Does My Business Need Workers Compensation Coverage?

workers compensation

This is a common question that many entrepreneurs ask when establishing policies related to their business.  It comes as no surprise that, with everything you’ve invested in your business, you want to be able to protect yourself, your assets, your finances and your employees as much as possible.  But is workers compensation coverage something that you should worry about?

What Kind of Industry is Your Business In?

Workers compensation entitles an employee who is injured on the job medical coverage as well as monetary compensation in exchange for that employee waiving their right to sue the employer in a court of law. When it comes to whether or not such insurance is required, many people believe that worker’s compensation is something that is more relevant to some industries than other. It makes sense, too.

People who work in jobs where they are constantly lifting, moving, and operating heavy equipment are more prone to injury than those who spend their entire working day sitting behind a desk. Nevertheless, workers compensation is something that every business should have, even if the nature of your company’s work isn’t inherently dangerous. It doesn’t matter if the people in your office never lift anything heavier than an ink pen, accidents in the workplace don’t necessarily have to be related to the work that you do.

When asking yourself the question of “Does my business need workers compensation coverage,” there are several different factors that you have to keep in mind to ensure that the level or coverage provided by your worker’s compensation coverage is adequate enough to protect your company and your employees.

Let’s take a look at what you need to consider:

  • What you can afford – The kind of insurance that covers your business in case of an employee’s injury works much in the same way that your personal health insurance does.If you think that you can’t afford insurance, consider a basic policy that covers things like property and injury at a reasonable cost.  It should be noted that, like personal insurance, a higher deductible means lower monthly premiums and vice versa. Keep that in mind when you shop for a policy.
  • Take a look at your business and the risk associated with it – Anyone who asks “Does my business need workers compensation coverage,” should know that looking at the level of risk their company faces will help determine what kind of coverage would be ideal for their situation.From determining just what around your work environment can pose a threat to the safety of your employees to determining how you can treat and perhaps reduce that risk, it’s adamant that you keep such factors under constant review.

This is so that you never pay for more coverage then you need, and at the same time, you have enough to cover any possible mishaps.

  • What are the local laws? – Many states require companies to be covered some way, so the question of “Does my business need workers compensation coverage” then becomes a matter of how much you need. The law is different in each state, so you’ll have to contact your local insurance commissioner’s office to find out just what you need and how you can go about getting covered so that you, your company, and your employees are all covered in case something happens

It’s important to be covered for incidents that you couldn’t possibly foresee. Without workers compensation coverage, you open yourself up for lawsuits if someone happens to get injured on your company’s property.

Best case scenario: The ruling is in your favor, but you’ll still have lost money to attorney’s fees, and will have spent a large amount of time dealing with the issue.

Worst case scenario: a lawsuit from an injured worker brings about a number of costs that your company never fully recovers from.

When asking yourself “Does my business need workers compensation coverage,” take the time to think about what could happen without it and you’ll have your answer.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more interesting topics to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

How to Reduce Operational Risk

how to reduce operational risk in your business

The question of how to reduce operational risk is one that should be on the mind of every business owner. It doesn’t matter if you run a hot dog cart or a multinational conglomerate. It doesn’t matter if you’re the only employee or if you employ a workforce that could populate a small city.

Whoever you are, whatever you do, you need to know about the many different ways your company is constantly exposed to operational risk. You also need to know what you can do to reduce risks so that they aren’t as much of a hazard to your company’s success.

Doing so is necessary to maintaining a competitive advantage. It also ensures that your company is able to keep a strong presence in its sector. Because no businesses are alike, the risks that they face will differ, so this post will take a broad look at how to reduce operational risk. By the end, you’ll be able to take the principles of what’s discussed here and apply them to your own business practices. This should allow you to reduce the impact of the losses that your business could incur as a direct result of risk.

