How to Set Financial Benchmarks to Achieve Long Term Success

milestone2You need a starting point to establish business benchmarks. What better place to begin than with your own financial results. If you have been in business for at least a year then you can use annual data and look for specific areas to improve. Likewise, you can benefit from this practice in a brand new business, too. Here’s how.

The first step is to bring your books up to date.

Yes, I know, bookkeeping is not the most attractive task in business but it is something that we all have to do. If you are dead set against sitting down with the numbers consider subbing it out. Whatever you have to do this year to stay on top of the finances, do it. Believe me having this part of your business in order pays off when you know exactly how things are going. Also, when it comes to building your ideal business model with bench-marking, there is no room for guesstimates. Only actual will do. 

After completing the bookkeeping, the next phase is financial reports.

In this step, you prepare an accurate Balance Sheet, Profit and Loss Statement and a Statement of Cash Flows. These are the three basic reports that managers use in business. They are the score cards that provide information such as the amount of sales made, how much profit remains and what is the balance of cash in the bank. Other financial data that you may want to use for bench-marking comes from Accounts Receivable Aging, Accounts Payable Summary, and Debt Schedules.

Now you are ready for forecasts and benchmarks.

Using the historical information from financial reports is how to jump-start the process. The reports contain key numbers that you will use to calculate figures specific to your business. So rather than creating hypothetical measures, use actual financial results. Since business conditions rarely stay the same you should expect results change in future periods.

Your company is constantly changing so be prepared to forecast changes, too. One way to do this is by establishing a multiplier for each statistic you track. A multiplier provides the amount by which forecasts will increase. For example, if sales were at $100,000 at the end of the year and you expect them to grow to $150,000 over the next period, the multiplier will be 1.5 times the historical amount. Another point to keep in mind when forecasting is attrition so that you account for both the ups and downs in your business.

Overall, having the right data from the start is key to establishing benchmarks. When you couple financial information with thorough research in competitive performance, you have the makings for solid milestones in your business plan.

Do you use benchmarks in your business? Tell us how in the comments below. Want to learn what’s working for other entrepreneurs who are raising their financial IQ? Join our Facebook community.

To your success :^)

 

Think About Business Taxes Before It’s Tax Time

taxentrepreneurStaying up on tax laws is key to paying the least tax possible when you’re self-employed. Even if you hire someone to complete your return, use these tax strategies to reduce what you owe.

Pay Less Tax By Legally Reducing Taxable Income

Many self-employed persons are surprised to find that they can reduce their taxes by lowering the income they will be taxed on. You can do this by following a tax reduction plan the entire year. One strategy that entrepreneurs often miss is saving for retirement. When you contribute to a retirement account like a Self Employed Pension Plan, for example, you not only pay less tax, but build tax free savings.

Estimate Taxes Ahead of The Deadline

When you work as an independent contractor instead of an employee there is no tax withheld. That does not mean that you are not required to send in what you owe. A top concern for many entrepreneurs is how much taxes they will have to pay. You can figure this out by keeping a good record of sales and then computing your gross income. A handy tool that can help with this is an income tax calculator. When you have the estimated amount, be sure to send them in. Paying on time helps you save money by not having to pay late filing fees.

File the Right Forms

When you file a business tax return you will need to complete the forms. The one that you do will depend on your company’s legal structure. For example, if you are setup as a sole proprietor then you will need to file a Schedule C to report business income. Other forms, including Partnerships, “S” Corporations and “C” Corporations have their own forms, as well.

Being self-employed has many benefits including earning as much as you’d like. What matters overall is not how much sales you bring in but how much you get to keep.

Do you use tax reduction strategies to maximize your profits? Share your time proven tips in the comments below.

25 Financial Management Tips for Entrepreneurs

checksuccessEntrepreneurs are experts in their field but when they first start out many do not expect to be responsible for so many financial decisions. The following list will help you consider what practices you may be overlooking and need to put in place.

