Why Business Owners Should Embrace Effective Internal Controls

Internal controls are the backbone of any small business, whether it’s a doctor’s office or a retail operation. Without them, your business cannot function effectively or profitably.

Here’s what the Association of Certified Fraud Examiners (ACFE) found in their 2014 Report to the Nation on Occupational Fraud & Abuse:

  • The median loss caused by fraud was $145,000
  • 22% of cases lost at least $1 million
  • 85% of cases dealt with asset misappropriations
  • 39% of cases were corruption schemes
  • 9% of cases dealt with financial statement fraud

Additionally, the ACFE noted that smaller businesses (less than 100 employees) tend to suffer disproportionately large losses compared to larger companies. Employees committed 42 percent of frauds. Collusion – more than one perpetrator – resulted in the largest losses.

The good news is that organizations with internal controls fair better than those without. Here are three ways to ensure internal controls are effective in your small business. 

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Going the Extra Mile for Growth

For emerging entrepreneurs who want to get create some momentum and grow their business, going the extra mile may seem like too much work–but you’d be wrong! Customers already expect you to meet their needs and troubleshoot their issues. That’s a given. What separates you from your competitors is when you do the things that customers don’t expect.

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The Power of the Testimonial

It’s tempting to toot your own horn, but it’s far more effective when someone else does the trumpeting for you. When it comes to expanding your company’s reach and client list, you can’t beat a sincere, yet complimentary testimonial. Add another tool to your business toolbox and learn how to grow your business with testimonials. Knowing how to ask for them and when to use these good reviews will get the greatest impact.

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Small Businesses: Choosing Health Insurance Penalty

After the Affordable Care Act passed last year, a lot of analysts and business owners began discussing the impact that it would have on small business health insurance. The law requires small businesses with at least 50 employees to provide health insurance to their employees who work 30 or more hours per week, on average.

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Small Business Comparison: LLC vs. S Corp

Small business owners who do not have a legal or accounting background get confused when they have to compare a bunch of different options for incorporating. One of the common decisions is that of an LLC vs. S Corp. There are similarities, differences and advantages between the two, but they can be complex to summarize. Here are a few of the basic similarities and differences.

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How to Conduct a Job Interview: 4 Ways to Go Beyond the Typical Questions

When you run your own business, the question of how to conduct a job interview is one that you will have to answer eventually.

Knowing that, it’s important for you to realize that conducting an interview involves much more than simply asking the right kinds of questions.

So what is it you need to do to ensure you conduct the best interviews and, as a result, be able to effectively screen the right candidates?

That’s a question we’ll be looking at in this post as I explain how to conduct a job interview, so keep reading to learn more.

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Cash Flow Management Strategies: How to Make Your Money Work for You

Ask any successful business leader and he or she will tell you that no company, great or small, can survive without the right cash flow management strategies.

It’s important to remember that, as a business, you don’t just have an obligation to your customers; you have obligations to your employees and creditors as well.

That’s why it’s important to keep track of the money that moves through your business.

Cash is king when it comes to managing the immediate needs of your business and when it comes to planning for the long term, so it needs to be adequately managed down to the last cent.

So let’s take a look at some cash flow management strategies that you can apply to your business. You’ll see just why this simple concept has such big implications.

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The Importance of Small Business Goals: What You Can Do To Improve Your Bottom Line

As a consultant to entrepreneurs like you, one thing I like to do is repeatedly stress the importance of establishing small business goals and then doing everything within your power to achieve them.

But just how can you ensure your goals translate into real-world success?

Unfortunately, there isn’t a catch-all answer to that question, if only because no two industries are exactly alike. At the same time, no two businesses within a given industry are exactly alike either.

Even so, the fact is that goals are what drive business owners to make the decisions they do.

So let’s take a look at some small business goals that you should consider and I’ll show you how they’re important to taking your business to the places you want it to go.

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Identifying Business Structure

Knowing How to Classify Your Company

As an entrepreneur, you’re probably asking yourself about identifying business structure in order to better organize your business to deliver your products and services as efficiently and effortlessly as possible.Identifying Business Structure

By knowing about the organizational structure under which your company works, you’ll not only have a clear idea about who in your company is responsible for what, but what your company is capable of as far as leadership and manpower are concerned.

By having a clear structure in which everyone has a defined role that he or she performs, a job can often get done quickly and without any confusion as to who is responsible for what, but is this kind of organization always needed within a company?

Let’s take a look at the practice of identifying business structure and you’ll get a clear idea about how important it is and whether or not it’s something you’ll need to take up.

The Types of Business Structure

There is no one type of business structure that’s one size fits all.

Since businesses come in all kinds of sizes, so too do the types of structures that cater to those businesses. You wouldn’t need a board of directors for a small, locally owned grocery store anymore than you would attempt to have a single executive run a multinational conglomerate.

Because of this, there are several officially recognized types of business structures that a company can claim, but it all depends on several factors. In addition, each type of structure has its advantages and disadvantages.

So let’s take a look at each type of structure and you’ll be able to determine what’s best for your company.

  • The Sole Proprietorship – Your business is a sole proprietorship is the type of business you run when you are the only employee involved.

    Whether you simply want to make a little money on the side in order to supplement your full time job or you feel as though you’re enough of an expert in a given subject that you could be successful as a consultant, the sole proprietorship is the business structure you would classify your company as so long as you’re the only employee.

  • The Partnership – This is the structure you would follow if you were starting a company with another person or a small group of people.

