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.
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Why Hire a Business Coach?

why hire a business coach for your business

As someone who runs their own business, you may ask yourself “Why hire a business coach?”

While you may have a good grasp on running your company, you should know that you still have a lot to learn.

It could be argued that this is true for a business owner no matter what stage of development the company is in.

While someone who has never run a company before certainly has a lot of growing to do, you may not realize that someone who has been an entrepreneur for a while could also stand to consult an expert on certain matters related to the business.

It’s a common misconception that only the inexperienced could benefit from the insight that an outsider can bring to the table, but this blog post will illustrate just why that’s a misconception.

So, why hire a business coach?

Well, let’s take a look at several scenarios where such expertise could come in handy, and you’ll quickly see why working with someone from the outside could be to your advantage.

You’re New to Running Your Own Business

This is the most obvious scenario in which you might benefit from some coaching.

When starting out, it’s all too likely that you’ll have countless questions about how things should go. It’s no secret that getting a company off the ground, never mind making it a success, requires a lot of different things to happen.

Besides having a strong business plan that helps you define the path that you’re going to follow, you also need to be sure that everything you’re doing is in compliance with both local and federal laws. From making sure you have the right licenses, to being certain that you have the right marketing practices in place in order to get as much exposure as possible, there are a lot of gaps to fill in between coming up with your idea and getting customers to hand you their hard earned money.

If you’re new to running a company and you’re wondering “why hire a business coach“, then you should be thinking about roadblocks that you could potentially come across and how you’ll deal with them.

You could certainly find a way to remedy these issues yourself but, without experience, how long will it take you? During a company’s early days, resources are especially scarce and you can’t afford to let anything go to waste.

So why spend more time dealing with a problem than you would need to? In all likelihood, a good business coach has the experience necessary to foresee potential issues and help you deal with them as quickly and efficiently as possible.

Your Company Is Running and Bringing in Steady Revenue

If your company has been in business for a few years and you’ve been able to get a handle on how operations should run, it somewhat makes sense to ask “Why hire a business coach?” It makes sense, but that doesn’t mean you shouldn’t consider hiring one.

Business owners whose firms are beyond the startup stage, but ask “why hire a business coach”, may not have much to learn about what goes into getting the company on its feet, but they have much to learn about growth, development, and expansion.

With everything that it took to reach this stage, the last thing you want to do is get comfortable to the point where the business plateaus and growth stagnates as a result. As your company establishes lasting relationships with customers and adds to its staff, there will be greater demands on your time and money.

A good business coach can help you effectively manage your revenue to make sure that it goes to the appropriate places all in the name of continued growth. It’s also important to maintain strong ties with banks and other lenders, in case you need access to additional capital for a project that would be beneficial to your company.

This may also be the stage where you evaluate the feasibility of moving into new markets. If that’s the case, then the answer to the question of why hire a business coach is obvious.

Moving into a new market can be an alien prospect for you as an entrepreneur, and good executive coaching will help you determine what you can expect to see as you move forward. You will have to conduct thorough research and planning when expanding your business.

Having a good coach at your side during this stage can go a long way toward making sure that the process goes smoothly.

Your Company Has Been Around For a While

A business owner whose company is in a mature state may ask “why hire a business coach”, but they need to be aware of the fact that companies in the same sector may be looking for their own market share, and will be aiming for the established companies as a result.

During this time, companies can benefit from the services of a business coach in order to examine the feasibility of going back to exploring new markets and creating ways to retain customers and keep revenue up in the face of increased competition.

If increased competition affects business, good executive coaching can help with a turnaround in order to successfully restructure the company and become viable again. It’s important to remember that, as your business grows over the years, you have to do everything necessary to keep the doors open and revenue coming in.

With all of the uncertainty that is a part of entrepreneurship, you want to take every advantage that comes your way and use it to make your company a success.

The question shouldn’t be “Why hire a business coach?”

Instead, it should be “Why NOT hire a business coach?”

From helping a startup establish itself, to helping a distressed company reinvent itself in order to keep the doors open, a good business coach can do a number of things from an objective point of view that just about any business could benefit from in the long run.

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 Operating Expenses in Business

Cut costs

You can never have low enough overhead. Many entrepreneurs are always trying to figure out how to reduce operating expenses in business.

Let’s take a look at why you should reduce operating expenses in your business and what doing so can ultimately mean for a business owner like you.

1. Why Do You Want to Reduce Overhead?

With economic times being as unpredictable as they are, there are a number of reasons why you might want to keep your overhead as low as you possibly can.

Do any of these scenarios sound familiar?

  • Customer demand for your goods or services isn’t what it used to be – It could be that what you provide is seen as something of a luxury that people feel as though they can’t afford to use at the moment. Or perhaps there has been a perceived decline in your product’s quality.

