Whether you are a small business owner or a large conglomerate, properly managing your finances is a must for any healthy business. Having full control of your finances prepares your business to stay afloat during bad times and propel it forward during the good times. You should familiarize yourself with the following proven financial tips for small business owners that can help you to be more successful in your business.
Set a BudgetBudgeting allows you to stay goal-focused. It lets you know how much you can spend, your exact spending, and on what items. Setting a realistic budget allows you to cut down on unnecessary expenses and estimate what your profit will be at the end of each period. Before setting your budget, it’s important to familiarize yourself with certain financials from your business such as:
- Estimated revenue from your business
- Fixed, variable, and one-off costs
- Cash flow projections
Keep Personal and Business Finances SeparateAs a rule of thumb, never mix your personal finances with business funds. Mingling the two can mean you may not be able to differentiate the business assets from personal ones and find it harder to reconcile the financial records. You’ll also lose the liability protection afforded by an LLC if you commingle business and personal transactions. Always have a separate bank account for your business. If you don’t know where to get started with selecting a bank, we’ve created a round-up of all the factors you should consider prior to picking who you should consider for your bank accounts.
Analyze Your Cash FlowAlways keep track of how much money is going in and out of your business at all times. This allows you to plan in advance. By planning in advance, you’ll be able to create a better budget for things such as new raw materials, employee wages, or to build a cash reserve for a rainy day. Most business owners claim that their business struggles with cash flow. In most cases, the root of cash flow problems begins with not properly forecasting or projecting the cash going in and out of your business. If you find yourself struggling to manage your cash flow month after month, it may be time to consider accounting software. Using software such as FINSYNC will help you stay on top of your finances. With FINSYNC’s cash flow management solution you’ll be able to:
- Connect all bank accounts and credit card accounts in one place
- Have all payments in and out on the same platform
- View a calendar view of every payment coming in or going out
Don’t Be Afraid to Seek Professional HelpOften, small business owners struggle to keep up with accounting and bookkeeping requirements. They either end up spending more than needed or neglecting it due to time constraints. If you find yourself feeling overwhelmed, it may be time to consider hiring a qualified professional to do the heavy-lifting for you. Remember to revisit these financial tips to take your business to the next level.
Employees form the backbone of any business. Businesses are dependent on their staff especially in the absence of automated processes. Small businesses often face the challenge of retaining staff during uncertain times. Employee loss leads to disruption of normal operations. You may ask yourself, how does my company deal with such a situation? In this blog, we’ll explore some tips to deal with staffing shortages.
Common Reasons for Staffing ShortagesThere are several factors that often lead to staffing shortages such as:
Job InsecurityWe are going through uncertain times with economic instability. Due to the Covid-19 pandemic, businesses are facing many challenges such as maintaining steady cash flow. This has led to irregular salary disbursements, which ultimately have led to attrition.
Lack of a Career Growth TrajectorySmall businesses often struggle with business expansion due to resource constraints. On the retention side, motivated employees are often looking for what’s next career-wise. It can be hard to answer that question without a growing business. On the hiring side, many candidates ask what positions are down the road for an entry-level role.
Job ExpectationsEmployees' expectations have dramatically changed after what they’ve experienced during the pandemic. There has been a growing demand for flexible working hours, the ability to work from home, and better awareness and handling of mental health. Therefore, If your business has the flexibility to provide those accommodations, staffing is easier. However, some of those benefits are not realistic for many types of businesses.
How to Deal with Staffing Shortages?Staffing shortages are a limiting factor for the success of a business. Rather than quick fixes, long-term strategies are crucial for mitigating a crisis. Below are tips to address shortages in the short and the longer term.
Process & Operations Automation:Technology and automation are gradually replacing manual work in many industries. For instance, If you are experiencing a staffing shortage, you might consider it a prompt to double-check that you aren’t missing opportunities to use automation for what used to require an employee, or reducing the time it takes to do the work. Merging various verticals helps in streamlining processes. Additionally, it reduces over-dependence on manpower.
Employee Retention Strategies:Without upskilling and training options, employees often lack motivation. Offering extra perks such as learning or certification opportunities helps in retaining employees. Indeed offers an extensive list of high-demand certifications. While not all companies may be able to offer comprehensive perks, there there are many other perks you can make available to your employees that have little to no cost. Some examples include:
- Flex day offs
- Summer hours
- Paid volunteer time
Trends for Recruiting New TalentOver the past year and a half, companies have had to re-examine their talent acquisition strategies as employee expectations have changed. To ensure success in the hiring process, we suggest trying these strategies for attracting new talent.
