Small Business Budgeting - A "Balancing Act"

 

 A budget is a financial plan and essential for a business to succeed

 It’s a list of all expenses and revenues.

 Also a plan for saving and spending.

 This is the “Balancing Act” part.

A Budget helps to aid the planning of actual operations by forcing business owners/management to consider how the conditions might change and what steps should be taken. And by encouraging the business owner to consider problems before they happen.

  Monitoring all positions (revenue in and expenses) on a routine basis which has the tendency to change. So must the business owner.

This is ‘Adaptability”

 A Solid Budget is necessary to:

   Control Resources

   To Monitor Expenditures

   To Provide Visibility into the Company's Performance

 Cash Flow/Cash Budget – a projection of future cash flow and expenditures for a particular time period.

 It usually covers a period in the short term future. The cash flow budget helps the business determine when income will be sufficient to cover expenses and when and if the company will need to seek outside financing.

 Marketing Budget – an estimate of the funds needed for promotion, advertising, in order to market the product or service.

 Project Budget – a prediction of the costs associated with a particular   business/company project. These costs include labor, materials, and other related expenses. The project budget is often broken down into specific tasks, with task budgets assigned to each. A cost estimate is used to establish a project budget.

 

 1. Watch your cash flow. If you want to stick to a budget, make sure that your cash inflow is more than your cash outflow. Monitor your income closely to make certain that you'll have adequate funds to pay your bills, particularly if your business is prone to long lapses between cash in-flow/revenue.

 Cash-flow problems are what kill most small businesses. Keep checking to make certain that your revenues match your expenses.

 2. Lean on the side of being conservative (underestimating cash inflow). When setting up your budget it’s a good idea to overstate (over estimate) your expenses and low-ball (underestimate) your expected revenue/cash flow. That approach is also a solid strategy when making sure your cash flow is going to hold up. Look into saving money and budget savers.

 "Money you don't spend is money you don't have to earn."

  Or   “Money Saved is Money Earned”.

 3. Build a cash cushion. The uncertainty of budgeting — both in terms of income as well as expenses — stands as one of the biggest threats to the survival and success of any small business.

 Trimming   expenses   to the bone is a good idea. It's also smart to set aside income whenever possible. If you can afford it, allocate a portion of every paycheck you get and put those funds away.  It can prove an essential lifesaver should an unexpectedly high bill suddenly crop up and usually does at some point in the life of a small business.

 James J. Pastore,  SCORE Counselor/Consultant

visit us at: www.scoresouthflorida.net

How to Get Paid on Time

 

Due to current economic conditions, it's likely that collecting on your accounts receivables is becoming more and more of a challenge. Strengthening your collection procedures may allow you to improve collection rates and shorten the aging days of your accounts receivables.

The following suggestions will help your business improve its cash flow and tighten up its credit and collections policies. Some of the tips discussed here may not be suitable for every business, but can serve as general guidelines to give your company more financial stability.

Define Your Policy. Define and stick to concrete credit guidelines. Your sales force should not sell to customers who are not credit-worthy, or who have become delinquent. You should also clearly delineate what leeway sales people have to vary from these guidelines in attempting to attract customers.

Tip: You should have a system of controls for checking out a potential customer's credit, and it should be used before an order is shipped. Further, there should be clear communication between the accounting department and the sales department as to current customers who become delinquent.

Clearly Explain Your Payment Policy. Invoices should contain clear written information about how much time customers have to pay, and what will happen if they exceed those limits.

Tip: Make sure invoices include a telephone number and website address so customers can contact you with billing questions. Also include a pre-addressed envelope.

Tip: The faster invoices are sent, the faster you receive payment. For most businesses, it's best to send an invoice with a shipment, rather than afterward in a separate mailing.

Follow Through on Your Stated Terms. If your policy stipulates that late payers will go into collection after 60 days, then you must stick to that policy. A member of your staff (but not a salesperson) should call all late payers and politely request payment. Accounts of those who exceed your payment deadlines should be penalized and/or sent into collection, if that is your stated policy.

Train Staff Appropriately. The person you designate to make calls to delinquent customers must be apprised of the seriousness and professionalism required for the task. Here is a suggested routine for calls to delinquent payers:

• Become familiar with the account's history and any past and present invoices.
• Call the customer and ask to speak with whoever has the authority to make the payment.
• Demand payment in plain, non-apologetic terms.
• If the customer offers payment, ask for specific dates and terms. If no payment is offered, tell the customer what the consequences will be.
• Take notes on the conversation.
• Make a follow-up call if no payment is received and refer to the notes taken as to any promised payments.

Barry Eisenberg, SCORE Counselor
Contact Barry at barry003@aol.com

Visit us at www.scoresouthflorida.net

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Tax Tips

 

Standard Mileage Rates
The rate for business miles driven is 56.5 cents per mile for 2013, up from 55.5 cents per mile in 2012.

Section 179 Expensing
For 2013 the maximum Section 179 expense deduction for equipment purchases increases to $500,000 of the first $2,000,000 of business property placed in service during 2013. The bonus depreciation of 50% is also extended through 2013.