Regardless of the reason, people aren’t buying in the amounts that they once did. This could lead you to trying to figure out how to reduce operating expenses in business, among other things.

  • Revenue is down across the board – This could be tied to the decreased demand or could be influenced by other factors like you being unfamiliar with what your competitors are doing.

Either way, decreased revenue could have you scrambling to figure out how to keep your head above water long enough to work out a way to get a strong cash flow going again.

  • Revenue isn’t being used efficiently – Do you often find your business is spending money in areas where it doesn’t need to be?

Wasteful spending is every bit as much a hindrance to growth in business finance as it is in personal finance, so it makes sense that you want to look at ways to keep that sort of a spending to an absolute minimum or simply eliminate it outright.

2. What You Need to Know Beforehand

What many business owners don’t realize in figuring out how to reduce operating expenses in business is that doing so can often carries risks. This makes the process of lowering your overhead more trouble than it’s worth and could potentially leave you worse off in the long run than you were when you first started.

Before you think about ways to reduce your company’s operating expenses, there are several worthwhile questions that you have to ask yourself.

Namely:

  • How will my customers be affected? – Everything that you do should ultimately benefit your customers in some way.  If the actions that you take in reducing your company’s operating costs could conceivably alienate the people to whom you provide your services, then your plans will definitely need to be reevaluated.
  • Will the quality of my products suffer? – Offering product that is inferior to what you used to provide cancels out anything that you achieved through reducing your overhead. If they don’t notice right away, your customers will notice the decline in time and take their business elsewhere.

You want to make sure that your offerings remain the same so that you can keep your customers happy.

  • Will it put me at a disadvantage? – You always want to be able to keep up with your competitors, so your strategy on how to reduce operating expenses in business should never undermine your competitive edge.

If lower overhead means fewer offerings, a reduced service area, fewer business hours or anything else that competitors could take advantage of, then you need to rework your business plan to lower your expenses without having to resort to any of those potentially harmful measures.

3. What You Can Do

Knowing what you do about how your business can be negatively affected by lowering your overhead, keep in mind that there are still several ways to go about continuing your business while remaining profitable.

The question of how to reduce operating expenses in business without being detrimental can be answered in some of the following ways:

  • Look at your employees – It makes sense that most consumers hold good customer service above anything else when considering where they will spend their money. That’s why you want to look at your employees as a way of reducing business costs.

How is that done, exactly?

Train your employees and keep them happy!

By providing a high level of training, your employees will know how to deal with certain situations and will be able to meet the needs of your customers.

Show your employees how important they are to the company’s mission and you’ll keep turnover, which can lead to high costs for your business, low.

  • Consider outsourcing some business functions – Every business relies on important services like information technology (IT) for communication purposes, and accounting for bookkeeping purposes.

In figuring out how to reduce operating expenses in business, one thing you could look at is outsourcing these important functions to professionals who specialize in these areas.

With respect to IT, outsourcing can save you money be lifting the burden of having to maintain, install, and update equipment and software, as well as having to devote time and resources to dealing with troubleshooting.

With respect to accounting, having a consultant carry out your company’s financial oversight will allow you to take advantage of expert bookkeeping that will be able to oversee financial record keeping much more efficiently than you might be able to were you to take care of it yourself.

Outsourcing both IT and accounting are textbook examples of how to reduce operating expenses in business because they allow you to get business critical services while avoiding payroll expenses and other taxes you would incur if you had these professionals as part of your regular staff.

  • Look at your production costs – How much is it costing you to provide your services to your customers?

You want to look at the materials that go into what you provide, as well as your relationship with the suppliers who provide you with those raw materials.

Are there alternatives that you can use in your production without affecting the quality? Do you have a strong enough relationship with your suppliers that you would be able to renegotiate the terms of your contract?

Many times, figuring out how to reduce operating expenses in business can be as simple as forming and maintaining strong business to business relationships with other companies.

Other times, it’s a matter of finding alternative ways to do something that you’re already doing.

  • Conserve energy – This may seem like a very basic premise, but take a look at how much good reducing your energy bill can do and you’ll see why it’s such a good idea.

By taking small steps like turning off devices when they aren’t in use, using lower wattage light bulbs, and generally conserving whenever the opportunity presents itself, you can see a dramatic reduction in one of your recurring bills.

These are just a few of the measures that you can take to keeping your company’s operating costs low. You just have to remember that when it comes to figuring out how to reduce operating expenses in business, you want to look for examples that might be unique to your industry on top of the examples illustrated here.

Keeping your overhead low without sacrificing quality of service or withdrawing the affections of long time customers will go a long way towards helping your bottom line.

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

Check out our website at www.portalcfo.com for more tips on how to grow your business profitably.

You may also be interested in Learning How to Reduce Operational Risk.

How to Reduce Business Debt

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 ideas on how to grow your business, please check out our website at 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 last 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 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 information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com.