- Outsourced recruiting
- Short-term gigs for specific requirements
- Performance-based incentives
- Internal hiring
- Remote onboarding
Small businesses have become more prevalent than ever. With more and more people starting their own business, a common question that arises is whether health insurance should be provided by your company.
Is Your Small Business Required to Provide Health Insurance?Under The Affordable Care Act (ACA), small businesses with less than 50 employees are not required to provide health insurance to their employees. This means that your company will not face a tax penalty for not providing insurance. However, if you decide to offer your employees health insurance, you may qualify for a “Small Business Health Care Tax Credit.” There are a few requirements in order to receive this credit, such as:
- The company should have less than 25 full-time employees
- Average salary of workers should be lower than$50,600 per year
- The company should pay at least 50% of the cost of an employee’s health insurance premium
A Few Reasons Why You Should Consider Offering Health Insurance:
Improved Hiring and RetentionA major benefit of being employed is the health insurance that comes with it. Without health insurance, the out-of-pocket expenses for an individual can get very hefty in no time. In fact, many employees would choose health benefits over retirement benefits if only one were offered. Without a doubt, offering health insurance improves retention rates. There are several different health plan options to choose from depending on desired coverage and cost. A great starting point to research health insurance plans in your area is by visiting healthcare.gov.
Lower Payroll TaxesA financial advantage of providing health insurance through your small business are the tax benefits. Typically, pre-tax dollars pay for health insurance. This means your taxable income decreases. A lower taxable income results in lower business payroll taxes and lower income taxes for employees.
Healthier EmployeesA healthier workforce results in increased productivity. In fact, striving for a healthy workforce proves to your employees that you care about their mental, emotional, and physical wellbeing. When your employees know that they are covered, they have less mental fatigue and can live their life without worries. Many health insurance companies offer additional wellbeing programs to employees at no additional charge. These programs are designed to promote health and fitness. The programs reward your employees by offering discounts or even cash rewards for participating in health challenges and similar programs. Deciding on health insurance options is a big decision for any company. The most important step is to research which coverage is best for your company and employees.
Selecting a bank for your small business takes more insight and deliberation than selecting a personal banking account. Since your commercial banking needs are different from your personal banking needs, taking some time to identify the correct business account and other services is an important initial step towards business success. Do you require a savings account? Is having an account you and a business partner can both access necessary for your business? These are the types of questions you should ask yourself in the research phase.
Factors You Need To Consider:
Location of the BankMake your decision according to how often you will need to visit the bank. If you need to physically visit more often, you might want something closer to you. Similarly, if you are in other cities frequently, you may want a bank with a wide geographical spread.
CreditSmaller community banks tend to be more lenient with new business owners and have more flexible credit standards for opening accounts. This is important to know since it can be difficult to borrow from a big financial institution if your company has a bad credit score or has recently launched (has not developed business credit yet).
Tech IntegrationManually logging transactions is a tedious and time-consuming task. Choosing a modern bank that interfaces with your current tech framework or with applications that you aim to implement in the future is your best bet. At FINSYNC, we know first-hand that syncing bank accounts to back-office software makes business life much more manageable. Bridget Chun of Chunogly Productions says, “Having my Chase accounts connected to FINSYNC makes my life significantly easier! It is especially convenient for my accountants when they do my deductibles or while figuring out how much we spend and what we spend it on.”
Added FeesFees are typically charged by banks for a variety of services, such as low deposits, overdraft fees, inactivity penalties, wire transfers, and other service charges. These charges can add up quite fast if you don’t pay attention to them and adhere to the bank’s policies.. If you think maintaining the minimum balance, for example, would be challenging, consider switching banks.
IncentivesIncentives are a great reward for your affiliation with the bank. One of the most common types of incentives is cashback. The main thing to look for is what kind of benefits come with keeping a certain balance in the account for the said amount of time. It's all about developing and maintaining the practice of routinely holding a certain cash level in the account. You may also pick up additional incentives on other offerings from the bank. Add a credit card and it likely has a rewards program of its own. One important thing to keep in mind is that as your business grows, new or additional banking services may be needed. We recommend conducting a review of your accounts at least every one to two years to make sure your bank accounts still meet your business needs.
Small businesses are extremely important. From providing employment to boosting the local economy, they create tremendous value. In order for businesses to reach optimal growth, they must track their financial transactions carefully. Bookkeeping activity can help businesses in recording their daily financial transactions with supporting documents. Consistent bookkeeping helps in financial tracking and in the preparation of accounting statements. However, most small businesses struggling with bookkeeping due to time and resource constraints. Without proper or professional guidance, many small businesses commit bookkeeping mistakes that turn out to be costly. Next, we’ll identify some of these common mistakes and learn tips to avoid them.
