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Starting A Business

Good Financial Management

Today’s worrying financial climate has made most of us more aware than ever of the need for good financial management in business. Businesses need to be competitive and fiscally strong in order to survive, and it is only through carefully considering several key areas of financial planning that any business can hope to achieve this. These critical areas of financial management may seem obvious when pointed out, but many business people still make silly mistakes in these areas or worse still overlook them entirely.
Cash flow Projections- Even the most inexperienced of business owners has probably understood the vital need for good cash flow long before starting their enterprise, but keeping cash flowing without the nightmare that a cash flow crisis can bring is nothing more than a matter of good planning. Every business should be making regular cash flow predictions that detail all cash expected in to the business from sales and other income and all anticipated outgoings of cash such as expenses and other payments. A�Regular cash flow forecasts of this kind allow a business to stay ahead of the game by giving it the opportunity to arrange finance in advance of any looming crisis.
Payment Management- For most businesses invoicing for payment is standard practice; for every customer sent an invoice, one will probably be received from elsewhere for supplies etc. To get the best from your cash flow it is wise to make good use of any terms offered, paying an invoice immediately might seem honourable, but it will mean that the cash used to pay it will be helping the supplier’s cash flow and not your own. When a supplier gives a business 30 days to pay, they are allowing 30 days to receive payment, so it is always good practice to use this time.
Debtor Management- Although when offering terms a business expects its customer to utilise the terms in full and will allow for this, there are always customers who push terms further than your business can stand. It is therefore crucial to have a workable system in place for dealing with bad payers well before the first bad debt occurs. It is important to know exactly what is owed to the business and when it is due at all times and so good record keeping in this area is essential; many accountancy software packages have debtors’ listings built in, but a simple spread sheet will suffice. Chasing the money due in to your business can be a valuable exercise, as it is often the case that debtors have simply forgotten to make payment or are merely pushing terms as far as they can, waiting to be chased before they pay. Many invoices will be settled once chased, so it is important to do this regularly, clearly and uniformly; using a standard letter, followed by a call if the letter remains unanswered is a useful system. When it comes to persistent bad payers, it is probably prudent to drop them as customers and to put the chasing of any accrued debt into the hands of professionals.
Monthly Records- Plenty of business owners prefer not to get involved in what they consider to be the remit of their Bookkeeper or accountant, and will shy away from regular bookkeeping. However this is an area of financial management that it really will benefit the business owner to hang on to. Keeping monthly records of transactions will allow a business owner to keep a firm control of the businesses finances; it gives a far better indication of business performance than most other indicators and will highlight profits and losses well in advance of the annual reports. As with other records kept, it is not necessary to have complex software packages to keep monthly books, a spreadsheet will work just as well.
There is no real alternative for enlisting the help of a good accountant to give your business the solid financial advice it needs, but decent financial management must also happen on a regular basis at the core of every business; there is no substitute for knowing what is going on with your business’ finances if you want to survive in today’s difficult climate.…