4 Steps – How To Reduce Operational Risk:

Step 1:  Managing Equipment Failures

For all of the good that technology has done for the world of business, the equipment that you use to conduct your operations can still break down. Depending on the severity of the failure, you could face crippling losses in revenue.  It’s because of the fact that technology has become so intertwined with businesses that extra steps have to be taken to:

  • safeguard information
  • make sure all equipment works properly
  • ensure alternate plans are in place in the event of a failure

If your company relies heavily on information technology (IT) infrastructure like a computer network, then make sure that programs and hardware are up to date and protected by the best security that you can afford.

If you operate in manufacturing, transportation, or any other industry that relies heavily on machines with a lot of moving parts, then the question of how to reduce operational risk can be answered by adhering to regular maintenance and making sure that small issues are addressed quickly enough that they don’t become large issues.

Step 2:  Keep Strong Business to Business Relationships

Your business wouldn’t be able to survive without the work of other businesses. Whether you rely on another company for supplies, shipping, or anything else that you need to count on in order to run your own enterprise, it pays to keep strong relationships with other companies.

In thinking of how to reduce operational risk in this respect, you have to look at common risks like miscommunications, accounting errors, delivery failures, incomplete or missing legal documents and vendor disputes as ways that business to business relationships can expose your company to risk.

With this type of operational risk, you want to make sure that you and your vendors and suppliers are always on the same page when it comes to your transactions. It never hurts to double check figures and make sure that invoices, quantities, and other aspects of the business to business supply chain are correct.

Doing these things can keep your relationships strong and reduce the likelihood that errors common in these sorts of interactions will have negative effects on either side of the transaction.

Step 3:  Having Adequate Insurance

You want to make sure that, in the event that something does happen, your business has the proper insurance it needs to cover the event.

It could be anything from property damage to a personal injury, but having an insurance policy that covers something that could negatively impact your business could mean the difference between a minor and major disruption in your business operations.

When thinking about how to reduce operational risk as far as your insurance coverage is concerned, go over your existing insurance policies and make sure that all possibilities are covered. It pays to consult with a representative of your company’s insurance broker to guarantee that you have all of the coverage you need.

From property insurance to liability, there are a number of different types of insurance that you can get to cover your business. Make sure you have them all and risk won’t catch you off guard.

Step 4: Know the Regulations

If you stay up to date on state and federal regulations as they relate to your business, then you take a huge step towards knowing how to reduce operational risk. Whatever it is that you do, you want to make sure that all of your business practices are well within the confines of the law of the land in which you operate.

Things like health and safety standards, employee wages, licensing and certification, taxes, and permits all have an influence on how you’ll run your business. Don’t let ignorance of the law lead to trouble later down the road.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

How to Perform a Break-Even Analysis: Step-by-Step Guide Provided By PORTAL CFO

break-even analysis

As a business owner, it goes without saying that your ultimate goal is to make a profit. Before you make a profit, you have to reach what is known as your break-even point (BEP). This is the point at which revenue earned will match your expenses.

If you can figure out how to perform a break-even analysis, you can determine whether or not your company has reached its BEP. Even if you haven’t reached that point yet, performing a break-even analysis can help you determine when you will reach that point so that you have something tangible to work toward.

Let’s take a look at the various methods that many companies have used to see how close they were to their own BEPs and you will see for yourself how to perform a break-even analysis.

Your Company’s Costs

When it comes to trying to determine what your company’s BEP will be, there are several factors that you need to consider. Among them are:

  • Your Fixed Costs – These are the costs associated with your company that stay the same every month. Things like the rent on your office space, your insurance, utilities and the like.
  • Your Variable Costs – These are expenses that can change from month to month. Things like shipping payments can be considered variable costs that your company has to undertake. If you perform a service, the quantity of how many items you need to buy in order to perform that service can also change from month to month.
  • Your Prices – How much are you going to charge a single customer for a unit of what your provide? Having a concrete answer for this is essential to determining your company’s BEP.
  • Your Revenue After Each Sale – After performing the service, you have to look at how much money is left (from the customer’s payment) once you’ve recovered the costs directly related to performing the service. This amount is your average gross profit.

