Is Your Business Profitable?

by: Pam Newman

 

Copyright 2005 Pam Newman

What’s your job profitability? Do you know?

Many business owners are unsure of their profitability at a company or job level. They “think” they are making money because they have a few dollars in their checking account. Having money in your checking account doesn’t mean you are profitable. It might simply mean you haven’t paid all the bills yet, so you have a little cash. Cash and profit are two different concepts. If you don’t know your exact income and expenses for each job and your overall business, then how can you know whether you are making a profit? And, if you aren’t profitable, your business won’t last long.

Analyze Each Job

Regardless of the size of your business or your industry, profitability is something you should be monitoring on a monthly basis. To determine your profit, you must know how much you make and spend on each job. Expenditures should be tracked for direct labor and material costs on each job. In addition, you should also be tracking overhead costs and allocating them to your various jobs as applicable. There is always going to be some general overhead, but too often dollars are thrown into general overhead, when those dollars could easily be attached to specific jobs. 

Intuit’s QuickBooks software program has easy-to-use features that allow you to do job-costing for time and materials, so you don’t have to worry about having to track it all manually. Rely on tools to help you run your business more efficiently and effectively.

Company/Employee Handbook as Organisational Improvement Tool

by: Stephan Szugat

A business is only able to grow as fast as the internal organisation is able to process higher volumes of sales. But how to get an optimal internal organisation? Well, you will need to adapt your internal organisation over and over again. It’s a never ending story. However, a Company/Employee Handbook could assist you to achieve the best internal business organisation.

This brings up the question, What has to be included in a Company/Employee Handbook? Everything what has influence to your business operation. First of all, it has to be outlined which areas the Company/Employee Handbook will cover. As it has to do with internal operation, here is a list of items you should include:

- Company Background Information (Name-Development, Foundation date and place, History-Milestones, Vision)
- Owner and/or Manager Bios/Profiles
- Listing of Officers and Board of Directors
- Employment Roles (Job Roles, Job Descriptions)
- Description of the main products and services (just use your marketing material)
- FAQ (about internal subjects only)
- Company timeline (What, when, where)
- Office procedures (Workflow-Information, Working Procedures)
- List of persons to know (Bank Contact, Tax Advisor, Laywer, Main Suppliers, etc.)
- Overview of agreements (Rental, Leasing, etc.)
- Internal Policies (Dress code, Phone usage and answering, Voice Mail Procedure, Parking,
Business Cards, Drug Policy, etc.).

An introduction to point of sale software

by: Jakob Jelling

 

Point of sale software gives business owners a convenient way of checking out customers and of recording sales. It can keep a record of the store inventory, updating it when an order is processed. It can also print out receipts, carry out credit card processing, track customers, etc. Point of sale software eases the flow at checkout terminals, while recording all the information that can help you make better business decisions.

Point of sale software allows users to input via keyboard or mouse, and some even have a touch screen interface. You can install the software on your checkout register.

Bottleneck-oriented Business Management

by: Stephan Szugat

Simple and effective Business Management

In every enterprise there are, at every time, one or more bottlenecks, which have influence to the commercial situation. Bottleneck-oriented business management has the purpose to early track the bottlenecks and to remove them, to allow an optimum of commercial development. To know at any time, what a business lacks of and to be able to add the missing things, is today a determining competition advantage. Bottlenecks can be, e.g.:

low sales proceeds
high due or overdue accounts receivables
low liquidity (Cash on Hand, etc.)
high amount of liabilities
low number of customers
too many new customers
too high capacity utilization
defective administration or management
and a lot more. 

These example show that bottlenecks not only concern negative circumstances, but also can apply to positive commercial development. If an enterprise takes up many new customers, this results in new orders, which lead to other circumstances, like a possible excess in capacity utilization. In case the excess of capacity utilization stays for a longer time, this may result in a lower employee motivation, because of a slump in working atmosphere within the company, which then could lead to less qualtiy of the work performed.

