Success Guide For Small Entreprises - Whether you run a local firm employing 150 people, operate a mail order business, or something else entirely, you need to know how to maintain your operations amid economic downturns. Anytime a corporation, regardless of size, experiences a reduction in cash flow, its money management needs to be operated like a "tight ship."
Among the things you can and ought to do is safeguard yourself against rash or impulsive purchases. Everyone has purchased goods or services they didn't actually need, either because the salesperson or the flamboyant advertisement caught their attention or because they were in the mood.
A few days later, we sort of "wake up" to discover that we had spent hundreds of dollars of company funds on a service or good that wasn't necessary for our company to succeed, while more urgent needs had been waiting for those monies.
If your company is incorporated, you can do away with these "impulse buys" by putting a section in your bylaws that says, "All decisions regarding purchases exceeding (a certain amount) are subject to approval by the board of directors." This will compel you to evaluate any costly "impulse purchases" and might even serve as a reminder for less expensive purchases.
If your company is a partnership, you can specify that all purchases are subject to third-party approval when making a purchase decision. As a matter of fact, the third party may be a supplier, a department head, or even your partner.
If your company is a sole proprietorship, you don't really need to worry about anything because you have three days as an individual to consider your purchase and return it if you decide you don't need it or can't afford it.
Despite your belief that you cannot afford it, make sure you don't "short-change" yourself by not hiring a professional. This would be relevant, particularly in an emergency. You're skating on thin ice if you commit and proceed without thoroughly examining all the possibilities and readying yourself for any eventuality.
It always pays off in the long term to seek the opinion of knowledgeable people before starting a strategy that could ruin you, regardless of the price involved.
An expert company consultant, for instance, can enlighten you on the benefits of 1244 stock. Although qualifying for the 1244 stock category is a rather easy process, it has significant advantages for your company.
Because the entire investment can be written off in the current year in the event of a loss, the 1244 stock encourages investors to invest equity capital in your company. Any losses would have to be spread out over a number of years in the absence of the "1244" designation, which would naturally significantly reduce the appeal of your company's stock. When a business owner doesn't file the 1244 corporation, they effectively close the door on ninety percent of potential investors.
You have to be "hard-nosed" when it comes to persons trying to offer you luxury items for your company, especially when sales are slow. You will definitely let salespeople demonstrate you new equipment models or a new line of supplies when business is thriving; however, when things are slow, cut back on the fun extras and focus on the essentials. But you have to be very careful to be kind and let these sellers think of you as a friend and give you a call back at a later time.
Whoever keeps your company's books should produce information in accordance with your policies and your style of thinking. Therefore, to calculate your return on investment and the turnover of your inventory and accounts receivable, you should use an outside accountant or accounting firm.
A survey or audit of this kind should go into great detail on any and all items in the financial statement that require extra attention. By doing this, you'll most likely find any possible money issues before they become obvious and most definitely before they may grow out of control.
A lot of small businesses form advisory boards composed of outside experts. When implemented, these also referred to as power circles—always help the company, particularly when operating money is scarce.
An attorney, a certified public accountant, leaders of civic clubs, owners or managers of companies that are comparable to yours, and retired CEOs should all be on such an advisory board or power circle. It's actually rather simple to establish an advisory board of directors because most people you ask will be honored to participate.
You should meet once a month to present information for review when your board is established. At every meeting, you should talk about the issues facing your company and get advice from your advisors on potential fixes.
These members of your board of advisors ought to be impartial and present you with suggestions in addition to options. You shouldn't have to make any official decisions at your board meeting or as a result of it, but you should be able to learn a lot from the recommendations presented.
Most of your clients will have enough cash on hand to settle at least a portion of their debt to you right away. Call them and request an explanation of their falling behind in order to maintain them current and the quantity of accounts receivable in your files to a minimum.
Your bills will appear to be pulled to the top of their piles of bills to pay if you make this a routine part of your business process. When it comes to collecting money, don't be too cautious or a "nice guy" about it while still acting politely.
Another excellent business tip that not many entrepreneurs follow is methodically establishing a credit rating with their local banks. Every ninety days or so, you should borrow $100 to $1,000 from your banks, especially if your cash flow is strong. Just take out a loan, deposit the money into an interest-bearing account, and make sure you pay it back in full at least one month before it's due.
By doing this, you will fortify your ability to quickly secure the necessary funding and raise the borrowing power of your signature. This type of business leverage will be quite valuable to you in the event that your cash situation worsens.
Participate in local and national trade associations for your industry, please. The majority of these organizations provide a plethora of information on new products, services, trends, typical industry sales statistics, and information on your competitors.
It is recommended that you prominently display any membership certificates or wall plaques that you get on the wall of your office. Consumers prefer to see these "seals of approval" and are more trusting of your company when they do.
Another often forgotten item is that you should, if at all possible, have your spouse work with you for three or four weeks a year in the firm. What matters is that your spouse will know certain individuals and circumstances related to your firm in the event that you are unable to manage it.
These folks ought to consist of your creditors, important suppliers, experts, accountants, and advisers. If your spouse works four weeks a year in your firm alongside you, the short-term discomfort will be far outweighed by the long-term benefits. The majority of couples completely share time and responsibilities, which is typically even more desirable.
Utilize whatever free business counseling is offered as much as possible and whenever possible. The Small Business Administration released a ton of great pamphlets, checklists, and books covering a wide range of industries.
You can get these publications from the U.S. Government Printing Office. The majority of nearby colleges and numerous private organizations host seminars for little or no cost. Additionally, you ought to utilize the resources provided by your neighborhood library and bank.
The most crucial aspects of managing a small business are knowing where you're going, tracking your progress every day in that direction, keeping an eye on your competition, and always practicing sound money management. All of this will equip you to identify any issues before they materialize.
Regardless of the state of the economy, having a small business requires you to surround yourself with intelligent people and always practice excellent business management.