Each of these costs goes in to figuring out how to perform a break-even analysis. Once you have these costs sorted out, you’ll know exactly how much you need to sell in order to cover all of the costs associated with your business.

In order to figure out exactly what your BEP is, you need to divide your company’s fixed costs by the contribution margin of your of your product.

The contribution margin is what you get when you subtract the variable costs related to a unit of whatever you sell from the sale price of that unit.

Say you run a pizza shop and you want to figure out the margin on a large cheese pizza. Let:

Margin (M) = ?

Price (P) =  $12

Ingredients (I) = $3

Wage (W) for the employee who makes the pizza = $7

The formula for the contribution margin would be P – (I + W) = M or 12 – (3 + 7) = 2

This means that you make two dollars off of every twelve dollar pizza that you sell.

From there, you take the fixed costs that you business has over a certain period and divide them by the two dollars that you make on every pizza. This would tell you how many pizzas you need to sell in order to break-even over that given period.

The complexity of the formula for how to perform a break-even analysis depends on the variety of your offerings. In the above example, for instance, you would need to factor in the different kinds of pizzas you sell, as well as other food items, but the general idea is always the same.

Cutting Your Company’s Costs

If, after you figure out how to perform a break-even analysis, you BEP is higher than you’d like it to be, you can look at your costs and figure out where you can retool certain aspects of your business in order to lower the BEP.

This can range from raising the prices on your products and services to using the most cost-effective supplies to finding another office space where your rent isn’t as high.

By figuring out how to perform a break-even analysis, you can take variables and put them in place of the actual numbers to try and find the best solution for running your business, so that you can make a healthy profit.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

Small Business Growth Strategies: Tips to Help Your Company Grow Profitably

small business growth strategies

When it comes to your company, there are several different small business growth strategies that you can employ in order to make sure that your company thrives and your profits grow.

From establishing your own unique niche to making sure that your customers know that your offering is the best in the market, there are many things that you can do to make sure that your company expands and enjoys a lucrative future.

Let’s take a look at some small business growth strategies that other entrepreneurs have used. You may be able to adopt some of these for yourself or draw inspiration for your own ideas on how to make your company expand.

Common Growth Strategies for Small Businesses

  • Finding a Niche – Does your target demographic have a certain need that you and your competitors are failing to meet? By doing market research among the chief audience that you want to sell to, you can find out if they’re getting everything they want from businesses like yours.

If you manage to dominate a section of a market early enough, your name can become one of few (or, in some cases, the only one) associated with that product or service. This method takes a lot of work, but the reward for finding an untapped segment of the market and providing for it far outweighs the work that goes into finding it.

  • Network, Network, Network – Whether you do so at a conference, an industry trade event, through professional associations, speeches, or dedicated networking events, you’ll never know who you’ll meet.  Small business growth strategies that involve networking are great because you can meet people who have interests similar to yours and chat with them about what you do.

Who knows what kind of relationships networking could lead to? You might meet potential business partners, employees, suppliers, and other people who could help your company thrive.

  • Develop Your Website – In this day and age, when an increasing amount of business is conducted online, there’s no reason not to have a website for your business. That said, once you do have a website, you want to develop it so that it’s as easy to use as possible.

By supporting your company with an engaging website, you make it easier for customers to find you and buy from you.  A well-developed website will allow customers to find what they want quickly and easily.  Being able to navigate a site with ease is essential to keeping a customer happy and turning them into a repeat buyer.

  • Advertise – This seems like a fairly obvious method as far as small business growth strategies go, but it never hurts to reiterate it.

Many times, the most successful means of getting the word out about your company can depend on what your target demographic is. Younger buyers may look to social media and the internet more, while older consumers rely on television and print. Figure out who you want to advertise to and that should give you some idea about how to do it.