Common Bookkeeping Mistakes:
- Failure to Keep Receipts: Many bookkeepers fail to classify and file relevant receipts associated with transactions. This happens mainly in the case of small value transactions, for example, food receipts. A proper record of them is necessary for proof of expenses. Especially, in the case of an audit, having receipts is crucial. To avoid this, it is advisable to keep a special folder for filing these receipts. Also, make sure to train your bookkeeping staff about the importance of recording every transaction for long-term use.
- Wrong Category Entries: Bookkeeping involves the categorization of every transaction in a suitable account within your general ledger. These accounts are typically numbered. This will be a great help for your accountant in analysis while preparing financial documents. If your organization doesn’t have a proper chart of accounts, it can confuse the bookkeeper. For example, common mistakes include using the wrong expense account. The primary solution to this mistake is to have a solid chart of accounts based on your organization’s business activity prepared for you and train on it. When you come across a transaction that you don’t know how to categorize, put it in a special account for review. “Ask My Accountant” or sometimes this account is referred to as a suspense account. You’ll let the pros tell you where that one goes.
- Lack of Data Backup: Today we live in a digital world. It is always good to digitize your bookkeeping activities using software such as FINSYNC. It’s recommended to make sure to have a backup option in the form of paper printouts or a second cloud storage device where copies can be stored. A lack of such backup might cause you trouble in the case of any technical failure or data loss. For example, the practice of taking daily transaction printouts from your software will be helpful in case your online backup collapses.
- Reconciliation with Bank Statements: Human data entry errors are inevitable during bookkeeping. Errors such as entry reversal (credit/debit), wrong transaction value, typos, etc. are very common. The only way to rectify this is by cross-checking entries with your bank accounts. For example, an income of $300.00 wrongly entered as $30000 can adversely affect your entire understanding of your business’s health. Make it a habit to reconcile your accounts as soon as new bank statements become available.
There are several types of tax deductions that small business owners can use to save money. Unfortunately, many people are unaware of these deductions and typically end up paying more. As a small business owner, are you aware of all the tax deductions you can use to lower your taxable income and save money? Here are some tax deductions you might not be aware exist:
Startup Costs:Typically, new businesses incur large costs before they are even able to fully operate. These costs are referred to as start-up costs. You are eligible to deduct up to $5,0000 of your start-up costs in the year your business begins. These costs vary by business type and industry. However, some common expenses to consider are insurance, equipment, permits, and employee training.
Car and Truck Expenses:Do you use a vehicle such as a van, truck, or car for your business? You are able to deduct the operating costs of that vehicle. You must, however, be able to prove that the vehicle was used for business purposes. In order to be able to provide evidence in case needed, be sure you keep a dated record of how many miles you drove for business purposes.
Home office:If you run your business out of a proper home office, you could be eligible for a home office tax deduction. In order to qualify for this deduction. part of your home must be used exclusively for business. Your home office must be used on a regular basis, using it only a few times a month disqualifies you from this deduction. It is also common to have the IRS visit your home to investigate whether the use tests are met. In addition, you may be eligible to deduct expenses such as utilities, rent, or property taxes, but there are some requirements you must meet. For the latest most up-to-date information we suggest visiting the IRS website.
Marketing:The IRS allows you to deduct several types of expenses related to sales and marketing. Money spent on advertising, email marketing, public relations, and printed marketing material qualifies for a tax deduction. These expenses are related to helping you bring in new customers and retain existing customers. On the other hand, there are certain marketing expenses you are unable to deduct, such as, expenses associated with research and development activities, cars with advertisements, or advertising on websites used by or for a political party. Tax rules undergo constant change. This tax season, check the IRS guidelines for small business tax deductions before you file your taxes for the latest information and you might even save more. Need assistance filing your taxes? FINSYNC connects you with the right accountant for your business. We match based on proximity, industry, and experience. Get matched for free, it only takes 5 minutes to get started.
The latest trends in Digital Marketing show that social media platforms are quickly evolving into online marketplaces. Moving beyond the realms of creativity and connectivity, they offer a vast customer base for businesses. While there are multiple social media platforms across the internet, each platform comes with its own set of advantages and disadvantages. Moreover, there are differences in content types, formats, and audiences. For businesses seeking to get started with social media, choosing a single platform that best aligns with your product or service is a great first step. Then comes the formulation of an effective social media strategy. Let’s explore some social media trends that businesses can leverage in 2021.
