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Budgeting for small businesses

When you are starting off on your own business, there is a lot on your mind. Planning your product’s marketing strategy, forming your business policies, getting the registration done, setting up your office and the related infrastructure, hiring employees if needed and a lot more. However, one of the key factors that most small business owners fail to plan on is the budget! Budgeting your business is vital to ensure that you are making enough profits not just to meet current expenditure but also to be prepared for future growth and contingencies. If you have poor budgeting, you could actually be headed for a major loss and won’t even realize it. Here are a few tips on how to budget effectively for small businesses:

1. Remember that a budget is not just meant for huge companies. It is nothing but a tool to plan and measure your finances, which is important for any business, no matter what its size.

2. Plan your budget based on quarters (3 months). Cutting it down into measurable portions will help you forecast better and plan your strategies accordingly.

3. The first thing to do would be to forecast your sales revenue target. Remember to keep it realistic and achievable.

4. Based on the performance of your business in the past, come with a cost of goods sold. Subtracting this amount from your sales revenue will give you your gross profit margin.

5. You will need to factor in fixed costs such as rent, power bills, employee salary and so on and subtract this from the gross profit.

6. Calculate your variable expenses (expenses that change in correlation to your sales). This could include travel as well as commissions paid. Subtract this from your profit margin as well and you will arrive at your net profit.

7. Judging by how much net income your have gained and how you expect your business’ expenses to grow, adjust your mark up for the next quarter.

Filed Under: Business, Spending Tagged With: , ,

Online Businesses; Top Ten in Customer Service

“The customer is always right” is a saying in business that’s gone a long way in the world. Keeping return customers is important in any company and it’s how they keep alive. Some companies are better than others in the way they treat their customers, and some are really bad. The really bad ones will be in the next post, but for now, here’s the top 10 businesses that know how to pamper their customers, by Financial Times.
The businesses were rated by Stella Services who examined and interacted with online companies, judging them in customer services. Stella’s analysts then graded each company with scores between one and 100 on such points as customer relations and communication, online tools, shipping and returned items. Then they grouped the scores into four groups;  Elite, Excellent, Approved and Not Recommended. Here is FT’s 2010 top guest pamper-ers.
10.) RoadRunnerSports.com; sports apparel and accessories
Customer Relations 93
Distribution and Returned Items 92
Online Tools 92
Final Score 92
9.) Amazon.com; books and resale items, toys, electronics
Customer Relations 87
Distribution and Returned Items  93
Online Tools 99
Final Score 93
8.) DVDEmpire.com; DVDs
Customer Relations 92
Distribution and Returned Items  92
Online Tools 95
Final Score 93
7.) L.L.Bean.com; outdoor equipment and apparel
Customer Relations 97
Distribution and Returned Items  91
Online Tools 91
Final Score 93
6.) Staples.com; office supplies
Customer Relations 95
Distribution and Returned Items  96
Online Tools 92
Final Score 94
5.) BeautyBar.com; beauty products
Customer Relations 93
Distribution and Returned Items  99
Online Tools 93
Final Score 95
4.) BlueNile.com; designer jewelry
Customer Relations 96
Distribution and Returned Items  94
Online tools: 95 points
Final Score 95
3.) Diapers.com; diapers, baby food, clothes and products
Customer Relations 93
Distribution and Returned Items  99
Online Tools 96
Final Score 96
2.) Soap.com; brand name beauty products, household items, more
Customer Relations 93
Distribution and Returned Items  99
Online Tools 97
Final Score 96
1.) Zappos.com; shoes, bags, accessories
Customer Relations 95
Distribution and Returned Items  99
Online Tools 95
Final Score 97
Filed Under: Business, Marketing Tagged With: ,

How To Increase Profits In Business?

Business always depends upon profits and loss. You need to increase the profits regularly in order to run your business successfully. There is no reason for you to make loss in a business and continue it. Do business only if you can make profits out of it. This is the concept of business. There are many ways in which you can increase the profits in your business.

It is not an easy task though. To earn profit in any business you need to be on par with the competitors. The basic rule of business is to but at lower rates and sell at higher prices to make profit. So make sure that your product or service follows this rule. The cost of producing & selling the product or service should be very low and thus give you maximum profits.

The second method for increasing profits is to have good relationship with the customers. You need to maintain good relationship with the customer in order to get good business from them time and again. This way you can ensure that business runs without any hurdles. If the customer is happy with your services he / she will continue business with you for a longer period and might even encourage others to do business with you. Customer as they say is really the king of any business. You maintain good relationship with them and you can do well.

The last but not the least fact is the need to cut the unnecessary expenditures, which means you need to keep an organized ledger of what you spend. In the 21st century we use ecommerce software of some kind. This will not only help you keep track of expenses, but allow you to research marketing options and conversion rates. Knowing how much money will be coming in will allow you to make decisions on future orders or investments for your business. You need to check the cost of production and ensure that all these smaller expenses are cut down as far as possible so that there is scope for higher percentage of profit from the business. This is accepted rule in this world. It can really take your business to a new level.

