business finances 101 – Growing Forward

Taking Care of Your Small Business’ Accounts

11/20/2018 Scott Asai2 Comments

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When you first set up a small business, you will generally have one thing at the forefront of your mind: profit. But where profit is concerned, there are a whole host of steps that you have to take to deal with your accounts. Not only do you need to take account of everything to do with your business and its finances for legal purposes, but you also need to take account of your finances for the sake of your own benefit. After all, if you are unsure of where your business is making money and losing money, how can you expect to move forward and progress? Here are a few steps that you can take to manage your business’ accounts effectively.

Getting to Grips with Accounting

Put simply, accounting is a form of systematic and comprehensive record keeping that primarily revolves around your business’ financial transactions. Any records kept can be summarized and analyzed, allowing you to make more informed decisions regarding your business’ future transactions, reducing spending in futile areas and increasing spending in other areas with more potential for profit. Records kept can also come in extremely useful when you come to file your tax return at the end of each fiscal year. While you can become qualified in accounting yourself, and could, by all means, take care of your accounts independently, it’s generally best to leave this work to professionals within the field. Hiring an accountant can not only save you a whole lot of time, but a whole lot of money too. Remember that accountants can take care of so much more than simply filling in your tax return. They offer services such as Small Business Bill Pay Service, payroll services, bookkeeping, and management reporting too!

Open a Business Bank Account

Many small business owners will start out using their own bank account to fund professional practice. As they begin to grow and expand, they stick with what they know. However, you should never use your personal account for anything to do with your business. It’s always best to keep personal and professional finances completely separate. This will help you when it comes to filing personal and business tax returns, as well as helping you to organize your finances more simply and effectively on a day to day basis. While a business account doesn’t tend to vary from a standard checking account all too much at first glance, it means that you can carry out all professional transactions separately from personal ones. Browse different options available to you before signing up to one bank or another. Some will charge you to make transactions, so it’s best to compare rates and get the best offer possible.

Accounting for your business can, of course, be a complex and difficult process. But it’s important that you take care of your accounts effectively from the start of your business venture. This will set you off in the right direction and minimize the amount of problems that establish themselves over time.

Business Pricing & Profits: Questions & Answers

01/15/201801/15/2018 Scott AsaiLeave a comment

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Business pricing is always a tricky area to contemplate. If you set your prices too low, then you will find yourself struggling to generate a profit. Set your prices too high, and you’re not going to be able to find enough clients to sustain your business. You have to be a real-life Goldilocks, devising a pricing strategy that is just right.

Sadly, this can be an incredibly confusing task, which often generates more questions than answers. Below are some of the most common questions new business owners find themselves asking when they consider their pricing, so browse through and find the answers you need to ensure your future business success.

Products

How do I decide a price for a product I am selling myself?

Products that you sell yourself — for example, through an online store or at a market — should be priced at your retail value. This price takes into account:

Your costs for producing the product,

Plus…

The cost of selling the product (such as online selling fees),

Plus…

The profit margin you expect.

How do I decide the price for a product I am selling for others to sell on (distributors, stores, etc.)?

In this case, you will be selling for a wholesale price. This will usually be less than your retail price, as you do not have to factor in the costs of marketing, selling fees, and other costs of selling directly to customers. So you will set a price based on:

The cost to you of producing the product,

Plus…

The profit margin you expect.

What should my profit margin be?

It depends; the average profit margin fluctuates hugely between industries. If you’re not sure what your profit margin should be, then run a search for the average margin in your industry and use that number as a baseline.

How do I know how to price products to meet my needs and keep the business running?

This is a very complicated question, and sadly, it depends on too many variable factors (such as the profit you want to generate and your own expectations for a wage) to determine. However, there is a basic calculation that should give you a starting point for how much you need to earn:

Your expenses (your rent/mortgage, utilities, broadband, insurance payments, groceries) + costs of running the business + the national minimum wage.

This calculation should give you a figure you need to earn on a monthly basis for the business to stay afloat and keep your life running smoothly. You won’t be making a fortune, but it’s a good starting point to base startup calculations on.

Can I control what stores/distributors charge for my product when they have bought it from me?

Yes, this is your minimum advertised price (MAP), and you can set this at a price point you feel reflects your product. It is essential that you always set the exact same MAP for every store or distributor you sell to. This protects your business relationships, establishes fairness, and makes it clear you are a reputable business owner. If you sell to multiple sources, the likes of Trade Vitality can help you ensure MAP compliance, so you can protect the reputation of your company.

How do I know what customers will pay when setting my retail price?

To an extent, you won’t know until you try! Take your lead from competing products and businesses, or conduct market research to help ascertain what potential customers think of your pricing strategy.

In conclusion

Hopefully, you found the above answers helpful, and can now go forth and set the right prices to ensure a bright future for your business.

Build A Professional Bridge Over Troubled Water

11/08/2017 Scott AsaiLeave a comment

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Not everything in the river of business runs smoothly. When you set up your own company, you will find that there are many trials and tribulations that you will have to overcome and some point or another. Don’t worry, though, not all of these problems are things that should stand in the way of your business becoming a success as there are many solutions to get passed them. You just need to know how to build a professional bridge over troubled water! Here are some great tips to help you do that.

Money Worries

Did you know that restaurant, shop, and hotel liquidations are on the rise? And it’s not just businesses in the hospitality sector that are struggling – the latest figures show that many administrative businesses are also folding shortly after they are set up. The main reason for all of these failing businesses is money trouble. In order to make sure you always have enough capital in the bank, you should secure your first load of investment before you launch your company. That way, you aren’t trying to scrabble around to find investors while you are also busy trying to run your company.

Regulation And Compliance Issues

As various markets and industries develop their processes and preferred methods, their regulations and compliance procedures also change. As a result, you always need to be on your toes when it comes to these two factors. Otherwise, you could be breaking some regulations without even knowing it, and this could prove to be illegal and could force you to call time on your business. So, keep reading up on all of your industry’s regulations and compliances so that you are always trading above board.

Improving Profits

Many small businesses struggle to increase their profits as time goes on. Sure, it’s easy enough for them to make a profit that is large enough to cover their expenses, employee wages, and still have some money left in the bank at the end of the month. However, when they want to increase their overall profits, the small team that makes up the business can often find it difficult to take on any extra work. But as long as you are able to be innovative about your company’s practices, you should be able to come up with new ways to keep your costs and expenses down to a minimum. By reducing your expenses, you’ll find that you have a larger profit margin at the end of the month!

Cash Flow Problems

Many small businesses will experience cash flow problems, especially in their first couple of years. Thankfully, though, these are often easy to overcome. You just need to ensure that your invoice payment terms aren’t too long, and that way you won’t have to wait too long for money to come in from your clients and customers. Taking out some short-term business loans will also help you overcome immediate cash flow issues.

Hopefully, you can quickly build a professional bridge over troubled water in your company!