Harvard, companies like Shopify or LinkedIn, and individual entrepreneurs. Course lengths range from a couple of days to a couple of months. Costs vary.
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LINKS YOU CAN USE
This Month-Marketing |
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The right marketing strategies are crucial to your company's success. Since marketing trends are in constant flux, it's important to stay current on what works. Use the following links to beef up your marketing efforts and reap results that boost your bottom line.
What are the latest successful trends in marketing? Here are three:
These 3 New Marketing Trends Will Transform Your Marketing Strategy
Today's consumers expect more than flashy ads. To get the best ROI, you need to develop relationships. Here are five tips for relationship-marketing strategies:
5 Relationship-Marketing Strategies for Small Businesses to Use to Increase ROI
Have you incorporated video into your marketing efforts? Check out these impressive stats about the effectiveness of video marketing:
27 Video Marketing Statistics That Will Have You Hitting the Record Button
Artificial intelligence is a key component of modern marketing efforts. Try these five methods to make the most of AI in your marketing:
Five Ways To Use AI In Marketing Today
Need some fresh marketing ideas? Here's a list of 101 things you can try, broken down by category:
101 Small Business Marketing Ideas
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