Due to a TIMELY reporting system many companies take care of reaching the desired commercial development. However, a regular analysis of expenses or the annual reports are not enough to control a business today. In the today's dynamic markets these evaluations are too statical, too much oriented on the past commercial development, which had been achieved. Also cost accounting only shows what has happened in the past. The actual direction in which a business is running could not be seen.

Imagine a business to be a car. If you sat down in a car, do you like to receive information from the instruments from the last year or month? Probably not. You would like to have actual information about fuel tank content, coolant temperature and a lot more. Bottleneck-oriented business management should exactly bring the most important and actual information about a business to you, including so-called early warning signals (Screenshot abenetis ERS-Diagram).

Data oriented to the past for early-warning-systems?

A working early-warning-system needs data which are not oriented to the past, like from cost accounting or year-/month-end-closeings. It needs data from so-called early indicators, which has to be gathered from different areas of an enterprise. Of course, figures from the finance and accounting department belong into an early-warning-system, but they only have a subordinated role, because they are oriented to the past.

Nowadays the reporting must show the present situation of a business. In many businesses the expenditure of time for the reporting rose considerably, due to the today's flood of information. Aggravatingly added to this, is the selection of the really relevant business ratios, which allow an appropriate overview of the actual business situation. Too often reports are prepared, which are not perceived by anybody, due to the lack of necessary statements about the business development.

There are already proven business-ratio-systems, that enterprises only need to take over. Get back into the car again, imagine you have only one instrument in front of you, which shows the value "35". What does this signify? It is not recognizable how many fuel exists, how the Temperature of the coolant is or how fast the car is driving, etc.

At this example you could recognize the little expressiveness of only one business ratio. It shows the importance to use the right business ratios, which must have a connection to each other and which have a different temporal origin. Nevertheless, many business ratio systems are mostly based on data which originate from the past.

This turns often to the problem, that immediate information are not available, to indicate the actual situation of a business. However, there is still the alternative, to reduce the period of the past. How would it be with one week instead of analysing business data every 4 weeks? This would lead to the fact that you could act a few weeks earlier, if something should run a little bit inclinedly.

Only very few data are needed to receive an informative evaluation. This again is comparably with a car. If you are driving with your car, you only receive a small, well-chosen number of information and nevertheless, have an actual picture of the situation. This is also possible for businesses, as well!

As a motorist we receive only one fraction of the data which is acquired by the system of the car, and just these fraction of information is enough for us to reach the desired destination. When traveling usually we are well prepared, but the principle of the preparations is often neglected in business operation. As it is with traveling, the final goal has to be clearly stated by the business management. This could be done by having planing data available. Only by target/actual comparison divergences of the commercial development will be recognized.

Unfortunately, many small businesses renounce to use plan data. Besides, it is not about, to cut plan data into the smallest pieces, but only to get a rough picture, what the business is going to achieve. It is absolutely possible to run a business on the basis of the figures from the previous year, however, to use these figures, the past commercial development should be taken into consideration. So the figures from the previous year should be improved to fit with the new goals. And finished are the planning data and the basis for an operational risk management are laid. Still if it is most important to know the actual bottlenecks in business operation.

Recognize problems and act!

One of the most important factors in business management is the early recognition of problems and potentials. There are bottlenecks in every business, which could have serious results. Pecuniary difficulties could lead to bankruptcy for example. Therefore symptoms must be recognized early, in order to turn a possible crisis away and to secure the future of your business. Also to use available potentials, regular analyses should be done. Nowadays products and services could not be sold forever, because product cycles become shorter and shorter due to market dynamism. The recognition and development of potentials is exceptionally important, to avoid losing the already achieved basis of a business.