From e-Commerce to Social CommerceAccording to experts, more than 50% of sales across 14 major sectors are happening through social media. In a way, there is a thin line between e-commerce platforms such as Shopify or Woocommerce integrated with WordPress and social media. Platforms such as Facebook and Instagram are offering separate business profiles for dedicated campaigns and direct sales.* The integration of payment gateways and fintech applications are making the process much easier. *Instagram is owned by Facebook and Facebook Ads Manager must be used to advertise on Instagram.
Create Follower Communities:A loyal social media follower group is just as powerful as a team of sales executives. Proper interactions and responsiveness are crucial in creating a robust customer retention management system within the platform. Make your followers brand ambassadors of your product/service. The user-generated content such as testimonials, feedback, etc. can help more than you think in your business expansion. Consumers increasingly respond to relatable stories over rote advertising copy.
Influencers and CollaborationsThe power of social media lies in its multiplier effect. Likes, shares, and comments from your network can reach any corner of the world, especially if your content goes viral. At times it requires a push from someone with massive social media influence to spread the word. Influencer marketing is a buzz word in the digital marketing arena. One way to promote your business is by paid collaborations and reviews with influencers across different social media channels. There are even influencer marketplaces where you can read about what industries they promote and how successful they are.
Effective AnalyticsReal-time analytics is one of the best rewards of digital marketing. The fact that you are a small business should not drive you away from dealing with analytics. All platforms offer graphical analytics tools that even someone without a statistics background can understand.. Leveraging this data allows you to optimize your strategy and content over time. This will make your marketing campaigns successful by reaching out to a larger, more targeted customer base.
Leveraging New PlatformsWith the reduction in average internet bandwidth cost, video platforms are becoming increasingly popular. In content marketing, short videos are grabbing users’ attention faster than other mediums. This clearly explains the rising popularity of mediums such as TikTok. Many companies are already leveraging TikTok influencers for promoting business through short-format videos. These videos can cover product descriptions, reviews, or creative ad campaigns. Small businesses often struggle with low marketing budgets. However, the new social media trends suggest that it can be a very effective low-cost marketing alternative. As you get familiar and grow success with your first platform, you can add others that are relevant for your business. No matter what platform(s) you choose, remember to optimize your profile:
- Use crisp, clear, well-lit photos.
- Spell check your written content and be sure you are using terminology your intended audience can understand.
- Avoid a “ghost town” by posting frequently.
- Respond to comments, likes, etc. quickly to let your audience know you care.
Setting goals for your business helps identify opportunities for success. Achieving success without having a plan in place first is much harder. With 2021 right around the corner, a good first step for your business to achieve is to begin setting clear and realistic goals.
Get Started Setting GoalsThe process of setting goals begins with determining what you want to accomplish in a time period. Business goals should be objectives tied to the vision for your business. It may sound cliche, but writing down your goals on pen and paper makes it more likely for you to achieve them. According to an article by Inc., you are 42% more likely to achieve your goals if you write them down. In case you feel stuck about where to get started, these are some easy goals you can set for your small business:
- Reduce your unnecessary expenses
- Increase your website traffic
- Hire your next employee
- Improve your social media presence
- Introduce a new product or service
Don’t Lose Track of Your ProgressKeeping track of progress allows you to monitor whether you’re on the right track or need to make adjustments. With many different ways to track your progress towards your goals, let’s discuss some of the methods you can use to start tracking your progress:
- Planning and organizing. Develop a plan on how you will accomplish your goals. It can be as simple as setting dates to check back on your progress or listing out the steps you need to take.
- Set objectives. This can be especially important if you have employees. Fully understanding expectations increases the likelihood of embracing tracking goals.
- Create milestones. Think of this as breaking your larger goals into smaller pieces. This will help you assess how far you’ve come and figure out the next steps in achieving your larger goals.
- Celebrate the small wins. Doing so will help you avoid getting burned out. We live in such a fast-paced world, we always begin focusing on the next big thing. Taking the time to celebrate small achievements helps you appreciate the process towards the right path. In addition, this helps build more confidence. helps you acknowledge
Build Good HabitsAccomplishing your goals is a direct relation to the habits you form. Building good habits helps you reach your goals more effectively and efficiently. For example, you can begin with improving your time management or setting a work routine. Think of these habits as incremental steps to reaching your goals. Taking the time to look at your organization from a broader perspective will give you greater confidence to reach the next level in your business. Keep in mind you will need to rethink and refocus your business goals as you make progress and your situation changes.
2020 has been a year full of adjustments and changes. It has altered the way the world and businesses operate. It’s important to stay educated on the top business trends and developments that are sure to stick around for 2021. Here are some trends to account for in 2021.