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Business News Articles

Financial Management – 3 Ways To Secure Your Family’s Financial Future

We would all like to know that our family’s financial future is secure – especially in a difficult economy like ours.
But when you think about it, how safe is your family’s future right now?
How can you tell?
Here are 3 areas that you can check – and if you can strengthen these, you can more guarantee that your family will be financially strong for years to come.
1. Inflation.
In 1980 a stamp cost only 15 cents. Now its up to 44 cents. That’s about a 300% increase in 30 years.
Inflation will eat away at whatever money you have – which means in the future, you will only be able to buy a fraction of the things you can buy now.
The inflation rate is currently averaging about 2-3% – if your money isn’t earning more than that – then you are losing your money little by little every year.
Tip: invest your money to earn returns that are greater than the inflation rate, (a bank won’t cut it) so that your money will grow to meet your family’s future needs.
2. Taxes
Many of us are preparing for retirement by investing in a 401K, or IRA. Its a great strategy -especially if your employer matches your investment.
Unfortunately, if this is your only source for retirement – when the the time comes to pull it out, you may have a tax time bomb on your hands.
This is because the money in most qualified accounts (401K, 403b, IRAs, etc.) are taxable as ordinary income, when the money comes out.
Tip: find other tax free sources to invest your money into – such as a ROTH IRA or a life insurance policy where you can borrow from tax free.
When the time comes for you to get money out, take your money from all three sources so that you can keep your taxable income at a minimum. This will keep you in a lower tax bracket.
3. The 3 deadly “Ds”
Death, Disability and Disease.
These three things, though scary – are common to us as we grow older in age.
But, can you imagine what would happen to your family financially if any of these inevitable situations were to happen?
Are you and your family ready for it?
Tip: Insure yourself and your family against all three of these with sufficient life insurance, disability insurance – and long term care insurance.
Do it now, when its cheaper. Also do it now, because if you were to get sick, it will be much more God forbid, no longer available to you.
Now, these are only a few of the challenges that need to be overcome in order to secure a better life for your family.
But if you conquer these, you can better guarantee a great financial future for your family, and know with confidence that you and your family will prosper in the years to come.…

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Business Owner

How to Avoid Five Financial Mistakes Entrepreneurs Make

Business startups are all about the bottom line — profitability is the standard by which success is measured. For many first-time entrepreneurs, “profitability” is an elusive concept. At its base, it makes perfect sense — bring in more cash than you spend, and the business will be profitable. At its core, however, there are numerous factors that keep a viable idea from ever actually turning a profit. One of the most common problems in business startups boils down to poor financial management. The fundamental mistakes that entrepreneurs make can be easily rectified with just a little effort and attention to accounting processes.
The most common financial mistakes made when starting, and how to avoid them, are:
Lack of fundamental accounting knowledge
Entrepreneurship requires a strong basis in basic business essentials, and standard accounting skills in particular. Simply purchasing an off-the-shelf accounting system is not enough — the tool is only as useful as its user. From correctly categorizing expenses to ensuring debits and credits are balanced, knowing how accounting systems work, and why they work, is not only a good idea, it is an absolute necessity.
Failure to develop accounting procedures
Every financial transaction in a business should follow a consistent, written, formalized procedure from decision-making to recording. That is, every income and expense should follow the same path from approval to data entry into the accounting software. Without standard procedures, transactions get lost, decision-making becomes inconsistent, and the numbers never seem to quite work out. Everyone involved with the company’s accounting system need to be handling transactions in the same manner, and those procedures need to reflect an understanding of financial controls.
Inaccurate data entry
Along with developing standard accounting procedures, it is essential to include steps that verify the accuracy of the data entered into the system. This may seem obvious, but every struggling business we have encountered had serious data entry errors in the books. A small error — an extra digit, transposing numbers (2521 instead of 5221) — can wreak absolute havoc in a fairly short amount of time. Establishing at least one double-check procedure can eliminate the majority of these mistakes.
Failure to review and analyze
One of the great features of every available piece of accounting software is a set of easy-to-create financial statements. Unfortunately, many entrepreneurs are number-phobic and do not take the time to learn how to use these crucial tools for financial management. A simple, consistent review of the numbers and running a few basic financial ratios can be extremely revealing, both in terms of potential problems and identifying exploitable opportunities. Business owners do not have the luxury of being “not-a-numbers-person” — business is all about the numbers, thus it is essential to use the available tools to keep control over your venture.
Failure to budget
It is nearly impossible to launch a successful startup without a well-researched budget, and even more difficult to survive without planning out the business’s financial future. No budget generally indicates no planning, and tends to result in throwing good money after bad, especially during lean times in the venture. Setting a budget allows a business to maintain focus on a well-developed strategy while ensuring the cash flow is sufficient to keep the business alive and growing.
It is a common but inadvisable error for first-time entrepreneurs to underestimate the importance of solid financial management. Simply ballparking expenses and taking a see-what-happens attitude with the cash flow are quick paths to failure. Doing your homework and mastering the fundamentals of accounting are not just a good idea, they are the only way to build a viable business idea into a thriving company.…