About the author:
Stephan Szugat is founder of abenetis a web-based service about Business Management Solutions focusing on the core needs of business management. This includes operational and strategic analysis especially Early-Recognition-Systems, Knowledge-Management and other Services for small and mid-sized businesses. He has approx. 15 years experience in the Finance and Accounting Area from companies of different size and from various industries. http://www.abenetis.com

Why Online Presence Is Essential For Small Business Success

by: Srinivasan R.G.

 

If you are any kind of small business or home operated business, online presence is essential. Majority of web site visitors are from the English speaking population due to the high levels of internet penetration in that category, online presence for all small enterprises cannot be overemphasized. The research data in the US about online connectivity reveals the following facts which may help to understand the importance of the web presence for businesses especially the small enterprise.

70 % of the US households have web connectivity.

Starting An Online Business From Home

by: J. Elisha Burke

 

Many people believe that starting an online business from home is difficult. In fact it is quite easy. If you are already familiar with what product you will sell you will need to create or hire someone to produce an online website for you. This website should list the product or products you have available. If you will be selling your own products, make sure that your online business has a name that reflects you and what you offer.

After this has been completed, you should inquire in your local state to learn the guidelines necessary for you to run a business from your home. Many states require that even an online business register with them and receive a business license. You will have to get the necessary forms to request this license.

Resume Writing and Preparation is Free Online

by: Tom Brown

9 things you must do to maximize your chances of obtaining a small business loan

by: Neil Best

To get approval for your small business loan application, you must be able to meet the lending criteria set down. Some organisations are more risk averse than others, and will therefore have more stringent criteria.

To vastly increase your chances of a successful funding application, you will need to present the following information:

1. The reason for the loan. The lender will be looking for something that fits within the normal range and expertise of your business. The amount may cover a number of items, so you will need to cover each.

2. The amount required, and the repayment term of the small business loan you want. (e.g. $10,000 term 5 years, payable quarterly).

mMaterial Values in Business Management

by: Stephan Szugat

 

Article Title: I
Author: Stephan Szugat
Word Count: 915

mmaterial Values in Business Management

Maybe you have already heard that in some ways immaterial values are important for business management. But you might not found how to bring them into your management processes or into your reporting packages. However, first of all we should be clear, what immaterial values are? Well, this includes the balance sheet information about intangible assets, but is going far behind it. 

As we all know, decisions are mostly based on feelings or emotions, than on logical judgement. A feeling is an energy. Energy is not material, it is immaterial. The overall emotions or motivation of employees in a business is a immaterial value, it could have positive and negative impact on the business development. Does sound very esoterical for you? Might be, but today we know that our emotions drive a lot of our life. 

10 Amazing Ways To Jump Start Your Sales

by: Wesley Atkins

 

1. Find a strategic business partner. Look for ones that have the same objective. You can trade leads, share marketing info, sell package deals, etc.

2. Brand your name and business. You can easily do this by just writing articles and submitting them to e-zines or web sites for republishing.

3. Start an auction on your web site. The type of auction could be related to the theme of your site. You'll draw traffic from auctioneers and bidders.

3 Essential Tools for Starting and Maintaining a Small Business

by: Ryan Hough

We believe that there are 3 factors that drive the success of small businesses.

1) Acquiring start-up capital
2) Finding customers
3) Accounting for, budgeting and controlling sales and expenses

The following resources will help your small business achieve these success factors.

Acquiring Start-Up Capital

An adequate supply of capital is essential as many profitable businesses fail because they don’t have enough cash to pay their employees and suppliers. But what is an adequate supply of capital? The only way to tell is by doing a significant amount of research on your potential market and formally documenting this in a business plan. I’m sure you know that a business plan is a very important document that is crucial to convincing your banker to lend you money.

HOW TO STAY FOCUSSED AND BUILD YOUR BUSINESS

by: Matt Bacak.

You have a detailed business plan, which showed the overall intent of your company. You presented the business plan to your bank before start-up and they submitted funding in the amount that you both deemed acceptable. The original business plan contained the basis of the procedures that will help you stay focussed while the company grows. Let's examine some of these processes that you will use to give your business the focus it needs to grow and succeed.

