by Amanda King | Resources
The longevity and success of America’s small businesses is crucial to our economy and economic vitality. Employing 120 million Americans across the country, small businesses create two out of every three new jobs. Small businesses have generated over 65% of the net new jobs since 1995. There are now nearly 28 million small businesses in the U.S, according to the Small Business Association. Small businesses are good for the community, too. A Civic Economics Study found if you spend $100 at a local business, about $68 stays in your local economy. But, if you spend the same at a large business, only $43 stays in the local economy. According to research from the CAN Capital Small Business Health Index, over half of U.S. small business owners expect growth this year. However positive the outlook may be from small business owners, the statistics state otherwise. The Small Business Administration reports that only half of all businesses survive five years and only a third survive ten years or more. Successful Business Growth Tactics So why do 14 million U.S. business owners feel optimistic about their longevity? Because they’ve implemented the right business growth strategies, such as developing a marketing plan, a business plan, and introducing new products in new markets at the right time. 1. When small businesses develop a marketing plan, it impacts their business. 38% of business owners will grow by expanding or trying new forms of marketing. Social media marketing has been proven to propel consumer spending. According to Synnovatia, 68% of millennials are somewhat likely to purchase after seeing a friend’s post about a product or service. 2. Business...
by Amanda King | Business Coaches, Financial Analysis
As a professional advisor, multi-tasking runs through your veins. You’re a marketer, a financial advisor, and a confidant for your clients. You’re also business savvy. To make the financial advisor part of your job easier, we suggest you use financial analysis software. It gives you the ability to benchmark your client’s business performance against industry standards. Plus, it allows you to make timely, data-driven decisions. Financial analysis software adds value to you as an advisor. Maybe you’re already using a financial analysis tool, such as Excel. But hear us out – replace Excel with a Budgeting, Planning, and Forecasting software! If you graduate to a BP&F software, you can turn data into business insight. Excel also poses challenges in these areas: Security Control Consolidation Workflow Automation In contrast, here are the benefits of using a dedicated BP&F tool over Excel: Automates your annual budgeting process. Consolidates and centralizes a business’s financial information. Plans a company’s financial direction for the next three to five years. Documents how that plan follows through month-to-month and specifies expenditures. Forecasts finances using past company data to predict financial outcomes for the future. Promotes consistency across reports. And, nowadays, financial analysis is easy – if you use the right software. Just two years ago though, the reach of technology to financial advisors was severely limited. There were only a handful of players. Some of them were large platforms that had to be extensively adapted and customized to be relevant for financial advisors. But, eventually, software companies took advantage of this low-hanging business fruit. Today, there are many financial analysis software companies on the market. We sorted through...
by Amanda King | Financial Analysis
Financial Analysis: Your Window to Success Finance is the language of business. You have to make the best decisions possible for yours or your client’s business. And, understanding data financial analysis is the key to making this happen. Financial analysis is one part of the business finance process. It examines historical financial data to gain information about the current and future financial health of a company. Any successful business owner is constantly analyzing the performance of his or her company. He or she also compares it with the company’s historical figures, with its industry competitors, and even with successful businesses from other industries. Financial analysis can be applied in many different situations. To get you more familiar with financial analysis, we compiled the most important parts of it: financial analysis tools, financial statement analysis, financial analysis ratios, and financial analysis techniques. Financial Analysis Tools There are many financial analyses techniques, though three important methods will be discussed below: Horizontal, and Vertical Analyses, and Financial Ratios. Horizontal and Vertical Analysis Horizontal analysis is the comparison of financial information over a specified period of time. Vertical analysis is the proportional analysis of a company’s financial statement, meaning that each financial statement line item is listed as a percentage or another item, for easy comparability across different line items and easy observation of a line item’s relative size in comparison to a primary account for comparison. For example, each line item on an Income Statement is stated as a percentage of Gross Sales or Total Revenue, or even Net Sales (Revenue – discounts or rebates), while each Balance Sheet line item is listed as a...