  1. Setup procedures to get bookkeeping down to a science.
  2. Use projections to forecast cash flows.
  3. Build relationships with bankers.
  4. Get information on financing.
  5. Build a team of experts.
  6. Surround yourself with people who are smarter than you.
  7. Delegate to people who enjoy doing the tasks you hate.
  8. Get to know the main aspects of money management.
  9. Stay in the know about changes in your market conditions.
  10. Know what goes into a budget.
  11. Watch your costs closely.
  12. Aim to fund the business with adequate cash flow.
  13. Keep your financial ratios in line.
  14. Take a conservative approach to projecting sales.
  15. Remember that revenues and expenses rarely move at the same rate.
  16. Use marketing ratios to expand on what works.
  17. Find out what goes into a request for proposal.
  18. Build a credit profile for your company.
  19. Invest in assets to strategically add value to your business.
  20. Always put the company’s cash to work for you.
  21. Look for investment opportunities to multiply profits.
  22. Be careful when choosing debt over equity to cover the cost of growth.
  23. Make income producing activities a priority in your day.
  24. Understand what you are responsible for in accounting, tax and business law.
  25.  Learn to appreciate the value of numbers.

The use of knowledge is power. As you go forward, which of the tips can you implement now that will be most helpful to your business?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seven Strategies That Enterprising Women Use To Create a Thriving Business

womenentrepreneurIt’s safe to say that no two women-owned businesses are exactly alike. Yet, even in our differences, the way that we run our companies have many things in common. Here are seven secrets to female business success that stands out for me:

  1. The first thing I notice among female entrepreneurs is our goal to consistently reach new markets. We build companies with staying power. That means we are conscious of not putting all of our eggs in one basket. We add diversity in our companies by adding new products, services and market segments. We also consider new ways  to fill a different need by focusing on our core strengths.
  2. Women in business seek better ways to get goods and services to their customers. We run our companies like lean organizations because we want them to be efficient. Keeping our eyes on logistics is key as we look for ideas to streamline our processes. We are careful to control costs while doing our best to meet high standards of quality.
  3. Female CEO’s realize that a successful enterprise is a growing enterprise. Women in business know the difference between being thirsty and being hungry for success. That’s why we set the bar high. For us, the focus is two-fold: Give extremely high value to customers and add extremely high value to the companies we own.
  4. We are also interested in building relationships. In business the adage, “Time is money” is true. That’s why it is key to build strong business relationships.  Industrious women know that the investment of time is the seed that produces long-term growth.
  5. Women business owners build companies with strong teams. No woman is an island. So women achieve their goals in business by delegating where they are weak and building teams to complement their strengths.
  6. We look for ways to reduce costs without sacrificing quality. When it comes to saving money, enterprising women are careful of where and when to cut expenses. We also look at costs as investments when they make our brands and market positions stronger.
  7. Enterprising women are interested in managing money well. This is a strategy that most women business owners do not take lightly. We start with the end in mind picturing where in retirement we want to financially be. Then with the help of financial professionals, we create our companies around our goals.

As an entrepreneur of over a decade I have personally used these in my business but can always improve (especially in number 5 — getting better at delegating roles).

So tell me in the comments below, did any of these tips strike a chord?

Every Entrepreneur Has a Passion and Creative Process

ladygagaopraThere is a ton of advice for entrepreneurs to help hone in on their purpose. A common response is figure out what you enjoy most and build a business around it. Many call this finding your passion but I think of it as finding your spark.   

For this reason I remind you to kindle afresh the gift of God which is in you through the laying on of my hands. For God has not given us a spirit of timidity, but of power and love and discipline.…

Not long ago I went on a journey to find the answer for myself. I started by remembering when I was a little girl playing for hours in my mom’s kitchen. I always enjoyed organizing and adding things up. Then I’d switch gears to play school with mountains of stuffed animals while teaching from the assignments I’d write. These memories revealed two things for me: my love for administration and teaching and my creative process.

Today I watched one of the most fascinating episodes of Oprah where she interviewed singer/songwriter Lady Gaga. In the interview Oprah asks about her Born This Way Foundation, career, and creative process. As I listened to Lady Gaga’s response I was inspired by two things.

To be creative, you need to know what frees you up to bring out the creative genius in you.