Outside The Box

by: Phillip A. Ross 

Outside The Box

Thinking "outside the box" or as it is sometimes called, "coloring outside the lines" is a popular idea in the business world today. People and organizations are told to think outside the box or color outside the lines as a way to stimulate creativity when they need to solve problems like streamlining production, establishing a new product, or developing a new process. And it's true that creativity and innovation often arise from unexpected and unconventional thinking.

But there is a serious problem with trying to apply such thinking too broadly.

For instance, creativity is valued in art and advertising, but not in banking and accounting. An accounting firm recently ran an ad suggesting that it could think "outside the box." Do you really want your business to be associated with creative accounting? Aren't accountants supposed to put the numbers in the right box? Wasn't creative accounting a serious problem for Enron?

Understanding Depreciation: It May Be More Simple Than You Think

by: John Day

Depreciation is defined as a portion of the cost that reflects the use of a fixed asset during an accounting period. A fixed asset is an item that has a useful life of over one year. An accounting period is usually a month, quarter, six months or one year. Let’s say you bought a desk for your office on January 1, for $1000 and it was determined that the desk had a useful life of seven years. Using a one year accounting period and the “straight-line” method of depreciation, the portion of the cost to be depreciated would be one-seventh of $1000, or $142.86.

Most non-accountants roll their eyes and shudder when the topic of “depreciation” comes up. This is where the line in the sand is drawn. Depreciation is far too complicated to try and figure out, or so it seems to many. But is it really? Surely the definition of depreciation mentioned above is not that difficult to comprehend. If you look closely you will see that there are five pieces of information you must have in order to determine the amount of depreciation you can deduct in one year. They are:

-The nature of the item purchased (the desk).

-The date the item was placed in service (Jan 1).

-The cost of the item ($1000).

-The useful life of the item (seven years).

Taxing Overseas Firms for SOX Compliance

by: Neil More

The Sarbanes-Oxley Act, also called the Public Company Accounting Reform and Investor Protection Act of 2002 was signed into law on July 30, 2002 by President Bush. In the aftermath of Enron, Arthur Andersen, Global Crossing, and WorldCom, SOX promises greater corporate accountability and transparency. Named after Senator Paul Sarbanes and Representative Michael G. Oxley, SOX focuses on the importance of ethical behavior in corporate governance-across the United States and now…overseas.

All countries have government-required laws like Sarbanes Oxley. In the UK, it’s the "Combined Code on Corporate Governance," in The Netherlands it’s the "Code Tabaksblatt," Germany has a "Bilanz Reform" and a "Bilanz Kontroll Gesetz." But then, why do we need SOX overseas since we already have the required laws? It’s because companies with U.S. headquarters must ensure that all foreign outposts meet federal standards. This is the major cause of concern in the management and accounting circles. According to some experts, the Sarbanes Oxley Act might have dictated convoluted rules and regulations on the U.S. businesses. While the rules are concrete ideologies that prevent accounting scandals, the constant flux in the policies confuses businesses around the globe.

Top 7 Strategies for Writing Accounting Procedures

by: Chris Anderson

You have permission to publish this article free of charge, as long as the resource box is included with the article. If you do run my article, a courtesy reply to sean@bizmanualz.com would be greatly appreciated. This article is 909 words long including the resource box. Thanks for your interest.

Part Two of Cash to Cash Cycle Series

Part One: http://www.bizmanualz.com/articles/01-05-05_inventory_procedures.html/?ART78

Next Week: Sales

We’ve already found $250,000…so let’s find another $250,000…

Laying the Foundation

Non-Profit Organizations - What Are They?

by: John Day

 

Definition of Fund; Assets; and Fund Balance

According to the “Financial and Accounting Guide for Not-For-Profit Organizations” written by CPAs Gross, Larkin, Bruttomesso, and McNalley, (fifth edition, pg 25) the definition of a these three terms is as follows:

- A fund is any part of an organization for which separate account records are kept.

