How To Stay Ahead Of Competitors As A Small Business Owner

Even if you are a small business owner, it does not necessarily mean that you have no reason to stay ahead of your competitors. If others have cutthroat instinct for survival, you too should have some strategies that can help you thrive in a competitive business world. Even the best ideas can flop. This is why having a competitive advantage is one way you can pull ahead of your competition. Here are four techniques that can help you outperform competitors.

1. Identify strengths and weaknesses.

Your competitor may have an edge over your products and services, but this does not mean that you cannot emerge victorious. Every company has a weak point and this is something that you can use to outperform them. A company with a great product may have the poorest customer service. Find out what makes your company a better choice. It is also important to consider marketing and presentations. Even your prospective customers should know the importance of these selling points.

2. Keep customers involved.

Your product may be great today, but it can be easily forgotten the next day once they find a better replacement. However, if you are going to ask customers how you can enhance your product,  your competitors will be the last thing for you to worry about.

3. Choose large clients

One reason small business owners should go after larger clients is that they can help you yield better results such as increased revenues and more business. Compared to small companies that may require hand holding, larger clients are easier to service. You can also improve your credibility and even meet potential prospects. If the thought of approaching larger companies intimidates you, think about the long-term benefits you can get such as moving faster and gaining better ideas.

4. Keep track of your financial health

Any profitable business should never remain complacent just because of a good business performance. Your competitors can be like a thief in the night that will steal your position at the drop of a hat. If you are going to allow other businesses to pull ahead of you, growing your business will be a challenge. There is a good reason you have a good bookkeeper and that is to keep track of your financial health. Make sure you are checking your financial statements so you will know if your business is doing well.  Ask your accountant or bookkeeper about some recommendations to improve your business.

Change is also essential to stay on top of your game. This means that if you are still into traditional business process, you need to up your game by embracing technology.

Cash Flow Survival Tips For Small Business

A business cannot survive without a steady flow of cash. In spite of the profits it makes, the lack of cash flow can result in losing your business. Why is cash flow management important? How can business owners ensure that there is enough money for future investments and monthly expenses? Proper cash flow management is the secret to having a steady cash flow. Sure some businesses have secret sauce to ensure survival, but there are simple rules that are crucial to the survival of every company. If you manage your cash flow intelligently, you will be able to reduce error, plan for the future and manage your company’s spending habits. A few survival tips will not hurt:

Track, track, track

Handling your finances requires tracking everything so you will know what is coming in and what is going out. Simple oversights will result in losing track of your expenses. Tracking everything means you should monitor how much you are spending on company lunches and travels in real time. When you have a real-time view into cash flow, you will be able to have the ability to manage your cash flow efficiently.

Gain deeper understanding of your financial data

It is not enough that you generate a financial report because you should also understand whether or not your business is running smoothly. It is easy to misunderstand data unless you scratch beneath the surface. Got some questions? Ask your bookkeeper rather than assume that everything is doing perfectly fine. When information is outdated, the chances of making costly mistakes also increase. Make it a habit to consolidate your financial data to get accurate information. If you obtain financial information from multiple sources such as handwritten files, excel spreadsheets and some online tools, you can get confused in the long run.

Automate bookkeeping processes

Another reason your cash flow management is in chaos is due to manual bookkeeping processes. There are aspects of bookkeeping that you need to automate such as generating invoices. As your business begins to grow, it will be difficult for you to track clients who have and have not made payments. Automation bypasses the tedious process.

Evaluate spend

Are you doing good at spending? Do you always see to it that you renegotiate contracts and get a real-time view of your cash flow? If you want to drive growth, you need to know how to spot business trends. It is also necessary to formulate strategies that will improve your overall business performance. Costly mistakes can affect your business. However, if you are well-prepared, there is no other way to go but up.