by Amanda King | Financial Health
A Survival Guide to Your Company’s Financial Health Financial health is the way in which to measure the financial aspect of a company. Measuring a company’s financial health isn’t easy for small businesses or large corporations. But, with our tips, strategies, ratios and ways to check up on your financial health, you’ll have all the tools you need. A recent research report from the Federal Reserve Bank of Chicago, Pepperdine University, and online small business lending company FundWell raises awareness about small business financial health. The report titled, “Small Business Financial Health Analysis” covers policies, investments, and financial and technical assistance resources to help small businesses achieve their goals in computing their financial health. But, these three institutions came together for another important reason. Our U.S. economy depends on small businesses to be financially healthy. There’s no denying that small business growth drives U.S. job creation. From 1993-2009, the U.S. economy added 9.8 million jobs! A financially weak business creates a domino effect – impacting the U.S. economy. To ensure businesses are financially healthy, we need to give them (that means you!) the tools they need. The study, based on 940 small business owners, concluded that “small businesses that had a better understanding of asset based financing, including inventory financing, accounts receivable financing, trade credit, and equipment leasing financing, scored higher on the [study’s pre-determined] financial health index.” Over 33% of the businesses that had excellent financial health said they had a solid understanding of these asset-based financing products. Yet, over 33% of businesses with poor financial health said they had never even heard of or had limited knowledge of these four...
by Amanda King | Resources
Why It’s Important to Evaluate Your Company’s Financial Health Dynamic, fast-growing companies must adopt financial management solutions that can quickly adapt to their changing needs. Keeping tabs on your company’s financial health is important in order to help reduce costs, make smarter business moves, and to continue to grow. Keeping your company on track requires constant analysis, which includes understanding your financial position. Regular Checkups are Necessary In the midst of operating your business, owners may forget to step back and take stock of their company’s financial health. If you check in on your company’s financial health regularly, there won’t be any surprises! Have no fear – regular checkups are not complicated. Basic ratio analysis will get the job done by evaluating your finances, identifying potential issues, and determining whether your company is heading towards financial freedom…or a cash-flow crisis. You may be asking yourself: what should I measure? You should measure liquidity. Cash flow is the most important factor in operating a profitable company. You should constantly know what your current ratio is (your assets divided by your liabilities). The result of the ratio should be a number 1 or more. Understand Your Company’s Financial Health Running a company without understanding its financials is like driving on the freeway with your eyes closed. How can you know where your company’s financial health stands if you don’t look for signs along the way? Understand your financial dashboard, which consists of your net income statement, cash flow statement, and balance sheet. We recommend investing an hour of your time each week to analyze your income statement and cash flow statement in...
by Amanda King | Resources
A Company Financial Analysis in Just 12 Steps It’s important to perform a company financial analysis in order to see how the company is performing compared to earlier periods of time and how the company’s performance stands up against other competitors in its industry. “Financial Analysis is something of an art,” said Philadelphia University assistant professor of management, Harvey B. Lermack. While performing a company financial analysis can be involved, these steps will provide a basic foundation for you to get started. Experienced managers, investors, and analysts collect industry information over time that allow them to perform financial analysis of companies more thoroughly and more swiftly. But, for our purposes we will discuss the basic steps for you to start dabbling in the art of financial analysis. Step 1. Collect the company’s financial statements from the last three to five years including: Balance Sheets Cash Flow Statements Income Statements Shareholders equity statements These financial reports can be found in a recent annual report, in the company’s 10K filing, or on the U.S. Securities and Exchange Commission EDGAR database. Step 2. Analyze these financial statements and scan them in order to look for large movements in specific items from one year to the next. Lermack poses this example, “Did revenues have a big jump, or a big fall, from one particular year to the next? Did total or fixed assets grow or fall?” Also, look for suspicious activity. If anything jumps out at you, research what you know about the business to find out why an item is suspicious-looking. For instance, did the company sell off some of its operations during the period of...
by Amanda King | Resources
So, What is a Profit and Loss Statement? The Profit and Loss Statement (P&L), also known as the Income Statement, is an important financial tool. It summarizes your company’s revenues (net sales) minus costs and expenses (i.e., Cost of Goods) incurred during a specific operating period. The statement is usually done quarterly or annually. In other words, a P&L is a measurement of activity (revenue – expenses=profit) through time (whatever that operating period is). A P&L is similar to a Balance Sheet, which is an important measure of Assets & Liabilities. But, the Balance Sheet is a measure of activity at a certain time. Why You Need to Understand a Profit and Loss Statement A profit and loss statement shows how well your business buys and sells inventory or services to make a profit. As you know, a company needs to create a profit in order to survive and grow. If you analyze a profit and loss statement, you can determine your business’s cash flow that is available to repay existing debt, finance additional debt like loans in order to expand your business, or to reinvest in the business. Mark Staniszewski, IndustriusCFO’s account manager says, “A business needs to keep good records of their financial happenings. It’s important for business owners to understand their expense structure and monitor these expenses to ensure they’re achieving a healthy Gross Margin and Net Income as measures of profitability. The old adage is ‘you could only improve what you can measure’ and compiling your P&L is the first step in measuring your company’s revenue minus expenses.” In order to show you the positive impact...