  • Diversify – When it comes to running your own business, variety can always help you in some way.  Depending on your industry, the range of products and services that you provide could make your firm a one-stop shop for the needs of some customers. If your industry is one that is especially affected by the seasons of the year, then diversifying what you offer is definitely a great way to get your business to grow and become an industry leader.
  • Find New Uses For What You Offer – When it comes to being able to get things done, some people have to rely on being able to do more with less. If you can find a new use for something that you offer, then your customers will reward your innovation with brand loyalty and recognition that makes your company’s name synonymous with the industry in which you operate.

Take the time to look over various strategies, figure out what works best for your company, and formulate a strong business plan that maps out exactly where you want to go and how you plan to get there.  By doing that, your company will be on its way to profitable growth in no time.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

How to Reduce Operating Costs: Cost Saving Strategies for All Businesses

reduce operating costs

Whether you want to reduce operating costs out of desire or necessity, the options that you have available to you are varied enough that you should be able to find a solution that fits your company.  With that in mind, let’s look at how to reduce operating costs and what other entrepreneurs, as well as business experts, have done in the past.

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How to Undertake a Financial Restructuring: Tips on Turning Your Company Around

how to undertake a financial restructuring

If you’re a business owner who is interested in creating the best possible financial environment for your company, then you’re probably wondering about how to undertake a financial restructuring that will make that a reality. Whether things are going well or not, you need to evaluate your situation so that you can come up with a clear, attainable plan as to how you’re going to be able to remain competitive. You want to reach a point where, despite economic conditions being what they are, you’ll be able to eventually grow and expand in the future.

Before you ask about how to undertake a financial restructuring, let’s get a quick look at common scenarios that warrant taking that path to see if this is your best option.

  • Does your company have excess personnel? – Many times, staff responsibilities can overlap to the point where teams, divisions, or departments are doing the same thing. In some cases, one of these can be repurposed for other tasks, or the department can be eliminated outright in order to reduce cost and consolidate workload.
  • Has Your Net Profit Been on the Decline? – There could be one big reason why this is happening or several smaller ones that are working together to hurt your company’s financial viability. Regardless of the cause, an expert financial consultant who initiates a financial restructuring can help eliminate these and put you back on the right path.
  • Has Your Company’s Offering Been Overshadowed? – When something new is introduced to the market and your company is unable to keep up, you may have to change the way you do business so that you can be competitive once again.

These are just a few scenarios that warrant restructuring your company’s operations and there are several things you can do to get back right on track.

How to Undertake a Financial Restructuring: Common Strategies

It’s important to remember that no two firms are exactly alike, so the advice provided here may have to be adjusted slightly to suit your company’s situation. That said, these strategies have proven to help companies across a diverse number of sectors time and again.

  • Work with New Leadership – More often than not, a restructuring brings in new management. Whether this is a new CEO, CFO, project manager or any other position, this person may have new ideas and insight that can help get the company get back on track. Listen to what they say and take their advice. It could lead you to great things.
  • Consult Outside Help – When it comes to figuring out how to undertake a financial restructuring, a fresh set of eyes can make all the difference. If you bring in an expert who has no bias toward your company, you may be made aware of issues that you never knew about before.
  • Practice Transparency – The worst thing that you can do when your company is rearranging its operations is to keep people in the dark. Everyone from your employees to your investors deserves to know exactly what’s being done to keep the company afloat and see to it that the doors stay open. Doing this doesn’t just make it so that there aren’t any surprises, but shows that you’re someone who can be trusted. People will be more likely to stay by your side during transitional periods.
  • Establish Your New Goals Early. Reiterate Them Often – In working through how to undertake a financial restructuring, you want to make sure that you never lose sight of the objective. Make it clear what the entire point behind your company’s restructuring is and, once you see what you want to do, pursue that vision as aggressively as you’re able to.

Regardless of the strategies that you use to turn your company around and make it profitable again, you’ll want to make sure that your practices are sustainable, so that you can try to avoid turbulent times in the future.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more valuable articles to help you successfully manage the challenges of growing your business profitably, please search our blog at our website www.portalcfo.com.