5 Reasons Small Business Needs Bookkeeping

Tracking expenses is essential to all businesses and hiring a bookkeeping service is one way to make this task much easier. However, for small businesses, bookkeepers are not a priority because of perceiving bookkeeping as an additional expense. If you rely on DIY bookkeeping, there will be more room for mistakes you may tend to overlook essential information. There are good reasons bookkeeping is a must for your small business:

1. Transactions are classified.

Accuracy is important when generating financial report and spending time keeping books must also be a priority. A bookkeeper is capable of entering and classifying transactions as part of your pre-tax planning. Bookkeepers will also check your books regularly so you will not worry about payments come tax time.

2. You save time.

There are many problems associated with DIY bookkeeping such as failing to focus on other more important areas of your business as you are stuck in entering transactions into your ledger. If you let bookkeeping professionals take care of this task, you can save yourself from spending too much time on keeping books. These professionals have a sound knowledge with bookkeeping software and you will not also miss other great opportunities.

3. Manage payroll easily.

Whether you are a sole trader or in a partnership, it is important to note that as your business grows there will be additional tasks that you need to handle and one of which is payroll management. This is one aspect of running your business that you should not ignore. It includes creating checkes and making sure that income taxes are deducted correctly. You cannot afford to make mistakes. This why hiring a bookkeeper is important when handling payroll.

4. Prevent paying bills late.

It is easy to overlook bills when you are busy. Paying your bills may be a simple task, but it is mostly one of the obligations often forgotten. It can result in major and costly consequences. If you hire a professional to remind you of upcoming payments, late payments will no longer cause problems and worries. You just need to give access to your online accounts so the bookkeeper can check statements and even make payments online.

5. Generate reports when you need them.

Many small business owners are not completely aware of their true financial state. This is because they do not have access to the financial reports. Bookkeepers must make reports available to business owners on a bi-weekly basis so business owners will know how their business is doing. Reports also provide an idea where business stands. Problems are also prevented when financial reports are regularly checked.

Small Businesses: Tips for Improving Your Cash Flow

achievement-18134_1280If you are currently managing a small business, then I am sure that you are always looking for better ways to manage your finances, particularly your cashflow. This article provides some tips on how you can improve your cashflow in terms of managing suppliers, customers, inventory, and forecasting.

Managing Suppliers
When it comes to dealing with your suppliers, the number one tip is to pay them on time as much as possible. If the situation allows, you could also ask them for credit terms, which basically provides an interest-free loan for your business. Likewise, do not hesitate to ask for a discount or a good deal, especially if you order in bulk or make your payments early. In case you are not able to make a payment on time, communicate with your supplier as early as possible in order to set a formal agreement about the matter. Generally, the main purpose here is to maintain a good relationship with your suppliers.

Managing Customers
The secret to effective customer management is good communication. Whenever you have a new customer, always make sure that the payment terms are clear to them, and that your banking information is stated on your invoices. It is also a good idea to conduct a credit check on new customers, just to be sure that you do not run into any problems. In cases of large transactions, do not hesitate to ask for a deposit or set up a progressive payment schedule with your customers. Meanwhile, if you come across non-paying customers, the best thing that you can do is to offer them a payment plan that will eventually clear their debt. More importantly, regardless of the type of of customer that you are dealing with — be friendly.

Managing Inventory
In terms of inventory management, the two things that you need to watch is your profit margin and stock turnaround. Take a look at your products, identify which ones are making the most profit, and focus your time and investments on those items. Similarly, identify which products are “slow-moving” and come up with a plan on how to move them out as fast as possible. The money that you make from moving out these obsolete stock can eventually be used to invest on your more popular products.

Forecasting Your Cashflow
When it comes to forecasting your cashflow, what you can do is to search for a simple forecasting template and learn how to use it. By doing so, you can analyze your sales as well as identify patterns on when sales are at their highest and lowest.

By considering the ways in which you manage your suppliers, customers, and inventory; plus by learning how to do some basic forecasting — you will find that your cashflow will eventually improve in the long run.

What Does The Future Of Bookkeeping Look Like

Many small businesses have already adopted cloud accounting software. One of the reasons for the switch is the efficiency it provides especially in terms of data entry and reconciliation. These tasks can be time-consuming and they also demand accuracy. The cloud accounting software ensures these manual tasks are successfully done with ease. However, it cannot be denied that there are still small businesses that prefer to keep their legacy systems. The common reason is the unwillingness to adopt the new cloud culture.

