Ways to Strengthen Your Business and Effectively Manage Your Business Funding

With the current situation of the economy, more and more entrepreneurs are starting to focus on how they can strengthen their companies and successfully manage their business funding. In recent years, business owners started use various gauges such as return on investment, operating income, and economic value to evaluate and appraise the status of the company. Despite these, however, the question on whether or not these gauges will really provide an objective assessment of the company remains.

The use of these financial measures is important in every business. However, it should be noted that in order to get a better picture of the business, one must also use metrics that are not focused on the financial aspects of the organization.

One of the ways to put together a better picture of the company is by using a Balanced Scorecard which utilizes the right combination of financial and non-financial gauges.

In a nutshell, the Balanced Scorecard refers to a system that attempts to provide the company owners with an accurate status of the organization. It uses a variety of financial and non-financial metrics that gauges the performance of the company. These include:

1. The financial component which measures the cost reduction, revenue growth, and investment returns of the company;

2. The customer component which looks into the market share, loyalty of customers as well as their satisfaction and profitability;

3. The Internal Business Process which tries to find effective methods for the company that will lead to an efficient way to meet its goals; and

4. The learning and growth component that focuses on skills and training of employees, knowledge on information technology and the efficiency of processes concerning administration.

Initially, looking at these components may appear overwhelming. But since the Balanced Scorecard is only meant to cover those gauges that show the company's strategy, the reality is that it is far simpler. Instead of using every measure that is available, those who are tasked to develop a particular scorecard should limit their list with those that look into the fulfillment of the company's vision, goals and objectives. Thus, one is expected to first create or find a specific strategy that he or she wants to measure.

Using a Balanced Scorecard system will maximize a company's efficiency not only in managing business funding but also in strengthening the entire organization. Because it seeks to measure the progress of the company towards its objectives, the Balanced Scorecard will give entrepreneurs an opportunity to align the business into its targets. This solves one of the most common problems in the field - the tendency for some companies to develop a strategy and then forget about it for years.

How To Profit More By Thinking Small

Can you actually profit more by thinking small? The answer is absolutely and there are countless small business owners working online who can confirm this! The fact is these successful entrepreneurs, most of whom work alone, are experiencing financial success that many larger businesses can only dream about! The point here is so can you and here are 3 reasons why, provided you're willing to invest some time and effort!

Less Overhead

The internet is the only platform that allows you to access a global community and all for next to nothing in terms of cost! This enables small business owners the chance to market their goods and/or services in a much more competitive fashion without the large expenses typically involved to do so! This therefore levels the playing field for all companies no matter their size to have an equal chance at making a profit! No matter whether you work alone or have many employees, the costs involved in using the internet as your marketing platform is very inexpensive! In fact the smaller your company the higher you can expect your profit margins due to the size of your payroll!

Niche Specific

Oh yeah a smaller market does means less competition but it's up to you to do the research to locate these 'gold nuggets' and this requires patience and diligence! In so many words you're watching the crowd and going in the OPPOSITE direction and this takes nerve along with a bit of faith! What typically sets successful entrepreneurs aside from the rest of the crowd is their self confidence and vision! Testing new markets or opportunities online dramatically reduces the risks involved since the largest investment is usually just time and effort! On the other hand when the niche proves to be profitable, these small business owners are able to enjoy the financial rewards and with less competition!

Taking the Leap

Do you possess the 'moxie' to take chances and test the findings your research has uncovered? Many people are reluctant to take action primarily due to the 'unknown' or the necessary commitment involved if they do! Once again successful entrepreneurs possess a 'gun ho' attitude due to their self confidence and usually don't think twice about putting their plans into action! Being the internet greatly reduces any financial risks, many who aspire to business success experience a boost in their own confidence as well! This results in more people taking the necessary actions required and experiencing the rewards associated with the steps they've taken!