Filed Under: Business, Management Tagged With: , , ,

Hire for the Future, not Just for Today

Hiring practices have changed because the world has changed according to the recession. An employer can no longer hire someone for the job and then expect that person to morph into what the business needs in the future. The employer needs to hire people for what they can bring to the company tomorrow, too.
Cross-trained employees are becoming the new breed of what’s wanted. Businesses who’ve reduced staff because of the economy have put more on their employee’s plates and learned how to do the same amount of business with less help. It was a move out of necessity that’s becoming a business standard.
Employees, Update Your Skill-Sets

A person has to keep up on the current needs, constantly learning new things and updating skills. It’s not something new to the working world.
Say a person has hotel management skills and is applying for that position. The employer will now see previous experience as more important than it used to be, taking in all the potential employee’s skills and not just the ones they went to school for. Hiring with the future in mind is key to having employees that can morph into new times and new needs.
When hiring strategically, there’s three main characteristics identifying the practice:
  • 1.) No cutting corners on hiring; screening and selection should not be taken lightly; check for cross-training and skills that will come in handy down the road, as well as for the job immediately applied for.
  • 2.) Employee turnover should be something that’s controlled and not something that ‘happens to’ a business; it should be a strategic decision.
  • 3.) The business owner should pay attention to what the person can do for the company in the future, and not just right now. Hiring for those positions can and should be done within the company, and not left open to those who aren’t part of the picture already.
Filed Under: Business, Hiring Tagged With: , ,

Update That Resume Right Now

Got a resume? Got a job already? In this day of world-wide recession, nothing is for sure anymore. Businesses that were well established with customer bases have gone out of business because of the recession; either they were directly affected by the slow-down of revenue or their suppliers and vendors have gone out of business, affecting them indirectly, but seriously.
People should update their resume periodically, even if they’re not looking for work at the time. Just keep it ready, just in case; as mentioned before, nothing is for sure and the potential for loss is real. But, just updating the resume with job titles isn’t all that needs to be done. Get new skills as time goes on, as well.
New information should be on there – not meaning in recent job activity, but in skills and experience. It should be always fresh with things the person has learned along the way; new skills, refresher courses, anything that the worker didn’t do or know before.
Get That Update Done! It Just Takes a Minute

Even a waitress has new skills to learn these days, with new popularities all the time, and most restaurants now have a computer-based ordering system and many of those have applications to track the worker’s attendance and tardiness. This means restaurant chefs, managers and everyone – maybe even the dishwasher – has new skills to learn in order to do their job efficiently.
Think of what’s been done that wasn’t common before and think about the level of experience given to it. If a secretary suddenly has to deal with customers as well as the boss’s schedule, some new selling skills, or at least product information will be learned.
Updating regularly is important because we don’t always remember what we did six months ago, or when exactly we learned some certain skill. It’s hard to try and remember everything done, and something important could be inadvertently left off. It’s better to just do it and then it’s done for a while, and when it’s needed all the information will be there.
Filed Under: Business, Hiring Tagged With: , ,

Gamification; a New Word in Business Trends

New strategies for business are coming out all the time. The latest craze seems to be trendy and is getting picked up by all the most popular sites, like Facebook, and other sites that want to attract new members (or regular users). The new deal? Points, credits and badges.
Coined ‘Gamification,’ it’s all over the place. People are ‘winning’ at businesses all over the ‘Net by participating in their business endeavors. Even Facebook has now come up with credits that can be spent on accessories for their games, like recipes and furniture in CafeWorld (and many other games) and when one shops at a site like ShopAtHome.com they can win Facebook credits for each transaction.
Lots of other businesses are looking to get involved with Facebook credits – Facebook has over 500 million users and earning credits is actually bringing business to the companies that offer it. With 500 million users to shop around online and spend their rewards on Facebook, it’s a win/win situation that can’t lose.
Gamification is Spreading Like Wildfire

Lots of sites are starting up their own credits system, no matter what they call it. People can reach a certain purchase amount that rewards the purchase with different levels of participation. Those levels are rewarded on different levels and it encourages the customer to buy more, or at least participate regularly.
Other new strategies like Groupon attract business for the site for a one-time deal, but companies are finding that with no further reward, people use the coupons and don’t return to the business again. Coupons are the same way; people wouldn’t use certain businesses without one, many times. It seems getting good service isn’t enough to draw back repeat business anymore.
The new gamification, though, involves points that earn a reward for the shopper, badges to show off and discounts on further purchases. If a company has no way of rewarding their customers, they can offer rewards at a different site, like Facebook with credits. It draws people there and keeps them spending. It’s like free coupons on different products with every purchase.
Filed Under: Business, Hiring Tagged With: , ,

Retraining Might be Better Than Replacement

There are times in every manager’s career when they’re depended upon to motivate employees who are poor producers or who can’t really do the job – and decide if someone should be fired. A person that doesn’t have the training for the job can lose money for the company and offend potential return customers with their ignorance.
In these hard financial times, firing a person is cruel, since jobs are so difficult to find, and it’ll cost the employer more in rehiring and training another person.  For this situation, giving the employee more training is of utmost importance for both the company and the employee because the business has already spent money on training and wages thus far. It would be less expensive to simply retrain (which will go faster since the person has already gotten some of it), and it may make a more loyal employee who knows the job better in the end.
Business Ethics are Invisible, at First

