Category: Business

Managerial Accounting

Before you can measure your growth you need to be clear about where you are now and where you hope to go. What size is the market? Have you targeted a certain geographic area? Or perhaps a certain channel, like hair salons for your handmade moisturizing products.

Whatever the growth goals are, you can develop a system for tracking your progress. Let’s take a look at Carls’ Candles and the managerial accounting system he has developed to measure his growth.

Carl has been making container candles for three years now. At the current prices Carl has been able to increase sales year over year. But the growth rate has slowed and last year he only grew his sales revenue by 5%.

The market for container candles is growing and the distribution outlets are numerous. Carl has been marketing his candles direct by selling through independent retailers and small gift shops in the area.

Carl sells to the retailers at $3 per candle. The direct costs for each candle are $1 and the overheads are $4,000 per month. In Carls’ overhead budget he includes his own wages, electricity, and insurance. The direct costs include soy wax, containers, fragrance, wicks, and delivery.

Break even for Carl is $3 minus $1 divided into $48,000, or 24,000 candles per year. For the last three years Carl has sold 26,000 then 30,000 and 31,500 candles each year. Carl wants to develop a pricing program that will help him to stretch out into new areas like wholesale distribution.

If Carl keeps his price the same for all his customers he won’t be able to offer a lower price to the wholesalers. But if Carl drops his price to the wholesalers, below the $3 per candle, then he would not be making enough profit. What can Carl do?

Using managerial accounting, Carl has listed out the raw material costs for his candles.

  • $.45 Soy Wax
  • $.05 Glass Container
  • $.01 Wick
  • $.15 Fragrance
  • $.44 Delivery
  • $1 Total Direct Cost per Candle

Carl can offer the same candle to a wholesaler at $3 minus 44 cents for delivery, which equals $2.66 per candle. Will this be enough to increase his sales volumes? Carl puts out a flyer and mails it to all the local wholesalers. His sales increase because now the wholesalers can distribute many more candles than Carl.


Business Incorporation

The forms for business incorporation include articles of incorporation that conform to the state law. They must be filed with the correct state authorities along with the filing fees, initial franchise taxes and other initial fees. One of the easiest ways to fill out these forms is through BizFilings. All you have to do in order to incorporate your business is complete the online order form and BizFilings handles the rest.

There are many advantages to going through the business incorporation process. One of the primary advantages is the limited liability the corporate entity affords its shareholders. With the shareholders not being liable for the debts of the corporation, shareholders are free of obligation to the company. Another advantage to incorporating your business is the fact that ownership of the corporation is easily transferable. If you decide after a year or two that you don’t want to have full responsibility for the corporation any more, you can sell it or have someone take over very easily.

Having a corporation allows you to raise capital much easier through the sales of stocks. If that weren’t enough to get you to go through the business incorporation process, it’s soothing to know that you can be taken care of in the future as well. By being involved in a corporation your retirement funds such as a 401k are set up much more easily to ensure that you are taken care of after retirement.

While there are many benefits to business incorporation, there are also the downsides you have to face. The primary downside you will notice with a corporation is double taxation. Profits of a corporation are taxed twice when distributed to the shareholders; once as income to the corporation and another time as income to the shareholder. Other disadvantages to incorporating your business include the increase of paperwork and extensive record keeping that is required.

When going through the business incorporation process, there are many decisions that you have to make. It is a huge jump in your life and you have to determine if the advantages outweigh the disadvantages. If you do decide that incorporating your business is worth it, you then have to make sure to fill out all the legal documents correctly and submit them to the right place. Hiring an attorney is not necessary by any means, but is recommended. At the end of the day you have to realize that business incorporation is a huge decision and could change your life, so make sure that you are 100% sure on the decision you go with.