With technology gaining traction on small businesses, cloud accounting software will have a full impact on various business processes. Even when the bookkeeper still handles the data processing work, less time is required to finish the task.

Is this the end of traditional bookkeeping services?

The common misconception of adopting cloud accounting software is that it completely eliminates the human touch from any bookkeeping tasks. The truth is cloud accounting software provides a chance for traditional bookkeepers to increase the number of clients because the tasks that used to take hours can now be done in minutes. It is also a chance for bookkeepers to redefine their role. That said, they need to focus on higher-end functions. These functions include review, regular reporting, interpretation and more.

The changes that are taking place in bookkeeping technology is also a great chance for bookkeepers to re-shape client perception. In the past, clients view bookkeeping services as merely taking care of their tasks and making a payment for the services. Bookkeepers can change this perception by letting clients realise that they can gain financial peace of mind by engaging the services of a bookkeeper.

How to expand traditional bookkeeping services

1. Payroll is probably one of the most complex minefields for clients. It often takes a large chunk of their time because the details need to be accurate. This is a service that can be offered by a traditional bookkeeper. Aside from enabling the client to save time and money, bookkeepers will also reduce the risk of non-compliance.

2. Good debtor management ensures a steady stream of cash for clients. Bookkeepers are the ones keeping the business on its feet as they can identify the clients having trouble collecting their own debts.

3. Software consulting is also beneficial to clients especially when adopting cloud accounting software. Even traditional bookkeepers undergo training so they can make use of the advances in bookkeeping technology. These bookkeepers can also provide sound advice on the cloud options available to the clients.

Is It Really Necessary To Hire A Bookkeeper?

For small business owners, hiring a bookkeeper is already considered an unnecessary expense because of believing that a bookkeeping task can be done without the help of a professional. A bookkeeper is known for taking care of necessary paperwork. Although not hiring a bookkeeper can save you money, not doing the task right can result in an expensive mistake. Financial report needs to be done accurately because it is where business owners check the performance of a business.

Reasons a bookkeeper is essential to a small business

You have difficulties growing your business: Growing your business is definitely one of the goals you wish to accomplish. A bookkeeper is responsible for recommending the steps that a business owner needs to take so business growth can be achieved. If a business owner does not have a bookkeeper and decides to grow the business, he may eventually suffer due to financial problems that he will face. A bookkeeper advises which direction a business owner should take. The financial report that they prepare will serve as an accountant’s reference for giving advice or recommendations.

You have no access to essential information relevant to your business: A bookkeeper provides valuable information to a business owner that will help them gain a deeper understanding of tax code. Due to the fact that the tax code is changing, a business owner needs an update of the changes.

You will have trouble tracking your personal expenses: Running a business can be a daunting task let alone monitoring your business expenses. When you are juggling multiple jobs at the same time, it seems difficult for you to determine where you are spending your money. A bookkeeper will advise you to have a separate business and personal accounts. This way, you will prevent mixing the two as it can trigger untimely audit from the ATO. When it comes to ATO audits, the burden of proof will definitely be on you because you need to prove that the expenses in question are business-related.

You waste your time and money: A bookkeeper puts things in proper perspective by helping you focus on more valuable aspects of your business while they keep your business on its feet. Time is money for business owners and this is why carrying out tasks efficiently is important. A bookkeeper that reminds you of your payment deadlines can help you avoid penalties and fines.

If you are still vacillating between hiring a bookkeeper and setting the idea aside, keep in mind that your business can be in chaos because you do not have a bookkeeper professional to prepare your financial reports or remind you of tax time.

Business Practices Your Bookkeeper Cannot Afford To Screw Up

When dealing with numbers, accuracy is very important especially if you are a bookkeeper. Financial reports are the lifeblood of every company. It is where business owners refer their decisions on growing their business. Before you can create a flawless business plan, getting your bookkeeping practices in place must be kept in mind. Committing too many errors on your financial report spells trouble.