By using the internet as your primary marketing platform it is indeed possible to profit more than many larger businesses! Small business owners, most of whom work alone, have proven this point in a very convincing fashion and just about anybody can join their ranks! The 3 underlying reasons there are so many successful entrepreneurs found online are reviewed above and cost, or lack thereof, is the dominant factor! Although you may not be required to make a heavy financial investment to get started or even operate your own business, both your time and effort will still be needed! Do you have the motivation it takes to join the ranks of these successful entrepreneurs and enjoy similar financial rewards? If so get busy!

Bookkeeping Tips for Small Business Owners

Bookkeeping is an art and science. It has a set number of established rules and yet the system can be freely modified by users as per need. Bookkeeping and accountancy are often confused to be one single discipline. However, these are two different disciplines. Bookkeeping principally involves keeping a proper record of all the transactions that take place, whereas, accountancy involves processing and analyzing the recorded transactions. The point where the two overlap is, the preparation of balance sheet, cash flow statements and other analytical, costing related statements. The preparation of these statements is basically said to be a combination of the two, as it involves both recording and interpretation of transactions. Conventionally, bookkeeping has been considered to be a part of accountancy.

When it comes to small businesses, owners in several cases, are impartial to the importance of bookkeeping and accountancy. However, the use of these two disciplines even in small businesses proves to be productive and effective, in not just keeping a track of money, but also in analysis. Here are some simple tips, tricks and guidelines which will help you to maintain very good books of accounts.

Bookkeeping Tips and Tricks

Before we start off with the tips, here's one suggestion, make it a point to follow the double-entry system. The significant advantage of such a system is that, two entries offset and verify each other and any possibility of mistake or fraud is ruled out. Essentially, this system, which was developed by Luca Pacioli is considered to be the perfect system to maintain the books of accounts, due to the two self-verifying entries. Apart from that, it is also not that difficult to execute.

1. Proper Books, Every Day
This is the first and the most important step in the bookkeeping process. Punctually maintaining proper books of accounts is in fact the first step of bookkeeping. It is wise to pass journal entries as soon as the transaction takes place. Now, you can select two types of 'basis' for the entries, they can be either cash entries, that is the entry is recorded in the books of accounts as the transaction takes place. In accrual basis, the entry is made before the transaction. When you maintain books of accounts, you can pass entries in the journal and then transfer all the entries to the ledger book, before the closing of the day. To simplify matters, you can maintain 5 more books:

• Cash Book (for cash transactions)
• Creditor-Debtor Book (recording all transactions done on credit or debt basis)
• Purchase Book (entries for purchase)
• Sales Book (entries for sale)
• Bank Book (transactions affecting bank accounts)

These books can be updated regularly, by first filling the journal and then passing the entries in the ledgers and the aforementioned books. Regularity in bookkeeping leads to enlightening accounting and further more, profit.

2. Periodic Balance Sheet
It is wise to prepare a balance sheet at short and regular intervals. One side will contain all liabilities including the current liabilities such as creditors. The second side shall contain all assets as of date and their market value. While preparing such between-the-year balance sheets, make it a point to include all accrual and market values. Such a balance sheet can be prepared at every weekend, after a quarter or after a 6-month period. Fact is, preparation of such a balance sheet always helps you to keep a better track of your financial status and that of the business.

3. Proper Record Keeping
Apart from maintaining the books of accounts regularly, make it a point to accompany them with appropriate records. For example, your purchase and sales books should contain all invoices and the creditor-debtor books should contain all bills of exchange, promissory notes, etc. Keeping such records will help you to keep a tab on the accounts and it is also a very good verification system.

4. Include Costing in the System
Now this one's a pretty difficult one. You can include a cost sheet, which can be made at regular intervals, such as a week, month or even a quarter. The cost sheet, depending upon your business should include the following:

A total of all possible incomes and sales, per unit (divide the total income by the number of units sold/produced/in-stock) and the number of unsold units and the ones which are still in process (approximate monetary amounts).
The purchases, costs incurred, expenditure of machine hour rate, relevant depreciation and all possible expenditures, per unit or per hour (divide the total expenditure by number of units sold/produced/in-stock).
The third element on the costing statement is the first point minus the second point. In such circumstances, the derived figure should be positive, as it indicates profit.