by Amanda King | Business Owners
Why Small Businesses Should be Using Big Data Big businesses aren’t the only ones who can make data-driven decisions using big data these days. Small businesses can reap the benefits, too. Analyzing all the online and offline information that you can helps to grow your business. Big data is defined as very large datasets that can be analyzed computationally to reveal patterns, trends, and associations – especially in connection with human behavior and interactions. A big data revolution has arrived with the growth of the Internet, wireless networks, smartphones, social media and other technology. Organizations who discuss using big data usually have the resources to hire research forms and data scientists to do the work for them. But, if you know where to look, small businesses can finally step up to the plate and utilize big data, themselves. 7 Benefits of Using Big Data 1. Using big data cuts your costs A recent Tech Cocktail article looks at how Twiddy & Company Realtors cut their costs by 15%. The company compared maintenance charges for contractors against the average of its other vendors. Through this process, the company identified and eliminated invoice-processing errors and automated service schedules. 2. Using big data increases your efficiency Using digital technology tools boosts your business’s efficiency. From using tools such as Google Maps, Google Earth, and social media, you can do many tasks right at your desk without having travel expenses. These tools save a great amount of time, too. 3. Using big data improves your pricing Use a business intelligence tool to evaluate your finances, which can give you a clearer picture of...
by Amanda King | Business Managers
Millennials Want to be Coached A recent article out of Harvard Business Review reveals what millennials want at work – millennials want to be coached. SuccessFactors, a cloud-based business execution software company, conducted a study in 2014 in partnership with Oxford Economics that found 1,400 millennials want to be coached and want more feedback from their business managers. They found that millennials in the workforce want feedback at least once a month compared to non-millennials who do not need as much feedback. Through their conversations with hundreds of milliennials, SuccessFactors and Oxford Economics learned that millennials want to be coached for their own personal development, not necessarily more managerial direction. So, as a business manager, your role is expanding beyond your daily managerial duties and into coaching. You need to be prepared to evolve to meet the needs of millennials, because in five years, millennials will make up 50 percent of the workforce. That’s 80 million millennials, according to LifeHealthPro. The Hartford’s 2014 Millennial Leadership Survey found 83 percent of millennials consider themselves to be a leader while 73 percent aspire to be leaders in the next five years. Millennials want to be coached AND want to lead in the workplace. Most of their current leadership resides in community organizations, school groups and sports teams. 4 Tactics for Coaching Your Employees To help millennials and other employees get on the track that they aspire to be on, use these four tactics: Build a Relationship– Having a strong relationship with your coworker builds trust and is healthy for the workplace. You don’t need to go to happy hour every week to...
by Amanda King | Business Owners
Why You Should Want to Become a Better Leader Want to become a better leader? Wherever you live, there are most likely a handful of organizations that offer leadership development classes. It’s a trend that has become the norm as the modern workplace continues to change and companies try out different approaches to increase productivity, engage its employees, and plan strategically. A recent McKinsey & Company study opens with a rather powerful statement – over 90 percent of CEOs have plans to increase investment in leadership development because they view it as the most important human-capital issue their organization faces. Through research, McKinsey & Company, a global management consulting firm that leads businesses, governments, non-governmental organizations and not-for profits, found that a small subset of leadership skills creates leadership success. This is especially true when your employee(s) with leadership potential want to become a better leader. In their study, they used their experience and searched relevant academic materials to create a list of 20 leadership traits. Then, the firm surveyed 189,000 people in 81 diverse organizations globally to analyze how frequently distinct kinds of leadership behavior are applied within their organizations. Finally, they divided the group into organizations that showed strong leadership performance and those that had weak leadership performance. According to McKinsey & Company, “What we found was that leaders in organizations with high-quality leadership teams typically displayed 4 of the 20 possible types of behavior; these 4, indeed, explained 89 percent of the variance between strong and weak organizations in terms of leadership effectiveness.” 4 Leadership Traits You Need to Become a Better Leader Here are the...