Don’t pocket cash from clients

When it comes to securing a loan or seeking for investors, the profit margin plays a huge role. For small business owners, it can be tempting to pocket cash from clients considering the fact that it is your money. However, this practice can wreak havoc on your business in the long run because it undervalues your company. If the money you earn from clients is not on record, your financial report will appear to have a low profit margin and this will not qualify you for additional funds. It can also hurt your tax because when the cash is not reported, you will not be paying taxes on it and this practice is more likely to attract penalties once audit occurs. Make sure you deposit your business income into your business bank account if you want to increase your profit.

Don’t use personal bank accounts

Collecting your income in your personal bank account is not a good practice to follow because it denies you of getting a clear financial picture. How would you know if your business is making a profit if you have already mixed your business and personal bank accounts? You may not know your financial history if you have already fused two accounts into one. Knowing your financial history is a crucial step especially when ATO decides to audit your company. You can be held liable of paying additional taxes if you keep on following the practice.

Don’t ignore bank reconciliation

Make it a habit to check if your bank account is reconciled on a monthly basis. Bank reconciliation ensures that your bank account matches the amount listed in your bookkeeping software. Failing to reconcile regularly can end up overdrawing your bank account, which will result in shouldering bank fees.

Don’t underestimate the value of bookkeeping software

When tracking your financials, it is good to have bookkeeping software that will ease you into recording figures efficiently. Make sure you choose software that can give you real-time information and updates of your financial activities. Bookkeeping and accounting should be part of your routine. Avoid skimping on this valuable task because it allows you to monitor where your money is going. Tracking your expenses and income will give you peace of mind as you know you are not wasting money.

Good Bookkeeping Habits For Small Business

For small business owners, bookkeeping can be your least favourite task unless you are a fan of working with numbers. However, there are some good habits you can adopt so costly errors are prevented especially when it comes to record keeping. Once you are busy dealing with the financial details of your business, it is easy to overlook one of the most important aspects of your business. Although you might get tempted to tweak your budget, the problem may worsen once you lose track of your financial activity. It is important that you have a bookkeeping system in place so you can handle your money properly and prepare your records in time for audit.

Track your expenses

When you fail to track your expenses, you may encounter problems with missing tax write-offs in the end. When it comes to business credit cards, make sure they are tracked and kept together. Your payments must be kept up to date and the bill must be categorized into types of expenses. One way you can prepare for audits is to mark your calendars to keep track of important dates. This way, you will be able to substantiate expenses for your tax records. As a result, you will no longer have to worry about being audited.

Monitor deposits

Monitoring business bank account deposits can also help you determine if you are ready to pay taxes or grow your business. Having a separate bank account for your business will help prevent using your money for personal expenses.

Don’t ignore invoices

Another bad habit that can hurt your cash flow is allowing your bills to be left unpaid. A bookkeeper can track your billing and put a process in place so you can ensure that bills are paid in a timely manner. When there are unpaid bills, a bookkeeper can simply make a phone call and levy penalties. If clients are late in making payments, make a plan so you will know what to do.

Plan major business expenses

Analyse your budget before venturing into a big project and be honest about your financial standing. If you are always in denial about the expenses that your business incurs, you will not be aware that your spending habits are already hurting your cash flow. You also have to acknowledge that your business may experience seasonal ups and downs. When it comes to major upgrades, it is important that you forecast them so you will avoid taking money when it is not yet necessary. You may have enough money in good months, but you must also keep in mind that you should have enough cash in slow months.

What Are Considered Good Bookkeeping Practices

When it comes to running your business successfully, you need to incorporate good bookkeeping practices, which should be completed regularly. These practices are going to help you identify and fix problems before they take a toll on your business.  When these practices are followed on a regular basis, they become a habit and soon you will notice that your tasks are getting easier as you master these practices. The last thing that business owners want to do is worry about their bookkeeping practices. For those who have just started a small business, bookkeeping seems like a new concept and it may take time before you get a grasp of the bookkeeping practices. However, when you know why good bookkeeping practices must be followed, you will make it a point to incorporate them in your business.