ERP Applications

  • Information Transfer Is Unidirectional
    Information can flow in both directions, either from or to the ERP. If the ERP is integrated with the plant, it will have a bi-directional information flow.
  • ERP Integration Is All About Copying Data
    Since older methods of integration follow a system of copying a tag and its profile, business owners think modern ERP system can be integrated the same way. However, there is more to ERP integration, since the business related-date that the ERP handles is very different from what the plant handles.
  • The ERP Can Come Up With Standardized Answers All the Time
    Many people think that queries related to a business process follow a set pattern, as do their answers. They cannot be more wrong. Even if the system knows the right question, the right answer may depend on a number of factors.
  • You Must Use Only the Latest ERP Technology
    Although the latest ERP integration technologies offer many advantages to small business owners, they have their own share of problems. The biggest problem is the integration of new technology to the old. In some systems, you will find that retaining older applications may be more useful than overhauling it completely.
  • ERP to Plant Integration Needs To Be Total
    The ERP system deals with business process, while the plant, system deals with manufacturing and procurement issues. While the plant capacity fluctuates, the ERP capacity remains stable.
  • Data Security Is Compromised When You Integrate Plant to ERP
    Nothing can be farther from the truth. Many people are concerned about what happens to the data that is not on site. The ERP programmers have spent a lot of time and money on making the system as foolproof as possible, so even data that is not protected by elaborate passwords are not easily accessible to unauthorized personnel.
  • Installing ERP System Means That You Can Keep Fewer IT Staff
    The ERP system is not meant to replace your IT staff, it is there to help them with day-to-day problems related to maintenance and troubleshooting.

Start A New Business

Avoid making excuses

Many people have dreams of becoming successful businessmen, but they end up unsuccessful. They have excuses and a fear of failure. As a matter of fact, you may have millions of excuses for not starting your own business.

Actually, what excuses do is slow you down so you don’t achieve your goals. So, if you are serious about starting a new business, we suggest that rid you of all the excuses. You may want to look for a solution to your problems rather than make excuses.

Absorb everything

You may want to listen to your family, friends, experts and, of course, yourself. As far as dealing with things that are related to your business goals, you may want to become a sponge. With new ideas, you may want to spur on yourself to keep going. You may want to write down important ideas and maintain notes from different sources so you can have a solid business plan.

It’s not a good idea to ignore advice from experienced business men. As a matter of fact, experts know what works and what does not. Actually, smart people learn from the mistakes made by others.

Find a solution

As a matter of fact, if your product or service solves a problem people have been facing, it will be easier for you to get a customer base. For instance, if you are going to develop an application, find out if it can solve a problem people have been going through. If it does, go ahead and work on it.

Aside from this, you may want to understand your motives and find out more about the problems that your target audience may be facing.

Keep it simple

If you are like most businessmen, you will get an idea and get ready to work on it. However, at this stage, you may want to be careful not to turn your ideas into something complicated. Doing so may give you a product that no one will want to purchase.

What you need to do is start small and then continue to narrow your focus. You should find out how you can test your ideas so you can create a product or service that is simple and beneficial.

Figure out the costs

Once you have settled on an idea, your next step is to figure out how much it will cost. From start to end, you will have to calculate the total cost. This may include the location, supplies, rent, and marketing, just to name a few. After all, if you are on a small budget, you won’t be able to get things done.


Keys To A Successful Mindset In Business

Focus

Focus is definitely a key to a successful mindset. Continually remind yourself of what your business is about, what its purpose is, and why you’re doing it. Keep focusing on your goals by having them somewhere that you can see them.

Self-assessment

To achieve a successful mindset, you need to ferret out that negative mindset you may not even know you have. Here are some things to watch out for that may indicate a negative mindset:

  • Having excessive back-up plans and being over-cautious may mean you are doubtful about your success. Safety nets are understandable, but they can become a tempting escape when things are less than perfect. To be successful, you need to press through those imperfect times, not run from them.
  • Believe you deserve it. You may think that you really don’t deserve to succeed in business. You just aren’t “that type.” To be successful, though, you need to believe you are that type!
  • Uncertainty can be a manifestation of a negative mindset – you are not sure of yourself. There are resources out there; you can learn what you need to succeed. You just have to go for it.

Think Like an Entrepreneur

If you are starting your own business, it won’t work to think like an employee. You need to think like your own boss! This means the freedom and responsibilities that come with being the head of a business.

Believe In Your Product or Service

Whether you are selling something for a company or something of your own creation, you need to really love and believe in the product to succeed. If you are offering a service, you need to believe that you are offering something unique and excellent. Keep that mindset that says your product or service is absolutely worth it.