    If you are identifying business structure as a partnership, then it’s important to know that all of the partners are accountable for profit, loss, and liability.

    Likewise, each partner has a legitimate claim to profit as they are considered joint owners of the company.

  • Corporation – This is the most complex of business structures due to all of the people involved, as well the number of laws that are in place specifically to govern corporations.

    This type of business structure is unique from the others in that corporations are, in a sense “people”. While a group of entrepreneurs may form a corporation, it eventually becomes separate entity from those founders.

    Under law, this means that a corporation can legally do things that people like you and I can do like open bank accounts and own property.

    Unlike other types of structures, the owners of corporations are not responsible for things like debt and lawsuits. Any financial judgments made against a corporation are taken from its assets, not those of its share and stockholders.

  • Limited Liability Company – This is a fairly new classification of business structure that combines some of the features of both partnership and corporation.

    If you are identifying business structure as an LLC, then you should know that LLC status is typically granted by state statute.

    Within an LLC, owners may be individual members, corporations, and other LLCs and most states allow an LLC to have only one member.

    Identifying business structure as an LLC is advantageous because it allows you more flexibility in how you manage your business as opposed to what you can do with corporation status.

These are the basic types of business structure that you can use for classification when you begin building up your company.

It’s important to remember that each type of structure has its own setup procedures, paperwork, and red tape that you have to work through in order to make sure that you are in compliance with the law, so it pays to have an expert in business advising to make sure that everything involved with identifying business structure is in line before you actually get started.

By knowing the rules associated with each type of business structure, and just what the advantages and disadvantages are with each one, you can be well on your way to running a successful company that will be on the minds of your customers for years to come.

This post is a part of a series that helps you identify opportunities and problems within your small business.
Click here to read more related posts.

Identifying Business Strategy

How to Plan Ahead In Order to Get Ahead

Identifying business strategy is an important part of running your own company, no matter what industry you operate in.

I would say that doing this is especially true for small and medium sized businesses that are nowhere near the level of maturity that many of their competitors have reached.

When it comes down to it, being aware of your corporate strategy is very much like developing your business plan during the beginning stages of your business.

The difference here is that you could argue that business strategy planning for future development once your business is up and running is much more involved than initial business planning.

Since your company has begun establishing itself in its sector, gathering a steady customer base, and bringing in a respectable amount of revenue every quarter, it only makes sense that the stakes are higher now.

By identifying business strategy, you can make sure that your company continues to follow the path that brought from its infancy into the role of a legitimate business and continues to take it farther than that.

So let’s take a look at some of the ways that you can make sure you identify and establish the right strategies in order to achieve long-term objectives.

Analyze Your Situation

When you’re planning anything, whether it’s related to business or not, you want to look at the situation    and try to consider any factors that might affect your plans.

As far as your company is concerned, this would mean making sense of your business environment. That would include factors like:

  • Knowing your industry – Is your industry currently in an upturn or downturn? Is the nature of your industry such where new developments are always emerging (i.e. technology)? Are there times of the year that are bigger for your industry than others (i.e. toys and Christmas)?

Questions like these should be on your mind all the time, but they should be especially prevalent when it comes to identifying business strategy.

  • Knowing your customers – You wouldn’t be anywhere without them, so it helps to know just who your serve so that you can further capitalize on your efforts and strengthen your reputation among consumers.
  • Assessing the viability of your ideas – While you’re analyzing your situation, it pays to know just how plausible any ideas you might come up with would be. You may want to test certain practices, seek advice from colleagues and mentors, and study any similar situations that may have occurred in the past

Testing your ideas will allow you to see how well they might thrive in the market or, conversely, how poorly they might do if rolled out on a larger scale.

By testing your ideas early, you can either generate a positive buzz and create anticipation for a future product, or kill an idea before it hurts your revenue and reputation.

Analyzing your situation is a step in the right direction but, once you’ve done that, it’s time to follow through.

After you’ve looked at the circumstances, the next step is identifying business strategy by establishing long term goals.

Key Long Term Goal Areas to Examine

Since every business is different, there is no true one-size-fits-all formula for coming up with an effective business strategy, but there are a few areas in which every business should establish goals.

Some of those can include:

  • Your standing compared to the competition – Look at what the companies you compete against do as far as business is concerned and figure out where you want to be. By knowing this, you can figure out if there are things that you can do better than them, capitalize on those area and try to take some of their market share.
  • Your employees – Not only do your employees often serve as the face of your company, but their skill drives it, making them an important part of identifying business strategy.

From providing additional training in important skill sets, to implementing policies that keep morale and productivity high, you should work to develop your employees and offer an example that other companies will want to follow.

  • Growth – This goes hand in hand with planning your business’s future, but you should clarify just what kind of growth you want to undergo.

Do you want to get a larger office? Open additional locations? Expand the variety of offerings you bring to the market? Expand the geographic area that receives your product?

Growth in business can mean many different things and part of identifying business strategy has to do with just how you want to grow.

By identifying the type of growth that you want your company to undertake, you can establish a clear path for how to get there.

In order to plan a corporate strategy effectively, you have to look to the past, the present and the future.

Only by knowing where you’ve been, where you are right now, and knowing where you want to go in the future can you establish a strong, well-thought out plan that will help you navigate your industry and outmaneuver your competition.

By taking the right steps in identifying business strategy, you can not only avoid actions that might harm your business, but seize opportunities that will take it great places.

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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This post is a part of a series that helps you identify opportunities and problems within your small business.
Click here to read more related posts.