The benefits of good bookkeeping practices:

•    Monitor the failure and success of your business regularly. Without following good bookkeeping practices, you can always make yourself believe that your business is still doing well. However, you will realise the importance of bookkeeping when you discover that your business is not doing good. Bookkeeping allows you to obtain timely and accurate information. You will know if your sales are increasing faster or if the expenses are too high based on your sales level. You will also have an idea if your expenditures do not appear as expected.

•    Make sound financial decisions. A bookkeeper can give you recommendations based on what they see on the financial report. Before a decision can be made, evaluating the financial consequences must be kept in mind. You will never know the financial impact of a course of action that a bookkeeper provides if you do not have a financial report. A financial report tells you where your business is headed. Is it time to hire another salesperson? Do you have a profitable product line?

•    Bookkeeping procedures are put in place. Before you obtain bank financing, a banker needs to see your financial statements including the cash flow budget, balance sheet and income statement. These statements can create an impact on your requested loan. You will also have to prepare your bookkeeping documents and procedures so the bank can verify if you are running your business in a professional manner.

•    Prepare an accurate tax return. Every business is required to file an income tax return and make timely payments of income taxes. Good records are essential in preparing your tax return and it also allows you to provide accurate information. When you have poor records, your business will have the tendency to overpay or underpay taxes. Good recordkeeping can help prevent chaos in bookkeeping.

•    Obtain other sources of capital. If your business is expanding, you need a partner that can help you with expansion. A prospective business partner wants to take a look at the status of your business and being familiar with the financial picture is one way for them to gauge if you make a good business partner. Suppliers and creditors will also require your financial records because they can use them as basis for identifying your credibility as a borrower. These sources of capital are less likely to put their trust in you if you have poor financial records.

Bookkeeping Basics: Why Are These Important In Every Business?

There are many small business owners who excel at creating impressive products and services, but may need extra help with basic bookkeeping. Business owners need to have a clear financial picture of what is going on with their business so cash flow problems are prevented. Do you already have an idea what your accounts receivable look like? Do you always have delayed bills payment? Although you have a bookkeeper to read financial reports, it is still your obligation to understand the figures so you can determine if your business is still on the right track. Keep in mind that your financial records provide you an idea of the health of your business. These records must be kept for six years.

The following must be recorded as they are the legal basics of bookkeeping:

•    Sale ledger confirming the receipts of cash and cash owed by debtor to the business;

•    Cash book or statement where money spent and received are entered;

•    Purchase ledger where business-related information is recorded;

•    Wage and salary ledger confirming all salary and National Insurance expenses;

•    Details of GST charges for businesses which are GST registered.

The Tools Required For Bookkeeping

Efficiency is required for bookkeeping endeavors to be successful. You become more involved in bookkeeping once your business becomes larger and more complex. While there are some strategies that may help you survive the concrete jungle of bookkeeping, unable to understand bookkeeping basics will render advanced techniques useless.

It is also imperative that you learn how bookkeeping works before you jump on to the more advanced approaches that will make day-to-day transactions a breeze. As they say, you have to walk before you run and the same is true with managing a small business. As you employ additional employees for your business, you need to make sure that everything is put in proper perspective.

Why bookkeeping must be taken seriously?

Do you know how some entrepreneurs end up losing their business? Poor financial management is a serious issue that needs to be taken seriously. Accounting fraud is a serious offense and should not be ignored. If you do not understand how the system works, your business will have difficulties moving forward. Bookkeeping may be a simple task that some small business owners often overlook, but it has a serious impact on your business.

When recording your expenses, your bookkeeper should have two journals, one for cash receipts and the other for cash disbursements. A business owner should also follow best practices for collecting payment. It is important for bookkeepers and business owners to track accounts receivable. This refers to the money due from customers. It needs to be kept up to date as this is also critical to your business.

The products you have in stock are also important and they need to be accounted for and tracked. Make sure the figures in your books are periodically tested through inventory. Aside from accounts receivable, you must also give importance to accounts payable. Timely payments are encouraged so your business can qualify for discounts. There are other aspects of your business that need attention such as purchases, payroll expenses, loans payable, owner’s equity and others.