Sometimes people are hired and it’s not obvious what work ethics they have (or don’t have). They start out good, but what about the one that never seems to improve? The one that moves slowly, mismanages time and gets behind easily, or leaves tasks undone at the end of the day should be considered, warned and given a probation period in which the person should improve in order to remain. Retraining may be the answer, and if that doesn‘t help, then replacement is in order. It’s still cheaper than hiring and training a completely new person for the position, and could turn out a good employee afterwards.
People have greater needs during this world-wide recession, and some very creative ways of getting those needs met have become commonplace. Collaboration is one of the new forefronts that’s giving lots of small businesses a way to survive. They share employees, advertising, storefronts and utility bills, and it makes for less overhead and more profits.
Consider the options. A manager can do better at their job when their staff is well trained and wants to stay, and sometimes retraining is the answer.
Filed Under: Business, Hiring Tagged With: , ,

Predicting The Future

If you could predict the future, you could make your business fit right into whatever is coming, thereby shielding your business from hard hit economic times or changing interests across the country.  No one can say when or if the economy will ever completely recover.  No one can predict with any accuracy how long the recession will last.  No one can tell when money will no longer be a problem and prosperity will once again take hold.  Wouldn’t it be nice if crystal balls were real and there was someone out there who really could see into the future?

Of course we cannot do that.  There are however, indicators or business trends, past times and different things that can give us an indication of where the economy will go, how much our business will be needed in the near future and for how long to come.  There are actuaries out there crunching the numbers daily. There are researchers gathering data and forming hypothetical conclusions that will impact our spending, and the future of our businesses.  For example, taking many things into consideration, there is a way to predict what the young people will be spending their money on in the future.  There is a way to predict what needs the elderly will have in the coming years.  There are trends in the economy, that while not carved in stone, have been shown to be fairly good indicators or future behavior. By watching statistics of babies being born, predictions can be made as to how much of something we will need 20 years from now.

If you have been at your business for many years, there are probably specific indicators within your own field to tell you which way the business will probably go in the coming years.  Paying attention to all of those small hints can help you formulate a plan to keep your business healthy during these hard economic times

Filed Under: Business Tagged With: ,

The Advertising Budget

If your company provides a product or service, you want to get the word out.  You want everybody knowing the name of your product or service.  You want your product or service to be the first one they think of when it is needed.  So does every other company providing the same product or service.  Keeping your name out there is important to the success of your company.

There are ways to do this.  You can have your company logo placed on something as little as a pen, to something as large as a blanket.  In prosperous times, you could hand out pens by the dozens with your company name and logo on them.  This has been proven to be a very effective marketing tool.  You can expand that into computer wrist rests, coffee mugs, backpacks, key chains, flashlights, anything that people might need to use on a regular basis.  The point is to have your name being seen over and over and over again.

Choosing catchy slogans has been proven to be invaluable in having people remember the name of your company.  Running commercials continuously throughout the day on television and radio is another effective way to get your company’s name out there.  There is advertising space to be bought all over the Internet.  There are pop ups that will literally put your company’s name in someone’s face even if they are not looking for it.  Advertising is expensive and some companies are finding that this is not in their budget at this time.

Businesses have to advertise.  Without letting the consumer know that you have a better product or service at a better price, your product will sit on the shelves, your service will go unnoticed.  Be as creative as possible.  Find lots of ways to get your name out there, without having to put too much money into it.

Filed Under: Business Tagged With: ,

The Good Manager

Every employee in your company is an important part of making your company successful.  If you did not have a mail sorter, a lot of communication would not be happening.  Without a computer tech on hand your computers can spend days not producing work.  Without a team of competent people, who are well versed in your business and its practices, your business would not run well, and would not be profitable.  To that end, without a good management team, the rest of the team would fall apart.  There has to be someone at the forefront directing the flow of creativity.

Good managers are worth keeping.  A good manager works well not only with the employee, but with the boss as well.  While the manager knows exactly what the boss wants and how to get it, he also is very hands on with the employees, so he knows what they are capable of.  He knows how to dole out the responsibilities, and because he works closely with the employees, who knows exactly which employee would be the best for that particular job he needs completed.

A good manager has a great rapport with the employees.  He is easily accessible and more than willing to listen.  He is stern, making everyone work to their potential.  If an employee has an issue and has a manager he feels he can bring this issue to, the problem can be solved, without it having to fester and turn into something more than it need be.  A good manager is a good negotiator.  He can bring issues to the boss, offer solutions that will please both parties, and resolve small problems on his own.  A good manager can strengthen the relationship between boss and employee, boss and customer, employee and customer.

A good employee listens to a good manager, a good boss places his trust in a good manager and a good manager keeps the whole business running smoothly.

Filed Under: Business Tagged With: ,
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