Remote Work is Here to StaySeveral companies have already begun to take the flexible working arrangement seriously. It’s clear that for some industries, businesses do not fall apart when people work remotely. There are some amazing advantages to giving employees the freedom of working remote, such as:
- Business savings on things such as office space, utility costs, equipment, or office supplies
- No time spent commuting and reduced transport related expenses for employees
- Increased productivity. FlexJob’s annual survey found that 65% of respondents are more productive when working remotely
- Higher employee retention. In fact, companies that allow remote work have a 25% lower employee turnover than those that don’t
Increased Focus on Customer ExperienceCustomer experience has become a top priority for all business types, and in 2021, it will become even more important but with greater emphasis on digital experience. When it comes to customer loyalty, product pricing is no longer the driving factor. Customers remain loyal to companies due to the experience they receive. 86% of buyers across several categories are willing to pay more in exchange for a better customer experience. The customer experience journey begins the moment the customer engages with your business. This can be in several forms such as through websites, ads, social media, or referrals. You may be asking yourself: “How can I improve the overall experience?” Here are a few tips to help you get started.
- Offer superior customer service. One of the simplest ways to get started is by offering real-time support
- Keep engaging with customers across different lifecycle stages
- Create loyalty programs
- Keep branding consistent
- Acknowledge customer reviews
Digital TransformationDue to the pandemic this year, several companies were forced to digitize their services and operations. This will continue to be the case in 2021. Having an online presence of some sort is expected by customers. Making sure your website is responsive is crucial. This means that your website has been designed to respond based on the technology and type of device the visitor is using (it’s just as functional on a smartphone as it is on a computer). Over the past few years, more and more people are using their mobile devices to access the internet and Android is the #1 operating system globally. Businesses must operate with a digital mentality to keep up with competition.
Go CashlessCarrying cash is becoming rarer these days. There has been a rise in digital payment options. Digital payment options such as Apple Pay, Paypal, Cash App, or Venmo are starting to be more widely accepted by many small businesses. Although going cashless isn’t the right choice for every type of business, there are quite a few benefits to consider. For example:
- More security
- Faster checkout
- Reduced operating expenses
- Less accounting errors
Starting your business off on the right path can help you save on unnecessary costs and time. Just like in personal matters, there are always unexpected obstacles, but that does not mean you are destined to fail. If you are looking to start a business now or in the near future, we encourage you to read over these common mistakes to avoid.
Not Having a WebsiteHaving a website enables you to reach a wider range of audiences. In fact, 85% of people research a business or service on the internet prior to making a purchase or decision. One of the most common reasons why entrepreneurs refuse to create a website is they believe they are not “tech-savvy enough.” Surprisingly, you don’t need to be tech-savvy to create a website for your startup. You could choose a drag-n-drop website builder like SquareSpace or Wix and take a DIY approach. There are also many development companies or even freelancers that help with the process, making it a seamless process for you. One of our favorite resources for freelance web development is Fiverr. Fiverr offers reasonable pricing for freelance web services and 24/7 access to support. Websites are an effective way of introducing your customers to your product/services. By having a website you’ll be able to save time by redirecting your customers to visit your website for important information. You’ll be able to provide valuable information in various formats: blog posts, videos, photos, or testimonials. The best part is that websites are available 24/7; your customers are able to reach you at any time.
Waiting Too Long or Hiring Too SoonHiring employees is a critical step in a growing company. Some of the most common indicators that your company is ready for an employee include:
- Needing additional skill sets
- Having to turn down work
- Customers starting to complain about quality or timeliness
- What is your company’s growth forecast? All entrepreneurs need some sort of budget/business plan. Having revenue and growth projections will be vital when determining what you can afford to do or what is needed to get your business where you want it to be.
- Is the work steady enough to support an employee? It’s important to not make drastic decisions just because you may be feeling overwhelmed or stressed out. First figure out what exactly will the employee be doing, and how will they be bringing in additional revenue to the business.
- Can you afford to hire an employee at this time? There are many cost factors to consider before making the decision of hiring someone such as wages, training, software licenses, payroll costs, insurance, among several other overhead costs.
- Which type of employee would be best for your current situation? As mentioned above, hiring an employee comes with additional costs. Keep in mind you have options based on your budget and required time commitment: freelancer/contractor, part-time, or full time.
Not Listening to What Your Customers Are SayingPaying attention to what your customers are saying helps you improve your business and avoid situations that do not work well. In today’s world, customers have higher expectations than ever before. In a study conducted by PWC, customers said they are willing to pay more for a service or product in exchange for a better customer experience. One of the easiest ways to become more customer service-oriented is to open and formalize listening channels. Customers enjoy answers to their questions in real-time. Some options to consider for communicating with your customers are:
- Live chat
- Help desks
- Social media
|Cash Flow Management|