Start A Low Cost Business

Sell Other People’s Products

This online business model, known as affiliate marketing, is like being a commission paid sales person. You don’t have to buy any stock, deal with any payment programs or arrange any deliveries. The product owner takes care of that. Your job is to find the customers and get them to visit the product sales page. You can sell tangible products that get shipped to the customer’s front door or you can sell digital products which the customer downloads to their computer.

Freelance Your Services Online

If you have a specific level of knowledge or expertise there will be people looking online for them. Freelance websites like UpWork have countless numbers of customers looking for copy writers, creative designers, linguists, website developers, marketing and advertising staff, legal and financial specialists and more.

Create A Digital Product

The greatest advantage when you a create digital product is that once you have produced it, you can sell it online again and again. And you don’t need to be an expert in a particular subject to create a digital product like an eBook, video tutorial, white paper, or report. You just need to know more than the average person on your chosen subject.

Build A Membership Website

A membership site is like being like a consultant in the traditional offline world. You help and advise clients with your knowledge about your specialist subject. Every month you provide new content for your paying subscribers. You can produce content in advance that drip feeds to your clients when they sign up.


Institutional Investors

  • Equity Funding Mode:
    Majority of businesses prefer the equity-funding mode. Such funding is provided the venture capitalists or institutional risk takers who could be large financial institutions or high net worth individuals. Such investors constantly look out for start-up businesses where they can invest their money. They prefer to invest in at least three to five year old companies that posses the potential of becoming large national players in the end. Such venture capitalists check several potential investment options annually but may choose to invest only in few of them.

The venture capitalists may choose to participate in the management strategies of the company, in which they invested. They generally play a passive role in that company’s management, however, are free to react if they do not find certain things in the management worthy from the investment perspective.

Generally, the venture capitalists do not prefer funding start-ups and financing companies in their early stages, as the level of risk associated with such companies is often high. However, there are exceptional cases, wherein, the entrepreneur has obtained such a funding pattern, if he has a proven track record in the business where he operates.

  • Debt Funding Mode:
    Debt financing is generally done through banks and is common for funding start-ups in case of small companies. Banks offer products such as short-term loans, single-purpose loans, and seasonal lines of credit to meet the financial requirements of the small companies. The banks issue such products to the customers against their personal guarantees. The lender uses the collateral, in case, the borrower defaults in repaying. Banks do not prefer to give loans for start-ups or any other purposes on a long-term basis to small companies.
  • Securities Offerings:
    Producing genuine securities offerings before the investors while seeking for their investments is must. Otherwise, your company may end up violating the Federal and State Securities Laws, which could have disastrous consequences.

Research the market well for the right contacts of private capital before structuring any deal. Check out the contract options available in the market carefully. The most popular options are – royalty financing contracts, preferred stock, and short-term mortgage loan that has a tenor of three to four years.


Business Plan Resources

Build Leadership And Management Capacity

Implementing this principle ensures that the business owner and managers are committed and dedicated to the purpose and the direction of the business. The leaders of the business show the way, through their own beliefs, attitudes and behavior. They engage in their own leadership skills development as a constant.

The leaders in the business are the ones who must live the mission, vision and values of the business, on a daily basis and at all times in everything that they say and do. They adopt an ‘always learning’ mindset.

Develop A Strategic Business Plan

Effective business owners have a deep and thorough understanding of the nature and direction of their business. To this end, they clearly articulate the vision they have for their business within the framework of the small business plan. Everyone in the business understands the business plan. Everyone knows what their roles, responsibilities and accountabilities are in bringing about the results that have been spelled out for achieving the vision of the business.

Inculcate A Customer Focus Throughout Your Business

Everything that is done within a business is about delivering quality outcomes and results for customers. The effective business owner knows who his or her customers are, where they are located and what their needs are. With this knowledge in hand, they then ensure that their customer needs are met and, indeed, exceeded. Systems, policy development, procedures, processes and measures are all essential in achieving this area of excellence.

Deliver Products And Services That Provide Value

The effective business owner and manager always make sure that their business provides value for money with their product/service range. This means having proper controls in place for quality assurance, from product design and development, production, distribution and customer follow-up and feedback. These control mechanisms are indicative of an ongoing, continuous improvement culture that ensures value for customers on a consistent basis.