How to Pay Employees: What You Need to Know About Pay Structures

employee pay structure - Portal CFO Consulting

employee pay structure - Portal CFO Consulting“How to Pay Employees?” This is a question that many who are new to owning their own business ask themselves.

And why not?

The people who work hard to make sure that your company succeeds deserve to be compensated for their time and effort, but it can often be difficult determining how pay is going to be distributed among your workforce. This is because there are a lot of different factors that you have to keep in mind.

When determining how much an employee should be compensated, you need to keep in mind qualities like:

  • Your location and what the average person in your area makes for the same kind of work
  • The condition of the job market
  • The employee’s background and experience
  • The industry standard

Beyond that, figuring out how to pay employees also involves how frequently they get paid, the method through which they get paid and how things like benefits and company perks will affect that employee’s pay.

Let’s take look at many of the other factors that you have to determine when it comes to employee pay and, hopefully, you’ll be able to conclude what the best practices for your own company are.

Ways to Pay Your Employee

When it comes to how you pay the people who work for you, the most important thing to remember is that you have three basic methods for determining how they will receive their income:

  • Commission – When an employee gets paid on commission, he or she receives pay based on what has been sold. A percentage of the goods that the employee sells will be given to them as their compensation, so if you want to determine how to pay employees so that they stay motivated and you keep key talent then commissioned pay might be right for you.

While this structure has advantages like unlimited earnings potential and some degree of freedom, you have to be aware of the fact that this pay structure can also lead your salespeople neglecting good customer service in favor of chasing the biggest possible sale.

A salesman who only receives commission may not take the customer’s needs into consideration, or they may choose which customers they aid based on who they think will lead to the biggest payday.

  • Hourly Wages – This is by far the most common method of payment in our society. With this structure, the employee is paid a regular rate that gets multiplied by the hours that they work over a pay period. If you’re looking for a method on how to pay employees that will produce work when you need it and keep you from paying an employee when business is slow, then this is the kind structure that you should use. You may also get employees who are willing to work at times when others aren’t, like holidays, because they may need the money.

Some Disadvantages to Consider

As a business owner, one disadvantage you face with hourly employees is that labor laws state that you have to pay overtime (the employee’s hourly rate plus half) for every hour over forty that they work. If you don’t limit how often those employees work, payroll can start to encroach on your margins.

  • Salary – Through this form of payment, the employee receives a set amount of money per year, distributed in the same amount every pay period. Salaried employees typically don’t receive things like overtime, but the tradeoff is that they have a bit more flexibility about when they work.

One disadvantage that you face as an employer is, if this is how you pay employees, your ability to offer compensation as a reward for additional work is limited because of the employee’s fixed income. Salaried pay may also offer little in the way of appreciation shown for the extra work that an employee does. This could potentially affect morale.

Which of these structures you use to compensate your employers can have a lot to do with what kind of business you run and the size of that business, among other things, but the structure of the pay isn’t the only consideration that you need to take into account when figuring out how to pay employees.

Other Considerations

Besides the structure, you also have to consider the method of delivery (traditional paper check or direct deposit) as well as the perks that you can afford to offer.

In addition to adequate pay, many employees and job seekers also look for benefits to make their lives easier.

Some benefits that many people typically look for in employment can consist of:

  • Insurance like health, dental, and vision
  • Adequate vacation time
  • Employer sponsored retirement plans where contributions are matched by the company
  • Flextime to work at least some hours at their convenience provided the quality of their work doesn’t suffer.

Remember, when thinking about how to pay employees, it usually goes beyond what you offer in the form of a paycheck.

Your employees want to feel like they’re valued and their contributions matter in the larger scheme of things. Beyond that, you can retain loyalty by offering benefits that ensure security and promote a healthy work/life balance.

Show your employees that they matter and you’ll get quality work out of them in return.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com.  Follow us on Twitter @portalcfo

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