Lady Gaga mentioned that you need to, “cancel out the noise” so that you can be your creative self. I can relate to this process of pulling away. When I was creating my e-course, “How to Create Good Financial Habits and Position Your Business to Prosper”, unplugging from the busyness of business is what I had to do. So I limited the emails, turned off social media, and went on hiatus from events with family and friends. It is how I allow the creative spirit that comes from God to flow unhindered through me. As a result I not only found the inspiration for big ideas but the message that I was being led to deliver became undoubtedly clear.

Lady Gaga also shared the importance of having role models when developing your boldness. 

I thought it powerful that she once imagined one of her mentors, singer/actress Whitney Houston, singing the lyrics to one of her songs. What an awesome concept! This gives a totally new meaning to having role models in life. The lesson here is not to become less of who you are, but to see, believe and achieve who you want to be. Instead you can piggyback on the traits of women that you would like to emulate. When you imagine that the same phenomenal character that your mentors have is inside of you, it changes your perception of what is possible. That is the part of the creative process when you become a stronger, more confident, and unstoppable version of you.

At the end of the interview, Oprah asks the question, “What do you really want the world to know about you?” To that I imagined giving Oprah my response. Here is what I would say:

“I want the world to know that I care about enterprising women who are looked at as the underdog. My mission, this assignment that I am so passionate about, is to be a mentor and advocate for female entrepreneurs who daily dig in their high heels but still miss out because they do not have adequate finances.

Takeaways from the Lady Gaga interview:

  • Connect to your spark and fan the flames
  • Understand what makes you most creative
  • Find a way to express your gifts to the world

The episode of Oprah interviewing Lady Gaga was excellent! One of the best that I have seen on OWN’s #SuperSoulSunday. I could watch this episode over and over again (and I probably will)!

So let’s hear it…

Have you connected with your passion? How do you express your creativity? I’d love to hear about your experiences in the comments below.

Follow-Up Friday: The Most Wonderful Tools for Managing Action Items

You need to have all the pieces in your workflow to follow-through completely. Here’s how to do it by reducing bottlenecks in your business.

The success of your company hinges upon doing the right things in the most productive way. It requires knowing what resources are available and how to effectively use them. This is going to force you to assess your business routine and pinpoint the steps that are involved.

Create a Paperwork Flow With Multiple Access Points 

Now we all have to process paperwork for one reason or another. The goal is to spend the least amount of time doing it. Saving time is a factor of productivity that you can improve by making documents simple to access and find. Not every document that crosses your desk is going to be important but many of them are. Examples include banking, credit card, insurance, loans, and legal information. Online storage resources like Dropbox makes it extremely convenient to access files while at your desk and when you are on the road. Another time saving resource is Myfax.com which frees you up to send and receive faxes by email and on your cellphone.

Stock Up on Supplies

Nothing says, “stop the presses” like running out of supplies. Stay productive by being prepared with what you need on hand. For example, keeping an adequate supply of checks, stamps, and envelopes can help you stay on top of managing finances. Be sure to check your stock on a regular basis. Know how much time you need to allow for re-orders so that you are always well stocked with supplies.  Rather than making the trip in person consider saving time and money by ordering online and by phone.

Simplify Contact Management

Stay in touch with contacts by keeping your list up-to-date. A simple way to do this is by adding contact information in one place and syncing to a shared platform. Services such as Plaxo, for example allows you to duplicate contact information between on and offline software so that you can access contacts on your computers, tablets, and cell phones. Check out Plaxo’s video below.

Backup to Reduce Loss and Downtime

Now after doing the prep work and completing the tasks the final step is to have a way to protect and store your files. Believe me as someone who has seen hard drive failure on more occasions than I care to count, I realize how important this is to keeping your business running. One of my favorite tools is Carbonite  because it automates the process. Simply set the location for backup along with the date and voila! Like magic, it does the work for you.

So as you go through your action items today consider how to be more productive and efficient.

Remember that a little planning now saves a lot of time later.

I’d love to hear what tools make your workflow smoother. Share your tips with other readers by leaving a comment below.