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Identifying Business Strategy

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identifying business strategy

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-size 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 your standing, you can figure out if there are things that you can do better than them, capitalize on those areas, and try to take some of their market share.
  • Your employees – Not only do your employees serve as the face of your company, their skill drives it; which makes them a core 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 achieve.

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 achieve, 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 to great places.

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.

This post is a part of a series that helps you identify opportunities and problems within your small business.
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What Is Purchase Order Financing?

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what is purchase order financing

It isn’t uncommon for owners of small companies to ask What is purchase order financing? when looking for ways to gain some quick capital for mission critical operations. The thing is, however, that purchase order (PO) financing is something that might be ideal for a certain type of business in a certain type of situation, but it may not be something that works out in other scenarios.

In this post, we’ll explore PO financing and see just what you can use it for. Afterwards, you’ll have another bit of financial knowledge that will benefit you as an up-and-coming entrepreneur and will be that much closer to running your business with the best of them.

So, what is purchase order financing?

It’s a Way to Make Purchases Without Depleting Cash Reserves

As a small or medium sized business, you have to make sure that every dollar is spent wisely, right? That means that you need to be absolutely sure that you’re getting the best possible deal on supplies, equipment, and services that you need to run your business.

During the early years of a business, margins can be thin, so you can’t afford to let any of your resources go to waste. Still, cutting back isn’t an option. If you scale back on what you need to serve your customers, your reputation could suffer, people might turn to competitors, and you could lose market share quickly. That’s where PO financing comes in.

Whether your situation has your company seeing a lack of revenue as you attempt to turn your company around, or you’re saving your reserves for potential growth and expansion, you can use PO financing in order to continue operations.

When asking the question of “what is purchase order financing”, it’s important to think about how such a tool works as well.

In many ways, it acts as a form of cash. You can use a purchase order to pay creditors tomorrow for something that you’ll receive today, so to speak.

What happens is that you go through a PO financing company. That company then buys from your suppliers on your behalf.

The suppliers then fulfill their end of the agreement that your business has with them and the end product is delivered to your clients.

After the transaction is complete, the money from the letter of credit that the PO financing company drafted is released to the supplier and you typically have 30 to 60 days to pay an invoice to the PO financing company.

When to Use PO Financing

The question of “What is purchase order financing” goes hand-in-hand with when it should be used.

One such ideal situation for using this financial tool to further your business would be if one of your customers came to you with a large order that could potentially mean big things for your company.

While this is the break that you have been waiting for, the reality of the situation may be that you don’t have the capital or resources on hand that you need to make the order happen.

Bank loans may be out of the question as well, even if you have strong relations with your lenders.

When that happens, PO financing is your best bet for making that large order a reality so that you can deliver your product to your customers and grow as a company.

More About PO Financing: Who Uses Them

While many entrepreneurs may ask “what is purchase order financing”, they may fail to realize that the nature of this type of financial agreement limits exactly what kind of entrepreneur can use it.

These are the types of businesses that should typically be asking “What is purchase order financing?”

  • Producers – If you make a product, then PO financing could be an easy way for you to secure a large amount of raw materials that you use as ingredients. 
  • Distributors – You may find yourself having to send out a larger volume of a product than you usually would. In that case, PO financing can help you reach that goal.
  • Wholesalers – If you need to fill a larger than usual order with an existing customer, or are expanding to clients who purchase more than you normally supply, a PO financing may help cover the difference here. 
  • Resellers – Business owners in this industry who ask themselves “what is purchase order financing” can benefit from having more of a product to sell to customers by using PO financing.  

If you’re a business owner who wants to fulfill larger obligations to clients, but you aren’t asking yourself “what is purchase order financing”, then you should be.

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

How to Reduce Business Debt

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how to reduce business debt for service business owners

Once you’ve got your business up and running profitably, you probably want to know all about how to reduce business debt, right?

Depending on the kind of debt that it is, it could be eating into your cash flow and keeping you from expanding the way that you want to. It makes perfect sense that you want to get rid of any business debt you accumulate as quickly as possible.  Keep in mind that in some cases, there is debt that is “good” for your business.  We will discuss “good” business debt in a future post.

In many cases debt is inevitable, especially during the earliest phases of a company’s development.

Fortunately, that debt doesn’t have be something that constantly hangs over your head and keeps your enterprise from being the best that it can be.

Let’s take a look at some of the different strategies that you can employ to reduce your company’s debt.  You’ll see how you can gain peace of mind through business debt reduction.

  • Work with your suppliers – In figuring out how to reduce business debt, one of the first places that you should look should be the suppliers from whom you buy raw materials

If you happen to be behind on supplier payments, you want to work out a payment plan with your suppliers that will help you to get current with them.

Your company most likely depends on what your suppliers sell you, so you want to settle any outstanding debts with them first and foremost.

Doing so will make sure that your relationship stays strong and that you continue receiving the items you need to provide your own goods and services.

  • Sell, sell, sell – In order to reduce debt, you need to increase revenue. That much is obvious. There are several ways to go about doing that; the most straightforward of which is to increase your sales volume and move more product and services than you have in the past.

Offer incentives to your customers to get them to buy more, as long as its viable for you to do so. As you manage to sell more products, you can use the additional revenue to reduce your company’s debt.

  • Restructure – When many business owners try to figure out how to reduce business debt, one thing they often fail to consider is how much restructuring might help them reduce debt.

From selling surplus inventory and unused equipment, to cutting back on excess around the business, there are a several small, but significant things that you can do to get closer to your goal of eliminating your company’s debt.

  • Reduce Your Operating Expenses – This could fall in line with restructuring, or be its own strategy entirely.

Think about the things that always cost your money around your business.

You have your utilities like electricity and water, as well as services like your internet connection. Furthermore, you have the office itself, which you most likely pay to rent.

While it’s true that these things are the cost of business, it doesn’t mean that there aren’t ways to reduce them.

If it’s realistic for you to do so, consider moving to a smaller office or switching service providers for more cost-effective solutions. The money that you save could be reallocated to tackling your debt.

Likewise, you could consider alternative scheduling for your employees. If you encourage them to spend time working from home on their own schedules for part of the time, you can ease a transition to a different office.  Likewise, you may not need to purchase, power, support, and maintain as much equipment around your office.

  • Look over your taxes – Speak with your accountant, CFO, or any other financial expert that you employ and they can help you figure out how to reduce business debt.

One way that they might do this is by going over what you pay in taxes and making sure that you are counting all of your eligible deductions throughout the year.

It pays to do this often because tax laws are always changing and new ways for businesses to take advantage of tax breaks are always popping up.

You want to make sure that your annual tax bill is always at its lowest possible number, so that any money left over after you pay the IRS can go towards reducing your company’s business debt.

Keeping your debt under control is one of the most important things that you can do as a business owner, so you want to make sure that you’re taking every step that you can to pay back creditors and keep outstanding balances from impacting your company’s bottom line.

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.