Create A Developmental Culture

The successful business owner creates an ethos where continuous learning is the hallmark of pursuing excellence in everything that is done. This is evidenced from the recruitment stage through to exiting. All the employees in a value-based business are employed as being competent and being the ‘best fit’ for the business. They are always developing, both personally and professionally. They all have development plans that are aligned to business objectives and performance outcomes.

Adopt A Common Decision Making Framework

Effective decision-making is critical in achieving excellence. Successful high performing business environments adopt a common language and agreed ways of arriving at best-balanced choices, reaching conclusions, resolving conflict and making hard-edged decisions. Everyone in high performing business cultures knows what these frameworks are and uses the tools consistently to ensure common understanding in the implementation of problem solving/conflict resolution.

Measure Your Business Performance

Establishing benchmarks and measuring results and performance against agreed objectives and outcomes will insure high performance and excellence in business. Such measures are identified and spelled out in concrete terms in relation to the other six areas listed above.


Stepping Up to Potential Success

A business takes a few things in order to be successful. Unlike many have been taught, it doesn’t take what you think it would. It doesn’t take the right credentials, ‘falling into’ a market, or even going to business school. It is much simpler than this. The only thing that you need to do as a business is watch your character and your ability to open the doors.

A strong entrepreneur is the type that is mentally aware of what is available. They are able to find markets, are continuously working on the next best thing and don’t stop at anything. Their character is aggressive, straight-forward and persistent in getting the job done. Just like someone who is running a marathon, they don’t stop when they get tired. They only stop when they have crossed over the finish line in order to get their medal.

By beginning with these characteristics, you can start stepping towards your own success. It is the development of these few attributes that will lead you into practical actions of helping your business to succeed.

The first application to these attributes is to find the best way to advertise to people. Where will they go to respond to you? How will they catch your name, your services and your business? Some say this is the Internet; however, never underestimate the power of the mail box. This is definitely something that everyone will be looking at every day.

The next way to apply entrepreneurial attributes is to make sure that you are always focusing on a niche. It doesn’t matter what it is at the time, just find a group of people that you know will be interested in what you are offering. Focus on finding the best in the group through assertive means of advertising and reaching out to your niche. This is one of the most important steps to succeeding with your business.

The only other step that you need to take is with your persistence. The more persistent you are the more customers you will find that want your business. The more you focus on finding the right targets, make sure that you get your foot in the door ahead of your competition, and keep working towards your achievements, the more likely you will be to succeed. As W. Clement Stone says, “Inspiration to action.”

Believe it or not, it is these simple things that will make or break a business. Whenever you feel like stopping, giving up, or getting a day job, know that you are on the edge of great success. You just have to get through one more jump before you begin to see the new horizon that will open for your business to be the best.


Succeed In The Wholesale Business

The number one aspect of starting a successful wholesale business is focus. Once you have the ideas and the business action plan set, you need to focus on building such wholesale business niche into a profitable venture. You need to set yourself daily goals as to what you are going to achieve for such 24hrs period. There is a huge difference between having something written and not having anything written down. Both research and even my testing shows that once a wholesale entrepreneur focus on achieving his required written daily goals for his business, the chances of getting the job done are increased. When you don’t write what you need to do either for the day or for the whole week, you are most likely to be as people say- lost at the sea. This is even the primary reason a wholesale business fails in America, they start the business and once they do not see profits as expected- they carry their fault on the business instead of carrying such faults on themselves. Selling wholesale tangible items on the Internet and better yet on eBay works- your first step is to focus on what you need to do each and every day.

Second, if you are going to become a retailer or sell wholesale tangible items either locally offline or on the Internet- you need below wholesale prices for the merchandise you will sell. For most businessman and businesswoman this one is obvious- but in my surprise more than 95% of wholesale business are not buying wholesale merchandise at the best possible prices. It is incredible to see many online wholesale businesses go online and fail because they never had a great wholesale distributor or the perfect wholesale list to start with, thanks to reliable and profitable contacts.

My last suggestion for this lesson as a guy who started earnings more than a thousand dollars in a single day on the Internet is focus, develop profitable wholesale sources to your portfolio and build multiple niches around such business with sub-niches. With wholesale, I can assure you that you can focus in specific merchandise and build sub-niches around it. I look forward on teaching you more.