- Assets are valuable things owned or controlled by the organization. Types of assets include cash, investments, property, and amounts owed to the organization.

- Fund balance is the mathematical number obtained by subtracting total liabilities from total assets; it is a numerical representation of the net worth of the organization, but has no other significance. Fund balances do not exist except on paper; unlike assets, they have no intrinsic value and cannot be spent. Both assets and fund balances (as well as liabilities, revenues, and expenses) are part of the accounting records of a fund.

Internal Control: A Preventive Maintenance Program

by: John Day

 

You read about this in every newspaper in every town in the entire country: Some bookkeeper, trusted by the owner of a small business, embezzles thousands of dollars. If the theft doesn’t put owner out of business, it certainly causes a major headache.

The reason we hear of these cases so often is that, in a small business, there may only be the owner and a bookkeeper. The owner doesn’t like doing the books, doesn’t understand them, and relies on this one person to take care of things. The bookkeeper, who is usually having personal financial difficulties, takes a small amount of money intending to pay it back. No one seems to notice, so more is taken. Over a period of time, it starts to mount up to a lot of money.

This is where the concept of “internal control” comes in. Essentially, every business should have, at some level, an internal control system in place to protect against losses, both intentional and unintentional. This is because “internal control” systems will: 1) protect cash and other assets; 2) promote efficiency in processing transactions; and, 3) ensure reliability of financial records. An internal control system consists primarily of policies and procedures designed to provide reasonable assurance that these three objectives will be achieved. The size and complexity of the business will determine the extent of the internal control system.

Regardless of size, one of the most important aspects of an internal control system is the concept of separation of duties. Separating duties makes it more difficult for theft and errors to go undetected. It is highly unusual for two employees to “collude” in an effort to steal from the company.

I worked as an internal auditor for a newspaper chain for three years. My job was to walk in to the newspaper offices unannounced and go directly to the cash boxes, count them, and verify receipts. One of my most important audit steps was to make sure the internal control procedures were in place and working properly. Here are a few suggestions for internal control procedures regarding handling of cash:

- Allow only specific designated individuals to handle cash.

How to Stop Waste, Fraud and Abuse

by: Chris Anderson

Each year, businesses write-off six percent of revenue to waste, fraud and abuse. But why would managers throw all that hard-earned money away when there is a reliable way to eliminate waste, fraud and abuse using accounting policies & procedures to create internal controls. Internal controls eliminate uncollectible receivables; prevent theft or embezzlement; optimize inventory; and stop waste, fraud, and abuse. Utilizing just a single control will add real money to your bottom line each month.

Look for Easily Customizable MS-WORD files to Save Time

You can quickly and easily develop customized procedures and internal controls for your organization, no matter what size it is. WORD templates reduce the stress of writing clear internal controls, policies or procedures; of staying late at the office to research “best practices” or of worrying over what format to use.

Press ReleaseUCLA Alumni Association Retains the Accounting Firm of Singer Lewak Greenbaum & Goldstein, LLP

by:

The UCLA Alumni Association today announced that they have selected the accounting firm of Singer Lewak Greenbaum & Goldstein, LLP (SLGG) as its new independent auditor.

Los Angeles, CA July 17, 2004 -- The UCLA Alumni Association today announced that they have selected the accounting firm of Singer Lewak Greenbaum & Goldstein, LLP (SLGG) as its new independent auditor. SLGG, a leading regional CPA & Management Consulting firm, provides accounting, tax and management consultant services for a broad range of clients including individuals, family-owned businesses, private and public companies as well as nonprofit organizations.