Work Opportunity Tax Credit (WOTC)
The WOTC is extended through 2013 (retroactive to 2012) and includes a one-year extension of the enhanced credit for hiring certain veterans. When a business hires a person from one of several specific economically disadvantaged groups it may claim a Work Opportunity Tax Credit, generally equal to 40 percent of the first $6,000 in wages paid to a new hire.

Transportation Fringe Benefits
If you provide transportation fringe benefits to your employees, for tax years beginning in 2013 (through 2017) the maximum monthly limitation for transportation in a commuter highway vehicle as well as any transit pass is $245 up from $240 in 2012 (the American Taxpayer Relief Act provided for a retroactive increase from the $125 limit that had been in place for 2012). The monthly limitation for qualified parking is $240.

While this checklist outlines important tax changes for 2013, additional changes in tax law are more than likely to arise during the year ahead.

Don't hesitate to call us if you want to get an early start on tax planning for 2013. We're here

Barry Eisenberg, SCORE Counselor

Contact Barry at barry003@aol.com

visit us at www.scoresouthflorida.net

 

Value Proposition

What it is

Why you need one

While we live in a place many call Paradise, in South Florida. Business is not a “Field of Dreams”. The tag line from that movie: “Build it and they will come” is not enough to make a viable business.

 

YES, you need a Product or Service. But also YES, you need to reach prospective

CUSTOMERS with a description they will comprehend.

A Value Proposition (VP) is a compelling statement of the benefits a customer will get by purchasing your product or service.

If you do not have one that resonates with potential customers, you will not have a customer. No customers = no business!

To resonate, the VP should be described in terms the potential customer easily understands. It tells them you know who they are, what they want, need or could use.

Your VP should be visible, front and center and repeated throughout the marketing & sales material - on-site, on-paper, and online.

It should tell prospective customers why they should buy from you instead of the competition.

What is your experience?

 

Steve Koenig, SCORE Counselor,

Visit us at: www.scoresouthflorida.net

South Florida Loves Boca SCORE and Why You Should Too

 

As a volunteer organization with 49 years of service to the nation, SCORE proves the notion that advertising works and no advertising doesn't work well. Millions of Americans are still unaware in 2013 of the incredible service this proven business source provides. Just read the following and we think you'll get the picture...............

 

SOUTH PALM BEACH SCORE is here to help you Succeed in Business       (and here's how we do it) Pro Bono Business Coaching: face to face, via email, telephone, IM, or you can choose the method, even at your place of business Low cost workshops and seminars on vital business topics. Two monthly free roundtables-one for women in business and one learning technology for your business. A dedicated team of specific industry matched Certified SCORE business coaches, to work with you one on one, pro bono, as long as needed. Free Quarterly Advisory Board for selected businesses High level tech assistance from an industry guru/owner/advisor to 8 web businesses and a SCORE team of certified tech specialists Did we say all mentoring and coaching is free? It is. So what are you waiting for? Click here https://www.edmisscore.org/0412/ to register for counseling right now. Your success may depend on it.   Still Haven't Made Up Your Mind? View our staff and decide if we are for you (Click here "http://www.scoresouthflorida.net/counselor_profiles.htm"  to view "Counselor Profiles") Saturday Appointments Available THE BALL IS IN YOUR COURT What have you decided to do?   SOUTH PALM BEACH SCORE TWICE VOTED THE #1 SCORE CHAPTER IN AMERICA (among 348 Chapters, latest in 2012) (561)981-5180     South Florida SCORE | | http://www.scoresouthflorida.net SCORE South Florida 7999 N. Federal Highway Boca Raton, FL 33487     Copyright © 20XX. All Rights Reserved.

 

Web Site - a marketing or sales tool?

What is the difference? you ask.

Wikipedia defines each as follows: According to the American Marketing Association, "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." It is a critical business function or process that is responsible for attracting, retaining and growing customers. A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity.

Marketing is what you do to reach and persuade prospects. The sales process is what you do to close the sale. They should be balanced for business success.

Are you clear about the goal of your web site? What do you do to retain customers?

What do you think now?

Steve Koenig, SCORE Counselor,
visit us at: www.scoresouthflorida.net

Save Your Business from Disaster

 

If your business functions when your competitors do not…you have a Competitive Advantage. Have you thought about this?

Do you know how to keep capital flowing through your business during and after a disaster. Have you thought about this?

If your answer to the above questions is no, you are likely to be among the businesses that will not survive after a disaster.

Now that I have your attention and you have thought about these questions, what should you do? The answer is…it depends….

It depends on what your business is, what your business needs, how important each of those needs is to survival, how you prepare, and how you execute your plan.

Let’s try a few examples:

Your business loses power for a day or two.

All your records are on a computer that is burned in a fire.

Your backup records are a week old and in your basement…the fire destroys them.

Your backup records are on media stored in the same town, when the flood comes.

Your key supplier or your bank gets hit with a major storm.

Your remote backup site is shared and you are low on the priority list.

Your real time “Cloud” stored records are kept where a hurricane hits.

 

Without customer, supplier and banking information each day, your business fails.

You can do without daily personnel records, but must pay employees each week.

 

So you need to invest time to do some analysis, create a plan and practice, update, practice, update, and practice.

I hope I have stimulated you to pay attention now!

Share your examples here.

More on this at the South Palm Beach Score Business Conference on April 20, 2013. See my session at the event. See the event notice for more details.

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net