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Business Checks

Three Steps to Financial Independence

Taking adequate steps to financial independence should be everybody’s priority but unfortunately, some people live as if they don’t agree with this opinion. Knowledge is the greatest asset anyone can acquire. I have this opinion because it would amount to nil if all you still think of in this age is to get millions before you can start a simple home-based business.
We are aware of the fact that before the advent of the internet, you have to have some substantial capital before you can set up any type of business. Even when you decide to merchandise goods that were produced by others, lots of cash and capital resources are also needed to be able to break even.
Many did these things years ago and succeeded and some are still doing it but if you don’t have the capital, you stand better chances to make money today than it were ten years back.
One of the steps to financial independence is to align with the opportunities that the internet provide and kick-start your dream from there. You can easily leverage on other people’ s product as well through the internet and be in business in less than an hour if you know how to go about it.
All these are as results of having the unique knowledge and being able to implement them. If you have made up your mind to take your internet business serious and get the best from it, there are things you should look into right away and start making good inroads with your efforts.
The number thing you should do is to ascertain if the business model you are considering has a ready market. It isn’t enough to have the best ideas without sorting out the issues of demand and supply. I want to emphasize that the internet world has the same demand and supply elements that exists in any other brick and mortar businesses.
You have to check the number of hits such product theme receives at certain given time to know if it will be worth your time in the long run. Nothing can be more frustrating than jumping into any business, be it online or offline, only to discover that there isn’t any interest in the enterprise.
You can visit a free to check the subject matter of the kind of business you want to engage in online. It will be a good starting point to know the viability of such venture.
The steps to financial independence through internet based business wouldn’t be complete if you don’t have an eBook for marketing. Assuming you are involving in information niche.
You have to make the information available in easy to download book formats and have website where your customers can easily logon and get the eBook without your personal involvement. Ensure that you have a medium to collect payment from your customers such as PayPal.
This will enable anyone that gets to your website to easily pay and download the information he or she wants immediately without the need for any shipment or further exchange of mails.…

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Guarantor Loans – A Solution to Financial Problems

Budgeting and managing finances can be an issue for some people, day-to-day living costs may not be a problem but reacting to unexpected changes and situations often causes disruption. Unexpected changes or expenses may be in the form of damaged cars or household appliances, increases in utility bills or veterinary costs.
By implementing a good financial plan you will account for any unexpected expenses meaning that there is always enough cash to cover these situations. Even with a good financial management plan some situations are unavoidable.
Finding solutions to these problems can be tough and often having poor credit history means that many lenders will turn you down. Guarantor loans have a flexible criteria meaning that the applicant can have poor credit and will still have a good chance of being approved providing they have a good guarantor to support their application.
A guarantor must be a homeowner and be receiving regular income; they must have good credit history, they will be required to provide proof of income and proof of ID. As long as it is evident they can afford the monthly repayments if the applicant fails to do so; they have a good chance of being approved as a guarantor.
The applicant must also provide proof of ID and income. One of the many myths of guarantor loans is that the guarantor always pays the monthly repayments meaning that the borrower doesn’t need to prove that they can afford the monthly repayments. This is not the case; the guarantor only steps in if the borrower misses a payment.
Almost all specialist guarantor loan lenders will have a website with an online application form, this is not only quicker than the traditional paper-based method but it also greatly reduces the amount of paperwork involved.
There is also a number of unsecured loan comparison websites that offer quotes based on the information entered, this way you are able to find the cheapest and most suitable loan for you.
Another reason guarantor loans are ideal for those in financial trouble is the speed of approval, most lenders will pride themselves on a 48 hour turnaround time, meaning the money can be in your account just two days after application. The speed of approval is heavily dependent on the applicant and guarantor themselves, if they fail to provide the necessary documents such as proof of ID and proof of income this will slow down the process.
All in all, guarantor loans can be a good solution to financial trouble, however in order to maintain a healthy financial situation good planning and money management is required.…