"The Association is entering an exciting new phase in its history. We wanted a firm with roots in the Los Angeles community, a depth of resources and the adaptability necessary to support a dynamic organization's business requirements while ensuring the finest audit support available. SLGG has a solid reputation for professionalism and service with proven expertise," said Keith Brant '83, M.A. '88, Ph.D. ’95, assistant vice chancellor, alumni relations and executive director, UCLA Alumni Association

Accounting Methods – Cash and Accrual

by: Richard A. Chapo

 

When starting a business, you have to determine the method you are going to use for accounting and paying taxes. The two choices are the cash method and the accrual method.

Cash Method

If you are looking for simplicity, the cash method is probably your best accounting choice. Generally, income and deductions can be claimed when payment is actually received or made. This is best shown with an example.

Asset and liability basics

by: Mansi gupta

Knowledge of accounts can make life much easy. If you are to invest in a new business or joining your forefather’s business, planning to take some loan, looking for job in any marketing company, desire to be the manager of a multinational company or have the onus to manage your own assets and liabilities, knowing some basics of accounts becomes mandatory. 

Broadly, accounting is bifurcated into two categories-

Cash Bases Accounting

Accrual Accounting

The Cash Based accounting pertains to the management of an individual’s personal monetary transactions. In this case, he keeps a track of the money he withdrew, deposited, gave or received from someone etc. This accounting comes to life when actual cash transactions take place.

The Accrual Accounting requires an accountant who notes the transactions even if no money has been actually exchanged. This method works on the principle of comparing or seeing the ratio of the expenses to expenditure. If the expenditure is more, you need to cut down your luxuries, if not then it’s always good to have some savings for future. This type of accounting tells you the amount that you owed; this might not match with the figure of your bank balance. 

After the latest and accurate help in relation to accountancy.

by: Tom

When you are looking for high-class advice concerning accountancy, it will be hard sorting out the best information from foolish accountancy proposals and guidance so it's best to know ways of moderating the information offered to you.

How to Choose the Right Accounting Software for Your Business

by: Brandon Hall

With any good luck and a good amount of hard work, you're having the same problem many business owners today are facing. Your business is growing rapidly and you're having problems controlling your finances. Time and time again, that Microsoft Excel spreadsheet you've been using just isn't getting the job done for you.

So, you’ve decided that you’re ready to take the next step, and buy a full-featured accounting software program. Many options are available to choose from, but I believe the best solutions to be Quicken Premier Home and Business by Intuit, QuickBooks Pro also by Intuit, and Peachtree Accounting by Sage. In order to decide on the right package for you, you need define the type of business that you operate.

With the rise of self-employment (businesses with one or more owners but no paid employees) a need has arisen to manage business and personal finances on one platform. Intuit has released Quicken 2005 Premier Home and Business to fill this need.

This software is perfect for the small business owner who receives income from investments, real estate, and/or internet marketing. Also, Quicken 2005 Premier Home and Business is well priced at only $89.95.

For more typical brick-and-mortar business owners, you will usually need a more robust solution like QuickBooks Pro or Peachtree Accounting for functions like payroll reporting and check producing. Each piece of software has its advantages, but don't forget that QuickBooks has been the standard in business accounting software for many years now. As for features and basic operations, both applications will provide you the same functionality and convenience for your business.

Do You Need Accounting Software For Your Small Business?

by: Jakki Francis

 

If you’re anything like me then you dislike with a vengeance doing your accounts and taxes.

So how can you make this process easier, less painful and cut your accountancy fees?

Well buying an accounting software package is one way.

First of all you need to decide whether you are going to keep your accounting records manually, that is using pen and paper, or whether you are going to computerize the process.

If you decide that computerizing the process is the way to go then you need to decide whether to buy an accounting software package, for example Sage or Quicken, or whether a spreadsheet, such as Microsoft Excel will suit your needs better.

Accounting Police: Do They Exist?

by: John Day
 
Who created accounting principles? Who sets and revises accounting standards? What if you don’t follow all the rules, do you go to jail? Is there an accounting police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works: